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A bond issued by a company which is dependent upon the company's general credit and is not secured by a lien or mortgage on any particular property. A corporate IOU.

A type of qualified pension plan under which each participant's benefits are specifically determined under one of a number of accepted formulas. There are specific limits as to the annual benefit which may be provided. Contrast: Defined Contribution Plan

A type of qualified pension or profit-sharing plan under which the amount of the employer's contribution is specified under a formula providing a fixed dollar contribution or a percentage of compensation. There are specific limits to the maximum contribution which can be made each year. Contrast: Defined Benefit Plan

The amount by which a bond or preferred stock sells below its par value. Is also used as a verb to indicate that something has been taken into account, i.e. the stock has been discounted to reflect the expected reduction in the annual dividend.

Exchange members who will provide execution-only services for clients and, as a result, charge lower, or discounted, commissions. The principal difference between discount brokers and full-service brokers is that the latter will give investment advice and portfolio suggestions. Discount brokers enter orders for clients who wish to buy or sell. They also provide margin accounts and, occasionally, custodial service. They do not provide advice or other research services. Discount brokers cater to a clientele of customers who make their own investment decisions and who do not expect the broker to supply investment opinions. Also called discount houses.

The interest rate charged by the Federal Reserve to member banks, when these banks borrow funds. Over the long term the discount rate will affect both consumer loan rates and mortgage interest rates.

Brokerage account that permits a designated employee of the member firm to make investment decisions on behalf of a client. The investment decisions include buying and selling, the selection of the securities, and the time and price of the trade. Authorization for such accounts must be given in writing by the customer and must be accepted by an officer of the member firm. Member firm customers may verbally give discretion about time and price for specified trades. This limited discretion does not require written authorization. FESCO does not allow discretionary accounts.

Committee appointed by the members within 1 of the 13 districts of the Financial Industry Regulatory Authority (FINRA). The DBBC is empowered to hear trade practice complaints against a member or a person associated with a member under the Code of Procedure.

The practice of spreading investments among the different types of securities of different industries.

An investment company which invests at least 75% of its assets so that no more than 5% are invested in one corporation, and it owns no more than 10% of the outstanding voting stock of any one corporation. See also: Mutual fund

A pro-rata distribution of the profits of a corporation which is authorized by the board of directors. Although usually from current earnings, dividends are sometimes made from past earnings if the company is not presently making a profit. Even if the company is making a profit, the board of directors may not declare a dividend in order to invest in additional plant, equipment and expansion.

The systematic buying of securities with a fixed number of dollars being committed to each purchase. The system is designed to purchase a given dollar value of securities rather than a given number of shares. This results in the average cost of shares purchased being less than the average price at which the shares were bought.

Measurement of a market price movement based on 65 stocks: 30 industrials, 20 transportations, and 15 utility issues. Relatively few persons follow the composite average; instead, they follow the industrial average, DJIA, and the relative movement of the other two averages.

A measurement of general market price movement for 30 widely held NYSE-listed stocks. Called an average because no adjustment is made for the number of shares outstanding in the component stocks. Average is found by adding the prices of the 30 stocks and dividing by an adjusted denominator. Over the years, because of stock splits, stock dividends, and substitutions of stocks, the denominator has been changed from 30 to 1.30. The 30 component stocks and the current denominator can be found in The Wall Street Journal in the footnotes to the chart of the average.