Glossary 1

Question 1

12b-1 Fund

Answer 1

Mutual fund that is able to pass the costs of advertising to its shareholders.

Question 2

Accelerated Depreciation

Answer 2

Method of depreciating an asset by writing off greater amounts in earlier years, and lesser amounts in later years.

Question 3

Accredited Investor

Answer 3

Certain financial and nonprofit institutions, and persons who meet established net worth or annual income criteria.

Question 4

Accretion

Answer 4

Annual allocation of the capital gains earned on a discount bond, calculated for tax and yield purposes.

Question 5

401(k) plan

Answer 5

Retirement plan whereby employers contribute part of their pre-tax income to a qualified tax-deferred program. Generally, the employer can match part or all the employee contributions to the plan.

Question 6

403(b) plan

Answer 6

Tax-deferred annuity plan for employees nonprofit organizations

Question 7

5% Policy

Answer 7

Elements of the Rules of Fair Practice, which states that in most cases dealers need to restrict their fees to 5% of the transaction.

Question 8

Accrued Interest

Answer 8

Interest owed to the seller of a bond by its buyer. Using a 30-day month/360 day year calendar, the accrued interest rate payment up to, but not including, the settlement date.`

Question 9

Accumulation Area

Answer 9

Consolidation pattern in which buyers gradually begin to outnumber sellers, leading to an uptrend.

Question 10

Ad valorem taxes

Answer 10

Taxes collected on the value of property, goods, or services. Revenues from ad valorem property taxes often bought at a premium or discount.

Question 11

Accumulation Unit

Answer 11

Unit of measurement for ownership in an annuity. Each payment made by an annuitant goes to purchase a certain number of accumulation units.

Question 12

Adjusted Cost Bases

Answer 12

Sliding adjustment over time, for tax purposes, of the nominal price of a bond brought at a premium or discount

Question 13

Adjustable preferred

Answer 13

Preferred stock whose dividend rate is periodically reset to reflect changes in market interest rates.

Question 14

Adjustment Bond (Income bond)

Answer 14

Bond issued by a company in bankruptcy. These bonds replace existing bonds, have a higher face value than the original bonds (that is, have been adjusted), and pay interest on when the company generates a specific income.

Question 15

Administrator Account

Answer 15

Fiduciary account whereby a court appoints an individual to settle the affairs of a person who died intestate (without a will)