Terms 1 Flashcards
The date established by the SEC or the Administrator as to when the underwriters may sell new securities to the buyers; a.k.a. “effective date”.
Release Date
The risk that a fixed income investor will not be able to re invest interest payments or the par value at attractive interest rates. Happens when rates are falling.
Reinvestment Risk
This type of corporation or trust uses the pooled capital of investors to invest in owner ship of either income property or mort gage loans. 90% of net income is paid out to shareholders.
REIT (Real Estate Investment Trust)
The required minimum amount that must be taken from a retirement plan starting at a particular age to avoid IRS penalties.
Required Minimum Distribution (RMD)
The % of deposits that a bank must lock up in reserve, tablished by the FRB.
Reserve requirements
The right of common stockholders to claim assets after the claims of all creditors and preferred stockholders have been satisfied
. Residual Claim:
A line representing the high est closing price for a security over a period of time; AKA “overbought.”
Resistance
The party named in a discip linary proceeding or arbitration.
Respondent
A balance sheet ac count showing accumulated net income, from which any dividends are first de clared. Can be thought of as all the profits of the business that have not been paid out as dividends but, rather, re invested into the business as reflected by other balance sheet accounts, e.g. capital equipment, new stores, etc.
Retained earnings
A measure showing how much in profits each dollar of com mon stockholder’s equity generates for the company, net income / shareholder equity.
Return on equity
A short-term debt obligation of a munici pal issuer backed by upcoming revenues.
RAN- revenue anticipation note
A municipal bond whose interest and principal payments are backed by the revenues generated from the project being built by the proceeds of the bonds. Toll roads, for example, are usually built with revenue bonds backed by the tolls collected.
Revenue bond
Short-term securities that allow the holder to buy new shares below the current market price.
Rights
A feature of mu tual funds whereby a rise in account value is counted the same as new money for purposes of achieving a breakpoint.
Rights of Accumulation
An additional offer of
stock accompanied by the opportunity
for each shareholder to maintain his/
her proportionate ownership in the com
pany.
Rights offering
An account that has been designated a number for identification purposes in order to maintain anonymity for its owner. The owner must sign a statement acknowledging ownership.
Numbered Account
An order that gives the floor broker discretion as to the time and price of execution
Not-held (nh) order
An account that has been designated a number for identification purposes in order to maintain anonymity for its owner. The owner must sign a statement acknowledging ownership.
Numbered Account
An intermediate-term interest-bearing security that represents an obligation of its issuer.
Note
A retirement plan that does not allow contributions to be made with pre-tax dollars; that is, the retirement plan does not qualify for beneficial tax treatment from the IRS for its contributions.
Non qualified retirement plan
A type of UIT that allows changes in the portfolio and traditionally invests in mutual fund shares.
Nonfixed UIT
An investment strategy that concentrates its investments among a small group of securities or issuers.
Nondiversification
An investment company that concentrates its investments among a few issuers or securities and does not meet the diversification requirements of the Investment Company Act of 1940.
Nondiversified management company
A bid submitted for Treasury bills where the purchaser agrees to accept the average of all yields accepted at the auction. Noncompetitive tenders are always the first orders filled at the auction.
Non competitive bid
The yield that is stated or named on the security. The nominal yield, once it has been set, never changes, regardless of the market price of the security.
Nominal yield
A type of preferred stock whose dividends do not accumulate in arrears if the issuer misses the payment.
Non cumulative preferred
A fund that does not charge the investor a sales charge to invest in the fund. Shares of no-load mutual funds are sold directly from the fund company to the investor.
No load fund
An individual or entity registered as the owner of record of securities for the benefit of another party.
Nominal owner
A quote given for informational purposes only. A trader who identifies a quote as being nominal cannot be held to trading at the prices that were clearly identified as being nominal.
Nominal quote
A fund that does not charge the investor a sales charge to invest in the fund. Shares of no-load mutual funds are sold directly from the fund company to the investor.
No load fund
A municipal bond issued to build low-income housing. NHA bonds are guaranteed by the U.S. government and are considered the safest type of municipal bonds. NHA bonds are not considered to be double-barreled bonds.
New housing authority
A real estate program that seeks to achieve capital appreciation by building new properties.
