10-K: An annual, audited report on a publicly held company's operations and finances that is filed with the Securities and Exchange Commission.
10-Q: A quarterly report that public companies file with the Securities and Exchange Commission, similar to the annual Form 10-K but less comprehensive and generally not audited.
12b-1 fee: An annual charge that mutual fund companies (including companies that offer no-load funds) may impose on shareholders to cover marketing and distribution costs.
12 mo. EPS from continuing operations: See fully diluted EPS from continuing operations.
12 mo. EPS from total operations: See fully diluted EPS from total operations.
13-D: See form 13-D.
200-day moving average: See moving average.
30-year Treasury Bill: Known as "long bonds," 30-year Treasuries are the longest-duration bonds issued by the federal government.
401(k): A tax-deferred employee retirement plan in which employers often match all or part of employee contributions to the plan.
403(b): A tax-deferred retirement plan, similar to a 401(k) plan, that is offered by some nonprofit and public-sector employers.
5% insider ownership (%): Percentage of shares owned by insiders and by individuals or institutions that own 5 percent or more of the company.
50-day moving average: See moving average.
52-week high: The highest price for a security or fund during the past 52 weeks.
52-week low: The lowest price for a security or fund during the past 52 weeks.
5-year earnings growth: See earnings growth.
5-year high: The highest trading price for a security or fund during the past five years.
5-year low: The lowest trading price for a security or fund during the past five years.
7-day yield: The annual return of a money market mutual fund, based on the return from a seven-day period.
8-K: A form that public companies must file with the Securities and Exchange Commission to disclose material events that might affect financial situation or stock price—for example, the resignation of a chief executive officer.
Absolute Breadth Index: A market momentum indicator that measures volatility on the New York Stock Exchange regardless of the direction prices are headed. It is calculated by taking the absolute value of the difference between NYSE Advancing Issues and Declining Issues.
account: A group of transactions in MSN Money for a single bank, brokerage, retirement, loan, or credit card account. Accounts can also track assets such as houses or vehicles, or investments that you want to watch but do not own. See also watch account.
account group: A way to define the purpose of one or more accounts in the MSN Money Lifetime Planner.
account position: The amount of your investment, either by owning stock (a long position) or by owing stock (a short position). Also, the amount open.
account register: The page in MSN Money that displays all the transactions for one account, such as a checking, a credit card, or an investment account.
accumulated depreciation and depletion: The cumulative charges against the fixed assets of a company for wear and tear, obsolescence, or the depletion of a natural resource - for instance, oil in the ground - as it is used up.
accumulation and distribution: A market momentum indicator that associates changes in price with volume. The indicator is based on the premise that price follows volume. The higher the volume that accompanies a price move, the more significant the price move.
acid-test ratio: See quick ratio.
actual earnings: The actual Earnings Per Share (EPS) reported by a company (in contrast to the EPS estimates predicted by analysts).
ADR: See American Depositary Receipt (ADR).
advance/decline index: A technical indicator that shows the total difference between the number of advancing and declining security prices.
Advisor FYI: Messages based on the information in your MSN Money file that alert you to recent changes or provide relevant financial tips.
advisory services: Privately circulated publications, generally sold by subscription, that comment on the future course of financial markets and make buy and sell recommendations.
after hours: The sale of securities after regular business hours on organized exchanges. Because fewer trades are made after hours, prices in after-hours trading can be more volatile than they are during regular trading hours, and a stock's opening price might be different from the previous day's closing price.
aggressive growth fund: A mutual fund that focuses on stocks that have the potential to rise sharply in value, often new issues or troubled companies. Aggressive growth funds have both high potential returns and above-average risk.
all ordinaries: A benchmark index that tracks the performance of the Australian Stock Exchange (ASX).
alpha: Measures the difference between a fund's actual returns and its expected returns given its risk level as measured by its beta. A positive alpha figure indicates that the fund has outperformed its beta. A negative alpha indicates that the fund has underperformed, given the expectations established by the fund's beta.
alternative minimum tax: A tax designed to ensure that high-income taxpayers who shelter their income with certain deductions - such as accelerated depreciation, substantial itemized deductions, or tax-exempt interest—pay at least a minimum amount of tax.
American Depositary Receipt (ADR): American Depositary Receipts are tradable receipts for shares of foreign companies on deposit at a bank. They are in U.S. dollars on U.S. exchanges.
American Stock Exchange (Amex): A stock exchange that generally lists smaller companies than those listed on the New York Stock Exchange, as well as most U.S.-registered exchange-traded funds (ETFs) and many equity and index options.
American-style option: An option contract that may be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American style.
Amex: See American Stock Exchange.
Amex market value: An index that measures movements in all of the stocks listed on the American Stock Exchange. It's less widely followed as the Dow Jones Industrial Average or the Nasdaq Composite.
annualize: Convert to a yearly basis. If inflation is 1 percent in a given month, it is about 12 percent on an annualized basis. Annualized figures often ignore compounding.
annual return: The annual profit on an investment as a percentage of the amount invested. For example, a $1,000 investment that gives $100 in profit, including capital gain, over the year has an annual return of 10 percent.
annuity: A contract between you and an insurance company in which you pay the insurer a specified amount and, in return, receive regular payments either for life or for a stated period of time. Annuity gains may be tax-deferred.
annuity, deferred: An annuity contract for people who want to save on a tax-deferred basis for many years, then convert to a payout schedule after they retire.
annuity, immediate: An annuity with payouts that begin immediately after you purchase the contract, generally when you are close to retirement.
annuity, single life: A pension that provides a regular payment every month after you retire for the rest of your life, with payments based on life expectancy. If the purchaser lives longer than actuarial tables suggest, the payments continue and the annuity pays more in total than expected. If the purchaser dies before the average age, the remaining cash either reverts to the pension fund or - if the pension fund permits - is paid in a lump sum to the purchaser's estate. Sometimes called a straight-life annuity.
annuity, split: An annuity contract with the principal investment split between a deferred annuity and an immediate annuity.
appreciation: The gain in market value over the cost of a security, or the increase in the value of an asset.
arbitrage: An investment technique that profits from differences in prices for the same type of item, such as common stock shares, on two different exchanges or markets when prices don’t stay exactly in sync. Arbitrageurs make money by buying at the lower price on one market and quickly selling at the higher price on another market.
Arms Index: A market indicator that compares the number of stocks that increase or decrease in price (advancing/declining issues) with the volume associated with those stocks (up volume/down volume). Richard W. Arms developed the Arms Index in 1967. Also referred to as Short Term Trading Index, TRIN, MKDS, and STKS.
ask: The price at which a holder of a security is willing to sell, as opposed to the bid price, which is what someone has offered to pay.
ask size: The number of shares offered at the ask price.
asset: An item of value that you own. Assets can be tracked in MSN Money by using asset accounts.
assets (corporate): Anything of value owned by a corporation that, if sold, could be used to offset debts.
asset allocation: The way in which an investment portfolio is divided among different kinds of assets, such as stocks, bonds, or cash. Proper asset allocations helps investors balance growth potential and risk.
asset allocation fund: A mutual fund that invests in a wide variety of assets, including domestic and foreign stocks, bonds, and money market funds, to provide investment diversification to its shareholders.
asset class: A grouping of investments, based on the total market value of the company or companies and on the type of investment (stock, bond, cash, or other).
asset turnover: The ratio of sales to assets. Asset turnover helps analysts compare how capital-intensive businesses are and how well they use assets to produce revenue.
associated cash account: The cash portion of an investment account in which you temporarily keep both cash for buying investments and the proceeds from investment sales.
Atlanta Fed Index: A regional survey that measures manufacturing activity in states such as Georgia, Alabama, Florida, Tennessee, and Louisiana.
at-the-market order: See market order.
at-the-money option: An option for which the underlying investment sells at the same price as the strike price of the option.
auto and truck sales: A government report that tallies the monthly sales of all domestically produced vehicles. It is considered an important indicator of consumer demand.
average cost: The total cost for all shares of an investment, divided by the number of shares held.
average credit quality: A measure of the overall credit quality of a given bond portfolio. The average credit quality is derived by taking the weighted average of the credit rating for each bond in the portfolio. U.S. government bonds and bonds rated AAA are the safest. Bonds rated BBB are the lowest bonds still considered investment grade. Bonds rated BB or lower (often called junk bonds or high-yield bonds) are more risky. Bonds in the NR/NA category are either not rated by Standard & Poor's or Moody's or did not have a rating available at the time of publication.
average daily volume: The total shares (or other units) of a security traded during the current (or most recent) trading day.
average maturity (days): The date on which a bond's principal must be repaid at the face amount.
balanced fund: A mutual fund that invests in a mix of stocks and bonds to provide investment diversification to its shareholders.
balance sheet: A financial statement that shows a company's assets, liabilities, and owner's equity at a given point in time.
bankruptcy: Legal proceedings for adjusting the debts of an individual or business that cannot meet obligations to creditors. A Chapter 7 bankruptcy by a business liquidates the company to pay off creditors; a Chapter 11 bankruptcy reorganizes the company and enables the company to retain operating control while the company restructures its debt. A Chapter 7 bankruptcy for an individual liquidates the individual's assets (with some exceptions) to pay off creditors; a Chapter 13 bankruptcy provides debt relief and a structured program in which the individual agrees to make partial payment to creditors.
bar chart: Displays a security's open, high, low, and closing prices by using one vertical line for a specified time period. Bar charts are the most popular type of security chart. The tick on the left side of the bar is the opening price; the tick on the right side is the closing price. The vertical length of the bar shows the price range.
base currency: The currency used to record transactions within an account or file.
basis point: One one-hundredth of a percent, often used to describe changes in bond yields. For example, if a bond's yield drops from 6.56 percent to 6.51 percent, it has fallen by 5 basis points.
bear: Term for someone who believes that the value of the stock market or equities will fall.
bearish spread: An option spread designed to be profitable if the underlying security declines in price. A bearish debit spread involves purchasing a put and selling a further out-of-the-money put. A bearish credit spread involves selling a call and buying a further out-of-the-money call.
bear market: A prolonged downward trend in stock prices.
Bear Market Decile Rank: This number reflects a fund's performance during a bear market. Data showing a fund's performance during each bear-market month over the past five years are added together. Funds receive a rating between 1 (the best-performing 10% of funds) and 10 (the worst-performing 10%). Only funds with at least five years of history are given a Bear Market Decile Rank.
bear trap: A situation in which a market that appears to be in decline rallies unexpectedly. Investors who predict that the market will continue to decline invest accordingly and are trapped when the market continues to rally.
Beige Book: The Summary of Commentary on Current Economic Conditions by Federal Reserve District. It is one of three books prepared in advance of each Federal Open Market Committee (FOMC) meeting and the only one that is released publicly. It tells FOMC members about changes in the economy since the last FOMC meeting.
beneficiary: A person who receives a benefit, such as the income of a trust or proceeds from an insurance policy.
best-fit index: The best-fit index is the most appropriate passively managed collection of stocks against which to measure the performance of a given mutual fund. The index also suggests the role that a given fund might play in your portfolio.
beta: A measure of the sensitivity of a stock, bond, or fund to swings of an index or the overall market. A beta of more than 1.0 indicates higher volatility than the overall market. A beta of less than 1.0 indicates lower volatility than the overall market.
bid: The price someone has offered to pay for a security (as opposed to the ask price, which is what the seller is willing to accept).
bid size: The number of shares a buyer is willing to buy at the bid price.
bid tick: Indicates whether the current bid is higher, lower, or the same as the previous bid.
Big Board: See New York Stock Exchange.
bill payment provider: An online service provider that enables you to pay bills electronically, either directly from MSN Money or on the provider's Web site.
blue chip: Generally, stocks of large, established companies that are considered relatively safe.
Bollinger bands: A technical indicator that charts a stock price's standard deviations above and below a moving average, used to find unusual price movements.
bond: An IOU from a government (national or local) or a corporation, promising to repay a given amount by a given date.
bond rating: A grade on creditworthiness given to a bond by one of the big rating agencies, such as Moody's or Standard & Poor's. Because bonds with high ratings are considered less risky than bonds with lower ratings, highly rated bonds usually pay lower interest.
book value: The net worth of a company according to its books, or the amount by which the company's assets exceed its liabilities. Also known as "shareholder's equity." Most companies are worth much more than their book value.
book value/share: The net worth of a company during its most recent quarter divided by the latest shares outstanding. The book value/share ratio estimates how much each share would be worth if the company were liquidated.
breakout: When a stock trades in a narrow range for some time and then advances above the resistance level, it is said to have an upside breakout. Breakouts are suspect if they do not occur on comparatively high volume.
brokerage account: The investments that a brokerage company holds for you. In MSN Money, each of your brokerage accounts should be set up as a separate investment account.
brokerage availability: Lists brokerage firms that offer the fund through their mutual fund program. If "NTF" (No Transaction Fee) appears after the broker name, it means that the broker does not usually charge a commission for funds in this program.
brokered CD: A Certificate of Deposit (CD) that is purchased through a brokerage rather than a bank. Brokered CDs are more liquid than bank CDs, have no penalty for selling prior to maturity, often pay more competitive rates, and are still insured by the Federal Deposit Insurance Corporation for up to $100,000.
bucket shops: Hard-sell telemarketing operations that push securities or financial services.
bull: Term for someone who believes that the value of the stock market will rise or that prices will rise in a market sector or for a specific security.
bull/bear ratio: A market sentiment indicator that is based on a weekly poll of investment advisors asking if they are bullish, bearish, or neutral on the stock market.
bullish spread: An option spread designed to be profitable if the underlying security rises in price. In a bullish debit spread, the investor purchases a call and sells a further out-of-the-money call. In a bullish credit spread, the investor sells a put and buys a further out-of-the-money put.
bull market: A prolonged upward trend in stock prices.
bull trap: A situation in which a market that appears to be rising unexpectedly goes into decline. Investors who predict that the market will continue to rise invest accordingly and are then trapped when the bull market fails.
buyers: Total number of institutional owners who increased their positions and the aggregate number of shares added to their positions.
buy on margin: The practice of buying stock with money borrowed from a broker. The loan is secured by the security, which is held in a margin account. The broker charges interest on the loan.
CAC 40: An index that tracks the performance of the Paris Stock Exchange (Bourse de Paris).
call: An option that grants the right to buy a given stock at a given price (the strike price) during a given period of time. The call holder profits if the market price rises higher than the strike price.
callable bond: A bond that can be retired, or "called in," by the issuer before the bond matures. The power to call a bond gives companies a way to respond to falling interest rates. Callable bonds often pay higher rates than noncallable bonds.
called away: Term used when the seller of a covered call or put option is obligated to surrender the underlying stock to the option buyer. The price of the surrender is the strike price of the option sold. The term is also used when a bond is redeemed, or called, before maturity.
candlestick chart: Chart that displays the high, low, opening, and closing prices of a security for each period. The high and low are shown by a vertical line, and the open and close are shown by a rectangle (a black rectangle if the price fell, white if it went up).
capacity utilization: The Federal Reserve's measure of manufacturing growth, which is used to gauge inflationary pressure. The capacity utilization rate is provided as part of the government's Industrial Production Index, a fixed-weight measure of the physical output of the nation's factories, mines, and utilities.
capital expenditure: Purchase or upgrade of physical assets that generally have a long useful life.
capital gain: Profit on the sale of stocks, bonds, mutual funds, or capital assets. Capital gains usually receive favorable tax treatment compared to other forms of income.
capital gains distribution: Profits from a mutual fund's sale of investments. The profits are passed along to shareholders.
capital loss: Loss from the sale of stocks, bonds, mutual funds, or capital assets. For tax purposes, capital losses may be used to offset capital gains or limited amounts of other income.
capital spending: See capital expenditure.
cash and equivalents: An asset category on a company's balance sheet that includes bank balances, currency and coins, and assets such as certificates of deposit or bonds that can quickly be converted into cash.
cash at beginning of period: The amount of cash and cash equivalents at the beginning of a fiscal period.
cash transaction register: The money market fund associated with an investment account and used to store proceeds from investment sales until you buy other investments. In MSN Money, the Cash Transactions register is a part of your investment account unless you choose not to track the cash in your account.
casualty: Damage to or destruction of property resulting from a sudden and unexpected event.
category average return: Average returns of all mutual funds in a particular category, useful for comparing one fund to comparable funds.
