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Glossary
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. |
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| listed companies |
| Companies whose shares of stock trade on a securities market |
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| 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. |
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| 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) |
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| long |
| Signifies ownership of securities |
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| 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). |
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| 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. |
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| 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. |
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| 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. |
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| market price |
| The last reported price at which the stock or bond sold, or the current quote. |
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| 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. |
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| 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. |
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| maturity |
| The date on which the borrower repays the principal amount of the obligation, with the last interest payment, to lenders. |
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| money market account |
| An account in which your money is reinvested in short-term securities by the bank or investment firm managing the account. |
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| 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. |
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| 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. |
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| NASDAQ |
| An automatic information network that provides brokers and dealers with price quotations on securities traded over-the-counter. (see Over-the-Counter) |
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| 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. |
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| 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 |
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| 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). |
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| 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. |
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| 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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