SIE

Assignment

(1) A document accompanying or part of a stock certificate that is signed by the person named on the certificate for the purpose of transferring the certificate's title to another person's name. (2) The act of identifying and notifying an account holder that the option owner has exercised an option held short in that account.

Administrator

(1) A person authorized by a court of law to liquidate an intestate decedent's estate. (2) An official or agency that administers a state's securities laws.

Amortization

(1) The paying off of debt in regular installments over a period of time. (2) The ratable deduction of certain capitalized expenditures over a specified period of time.

Affiliate

(1) A person who directly or indirectly owns, controls, or holds the power to vote 10% or more of the outstanding voting securities of a company. (2) With respect to a direct participation program, any person who controls, is controlled by, or is under common control with the program's sponsor and includes any person who beneficially owns 50% or more of the equity interest in the sponsor. (3) Under the Investment Company Act of 1940, a person who has any type of control over an investment company's operations, which includes anyone with 5% or more of the outstanding voting securities of the investment company or any corporation of which the investment company or any corporation of which the investment company holds 5% or more of outstanding secures.

Broker

(1) An individual or a firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm. (2) The role of a firm when it acts as an gent for a customer and charges the customer a commission for its services.

Agent

(1) An individual or a firm that effects securities transactions for the accounts of others. (2) A person licensed by a state as a life insurance agent. (3) A securities salesperson who represents a broker-dealer or an issuer when selling or trying to sell securities to the investing public; this individual is considered an agent whether he actually receives or simply solicits orders.

Call

(1) An option contract giving the owner the right to buy a specified amount of an underlying security at a specified price within a specified time. (2) The act of exercising a call option.

Asset

(1) Anything that an individual or a corporation owns. (2) A balance sheet item expressing what a corporation owns.

Board of directors

(1) Individuals elected by stockholders to establish corporate management policies. A board of directors decides, among other issues, if and when dividends will be paid to stockholders. (2) The body that governs the NYSE. It is composed of 20 members elected by the NYSE general membership for a term of two years.

Accredited investor

As defined in Rule 502 of Regulation D, any institution or individual meeting minimum net worth requirements for the purchase of securities qualifying under the Regulation D registration exemption. An accredited investor is generally accepted to be one who: Has a net worth of $1 million or more not including net equity in a primary residence; or Has had an annual income of $200,000 or more during each of the two most recent years (or $300,000 jointly with a spouse) and who has a reasonable expectation of reaching the same income level during the current year.

Bond ratio

One of several tools used by bond analysts to assess the degree of safety offered by a corporation's bonds. It measures the percentage of the corporation's capitalization that is provided by long-term debt financing, calculated by dividing the total face value of the outstanding bonds by the total capitalization. Syn. Debt ratio.

Asset-backed security

One whose value and income payments are backed by the expected cash flow from a specific pool of underlying assets. Pooling the assets into financial instruments allows them to be sold to investors more easily than selling them individually. This process is called securitization.

Anti-money laundering

Programs developed under the Bank Secrecy Act to prevent and detect the act of "clean" money or money that has been laundered through legitimate businesses later being used for "dirty" purposes such as terrorist activities.

Balance of trade

The largest component of a country's balance of payments; it concerns the export and import of merchandise (not services). Debit items include imports, foreign aid, domestic spending abroad, and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy, and foreign investments in the domestic economy.

Assumed interest rate (AIR)

The net rate of investment return that must be credited to a variable life insurance policy to ensure that at all times the variable death benefit equals the amount of the death benefit. It forms the basis for projecting payments, but it is not guaranteed.

Blue-sky laws

The nickname for state regulations governing the securities industry. The term was coined in the early 1900s by a Kansas Supreme Court justice who wanted regulation to protect against "speculative schemes that have no more basis than so many feet of blue sky."

Authorized stock

The number of shares of stock that a corporation can issue. This number of shares is stipulated in the corporation's state-approved charter and may be changed by a vote of the corporation's stockholders.

Accumulation stage

The period during which contributions are made to an annuity account.

Breakeven point

The point at which gains equal losses.

Basis quote

The price of a security quoted in terms of the yield that the purchaser may expect to receive.

