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First Midwest Securities, Inc.
D-E
Glossary of Terms Stocks/Options/Fixed Income
| day order |
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An order to buy or sell
which, if not executed, expires at the end of the trading day on which
it was entered.
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| dealer |
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An individual or firm in the
securities industry who buys and sells stocks and bonds as a
principal rather than as an
agent. The dealer's profit or loss is the difference between the
price paid and the price received for the same security. The dealer's
confirmation must disclose to the customer that the principal has been
acted upon. The same individual or firm may function, at different
times, either as
broker or dealer.
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| debenture |
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Debt not secured by a
specific asset of the corporation, but issued against the issuer’s
general credit.
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| debit balance |
| In a customer's margin account, that portion of the purchase price
of stock, bonds or commodities that is covered by credit extended by the
broker to the margin customer. |
| default |
| Failure by the bond issuer to pay the interest or principal, when
due.
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| delayed opening |
| The postponement of the trading of an issue on a stock
exchange because of unusual market conditions. Reasons for
the delay might be an influx of either buy or sell orders,
an imbalance of buyers and sellers, or pending corporate
news that requires time for dissemination. |
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| derivative security |
| A financial security whose value is determined in part from the
value and characteristics of another security, known as the
underlying security. |
| discount |
| The amount by which a preferred stock or bond may sell below its par
value. See Premium.
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| discretionary account |
| An account in which the customer gives the broker or someone else
discretion to buy and sell securities or commodities including
selection, timing, amount, and price to be paid or received. |
| 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 equipment. Sometimes a company
will pay a dividend out of past earnings even if it is not currently
operating at a profit. |
| dividend reinvestment plan (DRIP) |
| A program offered by companies that allow investors to buy their
stock directly from the company, without using a brokerage firm. DRIP
allows investors to use their dividends to purchase additional shares of
stock in the company. |
| 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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| earnings report |
| A statement issued by a company showing its revenues and expenses
over a given period. The health of a company's earnings is what most
investors consider when buying stock |
| Equity |
| Ownership in a company, whereas
bonds represent debt, stocks represent equity.
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| European Style Option |
| An option that may be exercised only during a brief period of time
just prior to its
expiration date |
| ex-dividend |
| A synonym for "without dividend." The buyer of an
ex-dividend stock is not entitled to the next dividend
payment. Dividends are paid on a set date to all those
shareholders recorded on the books of the company as of a
previous date of record.
For example, a dividend may be declared as payable to
stockholders of record on a given Friday. Since three
business days are allowed for delivery of stock in a regular
transaction on the New York Stock Exchange, the Exchange
would declare the stock "ex-dividend" as of the opening of
the market on the preceding Wednesday. That means anyone who
bought it on or after that Wednesday would not be entitled
to that dividend. When stocks go "ex-dividend," the stock
tables include the symbol "x" following the name. |
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| exercise |
| Action taken by an option holder that requires the writer to perform
the terms of the contract. |
| exercise prices |
| The prices at which an option may be exercised. Also called strike.
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| exercise settlement amount |
| The difference between the exercise price of the option and the
exercise settlement value of the index on the day an exercise notice is
tendered, multiplied by the index multiplier. |
| expiration date |
| The date after which an option can no longer be exercised. If an
option has not been exercised by its expiration date, it becomes
worthless and ceases to exist. The expiration date for most options is
the Saturday following the third Friday of the expiration month. |
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