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1.

Accrued Interest: The interest earned on a bond between interest


payment periods (generally twice a year).
2. Acquisition: One company taking control of another by purchasing a
majority or all of the target company's outstanding shares. An
"unfriendly" or "hostile" acquisition attempt is usually characterized by
an offer far in excess of the market value of the shares, which is meant to
induce current stockholders into selling.
Ask" Price: In the context of the over-the-counter market, the term "ask"
refers to the lowest price at which a market maker will sell a specified
number of shares of a stock at any given time. The term "bid" refers to
the highest price a market maker will pay to purchase the stock.

The ask price (also known as the "offer" price) will almost always be higher
than the bid price. Market makers make money on the difference between
the bid price and the ask price. That difference is called the "spread".

3. Annual Report: A publication that is issued yearly by all publicly held


corporations and freely available to all shareholders. It reveals the
company's assets, liabilities, revenues, expenses, and earnings for the past
year, along with other financial data.
4. Audit Committee: Appointed by the Board of Directors and charged
with monitoring the internal and external reviews of the finances of the
Exchange and its subsidiaries, and of the Exchange’s information
technology systems.
5. Balance Sheet: A condensed financial statement showing the nature and
amount of a company's assets, liabilities and capital on a given date. In
dollar amounts the balance sheet shows that the company owned, what it
owed, and the ownership interest in the company of its stockholders.
6. Bear: For generations, bulls and bears on Stock exchanges have referred
to two decidedly different types of investors - the bulls being those who
expect stock prices to rise, the bears being those who believe prices are
about to decline.
7. Bear Market: A term to describe a market of declining prices.
8. Blue Chip: A company known nationally for the quality of its products
or services, its reliability, and its ability to operate profitably in good and
bad economic times.
Bankruptcy: It’s a position where the liabilities of the company exceeds the
assets of the company and the company is not in a position to pay its
debts and unable to run the business.

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"Bid" Price: In the context of the over-the-counter market, the term "bid"
refers to the highest price a market maker will pay at any given time to
purchase a specified number of shares of a stock. The term "ask" refers
to the lowest price at which a market maker will sell the stock.

The ask price (also known as the "offer" price) will almost always be higher
than the bid price. Market makers make money on the difference between
the bid price and the ask price. That difference is called the "spread".

Blank Cheque Company: A blank check company is a development stage


company that has no specific business plan or purpose or has indicated
its business plan is to engage in a merger or acquisition with an
unidentified company or companies, other entity, or person. These very
small companies typically involve speculative investments and often fall
within the SEC’s definition of "penny stocks" or are considered
"microcap stocks."
9. Bond: A debt secured by a specific asset of the issuing corporation.
The term bond, debenture and note are often used interchangeably. All
three represent debt obligations of the issuing entity.
Stock and Bond Certificates, Old : An old stock or bond certificate may
still be valuable even if it no longer trades under the name printed on the
certificate. The company may have merged with another company or
simply changed its name. You can use the resources below to find out if
an old stock or bond certificate has value. Even if you learn that a
certificate has no value, you may find that the certificate itself has value
as a collectable
Book Entry

The "book entry" form of ownership allows you to own securities without
a certificate. Stock in direct investment plans, Treasury securities
purchased directly from the U.S. Department of the Treasury, and
recently issued municipal bonds are held in book entry form.

Buying and Selling Stock

When you call your broker to buy or sell a stock – or hit "enter" when
placing an order through your online brokerage account – that's only the
beginning of the transaction. Your broker's firm must then send your
order to a market center to be executed. This process of filling your order
is known as "trade execution."

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10.Your broker generally has a choice of market centers to execute your
trade:

Exchange

An exchange is a marketplace where traders can buy or sell stocks and


bonds. For a stock that's listed on an exchange, such as the New York
Stock Exchange (NYSE), your broker may direct the order to that
exchange, to another exchange (such as a regional exchange), or to a firm
called a "third market maker."

Market Maker

A "market maker" is a firm that stands ready to buy or sell a stock at


publicly quoted prices. Market makers in exchange-listed stocks are
known as "third market makers." Market makers in stocks that trade in
over-the-counter (OTC) markets, such as the Nasdaq, are known as
"Nasdaq market makers" or simply "market makers."

Electronic Communications Network (ECN)

An electronic communications network (ECN) is an electronic trading


system that automatically matches buy and sell orders at specified prices.

11.Bull

For generations, bulls and bears on Stock exchanges have referred to two
decidedly different types of investors - the bulls being those who expect
stock prices to rise, the bears being those who believe prices are about to
decline.

12.Bull Market
A condition of the stock market when prices of stocks are generally
rising.
13.Call Option
A contract that gives the holder the right to buy the underlying stock at a
specified price (the strike price) within a fixed period of time.
14. Capital Stock
All shares representing ownership of a business, including common and
preferred.

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15.Cash Flow
Reported net income of a corporation plus amounts charged for
depreciation, depletion, amortization, extraordinary charges to reserves,
which are bookkeeping deductions and not paid out in actual dollars and
cents.
16.Closed-end Fund
Closed-end funds have a fixed number of shares outstanding. Following
an initial public offering, those shares trade throughout the day on an
exchange between investors. Share prices are determined by the forces of
supply and demand and can be more or less than the fund's net asset
value (NAV). This differs from open-end funds, which continuously
offer their shares to investors and whose share prices are based on their
NAV, determined at the close of each business day.
17.Commercial Paper
Very short term IOUs written by reputable blue chip companies in need
of short-term financing.
18.Commodities
Articles of commerce or products that can be used for commerce. In a
narrow sense, products traded on an authorized commodity exchange.
Types of commodities include agricultural products, metals, petroleum,
foreign currencies, financial instruments and indexes to name a few.
19.Common Stock
Securities that represent an ownership interest in a corporation. If the
company has also issued preferred stock, both common and preferred
have ownership rights. Common stockholders assume the greater risk,
but generally exercise the greater control and may gain the greater award
in the form of dividends and capital appreciation. The terms common
stock and capital stock are often used interchangeably when the company
has no preferred stock.
20.Conglomerate
A corporation that has diversified in operations usually by acquiring
enterprises in widely varied industries.
21.Consolidated Balance Sheet
A balance sheet showing the financial condition of a corporation and its
subsidiaries.
22.Convertible Bond
A debt issue that may be exchanged, or converted, by the owner for a
fixed number of common shares, or other securities, usually of the same
company, in accordance with the terms of the issue. Companies also
issue convertible preferred shares.

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23. Credit Rating
An evaluation of a debt issuer by a rating agency such as Moodys and
Standard and Poor’s. The evaluation is based on the issuers credit history
and its ability to pay its obligations.
24. Current Assets
Those assets of a company that are reasonably expected to be realized in
cash, or sold, or consumed during one year. These include cash,
Government bonds, receivables and money due usually within one year,
and inventories.
25.Current Liabilities
Money owed and payable by a company, usually within one year.

Capital Gains and Losses

Investors contact the SEC asking about the tax consequences when they
sell securities. In particular, investors want to know whether they will
have to pay a capital gains tax or can take a capital loss. The SEC does
not regulate this area. The Internal Revenue Service does instead

Central Registration Depository or CRD

The Central Registration Depository, called the CRD, is a computerized


database that contains information about most brokers, some investment
advisers, their representatives, and the firms they work for. For instance,
you can find out if brokers are properly licensed in your state and if they
have had run-ins with regulators or received serious complaints from
investors. You'll also find information about the brokers' educational
backgrounds and where they've worked before their current jobs.

