10-K

Annual comprehensive overview of business activity registered companies must file with the SEC within 90 days of the end of the fiscal year.

1042S

Tax form for foreign individuals owning American securities to report income for the calendar year.

1099

Series of tax forms used to report various types of income by financial institutions. 1099 forms include: 1099B, 1099DIV, 1099INT, 1099OID

1099B

Form that reports proceeds from Broker transactions, including the sale or exchange of securities.

ABANDONED PROPERTY

Cash, stocks, bonds and other holdings that have been turned over to the state (in which the shareholder resides at the time of ownership, if foreign holder shares are escheated to the state of incorporation of the issuer) after several years of inactivity. Some states hold onto such property and allow the original owners and heirs to claim it indefinitely. In other states, if the property goes unclaimed for too long, it may become the state's property through a process known as escheatment.

ACCREDITED INVESTOR

An accredited investor is a person or entity that can deal with securities not registered with financial authorities by satisfying one of the requirements regarding income, net worth, asset size, governance status or professional experience. The term is used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. Accredited investors include natural individuals, banks, insurance companies, brokers and trusts.

ACCRUED INTEREST

The interest accumulated on a bond since the last interest payment.

ACQUISITION

A corporate action in which a company buys most, if not all, of the target company's ownership stakes to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy when it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.

B NOTICE

Notice sent to a taxpayer when an invalid Tax Identification Number is supplied.

BABY BOND

Fixed income securities issued in small denominations, generally with a maximum face value of $5,000.

BACK-END LOAD

Fee that investor pays when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.

BALANCE SHEET

A financial statement summarizing a company's assets, liabilities and shareholders' equity for a specific date. These three balance sheets provide investors a summary of what the company owns and owes, as well as the amount invested by shareholders.

C NOTICE

Notice administered by the IRS to the payers of earnings to begin backup withholding on a security holder. The security holder is responsible for contacting the IRS to resolve the issue.

CALL

The issuer's right to redeem bonds or preferred stock before maturity date. The date when an issuer may call securities is specified by the issuer when securities are issued.

CALL OPTION

An agreement to buy shares at a specified price within a specific time period. The buyer does not have to pay full price for shares unless they exercise the options.

CAPITAL

Financial assets or the financial value of assets, such as cash.

DAY ORDER

An order to buy/sell a security that expires if it is not executed on the same day that the order is placed.

DEALER

An individual or firm that buys or sells securities for their own account. The dealer's profit/loss is the difference between the price paid and the price received for the security. The same individual/firm may function as a broker or dealer.

DEBENTURE

The most common type of bond. These bonds are backed by the credit of the issuer instead of company assets.

DEBIT DATE

The date when all or some of the shares in an account are issued or debited in certificate form or cash.

EARNINGS

Revenue for a specified period of time, after related costs and expenses have been deducted.

EARNINGS REPORT

A statement issued by a company that describes gains and losses over a specific time period. This is also referred to as an income statement.

EBITDA

EBITDA margin is a measurement of a company's operating profitability as a percentage of its total revenue. It is equal to earnings before interest, tax, depreciation and amortization (EBITDA) divided by total revenue. Because EBITDA excludes interest, depreciation, amortization and taxes, EBITDA margin can provide an investor, business owner or financial professional with a clear view of a company's operating profitability and cash flow.

EDGAR

“Electronic Data Gathering, Analysis and Retrieval” EDGAR is an online public database from the U.S. Securities and Exchange Commission. It performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the SEC.

FACE VALUE

The dollar value of a security stated by the issuer. For stocks, it is the original cost of the stock shown on the certificate.

FEDERAL INHERITANCE TAX WAIVER

Authorization by the government given to transfer U.S. securities of a non-citizen decedent without charging any taxes.

FIDUCIARY

A legally appointed individual who is authorized to hold assets in trust for another individual. The fiduciary manages the assets for the benefit of the other individual rather than for his or her own profit.

FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)

The largest non-governmental regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's regulation committee. FINRA responsibilities include governing business between brokers, dealers and the investing public.

