Accredited Investor
Term used by SEC in Regulation D of private placements. Concept: although 35 is the upper limit of persons who may purchase a private placement, accredited investors are not included in this number. General definition of accredited investors: institutional type accounts and persons of wealth (persons with a net worth of $1 Million or more, persons with annual income of $200,000 or more, persons who purchase $150,000 or more of the offering and this does not represent more than 20% of their net worth).
Accrued Interest
Interest that has been earned since the last interest payment date ie: When a bond trades, the buyer pays the seller the accrued interest.
Accumulation
Buying more shares of a security without causing the price to increase considerably. A stock may start to base and trade sideways for an extended period. While this base builds, traders and investors may seek to establish or increase existing positions.
Accumulation/Distribution Line
Momentum indicator that relates price changes with volume. It relates the closing price to the range of prices (high - low). The closer the close is to the high, the more volume is added to the cumulative total.
Advance/Decline Line
Widely used indicator to measure the breadth of a stock market advance or decline. The AD line tracks the net difference between advancing and declining issues. It is usually compared to a market average where divergence from that average would be an early indication of a possible trend reversal.
Advance/Decline Ratio
The ratio of advancing issues over declining issues. Taking the moving average of the AD ratio will smooth it so it can be used as an overbought and oversold indicator.
Advancing
Stage the market or of a stock that is characterized by an uptrend, making higher highs and higher lows.
Advancing/Declining Issues
Market momentum indicator using the advancing issues and the declining issues. It subtracts the declining issues from the advancing ones and is usually smoothed to make it a good overbought or oversold indicator.
After Hours Trading
Trading activity before 9:30am EST and/or after 4:00pm EST. Market hours are from 9:30am EST to 4:00pm EST.
All or None
Type of order issued to a broker by a buyer or seller to fill the order in its entirety or not at all. There would be no partial transactions.
Alpha
Alpha measures the portion of an investment's return that is not related to the performance of the overall market; it is the difference between an investment’s actual return (over a period of time) and its market return as measured by beta. Alpha is most commonly used with stock funds and is one way to measure the value that a portfolio manager adds to (or detracts from) a fund's return.
Alpha
Measure of the residual risk that an investor takes for investing in a fund rather than a market index. It represents the difference between a mutual fund's actual performance and the performance that would be expected based on the level of risk taken by the fund's manager. If a fund produced the expected return for the level of risk assumed, the fund would have an Alpha of zero. A positive Alpha indicates the manager produced a return greater than expected for the risk taken. Conversely a negative Alpha indicates the manager has not adequately rewarded investors for the risks taken.
American Depository Receipt-ADR
Securities issued by commercial banks that represent the shares of a foreign company. ADRs trade just like normal stocks on various US stock exchanges. Their performance usually parallels that of the parent company on its domestic exchange.
AMEX
Acronym used for the American Stock Exchange.
AMEX Composite Index
Weighted index of the stocks listed on the American Stock Exchange. The market capitalization of each company is used to construct the index.
Analyst
Person who evaluates financial instruments, performs investment research, and makes recommendations to institutional and retail investors to buy, sell, or hold financial instruments.
Announcement Date
Date on which a company first publicly announces an impending stock split.
Annualized
Translation of periods of less than a year into an annual rate for comparative purposes. To annualize quarterly figures, you would multiply them by four.
Annual Report
Term for the yearly report made by a company to its stockholders. Federal law requires all registered corporations to make such reports. They usually contain a balance sheet, an income statement, a list of changes in retained earnings, and how income of the corporation was used.
Annuity
Contract between an individual and an insurance company in which the individual pays money into an account in exchange for a guaranteed payment at or during retirement. Annuities offer tax-deferred growth potential. There are two types of annuities: fixed and variable.
Arbitrage
Simultaneous buying and selling of securities to take advantage of price discrepancies. Arbitrage opportunities usually surface after a takeover offer.
Ask
Known as the "offer", it is the price that the market maker guarantees to fill a buy order. A buy order placed at the market will usually be filled at the current asking (offer) price.
Asset Allocation
A process of dividing investments in your portfolio among different kinds of assets, such as stocks, bonds, futures, forex, real estate, and cash, to try to meet a specific objective.
Assets
Any possessions that have value in an exchange.
At The Money
An option whose strike price is equal to the price of the underlying security.
Average Directional Index
Part of the Directional Movement Indicator system, the ADX line is based on the spread between the +DI and -DI lines from that same system.
Average True Range
Indicator that measures a security's volatility. High ATR values indicate high volatility and may be an indication of panic selling or panic buying. Low ATR readings indicate sideways movement by the stock.