Glossary
New
Updated Mar 18 2026
A tax-deferred retirement savings plan offered by employers. Employees contribute pre-tax income, which grows tax-free until withdrawal during retirement.
An exchange-traded fund that automatically reinvests dividends back into the fund rather than distributing them to investors, allowing for compound growth.
An investment strategy where portfolio managers make specific investment decisions to outperform a benchmark index, as opposed to passive investing.
A certificate issued by U.S. banks representing shares of foreign companies, allowing Americans to invest in international stocks using U.S. dollars.
A certificate issued by U.S. banks representing shares of foreign companies, allowing Americans to invest in international stocks using U.S. dollars.
Stock trading that occurs outside regular market hours (before 9:30 AM or after 4:00 PM Eastern Time), often with higher volatility and wider spreads.
A measure of an investment's performance compared to a benchmark index, representing the excess return generated by active management.
The real rate of return earned on an investment in one year, accounting for compound interest. Higher APY means faster money growth.
A financial product sold by insurance companies that provides regular payments in exchange for an upfront investment, commonly used for retirement income.
The lowest price a seller is willing to accept for a security. The difference between ask price and bid price is the spread.
The process of dividing investments among different asset categories (stocks, bonds, cash) to balance risk and reward based on goals and risk tolerance.
A group of investments with similar characteristics that behave similarly in the marketplace, such as stocks, bonds, real estate, or commodities.
A fee charged when selling shares of a mutual fund, also called a deferred sales charge. The fee typically decreases the longer you hold the investment.
A market condition where securities prices fall 20% or more from recent highs, typically accompanied by widespread pessimism and negative investor sentiment.
A standard index or measure used to evaluate the performance of an investment portfolio, such as the S&P 500 for U.S. large-cap stocks.
A measure of a stock's volatility relative to the overall market. A beta above 1 indicates higher volatility than the market; below 1 indicates lower volatility.
The highest price a buyer is willing to pay for a security at a given time. Investors sell at the bid price when executing market orders.
The difference between the highest price buyers will pay (bid) and the lowest price sellers will accept (ask) for a security.
The first and most well-known cryptocurrency, operating on a decentralized blockchain network without central authority or intermediary institutions.
A distributed digital ledger technology that records transactions across multiple computers, providing transparency and security for cryptocurrencies.
Shares of large, established companies with a history of reliable performance, stable earnings, and often regular dividend payments.
A debt security where an investor loans money to an entity (corporate or governmental) that borrows funds for a defined period at a fixed interest rate.
A licensed individual or firm that facilitates buying and selling of securities between buyers and sellers in exchange for a commission or fee.
A market condition characterized by rising prices, strong investor confidence, and expectations that strength will continue for an extended period.
The total amount of money available in a brokerage account to purchase securities, including cash and available margin credit.
A contract giving the buyer the right (but not obligation) to purchase a security at a specified price within a specific time period.
Profit from selling an investment for more than the purchase price. Short-term gains (held <1 year) are taxed as ordinary income; long-term gains receive preferential tax treatment.
A loss that occurs when selling an investment for less than the purchase price, which can be used to offset capital gains for tax purposes.
A brokerage account where investors must pay the full amount for securities purchased and cannot borrow funds from the broker.
A savings product offering a fixed interest rate for a specific term, typically providing higher returns than savings accounts in exchange for locking up funds.
The final price at which a security trades during regular market hours, used as a reference point for the next day's opening and performance calculations.
A security representing ownership in a corporation, typically providing voting rights and potential dividends, but junior to preferred stock in liquidation.
Interest calculated on the initial principal and accumulated interest from previous periods, allowing investments to grow exponentially over time.
A corporate bond that can be converted into a predetermined number of the company's common stock shares, offering hybrid characteristics.
Any event initiated by a company's board of directors that affects securities holders, such as stock splits, dividends, mergers, or acquisitions.
Digital or virtual currency using cryptography for security, operating independently of central banks on decentralized networks like blockchain.
The annual income (interest or dividends) divided by the current price of a security, expressed as a percentage.
Stocks of companies whose performance closely follows economic cycles, typically performing well during expansions and poorly during recessions.
The practice of buying and selling securities within the same trading day, attempting to profit from short-term price movements. Highly risky and requires significant capital.
Stocks that provide consistent returns regardless of economic conditions, typically in industries like utilities, healthcare, and consumer staples.
A financial contract whose value is based on an underlying asset, index, or benchmark, including options, futures, and swaps.