Executive Compensation

The federal securities laws require clear, concise and understandable


disclosure about compensation paid to CEOs and certain other high-
ranking executive officers of public companies. Several types of
documents that a company files with the Commission include
information about the company's executive compensation policies and
practices. You can locate information about executive pay in: (1) the
company's annual proxy statement; (2) the company's annual report on
Form 10-K; and (3) registration statements filed by the company to

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register securities for sale to the public. The easiest place to look up
information on executive pay is probably the annual proxy statement.

Forex - Foreign Currency Transactions

The foreign exchange markets are sometimes referred to as "forex."


Operating 24 hours a day, the forex market is highly liquid and most of
the trading is conducted electronically or over the phone. Banks,
insurance companies, large corporations and other large financial
institutions all use the forex markets to manage the risks associated with
fluctuations in currency rates. In recent years, retail investors have also
looked to the forex markets as yet another possible investment
opportunity.

The Commodity Futures Trading Commission cautions investors to be


wary of websites that purport to offer high yield investment opportunities
in forex transactions, because this is a common area of internet fraud.

Convertible Securities

A "convertible security" is a security - usually a bond or a preferred stock


- that can be converted into a different security - typically shares of the
company's common stock. In most cases, the holder of the convertible
determines whether and when a conversion occurs. In other cases, the
company may retain the right to determine when the conversion
occurs.Companies generally issue convertible securities to raise money.
Companies that have access to conventional means of raising capital
(such as public offerings and bank financings) might offer convertible
securities for particular business reasons.

26.Agent
A person who buys or sells for the account and risk of another. Generally, an
agent takes no financial risk and charges a commission for his services.
27.American Depositary Receipt (ADR)
A receipt that is issued by a U.S. depositary bank which represents shares of
a foreign corporation held by the bank. Because ADRs are quoted in U.S.
dollars and trade just like any other stock, they make it simple for investors
to diversify their holdings internationally.

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28.American Stock Exchange (Amex)
An open auction market where buyers and sellers compete in a centralized
marketplace. The Amex typically lists small to medium cap stocks of
younger or smaller companies. Until 1921 it was known as the New York
Cumulative Exchange.

Arbitration

Arbitration often allows you to resolve disputes more quickly and cheaply
than by going to court. Instead of judges or juries, arbitrators decide if
wrongdoing occurred and how to correct or compensate you for it.

When the arbitration is over, the decisions of the arbitrators are final. If you
are unhappy with the result, you cannot go to court to try again. The
arbitrators' decisions can only be appealed under very limited circumstances
—for example, if you can demonstrate that an arbitrator was biased. If you
want to appeal an arbitrator's decision you must do so within three months or
less in a "motion to vacate

Cumulative Voting

Cumulative voting is a type of voting process that helps strengthen the


ability of minority shareholders to elect a director. This method allows
shareholders to cast all of their votes for a single nominee for the board
of directors when the company has multiple openings on its board. In
contrast, in "regular" or "statutory" voting, shareholders may not give
more than one vote per share to any single nominee.

Derivatives

Derivatives are financial instruments whose performance is derived, at


least in part, from the performance of an underlying asset, security or
index. For example, a stock option is a derivative because its value
changes in relation to the price movement of the underlying stock.

Employee Stock Options Plans

Many companies use employee stock options plans to compensate, retain,


and attract employees. These plans are contracts between a company and
its employees that give employees the right to buy a specific number of
the company’s shares at a fixed price within a certain period of time.

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Employees who are granted stock options hope to profit by exercising
their options at a higher price than when they were granted.

Employee Stock Ownership Plans (ESOPs)

An employee stock ownership plan (ESOP) is a retirement plan in which


the company contributes its stock to the plan for the benefit of the
company’s employees. With an ESOP, you never buy or hold the stock
directly. This type of plan should not be confused with employee stock
options plans, which are not retirement plans. Instead, employee stock
options plans give the employee the right to buy their company’s stock at
a set price within a certain period of time.

29.Debenture
Debt not secured by a specific asset of the corporation, but issued against
the issuer’s general credit.
30.Director
Person elected by shareholders, usually during an annual meeting, to
serve on the Board of Directors of a corporation. The directors appoint
the president, vice president and all other operating officers. Directors
decide, among other matters, if and when dividends shall be paid.

31.LOAN SYNDICATION

The process of involving numerous different lenders in providing various


portions of a loan. Mainly used in extremely large loan situations,
syndication allows any one lender to provide a large loan while
maintaining a more prudent and manageable credit exposure because
they aren't the only creditor.

32.TRUSTEES

One, such as a bank, that holds legal title to property in order to


administer it for a beneficiary.

A member of a board elected or appointed to direct the funds and policy


of an institution.

A country responsible for supervising a trust territory.

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33.Does a banker sign the annual report who has sanctioned loan to the
Company?

NO, the banker doesn’t sign the annual report but he sees the documents are
charged in favour of him.

34.What is synergy?

The idea that the value and performance of two companies combined will be
greater than the sum of the separate individual parts

This term is used mostly in the context of mergers and acquisitions. For
example, if Company A has an excellent product but lousy distribution
whereas Company B has a great distribution system but poor products, the
companies could create synergy with a merger.

35.What is meant by liability and Contingent Liability?

Liability -legal debt or obligation estimated via accrual accounting

Contingent Liability-An asset in which the possibility of ownership


depends solely upon future events uncontrollable by the company.

An example might be a settlement from a lawsuit

36.Who is a general partner?

partner in a business who has unlimited liability.

37.What is limited Liability Company?

A corporate structure whereby the shareholders of the company have a


limited liability to the company's actions

Basically, an LLC is a hybrid between a partnership and a corporation

38.Who is Merchant Banker?

A bank that deals mostly in (but is not limited to) international finance,
long-term loans for companies and underwriting. Merchant banks do not
provide regular banking services to the general public.

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39.What is public float?
The total number of shares publicly owned and available for trading. The
float is calculated by subtracting restricted shares from outstanding
shares.

For example, a company may have 5 million outstanding shares, but only
3 million are trading on the stock market. So, the float would be 3
million.
40.Secondary Market
A market on which an investor purchases an asset from another investor
rather than an issuing corporation.
good example is the New York Stock Exchange. Here all stock exchanges
are part of the secondary market, as investors buy securities from other
investors instead of an issuing company.
41.What is balance of trade?
The largest component of a country's balance of payments. It is the
difference between exports and imports. Debit items include imports,
foreign aid, domestic spending abroad and domestic investments abroad.
Credit items include exports, foreign spending in the domestic economy
and foreign investments in the domestic economy. A country has a trade
deficit if it imports more than it exports, and the opposite scenario is a
trade surplus.
42.What is balance of payments?
A record of all transactions made by one particular country during a
certain period of time. It compares the amount of economic activity
between a country and all other countries.
This includes trade balance, foreign investments, and investments by
foreigners among other things.
43.What is corporate governance?
The relationship between all the stakeholders in a company. This
includes the shareholders, directors, and management of a company, as
defined by the corporate charter, bylaws, formal policy, and rule of law.
44.Who is a factor?
financial intermediary that purchases receivables from companies

45.what is W.T.O
An international organization dealing with the global rules of trade
between nations. Its main function is to ensure that trade flows as
smoothly, predictably, and freely as possible.

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46.What is dumping?
In international trade, this occurs when one country exports a significant
amount of goods to another country at prices much lower than in the
domestic market.
47.What is globalization?

The tendency of investment funds and businesses to move beyond domestic


and national markets to other markets around the globe,

48.Diversification
Spreading investments among different types of securities and various
companies in different fields.

