| A B C D E
F G
H I J K L
M N O P Q
R S T U V
W X Y Z |
| Annuity
contract |
An Investment vehicle sold by insurance companies. Annuity buyers can elect to receive periodic payments for the rest of their lives. Annuities provide insurance against out living one's wealth. | |
| Arbitrage | A form of
hedged investment meant to capture slight differences in the prices of
2 related securities - for example, buying gold in London and selling
it at a higher price In New York |
|
| |
| Balanced
budget |
A budget is balanced when receipts equal expenditures. When receipts exceed expenditures, there is a surplus; when they fall short of expenditures, there is a deficit. | |
| Balance
of payments |
The difference between all payments, for some categories of transactions, made to and from foreign countries over a set period of time. A favorable balance of payments exists when more payments are coming in than going out; an unfavorable balance of payments obtains when the reverse is true. Payments may include gold, the cost of merchandise and services, interest and dividend payments, money spent by travelers, and repayment of principal on loans. | |
| Balance
of trade (trade gap) |
The difference between exports and imports, in both actual funds and credit. A nation's balance of trade is favorable when exports exceed imports and unfavorable when the reverse is true. | |
| Bear market | A market in which prices are falling. | |
| Bearer
bond |
A bond issued in bearer form rather than being registered in a specific owner's name. Ownership is determined by possession | |
| Bond | A written promise, or IOU, by the issuer to repay a fixed amount of borrowed money on a specified date and generally to pay interest at regular intervals in the interim. | |
| Bull market | A market in which prices are on the rise. |
| Capital
gain (loss) |
An increase (decrease) in the
market value of an asset over some period
of time. For tax purposes, capital gains are typically calculated
from
when an asset is bought to when it is sold. |
|
| Commercial paper | An extremely short-term
corporate IOU, generally due In 270 days or less. |
|
| Consumer price Index (CPI) | A statistical measure of the
change in the price of consumer goods. |
|
| Convertible bond | A corporate bond (see below)
that may be converted into a stated number of shares of common stock.
Its price tends to fluctuate along with flucuations in the price of the
stock and with changes in interest rates. |
|
| Corporate bond | A bond issued by a corporation.
The bond normally has a stated life and pays a fixed rate of interest.
Considered safer than the common or preferred stock of the same
company. |
|
| Cost of living | The cost of maintaining a
standard of living measured in terms of purchased good and
services. Inflation typically measures changes in the cost of
living. |
|
| Cost-of-Iivlng adjustments | Changes in promised payments,
such as retirement benefits, to account for changes in the cost of
living. |
|
| Credlt crunch (liquidity crisis) | A situation in which cash for
lending is in short supply. |
| Debenture |
An unsecured bond backed only by the general credit of the issuing corporation. |
| Deficit spending | Govemment spending in excess of revenues, generalIy financed with the sale of bonds. A deficit increases the govemment debt |
| Deflation | A decrease In the level of prices. |
| Democracy | 1. Government by the people,
exercised either directly or through elected representatives. 2. A
political or social unit that has such a government. 3. The common
people, considered as the primary source of political power. 4.
