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Definition
| are a form of equity. each share of stock represents a fractional ownership position in a corporation. equal participation in the corporation, equal vote and voice in management. has no maturity date. TAXES ARE PAID ON DIVIDENDS |
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Definition
bonds are liabilities. goverments and corporations give out bonds that pay a stated return called interest. typically paid every 6 months plus the return of the face value of the bond. a bond can be sold before maturity. usually 20 years
Call feature: not all have it. if Co. cant pay interest can pay early bond |
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Definition
these are hybrid securities that have both stock and bond characteristics. Preferred stock are issue as stoc and therefore represent an equity in a corporation. These have a stated dividend that are paid before common stuck get paid. As bond they pay dividends as they pay when the time of purchase.
first to receive money in liquidation |
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these provide the fixed income benefits of a bond while offering the price appreciation potential of common stock.
it can be converted to shares after a certain amount of time |
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are org. that invests in and professionally manages a diversified portfolio of securities.These sell shares to investors, who then become part owners of the funds securities portfolio.
+ diverse + convinient |
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| in the PM, new securities are sold to the public and one party of the transaction is always the issuer. A security is sold in the PM just once, when is first issued. investment bankers are involved in this market. |
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Definition
these are where the old securities are bought or traded between investors. these permit investors to execute transactions among themselves. these do not generate cash for the issuer
security exchange: buyers-sellers brought together to execute the tradenasdaq market: electronic platform to execute trade |
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Definition
| over the counter market deals in smaller, unlisted securities |
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| these represent respectively the highest price at which the security is offered for purchase a given security and the lowest price at which the security is offered for sale in the dealers market. |
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securities and exchange commission: an agency of the fed. gov. that regulates the disclosure of information about securities and generally oversees the operation of the securities exchanges and markets.
established to avoid another depression |
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| a market condition normally associated with investor optimism, economic recovery, and expansion; characterized by generally rising securities prices. |
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| a condition of the market typically associated with investor pessimism and economic slowdown; characterized by generally falling securities prices. |
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securities investor protection corp. is an org. that protect investors against financial failure of brokerage firms, much as the FDIC protects depositors against bank failures. its a non profit org. authorized by the securities investors act of 1970. NOT an agency of the US government
does not insure against bad investment advice or broker fraud. if you have a dispute you go to arbitration |
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Definition
a broker, in addition, to executing clients transactions, offers a full array of brokerage services. registered with SEC
+ expensive |
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Definition
typically a discount broker through which investors can execute trades electronically through a commercial service or on the internet broker.
less expensive than full broker |
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Definition
a security transaction made on a quantity of fewer than 100 shares of stock
bc the purchase or sale of odd lot requires additional processing an added fee is charge onto normal commission charges |
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Definition
| a security transaction that represents a quantity of 100 shares or multiple there of. |
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| a procedure used to settle disputes between a brokerage firm and its clients; both sides present their position to a board of arbitration which makes a final and often binding decision on the matter. |
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| Buying and Selling orders |
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Definition
Market order: an order to buy or sell a security at the best price available at the time it is placed.
-Limit order:an order to either buy a security at a specified or lower price or to sell a security at or above a specified price.-stop order: an order to sell stock when the market price reaches or drops below a specified priceall protects investors against rapid declines in prices. |
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Definition
| the most widely followed measure of stock market performance, consists of 30 blueship stocks listed mostly on the NYSE |
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Definition
the standard and poor indexes are similar to the dow jones aveg in that both are used to capture the overall performance of the market. the S&P uses a lot more stocks (500). DIJA uses 30. they are also large stock.
is an index dow jones is an average |
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Definition
| an index of the total market value of the approx. 6000-7000 or so most actively traded stocks in the U.S. accounts for 98-99% of all market. |
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| the degree of uncertainty associated with the firms cash flow and with its subsequent ability to meet its operating expenses. |
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Definition
| a type of risk associated with the price volatility of a security |
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| a type of risk associated with the mix of debt and equity financing used by the issuing firm and its ability to meet its financial obligations. |
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Definition
a type of risk resulting from possible changes in price levels, that can significantly affect investment returns.
inflation and value of the dollar affects this |
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Definition
| a type of risk resulting from changing market interest rate that mainly affects fixed income securities. such as preferred stock, CD etc. |
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Definition
| a risk associated with the inability to liquidate an investment conveniently and at a reasonable price. |
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| the risk that some major, unexpected event will occur that leads to a sudden and substantial change in the value of an investment |
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Definition
any investment vehicle- wether it is a share of stock, a bond, a piece of real state, or a mutual fund, has two basic form of return: current income and capital gains.
