Glossary


Call – an option to buy a specified number of shares during a specified period at a specified price; the buyer/holder expects a price rise

Cash Equivalents – investments that are as liquid as cash itself, such as T-bills, commercial paper, and CDs

Certificates of Deposit (CD) – a time deposit at a bank with a specified interest rate and maturity date, similar to a bond

Closed-End Investment Companies – a fund that, in contrast with open-end funds, sells a fixed number of shares established at the first issuance and closed thereafter

Commercial Paper – short-term promissory note issued by a corporation in large, unsecured denominations

Common Stock – an equity security that represents the residual ownership interest in a corporation

Consumer Price Index – an index of the variation in prices paid by typical consumers for retail goods and other items

Corporate Bonds – debt offering by companies, sold in units of $1,000 through bond dealers

Coupon – the yield paid by a fixed-income security

Eurodollars – dollar-denominated deposits in banks in foreign countries

Exchange-Traded Funds – index-type shares that offer investors the ability to invest in a basket of stocks that mirror closely an underlying benchmark index (i.e. S&P 500, Russell 2000); priced in real-time

Executive Order (EXORD) – Presidential directive issued by the President of the United States with the advice and consent of a major agency or department found within the executive branch of government

Federal Deposit Insurance Corporation (FDIC) – agency that preserves and promotes confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000

Federal Funds Rate – the interest rate which the Federal Reserve charges depository institutions for overnight lending

Futures Contracts – commitments to buy or sell a specified amount of commodity, financial instrument, or currency at a specified future date at a specified future price

Hedge Funds – usually set up as limited partnership, these funds invest in a pool of products which may include puts, calls, short positions, long positions, etc.

Market Risk – loss probability arising from factors affecting the market

Money Market Funds – highly liquid deposit accounts set up with banks; depositor can write a limited number of checks and deposits are FDIC insured

Mortgage-Backed Securities – a security backed by a mortgage or collection of mortgages sold to agencies

Mutual Fund (Open End) – companies which offer shares for sale continuously and agree to buy back or redeem shares at their net asset values

Net Asset Value (NAV) – the value of a mutual fund that is reached by deducting the fund’s liabilities from the market value of all of its shares and then dividing by the number of issued shares

Preferred Stock – a fixed-income equity security with no maturity date offering the owner priority claim to income and assets over a common stock/shareholder

Private Equity – investment manager(s) who invest in private equity of operating companies through leveraged buyout, venture capital, or other strategies

Put – an option to sell a specified number of shares during a specified period at a specified price; the buyer/holder expects a drop in price

Real Estate – various types of land that may be the subject of investment, including unimproved and improved land

Real Estate Investment Trust (REIT) – a publicly traded closed-end investment company that invests in a diversified portfolio of real estate or real estate loans; at least 90% of income must be paid as dividends to qualify as a REIT

Separate Trading of Registered Interest and Principal Securities (STRIPS) – Treasury-issued bonds with investment and repayment of principal components sold individually as zero-coupon bonds

Series EE Bonds – U.S. bonds sold at a discount with variable rates that change every 6 months; proceeds are federal tax free

Series HH Savings Bonds – Treasury bonds sold at par with a 20 year maturity; interest payments are paid annually

Treasury Bills – or T-bills, are direct U.S. government issued debt obligations with short terms of 4 weeks to 1 year; deposits are a minimum of $1,000

Treasury Inflation-Protected Securities (TIPS) – a security that adjusts its income stream with inflation, as measured by the CPI

Treasure Notes and Bonds – notes (1-10 year terms) and bonds (10+ years) are marketable debt securities issued by the federal government

U.S. Government Bonds – direct debt obligations of the federal government, including marketable and non-marketable instruments (i.e. Series EE and HH bonds)

Unsystematic Risk – risk arising from some specific or unique circumstance of a business or industry

Venture Capital – capital invested in a project in which there is a substantial element of risk, typically a new or expanding business  that does not have access to capital markets

Zero-Coupon Bonds – a bond that pays no interest from issue date to maturity date, with full accumulated interest being paid at the date of maturity

Can you think or more to add? Drop me a line below!

Leave a Reply