Majority rule. 5. The principles of social equality and respect for the
individual within a community. source: The American Heritage® Dictionary of the English Language: Fourth Edition. 2000. |
| Depression | A long period of economic decline marked by low prices, high unemployment, and many business failures. |
| Derivatives | financial contracts, such as options, whose values are based on, or derived from, the price of an underlying financial asset or indicator such as a stock or an interest rate. |
| Devaluation | The official lowering of a nation's currency, decreasing its Value in relation to foreign currencies. |
| Discount rate | The rate of interest set by- the Federal Reserve that member banks are charged when borrowing money through the Federal Reserve System. |
| Disposable income | Income after taxes that is available to persons for spending and saving |
| Diversification | investlng In more than one asset in order to reduce the riskiness of the overall asset portfolio. By holding more than one asset, losses on so meassets may be offset by gains realized on other assets. |
| Dividend | discretionary payment by a corporation to its share holders, usually in the form of cash or stock shares. |
| Dow
Jones Industrial Average |
an index of stock market prices, based on the prices of 30 companies, 28 of which are on the New York Stock Exchange. |
| Econometrics
|
the use of statistical
methods to study economic and financial data. |
| Federal Deposit Insurance Corp. (FDIC) | a U.S. government sponsored corporation that insures accounts in national banks and other qualified institutions against bank failures | |
| Federal Reserve System | the entire banking system of the U.S., incorporating 12 Federal Reserve banks (one in each of 12 Federal Reserve districts), 25 Federal Reserve branch banks, all national banks, and state-chartered commercial banks and trust companies that have been admitted to its membership, The governors of the system greatly influence the nation's monetary and credit policies. | |
| Full employment | the economy is said to be at full employment when everyone who wishes to work at the going wage-rate for his or her type of labor. is employed save only for the small amount of unemployment due to the time it takes to switch from one job to another. | |
| Futures
|
a futures contract is an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price at a set date in the future. For example, futures based on a stock index (such as the Dow Jones Industrial Average) are bets on the future price of that group of stocks. |
| Golden
parachute |
provisions in contracts of some high-level executives guaranteeing substantial severance benefits if they lose their position in a corporate takeover. | |
| Government bond | A bond issued by the U.S. Treasury, considered a safe investment. These are divided into 2 categories - marketable and not marketable. Savings bonds cannot be bought and sold once the original purchase is made. Marketable bonds fall into several categories. Treasury bills are short term U.S. obligations, maturing in 3, 6, or 12 months. Treasury notes mature in up to 10 years. Treasury bonds mature in 10 to 30 years. Indexed bonds are adjusted for inflation. | |
| Greenmail | a company buying back its own shares for more than the going market price to avoid a threatened hostile takeover. | |
| Gross domestic product (GDP) | The market value of all goods and services that have been bought for final use during a period of time. It became the official measure of the size of the U.S. economy in 1991, replacing gross national product (GNP), in use since 1941. GDP covers workers and capital employed within the nation's borders. GNP covers production by U.S. residents regardless of where It takes place. The switch aligned U.S. terminology with that of most other industrialized countries. | |
| Gross national product (GNP) | See Gross Domestic
Product (GDP) |
| Hedge
fund |
A flexible investment fund for a limited number of large investors (the minimum investment is typically $1 million). Hedge funds use a variety of investment techniques, including those forbidden to mutual funds, such as short-selling and heavy leveraging | |
| Hedging | taking 2 positions whose gains and losses will offset each olher if prices change, in order to limit risk. |
| Individual retirement account (IRA) | a self-funded tax-advantaged retirement plan that allows employed individuals to contribute up to a maximum yearly sum. With a traditionai IRA, individuals contribute pre-tax earnings and defer income taxes until retirement. With a Roth IRA, individuals contribute after-tax earnings but do not pay taxes on future withdrawals (the interest is never taxed). 401(k) plans are employer-sponsored plans similar to traditional lRAs, but having higher contribution Iimits. | |
| Inflation | an increase in the level of prices. | |
| Insider information | Important facts about the condition or plans of a corporation that have not been released to the general public. | |
| Interest | the cost of borrowing money | |
| Investment
bank |
a financial institution that
arranges the initial issuance of stocks
and bonds and offers companies advice about acquisitions and
divestitures. |
| Junk
bonds |
bonds issued by companies
with low credit ratings. They typically pay
relatively high inlerest rates because of the fear of default. |
| Leading
indicators |
a series of 11 indicators from different segments of the economy used by the U.S. Commerce Department to predict when changes in the level of economic activity will occur. | |
| Leverage | the extent to which a purchase
was paid for with borrowed money. Amplifies the potential gain or
loss for the purchaser. |
|
| Leveraged buyout (LBO) | an acquisition of a company in which much of the purchase price is borrowed, with the debt to be repaid from future profits or by subsequently selling off company assets. A leveraged buyout is typically carried out by a small group of investors, often including incumbent management. | |
|
Liquid assets |
Assets consisting of cash and / or items that are easily converted into cash. |
| Margin
account |
A brokerage account that allows a person to trade securities on credit. A margin call is a demand for more collateral on the account. | |
| Money supply |
The currency held by the public, plus checking accounts in commercial banks and savings institutions. |
|
| Mortgage-backed securities | Created when a bank, builder, or government agency gathers together a group of mortgages and then sells bonds to other institutions and the public. The investors receive their proportionate share of the interest payments on the loans as well as the principal payments. Usually, the mortgages in question are guaranteed by the government. | |
| Municipal
bond |
Issued by governmental units such as states, cities, local taxing authorities, and other agencies. Interest is exempt from U.S. and sometimes state and local income tax. Municipal bond unit investment trusts offer a portfolio of many different municipal bonds chosen by professionals. The income is exempt from federal income taxes. | |
| Mutual fund | A portfolio of professionally bought and managed financial assets in which you pool your money along with that of many other people. A share price is based on net asset value, or the value of all the investments owned by the funds, less any debt, and divided by the total number of shares. The major advantage relative to investing individually in only a small number of stocks is less risk the holdings are spread out over many assets and II one or two do badly the remainder may shield you from the losses. Bond funds are mutual funds that deal in the bond market exclusively. Money market mutual funds buy in the so-called money market-institutions that need to borrow large sums of money for short terms. These funds offer special checking account advantages. |
| National
debt |
The debt of the national government, as distinguished from the debts of political subdivisions of the nation and of private business and individuals. | |
| National debt ceiling |
Total borrowing limit set by Congress beyond which the national debt cannot rise. This limit is periodically raised by congressional vote. |
|
| Per capita income | The total income of a group divided by the number of people in the group. |