New construction program
A calculation that measures the interest cost of a municipal issue over the life of all bonds. Most competitive underwritings for municipal securities are awarded to the syndicate that submits the bid with the lowest NIC.
Net interest cost
The total sum of investment income derived from dividend and interest income after subtracting expenses.
Net investment income
A pledge from a revenue bond that pays maintenance and operation expenses first, then debt service.
Net revenue pledge
A measure of a municipal issuer’s ability to meet its obligations. It measures the debt level of the issuer in relation to the population.
Net debt per capita
A measure of the issuer’s ability to meet its obligations and to raise additional revenue through property taxes.
Net debt to assessed valuation
The total amount of general obligation debt, including notes and short-term financing, issued by a municipality or state.
Net direct debt
The total amount of general obligation debt, including notes and short-term financing, issued by a municipality or state.
Negotiable certificate of deposit
A type of demand deposit that allows the holder to write checks against an interest-bearing account.
NOW account (negotiable order of withdraw)
The difference between the previous day’s closing price and the price of the most recently reported trade for a security.
Net change
An NASD publication that outlines the rules and regulations of NASD membership. Now known as the FINRA Manual.
NASD manual
The clearing intermediary through which clearing member firms reconcile their securities accounts.
National securities clearing corporation
The net value of a mutual fund after deducting all its liabilities. A mutual fund must calculate its NAV at least once per business day. To determine NAV per share, simply divide the mutual fund’s NAV by the total number of shares outstanding.
NAV- Net Assessed Value
An index that is based on a market sector or a limited number of securities.
Narrow based index
The industry self-regulatory agency that was authorized by the Maloney Act of 1938 and empowered to regulate the over-the-counter market. The NASD is now part of FINRA.
NASD (National Association of Securities Dealers)
The rules that define the operation of the NASD and how it regulates the over-the-counter market. The four major bylaws are the Rules of Fair Practice, the Uniform Practice Code, the Code of Procedure, and the Code of Arbitration. Now known as FINRA bylaws.
NASD bylaws
A qualified financial institution that maintains physical custody of a mutual fund’s cash and securities. Custodians are usually banks, trust companies, or exchange member firms.
Mutual fund custodian
The sale of a call option without owning the underlying security or the sale of a put option without being short the stock or having cash on deposit that is sufficient to purchase the underlying security.
Naked
A service that provides real-time secondary market quotes. Munifacts is now known as Thomson Muni Market Monitor.
Munifacts
An investment company that invests in and manages a portfolio of securities for its shareholders. Open-end mutual funds sell their shares to investors on a continuous basis and must stand ready to redeem their shares upon the shareholder’s request.
Mutual fund
An independent insurance company that will, for a fee received from the issuer, insure the interest and principal payments on a municipal bond.
Municipal Bond Investors Assurance Corp. (MBIA)
A short-term municipal issue sold to manage the issuer’s cash flow, usually in anticipation of the offering of long-term financing.
Municipal note
The self-regulatory organization that oversees the issuance and trading of municipal bonds. The MSRB’s rules are enforced by other industry SROs.
Municipal Securities Rulemaking Board (MSRB)
The ability of the money supply to grow simply through the normal course of banking. When banks and other financial institutions accept deposits and subsequently loan out those deposits to earn interest, the amount of money in the system grows.
Multiplier effect
A bond issued by a state or political subdivision of a state in an effort to finance its operations. Interest earned by investors in municipal bonds is almost always free from federal income taxes.
Municipal board
A mutual fund that invests in a portfolio of municipal debt in an effort to produce income that is free from federal income taxes for its investors.
Municipal bond fund
A mutual fund that invests in money market instruments to generate monthly interest for its shareholders. Money market mutual funds have a stable NAV that is equal to $1, but it is not guaranteed.
Money market mutual fund
The total amount of currency, loans, and credit in the economy. The money supply is measured by M1, M2, M3, and L.
Money supply
Economic policy that is controlled by the Federal Reserve Board and controls the amount of money in circulation and the level of interest rates.
Monetary policy
A theory that states that the money supply is the driving force in the economy and that a well managed money supply will benefit the economy.
Monetarist theory
Economic policy that is controlled by the Federal Reserve Board and controls the amount of money in circulation and the level of interest rates.
Monetary policy
