Glossary

Bad

Things that individuals prefer to avoid if possible, i.e., would accept only if they are compensated for accepting. For example, rational investors would not invest in risky assets unless they get compensated an amount that it commensurate with the riskiness of the asset. Thus, risk is said to be bad. Another example would be pollution.

A basic accounting statement that represents the financial position of a firm on a given date.

This is a mutual fund that buys common stock, preferred stock and bonds.

A draft drawn on a specific bank by a seller of goods to obtain payment of goods that have been sold to a customer. The customer maintains an account with that specific bank.

Re-organization under "Chapter 11."

.01 percent. Used to measure changes in yields of bonds.

General decline in security prices.

The market value of a fund share on a predetermined start date.

The lowest quoted offer of all competing Market Makers to sell a particular stock at any given time.

The highest quoted bid of all competing Market Makers to buy a particular stock at any given time.

A method of selling newly issued securities whereby the underwriters are expected to sell as many securities as possible. They are not obligated to sell the entire subscription. Also see "firm commitment."

A relative (to a benchmark) measure of risk. Measures of an asset's non-diversifiable -- market-- risk.

The lowest price anyone wants to sell the security for at a given time.

The difference between the bid and the ask for a security at a given time.

Refers to the New York Stock Exchange (NYSE).

Debt that has less than 1-year maturity at time of issue.

The stocks in the Dow Jones Industrial Average.

Long-Term IOU whereby the holder (lender or buyer) is promised to receive fixed payments over a pre-specified time period. Corporate bonds are one of the available instruments that companies can resort to for their financing needs.

The face value ($1,000) that is to be returned to a bondholder at maturity.

This is the semiconductor book to bill ratio. It reports on the amount of semiconductor chips that are booked for delivery as compared with those that companies already have billed for.

The depreciated value of a company's assets (original cost less accumulated depreciation) less the outstanding liabilities.

A person who facilitates transactions (buy and sell) in the secondary market.

The amount of money your brokerage house would charge for a given transaction (buy/sell). This is how these firms make their living.

Individuals who buy stocks on margin borrow part of the funds to pay for the stocks they buy from their broker. The broker in turn may borrow the funds from a bank, agreeing to repay the bank immediately (on call) if the bank requests it. The rate paid on such loans is usually about 1% higher than the rate on short-term Treasury bills.

A market with the general prices advancing.

One who believes the general market will rise.

When a firm repurchases its own stock from the public.