| Plutocracy |
1. Government by the wealthy. 2.
A wealthy class that controls a government. 3. A government or state in
which the wealthy rule. source: The American Heritage® Dictionary of the English Language: Fourth Edition. 2000. |
| Prime
Interest rate |
The rate charged by banks on short-term loans to large commercial customers within the highest credit rating. |
| Producer price index | A statistical measure of the change in the prices of wholesale goods. It is reported for 3 different stages of the production chain: crude, intermediate, and finished goods. |
| Program trading | Trading techniques involving large numbers and large blocks of stocks, usually used in conjunction with computer programs. Techniques include index arbitrage, in which traders profit from price differences between stocks and futures contacts on stock indexes, and portfolio insurance, which is the use of stock-index futures to protect stock investors from potentially large tosses when the market drops. |
| Public debt | The total of a nation's debts owed by state, local, and national government. Increases in this sum, reflected in public-sector deficits, indicate how much of the nation's spending is being financed by borrowing rather than by taxation. |
| Recession | A mild decrease in economic activity marked by a decline in real (inflation-adjusted)) GDP, employment, and trade, usually lasting from 6 months to a year, and marked by widespread decline in many sectors of the economy. |
| Savings
Association Insurance Fund (SAlF) |
Created in 1989 to insure
accounts in savings and loan associations up to $100,000. |
|
| Seasonal adjustment | Statistical changes made to compensate for regular fluctuations in data that are so great they tend to distort the statistics and make comparisons meaningless. For instance, seasonal adjustments are made for a slowdown in housing construction in midwinter and for the rise in- farm income in the fall after summer crops are harvested. | |
| Short-selling | Borrowing shares of stock from a brokerage firm and selling them, hoping to buy the shares back at a lower price, return them, and realize a profit from the decline in prices. | |
| Stagnation | Economic slowdown in which there is little growth in the GDP, capital investment, and real income. | |
| Stock | Common stocks are shares of ownership in a Corporation. For publicly held firms, the stock typically trades on an exchange, such as the New York Stock Exchange; for closely held firms, the founders and managers own most of the stock. There can be wide swings in the prices of this kind of stock. Preferred stock is a type of stock in which a fixed dividend must be paid before holders of common stock are issued their share of the issuing corporation's earnings. Preferred stock is less risky than common stock. Convertible preferred stock can be converted into the common stock of the company that issued the preferred. Over-the-counter stock is not traded on the major or regional exchanges, but rather through dealers from whom you buy directly. Blue chip stocks are so called because they have been leading stocks for a long time. Growth stocks are from companies that reinvest their earnings, rather than pay dividends, with the expectation of future stock price appreciation. | |
| Supply-side economics | A school of thinking about economic policy holding that lowering income tax rates will inevitably lead to enhanced economic growth and general revitalization of the economy. |
| Takeover | Acquisition of one company by another company or group by sale or merger. A friendly takeover occurs when the acquired company's management is agreeable to the merger. When management is opposed to the merger, it is a hostile takeover. | |
| Tender offer | A public offer to buy a company's stock; usually priced at a premium above the market. |
| Zero
coupon bond |
A corporate or government bond that is issued at a deep discount from the maturity value and pays no interest during the life of the bond. It is redeemable at face value. |