Certificate of Deposit (CD): Bank, credit union, or savings-and-loan instruments that enable you to lock in an interest rate for a specific period of time.
chain store sales: A private survey that tracks a representative sample of retailers to measure their sales on a weekly basis.
change: The difference between the preceding day's closing price for a security and the most recent price. Note: Prices are usually delayed by at least 20 minutes.
Chicago Board Options Exchange (CBOE): A financial market where traders buy and sell standardized option contracts, including stock, currency, and index options.
churning: An unethical practice used by some brokers in which they repeatedly buy and sell in their clients' accounts for the sole purpose of generating commissions.
Class B shares: (Mutual funds) Mutual fund shares that usually have a back-end load, generally one based on the length of time that the shares have been held.
class of options: Option contracts of the same type (put or call) and style (American or European) that cover the same underlying security.
close: The final trading price for a security or fund at the end of the most recent trading day.
closed-end fund: A mutual fund that issues a fixed number of total shares. Shares are traded from investor to investor on an exchange instead of being sold by the issuing company, and the share price changes based on supply and demand.
closed to new investors: A fund that is not issuing new shares, usually to avoid becoming too large.
commission: A fee that a broker charges a client for buying or selling a security. The commission is usually based on the number of shares or the total value of the transaction.
commodity: A generic item - such as copper, oil, wheat, or cocoa - that can be bought and sold by investors on a commodity exchange.
Commodity Futures Trading Commission (CFTC): The regulatory body that oversees the markets where commodity futures and options are traded.
common stock: The most widespread form of stock ownership. Common stock holders can typically vote for a company's board of directors and can buy or sell stock shares, but they are last in line (behind creditors, bond holders, and preferred stock holders) for dividends, asset distributions, and other benefits.
common stock equity: A company's net worth - that is, the difference between assets and liabilities on the company's balance sheet.
company name: The name of the organization that issued a security.
composition: A breakdown of a mutual fund's assets by investment class, such as stocks, bonds, cash, or other. The "other" category includes preferred stocks, as well as convertible bonds and convertible preferreds.
concentration risk: The risk you take when you put all of your money into one kind of investment, such as a stock, your home, or your business.
conglomerate: A corporation that consists of many companies that are engaged in a variety of businesses.
consensus EPS trend: A graph that shows changes over time in analysts' consensus estimates for a company's earnings per share (EPS).
consensus estimate: A company’s average Earnings Per Share (EPS) estimate according to top analysts.
consolidated balance sheet: A balance sheet that combines the assets and liabilities of the various subsidiaries of a firm into a single snapshot. Most balance sheets for large firms are consolidated.
constant ratio investing: An investing strategy in which investors adjust their portfolios on a regular basis to keep the ratio of stocks and bonds constant.
construction spending: A government report that breaks down spending on new construction by residential, nonresidential, and public construction.
consumer confidence: A government survey that measures consumer optimism or pessimism about current and future economic conditions.
Consumer Credit Report: A government report issued by the Federal Reserve that measures consumer debt in three categories: auto loans, revolving loans, and credit card debt.
consumer durables sector: A category that includes auto, housewares, recreation/luxury, and multi-industry companies.
consumer price index: A measure of changes in the price of products typically bought by consumers, used as one indicator of inflation. Also known as the cost-of-living index.
consumer sentiment index: An index that combines the current and expected levels of consumer confidence. It is released two times a month, first as a preliminary reading and then as a final reading.
consumer staples sector: A category that includes food, beverages, tobacco, and household goods companies.
contingent deferred sales load: An "exit fee" that some mutual funds charge to customers who sell their shares within five or six years of making their investment. Such funds may call themselves no-load funds even though investors have to pay a load if they sell early.
contract size of an equity option: The amount of the underlying asset that is covered by an options contract. The standard is 100 shares for one option contract unless adjusted for a special event, such as a stock split or a stock dividend.
contrarian: An investor who does the opposite of what most other investors are doing at any given time, such as investing in out-of-favor market sectors or selling stocks that analysts encourage investors to buy.
convertible security: A security that can be converted into some other kind of security. Typically this means a species of bond that can be converted into common stock at a given price at the option of the holder, who would make the conversion if the common shares rise above this price.
cop/lease sector: A category that involves certificates of participation and leases.
corporate bonds: Bonds issued by private corporations rather than by governments.
correction: A sharp, short drop in stock prices, after which the market resumes an upward climb.
correlation: A measure of how closely two variables move together through time. For example, all utility stocks tend to have a high degree of correlation because the same forces influence their share prices.
cost basis: The amount invested in a given security or portfolio, calculated by multiplying the share price by the number of shares, plus any commission. This figure is used to determine your investment return and to calculate taxes when you sell the investment.
cost of sales: The cost of producing a firm's products, including the costs of materials, labor, and overhead, but excluding costs such as depreciation, taxes, and interest.
Council of Economic Advisors (CEA): A three-person panel appointed by the president of the United States to advise on economic issues.
coverage ratio: The ratio of earnings to some given expense, such as interest or dividends paid. For example, if a company is earning less than its dividend payout, its coverage ratio is less than one.
Coverdell Education Savings Account (Education IRA): A type of college savings plan. Contributions aren't tax deductible, but withdrawals made to pay for qualified education expenses are tax-free.
covered call: A form of option writing or selling in which the seller owns a quantity of the underlying security equivalent to the number of shares represented by the option contracts sold. A covered call position is less risky than an outright long stock position and is equivalent in its profit/loss profile to selling naked puts.
CPI-Indexed Treasury Notes (TIPS): A series of inflation-adjusted 10-year notes first issued by the U.S. Treasury in 1997. The 10-year notes help protect investors from inflation by linking the principal payment to the consumer price index (CPI), a commonly used measure of inflation. Each year, the principal increases by the percentage that the CPI increased for the prior year. The interest rate is constant over 10 years, but the interest payment increases as the principal does. Investors realize the increase in principal when the note matures.
credit risk: The chance that a borrower won't repay what is owed.
credit spread: The spread between Treasury securities and non-Treasury securities that are identical in all respects except quality rating. Credit spread also refers to an investment strategy in which the investor receives a net credit amount when the spread is initiated. For example, in a bullish credit spread, an investor sells a high-premium, out-of-the-money put and buys a low-premium, further out-of-the-money put on the same underlying security.
currency: The units in which prices are quoted, such as U.S. dollars, British pounds, or Japanese yen.
currency hedging: A tool used to protect against the risks posed by worldwide currency fluctuations and to lock in an exchange rate by taking out a foreign futures contract (a hedge).
currency risk: The risk to investments, such as foreign stocks or U.S.-based mutual fund companies that invest in overseas companies, from fluctuating worldwide exchange rates.
current dividend yield: The dividend yield for a security is reported as the amount of its current per-share dividend, divided by the share price.
current (last) price: The current trading price of one unit of a particular security. Note: Prices are usually delayed by at least 20 minutes.
current assets: Cash, accounts receivable, inventory, and other assets that are likely to be converted into cash within a year.
current liabilities: Debts or other obligations coming due within a year.
current offer: The price at which the owner of a security offers to sell it.
current ratio: Current assets divided by current liabilities from the most recent quarter. The current ratio is a measure of a firm's immediate financial health and its ability to meet current obligations.
current yield: The return on an investment (from dividends, interest payments, or capital gains distributions) as a percentage of the current price of the investment.
custodial account: An account set up with a bank or securities company in a child's or other dependent's name.
cyclical stock: A stock whose price tends to rise when the economy is entering an upswing and fall as the economy begins to decline.
daily volume (13-week average): The average number of shares of a company's stock that have been traded daily over the previous 13-week period. Daily volume is an indicator of a security's liquidity.
DAX: A benchmark index that tracks 30 blue chip stocks traded on the Frankfurt Stock Exchange in Germany.
day's high: The highest price of a security during the current day's trading.
day's low: The lowest price of a security during the current day's trading.
day trader: Someone who makes short-term investments in securities, commonly buying and selling a security on the same day.
debenture: A bond issued without specific security. Debentures usually pay higher interest rates because, in the event of a crisis, holders of these securities take a back seat to other bondholders.
debit spread: A strategy in which an investor buys a call (put) and sells a further out-of-the-money call (put) to create a spread with an initial debit in the investor's account.
debt/equity ratio: The long-term debt reported in the most recent quarter, divided by the common stock equity of the most recent quarter.
debt ratio: Total liabilities divided by total assets. The debt ratio is an indicator of the extent to which a business is leveraged.
debt securities: A security that represents borrowed funds, such as bonds.
decrease/increase in other current liabilities: The change over time of the "other current liabilities," a category that includes all current liabilities that are not included in short-term debt.
decrease/increase in payables: The change over time in accounts payable.
deferred income taxes: Future taxes due on current income, based on the difference between income calculated for tax accounting and for regular accounting as presented to investors.
deferred sales charge: A fee charged when you sell mutual fund shares, instead of when you buy them. Also known as a back-end load.
delta: A measure of how movements in a stock's price affect the price of an option based on the stock. A delta of .25, for example, means that when a stock rises by $1, the option price rises by 25 cents. Call options have a positive delta, and puts have a negative delta.
demand sector: A category that includes short-term municipal securities.
depreciation and amortization: A balance sheet item that reduces the value of assets because of wear, age, or obsolescence, or that amortizes a cost over a period of years, such as the expenses for leased property, intangibles, goodwill, and depletion.
derivative instrument: Investments that are derived from something else. An options is a derivative, for instance, because there is an underlying stock, commodity, or other asset on which its price is based.
difference in earnings: The difference in Earnings Per Share (EPS) between what analysts predicted for a company and what the company actually reported.
dilution: A "watering down" in the ownership stake represented by a single share of stock, usually as a result of the sale of additional shares.
direct debit: A withdrawal transaction, such as an annual fee, that is subtracted directly from your account with your permission.
direct deposit: A deposit that is made directly to your account by someone else, such as your employer or a brokerage company.
direct purchase plan: Investment plan that permits any investor, even one who does not already own a company's stock, to buy stock directly from the company itself without paying a broker's sales commission.
distribution: Payout of funds from a retirement plan, such as an IRA or 401(k). Also, payout of cash or property from a corporation to shareholders (including dividends, stock redemptions, and other corporate transactions).
diversification: An investing strategy that attempts to minimize risk by investing in different types of investments.
Diversified emerging markets: A Morningstar category for international equity funds that have at least 50 percent of their stock holdings invested in emerging markets and 40 percent of equity holdings in foreign stocks.
Diversified Pacific Asia: A Morningstar category for international equity funds that have at least 65 percent of their stock holdings in Pacific countries/regions and at least 10 percent more invested in Japan.
dividend: A distribution of corporate earnings to shareholders, usually on a quarterly basis.
dividend coverage: A comparison of earnings and dividend payout to see whether a company has enough money coming in to cover what it pays to shareholders.
dividend growth: The compound annual growth rate of dividends per share.
dividends paid per share: The cash payment per share made by a company to its shareholders.
dividend payout: See payout ratio.
dividend rate: The periodic amount of the dividend per share.
Dividend Reinvestment Plan (DRIP): A system in which dividends on a stock are automatically reinvested in additional shares of stock, usually without a fee and sometimes even at a discount.
dividend yield: A stock's dividend expressed as a percentage of the share price. A high dividend yield may indicate that a stock is undervalued or that dividends may be cut.
dividend yield (5-year average): The sum of the past five fiscal year-end dividend yields divided by 5.
dollar: The name of a unit of currency used by several countries, including the United States, Canada, Australia, New Zealand, and Singapore.
dollar cost averaging: An investment technique in which you invest the same amount of money in stocks each month, quarter, or year. With this technique, you automatically purchase more shares when the price is lower and fewer shares when the price is higher.
domestic hybrid: A Morningstar category for domestic equity funds that have stock holdings of greater than 20 percent but less than 70 percent of their total portfolio.
domestic stock fund: A mutual fund that invests mainly in stocks of U.S. companies, including companies that do business overseas.
double bottom: For technicians, this is when a stock falls, bounces back, falls again to the same level, and then rebounds once more, creating a graph that looks somewhat like the letter W. The twice-touched low is considered a support level.
double top: For technicians, this is when a stock rises to a given high level twice, with a drop in between, creating a graph that looks somewhat like the letter M. The high level may indicate a ceiling for the stock's price.
Dow industrials: See Dow Jones Industrial Average.
Dow Jones Industrial Average: An index that reflects the prices of 30 U.S. stocks. It is one of the most widely watched indicators of U.S. stock market movements.
Dow Jones membership: Inclusion in the Dow Jones Industrial Average.
Dow Jones Transportation Average: An index that reflects the prices of 20 stocks in the transportation sector of the economy. These include trucking companies, railroads, airlines, and package delivery companies such as FedEx and United Parcel Service.
Dow Jones Utilities Average: An index that reflects the prices of 15 electric and gas utility companies.
Dow Jones Wilshire 5000 Composite Index: See Wilshire 5000 Stock Index
DRIP: See Dividend Reinvestment Plan (DRIP).
durable goods order: A government index that measures the dollar volume of orders, shipments, and unfilled orders of durable goods (defined as goods whose intended life span is three years or more). Orders are considered a leading indicator of manufacturing activity.
earnings: A company's net income from operations during the most recent four quarters. Earnings can be reported as actual earnings, operating earnings (from ongoing businesses only), or pro forma earnings (which adjust for changes in the company's business activities, such as mergers or closed businesses).
earnings date: The date on which a company's earnings will next be reported.
earnings estimates: Analysts' estimates for earnings per share.
earnings growth: The percent change in earnings for a company over an actual or a projected time period.
earnings multiple: See price/earnings ratio.
earnings per share (EPS): A company's net income divided by common shares outstanding. EPS is a measure used as the basis for many calculations that are used to assess whether a stock is overpriced or underpriced.
earnings surprise: The difference between what analysts expected a company to earn and what was actually earned, sometimes expressed as a percentage.
EBIT: Earnings before interest and taxes. This is the figure for operating income after depreciation, but it doesn't allow for debt service or what is owed to the government for taxes.
EBITDA: Earnings before interest, taxes, depreciation, and amortization.
Edgar: The Electronic Data Gathering, Analysis, and Retrieval system used by the Securities and Exchange Commission to electronically receive and disseminate corporate filings.