The practice of spreading investments across various assets, sectors, or geographic regions to reduce risk and volatility in a portfolio.
A portion of a company's earnings distributed to shareholders, usually paid quarterly in cash or additional shares of stock.
An automated program that uses dividend payments to purchase additional shares, accelerating compound growth without transaction fees.
An investment strategy of regularly investing fixed amounts regardless of price, reducing the impact of volatility by averaging purchase costs over time.
A stock market index tracking 30 large, publicly-owned U.S. companies, serving as a key indicator of overall market performance.
A company's net profit divided by outstanding shares, indicating profitability on a per-share basis. Higher EPS generally suggests better financial health.
Economies transitioning from developing to developed status, offering higher growth potential but increased investment risk and volatility.
Liquid savings set aside for unexpected expenses, typically 3-6 months of living expenses, to avoid disrupting long-term investments.
Ownership interest in a company, represented by stock. Also refers to the value of an asset minus liabilities (home equity, portfolio equity).
Investment approach considering Environmental, Social, and Governance factors alongside financial returns to promote sustainable and ethical business practices.
An investment fund trading on stock exchanges like individual stocks, offering diversified exposure to various assets with typically lower fees than mutual funds.
The annual fee expressing what it costs to operate a fund as a percentage of assets, covering management, administrative, and operating costs.
Acronym for five major technology companies: Meta (Facebook), Apple, Amazon, Netflix, and Alphabet (Google), known for market leadership and growth.
A person or organization legally obligated to act in another's best interest, placing client interests above their own regarding financial matters.
The ability to understand and effectively apply financial skills including budgeting, investing, and managing money for long-term financial stability.
Financial Industry Regulatory Authority, a self-regulatory organization overseeing broker-dealers and protecting investors in U.S. securities markets.
Investments providing regular, predetermined returns, primarily bonds and Treasury securities, offering stability and income generation.
Portions of a full share allowing investors to buy expensive stocks with smaller amounts of money, enabling greater diversification and accessibility.
Investment analysis evaluating a security's intrinsic value by examining economic factors, financial statements, management quality, and industry conditions.
An order to buy or sell a security that remains active until executed or manually cancelled, typically lasting up to 90 days depending on the broker.
Investment approach focusing on companies with above-average growth potential, even if shares appear expensive based on traditional valuation metrics.
Shares of companies expected to grow earnings faster than the market average, typically reinvesting profits rather than paying dividends.
Private investment partnerships using diverse strategies including leverage and derivatives to generate returns, typically requiring high minimum investments.
Bonds with lower credit ratings (below investment grade) offering higher interest rates to compensate for increased default risk. Also called junk bonds.
Investment strategy focused on generating regular income through dividends, interest, and distributions rather than capital appreciation.
A statistical measure tracking a specific basket of securities representing a market segment, sector, or asset class for performance comparison.
A passively managed investment fund designed to replicate the performance of a specific market index with minimal management intervention and lower fees.
The rate at which general prices for goods and services rise, eroding purchasing power and impacting investment returns and savings.
The first time a private company offers shares to the public, transitioning to public ownership and listing on a stock exchange.
The percentage charged by lenders for borrowing money or paid by institutions on deposits, influencing investment returns and borrowing costs.
A tax-advantaged retirement savings account allowing individuals to save and invest for retirement with tax benefits varying by IRA type.
Stocks of companies with market capitalizations exceeding $10 billion, typically well-established firms with stable operations and lower volatility.
Using borrowed money to amplify investment potential returns, which also magnifies potential losses and increases risk exposure.
An order to buy or sell a security at a specific price or better, providing price control but no guarantee of execution.
The ease and speed with which an asset can be converted to cash without significantly affecting its price. Stocks are typically more liquid than real estate.
Ownership of a security with the expectation its value will increase, representing the traditional buy and hold investment approach.
Borrowed money from a broker to purchase securities, using the investment as collateral. Margin trading amplifies both gains and losses.
A broker's demand for additional funds when a margin account falls below minimum maintenance requirements, requiring immediate deposit or liquidation.
Total value of a company's outstanding shares calculated by multiplying share price by total shares outstanding, used to categorize company size.
An order to buy or sell a security immediately at the best available current price, guaranteeing execution but not price.
Stocks of companies with market capitalizations between $2 billion and $10 billion, offering balance between growth potential and stability.
A mutual fund investing in short-term, high-quality debt securities, offering liquidity and stability with returns typically exceeding savings accounts.