GENERAL PARTNER

In a general or Limited Partnership, a partner with unlimited legal responsibility for debts and liabilities.

GLOBAL REGISTERED SHARES

Shares issued and registered in multiple markets around the world. Global registered shares represent the same class of shares.

GOOD DELIVERY

Certain qualifications that need to be met before a security sold on a stock exchange can be delivered. Qualifications include the security being in proper form to comply with the contract of sale and transferring the title to the purchaser.

GOOD 'TIL CANCELLED (GTC)

An order to buy or sell a security at a set price that remains active until the investor decides to cancel or execute the trade.

HIGH-YIELD BOND

A bond with a credit rating of BB or lower. Also known as junk bonds because of the rewards offered to those who are willing to take on the additional risks of a lower-quality bond. Junk bonds are speculative compared with investment- grade bonds.

HIGH-YIELD BOND FUND

A mutual fund that invests primarily in bonds with a credit rating of BB or lower. Because of the speculative nature of high-yield bonds, high-yield funds are subject to greater share price volatility and greater credit risk than other types of bond funds.

HOLDER

The name of the registered owner of a security and individual who has the rights, benefits and responsibilities of ownership, which may include voting rights and dividend payouts.

HOLDING COMPANY

A holding company is a parent corporation, limited liability company or limited partnership that owns enough voting stock in another company to control its policies and management.

INCOME BOND

Type of debt security where only the principal is promised to be paid to the investor, only if the issuing company has enough earnings to pay for the principal.

INCOME FUND

A mutual fund that seeks current income rather than growth of capital. Income funds typically invest in bonds and/or high-yielding stocks.

INCOME STOCK

A stock that pays regular and steady income. These stocks should appreciate enough to keep up with inflation. Income stocks are those of well-established companies, such as utilities, some telephone companies, and some blue-chip companies.

INDENTURE

A contract between an issuer of bonds and the bondholder stating all of the rights and obligations of the bondholder.

JOINT TENANCY

A type of ownership where two or more people own property together, each with equal rights and obligations. Upon an owner's death, that owner's interest in the property is transferred to the survivors without the property having to go through probate.

JOINT TENANTS WITH RIGHT OF SURVIVORSHIP

A form of account registration in which two or more individuals share an undivided interest in an account. In the event of one tenant’s death, the surviving tenant (or tenants) automatically inherits the property without the necessity of court proceedings.

JUNK BOND

See high-yield bond.

K-1 FORM

A tax document used to report the incomes, losses and dividends of a business's partners or S-corporation's shareholders. Rather than being a financial summary for the entire group, the Schedule K-1 document is prepared for each partner or shareholder individually.

KELMAR AUDIT

An auditing firm known for their prominent audits of general ledger property.

KEOGH PLAN

A tax deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes.

LARGE-CAP STOCKS (LARGE-CAPITALIZATION STOCKS)

The stocks of companies whose market capitalization exceeds a certain dollar amount. As of December 2001, as per Morningstar, large-cap stocks had market capitalization of over $5 billion.

LEGEND

A statement on a stock certificate noting restrictions on the transfer of the stock, often due to SEC requirements for unregistered securities. A legend may or may not be legally required on the certificate itself, depending on state laws. Restrictions on the sale or transfer of share ownership are common among privately held corporations.

LETTER OF TRANSMITTAL (LOT)

Letter sent to a shareholder announcing spin-off, merger, or exchange and how they can participate. Shareholders complete and return a form, which includes a W-9 and Affidavit of Loss, along with the securities in order to receive cash-in-lieu payments or exchanged securities.

LETTERS TESTAMENTARY

A court document appointing the executor to distribute assets of an estate.

MANAGEMENT FEE

A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting stocks and managing the portfolio. It can also include other items such as investor relations expenses and the administration costs of the fund.

MARGIN

Borrowed money used to purchase securities.

MARGIN CALL

A broker requirement from an investor using margin to deposit additional funds or securities so the margin account is brought up to the minimum maintenance margin. Margin calls occur when an account value decreases to a value calculated by a broker's particular formula.

