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First Midwest Securities, Inc.
L-M-N
Glossary of Terms Stocks/Options/Fixed Income
| limit order processing |
| The limit order system electronically files orders which are to be
executed when and if the specific limit price is reached. The system
accepts limit orders up to 99,999 shares and electronically updates the
Specialist's Display Book. Good 'til Cancelled
orders not executed on the day of submission are automatically
stored until executed or cancelled. |
| listed companies |
| Companies whose shares of stock trade on a securities market |
| listed stock |
| The stock of a company that is traded on a securities exchange. The
various stock exchanges have different standards for listing. Some of
the guides used by the New York Stock Exchange for an original listing
are national interest in the company and a minimum of 1.1 million shares
publicly held among not less than 2,000 round-lot stockholders. The
publicly held common shares should have a minimum aggregate market value
of $18 million. The company should have net income in the latest year of
over $2.5 million before federal income tax and $2 million in each of
the preceding two years. |
| load |
| The portion of the offering price of shares of open-end investment
companies in excess of the value of the underlying assets. Covers sales
commissions and all other costs of distribution. The load is usually
incurred only on purchase, there being, in most cases, no charge when
the shares are sold (redeemed). (see Investment
Company) |
| long |
| Signifies ownership of securities |
| long option position |
| A position wherein an investor's interest in a particular series of
options is as a net holder (i.e., the number of contracts bought exceeds
the number of contracts sold). |
| manipulation |
| An illegal operation. Buying or selling a security for the purpose
of creating false or misleading appearance of active trading or for the
purpose of raising or depressing the price to induce purchase or sale by
others. |
| 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. |
| 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.
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| market maker |
| A broker/dealer who is registered to trade in a given security on
the NASDAQ.
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| market order |
| An order to buy or sell at the best price currently available on the
Trading Floor. |
| market price |
| The last reported price at which the stock or bond sold, or the
current quote. |
| 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. |
| 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. |
| maturity |
| The date on which the borrower repays the principal amount of the
obligation, with the last interest payment, to lenders. |
| money market account |
| An account in which your money is reinvested in short-term
securities by the bank or investment firm managing the account. |
| money market fund |
| A mutual fund whose investments are in high-yield money
market instruments such as federal securities, CDs and
commercial paper. Its intent is to make such instruments,
normally purchased in large denominations by institutions,
available indirectly to individuals.
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| municipal bond |
| A bond issued by a state, county, city,
district or regional authority. Municipal bonds, in all but a few cases,
are federally tax-exempt.
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| 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 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. |
| naked option |
| Sometimes called an uncovered option, a naked option is one whose
seller does not maintain an equivalent position in the underlying
security. For example, the owner of a call has the option to buy the
underlying stock from the writer of the call. However, if the writer
does not own that stock the option is naked. When the holder decides to
exercise his option, the writer will be forced to buy the stock on the
open market, and then resell it at the lower strike price. This will
result in a loss for the writer. For obvious reasons, writing naked
options is risky and must be done in a margin account. |
| NASDAQ |
| An automatic information network that provides brokers and dealers
with price quotations on securities traded over-the-counter.
(see Over-the-Counter) |
| Financial Industry Regulatory
Authority FINRA (formerly NASD) |
| The Financial Industry Regulatory Authority is an industry
association of broker/dealers in the over-the-counter securities
business. The FINR is a self-regulatory body and administers the NASDAQ
stock market. |
| 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 |
| 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 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). |
| non-callable bond |
| A bond that cannot be redeemed by the issuer before the maturity
date.
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| notes |
| Generally, a bond issue maturing in more than two years but no more
than ten years. |
| 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. |
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| NYSE-listed companies |
| Companies that have their shares traded on the New York Stock
Exchange.
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