GDRs
Global Depositary Receipt. A negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country. American Depositary Receipts make it easier for individuals to invest in foreign companies, due to the widespread availability of price information, lower transaction costs, and timely dividend distributions. also called European Depositary Receipt.
ADRs
American Depositary Receipt. A negotiable certificate issued by a U.S. bank representing a specific number of shares of a foreign stock traded on a U.S. stock exchange. ADRs make it easier for Americans to invest in foreign companies, due to the widespread availability of dollar-denominated price information, lower transaction costs, and timely dividend distributions.
Private Placement
The sale of securities directly to institutional investors, such as banks, mutual funds, insurance companies, pension funds, and foundations. Does not require SEC registration, provided the securities are bought for investment purposes rather than resale, as specified in the investment letter.
Public Company
A company which has issued securities through an offering, and which are now traded on the open market. also called publicly held or publicly traded. opposite of private company
Initial Public Offering
The first sale of stock by a company to the public.
Going Private
The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative, the company stops being publicly traded. Sometimes, the company might have to take on significant debt to finance the change in ownership structure. Companies might want to go private in order to restructure their businesses (when they feel that the process might affect their stock prices poorly in the short run). They might also want to go private to avoid the expense and regulations associated with remaining listed on a stock exchange. opposite of going public.
Liquidate
Definition 1: To convert to cash
Definition 2: To sell all of a company's assets, pay outstanding debts, and distribute the remainder to shareholders, and then go out of business.
Definition 3: A broker's sale of his/her customer's securities after the customer failed to meet a margin call.
Prospectus
A legal document offering securities or mutual fund shares for sale, required by the Securities Act of 1933. It must explain the offer, including the terms, issuer, objectives (if mutual fund) or planned use of the money (if securities), historical financial statements, and other information that could help an individual decide whether the investment is appropriate for him/her. also called offering circular or circular.
Incorporation
The process by which a business receives a state charter, allowing it to become a corporation.
REIT
Real Estate Investment Trust. A corporation or trust that uses the pooled capital of many investors to purchase and manage income property (equity REIT) and/or mortgage loans (mortgage REIT). REITs are traded on major exchanges just like stocks. They are also granted special tax considerations. REITs offer several benefits over actually owning properties. First, they are highly liquid, unlike traditional real estate. Second, REITs enable sharing in non-residential properties as well, such as hotels, malls, and other commercial or industrial properties. Third, there's no minimum investment with REITs. REITs do not necessarily increase and decrease in value along with the broader market. However, they pay yields in the form of dividends no matter how the shares perform. REITs can be valued based upon fundamental measures, similar to the valuation of stocks, but different numbers tend to be important for REITs than for stocks.
Recapitalization
A change in a company's capital structure, such as an exchange of bonds for stock. Recapitalization is often undertaken with the aim of making the company's capital structure more stable, and sometimes to boost the company's stock price (for example, by issuing bonds and buying stock). Companies that do not want to become hostile takeover targets might undergo a recapitalization by taking on a very large amount of debt, and issuing substantial dividends to their shareholders (this makes the stock riskier, but the high dividends may still make them attractive to shareholders). Also, bankrupt companies often undertake a recapitalization as a part of their reorganization process.
Coupon
Definition 1: The interest rate on a fixed income security, determined upon issuance, and expressed as a percentage of par.
Definition 2: The term for each interest payment made to the bondholder.
Par
The nominal dollar amount assigned to a security by the issuer. For an equity security, par is usually a very small amount that bears no relationship to its market price, except for preferred stock, in which case par is used to calculate dividend payments. For a debt security, par is the amount repaid to the investor when the bond matures (usually, corporate bonds have a par value of $1000, municipal bonds $5000, and federal bonds $10,000). In the secondary market, a bond's price fluctuates with interest rates. If interest rates are higher than the coupon rate on a bond, the bond will be sold below par (at a "discount"). If interest rates have fallen, the price will be sold above par. here also called face value or par value.
Face Value
The nominal dollar amount assigned to a security by the issuer. For an equity security, face value is usually a very small amount that bears no relationship to its market price, except for preferred stock, in which case face value is used to calculate dividend payments. For a debt security, face value is the amount repaid to the investor when the bond matures (usually, corporate bonds have a face value of $1000, municipal bonds $5000, and federal bonds $10,000). In the secondary market, a bond's price fluctuates with interest rates. If interest rates are higher than the coupon rate on a bond, the bond will be sold below face value (at a "discount"). If interest rates have fallen, the price will be sold above face value. here also called par or par value.
Debenture
Unsecured debt backed only by the integrity of the borrower, not by collateral, and documented by an agreement called an indenture. One example is an unsecured bond.
Fidelity Bond
A debt obligation serving to protect an employer from loss in the event that its employees cause damages through dishonest or negligent action. Insurance companies and securities firms are often required to possess a fidelity bond.
Financial Futures
Futures contracts based on financial instruments, such as Treasury Bonds, CDs, currencies or indexes.
Fixed Annuity
An investment vehicle offered by an insurance company, that guarantees a stream of fixed payments over the life of the annuity. The insurer, not the insured, takes the investment risk. also called fixed dollar annuity.
Variable Annuity
A life insurance annuity contract which provides future payments to the holder (the annuitant), usually at retirement, the size of which depends on the performance of the portfolio's securities.
Forbes 500
An annual listing by Forbes magazine of the top 500 public companies in the U.S. ranked by sales, assets, earnings, and capitalization.