Education sector: A sector of the economy that includes colleges and universities, independent and unified school districts, student loans, and tuition companies.
effect of exchange rate changes: Includes any gains or losses from the translation from foreign currency to U.S. dollars.
Elliott wave theory: Ralph Nelson Elliot's theory that movements in the stock market can be predicted by identifying repetitive patterns of waves by using price charts. The underlying premise of the Elliott Wave Theory is that of building up and tearing down. He concluded that there are five price-change waves in the direction of the main trend followed by three corrective waves, often referred to as a "5-3" move.
emerging-markets bond: A Morningstar category for taxable bond funds that invest at least 75 percent of their assets in emerging-markets bonds based on holdings for the last three years. These bonds can be of any duration or maturity.
emerging markets fund: An international mutual fund that invests in developing countries/regions, such as those in Southeast Asia and Eastern Europe.
employees: The number of employees as indicated on a company's latest 10-K or 10-Q.
employee stock option grant: A form of compensation in which an employer gives an employee the right to buy a specific amount of the company’s stock at a specific price (the strike price).
employee stock purchase plan (ESPP): A plan that enables employees to purchase company stock at a discount to the fair market value.
employment report: A government survey that measures unemployment levels and nonfarm payrolls. It is the most timely and broad indicator of economic activity that is released each month.
Energy sector: A category that includes oil and natural-gas companies.
entry level: Jargon term used by analysts to specify the recommended price at which to purchase a security.
EPS: See earnings per share (EPS).
EPS (latest 12 months): The sum of the last four quarters of earnings per share.
EPS (1-year growth rate): The year-to-date percent change in earnings per share versus the same period a year ago.
EPS (5-year growth rate): The compound annual growth rate of earnings per share over 5 years.
EPS estimate: The average prediction of a company's earnings per share (EPS) for a quarter or year, made by the analysts that cover the company.
EPS growth next year: The estimated growth of earnings per share for the next year, calculated by using the following formula: 1 - (estimate for the next year/estimate for current year).
EPS growth quarter vs. quarter: The percent change between the current quarter's earnings per share (EPS) versus the same quarter one year ago.
EPS growth year vs. year: The percent change between annual earnings per share (EPS) versus EPS one year ago.
EPS growth YTD vs. YTD: The percent change between the current year-to-date earnings per share (EPS) versus the year-to-date EPS figure of one year ago.
EPS percent change: The percent difference between the latest fiscal year earnings per share (EPS) from total operations and the EPS from total operations one fiscal year ago.
equity: The amount that an asset or business is worth, minus associated liabilities it. For example, your home equity is the home's market value minus any mortgages, liens, and home equity loans.
equity securities: A security that represents an ownership stake rather than a debt obligation. Equity securities include common and preferred stock, but not bonds.
escudo: The national currency of Portugal.
estate: Everything you own, including your house, bank accounts, investment portfolios, life insurance, personal property, and retirement plans.
estate planning: An overall strategy that coordinates the disposition of everything you own, including your house, bank accounts, investment portfolios, life insurance, and retirement plans.
ETF: Exchange-Traded Funds (ETFs) are securities that hold a basket of stocks, bonds, or other investments, much like a mutual fund. Unlike funds, they trade throughout the day as stocks do. Most ETFs track an index, such as the S&P 500 or the NASDAQ 100.
euro: The currency of the member countries in the European Economic and Monetary Union, issued by the European Central Bank.
European-style option: An option contract that can be exercised only during a specified time period just prior to its expiration.
Europe stock fund: A Morningstar category for international equity funds that have at least 75 percent of their stock holdings in Europe.
Eurotop 100: A benchmark tracking the performance of the European stock market. Officially known as the EUROTOP 100 Index (EUR), it comprises 100 of the most actively traded and highly capitalized stocks in Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, and the United Kingdom. It is denominated in U.S. dollars.
even lots: Transactions in which stocks are purchased or sold in multiples of 100 shares. Also referred to as round lots. Brokers may charge a higher commission on odd-lot orders.
exchange: An organization that provides a marketplace for the trading of a listed security. There are many exchanges around the world, but in the United States, the New York Stock Exchange and the Nasdaq are among the biggest.
ex-dividend: Term indicating that a company recently announced a dividend for its shareholders but hasn't yet paid the dividend. If a stock is sold during the ex-dividend period, the dividend belongs to the seller not to the buyer.
exemption: A flat dollar amount that the Internal Revenue Service lets you subtract from income before taxes are calculated. You claim one exemption each for yourself, your spouse, and your dependents.
exercise: To buy or sell stock at a specific price, using the right granted by an option.
exercise price: See strike price.
existing home sales: A report issued monthly by the National Association of Realtors that estimates sales of existing homes, as opposed to new homes. It is a closely watched indicator of activity in the housing sector.
exit level: Jargon term used by analysts to specify the recommended price at which to sell a security.
expectational analysis: An approach to investment analysis that takes into account and measures the beliefs of investors and speculators relative to the prevailing technical trends and fundamental facts. The goal is to try to gauge the future direction of stock prices.
expected risk/return: The relationship between a stock's potential risk and its potential return. Risk is estimated by the expected volatility of the stock's price - that is, how much it goes up and down.
expense projections (3-, 5-, and 10-year): Figures from a mutual fund's prospectus that show how much an investor would expect to pay in expenses - sales charges and fees - over the next 3, 5, and 10 years, assuming a $1,000 investment that grows by 5 percent each year with redemption at the end of each time period.
expense ratio: The percentage of assets consumed by management fees, 12b-1 fees, and all other asset-based costs that are incurred by a mutual fund. (Brokerage costs and sales charges are not included.)
expiration date: The date that an option expires. This is the last day that the option holder can choose to purchase shares at the strike price (or sell shares at the strike price, if the option is a put). For stock options, this is the Saturday immediately following the third Friday of the expiration month; however, brokerage firms may set an earlier deadline for notification of an option buyer's intention to exercise. If Friday is a holiday, the last trading day will be the preceding Thursday.
export: To save data in a different file format so that it can be used by another program, such as a tax preparation or spreadsheet program.
extraordinary (gains) losses: Includes income (or losses) from events and transactions that are extraordinary and not expected to occur again, such as the expense of settling a lawsuit.
extraordinary income: Income from events and transactions that are extraordinary and not expected to occur again, such as settling an expensive lawsuit.
face value: The amount indicated on an instrument, such as a bond or check. The face value of a bond is its redemption value at maturity.
factory orders: A government report that combines the earlier announced durable goods report and nondurable goods orders, such as food and tobacco products.
family name: The name of the family of funds to which a mutual fund belongs. Fidelity, Vanguard, Janus, and many other firms offer fund families, typically including stock, bond, and money market funds.
family of funds: A group of mutual funds that is offered by a single company, such as Fidelity or Vanguard.
Fannie Mae: The popular name for the Federal National Mortgage Association, a company listed on the New York Stock Exchange that is a key player in the nation's housing business. Founded by the federal government, Fannie Mae buys mortgages from lenders, thus replenishing their cash to make more loans. It packages the loans into securities for sale to investors.
Federal Open Market Committee (FOMC): A committee of the Federal Reserve ("The Fed") that makes national monetary policy decisions, including whether to raise interest rates and whether to tighten or loosen the money supply.
Federal Reserve System: The independent central bank of the United States. The system is governed by the Federal Reserve Board ("the Fed"). The Fed can make the U.S. money supply expand or contract, and help the economy do likewise, by buying or selling Treasury securities and altering reserve requirements for U.S. banks.
Fibonacci studies: A series of technical analysis studies that use charts and numeric relationships to pinpoint high and low price levels for a security. The four popular Fibonacci studies are arcs, fans, retracements, and time zones.
fiduciary: A person who holds a position of confidence, such as a trustee, guardian, or executor.
FIFO: First-in, first-out. A method for tracking assets that are acquired over a period of time, such as stocks or inventory. It assumes that you sell assets in the same order you bought them.
financial adviser: Someone who provides professional advice about your investment portfolio, including stocks, bonds, mutual funds, and other investments that fit your goals and risk level.
financial planner: Someone who provides professional help with managing all of your assets, your investment portfolio, real estate, insurance, and even collectibles and college-savings accounts. Financial planners commonly formulate trusts and provide tax advice.
financials sector: A category of U.S. companies that includes banks, brokerage firms, thrifts, insurance, and real estate companies.
financing activities: The sale or purchase of a company's own stock or bonds, payment of dividends, and any other finance charges incurred in the company's operations.
fiscal year (FY): The 12-month accounting period of a business. It may be different from the calendar year.
fixed asset: An asset that can't be instantly liquidated, such as a building, factory, or piece of equipment.
fixed cost: A cost that stays the same regardless of manufacturing or sales volume. The cost of owning a warehouse, for example, might be the same whether the warehouse is full or empty.
float (%): Common shares outstanding, minus insiders, divided by common shares outstanding.
foreclosure: The process of satisfying claims against someone who has defaulted on a loan, such as a mortgage. It usually involves the forced sale of the property to satisfy payment of the loan.
foreign exchange rate: The price at which one currency trades for another.
foreign exchange risk: The risk that a long or short position in a foreign security may be adversely affected by a change in the value of the foreign currency.
foreign funds: See international funds.
foreign stock fund: A Morningstar category for international equity funds that focus on foreign stocks and have no more than 10 percent of their equity portfolio invested in the United States.
Form 10-K: A report filed annually by public companies with the Securities and Exchange Commission. The report provides detailed information about the company's operations and finances and is audited by the company's outside accountants.
Form 10-Q: A quarterly report filed with the Securities and Exchange Commission by public companies, similar to the annual Form 10-K, but less comprehensive and (usually) not audited.
Form 13-D: A form that must be filed with the Securities and Exchange Commission whenever an investor acquires 5 percent of any public company.
Form 4: A report that is filed with the Securities and Exchange Commission by directors, officers, or owners of more than 10 percent of a public company when they make purchases and sales of certain equity securities.
Form 8-K: A form that is filed with the Securities and Exchange Commission by public companies to disclose a material event that might affect its financial situation. An 8-K might be filed when the chief executive resigns or some other unusual matter arises that could affect the price of the company's stock.
forward P/E: Forward year price-earnings ratio (forward P/E) is the analysts' consensus estimate for earnings per share in the following 12 months divided by current price.
franc: A unit of currency; several countries call their currency the franc, including Switzerland. The franc was also the name of the national currencies of Belgium, France, and Luxembourg until early 2002, when these countries adopted the common European currency, the euro (introduced in 1999).
free cash flow: Conventional cash flow from operations, reduced by capital expenditures and cash dividends paid, based on the premise that these cash outlays are optional.
front load: A fee levied by a mutual fund company on new investments in the company's funds.
FTSE 100: A benchmark index that tracks the performance of the London Stock Exchange and comprising the 100 largest companies traded on the exchange. The full name is Financial Times Stock Exchange 100, but it is commonly called the “Footsie” 100.
fully diluted earnings per share: Earnings per share (EPS) that takes account of all the common stock that would exist if convertible securities and warrants and stocks options were traded in for common shares.
fully diluted EPS from continuing operations: Earnings from continuing operations divided by the fully diluted shares outstanding (including effects of any convertible debentures, warrants, and so on). This excludes income from discontinued operations and extraordinary gains and losses.
fully diluted EPS from discontinued operations: Earnings from discontinued operations (during the reporting period) divided by the fully diluted shares outstanding (given the dilution effects of any convertible debentures, warrants, and so on). This excludes income from extraordinary gains/losses.
fully diluted EPS from total operations: Earnings for the most recent fiscal year from total operations (continuing operations plus discontinued operations) divided by the fully diluted shares outstanding (given the dilution effects of any convertible debentures, warrants, and so on). This excludes income from extraordinary gains and losses.
fundamental analysis: Predicting future stock performance by analyzing the factors that affect a company's profitability and earnings growth, such as the economy, the company's earnings history, balance sheet, management, product line, and others. Contrast with technical analysis.
fundamentals: Characteristics of a specific business that value investors find important, such as profitability, balance sheet strength, management quality, and industry prospects.
fund inception date: The date a mutual fund initially became available.
fund manager: The person responsible for investing the monies of a mutual fund. Some funds are run by one person, others by committee.
fund transfer: An online transaction that moves money between accounts. When you enter the transaction in one account, it is automatically recorded in the other account.
future occurrences: Scheduled recurring transactions that will occur in the future. Future occurrences do not include the next transaction due.
futures: Contracts to make or accept delivery of a given commodity on a given date at a prearranged price. It is rare that anyone actually delivers (or accepts) the commodity implied by a futures contract; investors simply settle with money.
futures options: Contracts that give the holder the right to buy or sell a specified futures contract at an agreed-upon price before a specific expiration date.
FY: See fiscal year (FY).
gain/loss: The profit or loss on a given security or portfolio expressed in dollars. It is calculated as market value minus cost basis.
gain/loss %: The profit or loss on a given security or portfolio expressed as a percentage. It is calculated as market value minus cost basis, divided by cost basis.
general obligation sector: A category that includes general obligation bonds, which are repaid from general revenue and borrowings rather than from the revenue of a specific project or facility.
giant cap: See large cap.
global funds: See international funds.
good-till-canceled order: A limit order that stays on the books of the exchange-trading floor until executed or until canceled by the investor.
goodwill: An intangible business asset that is listed on a company's balance sheet, based on the amount the value of a business exceeds its individual assets. Goodwill is the result of a good business reputation and a recognizable name, among other things.
government income funds: A mutual fund that invests in government securities, such as U.S. Treasury bonds, Ginnie Maes and other types of mortgage-backed securities, and short-term government notes.
gross domestic product (GDP): For the United States, the total value of goods and services produced within the United States, including U.S. production by foreign companies.
gross margin: A company's gross operating profit divided by sales, reported as a percentage.
gross national product (GNP): For the United States, the dollar value of all goods and services produced in the United States, including goods and services produced in other countries by U.S. companies.
gross operating profit: A company's operating revenue minus the cost of goods sold.
gross pay: Wages or salary before taxes and other deductions.
gross profit: Revenue minus cost of goods sold.
gross sales: A company's total sales before returns, discounts, and shipping expenses.
G-8 (group of eight): An organization of eight of the world's major industrialized countries that meets to discuss international economic issues. Includes the United States, Canada, the United Kingdom, France, Italy, Germany, Japan, and Russia.
growth and income funds: Mutual funds that invest in both equity and debt securities, mainly for the purpose of producing current income, such as dividends and interest payments.
growth persistence: A measure of how consistently a mutual fund has outperformed its equity or fixed-income peers. Value Line's calculation of growth persistence rewards a fund only for its consistency of outperformance, not for its degree of outperformance.
growth rate: The rate at which a company's stock price, earnings, revenue, and/or sales have changed or are expected to change in the future.
growth stock: The stock of a company whose earnings have consistently grown faster than the average growth of other companies. Growth stocks generally pay little or no dividends.
Guaranteed Investment Contract (GIC): A contract, issued by an insurance company and sold only to pension plans and certain other types of retirement funds, that pays a fixed interest rate for a fixed term, typically one to five years.
