Business/Investment Glossary A-E Accumulation  This is another way of saying: professional buying. A stock is under accumulation when volume expands on days when price moves up.  Annual report  Companies send their shareholders an annual report at the end of a fiscal year. The magazine or brochure sizes up company operations and displays earnings, sales, balance sheets and financial footnotes.  Ask  This is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically speaking, this is the quoted offer at which an investor can buy shares of stock.  Accumulation  This is another way of saying: professional buying. A stock is under accumulation when volume expands on days when price moves up.  Annual report  Companies send their shareholders an annual report at the end of a fiscal year. The magazine or brochure sizes up company operations and displays earnings, sales, balance sheets and financial footnotes.  Basic earnings  A simple calculation that takes net income divided by shares outstanding to get per-share earnings.  Basis point  In the bond market, the smallest measure used for quoting yields is a basis point. One basis point is 0.01 percent of a bond's yield. Basis points also are used for interest rates. An interest rate of 5 percent is 50 basis points greater than an interest rate of 4.5 percent.  Beta  This measures the volatility of a share of stock. A high beta stock, for example, will rise more in value than the stock market average on a day when shares in general are rising. And it will fall more sharply than the average on a day when shares are falling. The Standard & Poor's 500 Index of stocks, an index that represents large-company stocks, has a beta of 1.  Bid  This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically speaking, this is the available price at which an investor can sell shares of stock.  Bond  Bonds are debt and are issued for a period of more than one year. Book value  A company's book value is total assets minus intangible assets and liabilities such as debt. Book value might be more or less than the market value of the company.  Buy Price  Enter here the price you paid for a security. If, for example, you paid 8 1/4 a share for a security, enter 8 1/4.  Call option  This security gives investors the right to buy a security at a fixed price within a given time frame. An investor, for example, might wish to have the right to buy shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment.  Certificate of deposit  CDs, as they are called, pay interest to investors for as long as five years.  Change  This shows the change in price of a security from the previous day's closing price. For instance, -1 1/8 means the security has fallen $1.12.  Chief Operating Officer (COO)  A person who has full operational responsibilities for the day-to-day activities of an organization.  Commission  This is a fee an investor pays a broker for buying or selling securities.  Commodity  A commodity is food, a metal or another physical substance that investors buy or sell, usually via futures contracts.  Common shares  These are securities that represent equity ownership in a company. Common shares let an investor vote on such matters as the election of directors. They also give the holder a share in a company's profits via dividend payments or the capital appreciation of the security. Consumer Price Index  The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S. Department of Labor publishes the CPI every month. Consumer stock  The stock of a company that produces consumer-oriented products like food, beverages, tobacco, pharmaceuticals. Currency  This shows the currency that a security trades in, such as USD for U.S. dollar.  Current Yield  If a security has a dividend, the yield is the price of a stock dividend. A $10 stock that pays a 50 cent dividend for the year has a 5% yield.  Day High  This is the highest price that a security has traded at during the day. Day Low  This is the lowest price that a security has traded at during the day.  Devaluation  A lowering of a country's currency relative to gold and/or currencies of other nations. The opposite is revaluation. Debenture  The common type of bond issued by large, well-established organizations. Holders of debentures representing corporate indebtedness are creditors of the corporation Corporate securities (preferred shares or bonds) that are exchangeable for a set number of another form at a prestated price.  Subordinated Debenture  A debt that is junior in claim on assets to other debt, repayable only after other debts with a higher claim have been satisfied.  Diluted earnings  A calculation that includes stock options, warrants and convertible securities to get per-share earnings.  Distribution  This is another way of saying: professional selling. A stock is under distribution when volume expands on days when price moves down.  Dividend  A dividend is a portion of a company's profit paid to common and preferred shareholders. A stock selling for $20 a share with an annual dividend of $1 a share yields the investor 5 percent. Dow Jones Industrial Average  This is the best known U.S. index of stocks. It contains 30 stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing. There are thousands of investment indexes around the world for stocks, bonds, currencies and commodities.