49.Depreciation
Charges against earnings to write off the cost, less salvage value, of an
asset over its estimated useful life. It is a bookkeeping entry and does not
represent any cash outlay nor are funds earmarked for the purpose.
50.Dividend

The payment designated by the Board of Directors to be distributed pro


rata among the shares out-standing. For preferred shares, the dividend is
usually a fixed amount. For common shares, the dividend varies with the
fortunes of the company and the amount of cash on hand, and may be
omitted if business is poor or if the directors determine to withhold
earnings to invest in plants and equip-ment.

51.Dow Jones Industrial Average (DJIA)

The Dow Jones Industrial Average (DJIA) is an index used to measure


the performance of the U.S. financial markets. Introduced on May 26,
1896 by Charles H. Dow, it is the oldest stock price measure in
continuous use. Over the past century "the Dow" has become the most
widely recognized stock market indication in the U.S. and probably in the
entire world. Most of the stocks included in the index are listed on the
New York Stock Exchange, and are all large blue-chip companies that
reflect the health of the U.S. economy. All but a handful of these have
major business operations throughout the world, thus providing some
insight into the economic well-being of the global economy

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52.Income Statement

A report on a company's financial status over a period of time. It totals


profits, subtracts expenses and pinpoints how much money the company
can reinvest.
53.Market Order Processing
Super Dot's market order system is designed to process member firms'
market orders of up to 30,099 shares. The system provides for rapid
execution and reporting of market orders. In 1994, market orders were
executed and reported back to the originating member firm on average
within 24 seconds.
54.Market Price
The last reported price at which the stock or bond sold, or the current
quote.

Going Private

A company "goes private" when it reduces the number of its shareholders


to fewer than required and is no longer required to file reports with the
SEC.

A number of transactions can result in a company going private,


including:

Another company or individual makes a tender offer to buy all or most of


the company’s publicly held shares;

The company merges with or sells the company’s assets to another


company; or

The company can declare a reverse stock split that not only reduces the
number of shares but also reduces the number of shareholders. In this
type of reverse stock split, the company typically gives shareholders a
single new share in exchange for a block—10, 100, or even 1,000 shares
—of the old shares. If a shareholder does not have a sufficient number of
old shares to exchange for new shares, the company will usually pay the
shareholder cash based on the current market price of the company’s
stock.

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55.Face Value
The value of a bond that appears on the face of the bond, unless the value
is otherwise specified by the issuing company. Face value is ordinarily
the amount the issuing company promises to pay at maturity. Face value
is not an indication of market value. Sometimes referred to as par value.
56.Fiscal Year
Any consecutive 12-month period of financial accountability for a
corporation or government. For example, because of the Christmas rush
many department stores find it easier to wind up their yearly accounting
on January 31 instead of December 31. Fiscal year is often abbreviated
FY with a date. For example, FY May 31 means that the company's fiscal
year goes from June 1 to May 31 of the following year.
57.Fixed Charges
A company's fixed expenses, such as bond interest, which it has agreed to
pay whether or not earned, and which are deducted from income before
earnings in equity capital are computed.
58.General Mortgage Bond
A bond that is secured by a blanket mortgage on the issuing company's
property, though it may be outranked by one or more other mortgages.
59.Going Public: When a company sells shares of itself to the public to
raise capital.
60.Government Bonds
Obligations of the Government, regarded as the least risky, highest-grade
securities issues. The major types of debt instruments issued by the
government are: Treasury Bills, Saving Bonds, Treasury Notes, and
Treasury Bonds.
61.Hedging
The purchase or sale of a derivative security (such as options or futures)
in order to reduce or neutralize all or some portion of the risk of holding
another security.
62.Holding Company
A corporation that owns a large number of shares in other companies.
Holding companies use the voting rights that come with their shares to
exert influence over the companies under them.
63.Initial Public Offering (IPO)
An issue of new stock by a once private company to transform itself into
a publicly held one. IPOs are usually done to raise cash for growing
young companies that need larger sources of capital than the private

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sector can provide. The new shares are sold to one or more investment
banks, which then sell them to the public.
64.Institutional Investors
Organizations whose primary purpose is to invest their own assets or
those entrusted to them by others. The most common are employee
pension funds, insurance companies, mutual funds, university
endowments, and banks.
65.Investment Banker
One whose principal business consists of acting as investment adviser
and rendering investment supervisory services.
66.Investment Counsel
One whose principal business consists of acting as investment adviser
and rendering investment supervisory services.
67. Issuer
A corporation, government, or other authority, that borrows money
through the sale of bonds or notes.

Insider Trading

"Insider trading" is a term that most investors have heard and usually
associate with illegal conduct. But the term actually includes both legal
and illegal conduct. The legal version is when corporate insiders—
officers, directors, and employees—buy and sell stock in their own
companies. When corporate insiders trade in their own securities, they
must report their trades to the SEC.

68.Examples of insider trading cases that have been brought by the SEC
are cases against:

Corporate officers, directors, and employees who traded the corporation's


securities after learning of significant, confidential corporate
developments;

Friends, business associates, family members, and other "tippees" of such


officers, directors, and employees, who traded the securities after
receiving such information;

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69.Leverage

Any means of increasing value and return by borrowing funds or


committing less of one's own. For corporations, it refers to the ratio of
debt (in the form of bonds and preferred stock outstanding) to equity (in
the form of common stock outstanding) in the company's capital
structure.
70.Listed Companies: Companies whose shares of stock trade on a
securities market.

71. Locked In:


Investors are said to be "locked in" when a security they own is trading at
a higher price than they paid for, but they choose not to sell in order to
avoid having their profit become subject to the capital gains tax.
72.Margin
The amount paid by the customer when using a broker's credit to buy or
sell a security. Under Federal Reserve regulations, the initial margin
required since 1934 has ranged from 40% of the purchase price up to
100%. Since 1974 the current rate of 50% has been in effect.
73.Margin Call
A demand upon a customer to put up money or securities with the broker.
The call is made when a purchase is made; also if a customer's equity in a
margin account declines below a minimum standard set by the Exchange
or by the firm.

74.Market Data System (MDS)


Captures and displays, worldwide, trade and volume information
continuously generated by trading floor activity. MDS is the core of the
NYSE international communications network.
75.New Issue or IPO
A stock or bond sold by a corporation for the first time. Proceeds may be
used to retire outstanding securities of the company, for new plants or
equipment, for additional working capital, or to acquire a public
ownership interest in the company for private owners.
76.New York Stock Exchange (NYSE)
The NYSE marketplace blends public pricing with assigned dealer
responsibilities. Aided by advanced technology, public orders meet and
interact on the trading floor with a minimum of dealer interference. The
result is competitive price discovery at the point of sale. Liquidity in the

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NYSE market is provided by individual and institutional investors,
member firms trading for their own accounts, and assigned specialists.
The NYSE is linked with other markets trading listed securities through
the Intermarket Trading System (ITS).
77.Nominating & Governance Committee

Appointed by the NYSE Board of Directors and charged with


(i)recommending to the Board candidates for the Board of Directors, the
Board of Executives and for Trustees of the Gratuity Fund, (ii) reviewing
the Exchange’s governance principles and practices, (iii) establishing and
overseeing self-assessment by the Board and the Board of Executives,
(iv) recommending director compensation, and (v) succession planning
for the Chairman and Chief Executive Officer of the Exchange.

78.Notes: Generally, a bond issue maturing in more than two years but no
more than ten years.

79.NYSE Composite Index

The NYSE Composite Index is designed to measure the performance of


all common stocks listed on the NYSE, including ADRs, REITs and
tracking stocks. Under its methodology, all closed-end funds, ETFs,
limited partnerships and derivatives are excluded from the index. It is a
measure of the changes in aggregate market value of all NYSE-listed
common stocks, adjusted to eliminate the effects of capitalization
changes, new listings and delistings. The index is weighted using free-
float market capitalization and calculated on both price and total return
basis.