Hang Seng: A benchmark index that tracks the performance of the Hong Kong Stock Exchange.
head and shoulders: For technicians, a chart pattern (for a stock or index, for example) that indicates a peak, a decline, a second even higher peak, a decline, a rebound to the level of the first peak, and yet another decline. A head and shoulders pattern may indicate that that the stock is headed downward.
health sector: A category of companies that includes pharmaceutical, health-care services, medical devices, and drug wholesale companies.
hedge fund: An investment pool, generally open only to investors of high net worth, that takes high risks to seek high returns by using tools such as short selling, leverage, options, and futures.
hedging: A method used to minimize investment risk. For example, a stockholder might buy a put option or sell a call option on the underlying stock. If the stock goes down, the option will rise in value, providing a "hedge" against losses.
high: The highest price reached by a stock, mutual fund, or other security in a given period of time, such as a day, month, or year.
high estimate: The highest of the earnings estimates on a stock by any analyst.
high-yield bond fund: A Morningstar category for taxable bond funds that invest at least 70 percent of their portfolio in high-yield corporate bonds. Also known as junk bond funds.
Hong Kong Options Index: A benchmark index comprised of 30 of the most highly capitalized stocks in the Stock Exchange of Hong Kong Ltd., used to track performance of the Hong Kong stock market. It is denominated in U.S. dollars. Also called HKO.
housing sector: A category that includes single and multifamily housing companies.
housing starts and building permits: A measure of the number of residential units on which construction is begun each month. A housing start is defined as the beginning of excavation of the foundation for the building.
index effect: For a price-weighted index, the index effect is the sum of all stock prices for the particular index, divided by the particular stock price. For example, the index effect for a stock that is a member of the Dow Jones Industrial Average Index is calculated by adding all the latest prices for all the stocks in the Dow Jones Industrial Average Index, and then dividing the sum by the latest price of the particular stock.
index percent: For a price-weighted index, the index percent is the price change of the stock divided by the index’s divisor.
incentive stock option (ISO): A benefit that some companies offer their employees. An ISO gives employees the option to purchase company stock at a fixed price. If the stock rises in value, the employee profits by the difference between the price of the option (sometimes called the strike price) and the price when the option is exercised and sold.
inception date: The date a mutual fund was started or first offered to the public.
income (1-year growth rate): The year-to-date percent change in net income versus the same period one year ago.
income (5-year growth): The compound annual growth rate of income over a five-year period.
income (last 12 months): The sum of the last four actual quarters of net income from total operations. This calculation is the same for income from continuing operations.
income from continuing operations: Income from operations that remain ongoing but not from operations that have been closed or sold.
income from cumulative effect of accounting change: Gains or losses from changes in accounting methods, such as changes to the way depreciation or inventory values are calculated.
income from tax loss carryforward: Income from the tax benefit of a net loss from operations in a previous year that is carried forward to reduce net income in the current year.
income from total operations: Income from all operations, including those that have been discontinued or sold off.
income per employee: Profits divided by number of workers. It is an indication of how effectively a company turns the effort of its workforce into earnings for shareholders.
income statement: A financial statement that shows a company's revenue, expenses, and profit during a given accounting period.
income stock: A stock purchased primarily for income, paid out in the form of dividends.
income tax: An annual tax on an individual's or corporation's income that is levied by the federal government and by many state and city governments.
increase/decrease in inventories: Change in inventories over time.
increase/decrease in other current assets: The increase or decrease between periods of the current assets that are not assigned to accounts receivable and inventories. This category typically includes prepayments, deferred charges, and amounts (other than trade accounts) due from parents and subsidiaries.
increase/decrease in receivables: Change over time of amounts owed to the company.
index: A composite of securities that serves as an indicator for the overall market or some segment of it. The best known indexes are the Dow Jones Industrial Average and Standard & Poor's 500, both of which reflect the performance of large U.S. companies.
index fund: A mutual fund that seeks to match the performance of some market index, such as the Standard & Poor's 500.
index option: An option on a stock index, usually the Standard & Poor's 500, that provides a way to bet on the direction of the market.
Individual Retirement Arrangement (IRA): A retirement plan to which most individuals with employment income can contribute. Traditional IRA contributions are generally tax deductible, and gains in IRAs are not taxed until they are withdrawn at retirement. Roth IRA contributions are not deductible, but withdrawals after retirement are not taxable.
industrial cyclicals sector: A category that includes aerospace, construction, machinery, machine tools, chemicals, metals, paper, and building-materials companies.
industrial development bond fund: A municipal bond secured by the creditworthiness of a private business rather than a government entity. These bonds are issued by local governments to attract new businesses or to help local businesses expand.
industrial production: A government report that provides a fixed-weight measure of the physical output of the nation's factories, mines, and utilities and a measure of capacity utilization.
industrial sector: A category that includes economic and industrial development, pollution control, resource recovery, conventions, expositions, stadiums, and hotels.
industry: A category that indicates the field in which a company operates. For example, Microsoft is in the computer software industry.
industry full name: The full name of the industry in which a company does business.
inflation risk: The risk that money will not be worth as much in the future because of cost increases in the things people buy, such as housing, clothing, and medical care.
initial jobless claims: A government index that tracks the number of filings for state unemployment benefits. Increases or decreases in claims indicate possible slowing or accelerating job growth. A report on the index is normally issued each Thursday.
initial public offering (IPO): The first publicly available stock sold by a company.
insider trading: Buying and selling by a company's own officers and directors for their personal accounts. These trades are legal as long as they are based on publicly available information and follow rules established by the Securities and Exchange Commission. Insider trades are illegal if they are based on nonpublic information, even if the person trading is not affiliated with the company.
institutional fund: A mutual fund designed for purchase by institutional investors, such as pension funds or endowments, rather than by individual investors.
institutional investor: Someone who manages investments for large organizations that typically purchase very large lots of stock. Mutual fund managers, pension fund managers, and insurance companies are institutional investors.
institutional ownership: The share of a company's stock that is owned by banks, mutual funds, pension funds, insurance companies, and other institutions that usually trade in very large lots.
intangibles: Items such as goodwill or patents that have value but are neither physical nor financial in nature.
interest coverage: The latest 12 months' earnings before interest and taxes (EBIT) divided by the latest 12 months' interest expense (all taken from the income statement). Interest coverage is a measure of a company's ability to handle debt service.
interest expense: The cost of interest on outstanding debt. It includes fixed interest expenses net of capitalized interest, as well as dividends on preferred stock of unconsolidated subsidiaries.
interest rate risk: Investment risk associated with the possibility that interest rates will change the value of an investment. Interest rates have the greatest effect on bond values.
interest-sensitive stock: A stock whose price is especially affected by rising or falling interest rates, such as the stock of automakers, home builders, mortgage lenders, and financial institutions.
intermediate bond: Bonds that mature in 7 to 15 years. Some people consider even 5-year bonds to be intermediates.
intermediate-term bond fund: A Morningstar category for taxable bond funds that invest at least 70 percent of their assets in a mixture of corporate and government bonds, with a primary focus on intermediate-term bonds.
intermediate-term government fund: A Morningstar category for taxable bond funds that invest at least 80 percent of their bond portfolio in intermediate-term government bonds.
international bond fund: A Morningstar category for taxable bond funds that invest at least 40 percent of their assets in bonds issued by foreign governments or corporations.
international funds: Mutual funds that invest in stocks and/or bonds of companies headquartered outside the United States.
international hybrid: A Morningstar category for international equity funds that invest at least 20 percent but less than 70 percent of their portfolio in stocks, with at least 40 percent of all stock and bond investments in foreign countries.
international trade report: A government report that measures the international trade balance on a monthly basis. This report is watched for overall trends in the trade balance and trends in both exports and imports of goods and services.
in the money: An option with intrinsic value. A call is in the money when the market price of the underlying security is greater than the option strike price. A put is in the money when the market price of the underlying security is less than the option strike price.
intrinsic value: The difference between an in-the-money option strike price and the current market price of the underlying security.
inventories: Merchandise bought for resale, or supplies and raw materials purchased for use in revenue-producing operations.
inventory turnover: The cost of sales over the latest 12 months divided by the average inventory from the same period. The rate is an indicator of how well the company's products are succeeding in the marketplace.
investing activities: Cash derived from (or used in) securities investments and asset purchases and sales.
investment: Assets such as stocks, bonds, mutual funds, real estate, or other items purchased for expected favorable future returns.
investment account: A brokerage account, retirement account, or other account in which you hold investments. You track individual investments, such as stock purchases, in the associated investment account.
investment category: The type of investments in a fund - for example, European stocks, intermediate-term bonds, or small-cap growth stocks.
investment limited partnership: A group of individuals who pool their money for the purpose of investing. Profits, tax deductions, and other items are usually split according to each investor's interest in the pool. At least one investor - known as the general partner - is responsible for running the partnership's investment. The general partner usually has total liability, while the investors - known as limited partners - are liable only for the amount they put in.
IPO: See initial public offering.
IRA: See Individual Retirement Arrangement.
ISP: Internet service provider. The company that provides you access to the Internet.
issuance of capital stock: The process by which a company raises cash by selling stock to investors. The stock can be either common stock or preferred stock, although capital stock is sometimes used to mean common stock.
issuance of debt: Proceeds from company borrowing.
Japan Index: Also called JPN. A benchmark that tracks the performance of the Japanese stock market. It comprises some of the most highly capitalized stocks on the Tokyo Stock Exchange. It is denominated in U.S. dollars.
Japan stock fund: A Morningstar category for international equity funds that have at least 75 percent of their stock holdings in Japanese companies.
junk bond: A debt security that pays investors a high interest rate because of its high risk of default.
Keogh plan: A pension plan designed for self-employed individuals.
key support: A price level for a security or an index that may signal a major change in market direction or sentiment if it is penetrated.
krona: A unit of currency in Iceland and Sweden.
krone: The national currency of Denmark and Norway.
laddering: The practice of reducing market risk by owning a series of bonds or other investments of staggered durations.
Large Blend: A Morningstar category for domestic equity funds that invest in a mixture of large growth stocks and large value stocks. These stocks typically have a market cap greater than $5 billion and a combined Price/Earnings ratio plus Price/Book value between 1.75 and 2.25.
large cap: A company that has a very high market capitalization, or a mutual fund that specializes in investing in such companies.
Large Growth: A Morningstar category for domestic equity funds that invest in large companies whose share prices are expected to increase and that typically pay little or no dividends. Stocks held in these funds typically are large-cap stocks that have a combined Price/Earnings ratio plus Price/Book value greater than 2.25.
Large Value: A Morningstar category for domestic equity funds that invest in large companies whose shares are priced below the market compared to their peers. Stocks held in these funds typically are large-cap stocks that have a combined Price/Earnings ratio plus Price/Book value less than 1.75.
last: The current trading price of one unit of a particular security. Note: Prices are usually delayed by at least 20 minutes.
last trade size: The most recent number of security shares traded.
last updated: The time or date that an account or investment quote was updated. Quotes are usually delayed at least 20 minutes unless you have access to real-time quotes.
latest dividend rate: The number of times the company pays dividends per year multiplied by the latest dividend, expressed in dollars. If a company's board has not committed to dividend payments in the future, the latest reported dividend rate equals the total dividends paid in the past 12 months.
latest fiscal EPS: Earnings per share for the most recent fiscal year.
latest quote: The most recent trade price (buy or sell) for a stock, as reported by all exchanges.
Latin American stock fund: A Morningstar category for international equity funds that have at least 75 percent of their stock holdings in Latin American companies.
leading economic indicators: Measures that may provide an indication of which way the overall economy is heading. Typical leading indicators include new orders for durable goods, new jobless claims, money supply, hours in the average workweek, building permits issued, and stock prices.
leverage: The use of debt to increase returns.
leveraged buyout (LBO): The purchase of a company by using a large amount of debt, much of it short-term bank borrowing secured by the assets of the company itself. After the acquisition, the acquired company typically issues bonds to pay off a portion of the debt created by the takeover.
leverage ratio: Total assets divided by total stock equity. This ratio indicates how highly leveraged a company is.
liability: An obligation to pay. Short-term debt, long-term debt, and certain other obligations appear as liabilities on a company's balance sheet.
lien: A creditor's claim against a property.
limited partnerships: A form of business organization that offers some of the partners limited liability. It consists of a general partner, who organizes and manages the partnership, and limited partners, who contribute capital but have limited liability and assume no active role in day-to-day management.
limit order: An instruction given by an investor to a broker to buy shares at or below a certain price (or sell shares at or above a certain price). The opposite of a limit order is a market order.
linear regression channels: A technical indicator used to determine the trend a security is developing and the likely price range that will take place within that trend. The channel consists of an upper line, a middle line, and a lower line. The upper channel line is created by connecting a series of recent high price points in a straight line, the middle line by connecting intermediate highs and lows, and the lower channel line by connecting a series of low price points. The channel provides a picture of the overall trend of a stock, whether it is in an uptrend, in a downtrend, or just consolidating.
line charts: A chart that displays only the closing price for a security for each time period. A line connects closing values from each period. Often used for plotting mutual funds, which typically have only a daily close value.
line of credit: An agreement to lend money to a borrower up to a specified amount. Unlike a one-time loan, a line of credit can be borrowed on as needed and typically does not have to be paid off by a specific date.
liquidity: The extent to which an individual or firm can produce cash when necessary. Cash and assets easily converted to cash are liquid assets.
liquidity ratio: A measure of how much of a given stock needs to be traded for the price to change by 1 percent. The liquidity ratio is figured by adding up the daily percentage change in closing price for each trading day of the month, regardless of direction. This number is divided into the total dollar volume for the month. The higher the resulting number, the more liquid the stock and thus the more attractive it becomes for conservative investors and institutions whose large trading might otherwise move the market too much.
load: A sales commission charged when you buy or sell shares in certain mutual funds. Mutual funds that don't charge a sales commission are no-load funds.
load-adjusted return (1, 3, 5, 10 year): Total returns, calculated monthly and adjusted downward to account for sales charges. For funds with front-end loads, the full amount of the load is deducted. For deferred or back-end loads, the percentage, often coupled with a 12b-1 fee, usually disappears entirely after several years.
load fund: A mutual fund that charges a commission, or "load," on every purchase of shares. Load funds are usually purchased through stockbrokers and financial planners.
lock-limit: A tool that the exchanges use to help protect investors in a whirlwind market. If a contract price moves up or down to the pre-established price limit, the market "locks up" or "locks down" and doesn't open up again until the price returns to an acceptable level.
long bond: A bond with a maturity of 30 years or longer. Generally, the term has referred to the 30-year Treasury Bond, which was discontinued by the U.S. Treasury Department in 2001.
long-term bond fund: A Morningstar category for taxable bond funds that invest at least 70 percent of their assets in bonds, with a primary focus on corporate and investment-grade bonds. These bonds have a duration of more than 6 years or an average effective maturity of more than 10 years.
long-term debt: Debt due in more than a year.
long-term government fund: A Morningstar category for taxable bond funds that have at least 80 percent of their bond portfolio invested in long-term government bonds and 70 percent of all assets invested in bonds. These bonds have a duration of greater than 6 years or an average effective maturity greater than 10 years.
lot: A set of stock or mutual fund shares that were purchased at the same time. For stocks, a lot is usually 100 shares.
low: The lowest price reached by a stock, mutual fund, or other security in a given period of time, such as a day, month, or year.
low estimate: The lowest of the given earnings estimates by any analyst.
managed futures: A managed account or fund in which professional money managers trade futures and forward contracts.
manager tenure: The number of years a mutual fund manager has been running the fund.
margin account: A brokerage account that lets an investor buy securities on credit or borrow against securities held in the account to make additional investments.
marginal rate: The tax rate on an additional dollar of income.
margin call: A call for additional capital to bolster the equity in an investor's margin account.
marketability risk: The chance that there will be no ready market for your investment if you want to sell it quickly.
market capitalization: The value of a company's outstanding shares, calculated as the total number of common shares outstanding multiplied by their current price.
market cap composition: A fund's net assets by market capitalization, or the size of companies they invest in. In Morningstar methodology, large-cap stocks are those that account for the top 70 percent of the market capitalization of Morningstar domestic stocks; mid-cap stocks are those that account for the next 20 percent; and small-cap stocks are the balance.
market maker: The individuals or firms who maintain the best bid and ask prices on the floor of an exchange, such as the Chicago Board of Exchange. Market makers bid for or offer securities for sale, thus keeping a market orderly. Market makers can compete with each other on the same underlying security's option pricing to provide the best bid and ask prices at any time.
market order: An order to purchase or to sell at the best available price. Market orders must be executed immediately and therefore take precedence over all other orders.
market timing: A technique used by investors or money managers who believe that they can predict when the market will change course, and buy or sell investments accordingly.
market value (current): The market value of all of a company's outstanding shares (in other words, price multiplied by shares). It is a rough estimate of what a company is worth. Also known as market capitalization or market cap.
material participation: Meeting the IRS guidelines for working in and being involved in a business activity on a regular basis, as opposed to being only an investor.
maturity: The date on which a bond's principal must be repaid at the face amount.
mean: The average from which the standard deviation is calculated. In security analysis, the mean return is the average of all of the expected returns on investments in a portfolio.
mean recommendation: An arithmetic average of analysts' buy-sell recommendations for a given stock.