Buy-in

The procedure that the buyer of security follows when the seller fails to complete the contract by delivering the security.. The buyer closes the contract by buying the security in the open market and charging the account of the seller for transaction fees and any loss caused by changes int he markets.

Bond swap

The sale of a bond and the simultaneous purchase of a different bond in a like amount. The technique is used to control tax liability, extend maturity, or update investment objectives. Syn. Tax swap.

Breakpoint sale

The sale of mutual fund shares in an Amount just below the level at which the purchaser would qualify for reduced sales charges. This violates the Conduct Rules.

Breakpoint

The schedule of sales charge discounts mutual fund offers for lump-sum or cumulative investments.

At-the-money

The term used to describe an option when the underlying stock is trading precisely at the exercise price of the option.

Adjusted Basis

The value attributed to an asset or security that reflects any deductions taken on, or capital improvements to, the asset or security. Adjusted basis is used to compute the gain or loss on the sale or other disposition of the asset or security.

Assessed value

The value of a property as appraised by a taxing authority for the purpose of levying taxes. It may equal market value or a stipulated percentage of market value.

Annuitize

To change an annuity contract from the accumulation (pay-in) stage to the distribution (pay-out) stage.

Blue sky

To register a securities offering in a particular state.

Block trade

In general, 10,000 shares of stock would be considered a block trade.

Banker's Acceptance (BA)

A money market instrument used to finance international and domestic trade. It is a check drawn on a bank by an importer or exporter of goods and represents the bank's conditional promise to pay the face amount of the note at maturity (normally less than three months).

Back-end load

A commission or sales fee that is charged when mutual fund shares or variable annuity contracts are redeemed. It declines annually, decreasing to zero over an extended holding period—up to eight years— as described in the prospectus. Syn. Contingent-deferred sales load.

Annuity

A contract between an insurance company and an individual, generally guaranteeing lifetime income to the individual on whose life the contract is based in return for either a lump-sum or a periodic payment to the insurance company. The contract holder's objective is usually retirement income.

Business day

A day on which financial markets are open for trading. Saturdays, Sundays, and legal holidays are not considered business days.

Agency Issue

A debt security issued by an authorized agency of the federal government. Such an issue is backed by the issuing agency itself, not by the full faith and credit of the U.S. government (expect Government National Mortgage Association (GNMA) and Federal Import Export Bank Issues)

Audited financial statement

A financial statement of a program, a corporation, or an issuer (including the profit and loss statement, cash flow and source and application of revenues statement, and balance sheet) that has been examined and verified by an independent certified public accountant.

Auction market

A market in which buyers enter competitive bids and sellers enter competitive offers simultaneously. The NYSE is an auction market. Syn. double auction market.

Bear market

A market in which prices of a certain group of securities are falling or are expected to fall.

Bull Market

A market in which prices of a certain group of securities are rising or will rise.

Basis point

A measure of a bond's yield, equal to 1/100 of 1% of yield. A bond whose yield increases from 5.0% to 5.5% is said to increase by 50 basis points.

Book value per share

A measure of the net worth of each share of common stock. It is calculated by subtracting intangible assets and preferred stock from total net worth, then dividing the result by the number of shares of common outstanding. Syn. Net tangible assets per share.

Balanced investment strategy

A method of portfolio allocation and management aimed at balancing risk and return. A balanced portfolio may combine stocks, bonds, packaged products, and cash equivalents.

Callable preferred stock

A type of preferred stock issued with a provision allowing the corporation to call in the stock at a certain price and retire it.

Asset allocation fund

A mutual fund that splits its investment assets among stocks, bonds, and other vehicles in an attempt to provide a consistent return for the investor.

Bond fund

A mutual fund whose investment objective is to provide stable income with minimal capital risk. It invests in income-producing instruments, which may include corporate, government, or municipal bonds.

Balanced fund

A mutual fund whose stated investment policy is to have at all times some portion of its investment assets in bonds and preferred stock as well as in common stock in an attempt to provide both growth and income.