80.NYSE Hybrid Market


The NYSE Hybrid Market is the NYSE’s new market model, integrating
into one venue the best aspects of both the auction market and automated
trading while providing customers with the broadest choice of trade-
execution preferences.

Net Asset Value

"Net asset value," or "NAV," of an investment company is the company’s


total assets minus its total liabilities. For example, if an investment
company has securities and other assets worth $100 million and has
liabilities of $10 million, the investment company’s NAV will be $90

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million. Because an investment company’s assets and liabilities change
daily, NAV will also change daily. NAV might be $90 million one day,
$100 million the next, and $80 million the day after.

Mutual funds and Unit Investment Trusts (UITs) generally must calculate
their NAV at least once every business day, typically after the major U.S.
exchanges close. A closed-end fund, whose shares generally are not
"redeemable"—that is, not required to be repurchased by the fund—is not
subject to this requirement.

81.Market Performance Committee (MPC)


Focuses primarily on evaluating and seeking to strengthen the
performance of NYSE specialist organizations, administering trading
procedures, and recommending to the QOMC ways to improve NYSE
markets' quality and competitiveness. Members include specialists, non-
specialist floor members, allied members, and institutional traders.
Hypothecation
The pledging of securities as collateral for example, to secure the debit
balance in a margin account.
82.Market Value
The current resale value of a security. The market value of an issue is
easily computed as the closing price multiplied by the shares outstanding.
83.Market-On-Close (MOC) Order
A market order, which is to be executed in its entirety at the closing
price, on the Exchange, of the stock named in the order, and if not so
executed, is to be treated as cancelled. The term "at the close order'' shall
also include a limit order that is entered for execution at the closing price,
on the Exchange, of the stock named in the order pursuant to such
procedures as the Exchange may from time to time establish.
84.Merger: Combination of two or more corporations.
85.Money Market Account
An account in which your money is reinvested in short-term securities by
the bank or investment firm managing the account.
86.Municipal Securities Rulemaking Board (MSRB)
The organization responsible for rules regulating dealers who deal in
municipal bonds, municipal notes, and other municipal securities.
87.Mutual Fund
A portfolio of stocks, bonds, or other securities administered by a team of
one or more managers from an investment company who make buy and
sell decisions on component securities. Capital is contributed by smaller

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investors who buy shares in the mutual fund rather than the individual
stocks and bonds in its portfolio. The return on the fund's holdings is
distributed back to its contributors, or shareholders, minus various fees
and commissions. This system allows small investors to participate in the
reduced risk of a large and diverse portfolio that they could not otherwise
build themselves. They also have the benefit of professional managers
overseeing their money who have the time and expertise to analyze and
pick securities.

There are two types of mutual funds, open and closed-ended. Shares in
closed-end funds, some of which are listed on the New York Stock
Exchange, are readily transferable in the open market and are bought and
sold, like other stock. These funds do not accept new contributions from
investors, but only reinvest the return on the existing portfolio.

Open-end funds sell their own new shares to investors, stand ready to buy
back their old shares, and are not listed on exchanges. Open-end funds
are so called because their capitalization is not fixed; they issue more
shares as people want them. Many open-ended funds allow contributors
extra perks, such as the ability to write checks with their portion.

Mergers

Mergers are business transactions involving the combination of two or


more companies into a single entity. Most state laws require that mergers
be approved by at least a majority of the company's shareholders if the
merger will have a significant impact on the company.

The proxy or information statement will describe the terms of the merger,
including what you will receive if the merger is approved. If you believe
the amount you will receive is not fair, check the statement for
information on appraisal or dissenter's rights under state law. You must
follow the procedures precisely or your rights may be lost.

Mortgage-Backed Securities

Mortgage-backed securities (MBS) are debt obligations that represent


claims to the cash flows from pools of mortgage loans, most commonly
on residential property. Mortgage loans are purchased from banks,
mortgage companies, and other originators and then assembled into pools
by a governmental, quasi-governmental, or private entity. The entity then

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issues securities that represent claims on the principal and interest
payments made by borrowers on the loans in the pool, a process known
as securitization.

Mutual Funds

A mutual fund is a company that pools money from many investors and
invests the money in stocks, bonds, short-term money-market instruments,
or other securities. Legally known as an "open-end company," a mutual fund
is one of three basic types of investment company. The two other basic types
are closed-end funds and Unit Investment Trusts (UITs).

88.NASDAQ
An automatic information network that provides brokers and dealers with
price quotations on securities traded over-the-counter.
89.National Securities Clearing Corporation (NSCC)
Facilitates trade processing, clearance, delivery and settlement of
equities, and corporate and municipal bonds. NSCC is owned equally by
the New York and American Stock Exchanges and the National
Association of Securities Dealers.
90.Negotiable: Refers to a security title that is transferable by delivery.
91.Net Asset Value
Usually used in connection with investment companies to mean net asset
value per share. An investment company computes its assets daily, or
even twice daily, by totaling the market value of all securities owned. All
liabilities are deducted, and the balance divided by the number of shares
outstanding. The resulting figure is the net asset value per share.
92.Odd Lots: Stock transactions that involve less than 100 shares.
93.Off-Board:
This term may refer to transactions over-the-counter in unlisted securities
or to a transaction of listed shares that is not executed on a national
securities exchange.
94.Offer: The price at which a person is willing to sell a security.
95.Open Interest:
In options and futures trading, the number of outstanding option contracts
at any given time which have not been exercised and have not yet
reached expiration.
96.Open-End Investment Company
A company or trust that uses its capital to invest in other companies.
There are two principal types: the closed end and the open end, also

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known as mutual fund. Shares of closed-end investment companies, most
of which are listed in the NYSE, are readily transferable in the open
market and are bought and sold like shares of stock. Capitalization of
these companies remains the same unless action is taken in change,
which is rare. Open-end funds sell their own new shares to investors,
stand ready to buy back their old shares, and are not listed. Open-end
funds are so called because their capitalization is not fixed; they issue
more shares as people want them.
97.Opening Automated Reporting System (OARS)
OARS, a feature of the Super Dot system, is designed to accept member
firms' pre-opening market orders for all stocks up to 30,099 shares for
rapid, systematic execution and immediate reporting. OARS
automatically and continuously pairs buy and sell orders and presents the
imbalance to each specialist up to the opening of a stock, thus assisting
the specialist as he or she determines the opening price.
98.Options
Options are derivative securities that give the holder the right to buy
(call) or sell (Puts and Calls) a specified amount of the underlying
security at a specific "strike price" and within a specified timeframe.

The NYSE withdrew from the options trading business in 1997.

99.Out-of-the-Money
A call option is out-of-the-money when the strike price is above the price
of the underlying security. Likewise, a put option is out-of-the-money
when the exercise price is below the price of the underlying security. An
out-of-the-money option is one that has no intrinsic value.
100. Over-the-Counter (OTC)

A market for securities made up of dealers who may or may not be


members of a securities exchange. OTC firms conduct business over the
telephone and act either as principals or dealers (buying and selling stock
from their own inventory and charging a markup) or as a broker or agent
and charging a commission.

Stock and Bond Certificates, Old

An old stock or bond certificate may still be valuable even if it no longer


trades under the name printed on the certificate. The company may have
merged with another company or simply changed its name. You can use

96
the resources below to find out if an old stock or bond certificate has
value. Even if you learn that a certificate has no value, you may find that
the certificate itself has value as a collectable.

These resources may be found on the Internet, at public libraries, stock


exchanges, or stockbrokers' offices. But please note that the SEC cannot
recommend or endorse any of these entities, their personnel, or their
products or services.

