Appreciation O An increase in the basic value of an investment
Depreciation O A decrease in the basic value of an investment
Bear Market O A market characterized by generally falling prices over a period of several months or years
Blue Chip O Common stock of a company known nationally for the quality of it’s products and it’s profitability
Bond O Certificate representing a loan of money to a corporation or government for a specific period, in exchange for a promise to repay the bondholder the amount borrowed plus interest.
Broker O A representative who handles transactions related to investor’s order to buy and sell securities.
Bull Market O A market characterized by generally rising prices over a period of several months or years.
Capital Gain O The gain obtained when a security is sold for more than the purchase price.
Capital Loss O The loss incurred when a security is sold for less than it’s purchase price.
Caveat Emtpor O Latin Phrase meaning, “Let the buyer beware”
CFP O Certified Financial Planner O An individual who has completed the education requirements of the International Board of Certified Financial Planners
CFTC O Commodity Futures Trading Commission O The federal regulatory agency that monitors the futures and options market
Commission O A broker’s or adviser’s fee charged for buying or selling securities for an investor.
Common Stock O The most basic form of corporation ownership. Owners of common stock have a claim on the assets of a company after those of preferred stockholders and bondholders.
Compound Interest O Interest earned on interest that is added to the principal.
Discount O Sale of a bond at a price less than face value
Diversification O Spreading investment funds among different types of investments and industries
Dividend O Payment received by stockholders from the earnings of a corporation
DJIA O Dow Jones Industrial Average O Price-weighted average of actively traded stocks
Face Value O The amount the bond is worth when it matures.
FDIC O Federal Deposit Insurance Corporation O An agency of the federal government created to guarantee bank deposits
Financial Planner O A person who advises others about financial issues. This person may need to be registered as an investment adviser if he/she provides investment advice for a fee.
Futures Contract O A legal commitment to buy or sell a commodity at a specific future date and price.
Hedging O The process of protecting an investment against price increases.
Inflation Risk O The risk that the financial return on an investment will lose purchasing power due to a general rise in prices of goods and services.
Insider Trading O The illegal use of investment information not generally known to the public.
Interest O For the investor, interest is the payment received from a financial institution for lending money to it.
IRA O Individual Retirement Account O A tax-defrred savings account
Liquidity O The ease with which an investment can be converted into cash.
Load Fund O A mutual fund purchased directly by the public that charges a sales commission when bought.
Market Risk O The risk that the price of stocks, real estate, or other investments will go down due to business cycles or other causes.
Mutual Fund O A company that invests the pooled money of its shareholders in various types of investments.
NASAA O North American Securities Administrators Association O An organization of securities administrators charged with enforcing securities laws and protecting investors from fraudulent investments.
No Load Fund O A mutual fund purchased directly by the public and does not have a charge for buying.
Odd Lot O A unit of less than 100 shares of stock
P/E Ratio O The price of a stock divided by per share earnings for a 12 month period
Penny Stocks O High risk stocks that generally sell for less than $3 and are not listed and traded on any exchange or stock market. O (Con Artists often deal in Penny Stock frauds)
Ponzi Scheme O An illegal investment scam named for its inventor, Charles Ponzi.
Portfolio O The total investments held by an individual
Preferred Stock O Ownership in a corporation that has a claim on assets and earnings of a company before those of common stockholders but after bondholders.
ROI O Return on Investment O A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.
Risk O In an investment, the uncertainty that you will get an expected return. O In insurance, the uncertainty whether a loss will occur.
Risk Tolerance O A person’s capacity to endure market price swings in an investment. O Risk tolerance is an important component in investing. An individual should have a realistic understanding of his or her ability and willingness to stomach large swings in the value of his or her investments.