American depository receipt (ADR)

A negotiable U.S. Security certificate representing a given number of shares of stock in a foreign corporation. It is bought and sold in the American securities markets, just as stock is traded. Syn. American depositary share

Best efforts underwriting

A new issue securities underwriting in which the underwriter acts as an agent for the issuer and puts forth its best efforts to sell as many shares as possible. The underwriter has no liability for unsold shares, unlike in a firm commitment underwriting.

Broker-dealer (BD)

A person or firm in the business of buying and selling securities. A firm may act as both broker (agent) and dealer (principal), but not in the same transaction. They normally must register with the SEC, the appropriate SROs, and any state in which they do business.

Assignee of record

A person who has acquired a beneficial interest in a limited partnership and whose interest has been recorded on the books of the partnership and is the subject to written instrument of assignment.

Assignee

A person who has acquired a beneficial interest in a limited partnership from a *third party*, but who is neither a substitute limited partner nor an assignee of record.

Annuitant

A person who receives an annuity contract's distribution.

Business cycle

A predictable long-term pattern of alternating periods of economic growth and decline. The cycle passes through four stages: expansion, peak, contraction, and trough.

Average

A price at a midpoint among a number of prices. Technical analysts frequently use averages as market indicators.

Acceptance, waiver, and consent

A process for settling a charge or complaint that is quicker and less formal than the regular complaint procedure.

Balloon maturity

A repayment schedule for an issue of bonds wherein a large number of the bonds come due at a prescribed time (normally at the final maturity date); a type of serial maturity.

Balance sheet

A report of a corporation's financial condition at a specific time.

Book-entry security

A security sold without delivery of a certificate. Evidence of ownership is maintained on records kept by a central agency; for example, The Treasury keeps records of Treasury bill purchasers. Transfer of ownership is recorded by entering the change on the books or electronic files.

Buyer's option

A settlement contract that calls for delivery and payment according to a number of days specified by the buyer.

Average price

A step in determining a bond's yield to maturity. A bond's average price is calculated by adding its face value to the price paid for it and dividing the result by two.

Bar chart

A tool used by technical analysts to track the price movements of a commodity over several consecutive time periods.

Agency Transaction

A transaction in which a broker-dealer acts for the accounts of others by buying or selling securities on behalf of customers. Syn. agency basis

Callable bond

A type of bond issued with a provision allowing the issuer to redeem the bond before maturity at a predetermined price.

Accumulation Unit

An accounting measure used to determine an annuitant's proportionate interest in the insurer's separate account during an annuity's accumulation stage.

Annuity unit

An accounting measure used to determine the amount of each payment during an annuity's distribution stage. The calculation takes into account the value of each accumulation unit and such other factors as assumed interest rate and mortality risk.

Average basis

An accounting method used when an investor has made multiple purchases at different prices of the same security; the method averages the purchase prices to calculate an investor's cost basis in shares being liquidated. The difference between the average cost basis and the selling price determines the investor's tax liability.

Amortization of bond premium

An accounting process whereby the initial cost of a bond purchased at a premium is decreased to reflect the basis of the bond as it approaches maturity.

Bond counsel

An attorney retained by a municipal issuer to give an opinion concerning the legality and tax-exempt status of a municipal issue. Syn. bond attorney.

Bond rating

An evaluation of the possibility of a bond issuer's default, based on an analysis of the issuer's financial condition and profit potential. Standard & Poor's, Moody's Investors Service, and Fitch Investors Service, among others, provide bond rating services.

Broad-based index

An index designed to reflect the movement of the market as a whole. Examples include the S&P 100, the S&P 500, the Major Market Index, and the Value Line Composite Index.

Ask

An indication by a trader or a dealer of a willingness to sell a security or a commodity; the price at which an investor may buy from a broker-dealer. Syn. offer

Bid

An indication by an investor, trader, or dealer of a willingness to buy a security; the price at which an investor may sell to a broker-dealer.

Balance of payments (BOP)

An international accounting record of all transactions made by one particular country with others during a certain time period; it compares the amount of foreign currency the country has taken in with the amount of its own currency it has paid out.

Bear

An investor who acts on the belief that a security or the market is falling or will fall.

Bull

An investor who acts on the belief that a security or the market is rising or will rise.

