Quick Jump: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

RANGE 
The difference between the high and low price during a given period.  

RETURN 
The percentage gain or loss for a mutual fund in a specific time period. This number assumes that all distributions are reinvested.  

RECORD DATE 
Date by which a shareholder must officially own shares in order to be entitled to a dividend. For example, a firm might declare a dividend on Nov 1, payable Dec 1 to holders of record Nov 15. Once a trade is executed an investor becomes the "owner of record" on settlement, which currently takes 5 business days for securities, and one business day for mutual funds. Stocks trade ex-dividend the fourth day before the record date, since the seller will still be the owner of record and is thus entitled to the dividend.  

REDEMPTION CHARGE 
The commission charged by a mutual fund when redeeming shares. For example, a 2 % redemption charge (also called a "back end load") on the sale of shares valued at $1000 will result in payment of $980 (or 98 % of the value) to the investor. This charge may decrease or be eliminated as shares are held for longer time periods.  

RELATIVE STRENGTH 
A stock's price movement over the past year as compared to a market index (the S&P 500). Value below 1.0 means the stock shows relative weakness in price movement (underperformed the market); a value above 1.0 means the stock shows relative strength over the 1-year period. Equation for Relative Strength: [current stock price/year-ago stock price] [current S&P 500/year-ago S&P 500]  

RETRACEMENT 
A price movement in the opposite direction of the previous trend.  

RETURN ON ASSETS (ROA) 
Indicator of profitability. Determined by dividing net income for the past 12 months by total assets. Result is shown as a percentage.  

RETURN ON EQUITY (ROE) 
Indicator of profitability. Determined by dividing net income for the past 12 months by common stockholders' equity (adjusted for stock splits). Result is shown as a percentage.  

REVERSE STOCK SPLIT 
A proportionate decrease in the number of shares, but not the value of shares of stock held by shareholders. Shareholders maintain the same percentage of equity as before the split. For example, a 1-for-3 split would result in stockholders owning 1 share for every 3 shares owned before the split. A firm generally institutes a reverse split to boost its stock's market price and attract investors.  

RIGHTS OFFERING 
Issuance of "rights" to current shareholders allowing them to purchase additional shares, usually at a discount to market price. Shareholders who do not exercise these rights are usually diluted by the offering. Rights are often transferrable, allowing the holder to sell them on the open market to others who may wish to exercise them. Rights offerings are particularly common to closed end funds, which cannot otherwise issue additional common stock.

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SALES CHARGE 
The fee charged by a mutual fund when purchasing shares, usually payable as a commission to a marketing agent, such as a financial advisor, who is thus compensated for his assistance to a purchaser. It represents the difference, if any, between the share purchase price and the share net asset value.  

SEC 
The Securities and Exchange Commission, the primary federal regulatory agency of the securities industry.  

SECONDARY MARKET 
A market that provides for the purchase or sale of previously owned securities. Most trading is done in the secondary market. The New York Stock Exchange, as well as all other stock exchanges, the bond markets, etc., are secondary markets.  

SELLING SHORT 
If an investor thinks the price of a stock is going down, the investor could borrow the stock from a broker and sell it. Eventually, s/he must buy the stock back on the open market. For instance, you borrow 1000 shares of XYZ on July 1 and sell it for $8 per share. Then, on Aug 1, you purchase 1000 shares of XYZ at $7 per share. You've made $1000 (less commissions and other fees) by selling short.  

SERIES 
Options: All option contracts of the same class that also have the same unit of trade, expiration date, and exercise price.Stocks: shares which have common characteristics, such as rights to ownership and voting, dividends, par value, etc. In the case of many foreign shares, one series may be owned only by citizens of the country in which the stock is registered.  

SETTLEMENT DATE 
The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently 5 business days after the trade, but this will be reduced to 3 days in 1995. For mutual funds, settlement usually occurs in the U.S. the day following the trade. In some regional markets, foreign shares may require months to settle.  

SHARES 
Certificates or book entries representing ownership in a corporation or similar entity  

SHARE REPURCHASE 
Program by which a corporation buys back its own shares in the open market. It is usually done when shares are undervalued. Since it reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.  

SHORT POSITION (OPTIONS) 
A position wherein a person's interest in a particular series of options is as a net writer (ie, the number of contracts sold exceeds the number of contracts bought).  

SHORT POSITION (STOCKS) 
Occurs when a person sells stocks s/he does not yet own. Shares must be borrowed, before the sale, to make "good delivery" to the buyer. Eventually, the shares must be bought to close out the transaction. Technique is used when an investor believes the stock price is going down.  

SHORT SALE 
Selling a security that the seller does not own but is committed to repurchasing eventually. It is used to capitalize on an expected decline in the security's price.  