Media General Financial Statements: Statements prepared by Media General by using a proprietary standardized format for industrial companies. When importing data from SEC filings or other company-prepared statements, Media General reserves the right to reclassify line items and regroup amounts to meet their specifications. Therefore, it is possible that Media General Financial Statements and other financial statements on MSN Money will not have a one-for-one mapping of line items and amounts. This standard format enables direct comparison of all companies, industries, and indexes across multiple time frames and for a multitude of factors.
median market cap: A measure of the size of companies in which a mutual fund invests. Half the companies in the fund have a market capitalization larger than this number, and half have a market capitalization that is smaller.
medical sector: A category that includes pharmaceuticals, health-care services, medical devices, and drug wholesalers.
medium cap: See mid-cap.
Mexico Index: A stock market index based on 10 of the most highly capitalized Mexican companies traded as American Depositary Receipts (ADRs). It is denominated in U.S. dollars. Also known as MXY.
micro cap: See small cap.
mid-cap: Classification of stocks with medium-sized market capitalization, or the funds that invest in those stocks. Under Morningstar's methodology, mid-cap stocks account for the 10th to 30th percentile of the market capitalization of Morningstar domestic stocks.
Mid-Cap Blend: A Morningstar category for domestic equity funds that invest in a mixture of mid-size companies whose share prices are expected to increase (growth stocks) and mid-size companies whose share are priced below the market (value stocks).
Mid-Cap Growth: A Morningstar category for domestic equity funds that invest in mid-size companies whose share prices are expected to increase significantly (growth stocks). Stocks held in these funds typically are mid-cap stocks with a combined Price/Earnings ratio plus Price/Book value greater than 2.25.
Mid-Cap Value: A Morningstar category for domestic equity funds that invest in mid-size companies whose shares are priced below the market compared to their peers (value stocks). Stocks held in these funds typically are mid-cap stocks with a combined Price/Earnings ratio plus Price/Book value of less than 1.75.
minimum initial purchase: The smallest sum a fund will accept to establish a new account.
minimum subsequent purchase: The smallest additional investment permitted by a given mutual fund.
minority interest: Stockholders who own less than 50 percent of a subsidiary's outstanding voting common stock. The minority stockholders hold an interest in the subsidiary's net assets and share earnings with the parent company. Minority interest also refers to the stated value of the subsidiary stock not owned by the parent company plus the minority interest's equity in the surplus of the subsidiary. This item includes preferred dividend averages on the minority preferred stock (preferred shares not owned by the reporting parent company).
miscellaneous revenue sector: A category that includes revenue bonds that don't fall into other obvious categories.
Mitsubishi Index: A chain-store sales index that measures sales on a weekly basis for nine large retailers.
modern portfolio theory: A sophisticated investment approach that helps investors estimate statistically expected risks and returns for their investment portfolios. Also called "portfolio management theory" or "portfolio theory."
momentum: The underlying power or thrust behind an upward or downward price movement. Momentum is represented on a chart as a line that continually fluctuates above and below a horizontal equilibrium level that represents the halfway point between the extreme readings.
money flow (MF): The amount of money flowing into and out of a security, calculated daily by multiplying the number of shares traded by the change in closing price. If prices close higher, money flow is a positive number. If prices close lower, money flow is a negative number.
money market fund: A mutual fund that invests in very short-term securities, such as Treasury bills, certificates of deposit, and commercial paper and that pays interest. The share price is kept stable at $1.
money supply: The amount of money monitored and heavily influenced (if not controlled) by the U.S. Federal Reserve Bank. There are three components of money supply. M1 consists of currency, checking accounts, money market funds, negotiable order of withdrawal (NOW) accounts, and traveler's checks. M2 is everything in M1 plus time deposits exceeding $100,000 and repurchase agreements. M3 includes M2, savings bonds, Treasury bills, commercial paper, euros, and more.
Morningstar: The premier provider of unbiased information about mutual funds, including fund comparisons, risk assessments, and other analyses. Morningstar's analysts are quoted widely in the popular press, and Morningstar's star system for rating funds is closely watched by investors, the fund industry, and the media.
Morningstar 3-, 5-, and 10-year rating: A monthly mutual fund rating that is based on performance and risk. To calculate a fund's star rating for a period (3, 5, or 10 years), its Morningstar Risk score is subtracted from its Morningstar Return score. Funds that score in the top 10 percent of their broad investment category receive five stars. Funds in the next 22.5 percent get four stars; funds in the middle 35 percent get three stars; and funds in the next 22.5 percent get two stars. Funds scoring in the bottom 10 percent get one star.
Morningstar 3-, 5-, and 10-year return rating: A mutual fund rating that is based on the fund's return compared to that of other funds in its category. To calculate a fund's star rating for a period (3, 5, or 10 years), Morningstar first adjusts for maximum front-end loads, applicable deferred loads, and applicable redemption fees. Then Morningstar calculates the excess return for each fund, defined as the fund's load-adjusted return minus the riskless return for 90-day Treasury bills over the same period. Funds that score in the top 10 percent their category receive five stars. Funds that score in the next 22.5 percent get four stars; funds in the middle 35 percent get three stars; and funds in the lower 22 percent receive two stars. Funds that score in the bottom 10 percent receive a one star.
Morningstar 3-, 5-, and 10-year risk rating: A mutual fund rating that is based on its downside volatility compared to that of other funds in its category. To calculate this risk score for a period (3, 5, or 10 years), Morningstar plots monthly fund returns in relation to riskless Treasury bill returns. Morningstar adds the amounts by which the fund trails the T-bill return each month and divides that total by the period's total number of months. A fund that scores in the top 10 percent of its broad investment category receives five stars. Funds that score in the next 22.5 percent get four stars; funds in the middle 35 percent get three stars; and funds in the lower 22 percent receive two stars. Funds that score in the bottom 10 percent receive a one star.
Morningstar category: Morningstar categorizes Domestic Equity Funds based on the style and size of the stocks that they typically own. The style categorization is Value, Blend, or Growth, and the size divisions reflect the median market capitalization of the companies held in the fund, which are categorized as Small, Medium, or Large. Based on their investments over the past three years, domestic equity funds are placed in one of the following nine categories:
Morningstar also includes several other specialty domestic equity fund categories, such as Specialty Heath Care and Specialty Technology, as well as International Equity, Bond, Taxable Bond, and Municipal Bond categories.
Morningstar rating: The weighted average of a fund's 3-, 5-, and 10-year ratings.
Morningstar return rating: The weighted average of a fund's 3-, 5-, and 10-year return ratings.
Morningstar risk rating: The weighted average of a fund's 3-, 5-, and 10-year risk ratings.
mortgage-backed securities: Securities that are issued by mortgage lenders such as banks, the Government National Mortgage Association (Ginnie Mae), or the Federal National Mortgage Association (Fannie Mae).
most-active list: A list of stocks with the highest trading volume on a given day.
moving average: The average price of a security over a given period (such as 5, 50, or 200 days), calculated for a consecutive series of those periods.
moving average convergence/divergence (MACD): A technical indicator developed by Gerald Appel that signals overbought and oversold conditions by measuring the intensity of public sentiment. It is calculated as the difference between two exponential moving averages. A third exponential moving average is plotted on top of the MACD as a trigger line to provide buy and sell signals.
moving average envelope: A trading band (bounded by upper and lower lines) that is plotted on top of a security's price chart at a specified percentage above and below a selected moving average.
Multisector Bond Fund: A Morningstar category for taxable bond funds that seek income by diversifying their assets among several fixed-income sectors, usually government-issued bonds, foreign bonds, and high-yield corporate bonds. To be classified as a bond fund by Morningstar, at least 70 percent of all assets must be invested in bonds.
municipal bond: A bond issued by a state or local government or other government unit, usually for building public facilities (such as roads, schools, or parks). Interest earned from municipal bonds is typically exempt from federal income taxes.
Municipal bond national, intermediate term fund: A Morningstar category for tax-free bond funds that invest in nationwide intermediate-term municipal bonds whose interest is paid by taxes or project revenues. These bonds have an average duration from 3.5 to 6 years or an average effective maturity from 4 to 10 years. To be classified as a bond fund by Morningstar, at least 70 percent of all assets must be invested in bonds.
Municipal bond national, long term fund: A Morningstar category for tax-free bond funds that invest in nationwide long-term municipal bonds whose interest is paid by taxes or project revenues. These bonds have an average duration of more than 6 years or an average effective maturity greater than 10 years. To be classified as a bond fund by Morningstar, at least 70 percent of all assets must be invested in bonds.
Municipal bond, short term (single-state and national) fund: A Morningstar category for tax-free bond funds that invest in nationwide or single-state short-term municipal bonds whose interest is paid by taxes or project revenues. These bonds have an average duration of less than 3.5 years or an average effective maturity less than 4 years. To be classified as a bond fund by Morningstar, at least 70 percent of all assets must be invested in bonds.
Municipal California intermediate fund: A Morningstar category for tax-exempt bond funds that invest at least 80 percent of their assets in California municipal bonds based on holdings for the last three years. These bonds have an average duration of 4.5 to 7 years.
Municipal California long term fund: A Morningstar category for tax-exempt bond funds that invest at least 80 percent of their assets in California municipal bonds based on holdings for the last three years. These bonds have an average duration of more than 7 years.
Municipal New York intermediate fund: A Morningstar category for tax-exempt bond funds that invest at least 80 percent of their assets in New York municipal bonds based on holdings for the last three years. These bonds have an average duration of 4.5 to 7 years.
Municipal New York long term fund: A Morningstar category for tax-exempt bond funds that invest at least 80 percent of their assets in New York municipal bonds based on holdings for the last three years. These bonds have an average duration of more than 7 years.
municipal revenue bond: Type of municipal bond issued to finance public works projects, such as airports, tunnels, or sports stadiums. Payment of interest and principal depends on the revenue generated from the completed project.
Municipal single-state bond, intermediate-term fund: A Morningstar category for tax-exempt bond funds that limit their investments to a single state, allowing shareholders to avoid state taxes. These bonds have an average duration of 3.5 to 6 years or an average effective maturity of 4 to 10 years. To be classified as a bond fund by Morningstar, at least 70 percent of all assets must be invested in bonds.
Municipal single-state bond, long-term fund: A Morningstar category for tax-exempt bond funds that limit their investments to a single state, allowing shareholders to avoid state taxes. These bonds have an average duration of more than 6 years or an average effective maturity of more than 10 years. To be classified as a bond fund by Morningstar, at least 70 percent of its assets must be invested in bonds.
mutual fund: An enterprise that pools funds from customers and invests them in a portfolio of securities, in keeping with the goals and principals stated in its prospectus.
naked calls: A form of option writing in which an investor sells a call against securities that he doesn't own. The writer's risk is unlimited, because if the option owner exercises the right to buy the stock, the writer must buy the shares at the current price.
naked puts: A form of option writing or selling in which the seller owns neither the underlying security nor a different option on that same security with the same (or later) expiration date and higher strike price, leaving the seller exposed to unlimited risk.
NASD: See National Association of Securities Dealers (NASD).
Nasdaq: The National Association of Securities Dealers Automated Quotation System. It was the first electronic stock market and lists a broad variety of U.S. and foreign companies.
Nasdaq Composite Index: An index of stocks traded on the Nasdaq.
necessary category: A category for fixed income or expenses that occur every month. For example, housing expense is a necessary expense category, as opposed to recreation, which is discretionary. All categories are marked as necessary by default until you change them.
Negative Volume Index (NVI): An index that focuses on days when the volume decreases from the previous day. NVI analysts believe that smart investors take positions on lower volume days.
net assets: A figure, recorded in millions, that represents the current total value of a mutual fund's holdings.
Net Asset Value (NAV): The current value of an asset, calculated by subtracting the asset's liabilities from its assets. For mutual funds, the NAV is reported as the fund's current value divided by the number of outstanding shares and is usually the price for one share.
net cash from continuing operations: The sum of depreciation and amortization, deferred income taxes, operating gains/losses, extraordinary gains/losses, other non-cash items, accounts receivable, inventories, other current assets, short-term debt, and other current liabilities.
net cash from discontinued operations: Cash gains that result from the sale of discontinued operations (but not an extraordinary gain or loss).
net cash from financing activities: The net sum of issuance of debt, issuance of capital stock, repayment of long-term debt, repurchase of capital stock, payment of cash dividends, and other financing charges.
net cash from investing activities: The sum of the sale of property, plant, and equipment; sale of short-term investments; purchases of property, plant, and equipment; purchase of short-term debt; and other investing changes.
net cash from operating activities: The sum of net cash from continuing operations and net cash from discontinued operations.
net change in cash and cash equivalents: The difference between the cash and cash equivalents at the beginning and end of the reporting period.
net income from continuing operations: Income taken before preferred dividends, extraordinary gains and losses, income from cumulative effects of accounting change, nonrecurring items, income from tax loss carryforward, and other gains and losses.
net income or loss: The earnings or profit of a company after all costs have been deducted.
net income from discontinued operations: Gains from sales of discontinued operations, not including extraordinary gains/losses.
net income from total operations: Income from total operations (continuing and discontinued operations), after taxes and minority interest and before extraordinary gains/losses.
net insider transactions: The number of shares purchased minus the number of shares sold by corporate officers and directors for the latest month, as reported to the Securities and Exchange Commission. There is usually a three-month lag in reporting insider transactions.
net investment income: Investment income minus investment expenses.
net position change: Buyers minus sellers.
net profit margin: The latest 12 months' net income divided by the latest 12 months' sales, expressed as a percentage.
net worth: The value of everything owned by you or your business, minus any of the values of any liabilities.
new home sales: A government report that indicates the level of new, privately owned, one-family houses sold and for sale.
new listing: A stock that recently began trading on a given exchange.
new positions: Total number of institutional owners with no ownership in the prior filing period and the aggregate number of shares bought by them.
