Browse Terms Alphabetically

The option to buy at a definite price within a specific period of time.
Contrast: Put

Referring to securities, either bonds or preferred stock which may be redeemed at a stated price by an issuing corporation prior to maturity date. No interest will be paid after bonds have been called.

The profit from the sale of a capital asset, such as a security or real estate. If it is from an asset held for six months or less, it is a short-term capital gain. If it is from an asset held for more than six months, it is a long-term gain. In general, capital gains are taxed as ordinary income. However, capital gains may be offset by capital losses.

Refers to an increase in the original value of an investment.

The loss from the sale of a capital asset. Capital losses may offset capital gains and up to $3,000 of other income. Remaining losses can be carried forward.

The securities of a corporation, to include common stock, preferred stock, bonds, and debentures.

An arrangement which allows each employee the opportunity to elect to defer taxation on a portion of compensation by allowing the employer to contribute that portion to a qualified retirement plan. One example: a 401(k) plan. An employer may offer a 401(k) plan only as part of an existing profit-sharing or stock bonus plan.

Chicago Board Options Exchange; an exchange for trading in puts and calls.

A time deposit paying higher rates of interest than other savings vehicles, but requiring larger deposits, minimum periods of investment and interest penalties for early withdrawals.

Unethical practice of encouraging investors to make frequent purchases and sales of securities without adequate or proper justification. Churning for the purpose of earning additional commissions is a violation of the Rules of Fair Practice.

An investment company which has a stipulated number of shares outstanding. They are traded on securities exchanges and over-the-counter in the same manner as stock. Unlike an open-end fund, shares will not be redeemed by the fund.

Includes bills of exchange, checks and other negotiable instruments issued by banks, corporations and others. Most often they are unsecured promissory notes issued at a discount by corporations in order to raise short-term funds.

Securities representing ownership in a corporation. Claims of both bondholders and general creditors of the corporation take priority over those of stockholders.
Contrast: Preferred Stock

Property owned in common by husband and wife as a kind of marital partnership. Community property states include Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas and Washington.

A portfolio with low turnover which is likely to contain a high percentage of "blue chip" securities.

Government-sponsored index of change in prices for consumer goods and services over time. Components include foods and beverages, transportation, housing, medical care and entertainment. Uses preestablished base of 100; thus, changes are in percentages up or down. Also used as a measurement of inflation or disinflation. Many labor contracts and changes in social security payments are based on changes in CPI.

Referring to securities, either bonds or preferred stock which may be converted to shares of common stock. For bonds, a specific number of shares may be specified or a conversion price may be indicated. For preferred stock, a specific number of shares may be specified, or a conversion ratio based on the preferred par value and the price of common stock may be used.

A bond issued with attached coupons which are detached and submitted for payment of interest.
Contrast: Zero-Coupon Bond

The rate of interest payable on a coupon bond.

An option in which the seller owns the underlying securities.

The annual return on an investment expressed as a percentage of the actual amount invested. For stocks, the current yield is the annualized dividend divided by the current market price of the mutual fund. For bonds, it is the amount of return (the stated interest) divided by the current market price.

An account established with a bank or savings institution, usually for the benefit of a minor. The account is in the name of the custodian but is the legal property of the minor and becomes his or hers upon reaching legal age.
See also: Uniform Gift to Minors Act

An organization or individual which holds in custody and safekeeping securities and other assets.