MARITAL TRUST

A trust created to allow one spouse to transfer, during life or upon death, an unlimited amount of property to his/her spouse without incurring gift or estate tax.

NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD)

A group of brokers responsible for establishing legal and ethical standards of its member for over the counter markets.

NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATION SYSTEM (NASDAQ)

The world's first electronic stock market created in 1971 and facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks.

NATIONAL CHANGE OF ADDRESS (NCOA)

A registry of individuals who relocate or change their address within the United States maintained by the United States Postal Service. Access to the registry is sold to firms that engage in direct mail and use of NCOA is required in order to obtain bulk mail rates.

NATIONAL MARKET SYSTEM

System for reporting transactions of active over the counter securities, and is sponsored by the NASD and NASDAQ.

ODD LOT

An amount of a security that is less than the normal unit of trading for that particular security

OFAC

A department of the U.S. Treasury that enforces economic and trade sanctions against countries and groups of individuals involved in terrorism, narcotics and other disreputable activities

OFFER

When one party conveys interest to buy or sell assets from another party. The offering price is the highest price the buyer will pay to purchase an asset, and the lowest that the seller will accept for the asset.

OMNIBUS ACCOUNT

An omnibus account is an account between two futures merchants (brokers). It involves the transaction of individual accounts that are combined in this type of account, allowing for easier management by the futures merchant. This protects the identities of the individual account holders, because the futures merchant transacts for them.

PAR

The face value of a bond.

PARTNERSHIP

An organization or two or more individuals who manage and operate the business, sharing rights and obligations.

PASSED DIVIDEND

Exclusion of a regular or scheduled dividend.

PAYABLE DATE

The date on which a declared stock dividend is scheduled to be paid.

QUALIFIED 423(B) PLAN

An Employee Stock Purchase Plan that is based upon the length of time the shares were held prior to being sold. This plan provides special tax treatment to employers that offer this type of plan.

QUALIFIED INSTITUTIONAL BUYER (QIB)

Institutions that manage at least $100 million in securities which include banks, savings and loans institutions, insurance companies, investment companies, employee benefit plans, or an entity owned entirely by qualified investors. Also included are registered broker-dealers owning and investing, on a discretionary basis, $10 million in securities of non-affiliates.

QUORUM

A quorum refers to the minimum acceptable level of individuals with a vested interest in a company needed to make the proceedings of a meeting valid under the corporate charter. This clause or general agreement ensures there is sufficient representation present at meetings before any changes can be made by the board. A quorum is normally comprised of a group that is considered as large as possible to be depended on to attend all corporate meetings, which is a qualitative assessment.

QUOTATION

The price being bid (by a prospective buyer) or offered (by a potential seller) for a security. It usually refers to the highest bid and lowest asked (offered) price currently available on a security.

RALLY

A continued increase in a stock price or market following a decline.

RATIO

The number of whole or fractional shares represented by a single American Depositary Share.

REAL ESTATE INVESTMENT TRUST (REIT)

Similar to a closed-end investment company, but organized to manage a portfolio of real estate investments and distributes to its shareholders at least 95% of its net earnings annually. Usually traded publicly, REITs often specialize in a particular kind of property. They can: invest in real estate such as office buildings, shopping centers, or hotels; purchase real estate (an equity REIT); and provide loans to building developers (a mortgage REIT). A REIT provides centralized management, limited liability, continuity of interest, and transferability of ownership. REITs generally avoid corporate tax by distributing earnings to shareholders. Distributed earnings are then taxed as ordinary income.

RECORD DATE

A date established by the issuer of a security for the purpose of determining the shareholders who are entitled to receive a dividend or distribution.

SALES CHARGE

Commonly referred to as the load; a transaction fee or commission paid for an investment instrument, such as a mutual fund. See Load and No-Load Funds.

SARBANES-OXLEY ACT OF 2002

An act passed by U.S. Congress in 2002 protecting investors from the possibility of fraudulent accounting activities by corporations. This act mandated stern reforms to improve financial disclosures from corporations and prevent accounting fraud.

