Glossary

Date of Record

The date on which a shareholder must officially own shares in order to be entitled to a dividend.

This is the highest price that a security has traded at during the day.

This is the lowest price that a security has traded at during the day.

Discounted Cash Flows

A person (or firm) who facilitates transactions in the secondary market. They make their living on the difference between the prices they pay for the assets in their inventory and what they sell them for.

Unsecured debt

IOU, such as bank loans, bonds, commercial paper, government bonds and bills.

The date on which a firm announces a future dividend payment.

Uncertainty of a firm's ability to meet its debt obligations on time and in full.

The additional return lenders require to compensate them for default risk.

A security is no longer included in The Nasdaq Stock Market.

(1) Reduction in the book or market value of an asset. (2) Portion of an investment that can be deducted from taxable income.

A financial asset whose value is based on an underlying asset. Options and futures are examples.

(1) A decrease in the proportion of income to which each shareholder is entitled, (2) A decrease in the % ownership of individual shareholders.

The act of not putting all your investments in only one or few assets.

(1) The amount by which a bond or preferred stock may sell below its par value. (2) The notion that market prices "takes into account@ or include all publicly available relevant information.

A bond that sells at value below par value.

Brokerage services provided at a cost lower than full-service brokers.

The inverse of compounding. This process is used to determine the present value of a cash flow.

(1) The interest rate used in calculating the present value of cash flows. The rate reflects the time value of money and risk of the cash flows. (2) The interest rate charged by the twelve Federal Reserve Banks for short-term loans made to member banks.

Date on which the payout of realized capital gains on securities in the fund portfolio occurred.

The components of an asset's risk that can be eliminated when the asset is combined in a well-diversified portfolio.

A division of a company that is sold out to new investors.

Distribution of wealth by firm to shareholders based on number of shares owned.

Dividends per share divided by the price of the security.

This is the best known U.S. index of stocks. It contains 30 stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing.

A measure of a bond price's sensitivity to a 100-basis point change in interest rates. A duration of 7 would mean that, given a 100-basis point change up/down in rates, a bond's price would move up/down by 7%.