New York Stock Exchange: The biggest, oldest, and most important U.S. securities exchange, where most of the nation's largest and best-established companies are listed.
next upcoming occurrence: The next pending occurrence of a scheduled transaction.
Nifty Fifty: A list of 50 large stocks, including Eastman Kodak and Anheuser-Busch, which were very popular in the 1960s because they purportedly guaranteed profits for investors who bought and held the shares. As a group, the stocks lost 42 percent of their value in the 1973 bear market. A "New Nifty Fifty" list, devised in 1995 by Morgan Stanley, favored companies with large shares of sales coming from outside the United States.
Nikkei 225: A stock index benchmark that tracks the performance of the Tokyo Stock Exchange.
no-load fund: A mutual fund with no transaction charges on purchases or sales of its shares (although it may assess other charges).
nominal return: The return on an investment without taking inflation into account.
non-amortized loan: An interest-free, short-term loan or debt.
noncurrent assets: Assets not expected to be converted into cash, sold, or exchanged within the normal operating cycle of a company, which is typically one year.
noncurrent liabilities: Liabilities due after one year.
nonvoting stock: Stock that carries no power to vote on matters put before the shareholders. Preferred stock usually is nonvoting.
normalized income: Net income from total operations adjusted for unusual or one-time events.
number of analysts: The number of analysts providing earnings estimates.
number of employees: The number of people who are employed by a company.
number of shares: The quantity of shares held of a given security.
occasional expenses: Expenses that occur irregularly during a typical year, such as vacations, automobile repairs, and holiday gifts. Planning for these expenses helps you create a more accurate budget.
odd lot: A block of fewer than 100 shares. Odd lots usually involve higher proportional transaction costs than round lots.
OFX: Open Financial Exchange, a standard for the secure exchange of financial data over the Internet between financial institutions and Web users.
On Balance Volume (OBV): A popular momentum indicator developed by Joseph Granville that tracks whether volume is flowing into or out of a security. When the security closes higher than the previous close, all of the day's volume is considered up-volume. When the security closes lower than the previous close, all of the day's volume is considered down-volume. OBV is calculated by assigning a positive or negative value to the day's volume depending on whether prices closed higher or lower that day. A running total is kept by adding or subtracting the result from the current total.
online quotes: Investment prices (for stocks, for example) that are updated from the Internet.
online services: Services provided by your bank or brokerage for common banking tasks, such as paying bills, over the Internet.
open: The price paid in a security's first transaction of the current trading day.
open-end fund: A fund that is open to new investors and in which both new investors and existing shareholders may purchase as many shares as they want. Most mutual funds are open-ended.
open interest: The number of contracts outstanding for a given option or commodities future. It measures how much interest there is in a particular option or future.
open market operation: A means of conducting Monetary Policy that is used by the Federal Reserve. It involves the purchase and sale of government securities by the Federal Reserve Bank of New York to regulate the money supply. This alters bank reserves, which affects the supply of credit.
operating activities: A company's ongoing business operations. Cash flow from operating activities does not include cash from asset sales or other extraordinary items.
operating gains or losses: Business revenue minus expenses before interest payments and income tax deductions.
operating income or loss: A firm's earnings from its normal operations, minus the everyday costs of those operations.
operating profit: See gross profit.
operating ratio: The ratio of operating costs to sales, or the inverse of the profit margin.
option: The right to buy or sell a stock at a given price (the strike price) during a given period. An option to buy a stock is a call; an option to sell a stock is a put. Employee stock option grants are typically calls.
other current assets: An asset category that includes prepayments, deferred charges, and amounts (other than trade accounts) due from parents and subsidiaries. Also includes any other current assets that are not assigned to cash and cash equivalents, receivables, or inventories.
other current liabilities: Liabilities not assigned to short-term debt or accounts payable.
other financing charges, net: Finance charges other than those assigned to issuance of debt, issuance of capital stock, repayment or long-term debt, repurchase of capital stock, or payment of cash dividends.
other gains or losses: Gains or losses from an event that is uncontrollable but not extraordinary, such as an earthquake if the company is in California.
other income (net): Non-operating revenues after related expenses.
other investing changes (net): Any investing items not assigned to purchases, selling of fixed assets, or investments.
other non-cash items: Expenses that do not involve cash outflow, other than depreciation or amortization.
other taxes: Generally, taxes other than income taxes (not including excise taxes, which the company does not actually pay, but only collects on behalf of the government).
out-of-the-money option: An option with no intrinsic value. A call is out of the money when the strike price is higher than the current market value of the underlying security. A put is out of the money when the strike price is lower than the current market value of the underlying security.
overall rank: A Value Line ranking that is calculated separately for each of three broad categories: equity and partial-equity funds, taxable fixed-income funds, and municipal bond (tax-free) funds. Value Line bases overall rank on three factors: five- and one-year growth persistence in fund returns and three-year risk-adjusted performance. Growth persistence rewards funds for consistency outperforming other stocks in their group, not for the magnitude of their outperformance. The three-year risk-adjusted performance is a fund's three-year total return divided by its standard deviation. After these three measures are combined into a total score for each fund, the funds are ranked from 1 (highest) to 5 (lowest).
overbought: A condition in which it appears that a stock has reached a price peak and is now likely to retreat.
overhead resistance: A condition in which a stock appears to have a price ceiling. Every time the stock approaches overhead resistance, the price goes down.
oversold: A condition in which it appears that a stock has declined to the point where the selling is over and buyers will likely step in and push the stock higher.
over-the-counter market (OTC): All U.S. stocks not traded on any of the major exchanges. OTC stocks are traded by telephone or computer and tend to be newer, smaller, and riskier than exchange-listed stocks.
Pacific-Asia stock excluding Japan: A Morningstar category for international equity funds that have at least 75 percent of their stock holdings in Pacific-Asia companies, specifically excluding investments in Japan.
Pacific Exchange (PCX): A major regional exchange with trading floors in both Los Angeles and San Francisco. PCX is the third largest exchange in the United States and the third largest stock options exchange in the world.
par value: The face value of a bond or for a share of preferred stock. Par value is the basis for the interest payment (for a bond) or preferred dividends (for stock).
passive loss deductions: Losses from trades or businesses in which the taxpayer not actively involved, such as investment portfolio losses. Passive loss deductions are subject to limitations.
pay date: The date a company will issue a previously announced dividend and mail checks to shareholders who owned the stock on the record date.
payee: A person or business to whom you write a check or make some other kind of payment.
payment of cash dividends: Includes cash payments of common and preferred dividends to the shareholders. Preferred dividends are the amounts required for the current year only and not for any amount in prior years.
payout ratio: The latest indicated annual dividend rate divided by the latest 12 months' earnings per share (EPS). It indicates the amount of earnings paid out in dividends.
percent change: The percentage difference between the preceding day's closing price and the current price. Note: Prices are usually delayed by at least 20 minutes.
PEG ratio: The price/earnings (P/E) ratio divided by expected per-share earnings growth over the coming year. A value of less than 1 implies that the stock could be undervalued; more than 1 implies that it is overvalued.
penny stock: A highly speculative stock that doesn't trade on any of the major exchanges. The share price typically is less than $1.
P/E ratio (1 month ago): The closing price one month ago divided by the latest 12 months' earnings per share (EPS).
P/E ratio (1 year ago): The closing price one year ago divided by the latest 12 months' earnings per share (EPS).
P/E ratio (5-year average): The arithmetic average of the last five fiscal year-end P/E ratios.
P/E ratio (5-year high): The highest P/E ratio for the company over the past five fiscal years.
P/E ratio (5-year low): The lowest P/E ratio for the company over the past five fiscal years.
P/E ratio (6 months ago): The closing price six months ago divided by the latest 12 months' earnings per share (EPS).
P/E ratio: See price/earnings ratio.
pension: A type of retirement plan that is funded by an employer.
percent bond: The percent of a mutual fund that is composed of bonds, including fixed-income securities with a maturity of more than one year.
percent cash: The percent of a mutual fund that is composed of cash and cash equivalents (fixed-income securities with a maturity of one year or less). Negative cash percentages indicate that a portfolio has borrowed money or used other techniques to leverage the market.
percent gain: The gain or loss on a security or portfolio, expressed as a percentage of its original cost.
percent giant capitalization: The percentage of a mutual fund that is invested in companies with a market capitalization of more than $25 billion.
percent institutional ownership: The proportion of outstanding shares held by mutual funds, pension funds, and other big institutional investors.
percent large capitalization: The percentage of a mutual fund that is invested in large-cap companies. Large-cap stocks are those that account for the top 70 percent of the market capitalization of Morningstar domestic stocks.
percent medium capitalization: The percentage of a mutual fund that is invested in mid-cap stocks. Mid-cap stocks are those that account for the bottom 10th to 30th percentile of the market capitalization of Morningstar domestic stocks.
percent micro capitalization: The percentage of a mutual fund that is invested in companies with a market capitalization of less than $250 million.
percent net assets: The proportion of a fund's net assets that is made up by each of its leading holdings. Morningstar calculates this by dividing the market value of the security by the fund's net assets.
percent of portfolio: The percentage of a portfolio's total value that is accounted for by a security or account.
percent other: The percentage of a mutual fund that is composed of holdings other than stocks, bonds, or cash. This can include preferred stocks (equity securities that pay dividends at a specified rate), convertible bonds, convertible preferreds, warrants, and options.
percent price change: The change in a stock price over a period of time, as a percent of the beginning price.
percent price change 1 week: The percent change in a stock price from the previous Friday's closing price to the previous day's closing price.
percent price change last 6 months: The percent change in a stock price from the closing price on the last day of the month six months ago to the previous day's closing price.
percent price change last month: The percent change in a stock price from the Friday closing price four weeks ago to the previous day's closing price.
percent price change last quarter: The percent change in a stock price from the closing price on the last day of the month three months ago to the previous day's closing price.
percent price change last year: The percent change in a stock price from the closing price on the last day of the current month one year ago to the previous day's closing price.
percent price change year to date: The percent change in a stock price from the closing price on the last day of the previous year to the previous day's closing price.
percent small capitalization: The percent of a mutual fund that is invested in small-cap stocks. Small-cap stocks are those that account for the lowest 10 percent of the market capitalization of Morningstar domestic stocks.
percent stock: The percentage of a mutual fund that is composed of common stock.
personal income report: A government report that measures income from all sources. The largest component of total income is wages and salaries, a figure that can be estimated by using payrolls and earnings data from the employment report. There are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income.
Philadelphia Fed Index: An index released each month by the Federal Reserve Bank of Philadelphia that offers a snapshot of manufacturing activity in the bank's district. It is the first of several regional manufacturing reports issued each month.
PIN: Personal identification number.
pink sheets: Daily listings of price quotations for thousands of over-the-counter securities that are not traded on the major exchanges, published on pink paper by the National Quotation Bureau. An electronic version of pink sheets is known as the OTC Bulletin Board.
point: A sum equal to 1 percent of a loan amount. The borrower pays it to the lender, often for a lower interest rate on the loan.
portfolio: A collection of securities held by an individual.
portfolio turnover: A measure of how much or how often a fund is buying and selling. This figure is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly assets. The resulting percentage loosely represents the percentage of the portfolio's holdings that have changed over the past year.
position tracking: Following your stake in various investments.
pound: The national currency of the United Kingdom.
power of attorney: A document authorized by a person, called the principal, that grants legal authority to another person, the agent, to act on behalf of the principal. A power of attorney can authorize the agent to write checks, sell property, file tax returns, and so on. Under a "durable" power of attorney, the principal authorizes the agent to make decisions (including health-care decisions) on his or her behalf in the event the principal is incapacitated.
preferred dividends: The total value of the current dividend requirement on issued preferred stock of the parent company for the current year.
preferred stock: A class of stock that typically pays a fixed dividend and gives its holder claim to earnings and assets before the owners of common stock.
preferred stock equity: Equity from the preferred stock of the parent company. Preferred stock equity usually equals the number of preferred shares issued (minus any preferred shares in the treasury) multiplied by par value.
pre-tax margin: The latest 12 months' pre-tax income divided by the latest 12 months' sales.
previous close: A security's price at the end of the previous day's trading session.
price: A security's current asked market value, or the amount paid to buy one unit of a security.
price appreciation: Market value minus investor's cost, or how much an investment has increased in price or value.
price/asset ratio: The closing price divided by total assets.
price/book value: The latest closing price of a stock divided by the most recent quarter's book value per share. Also known as the price/equity ratio.
price/cash flow ratio: Closing price divided by cash flow per share from the last 12 months. It is similar to the P/E ratio but does not take into account depreciation and other non-cash charges.
price channel: A margin defined by upper and lower lines that typically show the trailing 20-day high and 20-day low. Using the price channel strategy, you buy when the weekly closing price moves up to a new 20-period high, and you sell or sell short when the weekly closing price moves down to a new 20-period low.
price earnings ratio (P/E): A stock's latest closing price divided by the latest 12 months' earnings per share. The P/E ratio is the most common way of measuring how expensive a stock is. The higher the P/E ratio, the more investors are willing to pay for it.
price/earnings (portfolio): The weighted average of the price/earnings (P/E) ratios of the stocks in a mutual fund's portfolio.
price/sales ratio: The latest closing price of a stock divided by the previous 12 months' sales per share, often seen as an indicator of a company's prospects.
primary EPS from continuing operations: The latest four quarters of earnings per share from continuing operations divided by the number of shares outstanding.
primary EPS from discontinued operations: The latest four quarters of earnings per share from discontinued operations divided by the number of shares outstanding, not including income from extraordinary gains and losses.
primary EPS from total operations: The sum of the previous four quarters of primary earnings per share (EPS) from continuing operations and the primary EPS from discontinued operations divided by the number of shares outstanding.
prime rate: The interest rate that banks charge their biggest and best customers for short-term loans. It is an indicator of the general direction of interest rates.
principal: The amount still owed on a loan. Also, the part of a loan payment that reduces the loan's outstanding balance.
probate: The court process in which a deceased person's estate is administered, whether or not the person had a will. The process includes the appointment of a representative, notice to creditors, inventorying the estate, and distributing the estate according to the deceased person's will or according to the law if there is no will.
Producer Price Index (PPI): A measurement of changes in the wholesale prices of products purchased by manufacturers, used as one indicator of inflation.
productivity: The rate of output per unit of input. Usually reported as labor productivity, or the amount of product per hour worked.
productivity report: A government report that measures the productivity of non-farm workers and the costs associated with producing a unit of output.
profit and loss statement: A report that shows the income, expenses, and net profit of a business for a specific period of time.
profit margin: The ratio of profit (gross profit, operating profit, or net profit) to sales, expressed as a percentage of sales.
program trading: Computerized trading undertaken by large institutions to exploit differences in price between expiring stock index futures and the underlying stock when both ought to be equal.
projected expenses for $1,000 purchase: The amount an investor would expect to pay in expenses, including sales charges (loads) and fees, over the next 3, 5, and 10 years, assuming a $1,000 investment that grows by 5 percent each year with redemption at the end of each time period.
property, plant, and equipment, gross: The original purchase price of the fixed assets of a company.
property, plant, and equipment, net: Company assets that are of a relatively permanent nature and are not intended for resale, calculated as cost minus accumulated depreciation and amortization.
prospectus: A document issued by a company that is about to sell stock to the public. It includes financial, legal, and risk information.
proxy: Authority to act for another, or the person with the power to do so. In investing, a proxy is solicited from shareholders so that management can vote their shares. A proxy statement is a document sent to shareholders annually that discloses issues up for shareholder approval and how much top managers are paid.
