Glossary

S&P 500

Standard and Poor's stock price index comprising the 500 largest companies in the US.

Scrap value of a plant or equipment.

Additional issue of shares.

A figure of speech for a membership on an exchange.

The federal agency created by the Securities Exchange Act of 1934 to enforce federal securities laws.

Where trading (exchange of ownership) of financial assets takes place.

Issues related to daily movements in stock prices. "The market went down yesterday due to profit taking," or "The market did not go up yesterday despite US invasion of Mars."

A collection of investment bankers who participate in the distribution of new issues to potential investors.

Debt which, in the event of liquidation, must be repaid before subordinated debt receives any payment.

In US financial markets, an investor must pay for the purchase of shares by the third business day after securities are bought. An investor is also obligated to deliver an investment that he or she has sold by the third business day after the transaction.

A unit of measuring ownership in a company (i.e., if a firm has 1,000 shares outstanding and if you own 100 of them, then you have a 10% claim on the firm's net income (NI) and assets).

Legal anti-takeover mechanisms devised by management to deter potential takeovers.

A procedure that allows firms to file one registration statement covering several future issues of the same security.

Dollar-denominated bond issued in Japan by a non-resident.

The total number of shares of a security that have been sold short by customers and securities firms.

Sale of an asset that the investor does not own or any sale that is completed by the delivery of a security borrowed by the seller. Short selling is a legitimate trading strategy. Short sellers assume the risk that they will be able to buy the stock at a more favorable price than the price at which they sold short.

The gain (loss) realized from the sale of securities or other capital assets held six months or less.

A requirement specified in a bond indenture that obligates the firm to annually retire a specified portion of the debt.

Line representing the relationship between required return and beta.

Stocks of companies that have small capitalization, i.e., those that are small in terms of market value.

A business owned by a single individual. The sole proprietor pays no corporate income tax but has unlimited liability for business debt and obligations.

The acronym for Standard & Poor's Depository Receipts. It is a basket of the 500 stocks in the S&P 500 index.

A newly created company that used to be part of a parent company. Parent company shareholders receive a pro rata ownership in the new company.

An accounting transaction that increases the number of shares held by existing shareholders in proportion to the number of shares currently held.

Equity claims on the net income (NI) and assets of a corporation.

A unique four or five-letter symbol assigned to a Nasdaq security. If a fifth letter appears, it identifies the issue as other than a single issue of common stock or capital stock.

This is a lettered symbol assigned to securities and mutual funds that trade on US financial exchanges.

Exercise price of an option.

A privately owned, government-sponsored corporation that provides a secondary market for government-guaranteed student loans. It issues bonds to raise funds necessary for the purchase of student loans from financial institutions.

Debt whose holders, in the event of liquidation, get paid only after senior debt is paid off in full.

Cost that has been incurred and cannot be recoverable.

Eurodollar bonds issued by Japanese corporation.

A group of investment bankers who together underwrite and market a new issue of securities or a large block of an outstanding issue.