The Rule of 72 is an approximation used to determine the number of years required to double the principal at a fixed annual rate of compound interest. By dividing 72 by the annual interest rate, one can estimate the length of time it takes for the initial investment to grow twofold.
A U.S. government bond issued in denominations ranging from $50 to $10,000, traditionally issued at a discount and redeemed at face value upon maturity.
A seasoned issue refers to securities that are typically from established companies, have gained a reputation for quality with the investing public, and enjoy a high level of liquidity in the secondary market.
A seasoned loan is a bond or mortgage on which several payments have been collected. These types of loans are considered lower risk and more marketable than newly issued loans.
A secondary offering, also known as a secondary distribution, is the sale of new or closely held shares of a company by investors, usually institutions, who are selling off their positions entirely or part of it.
A secured bond is a type of bond backed by some form of collateral such as a mortgage or other lien. The specifics of the security are detailed in the bond agreement, known as an indenture. Unlike secured bonds, debentures (unsecured bonds) are not backed by collateral.
A securities loan involves the loaning of securities by one broker to another, typically to facilitate a short sale or, in a broader context, can refer to a loan collateralized by marketable securities.
Securities markets are venues where securities are bought and sold, encompassing both organized exchanges and over-the-counter (OTC) markets. These markets facilitate the flow of capital from investors to companies, enabling economic growth and liquidity.
Serial bonds are a type of bond issue where parts of the total amount mature at different intervals over a period, rather than all at once on one maturity date. This structure allows issuers to spread out the repayment burden and provides investors with a series of maturing investments over time.
Series bonds are a group of bonds issued at different times with different maturities but under the same indenture.
A Series EE Bond is a type of U.S. government savings bond that earns a fixed interest rate for up to 30 years and is guaranteed to double in value if held for 20 years.
U.S. government bond that was available in denominations ranging from $500 to $10,000, primarily issued in exchange for Series E or EE bonds. The last issue date was August 31, 2004.
Series I Bonds are accrual-type securities designed for investors seeking to protect the purchasing power of their investment and earn a guaranteed real rate of return. They are characterized by inflation-indexed earnings that adjust over time.
A share warrant is a financial instrument that gives the holder the right, but not the obligation, to purchase company stock at a specified price before a warrant expiration date.
A short bond, also known as a short-term bond, refers to a bond with a short maturity period, generally meaning one year or less. These bonds are often classified as current liabilities under the accounting definition of short-term debt.
For tax purposes, a short-term capital gain (loss) is the profit (loss) realized from the sale of securities or other capital assets not held long enough to qualify for a long-term capital gain (loss).
A silent partner, also known as a limited partner, is an investor who contributes capital to a business but does not involve themselves in the daily management or operations of the company. Unlike general partners, silent partners have limited liability, meaning they can only lose the amount of their investment.
Single Premium Life Insurance (SPLI) is a type of life insurance coverage where the policyholder makes a one-time lump sum payment to fully fund the policy. After this initial payment, no further premiums are required for maintaining the coverage.
A limited reserve set aside systematically by an issuer over time to repay debt or to replace an asset in the future.
A sleeping partner is an individual who invests capital in a partnership but does not participate in daily business operations. This person shares in the profits and bears the legal rights and obligations of ownership as specified in the partnership agreement.
A Small Business Investment Company (SBIC) operates under the Small Business Investment Act of 1958 and provides financial assistance to small businesses.
Small-cap stocks refer to the stocks of publicly traded companies with a market capitalization typically between $300 million and $2 billion. They are considered less well-established but often exhibit faster growth potential compared to mid-cap and large-cap stocks.
Social lending, also known as peer-to-peer (P2P) lending, is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary.
Money contributed to a proposed development or investment that is typically tax-deductible, or refers to development costs that do not go into physical construction.
SPDR, also known as Standard & Poor’s Depositary Receipts, are a type of Exchange Traded Fund (ETF) designed to track a specific index, sector, commodity, or other asset.
Speculation is the purchase of any property or security with the expectation of obtaining a quick profit as a result of price change, possibly without adequate research. It is often compared to gambling but is different from investment.
Speculative building involves land development or construction without formal commitments from end users. Builders anticipate future demand, contrasting with custom building, which is contractually defined.
Speculative risk refers to the possibility of both financial loss and financial gain, characterized by uncertainty and typically not covered by insurance.
The Standard & Poor's Index, widely known as the S&P 500, is a broad-based measurement of changes in stock-market conditions based on the average performance of 500 widely held common stocks.
The S&P 500 is a stock market index that tracks the stocks of 500 large-cap U.S. companies. It represents the stock market's performance by reporting the risks and returns of the biggest companies.
The ability of an investor to retain their investment during periods of declining value, ensuring that short-term market fluctuations do not force premature sales.
Stock valuation is the process of determining the intrinsic value of a company's stock, which helps investors make informed decisions about buying, selling, or holding shares.
A stockholder, also referred to as a shareholder, is an individual or organization that holds at least one share of a company's stock, granting them fractional ownership in the corporation.
In the USA, individuals, businesses, and groups that own stocks in a corporation are known as stockholders. They hold a portion of the corporation's equity.