PSE: See Pacific Exchange (PCX).
PSR: See price/sales ratio.
public short ratio: A technical indicator that shows the relationship between the number of public short sales and the total number of short sales.
purchase constraints: Limits on the purchase of shares in a fund.
purchase of property, plant, equipment: Capital outlays to increase, construct, or improve capital assets.
purchase of short-term investments: Items not assigned to purchases, selling of fixed assets, or investments.
put: An option that grants the right to sell a given stock at a given price (the strike price) during a given period of time. The put holder profits if the market price goes below the strike price.
put/call ratio: Volume of put options divided by the volume in call options. A high ratio (put volume much higher than call volume) indicates a bear market.
qualified fund: A fund - such as an employee pension plan, a 401(k) plan, or a 403(b) plan - that is offered through a retirement plan that meets IRS requirements so participants can deduct contributions from taxable income. Denoted by an A under the Purchase Constraints column.
quantity: The number of shares purchased or tracked for a given security.
quick ratio: The sum of cash and receivables from the most recent quarter divided by the total current liabilities from the most recent quarter. Also called the Acid Test Ratio.
rand: The national currency of South Africa.
random-walk theory: The theory that it is futile to try to predict where the market or an investment is going.
R & D costs: See research and development costs (R&D Costs).
rating: The Morningstar fund rating uses a scale of 1 (lowest) to 5 (highest) stars to rank a fund's risk-adjusted return on investment in comparison to other funds in its Morningstar category.
Real Estate Investment Trust (REIT): A company that manages a portfolio of real estate investments.
realized gain or loss: The profit or loss received from the actual sale of an asset.
real return: The return on an investment adjusted for inflation.
receivables: Total accounts receivable, less any provision for bad debts.
receivable turnover: The latest 12 months' sales divided by the average receivables from the latest two quarters. It measures the number of times, on average, that receivables are collected during a given period.
recent quarter surprise percent: See earnings surprise.
reconcile: (Advanced Account Register only) See Balance (to balance an account).
reconciled transaction: (Advanced Account Register only) A downloaded transaction that you confirmed to be correct when you balanced your account. A letter R in the C (Cleared) column indicates a reconciled transaction.
record date: The date by which you must own a stock to receive an announced dividend.
recurring transaction: A payment, deposit, transfer, or investment purchase that occurs at specific frequency, such as monthly or every two weeks.
Redbook survey: A chain-store sales index that tracks 15 retail stores every week to determine the change in month-to-date sales.
redemption fee: An amount charged when money is withdrawn from a mutual fund before a certain time limit.
red herring: A preliminary prospectus issued by stock-underwriting firms to measure investor interest in a prospective stock offering. The document must contain a warning, printed in red, that the document does not contain all the information normally required by the Securities and Exchange Commission and that some parts may be changed before the final prospectus is issued to the public.
regional funds: A mutual fund that focuses on companies from a particular part of the world or (less often) companies headquartered in or focused on a particular part of the United States.
registered representative: A stockbroker. All stockbrokers must register with the National Association of Securities Dealers before they can buy and sell securities for their customers.
reinvestment: Purchasing more shares of an investment with interest or dividend payments from that investment.
REIT: See Real Estate Investment Trust (REIT).
relative strength: A ranking of the price performance of a stock in comparison to all other stocks on a scale of 1 to 100, with 100 being best.
Relative Strength Index (RSI): A ranking of the current strength of a stock's price relative to its past performance. RSI readings above 70 indicate that the shares are overbought and the price is likely to start falling. Readings below 30 indicate that the shares are oversold and a rally can be expected.
repurchase of capital stock: The buying back of common and preferred stock for the corporate treasury.
research and development costs (R&D costs): Spending on the development of new products (or new knowledge) or on improving existing products.
resistance level: A price point that buyers appear to be unwilling to go above. The trading range between the support level and the resistance level is known as the channel.
Retail Sales Index: A government index that measures the total receipts of retail stores. It is widely followed as the most timely indicator of broad consumer spending patterns.
retail sector: A category that includes all retail companies.
retained earnings: The portion of net income retained for reinvestment in the company, rather than being paid in dividends to shareholders.
retirement account: An account, usually tax-deferred, designed to provide savings for retirement. Examples include 401(k) and IRA accounts.
return: The rate of return from a mutual fund investment, expressed as a percentage. It is calculated as the value per share of a mutual fund's price appreciation plus income distributions, divided by the fund's net asset value.
return of capital: A distribution from an investment that is not income but a return of a part of your original investment.
return on assets (ROA): The rate of return from a mutual fund investment, expressed as a percentage. It is calculated as the latest 12 months' net income divided by the total assets from the most recent quarter.
return on capital: See return on invested capital.
return on equity (ROE): The latest 12 months' net income divided by the common stock equity. It can be measured by using the equity at the end of the last quarter or the average value of the equity over the year. It is the most widely used measure of how well a company is performing for its shareholders.
return on investment (return on invested capital)(ROI): Latest 12-months' net income divided by invested capital (long-term debt plus common stock equity and preferred equity). The invested capital can be the figure at the end of the quarter or the average over the year.
return on sales: Net income as a percentage of sales.
revenue: All income received by a company during a given period, including income from sales, interest received, and proceeds from the sale of a subsidiary.
revenue/employee: Revenue divided by total employment at a firm. The ratio is an indication of how labor-intensive a business is.
revenue growth: The compound annual growth rate of a company's revenues.
revenue growth quarter vs. quarter: The rate at which revenue grew from a quarter in the last year to the most recent quarter.
revenue growth year vs. year: The rate at which revenue grew from the previous 12-month period to the most recent one.
revenue growth YTD vs. YTD: The rate at which revenue grew from the year-to-date period of the previous year to the same period in the current year.
revenue/share: Revenue divided by shares outstanding. This figure indicates the revenue multiple that investors are willing to pay for the stock.
risk: The possibility that a security will lose value.
risk rank: A Value Line measure of a mutual fund's volatility based on its standard deviation over a three-year period. Standard deviation accounts for positive and negative returns equally, indicating potential swings in a fund's performance. The most volatile, or risky, funds have a risk rank of 5.
risk tolerance: The ability of an investor to tolerate uncertainty about the safety and returns of an investment. Investors with very high risk tolerance are comfortable buying investments such as futures contracts; investors with very low risk tolerance prefer safer investments such as bonds, even if that means accepting lower returns.
ROA: See return on assets (ROA).
ROE: See return on equity (ROE).
ROI: See return on investment (ROI).
rollover: For retirement plans such as IRAs, the tax-free reinvestment of a distribution from one qualified retirement plan into another.
Roth IRA: Type of Individual Retirement Arrangement (IRA). Contributions do not reduce current taxable income, but withdrawals after retirement are tax-free.
r-squared: An indicator that ranges from 0 to 100 and tells what percentage of a fund's movements are explained by movements in its benchmark index. An r-squared of 100 means that all movements of a fund are completely explained by movements in the index. Thus, an index fund that invests only in S&P 500 stocks has an r-squared very close to 100. Conversely, a low r-squared value indicates that very few of the fund's movements are explained by movements in its benchmark index.
rule 12(b)1: A Securities and Exchange Commission rule that allows mutual fund companies to add an annual charge for marketing and distribution; also, shorthand for the fee that funds charge under this rule
rule of 72: A quick way to determine how long it take for an investment to double in value. To use the rule of 72, simply divide 72 by the percentage yield of the proposed investment. For example, an investment that yields 12 percent annually will double its value in six years.
rupee: The national currency of India.
Russell 2000 Stock Index: A broad measure of small-stock performance, consisting of the largest capitalization U.S. stocks except for the largest 1,000. It is often used as a performance benchmark for small-cap mutual funds.
sale of property, plant, equipment: Includes proceeds from selling any fixed assets such as property, plant, and equipment.
sale of short-term investments: Includes profit received from selling short-term marketable securities.
sales: On a company's financial statements, all net sales of a company plus any other revenues associated with the main operations of the business. Sales do not include dividends, interest income, or non-operating income.
sales growth (annual vs. one year ago): The percent change between current annual sales and sales one year ago.
sales (1-year growth rate): The year-to-date percent change in sales.
sales (5-year growth): The compound annual growth rate of sales over a five-year period.
sales (last 12 months): The sum of sales for the last four quarters.
sales/employee: The latest 12 months' sales divided by the most recent number of employees.
sales growth (qtr. vs. 1 year ago): The percent change between current quarter sales and the same quarter one year ago.
sales/share: The latest 12 months' sales divided by the number of shares outstanding.
S&P: See Standard & Poor's (S&P).
S&P 500: See Standard &Poor's 500 Stock Index (S&P 500).
S&P 500 index membership: Inclusion in the Standard & Poor's 500 Stock Index (S&P 500).
savings bonds: Small-denomination bonds that are issued and backed by the federal government.
schedule: In MSN Money, to set up a regularly occurring transaction, such as a withdrawal, deposit, or transfer. Also, to submit an online payment.
Schedule A: An IRS form used to itemize deductions and calculate the total deductible amount.
Schedule C: An IRS form used to calculate the profit and loss from a sole proprietorship.
Schedule D: An IRS form used to list the capital gains and losses from investments.
screen: A way to search online for stocks that meet a given set of criteria. For instance, you could screen for companies that have market caps above $500 million, returns on equity exceeding 20 percent a year for five years, and dividends exceeding 2 percent.
SEC: See Securities and Exchange Commission (SEC).
sector: A specific part of the economy that includes companies in the same, or closely related, industries.
sector weightings: The percentage breakdown of a mutual fund's portfolio into various stock and bond categories.
Securities and Exchange Commission (SEC): The federal agency that oversees and regulates U.S. securities markets.
security: An investment that can be easily traded, such as stocks, bonds, mutual funds, or options. Also, the collateral that secures a loan (for example, a car is the security for a car loan).
sellers: For equities, the total number of institutional owners who decreased their positions and the aggregate number of shares discounted from their positions.
selling, general and administrative expenses: An expense category that includes all salaries, indirect production, marketing, and general corporation expenses.
selling short: Sale of a security or future not owned by the seller to take advantage of an anticipated decline in the market or to protect a profit on shares actually owned.
services sector: A category that includes media, entertainment, personal and business services, waste management, and transportation companies.
Simplified Employee Pension (SEP or simple-IRA): A type of Individual Retirement Arrangement (IRA), most often used by sole proprietors and owners of small businesses, that has higher contribution limits than a traditional or Roth IRA.
shareholder's equity: The net worth of a company, calculated as assets minus liabilities. Also known as book value. The actual value of a company is usually always higher than this amount.
shares outstanding: The total number of a company's publicly traded shares.
Sharpe Ratio: A measure of how well a mutual fund rewards risk. A higher Sharpe Ratio indicates better risk-adjusted performance. The ratio is calculated as the fund's average monthly return minus the average monthly return of the 90-day Treasury bill (over 36 months), multiplied by 12 and then divided by the standard deviation of the fund's annualized excess returns.
short: See selling short.
short covering: Buying back stock that has already been sold short.
short interest ratio: Shares sold short divided by average daily volume. This ratio represents the number of days of average trading needed to cover short positions.
short interest shares: The number of shares of a stock that have been sold short but not yet repurchased.
short sale: See selling short.
Short-Term Bond fund: A Morningstar category for taxable bond funds that invest at least 70 percent of their assets in bonds with a focus on corporate and investment-grade bonds. These bonds have an average duration of 1 to 3.5 years or an average effective maturity from 1 to 4 years. To be classified as a bond fund by Morningstar, at least 70 percent of all assets must be invested in bonds.
short-term debt: Debt that must be paid in the near future (usually one year).
Short-Term Government fund: A Morningstar category for taxable bond funds that invest at least 80 percent of their bond portfolio in government-issued bonds. These bonds have an average duration from 1 to 3.5 years or an average effective maturity of 1 to 4 years. To be classified as a bond fund by Morningstar, at least 70 percent of all assets must be invested in bonds.
sinking fund: A special reserve account created by a bond issuer to help protect bondholders from default. The issuer promises to put money into the account at regular intervals and to use the cash that accumulates to redeem the bonds.
size of last sale: The most recent quantity of shares traded.
Small Blend: A Morningstar category for domestic equity funds that invest in a mixture of small companies whose share prices are expected to increase (growth stocks) and small companies whose share prices are priced below the market (value stocks). Morningstar classifies small-cap stocks as those that account for the lowest 10 percent of the market capitalization of Morningstar domestic stocks.
small cap: Classification of stocks that have the lowest market capitalization, or the funds that invest in those stocks. Morningstar classifies small-cap stocks as those that account for the lowest 10 percent of the market capitalization of Morningstar domestic stocks.
Small Growth: A Morningstar category for domestic equity funds that invest in small companies whose share prices are expected to increase significantly. Morningstar classifies small-cap stocks as those that account for the lowest 10 percent of the market capitalization of Morningstar domestic stocks.
Small Value: A Morningstar category for domestic equity funds that invest in small companies whose shares are priced below the market compared to their peers. Morningstar classifies small-cap stocks as those that account for the lowest 10 percent of the market capitalization of Morningstar domestic stocks.
socially responsible funds: Mutual funds whose investing strategy is driven by social and ethical goals (in addition to financial goals), such as environmental cleanup, health-care provision, or avoidance of companies involved in tobacco, weapons, or other controversial industries.
special income/charges: Income charges that are either infrequent or unusual, but not both.
soldout positions: Total number of institutional owners of an equity that closed their positions and the aggregate number of shares they sold.
Specialty-Financial: A Morningstar category for domestic equity funds that invest primarily in financial-services companies, such as banks, brokerage firms, and insurance companies.
Specialty-Health: A Morningstar category for domestic equity funds that invest primarily in health-care companies, including drug manufacturers, hospitals, and biotechnology firms.
Specialty-Natural Resources: A Morningstar category for domestic equity funds that invest primarily in companies involved in the exploration, distribution, or processing of natural resources.
Specialty-Precious Metals: A Morningstar category for domestic equity funds that invest primarily in exploration, mining, or processing of gold, silver, and other precious metals.
Specialty-Real Estate: A Morningstar category for domestic equity funds that invest primarily in real-estate-related securities.
Specialty-Technology: A Morningstar category for domestic equity funds that invest primarily in companies engaged in the development, distribution, or servicing of technology-related equipment or processes.
Specialty-Unaligned: A Morningstar category for domestic equity funds that invest in a single industry or sector other than those described by other specialty categories.
Specialty-Utilities: A Morningstar category for domestic equity funds that invest in public utilities, including electric, gas, and telephone service providers. This category also includes funds that invest primarily in global communications.
spin-off: Creation of a new company from part of an existing company.
split: The division of each share of a security into two or more shares, with the price adjusted so that the total value of the shares remains the same.
split transaction: A transaction (withdrawal, deposit, or transfer) whose total amount you divide among two or more categories.
spread trading: The practice of buying one option contract and selling another for the same underlying investment at the same time. The difference between the profit from one transaction and the loss on the other is the spread.