SLIPPAGE 
The difference between estimated transaction costs and actual transaction costs. The difference is usually composed of revisions to price difference or spread and commission costs.  

STOCK DIVIDEND 
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company, or it may be shares in a subsidiary being spun off to shareholders. Stock dividends are often used to conserve cash needed to operate the business. Unlike a cash dividend, stock dividends are not taxed until sold.  

STOP (-LOSS) ORDER 
An order to sell a stock when the price falls to a specified level.  

STRIKE PRICE 
The stated price per share for which underlying stock may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.

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10-K 
Annual report required by the SEC each year. Provides a comprehensive overview of a company's state of business. Must be filed within 90 days after fiscal year end. A 10Q report is filed quarterly.  

TICK INDICATOR 
A market indicator based on the number of stocks whose last trade was an uptick or a downtick. Used as an indicator of market sentiment or psychology to try to predict the market's trend.  

TIME VALUE 
The portion of the premium that is based on the amount of time remaining until the expiration date of the option contract, and that the underlying components that determine the value of the option may change during that time. Time value is generally equal to the difference between the premium and the intrinsic value.  

TOTAL REVENUE 
Total sales and other revenue for the period shown. Known as "turnover" in the UK.     

TRADE 
A verbal (or electronic) transaction involving one party buying a security from another party. Once a trade is consummated, it is considered "done" or final. Settlement occurs 1-5 business days later.  

TRADE DATE 
The date on which a trade occurs. Trades generally settle (are paid for) 1-5 business days after a trade date. With stocks, settlement is generally 5 business days after the trade.  

TRADING RANGE 
The difference between the high and low prices traded during a period of time; with commodities, the high/low price limit established by the exchange for a specific commodity for any one day's trading.  

TURNOVER  
Mutual Funds: A measure of trading activity during the previous year, expressed as a percentage of the average total assets of the fund. A turnover ratio of 25 % means that the value of trades represented one-fourth of the assets of the fund. Finance: The number of times a given asset, such as inventory, is replaced during the accounting period, usually a year. Corporate: The ratio of annual sales to net worth, representing the extent to which a company can growth without outside capital. Markets: The volume of shares traded as a percent of total shares listed during a specified period, usually a day or a year. Great Britain: Total revenue  

12B-1 FEES 
The percent of a mutual fund's assets used to defray marketing and distribution expenses. The amount of the fee is stated in the fund's prospectus. The SEC has recently proposed that 12b1 fees in excess of 0.25% be classed as a load. A true "no load" fund has neither a sales charge nor 12b1 fee.  

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UNCOVERED CALL 
A short call option position in which the writer does not own shares of underlying stock represented by his option contracts. Also called a "naked" call, it is much riskier for the writer than a covered call, where the writer owns the underlying stock. If the buyer of a call exercises the option to call, the writer would be forced to buy the stock at market price.  

UNCOVERED PUT 
A short put option position in which the writer does not have a corresponding short stock position or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put. Also called "naked" puts, the writer has pledged to buy the stock at a certain price if the buyer of the options chooses to exercise it. The nature of uncovered options means the writer's risk is unlimited.  

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VOLATILITY 
A measure of risk based on standard deviation in fund performance over 3 years. Scale is 1-9; higher rating indicates higher risk.  

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WANTED FOR CASH 
A statement displayed on market tickers which indicates that a bidder will pay cash for same day settlement of a block of a specified security.  

WARRANT 
A security entitling the holder to buy a proportionate amount of stock at some specified future date at a specified price, usually one higher than current market. This "warrant" is then traded as a security, the price of which reflects the value of the underlying stock. Warrants are usually issued as a "sweetener" bundled with another class of security to enhance the marketability of the latter.   

WATCH LIST 
A list of securities selected for special surveillance by a brokerage, exchange or regulatory organization; firms on the list are often takeover targets, companies planning to issue new securities or stocks showing unusual activity.  

WITHDRAWAL PLAN 
The ability to establish automatic periodic mutual fund redemptions and have proceeds mailed directly to the investor.

WRITER The seller of an option contract.

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YIELD 
The percentage rate of return paid on a stock in the form of dividends, or the rate of interest paid on a bond or note.  

YIELD TO CALL 
The percentage rate of a bond or note, if your were to buy and hold the security until the call date. This yield is valid only if the security is called prior to maturity. Generally bonds are callable over several years and normally are called at a slight premium. The calculation of yield to call is based on the coupon rate, length of time to the call and the market price.  

YIELD TO MATURITY 
The percentage rate of return paid on a bond, note or other fixed income security if you buy and hold it to its maturity date. The calculation for YTM is based on the coupon rate, length of time to maturity and market price. It assumes that coupon interest paid over the life of the bond will be reinvested at the same rate.

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