Debt securities issued by states, cities, or counties to finance public projects, typically offering tax-free interest income to investors.
An investment vehicle pooling money from multiple investors to purchase diversified securities, professionally managed with fees based on assets.
A global electronic marketplace and index tracking technology and growth companies, the second-largest stock exchange by market capitalization.
The per-share value of a mutual fund or ETF, calculated by dividing total assets minus liabilities by outstanding shares.
A mutual fund sold without sales commissions or load fees, allowing 100% of investment to work immediately generating returns.
A contract granting the right (not obligation) to buy or sell an underlying asset at a predetermined price before a specific expiration date.
A valuation metric calculated by dividing stock price by earnings per share, indicating how much investors pay per dollar of earnings.
A trader executing four or more day trades within five business days, requiring minimum $25,000 account equity and margin account under FINRA rules.
Low-priced stocks (typically under $5) of small companies, characterized by high volatility, low liquidity, and increased fraud risk.
A collection of investments held by an individual or institution, typically diversified across multiple asset classes and securities.
A hybrid security with characteristics of both stocks and bonds, offering fixed dividends and priority over common stock in liquidation, but typically no voting rights.
A contract giving the buyer the right to sell a security at a specified price within a specific time period, often used for hedging or speculation.
A company owning income-producing real estate, required to distribute 90% of taxable income as dividends, offering real estate exposure without property ownership.
Adjusting portfolio allocations back to target percentages by buying or selling assets, maintaining desired risk levels as market values change.
A significant, widespread, and prolonged downturn in economic activity, typically defined as two consecutive quarters of negative GDP growth.
A performance measure calculating the gain or loss from an investment relative to its cost, expressed as a percentage of the initial investment.
An investor's ability and willingness to lose some or all of an investment in exchange for potentially greater returns.
A retirement account funded with after-tax dollars, allowing tax-free growth and withdrawals in retirement, with contribution limits based on income.
A stock market index tracking 2,000 small-cap U.S. companies, serving as a key benchmark for small-company stock performance.
A market-capitalization-weighted index tracking 500 large U.S. companies, widely regarded as the best single gauge of U.S. equity market performance.
The primary U.S. federal regulatory agency overseeing securities markets, protecting investors, and maintaining fair and efficient markets.
A group of companies operating in similar business activities or industries, such as technology, healthcare, financials, or consumer goods.
The date when a securities transaction must be finalized, currently T+1 (one business day after trade date) for most U.S. securities.
A trading strategy borrowing shares to sell immediately, planning to repurchase at lower prices, profiting from price declines.
Stocks of companies with market capitalizations between $300 million and $2 billion, offering high growth potential with increased volatility and risk.
A security representing fractional ownership in a corporation, entitling holders to proportionate claims on assets and earnings.
A corporate action increasing outstanding shares by dividing existing shares, reducing per-share price proportionally without changing market capitalization.
An order automatically selling a security when it reaches a specified price, limiting potential losses or protecting gains.
The predetermined price at which an option contract can be exercised, buying (call) or selling (put) the underlying security.
A mutual fund automatically adjusting asset allocation based on a target retirement date, becoming more conservative as the date approaches.
Selling securities at a loss to offset capital gains tax liability, reducing overall tax burden while maintaining portfolio allocation.
Investment analysis using statistical trends from trading activity, including price movements and volume, to identify patterns and make trading decisions.
The complete investment return including price appreciation and income from dividends or interest, expressed as a percentage of initial investment.
The total number of shares or contracts traded for a security during a specific period, indicating liquidity and investor interest.
U.S. government debt securities with maturities of 10-30 years, paying fixed interest semi-annually and backed by full faith and credit of the U.S. government.
Investment approach seeking undervalued securities trading below intrinsic value, based on fundamental analysis of company financials and assets.
Shares trading below their intrinsic value based on fundamentals, characterized by low P/E ratios, high dividend yields, and low price-to-book ratios.
Financing provided to early-stage, high-potential startups in exchange for equity, offering high return potential with significant risk.
The degree of variation in securities prices over time, measuring risk with higher volatility indicating greater price fluctuations and uncertainty.
The income return on an investment, expressed as a percentage, calculated by dividing annual income by current price or initial investment.
A graph plotting interest rates of bonds with equal credit quality but different maturity dates, used to predict economic changes and recession risks.
A bond sold at a deep discount paying no periodic interest, with profit coming from the difference between purchase price and face value at maturity.
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