Standard & Poor's: An investment advisory company with several functions, including the maintenance of the S&P 500, a widely followed benchmark of stock market performance. S&P is also an important bond rating agency, and it sells data on companies and publishes reports and newsletters.
S&P 500: A widely followed stock index composed of 500 companies, including industrial firms, financial companies, utilities, and transportation companies.
standard deduction: A set amount that the IRS lets you deduct from taxable income if you don't calculate (itemize) your actual expenses in certain categories. The amount is adjusted annually for inflation.
standard deviation: A statistical measure of volatility. A mutual fund that has a high standard deviation has a greater potential for volatility, or significant swings in value.
statement: Bank or brokerage records of transactions processed in your accounts. Statements can be on paper, or they can be downloaded or imported from your bank's Web site.
statement of cash flow: A basic financial statement that shows a company's sources and uses of funds. Sources of cash include net income, depreciation, and reductions in inventory. Uses of cash include dividends declared as well as increases in current assets.
stochastic oscillator: A technical indicator of overbought and oversold conditions in a stock, based on moving averages and relative strength. The simplest form is expressed as a percentage of the difference between the high and low price of a stock in a given period.
stock: An ownership share or interest in a corporation.
stockbroker: An individual registered with the National Association of Securities Dealers (NASD) who is authorized to buy and sell securities on behalf of customers.
stock certificate: A document that proves ownership of shares in a particular company. For common stock, certificates are often not issued but are instead held by the brokerage firm.
stock option: See option.
StockScouter fundamental grade: StockScouter rates companies on a five-letter scale from A to F (excluding E) on their earnings growth trends. Grades represent a weighted combination of companies' earnings growth momentum, analysts' recent revisions of future earnings estimates, and recent actual earnings surprises.
StockScouter ownership grade: StockScouter rates companies on a five-letter scale from A to F (excluding E) on recent insider and institutional ownership trends. Grades represent a weighted combination of significant buying and selling by high-level executives, board directors, major shareholders, and large financial institutions.
StockScouter rating: The MSN Money StockScouter rating, which reflects an assessment of expected return and price volatility. The highest rating is 10, indicating a stock with strong expected returns and low volatility.
StockScouter sector: One of 12 industrial sectors, used by StockScouter to determine which sectors are likely to be favored by investors over the next one to three months. Stocks are sorted into sectors based on their primary business.
StockScouter size: Size, or market capitalization, calculated as the number of a company's shares outstanding multiplied by the stock price. StockScouter sorts companies into four capitalization groups, from large to micro.
StockScouter style: Growth style or value style, as determined by StockScouter. Growth stocks tend to have higher than average price-earnings and price-sales ratios; value stocks tend to have lower ratios.
StockScouter technical grade: StockScouter rates companies on a five-letter scale from A to F (excluding E) based on recent price trends of company stock. Grades represent a weighted combination of a stock's 120-day relative strength index and the relationship to the stock's 50-day moving average.
StockScouter valuation grade: StockScouter rates companies on a five-letter scale from A to F (excluding E) on their valuation trends. Grades represent a weighted combination of companies' price-earnings ratio, price-sales ratio, and price-earnings/growth (PEG) ratio.
stop loss order: An instruction to your broker to close out your short position - that is, to buy stock to replace the shares you borrowed - if your losses reach a certain percentage of your investment.
stop order: A standing order to sell a security when it reaches certain price, which can be higher or lower than the current price.
straddle: The purchase or sale of an equal number of puts and calls on an underlying stock, with the same strike price and expiration date. The investor who purchases or sells a straddle seeks to profit from moderate changes in the price of the underlying stock, regardless of whether the price goes up or down.
Straits Times Industrials: A benchmark index that tracks the performance of the Stock Exchange of Singapore. Also called the ST Industrials.
strangle: The purchase or sale of an equal number of puts and calls on an underlying stock, with the same expiration date but different strike prices. Investors purchase or sell strangles with the hope of profiting from large changes in the price of the underlying stock, regardless of whether the price goes up or down.
street name: The name under which a brokerage firm holds the securities of its customers. Most brokerage companies hold their customers' securities in the firm's street name rather than in the name of each individual customer.
strike price: The price specified in an option contract. For a call, it's the price at which the option holder can buy a stock; for a put, it's the price at which the option holder can sell the stock.
Student Loan Marketing Association (Sallie Mae): A publicly traded corporation that provides federal and private student loans. It was created as a government-sponsored entity, but it severed its ties to the federal government in 2004.
subcategory: A subset of an income or expense category. For example, Gasoline and Maintenance could be subcategories of Automobile expenses.
subclass: A subset of a class. For example, if you own rental property, you might set up "Maple Street condominium" as a class and Water, Maintenance, and Electricity as subclasses.
support level: A level below which a stock will not fall. The trading range between the support level and the resistance level is known as a channel
symbol: A unique, market-approved code that identifies a particular security on an exchange. The symbol generally reflects the name of the security. Also known as the ticker symbol.
target price: The price that one hopes a given security will reach. Also, a predetermined signal to buy or sell a stock.
tax bracket: A range of incomes that are taxed at a specific marginal rate.
tax-deferred: Subject to tax in a later year, not in the year the investment is made or earns income. Tax-deferred investments are in contrast to tax-exempt investments, which are never taxed. Traditional IRAs and 401(k) plans are examples of tax-deferred savings plans.
Tax Estimator: The MSN Money feature that helps you estimate your tax liability based on the financial information that you track in MSN Money.
tax withholding: Federal, state, and local income taxes that are taken out of your wages or other income and deposited into an IRS account.
technical analysis: Predicting future stock performance by examining trading patterns in prices and volumes and comparing them with past patterns. Charting techniques, such as Bollinger bands or moving average lines, are often part of technical analysis. Contrast with fundamental analysis.
technical analyst: A person who forecasts price movements by examining and charting the patterns formed by price history, trading volume, the ratio of advancing stocks to declining stocks, and other technical data.
technical correction: See technical analysis.
technical indicator: Any of the patterns or measures used in technical analysis, such as Bollinger bands, moving average analysis, or stochastic oscillators.
technology sector: A category that includes computer hardware, software, electronics, electrical equipment, and wireless-communications companies.
tender offer: An offer from a company to shareholders to buy their shares of stock. The offer may come from the company itself or from another company that wants to acquire it.
ticker: See symbol.
time value: The portion of an option premium that is attributed to the amount of time remaining until the option contract expires. Time value is whatever value the option has in addition to its intrinsic value.
title insurance: An insurance policy that protects lenders when the title of a property is challenged for reasons such as fraud.
today: The change in value of a given investment for the current day.
top-10 holdings: A list of a mutual fund's top holdings as a percentage of total assets.
total annualized return: An investment return projected over a one-year period, compounded daily. For example, an investment that returns 1 percent over one month has an annualized return of about 12 percent.
total assets: Current assets plus non-current assets.
total common shares outstanding: Common shares outstanding as reported by the company on the 10-Q or 10-K.
total current assets: The sum of cash and equivalents, receivables, inventories, and other current assets. Total current assets are all of the assets that are convertible into cash within a short period of time, usually a year.
total current liabilities: The sum of accounts payable, short-term debt, and other current liabilities.
total equity: The sum of preferred stock equity and common stock equity.
total liabilities: The sum of total current liabilities and total non-current liabilities.
total liabilities and stock equity: The sum of the total liabilities and the shareholders' equity.
total net income: The sum of income from continuing and discontinued operations plus all other adjustments for extraordinary items, other gains/losses, accounting changes, tax loss carryforwards, and special items.
total non-current assets: The sum of intangibles and other non-current assets.
total non-current liabilities: The sum of long-term debt, deferred income taxes, other non-current liabilities, and minority interest.
total return: Total amount gained or lost on a security, account, or portfolio, measured over a specified time period. Total return includes changes in the investment's value, as well as income from dividends, interest paid (for bonds), and capital gains distributions (for mutual funds).
total positions: Total number of institutional owners and the aggregate number of shares that they own.
total shares outstanding: The total number of shares issued by a company or fund.
total stocks: The number of different stocks held by a given mutual fund. An indication of the portfolio's diversification.
transaction: A withdrawal, deposit or transfer of funds, or a purchase, a sale, or an exchange of a security.
transaction form: The form at the bottom of an Advanced Account Register, used for entering transactions manually.
transfer: To move money between accounts.
transportation sector: A category that includes companies involved in transportation by air, water, road, or railroad.
Treasury budget: A government report that presents the monthly Federal Budget Deficit data.
Treasury shares: Stock that was once outstanding but has since been repurchased by the company. Treasury stock is generally carried at cost and is not included in calculations for dividends or earnings per share.
Treynor Ratio: A gauge of risk-adjusted performance calculated by comparing the return of a portfolio to its "Beta.” Higher values are desirable and indicate greater return per unit of risk.
triple witching hour: The last hour of trading on the third Friday of March, June, September, and December, when investors rush to unwind their positions in index options and futures, all of which are expire on the same day. Triple witching sometimes produces major price swings.
trust: A legal arrangement in which one or more persons (trustees) take title to property and manage it on behalf of another person (beneficiary).
trust deed: A legal document that specifies the collateral for a loan and it gives a lender the right to seize and sell the collateral if the borrower fails to repay. For a home loan, the collateral is the home itself.
TSE 300 Index: A benchmark that tracks the performance of the Toronto Stock Exchange.
turnover ratio: A measure of a fund's trading activity, calculated by dividing the lesser of purchases or sales (excluding all securities with maturities of less than one year) by average monthly assets. A turnover ratio of 100 percent or more does not necessarily suggest that all securities in the fund's portfolio have been traded. The turnover ratio loosely represents the percentage of the portfolio's holdings that have changed over the past year.
type: The kind of security in question, for example a stock or mutual fund.
ultrashort bond fund: A Morningstar category for taxable bond funds that invest at least 70 percent of their assets in bonds, with a focus on short-term government and corporate bonds. Ultrashort bonds have an average duration or an average effective maturity of less than one year. These funds specifically exclude investment in international, convertible, multisector, and high-yield bonds.
uncovered call: See naked calls.
uncovered put: See naked puts.
underlying investment: The security or commodity to be purchased or sold when an option contract is exercised.
underwriter: A firm that brings out new securities issues, agreeing to purchase and resell them. Often a lead underwriter and several other underwriters will work together on a given issue.
unearned income: Any income - such as dividends, interest, royalties, rental fees, or capital gains - that does not come from wages, salary, tips, trade in business, or other employee or self-employment compensation.
unit investment trust: A kind of mutual fund that holds a fixed portfolio of bonds. When the bonds mature, the trust is dissolved.
UPC restricted: A type of security for which the Uniform Practice Code (UPC) restricts short sales. NASD members (brokerage firms) are required to close out their short sales of these securities 10 days before the normal settlement date if the security has not been delivered.
utilities bond: A bond category that includes bonds related to electricity, gas, nuclear power, dams, and telephone companies.
utilities sector: A category that includes electricity, gas, nuclear power, dams, and telephone companies.
value stock: A stock that is undervalued by the stock market, based on analysis of the company's fundamentals.
variable ratio investing: A contrary investing strategy that involves increasing stock holdings when the market is weak and increasing bond or cash holdings when the market is strong.
VAT: Value Added Tax. In Europe and Canada, a common form of sales tax in which tax is added each time value is added to a product, not just at the point of retail sale.
venture capital: Capital made available to new companies by investors known as venture capitalists, who contribute substantial sums. In exchange for risking their money, the investors hold a large ownership stake in the company.
vested value: The value of retirement benefits or stock options to which an employee is entitled regardless of continued employment, usually based on length of service.
volatility: A measure of a security's likelihood of rising or falling sharply within a short period, often measured by the beta.
volume: The total shares (or other units) of a security traded during the current (or most recent) trading day.
W-2: The form sent by an employer to each employee and to the IRS to report the employee's annual wages, payroll deductions, and other tax-related information.
W-4: A form filed by an employee, which the employer uses to determine how much tax to withhold from the employee's paycheck.
warrant: A security that allows the owner to buy a certain number of shares of a stock at some point in the future, generally at a higher price. For example, you might buy a warrant that gives you the right to purchase 10 shares of XYZ stock at $50 per share at any time before January 1 of the following year. Warrants are generally offered in tandem with a fixed-income security to provide additional incentive to the buyer.
watch account: An account in the Portfolio Manager that you can use to track investments that you don't own.
water/waste sector: A category that includes water, sewer, sanitation, irrigation, and drainage companies.
wholesale inventories: A government report that includes sales and inventory statistics from the second stage of the manufacturing process.
will: A legal document that you use to direct where you want your legal assets to go after your death.
Wilshire 5000 Stock Index: The popular name for what is now the Dow Jones Wilshire 5000 Composite Index. The index provides a broad measure of trends in stock prices across the whole of the market. The Dow Jones Wilshire 5000 consists of approximately 6,500 U.S.-based stocks traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq.
working capital: Current assets minus current liabilities. A firm's working capital is the money it has available to meet current obligations (those due in less than one year).
World Equity Benchmark Shares (WEBS): Investments that seek to track the performance of specific Morgan Stanley Capital International Indexes (MSCI) for 17 different countries/regions. WEBS are listed on the American Stock Exchange and trade like any other listed stock.
World Stock fund: A Morningstar category for international equity funds that seek diversification by investing in both foreign and domestic stocks. To be classified as a world stock fund by Morningstar, a fund must invest at least 40 percent of its portfolio in foreign stocks and more than 10 percent in U.S. stocks.
wrap account: An investment account in which the investor receives brokerage and other investment services for a single, predetermined price, usually a percentage of assets ranging from 1 to 3 percent.
write-down: An accounting adjustment that reduces the book value of an asset.
year-ago EPS: The actual earnings per share for the given year-ago period.
yen: The national currency of Japan.
yield: The income (dividends, capital gains, or interest payments) from an investment, as a percentage of the current price of the investment.
yield curve: A graph of available bond yields that shows the dividend yield on the vertical line and bond durations on the horizontal line. A typical yield curve is rising, or positive, because long-term bonds pay more interest. The sharper the curve slope, the less additional duration you need for a higher yield. Treasury securities are typically plotted on a yield curve.
yield to maturity: The total return of a bond (or other debt security) that is held to maturity, including interest payments and any difference between how much the investor paid for the bond and its face value.
YTD: Year to date.
Zacks average brokerage recommendation (ABR): The ABR is the calculated average of the actual recommendations (strong buy, hold, sell, etc.) made by brokerage firms for a given stock as reported by Zacks Investment Research.
Zacks consensus: Average recommendation values expressed as standardized ratings equivalents on a scale of 1.0 to 5.0, where 1.0 = strong buy, 1.1 through 2.0 = moderate buy, 2.1 through 3.0 = hold, 3.1 through 4.0 = moderate sell, 4.1 through 5.0 = strong sell.
Zacks industry: The industry category to which a company belongs, according to Zacks Investment Research.
zero-coupon bond: A bond that, instead of paying interest, is sold at a deep discount. The purchaser receives the face value at maturity, and the difference between purchase price and face value is the yield. Most zero-coupon bonds are Treasury securities.