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Glossary A-E
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all or none
An order type that the broker executes only if the trade can be executed for the full quantity specified. If a complete transaction is not executed, it will remain open for the time limit specified. See Fill or Kill.

American Depositary Receipt (ADR)
Receipt for shares of foreign-based companies that entitle the shareholder to all dividends and capital gains. ADRs allow Americans to buy shares of foreign-based corporations' securities at U.S. Exchanges instead of having to go to overseas exchanges

An investment in which the policy holder makes a lump-sum or installment payment to an insurance company and receives income at retirement

The lowest price at which someone is willing to sell a security.

average maturity

The lifetime of a bond, concluding when the final payment of that obligation is due.

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back-end load
A fee charged by a mutual fund when you sell your shares. See Mutual Funds Glossary.

A statistical measure that shows a fund's volatility relative to the benchmark index over the last 36 months. By definition, the beta of the S & P 500 is 1.0. A fund with a beta of 1.10 tends to perform 10% better than the market in up markets and 10% worse in down markets. Usually, higher betas represent riskier investments. For funds that are not broadly diversified, a low beta may only indicate that the fund's volatility relative to the market is low, not that the fund has low risk.

The highest price at which someone is willing to buy a security.

blue chip
A common stock of an established company that has a long record of stable growth.

A long-term debt security of the Government or a corporation with maturity of 10 years or more from the issue date. Interest is usually paid every six months and its face value returned, repaid at maturity. The minimum denomination is US$1,000, with $1,000 increments thereafter.

purchase of a security

buy to close
You "close" a short option position when you buy it back. You must be pre-approved by Schwab to trade options. See Option.

buy to open
You "open" a long position when you buy an option. You must be pre-approved by Schwab to trade options. See Option.

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call option
Gives its buyer the right to buy or sell 100 shares of the underlying security at a fixed price before a specified expiration date. Call buyers hope the price of the stock will rise. Call sellers hope the price will stay the same or go down. You must be pre-approved by Schwab to trade options. See Put Option.

capital appreciation

The growth of the earnings on an investment's principals.

capital gain
Arises when an investment is sold at a higher price than originally paid. In a mutual fund, capital gains are created when the fund buys and sells underlying securities at a premium over purchase price. These gains are then distributed to unitholders at least annually. Unitholders can also earn capital gains by redeeming their fund shares at higher prices than they originally paid.

certificate of deposit
Debt instruments issued by banks and savings and loans. Maturities range from overnight to many years. Certificates of Deposit are issued at par and pay fixed interest at intervals or maturity. Can be brokered through a brokerage firm.

closed end mutual funds
A mutual fund that issues a set number of shares, which then are only re-sold on the secondary market exchanges like regular stock shares. See Mutual Funds Glossary.

common stock
Securities that represent an ownership interest in a corporation.

The computation of interest paid using the principal plus the previously earned interest.

corporate bond
Debt obligations issued by corporations as an alternative to offering equity ownership by issuing stock. Like U.S. Treasuries, most corporate bonds pay semi-annual interest and promise to return their principal when they mature. Maturities range from 1 to 30 years.

custodial account
An account for the benefit of a minor with an adult as the custodian.

current yield
The annual interest on a bond divided by the current market price.

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day (only) order
An order condition that causes your order to be canceled at the end of the current day's trading if the specified limits can't be met.

defined benefit plan
A company retirement plan in which you expect to receive a fixed amount on a regular basis from your employer, i.e. a pension. The employer is responsible for investing.

Effect on earnings per share and book value per share if all convertible securities were converted or all warrants or stock options were exercised.

The income or capital gain made by a mutual fund that is paid to the fund's investors.

The allocation of assets among various types of investments.

dividend amount
Value of last quarterly cash dividend or the number of shares an investor receives for each share owned in a stock dividend.

dividend reinvestment
Dividends that are reinvested in the security that generated them.

dollar cost averaging
Buying securities at scheduled intervals at with the same dollar amount.

do not reduce (DNR)
You may add this special condition on a limit order to buy, a stop order to sell, or on a stop-limit order to sell. This condition specifies that you do not want your limit or stop price reduced when the stock goes ex-dividend and the market price of the stock is reduced by the amount of the dividend.

dow jones industrial average (DJIA)
Measure of the performance of the collection of 30 "blue-chip" stocks traded on NYSE, considered the leaders of the market.

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earnings per share
Four times the last quarter's earning divided by the number of shares outstanding.

earnings per share date
Date of last earnings announcement.

electronic funds transfer
Transferring funds between accounts and firms electronically.

ex-dividend date
Date a split or dividend is reflected in the price of the security (if you buy a stock on the ex-dividend date, you are not entitled to the dividend); for splits, this is the trading day after the distribution is made.

Exchange Traded Funds (ETFs)
Exchange Traded Funds (ETFs) are index funds or trusts that are listed on an exchange each with a unique symbol and can be traded through a broker any time during market trading hours. ETFs allow investors to buy or sell shares in the collective performance of an entire stock portfolio or index as a single security. Most ETFs can be traded as little as one share and can even be sold short or bought on margin.

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