CG: from selling whole at a higher price Current income: received with some degree of regulatory. ex rent, interest from bonds. |
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Term
| the risk return trade off |
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Definition
| the amount of risk associated with a given investment vehicle is directly related to its expected return. if you want a higher return you have to take a higher risk. |
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Definition
a stock generally issued by companies expected to provide an uninterrupted stream of dividends and good long term growth prospects.
EX. Apple, Google, Exxon |
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Definition
a stock whose earnings and market price have increased over the time a rate well above average.
capital gains not dividends |
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Definition
| a stock that represents the technology sector of the market |
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Definition
| a stock whose appeal is the dividends it pays out; offers dividend payments that can be expected to increase over the time. |
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Definition
| stock that is purchased on little more that the hope that its price per share will increase. high risk |
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Definition
| stock whose price movements tend to parallel the various stages of the business cycle |
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| stock whose price movements are usually contrary to movements in the business cycle. |
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Definition
| bond feature that defines the annual interest income the issuer will pay the bondholder. |
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Definition
| a bond secured by a claim on real assets, such as a manufacturing plant. |
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Definition
| a bond provision specifying the annual repayment schedule to be used in paying off the issue. it basically describes how a bond will be paid off over time. |
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Definition
| bond feature that allows the issuer to retire the security prior to maturity debenture an unsecured bond issued on the general credit of the firm |
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Definition
exchange traded fund a mutual fund that trades as a listed security; usually structured as an index fund that is set up to match the performance of certain market segment.
can be sell or traded as a common stock (closed end fund) or back to the company (open end fund) |
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Definition
diversification
professional management financial returns
convenience |
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Definition
| a fund that charges a fee at time of purchase |
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Definition
| a fund on which no transaction fees are charge |
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Definition
| a commission charged for redeeming fund shares |
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Definition
| charges a commission when the shares of the fund are purchased. |
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Definition
| an annual fee that's supposed to be used to offset the promotion and selling expenses |
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Definition
| a fee paid to the professional money managers who administer a mutual funds portfolio |
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Definition
| the objective is capital appreciation. They invest principally in common stocks with above average growth potential. long term investment vehicle. |
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Term
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Definition
| rather than trying to beat the market, index funds simply try yo amtch the market. its based on buy and hold policy. inles the targeted market index alters its market basket of securities. |
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Definition
| restricts its investment to a particular sector of the market. |
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Term
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Definition
| these funds spread investors money across all different types of markets. |
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Term
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Definition
| for anyone born later than 1960 the SS administration defines as full retirement age as age 67. if born before 1960 your full retirement age is between 65 and 67. |
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Term
| noncontributory pension plan |
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Definition
| A pension plan in which the employer pays the total cost of the benefits |
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Term
| contributory pension plan |
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Definition
| a pension plan in which the employee pays part of the cost of the benefits |
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Term
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Definition
| a pension plan in which the formula for computing benefits is stipulated in its provisions. %*avg salary of x last years* numbers of yrs worked in company |
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Term
| defined contribution plan |
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Definition
| a pension plan specifying the contributions that both employer and employee must make; it makes no promises concerning the size of the benefits at retirement. |
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Term
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Definition
| an agreement by which part of the convered employee's pay is withheld and invested in some form of investment; taxes on the contributions and the account earnings are deferred until the funds are withdrawn. |
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Term
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Definition
an account to which self-employed persons may make specified payments that may be dedcuted from taxable income; earnings also accure on a tax-deferred basis.
up to 25% of earned income self-employment works like a traditional IRA |
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Term
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Definition
individual retirement plan arrangement: a retiement plan, open to any working american, to which a person may contribute a specified amount each year.
up to $5000 per year. cant do it with spouse 59 1/2 minimum. if take out before taxed 10% on every $ exceptions: permanent or totally disable. bought a house. pay debts |
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Definition
available since 98'. they can be opened by couples filing jointly with adjusted gross incomes of up to 166k whether they have other retirement plans or not.
