Glossary of Financial Terms

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12b-1 Plan- Expense under which a certain percentage of fund assets can be used to pay distribution and marketing expenses. BE SURE TO CHECK THESE on your mutual funds.

401(k) - Corporate retirement plan that allows employees to contribute pre -tax dollars in an investment plan.

403(b) - A qualified retirement plan similar to 401(k) plans designed for non-profit organizations.

52-week High - The highest price at which a security has traded within the previous 52 weeks.

52-week Low - The lowest price at which a security has traded within the previous 52 weeks.

AMEX - American Stock Exchange

Annualized Rate of Return - Average return over a designated period of time (usually years), taking into account the effect of compounding.

Balance Sheet - The part of a company's financial statement that depicts how a company is doing over the long term.

Bond - A debt security with a maturity of greater than one year; a corporate or government IOU. You buy a piece of paper from a corporation with the understanding that they will pay you back in a certain amount of time. In that amount of time, they will pay you a guaranteed amount of interest. Interest is usually paid every six months.

Broker - Any person registered by the National Association of Securities Dealers and or a state's securities regulation authority to take customer orders on the sale of a security.

Capital Gain - Gain (or profit) from the sale of securities (or assests).

Capital Loss - Loss on capital invested.

Certified Tax Identification Number - IRS requirement for all investment accounts; Social Security Number or tax ID number.

Close - The price at which a security closed at trading for on a given day.
Compounding - Earning additional interest on previously earned interest. Interest on interest.

Cost Basis - The purchase price you paid for your stock. You need this for tax purposes.

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Desktop Computer - The larger computers that sit on a desk and are not mobile.

Discount Broker - A Broker who will buy and sell securities for a reduced rate. Usually between $5.00 - $30.00.

Diversify - Spreading your assets among various types of investments.

Dividend - Payment by a fund (or stock) when invested in it.

Dow Jones - Thirty of the largest corporations in America.

Dow Jones Industrial Average - The stock index consisting of 30 of the largest American corporations.

Download - The process of getting computer files from the internet and loading them onto your computer.

E-broker - A broker that is able to make a stock trade for it's customers via the internet.

E.I.N. - Employer Identification Number. How your club is identified to Uncle Sam.

E-tail - Retail on the internet.

Equity - How much would you walk away with if you sold it.

Equity Security - Ownership in a corporation; common stock and preferred stock.

Fiscal Year - Accounting period of 365 days.

Front-End Load - Sales charge that is deducted from the purchase price of mutual fund shares.

Government Security - Debt obligation issued by the U.S. government.

Gross Margins - Percentage of Gross Profit relative to revenue.

Home Page - A spot, or place on the internet that can be tailored to identify you or in this case, your club. It can contain pictures and information unique to you.

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Income Statement - The part of a company's financial statement that depicts how a company is doing in the short term.

Index - Benchmark against which to measure performance.

Index Fund - Mutual funds whose portfolio matches the components of a particular index. Most popular is the Vanguard S & P 500 Fund.

Initial Public Offering - The first day the stock goes on sale to the public.

Internet Service Provider - The company that gets your computer talking to other computers on the Internet. The middle man.

ISP - Internet Service Provider

Java - Coffee

Laptop Computer - The smaller notebook type computers that are carriable.

Load Fund - Mutual fund that deducts a sales charge, or "load," from the net asset value of an investment.

Market Capitalization - The total value of a company's stock.

Marketable Securities - Stocks or other securities that are as good as liquid.

Market Order - Order which instructs a broker to execute an order as quickly as possible at the best price available.

Modem - the device inside your computer that dials and connects your computer to the internet.

Money Market Account - An account in which money is invested in various short-term securities; seeks to maintain $1 per share value.

Money Market Fund - A highly liquid mutual fund that invests in short-term securities and seeks to maintain a stable net asset value of $1 per share.

Mutual Fund - An investment company that pools money from shareholders and invests in a variety of securities, such as stocks, and bonds.

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NASDAQ - National Association of Securities Dealer Automated Quotations system, designed to facilitate over-the-counter stock trading.

Net Margins - Also known as Profit Margins. It is the actual amount a company makes on each dollar after all expenses are deducted.

NYSE - New York Stock Exchange

Online - Being hooked up to the internet.

Online Broker - A broker that is able to make a stock trade for its customers via the internet.

Open - The price at which a security opened for trading on a given day.

Order - Just like at McDonalds, a command to supply something, and in the stock market lingo, it means a command to supple a stock. You place an order.

Portfolio - Three ring binder made up of your security, or stock holdings.

Preferred Stocks - A class of stock with a claim on the company's earnings before payment is made to the common stock holders if the company declares bankruptcy.

Profit Margins - Also known as Net Margins.

Public Stock - Stock that is made available to the public for purchase through one of the Stock Exchanges.

Principal - The amount of money that is financed, borrowed, or invested.

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Russell 2000 - The stock market has many different indexes for tracking different industries. This index that tracks 2000 of the smaller companies in America.
S&P 500 - The stock market has many different indexes for tracking different industries. The S&P is the most popular of the indexes because it combines the top 500 companies in the U.S. and averages their daily worth.

Screen Name - How you are identified in the Cyber World, or on the computer.

Snapshot - A brief overview of a company.

Stock - A piece of paper ownership in a company.

Quarter - Every three months of a fiscal year is referred to as a quarter.

Quarterly Reports - The financial report that a U.S. corporation must file with the SEC every three months or quarter.

Quorum - A minimum number of members that must be present at a meeting to make it valid.

Security Type - The type of security such as stock, bond or mutual fund.

Securities and Exchange Commission (SEC) - Agency of the U.S. government, responsible for enforcement of federal securities laws in the United States.

Share - Unit of ownership.

Shareholder - Owner of shares.

Shares Outstanding - Shares of a company that are owned by the public.

S.I.P.C. - Securities Investor Protection Corporation. A government sponsored insurance that covers discount brokers.

Ticker Symbol - The letters used to designate a security/stock for trading.

Total Return - Annual return on an investment. This is measured by the sum of an appreciation plus all dividends, interest and reinvested gains.

Treasury Bill - A short-term debt security of the U.S. Government, known as a "T-Bill."

Treasury Note - A mid-term debt security of the U.S. Government, with maturities ranging from two to ten years that pay a fixed rate of interest every six months and returns its face value at maturity.

Treasury Security - Debt obligations of the U.S. Government that are issued through the Department of the Treasury. Since they are backed by the full faith and credit of the U. S. Government, they are considered virtually free from risk of default.

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Upload - The process of sending computer files from your computer to cyberspace.

Venture Capitalist - People with extra cash laying around who are willing to invest in your company to help it get started in exchange for some preferred stock or ownership.

Vested - The percentage of ownership in a retirement plan assets.

Volume - The daily number of shares traded in a security.

Web - Short for World Wide Web

Wilshire 5000 - The Wilshire 5000 Index is an unmanaged index which includes all publicly traded stocks headquartered in the U.S. and holds over 7,000 stocks. It is not possible to invest directly in an index.

World Wide Web - The most widely used portion of the internet.

www - the prefix that comes before almost all websites. It stands for World Wide Web.