A stripped coupon refers to a small minimum trading unit of a larger security, where the principal amount and the interest payments have been separated and sold as individual zero-coupon securities.
The subscription price refers to the fixed price at which existing shareholders of a corporation are entitled to purchase additional common shares in a rights offering or exercise their subscription warrants.
Systemic risk, also known as market risk or systematic risk, refers to the part of a security’s risk that is common to all securities within the same general class and cannot be eliminated by diversification. The measure of systemic risk for individual stocks is the Beta Coefficient.
The term refers to suffering a large loss on a product, speculation, or investment.
An investment option where accumulated earnings are not taxed until the investor takes possession of the assets.
A term certificate, more commonly known as a Certificate of Deposit (CD), is a widely used savings option with a fixed maturity date, often chosen for its reliable interest rates and diverse term lengths.
A ticker tape traditionally referred to the paper output of a stock ticker machine, which showed stock symbols and prices but now generally refers to the digital displays providing real-time stock prices.
Topping out is a term used in finance to denote the point at which a market or security is at the end of a period of rising prices and is expected to either remain stable or decline. This term is often associated with market peaks and potential future downturns.
A trader is generally anyone who buys and sells goods or services for profit, also known as a dealer or merchant. In the context of investment, a trader refers to an individual who actively buys and sells securities for their own account.
The date on which a transaction in the money market took place.
TreasuryDirect is an electronic platform that allows individual investors to purchase U.S. Treasury securities directly from the government, thus bypassing intermediaries like banks and brokers.
TIGERs (Treasury Investors Growth Receipts) are U.S. government-backed bonds stripped of their coupons and sold separately at a deep discount.
Intermediate-term (one to 10 years) obligation of the U.S. government that bears interest paid by coupon. Treasury notes carry the highest domestic credit standing and have the lowest taxable yield available at equivalent maturity.
A Triple-A Tenant refers to a tenant with an excellent credit record, typically used in commercial real estate to indicate high financial stability and reliability.
A U.S. Savings Bond is a government bond issued by the U.S. Department of the Treasury designed to provide savings and investment options for American citizens.
An undated security is a fixed-interest security that does not have a redemption date. These securities perpetually generate a set interest payment without a requirement for the principal to be returned at a specific future date.
Undivided interest describes an ownership right to use and possession of a property that is shared among co-owners, with no one co-owner having exclusive rights to any portion of the property.
Unrealized profits or losses represent the gains or losses that have occurred but have not yet been actualized through the sale of an asset. These figures remain 'on paper' until the asset is sold, transforming them into realized profits or losses.
Unsecured Loan Stock (ULS) is a type of loan stock that is not backed by any assets or collateral, making it riskier for lenders compared to secured loan stocks.
Upside potential refers to the amount of upward price movement an investor or an analyst expects of a particular stock, bond, or commodity.
An uptick indicates that the latest trade in a stock is at a higher price than the previous trade. A zero-plus tick is a trade at the last price with the preceding different price registered as an uptick.
An uptrend refers to the general upward direction in the price of a stock, bond, commodity futures contract, or overall market, characterized by higher highs and higher lows over a period.
A variable annuity is a type of life insurance annuity whose value fluctuates with that of an underlying securities portfolio or other index of performance. It contrasts with a conventional or fixed annuity, whose rate of return is constant.
Venture capital is a form of private equity financing provided by venture capital firms or individual investors to early-stage, high-potential, and high-risk startup companies.
A Venture Capital Trust (VCT) is an investment vehicle in the United Kingdom designed to provide capital to small, expanding companies and give investors tax benefits.
Venture Capital Trusts (VCTs) offer a high-risk, high-reward investment avenue that provides risk capital for smaller unlisted trading companies, with the added advantage of certain tax benefits in the UK.
A War Loan refers to government-issued securities distributed during wartime to raise funds for war efforts. These loans typically carry a fixed interest rate and traditionally do not have a redemption date.
A term used in the secondary mortgage market to distinguish an investment that represents an original residential mortgage loan (whole loan) from a loan representing a participation with one or more lenders or a pass-through security representing a pool of mortgages.
The Wilshire 5000 is a stock index tracking 5,000 common stocks and is considered one of the most broadly based barometers of American stock performance.
A wire house is a national or international brokerage firm whose branch offices are linked by a communications system that allows for the rapid dissemination of prices, information, and research related to financial markets and individual securities.
An abbreviation for warrant, WT is a term used in finance to denote a derivative security. It gives the holder the right, but not the obligation, to purchase a company's stock at a specific price before the warrant expires.
Yield is a measure of the income generated from an investment over a particular period, expressed as a percentage of the investment's cost or current market value. This concept applies variably to fixed-interest securities and equities.
A visual representation that plots the yields of bonds with varying maturities. It is an essential tool for understanding market sentiment and interest rate expectations.
Yield to Maturity (YTM) is the total return anticipated on a bond if it is held until it matures. YTM takes into account the bond's current market price, par value, coupon interest rate, and the time to maturity.
A zero coupon bond is issued at a discount and matures at its face value, paying no interest during its life. It is a deep discount bond and offers a unique investment opportunity.