Bond

An issuing company's or government's legal obligation to repay the principal of a loan to bond investors at a specified future date. They are usually issued with par, or face, values of $1,000, representing the amount of money borrowed. The issuer promises to pay a percentage of the par value as interest on the borrowed funds. The interest payment is state on the face of the bond at issue.

Bona Fide Quote

An offer from a broker-dealer to buy or sell securities. It indicates a willingness to execute a trade under the terms and conditions accompanying the quote.

All-or-None Order (AON)

An order that instructs the firm to execute the entire order. Firm does not have to execute immediately.

At-the-opening order

An order that specifies it is to be executed at the opening of the market of trading in that security or else it is to be canceled. The order will be executed at the opening price.

Buy stop order

An order to buy a security that is entered at a price above the current offering price and that is triggered when the market price touches or goes through the buy stop price.

Alternative order

An order to execute either of two transactions- for example, placing a sell limit (above the market) and a sell stop (below the market) on the same stock. Syn. either/or order; one cancels other order.

Associated person of a member (AP)

Any employee, manager, director, officer, or partner of a member broker-dealer or another entity or any person controlling, controlled by, or in common control with that member.

Branch office

Any location identified by any means to the public as a place where a registered broker/dealer conducts business.

Advertisement

Any promotional material designed for use by newspapers, magazines, billboards, radio, television, telephone recording, or other public media where the firm has little control over the type of individuals exposed to the material.

Balance sheet equation

Assets = Liabilities + Stockholders' Equity

Adjusted Gross Income (AGI)

Earned income plus the net passive income, portfolio income, and capital gains.

Broker's loan

Money loaned to a brokerage firm by a commercial bank or other lending institution for financing customers' margin account debit balances.

Bond quote

One of a number of quotations listed in the financial press and most daily newspapers that provide representative bid prices from the previous day's bond market. Quotes for corporate and government bonds are percentages of the bonds' face values (usually $1,000). Corporate bonds are quoted in increments of 1/8, where a quote of 991/8 represents 99.125% of par ($1,000), or $991.25. Government bonds are quoted in 32nds. Municipal bonds may be quoted on a dollar basis or on a yield-to-maturity basis.

Bank Secrecy Act

The act establishing the U.S. Treasury Department as the lead agency for developing regulation in connection with anti-money laundering programs, which require broker-dealers to establish internal compliance procedures to detect abuses.

Agreement among underwriters

The agreement that sets forth the terms under which each member of an underwriting syndicate will participate in a new issue offering and states the duties and responsibilities of the underwriting manager.

Buying power

The amount of fully margined securities that a margin client may purchase using only the cash, securities, and special memorandum account balance without depositing additional equity.

Annual compliance review

The annual meeting that all registered representatives and principals must attend, the purpose of which is to review compliance issues.

Bond Yield

The annual rate of return on a bond investment. Types of yield include nominal yield, current yield, yield to maturity, and yield to call. Their relationships vary according to whether the bond in question is at a discount, a premium, or at par.

Arbitration

The arrangement whereby, Financial Industry Regulatory Authority (FINRA) or a designated arbitration association hears and settles disagreements between members, member organizations, their employees, and customers.

Agreement of limited partnership

The contract that establishes guidelines for the operation of a direct participation program, including the roles of the general and limited partners.

Authorizing resolution

The document enabling a municipal or state government to issue securities. The resolution provides for the establishment of a revenue fund in which receipts or income is deposited.

Bank guarantee letter

The document supplied by a commercial bank in which the bank certifies that a put writer has sufficient funds on deposit at the bank to equal the aggregate exercise price of the put; this releases the option writer from the option margin requirement.

Blue-chip stock

The equity issues of financially stable, well-established companies that have demonstrated their ability to pay dividends in both good and bad times.

Back away

The failure of a market maker to honor a firm bid and ask price. This violates the Conduct Rules.

Automatic exercise

Unless other instructions have been given, contracts that are in-the-money by a specified amount at expiration will automatically be exercised. The amount, determined byOffice of the Comptroller of the Currency (OCC), applies to both customer and institutional accounts.