Online Trading

Although you may save time and money trading online, it does not take
the homework out of making investment decisions. To avoid costly
mistakes, investors who trade online should understand how our
securities markets work and their options in placing trades in fast-moving
markets when slow downs occur. Our publication, What You Need to
Know About Trading In Fast-Moving Markets, provides useful tips for
online traders.

101. Paper Profit (Loss)


An unrealized profit or loss on a security still held. Paper profits and
losses become realized only when the security is sold.
102. Par Value
Par value is ordinarily the amount the issuing company promises to pay,
per bond, at maturity, typically $1,000. Par value is not an indication of
market value. Also referred to as Face Value.
103. Passed Dividend: The omission by a company's board of a regular or
scheduled dividend payment.
104. Penny Stocks
Low-priced issues, often highly speculative, selling at less than $1 a
share. Frequently used as a term of disparagement, although some penny
stocks have developed into investment-caliber issues.
105. Portfolio
The collection of different investment instruments owned by one
individual or institution. A portfolio can consist of any combination of
stocks, bonds, derivatives and such.
106. Preferred Stock
A type of stock that pays a fixed dividend regardless of corporate
earnings, and which has priority over common stock in the payment of
dividends. However, it carries no voting rights, and should earnings rise

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significantly the preferred holder is stuck with the same fixed dividend
while common holders collect more. The fixed income stream of
preferred stock makes it similar in many ways to bonds.

107. Premium
For bonds and preferred stock, the premium is the amount by which the
price exceeds the face, or par, value. For options markets, the premium is
synonymous with the option's price. See also Discount.
108. Price Improvement
When a buy order is executed at a price lower than the current quoted
offer, or when a sell order is executed at a price higher than the current
quoted bid. In addition to quoting the best prices more than 90 percent of
the time, the NYSE continuous auction market typically improves upon
these quoted prices, allowing investors to get a better price for their
shares.
109. Price/Earnings Ratio
A popular measure for comparing stocks selling at different prices in
order to single out over- or under-valued issues. The P/E ratio is simply
the price per share divided by the company's earnings per share.
However, P/E is not always an accurate guide to a stock's quality. Some
people tend to think that a stock is inflated and drastically overvalued if
its price is many times its earnings. Yet that same stock may be quite
accurately valued to reflect the company's rapid growth and potential for
high future earnings. When comparing P/Es it is therefore important to
choose stocks in the same industry that are likely to face the same
earnings prospects.
110. Pricing
Bond prices may be stated in “dollar” or yield terms. In dollars, the price
is expressed as a percent of par value. Thus, a price of 90 means that the
value of the bond is equal to 90% of the (usually) $1,000 face amount of
the bond, or $900. Yield pricing expresses the price in terms of yield to
maturity.
111. Primary Market
The process by which a corporation's stock is issued for the first time. It
is then sold to the public on the secondary market.
112. Prime Rate
The lowest interest rate charged by commercial banks to their most
creditworthy and largest corporate customers; other interest rates such as
personal, automobile, commercial and financing loans are often pegged
to the prime.

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113. Profit-Taking
Selling stock that has appreciated in value since purchase, in order to
realize the profit. The term is often used to explain a downturn in the
market following a period of rising prices.
114. Prospectus
The issuer must provide according to SEC regulations, the official
documents to potential purchasers of a new securities issue. It highlights
the much longer registration statement filed with the Commission that
gives information on the financial well being of the issuer and the
specifics of the issue itself. Potential investors can consult this
information before buying.
115. Proxy
A ballot by which stockholders can transmit their votes on corporate
matters without needing to attend the actual shareholders meeting. A
proxy could also state the stockholder's intention to transfer voting rights
to someone else. A company's shareholders are commonly asked to vote
on such matters as electing a board of directors, approving mergers and
acquisitions, and sometimes on proposals that other stockholders have
submitted to management. One share generally equals one vote.
116. Primary Distribution
The sale of a new issue of securities by a company. Initial public
offerings (IPO’s) are primary distributions by companies that were not
publicly traded prior to the offering.
117. Put Option
A contract that gives the holder the right to sell the underlying stock, to
the writer of the put, at a specified price (the strike price) within a fixed
period of time.
118. Quote: The highest bid to buy and the lowest offer to sell any stock at
a given time.
119. Rate of Return
In stocks and bonds, the amount of money returned to investors on their
investments. Also known as yield.
120. Record Date
The date on which you must be registered as a shareholder of a company
in order to receive a declared dividend or, among other things,to vote on
company affairs.
121. Redemption Price
The price at which a bond may be redeemed before maturity, at the
option of the issuing company. Redemption value also applies to the
price the company must pay to call in certain types of preferred stock.

99
122. Registered Representative (RR)
Also known as account executive, customers' broker, or similar title.
Describes full-time NYSE member organization sales persons who have
met the NYSE's background and industry knowledge requirements.
123. Registrar
Usually a trust company or bank charged with the responsibility of
keeping a record of the owners of a corporation's securities and
preventing the issuance of more than the authorized amount.
124. Retained Earnings: Profits a company keeps for its operations, after
paying taxes and dividends.
125. Right to Vote
The right of common stockholders to vote on matters of corporate policy
at an annual stockholder's meeting. The impact of a stockholder's vote is
proportionate to the amount of stock owned.
126. Rights
When a company wants to raise more funds by issuing additional
securities, it may give its stockholders the opportunity, ahead of others, to
buy the new securities in proportion to the number of shares each owns.
The piece of paper evidencing this privilege is called a right. Because the
additional stock is usually offered to stockholders below the current
market price, rights ordinarily have a market value of their own and are
actively traded. In most cases they must be exercised within a relatively
short period. Failure to exercise or sell rights may result in monetary loss
to the holder.
127. S&P 500
A capitalization weighted index of 500 stocks. Standard and Poor's 500
index represents the price trend movements of the major common stock
of U.S. public companies. It is used to measure the performance of the
entire U.S. domestic stock market.
128. Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002 addresses a wide range of corporate-


accountability issues. Key provisions of the legislation, which apply to
both U.S. and foreign private issuers, will:

Create a Public Company Accounting Oversight Board to establish


auditing standards and regulate accountants who audit public companies;

Prohibit auditors from providing non-audit services to audit clients,


except with oversight board pre-approval;

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Require CEOs and CFOs to certify their companies’ annual and quarterly
financial reports, subject to civil and criminal penalties;

Require CEOs and CFOs to forfeit bonuses, incentive compensation or


gains from the sale of company securities during the 12-month period
after the initial publication of financial statements that have to be
reinstated as a result of misconduct;

Demand real-time disclosure, in plain English, of material changes to an


issuer’s financial condition or operations;

Require public companies to have an audit committee composed entirely


of independent directors;

Require public companies to disclose the adoption of, and any changes
to, corporate codes of ethics;

Prohibit issuers from extending new personal loans to directors and


executive officers;

Accelerate the reporting of insider transactions to within two business


days;

Prohibit directors and executive officers from trading company stock


during company benefit plan blackout periods;

Provide criminal penalties for destroying audit records or falsifying


documents;

Enhance criminal penalties for violations of antifraud rules, federal


securities laws and other “white-collar” crimes;

Protect employees of public companies against retaliation for whistle-


blowing;

Increase the frequency of SEC reviews of public-company filings to at


least once every three years.