. . E-O Earnings per share (EPS)  EPS, as it is called, is a company's profit divided by its number of shares. If a company earned $2 million in one year had 2 million shares of stock outstanding, its EPS would be $1 per share. Eurodollar  This is an American dollar that has been deposited in a European bank. It got there as a result of payments made to overseas companies for merchandise..  Ex-dividend  This literally means "without dividend." The buyer of shares when they are quoted ex-dividend is not entitled to receive a declared dividend.  EDGAR  The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit company documents to investors. Those documents, which are available via DBC's Smart Edgar service, include 10-Qs (quarterly reports), 8-Ks (significant developments such as the sale of a company unit) and 13-Ds (disclosures by parties who own 5% or more of a company's shares).  Exchange There are three main U.S. stock exchanges on which securities are traded. AMEX is the American Stock Exchange. NASDAQ is the National Association of Securities Dealers. NYSE is the New York Stock Exchange.  52 Week High  This is the highest price that a security has traded at during the last 52 weeks.  52 Week Low  This is the lowest price that a security has traded at during the last 52 weeks.  Float  The so-called float is the number of shares of a security that are outstanding and available for trading by the public.  Futures contract  This is an agreement that allows an investor to buy or sell a commodity, like gold or wheat, or a financial instrument, like a currency, at some time in future. A future is part of a class of securities called derivatives, so named because such securities derive their value from the worth of an underlying investment.   GAAP (General Accepted Accounting Principles)  Conventions, rules and procedures that define general accounting practice, including broad guidelines as well as detailed procedures.  Growth stock  The stock of a company whose business is considered recession-resistant and also possesses an above-average growth rate.  High price  This is the day's highest price of a security that has changed hands between a buyer and seller.  Initial public offering  An IPO is stock in a company that is being traded on an exchange for the first time. Investors first read a prospectus that describes the potential of the company and the risks of investing in it.  Insiders  These are directors and senior officers of a corporation -- in effect those who have access to inside information about a company. An insider also is someone who owns more than 10 percent of the voting shares of a company.  Junk bond  A bond with a speculative credit rating of BB or lower is a junk bond. Such bonds offer investors higher yields than bonds of financially sound companies. Two agencies, Standard & Poor's and Moody's Investor Services, provide the rating systems for companies' credit.   Last  This indicates the most recent trade of a security.  Limit order  Investors can place an order to buy or sell securities at a set price. The trade can take place only at that price or a lower one.  Long  Investors who go "long" simply own stock or another security. It is a term that means the opposite of "short," in which investors are short a stock or security because they have borrowed it and sold it to someone else.  Low price  This is the day's lowest price of a security that has changed hands between a buyer and a seller.  Margin  This allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes.  Market Cap  This is the company's market capitalization. If a company has 10 million shares and the company's shares are selling for $10, the market cap is $100 million. Market order  This is an order to buy or sell a security at the current trading price.  Moving average  A moving average is an average of a security's price over a specific time period. The average changes, for example, on a 30-day moving average, so that it includes the most current 30 trading days. Moving averages often indicate levels of support or resistance for a security.  Mutual fund  Mutual funds are pools of money that are managed by an investment company. Net asset value  Listed as NAV in mutual fund listings, net asset value is the market value of a fund's shares. It is calculated at the close of trading.  Net Change  This is the difference between a day's last trade and the previous day's last trade.  Net Profit  This is the difference between the total price you paid for a security, with the brokerage commission you paid, and the current value. It will show either a profit or a loss.  Open  The price at which a security opens the trading day. Generally, the opening price reflects the previous day's close -- unless extraordinary news or demand to buy or sell have occurred before the market opens. . Open order  An open order is any order to buy or sell securities that has yet to be executed.  Options  These contracts give the holder the right to buy or sell securities at a set price or a set period of time. Investors often use them to protect, or hedge, an existing investment. An option is part of a class of securities called derivatives, so named because these securities derive their value from the worth of an underlying investment.                                                            >>>NEXT

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