SAY ON PAY

Say on pay is a term used for a rule in corporate law whereby a firm's shareholders have the right to vote on the remuneration of executives. Often described in corporate governance or management theory as an agency problem, a corporation's managers are likely to overpay themselves because, directly or indirectly, they are allowed to pay themselves as a matter of general management power. Directors are elected to a board that has a fiduciary duty to protect the interests of the corporation. In large listed companies, executive compensation will usually be determined by a compensation committee composed of board members. Proponents argue that “say on pay” reforms strengthen the relationship between the board of directors and shareholders, ensuring that board members fulfill their fiduciary duty. Critics of the policy believe that “say on pay” does not effectively or comprehensibly monitor compensation, and consider it to be reactionary policy rather than proactive policy, because it does not immediately affect the Board of Directors. Some argue it is counter-productive because it diminishes the authority of the Board of Directors. The effect of ‘say on pay’ measures can be binding or non-binding, depending on regulatory requirements or internal corporate policy as determined by proxy votes.

SCALE ORDER

A type of buy or sell order that consists of several limit orders at incrementally increasing or decreasing prices.

T+3 (TRANSACTION DATE + 3)

The settlement date of a security transaction. All purchases and sales of securities are settled on the 3rd business day following the transaction date.

TABULATE

To tabulate information is to organize it into a table. Tabulating is a way of processing information or data by putting it in a table. This doesn't mean the kind of table you eat off of, though. It refers to a table, or chart, with rows and columns. When tabulating, you might have to make calculations. Someone who enjoys tabulating financial information might make a good accountant.

TAKEOVER

A change in the controlling interest of a corporation. A takeover may be a friendly acquisition or a hostile bid. A hostile takeover is usually attempted through a public tender offer.

TAX BASIS

The original value of an asset for tax purposes, adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's tax basis and the current market value.

U.S. PAYABLE DATE

The date which U.S. holders receive stock dividend distribution for Depositary Receipts.

UNCLAIMED PROPERTY

Cash, stocks, bonds and other holdings that have been turned over to the state after several years of inactivity. Some states hold onto such property and allow the original owners and heirs to claim it indefinitely. In other states, if the property goes unclaimed for too long, it may become the state's property through a process known as escheatment.

UNDERVALUED SECURITY

A security selling below its market value or liquidation value.

UNDERWRITER

A company or entity that administers public issuance and distribution of securities from a corporation. An underwriter works closely with the issuer to determine the offering price of the securities, buys them from the issuer and sells them to investors via the underwriter's distribution network.

VALUATION

The estimated worth or desirability of an asset such as a security. A valuation makes it easier to decide if an asset would make a good investment at a given purchase price. The price/earnings ratio is an example of a stock valuation.

VALUE STOCK FUND

A mutual fund that emphasizes stocks of companies whose growth opportunities are generally regarded as sub-par by the market. Value stock companies often pay regular dividend income to shareholders and sell at relatively low prices in relation to their earnings or book value.

VALUE STOCKS/VALUE INVESTING

Stocks that are considered to be undervalued based upon such ratios as price-to-book or price-to-earnings (P/E). Historically, these have been stocks that have low price-to-earnings ratios (P/Es), a high level of asset backing, or high dividend yields, or a combination of all three. These companies generally have lower forecasted growth rates than growth stocks.

VENTURE CAPITAL

Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. For startups without access to capital markets, venture capital is an essential source of money. Risk is typically high for investors, but the downside for the startup is that these venture capitalists usually get a say in company decisions.

W-8 FORM

Form issued by the Internal Revenue Service that grants a non-U.S. citizen an exemption from taxation on dividend income, interest, sales, etc.

W-8BEN

This form is used by foreign corporations and individuals certifying their non-American status.

W-9 FORM

Form issued by the Internal Revenue Service used to verify Tax Identification Numbers for U.S. citizens.

WAIVER OF PROBATE

An affidavit required to transfer securities from non-probated estates.

YIELD

The return on an investment from the interest or dividend received from a security. The return is expressed as a percentage based on the investment's cost or current market value.

ZERO COUPON BOND

A bond that does not pay interest but is priced at a discount from its redemption price.