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129. Secondary Market
When stocks or bonds are traded or resold, they are said to be sold on a
secondary market. The majority of all securities transactions take place
on a secondary market.
130. Securities and Exchange Commission (SEC)
A watch-dog agency created by the U.S. Congress to monitor the
securities industry and enforce punishments of those that violate the
industry's regulations.
131. Seller's Option
A special transaction that gives the seller the right to deliver the stock or
bond at any time within a specified period, ranging from not less
than two business days to not more than 60 business days.
132. Shares Outstanding
The number of authorized shares in a company that are held by investors,
including employees and executives of that company. Unissued shares or
treasury shares are not included in this figure.
133. Short Position
Stock options, or futures contracts sold short and not covered as of a
particular date. On the NYSE, a tabulation is issued once a month listing
all issues on the Exchange in which there was a short position of 5,000 or
more shares and issues in which the short position had changed by 2,000
or more shares in the preceding month. Short position also means the
total amount of stock an individual has sold short and has not covered, as
of a particular date.
134. Sinking Fund
Money regularly set aside by a company to redeem its bonds, debentures
or preferred stock from time to time as specified in the indenture or
charter.
135. Slow Market
The Market becomes “slow” or converts temporarily from a Hybrid
Market to an Auction Market only mode so as to enable specialists, floor
brokers, and customers to interact with Quotes and Orders “manually”,
with the objective of enhancing liquidity and reducing volatility. Certain
market conditions temporarily trigger a Slow Market including Gap
Quotes, Trading Halts or reaching LRPs. The Slow Market can be traded
through.
136. Sole Proprietorship
Any business that is owned and operated by a single individual.

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137. Speculation
The employment of funds by a speculator. Safety of principal is a
secondary factor.
138. Spin-Off
The separation of a subsidiary or division of a corporation from its parent
by issuing shares in a new corporate entity. Shareowners in the parent
receive shares in the new company in proportion to their original holding
and the total value remains approximately the same.
139. Split
The division of the outstanding shares of a corporation into either a larger
or smaller number of shares, without any immediate impact in individual
shareholder equity. For example, a 3-for-1 forward split by a company
with 1 million shares outstanding results in 3 million shares outstanding.
Each holder of 100 shares before the split would have 300 shares worth
less, although the proportionate equity in the company would stay the
same. A reverse split would reduce the number of shares outstanding and
each share would be worth more.
140. Stock Index
A basket of stock used to track the market. Typically, this is used for
long-term evaluation. The performance of a group of stocks is averaged,
and over time, that average serves as an indicator of the market's general
movement.
141. Stock Split
When a company increases the number of shares outstanding by splitting
existing shares. A 2-for-1 split means every stockholder gets two new
shares for each one they own, and a 3-for-2 split means they get three
shares for every two they own. The price of an individual share falls, but
stockholders do not lose money because they are being given the
equivalent number of new shares.

In a reverse stock split, a company reduces the number of the shares


outstanding by consolidating existing shares. A 1-for-5 reverse split for
example, means that for each five shares owned one receives a single
new share instead. The price of the new shares is five times higher, but
only to reflect the shortened supply. If a company's stock is trading at a
very low price, this process makes the company look more attractive to
investors

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142. Stockholder Record
A stockholder whose name is registered on the books of the issuing
corporation.
143. Swapping
Selling one security and buying a similar one at almost the same time to
take a loss, usually for tax purposes.
144. Tick
The tick is the direction in which the price of a stock moved on its last
sale. An up-tick means the last trade was at a higher price than the one
before it and a down-tick means the last sale price was lower than the one
before it. A zero-plus tick means the transaction was at the same price as
the one before, but still higher than the nearest preceding different price.
The tick becomes especially important when large market movements
trigger the implementation of certain circuit breakers meant to stabilize
the market.
145. Ticker
A telegraphic system that continuously provides the last sale prices and
volume of securities transactions on exchanges. Information is either
printed or displayed on a moving tape after each trade.
146. Ticker Symbol
A three or four letter abbreviation used to identify a security whether on
the floor, a TV screen, or a newspaper page. Ticker symbols are part of
the lore of Wall Street. They were originally developed in the 1800s by
telegraph operators to save bandwidth. One-letter symbols were therefore
assigned to the most active stocks. Railroads were the dominant issues at
the time, so they retain a majority of the one-letter designations.

Ticker symbols today are assigned on a first-come, first-served basis.


Each marketplace -- the NYSE, the American Stock Exchange, and
others -- allocates symbols for companies within its purview, working
closely to avoid duplication. A symbol used for one company cannot be
used for any other, even in a different marketplace.

147. Transfer

The legal change in ownership after the sale of a security. This task may
involve the physical delivery of a stock certificate or the change of
ownership on the books of the corporation by the transfer agent.

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148. Transfer Agent
A transfer agent keeps a record of the name of each registered
shareowner, his/her address, the number of shares owned, and sees that
the certificates presented for transfer are properly cancelled and new
certificates issued in the name of the new owner.

149. Transparency: Accurate and timely information regarding stock


prices and volume.
150. Treasuries:
Debt obligations of the U.S. government. Treasuries are among the safest
investments, since the full faith and credit of the government secure
them. The interest of Treasuries is exempt from state and local taxes but
is subject to federal income tax. There are three types of treasuries:
Treasury Bills, with maturities of one year or less; Treasury Notes, with
maturities ranging from one to 10 years; and Treasury Bonds, long-term
instruments with maturities of 10 years or more.
151. Treasury Stock
Shares, formerly outstanding, that were repurchased by the issuing
company. Companies often repurchase stock to benefit existing
shareholders. Those who sell receive a premium price from the company
for their shares, thus substituting a large capital gain for future dividends.
This ploy is used when dividend taxes are higher than capital gains taxes.
Remaining investors who keep their shares benefit from a tightened
supply, which raises the share price. Companies may later resell treasury
stock, or retire it according to a shareholder vote.
152. Trustee
A bank designated by the issuer as the custodian of funds and the official
representative of the bond holders.
153. Turnover Rate
The volume of shares traded in a year as a percentage of total shares
listed on an Exchange, outstanding for an individual issue or held in an
institutional portfolio.
154. Underlying
The security that one has the right to buy or sell according to the terms of
an option contract.
155. Voting Right
The common stockholders' right to vote their stock in the affairs of a
company. Preferred stock usually has the right to vote when preferred
dividends are in default for a specified period. The right to vote may be
delegated by the stockholder to another person.

105
156. underwriter for options
A person who assumes the obligation to sell (call) or buy (put) the
underlying security at an option’s exercise
157. Yield
In stocks and bonds, the amount of money returned to investors on their
investments. Also known as Return. For bonds, also see: Current
Yield; Yield-to-Maturity; and Yield-to-Call.
158. Yield to Call
A yield that would be realized on a callable bond, if the bond was
redeemed on the next call date.
159. Yield to Maturity
A yield calculated on the combination of the annual coupon (interest)
payments to maturity, the realized difference between the (discount or
premium) acquisition price of the issue and the par value at maturity. For
interest bearing issues, the calculation includes the assumption that
interest is earned on the interest received is at the same rate as the
calculated yield to maturity.
160. Zero-Coupon Bonds
Bonds that pay no interest but are priced, at issuance, at a discount
from their redemption par value, which usually is $1,000. The longer the
term of the issue the greater the discount at issuance.

Proxy Statement

The SEC requires that shareholders of a company whose securities are


registered under Section 12 of the Securities Exchange Act of 1934
receive a proxy statement prior to a shareholder meeting, whether an
annual or special meeting. The information contained in the statement
must be filed with the SEC before soliciting a shareholder vote on the
election of directors and the approval of other corporate action.
Solicitations, whether by management or shareholders, must disclose all
important facts about the issues on which shareholders are asked to vote.

Reverse Stock Splits

A reverse stock split reduces the number of shares and increases the share
price proportionately. For example, if you own 10,000 shares of a
company and it declares a one for ten reverse split, you will own a total
of 1,000 shares after the split. A reverse stock split has no affect on the
value of what shareholders own. Companies often split their stock when

106
they believe the price of their stock is too low to attract investors to buy
their stock. Some reverse stock splits cause small shareholders to be
"cashed out" so that they no longer own the company’s shares.