Global Depositary Receipt. A negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country. American Depositary Receipts make it easier for individuals to invest in foreign companies, due to the widespread availability of price information, lower transaction costs, and timely dividend distributions. also called European Depositary Receipt.
ADRs
American Depositary Receipt. A negotiable certificate issued by a U.S. bank representing a specific number of shares of a foreign stock traded on a U.S. stock exchange. ADRs make it easier for Americans to invest in foreign companies, due to the widespread availability of dollar-denominated price information, lower transaction costs, and timely dividend distributions.
Private Placement
The sale of securities directly to institutional investors, such as banks, mutual funds, insurance companies, pension funds, and foundations. Does not require SEC registration, provided the securities are bought for investment purposes rather than resale, as specified in the investment letter.
Public Company
A company which has issued securities through an offering, and which are now traded on the open market. also called publicly held or publicly traded. opposite of private company
Initial Public Offering
The first sale of stock by a company to the public.
Going Private
The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative, the company stops being publicly traded. Sometimes, the company might have to take on significant debt to finance the change in ownership structure. Companies might want to go private in order to restructure their businesses (when they feel that the process might affect their stock prices poorly in the short run). They might also want to go private to avoid the expense and regulations associated with remaining listed on a stock exchange. opposite of going public.
Liquidate
Definition 1: To convert to cash
Definition 2: To sell all of a company's assets, pay outstanding debts, and distribute the remainder to shareholders, and then go out of business.
Definition 3: A broker's sale of his/her customer's securities after the customer failed to meet a margin call.
Prospectus
A legal document offering securities or mutual fund shares for sale, required by the Securities Act of 1933. It must explain the offer, including the terms, issuer, objectives (if mutual fund) or planned use of the money (if securities), historical financial statements, and other information that could help an individual decide whether the investment is appropriate for him/her. also called offering circular or circular.
Incorporation
The process by which a business receives a state charter, allowing it to become a corporation.
REIT
Real Estate Investment Trust. A corporation or trust that uses the pooled capital of many investors to purchase and manage income property (equity REIT) and/or mortgage loans (mortgage REIT). REITs are traded on major exchanges just like stocks. They are also granted special tax considerations. REITs offer several benefits over actually owning properties. First, they are highly liquid, unlike traditional real estate. Second, REITs enable sharing in non-residential properties as well, such as hotels, malls, and other commercial or industrial properties. Third, there's no minimum investment with REITs. REITs do not necessarily increase and decrease in value along with the broader market. However, they pay yields in the form of dividends no matter how the shares perform. REITs can be valued based upon fundamental measures, similar to the valuation of stocks, but different numbers tend to be important for REITs than for stocks.
Recapitalization
A change in a company's capital structure, such as an exchange of bonds for stock. Recapitalization is often undertaken with the aim of making the company's capital structure more stable, and sometimes to boost the company's stock price (for example, by issuing bonds and buying stock). Companies that do not want to become hostile takeover targets might undergo a recapitalization by taking on a very large amount of debt, and issuing substantial dividends to their shareholders (this makes the stock riskier, but the high dividends may still make them attractive to shareholders). Also, bankrupt companies often undertake a recapitalization as a part of their reorganization process.
Coupon
Definition 1: The interest rate on a fixed income security, determined upon issuance, and expressed as a percentage of par.
Definition 2: The term for each interest payment made to the bondholder.
Par
The nominal dollar amount assigned to a security by the issuer. For an equity security, par is usually a very small amount that bears no relationship to its market price, except for preferred stock, in which case par is used to calculate dividend payments. For a debt security, par is the amount repaid to the investor when the bond matures (usually, corporate bonds have a par value of $1000, municipal bonds $5000, and federal bonds $10,000). In the secondary market, a bond's price fluctuates with interest rates. If interest rates are higher than the coupon rate on a bond, the bond will be sold below par (at a "discount"). If interest rates have fallen, the price will be sold above par. here also called face value or par value.
Face Value
The nominal dollar amount assigned to a security by the issuer. For an equity security, face value is usually a very small amount that bears no relationship to its market price, except for preferred stock, in which case face value is used to calculate dividend payments. For a debt security, face value is the amount repaid to the investor when the bond matures (usually, corporate bonds have a face value of $1000, municipal bonds $5000, and federal bonds $10,000). In the secondary market, a bond's price fluctuates with interest rates. If interest rates are higher than the coupon rate on a bond, the bond will be sold below face value (at a "discount"). If interest rates have fallen, the price will be sold above face value. here also called par or par value.
Debenture
Unsecured debt backed only by the integrity of the borrower, not by collateral, and documented by an agreement called an indenture. One example is an unsecured bond.
Fidelity Bond
A debt obligation serving to protect an employer from loss in the event that its employees cause damages through dishonest or negligent action. Insurance companies and securities firms are often required to possess a fidelity bond.
Financial Futures
Futures contracts based on financial instruments, such as Treasury Bonds, CDs, currencies or indexes.
Fixed Annuity
An investment vehicle offered by an insurance company, that guarantees a stream of fixed payments over the life of the annuity. The insurer, not the insured, takes the investment risk. also called fixed dollar annuity.
Variable Annuity
A life insurance annuity contract which provides future payments to the holder (the annuitant), usually at retirement, the size of which depends on the performance of the portfolio's securities.
Forbes 500
An annual listing by Forbes magazine of the top 500 public companies in the U.S. ranked by sales, assets, earnings, and capitalization.
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