Browse Terms Alphabetically

The par value of a security is the dollar value assigned to each share at issue. It has little significance in determing market value. Par value of a preferred stock is usually $100. Par value of a bond is the amount stated on the bond, commonly $1,000.

}ncome resulting from an activity where the investor is not involved on a "regular, continuous and substantial~@ basis, such as a limited partnership. Passive income can only be offset by passive loss. For investments made prior to the Tax Reform Act of 1986, there is a fiveyear phase-in of this provision.

Wall Street expression for relatively lowpriced, highly speculative securities. Although the term implies securities priced at less than $1 per share, the term is not limited to such shares. Many member firms have special margin maintenance requirements for such shares and often limit purchases of such shares to unsolicited orders by clients.

A qualified retirement plan established by an employer for the benefit of its employees and their beneficiaries. The design can provide for either a specific benefit (defined benefit plan) or a specific contributionJ (defined contribution plan).

With a stock, it is an amount equal to $1 per share, and with a bond, $10 per unit (the price of a bond is quoted as a percentage of each $1,000 of face amount). Also used to measure fluctuations in the market.

Commonly accepted term for those assets of an individual or a legal person, such as a bank, trust company, pension or profit-sharing plan, or an investment company, which are invested in primary or secondary market securities. Generally, hard assets (e.g., gold, silver, art) and commodities are excluded from the term. In the broadest sense, however, a person's portfolio is the sum of items of value which are (1) saleable and (2) needed for day-to-day use.

A person who makes day-to-day investment decisions for another. Commonly, the term is used of investment managers for mutual fund, pension or profitsharing plans or bank-trust companies. However, anyone who manages the assets of another and who invests these assets in things that have resale value can be called a portfolio manager.

Stock possessing a prior claim over common stock as to both dividends and distributions in liquidation. Contrast: Common Stock

Occurs when funds are distributed from an IRA prior to an indivdual reaching age 59-1/2, unless the individual dies or becomes permanently disabled.

When referring to the sale price of a bond, a bond selling in an amount in excess of its face value. Contrast: Discount

The price of a share of a common stock divided by the dividend per share for a 12-month period. For example, a stock selling at $50 and paying a dividend of $2 would have a P/E ratio of 25.

The amount of money borrowed, financed, or invested. Also, a dealer who buys and sells for his or her own account, or an individual for whom a broker executes an order.

A securities offering made to a limited number-of individuals and not to the general public.

A defined contribution qualified retirement plan established by an employer for the benefit of its employees and their beneficiaries. Each year's contribution can vary according to the actual profits of the corporation, although contributions need not be limited to profits.

The official circular which describes the securities being offered for sale. Must be supplied with new issues, mutual fund shares and variable annuities.

The price at which securities are offered to the public.

An option to sell at a definite price within a specified period of time. Contrast: Call