Short Sales

A short sale is generally the sale of a stock you do not own. Investors
who sell short believe the price of the stock will fall. If the price drops,
you can buy the stock at the lower price and make a profit. If the price of
the stock rises and you buy it back later at the higher price, you will incur
a loss.

When you sell short, your brokerage firm loans you the stock. The stock
you borrow comes from either the firm’s own inventory, the margin
account of another of the firm’s clients, or another brokerage firm.

Spin-Offs

In a "spin-off," a parent company distributes shares of a subsidiary on a


pro rata basis to the parent company's shareholders. As a result, the
subsidiary becomes a separate company. State law and the rules of the
stock exchanges determine whether a company must seek shareholder
approval for a spin-off. A subsidiary does not have to register the shares
of the spin-off under the Securities Act of 1933 if it meets certain
conditions. One of the conditions requires the parent company to provide
adequate information about the spin-off to its shareholders and the
trading markets. But when registration is required, the subsidiary must
file a registration statement with the SEC.

Spread

The "spread" is the difference between the "bid" price and the "ask" price
on over-the-counter market securities. The term "bid" refers to the
highest price a market maker will pay at any given time to purchase a
specified number of shares of a stock. The term "ask" refers to the lowest
price at which a market maker will sell the stock.

Stock and Bond Certificates, Old

An old stock or bond certificate may still be valuable even if it no longer


trades under the name printed on the certificate. The company may have

107
merged with another company or simply changed its name. You can use
the resources below to find out if an old stock or bond certificate has
value. Even if you learn that a certificate has no value, you may find that
the certificate itself has value as a collectable.

Stock Splits

When a company declares a stock split, the price of the stock will
decrease, but the number of shares will increase proportionately. For
example, if you own 100 shares of a company that trades at $100 a share
and it declares a two for one stock split, you will own a total of 200
shares at $50 a share after the split. A stock split has no effect on the
value of what shareholders own. If the company pays a dividend, your
dividends paid per share will also fall proportionately.

Stop Order

A stop order is an order to buy or sell a stock once the price of the stock
reaches a specified price, known as the stop price. When the specified
price is reached, your stop order becomes a market order.

Buy Stop Order — Investors typically use a stop order when buying
stock to limit a loss or protect a profit on short sales. The order is entered
at a stop price that is always above the current market price.

Sell Stop Order — A sell stop order helps investors to avoid further
losses or to protect a profit that exists if a stock price continues to drop. A
stop order to sell is always placed below the current market price.

Bond Swaps

A bond swap occurs when an investor sells one bond and uses the
proceeds to purchase another bond, often at the same price. Investors
engage in bond swaps for a variety of reasons. For example, investors
may want to take a tax loss by selling one bond at a loss but then preserve
their investment by simultaneously buying a similar bond. At other times,
investors swap bonds to obtain a higher yield and return on their bond
investments

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Capital Gains and Losses

Investors contact the SEC asking about the tax consequences when they
sell securities. In particular, investors want to know whether they will
have to pay a capital gains tax or can take a capital loss. The SEC does
not regulate this area. The Internal Revenue Service does instead.

Treasury Securities

Treasury securities—including Treasury bills, notes, and bonds—are debt


obligations issued by the U.S. Department of the Treasury. Treasury
securities are considered one of the safest investments because they are
backed by the full faith and credit of the U.S. government. The income
from Treasury securities is exempt from state and local taxes, but not
from federal taxes.

Zero Coupon Bonds

Zero coupon bonds are bonds that do not pay interest during the life of
the bonds. Instead, investors buy zero coupon bonds at a deep discount
from their face value, which is the amount a bond will be worth when it
"matures" or comes due. When a zero coupon bond matures, the investor
will receive one lump sum equal to the initial investment plus interest
that has accrued.

The maturity dates on zero coupon bonds are usually long-term—many


don’t mature for ten, fifteen, or more years. These long-term maturity
dates allow an investor to plan for a long-range goal, such as paying for a
child’s college education. With the deep discount, an investor can put up
a small amount of money that can grow over many years.

161. FORMS

10-Q - Quarterly report pursuant to sections 13 or 15(d)

10-QSB - Optional form for quarterly and transition


reports of small business issuers under section

10-K - Annual report pursuant

10KSB - Optional form for annual and transition reports

109
of small business issuers

8-K - Current report filing

20-F - Annual and transition report of foreign private


issuers

40-F - Annual reports filed by certain Canadian issuers

Forms S-1
& S-3 - Registration statement for face-amount
certificate companies

Forms N-
1 & N-1A - Registration statement for open-end management
investment companies

Form NCSR - Certified annual shareholder report of registered


management investment companies

162. ANNUAL MEETING


meeting of shareholders that the law requires a corporation to hold
each year for the election of directors and the transaction of other
business
163. SPECIAL MEETING

A meeting held for a special and limited purpose; specify A corporate


meeting held occasionally in addition to the annual meeting to conduct only
business described in a notice to the shareholders

164. STOCKHOLDER: One who owns a share or shares of stock in a


company. Also called stockowner
165. STAKEHOLDER : One who has a share or an interest, as in an
enterprise.
166. STOCK CERTIFICATE: A certificate establishing ownership of a
stated number of shares in a corporation's stock.
167. CLASS DIRECTORS
The Directors are appointed with specified tenure in the office. For
instance, if three directors are appointed for a period of three years and

110
two more directors appointed for period of two year, each of the group
will be classified as two different classes.

168. VOTING SECURITIES (RECORD DATE CAN BE FIXED TO


DETERMINE THE ELIGIBLE STOCK HOLDERS)
The Board of Directors will fix a record date to list certain securities
holders who are eligible to vote in an Annual Meeting or Special
meeting. Those securities that are on record date are called voting
securities.
169. BENEFICIAL OWNER :

A person who enjoys the benefits of ownership even though title is in


another name.

170. BYE LAWS OF A COMPANY


1. A law or rule governing the internal affairs of an organization.
2. A secondary law.
171. INDEPENDENT DIRECTORS
A director who does not have any other material pecuniary relationship
with the company apart from drawing his remuneration.

172. EXECUTIVE AND NON EXECUTIVE DIRECTORS

An Executive Director is a person who is Member of the Board of


Directors and also part of the company's management team.

He looks after the Management functions apart from being the Member
of the Board of Directors.

A non Executive Director is a person who is Member of the Board of


Directors and is not part of the management team.

The purpose of having Non-Executive Directors is to provide unbiased


and impartial perspectives on issues brought to the board.

He does not hold any Executive positions in the company.

173. EXECUTIVE AND NON EXECUTIVE CHAIRMAN

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He is one of the BOD
The presiding officer of a meeting, committee, or board
He could be Executive Chairman or Non Executive Chairman
An Executive Chairman is an employee of the Company but not the Non
Executive Chairman
It is his or her responsibility to determine the final agenda for each
meeting and to conduct the Board Meetings and General Meetings
The chairman has to be fair to all
A good listener and a good communicator
Next to Chairman is Co- Chairman and Vice Chairman
Co- Chairman or Vice Chairman shares the duties along with the
chairman

174. INTERNAL AUDITORS


Internal auditor is a person appointed as per statutory requirements and
audits the day to day financial and accounting transactions of the
Company.
175. DIRECTOR NOMINEE
He is a person whose name is proposed for the directorship of the
company and his chances of becoming director depend upon the election
in the meeting
He is not a director and only a proposed candidate for future Directorship
in the company.
176. NOMINEE DIRECTOR
A nominee director is a person appointed by the financial institution or
banks or such other government bodies to protect in their interest. Such
person would be employee of those organizations.
177. WHO IS A PROXY
A person authorized to act for another; an agent or substitute.
The authority to act for another.
The written authorization to act in place of another.
178. GENERAL COUNSEL

A lawyer at the head of a legal department (as of a corporation or


government agency)

179. COMMITTEES

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A group of people officially delegated to perform a function, such as
investigating, considering, reporting, or acting on a matter.

