Stock Market Help
Here is a list of common financial terms. Click on the letter that corresponds with the first letter of the financial term to get the definition.
Interest which is not actually paid to bond holders but which the IRS may tax anyway. Common with zero coupon bond interest.
A call option is in-the-money if the strike price is less than the market price of the underlying security. A put option is in-the-money if the strike price is greater than the market price of the underlying security.
Dividends or interest received by owners of equity or bonds respectively. Dividends represent a portion of earnings paid to shareholders while interest is compensation to bondholders in the form of cash or more bonds for the lending of capital. Reinvested income can significantly add to returns. See Projected Income.
An account that receives interest from bonds and credit balances, or dividends from stock positions.
Constructing a portfolio to match the performance of a specific index, such as the S&P 500. Individuals can do this by purchasing shares in an index mutual fund.
Click Dow Jones Indices and S&P Indices in the Glossary list for these definitions.
The rise in price of goods and services, or Consumer Price Index (CPI), when too much money chases too few goods on the market. Moderate inflation is a result of economic growth. Hyperinflation (CPI rising at rates of 100% or more annually) causes people to lose confidence in their economy and put their money in hard assets such as gold and real estate.
The annual percentage change in the price of goods and services. At the consumer level, it is the Consumer Price Index (CPI) and at the wholesale level it is the Producer Price Index (PPI).
See Stock Information for these definitions.
The name of the institution issuing a CD or money market.
The percentage of outstanding shares held by institutions for investment purposes. Includes charitable trusts, pension funds, mutual funds, brokerage firms, and banks.
Compensation to bondholders in the form of cash or more bonds for the lending of capital. Accumulated or accrued interest is the interest due to the seller of a bond from the day after the last interest payment to the day before the settlement date. It is paid by the buyer of the bond. Imputed interest is not paid to the bondholder but it is calculated as if it was so that taxes can be paid on it anyway. Reinvested interest can significantly add to returns.
Displays the frequency and dates that interest on a given bond is paid. By carefully selecting interest dates, you can receive income monthly from a group of bonds, with staggered interest dates.
A U.S. government debt instrument having a maturity of between 3 to 10 years.
Stocks purchased from companies based in countries other than the Unites States. International equities can also expose you to foreign currency risk.
An appreciating or income producing asset. An open investment is one you currently own. A closed investment is one you once owned. A long investment is an open investment that you bought. A short investment is an open investment that you sold short - i.e., you borrowed the investment from someone else, sold it, pocketed the proceeds, you hope it decreases in value, and you are obliged to buy it back in the future and return it to the original owner. An investment can be short and long at the same time if it contains both long and short lots. All investments are classified by type as a way of organizing your investments.
The official name of the company issuing a given bond.