Glossary

Income Stocks

Companies with high dividend yield or no NPV > 0 opportunities.

The legal agreement between the firm issuing the bond and the bondholders, providing the specific terms of the loan agreement.

A yardstick to measure change from a base year.

Mutual funds whose objective is to replicate the performance of an index. The most popular equity index is the S&P 500.

A general increase in prices of goods and services.

Additional compensation over the T-bill that levers require to compensation them for the risk of expected inflation.

The highest bid and the lowest offer prices among all competing dealers in a Nasdaq security, i.e., the best bid and offer prices.

These are directors and senior officers of a corporation -- in effect those who have access to inside information about a company. An insider also is a shareholder who owns more than 10 percent of the voting shares of a company.

When competing companies (say, IBM and Apple) have a common Board of Directors. This is illegal in the US but is common practice in Japan.

Financing projects through retained earnings.

An option that would be worth exercising if it expired immediately. Also see out-of-the-money options.

are firms that assist companies in initial sale of securities in primary market.

A company that uses its capital to invest in other companies. There are two types: the closed-end and the open-end, or mutual fund.

Bonds rated Baa or above.

Additional return required to compensate asset holders for inflation uncertainty.

Securities are offered for the first time to the public.