180. NON MANAGEMENT DIRECTORS


Non executive directors
181. LISTING STANDARDS
The norms specified the concerned stock exchange to get a company
listed.
182. INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants are the external auditors to the
company who shall report to the shareholders of the Company
183. ANNUAL FINANCIAL STATEMENTS
Balance sheet, Profit and loss account, cash flow statement are the annual
financial statements. They are prepared to once in a year to find out the
net profit and to list out the assets and the liabilities of a company.
184. CASH FLOW STATEMENT

One of the quarterly financial reports any publicly traded company is


required to disclose to the SEC and the public. The document provides
aggregate data regarding all cash inflows a company receives from both
its ongoing operations and external investment sources, as well as all
cash outflows that pay for business activities and investments during
a given quarter.

185. QUARTERLY REPORT


A quarterly report is a document required by all public companies,
reporting the results for the quarter
186. EMPLOYMENT AGREEMENT OF A DIRECTOR

An employment contract is an agreement entered into between an


employer and an employee at the commencement of the period of
employment and stating the exact nature of their business relationship,
specifically what compensation the employee will receive in exchange
for specific work performed.

187. EXCERCISABLE OPTIONS: Options matured and yet to be


converted in stock.
188. STOCK PRICE PERFORMANCE

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Performance of a stock in a stock exchange in a considerable time. The
high and low price quotation of that is compared to study the movement
of the stock of a company.
189. ELECTION AND RE ELECTION OF A DIRECTOR
The shareholders once a year in Annual Meeting shall elect the Directors
of the Company for a certain period of time at the end of which they have
to retire. The Directors who retire are eligible to be reappointed as
directors and their proposal is put to vote for reelection.

190. ALTERNATE DIRECTOR


A person is appointed in the place of a Director who stays away from the
place where Board Meetings are usually held.
191. ADDITIONAL DIRECTOR
A person appointed by the Board of Directors.
192. SECRETARY AND LEGAL COUNSEL

An officer of a business concern who may keep records of directors' and


stockholders' meetings and of stock ownership and transfer and help
supervise the company's interests. He acts as a liaison officer between the
Board of Directors and the share holders.
Looks after as the meetings of the Board of Directors and committeesAn
attorney.
193. MANAGEMENT BOARD
The management board is in charge of the management of the company
according to its own business judgment and represents the company in its
business dealings and in litigation.
194. SUPERVISORY BOARD
Supervisory Board functions like that of Board of Directors. In the Dual
Board system that exist in Germany, France and other European
countries, these Boards assume the supreme position of the management
of the Company.
195. BOARD OF STATUTORY AUDITORS
There Boards are common in Japan and Italy. These are the auditors
elected by the members of the Company in Annual Meeting to oversee
the audit aspects, supervision of decisions of the Company and assist in
appointment of the Independent Auditors.
196. CHAIRMAN EMIRETUS
Emeritus is an honorific title given to a retired Chairman or other
professional

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The term is used when persons of importance in a given profession
retires.
197. LEAD DIRECTOR
When in a company, same person holds both Chairmanship of the Board
and Chief Executive officer Position, in order to monitor the acts of such
person one of the board members will be appointed as Lead Director. In
order to be appointed as Lead Director, the person should be an
Independent Director.
198. PRESIDENT AND CHAIRMAN
The chief officer of an organization (as a corporation or institution)
usually entrusted with the direction and administration of its policies and
Decision making and he is called as president

However in countries like Germany a President is like a chairman of


Board of Directors

He is one of the BOD


The presiding officer of a meeting, committee, or board
He could be Executive Chairman or Non Executive Chairman
An Executive Chairman is an employee of the Company but not the Non
Executive Chairman

199. PROXY CARD


Proxy card is a form (card) to appoint a proxy on behalf of a stock holder
to attend a annual or special meeting.
200. SUBSIDIARY AND WHOLLY OWNED SUBSIDIARY
A company whose voting stock is more than 50% controlled by another
company, usually referred to as the parent company.

A subsidiary whose parent company owns 100% of its common stock.

201. AFFILIATES

A corporation may be referred to as an affiliate of another when it is


related to it but not strictly controlled by it, as with a subsidiary
relationship, or when it is desired to avoid the appearance of control. This
is sometimes seen with multinational companies that need to avoid
restrictive laws (or negative public opinion) on foreign ownership.

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202. TREASURER
Many organizations, particularly not-for-profit organizations such as
charities unions and churches, appoint treasurers, are responsible for
generating income for the group, whether this be through pricing of a
product, organizing sponsorship, or arranging fundraising events.
The treasurer would also be part of the group which would oversee how
the money is spent, either directly dictating expenditure or authorizing it
as required.

203. CERTIFICATE OF INCORPORATION AND CERTIFICATE OF


MERGER

A certificate issued by a state's secretary of state that shows acceptance of


a corporation's articles of incorporation. Certificate confirming the
merger of two entities by the concerned regulating authority.

204. PRINCIPAL EXECUTIVE OFFICER AND CHIEF EXECUTIVE


OFFICER

The highest-ranking executive in an organization. Employed by and


accountable to its board of directors. He has the ultimate executive
responsibility or authority within an organization responsible for carrying
out the policies of the board of directors on a day-to-day basis
Although it is possible to have more than one CEO in a company,
generally the job is not shared. All other management other than BOD
reports to the CEO.

205. CHIEF FIANANCIAL OFFICER AND CHIEF OPERATING


ACCOUNTING OFFICER
This is the senior manager who is responsible for overseeing the financial
activities of an entire company.
This includes signing checks, monitoring cash flow, and financial
planning. By comparison of CEO with CFO as strategic business partner
and statutory duties under SEC and Sarbanes-Oxley Act, both are equal
ranking top executive and separate posts.

Chief operating officer (or COO) is a corporate officer responsible for


management of day-to-day activities of the corporation.

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The COO is one of the highest ranking members of an organization,
monitoring the daily operations of the company and reporting to the chief
executive officer directly.
The COO in some companies is also the president, but they are usually an
executive or senior vice president
206. ATTORNEY-IN-FACT
attorneys-in-fact An attorney who may or may not be a lawyer who is
given written authority to act on another's behalf esp. by a power of
attorney compare
207. POWER OF ATTORNEY

A legal instrument authorizing one to act as another's attorney or agent.

208. RELATED PARTY TRANSACTIONS

A business deal or arrangement between two parties who are joined by a


special relationship prior to the deal. For example, a business transaction
between a major shareholder and the corporation, such as a contract for
the shareholder's company to perform renovations to the corporation's
offices, would be deemed a related-party transaction.

209. VENTURE CAPITAL

Money made available for investment in innovative enterprises or


research, especially in high technology, in which both the risk of loss and
the potential for profit may be considerable. Also called risk capital.

210. PORTFOLIO MANAGEMENT


The art and science of making decisions about investment mix and
policy, matching investments to objectives, asset allocation for
individuals and institutions, and balancing risk vs. performance. Thereby
increasing the interconnectedness of different markets
211. Demat A/c: It is just like a bank a/c where actual money is replaces
by shares.
212. Dividends: are payments made by companies to their stock holders in
order to share a portion of the profits.
213. Capital Mkt Definition: Capital mkt is market. This deals with long
term securities like corporate security govt security and long term
securities.

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