up to 5000$ a yr. no tax benefits.no age limitincome limits are significantly higher |
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Term
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Definition
| means anticipating the psychological and financial needs of those you love, and providing adequate resources to ensure continuation of their way of life. good for individuals with children who are minors. |
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Term
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Definition
| this is essential for anyone with an state exceeding $1 mill in 2011 under current law. |
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Definition
| the real and personal property owned by a person that can be transferred at death. |
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Definition
| all property that might be subject to federal estate taxes on a persons death. |
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Definition
| the situation that exists when a person dies without a valid will |
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Term
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Definition
| the person who makes a will that provides for the disposition of property at his or her death. |
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Term
| requirements for a valid will |
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Definition
mental capaciy
freedom of choice
proper execution |
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Term
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Definition
| a document that legally modifies a will without revoking it. |
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Term
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Definition
- his health or financial circumstances change significantly.
- births, deaths, marriages, or divorces alter the operative circumstances
the testator moves to a state other than where the will was executed
- an executor, trustee or guardian can no longer serve
- substantial changes occur in the tax law |
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| letter of last instructions |
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Definition
| an informal memorandum that is separate from a will and contains suggestions or recommendations for carrying out a descendants, wishes. |
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Definition
| the personal representative of an estate designated in the decedents will. |
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Term
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Definition
| durable power of attorney for financial matters: legal doc. that authorizes another person to take over someones financial affairs and act on his or her behalf. |
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Term
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Definition
| doc that precisely states the treatments a person wants if he or she becomes terminally ill |
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Term
| durable POA for health care |
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Definition
| legal doc authorizes an individual to amke health decisions on behalf of the principal when the principal is unable to make such decisions. also called advanced directive for health care. |
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Term
| joint tenancy with right of suvivorship |
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Definition
a type of ownership by two or more parties, with the suvivors continuing to hold all such property on the death of one or more of the owners.
Right of suvivorship: the right of surviving joint owners of property to receive title to the deceased joint owners interest in the property. |
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Definition
| a form of ownership by husband and wife, recognized in certain states in which property automatically passes to the surviving spouse. |
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Definition
| a form of co-ownership under which there is no right survivorship and each co-owner can leave his or her share to whomever he or she desires. |
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Term
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Definition
| a legal relationship created when one party transfers property to a second party for the benefit of third parties. |
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Term
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Definition
| a tax levied on the value of certain gifts made during the givers life time |
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Term
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Definition
Anual exclusions: the gift tax law allows a person to give gifts- present interest with no strings attached- up to a specified annual amount per calendar year to any number of recipients.
up to 13,000 per person per year spouses up to 26K and lifetime exclusion up to 5 mill. |
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Definition
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Definition
| how long you have to be in the company before you can get their money. usually at least 4 to 5 yrs. |
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Term
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Definition
| first yr 20% 2nd yr 40% etc |
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Term
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Definition
they might raise the age
can be claimed and then suspended. the older u claim it the higher it is. 70 yrs is the max. |
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Term
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Definition
-investing too little during retirement
-retiring before you need to
-divorce
-way overpaying mortgage
-cashing out 401(k) 10% penalty (remember to max match %)
-paying needless fund fees. |
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Term
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Definition
depends on the state
unmarried, no kids = parentsmarried, no kids = spouse married and kids= half and half |
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Term
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Definition
get filled in court
public after deathnot jointthings that do not pass through will:CDs, IRAs, CDs, Bank accounts, LI policy |
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Term
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Definition
to sell a casket have to provide full funeral services
funeral homes have to accept funeral delivery of caskets from other placescant be cremated unless family agrees. unless prepaid |
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Definition
only sold in one place
has to be bough via broker |
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Definition
no interest payment
usually a very safe investment |
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Definition
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Definition
| vanguard, merrill lynch etc |
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Term
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Definition
| much bigger category. infinite number of stocks and taking money. if too big might close for new investors. but no close end. |
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Definition
| Net asset value is the price per share of stock |
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Definition
| simplified employee pension: is a variation of IRA in the U.S applied to business owners and their employees |
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Definition
nasdaq + OTC market
buyer and seller never met. people buy and sell through a securities dealer. bid price and ask price pink sheets are unregulated |
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Term
| interest rates and the bond prices |
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Definition
high interest rates, low bond prices and opposite
you can buy at high interest rate a low bond and sell it at a lower interest rate and a higher price. |
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Definition
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Term
| Interest Rates and the effect on bond prices |
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Definition
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Term
| Social Security-Work requirement for benefits |
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Definition
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