Stock Exchange Terminology 1

8/8/2019 Stock Exchange Terminology 1

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1. Accrued Interest: The interest earned on a bond between interestpayment periods (generally twice a year).

2. Acquisition: One company taking control of another by purchasing amajority or all of the target company's outstanding shares. An"unfriendly" or "hostile" acquisition attempt is usually characterized byan offer far in excess of the market value of the shares, which is meant toinduce current stockholders into selling.

Ask" Price: In the context of the over-the-counter market, the term "ask"refers to the lowest price at which a market maker will sell a specifiednumber of shares of a stock at any given time. The term "bid" refers tothe highest price a market maker will pay to purchase the stock.

The ask price (also known as the "offer" price) will almost always be higherthan the bid price. Market makers make money on the difference between

the bid price and the ask price. That difference is called the "spread".

3. Annual Report:A publication that is issued yearly by all publicly heldcorporations and freely available to all shareholders. It reveals thecompany's assets, liabilities, revenues, expenses, and earnings for the pastyear, along with other financial data.

4. Audit Committee: Appointed by the Board of Directors and chargedwith monitoring the internal and external reviews of the finances of theExchange and its subsidiaries, and of the Exchanges informationtechnology systems.

5. Balance Sheet:A condensed financial statement showing the nature andamount of a company's assets, liabilities and capital on a given date. Indollar amounts the balance sheet shows that the company owned, what itowed, and the ownership interest in the company of its stockholders.

6. Bear:For generations, bulls and bears on Stock exchanges have referredto two decidedly different types of investors - the bulls being those whoexpect stock prices to rise, the bears being those who believe prices areabout to decline.

7. Bear Market:A term to describe a market of declining prices.

8. Blue Chip: A company known nationally for the quality of its productsor services, its reliability, and its ability to operate profitably in good and

bad economic times.Bankruptcy:Its a position where the liabilities of the company exceeds the

assets of the company and the company is not in a position to pay itsdebts and unable to run the business.

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"Bid" Price:In the context of the over-the-counter market, the term "bid"refers to the highest price a market maker will pay at any given time to

purchase a specified number of shares of a stock. The term "ask" refersto the lowest price at which a market maker will sell the stock.

The ask price (also known as the "offer" price) will almost always be higherthan the bid price. Market makers make money on the difference betweenthe bid price and the ask price. That difference is called the "spread".

Blank Cheque Company: A blank check company is a development stagecompany that has no specific business plan or purpose or has indicatedits business plan is to engage in a merger or acquisition with anunidentified company or companies, other entity, or person. These verysmall companies typically involve speculative investments and often fall

within the SECs definition of "penny stocks" or are considered"microcap stocks."

9. Bond: A debt secured by a specific asset of the issuing corporation.The term bond, debenture and note are often used interchangeably. Allthree represent debt obligations of the issuing entity.

Stock and Bond Certificates, Old : An old stock or bond certificate maystill be valuable even if it no longer trades under the name printed on thecertificate. The company may have merged with another company orsimply changed its name. You can use the resources below to find out ifan old stock or bond certificate has value. Even if you learn that a

certificate has no value, you may find that the certificate itself has valueas a collectable

Book Entry

The "book entry" form of ownership allows you to own securities withouta certificate. Stock in direct investment plans, Treasury securities

purchased directly from the U.S. Department of the Treasury, andrecently issued municipal bonds are held in book entry form.

Buying and Selling Stock

When you call your broker to buy or sell a stock or hit "enter" whenplacing an order through your online brokerage account that's only thebeginning of the transaction. Your broker's firm must then send yourorder to a market center to be executed. This process of filling your orderis known as "trade execution."

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10.Your broker generally has a choice of market centers to execute your

trade:

Exchange

An exchange is a marketplace where traders can buy or sell stocks andbonds. For a stock that's listed on an exchange, such as the New YorkStock Exchange (NYSE), your broker may direct the order to thatexchange, to another exchange (such as a regional exchange), or to a firmcalled a "third market maker."

Market Maker

A "market maker" is a firm that stands ready to buy or sell a stock at publicly quoted prices. Market makers in exchange-listed stocks areknown as "third market makers." Market makers in stocks that trade inover-the-counter (OTC) markets, such as the Nasdaq, are known as"Nasdaq market makers" or simply "market makers."

Electronic Communications Network (ECN)

An electronic communications network (ECN) is an electronic tradingsystem that automatically matches buy and sell orders at specified prices.

11.Bull

For generations, bulls and bears on Stock exchanges have referred to twodecidedly different types of investors - the bulls being those who expectstock prices to rise, the bears being those who believe prices are about todecline.

12.Bull Market

A condition of the stock market when prices of stocks are generallyrising.

13.Call OptionA contract that gives the holder the right to buy the underlying stock at aspecified price (the strike price) within a fixed period of time.

14. Capital Stock

All shares representing ownership of a business, including common andpreferred.

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15.Cash Flow

Reported net income of a corporation plus amounts charged fordepreciation, depletion, amortization, extraordinary charges to reserves,which are bookkeeping deductions and not paid out in actual dollars andcents.

16.Closed-end Fund

Closed-end funds have a fixed number of shares outstanding. Followingan initial public offering, those shares trade throughout the day on anexchange between investors. Share prices are determined by the forces ofsupply and demand and can be more or less than the fund's net assetvalue (NAV). This differs from open-end funds, which continuouslyoffer their shares to investors and whose share prices are based on their

NAV, determined at the close of each business day.17.Commercial Paper

Very short term IOUs written by reputable blue chip companies in needof short-term financing.

18.Commodities

Articles of commerce or products that can be used for commerce. In anarrow sense, products traded on an authorized commodity exchange.Types of commodities include agricultural products, metals, petroleum,foreign currencies, financial instruments and indexes to name a few.

19.Common Stock

Securities that represent an ownership interest in a corporation. If thecompany has also issued preferred stock, both common and preferredhave ownership rights. Common stockholders assume the greater risk,

but generally exercise the greater control and may gain the greater awardin the form of dividends and capital appreciation. The terms commonstock and capital stock are often used interchangeably when the companyhas no preferred stock.

20.Conglomerate

A corporation that has diversified in operations usually by acquiringenterprises in widely varied industries.

21.Consolidated Balance Sheet

A balance sheet showing the financial condition of a corporation and itssubsidiaries.

22.Convertible Bond

A debt issue that may be exchanged, or converted, by the owner for afixed number of common shares, or other securities, usually of the samecompany, in accordance with the terms of the issue. Companies alsoissue convertible preferred shares.

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23. Credit Rating

An evaluation of a debt issuer by a rating agency such as Moodys andStandard and Poors. The evaluation is based on the issuers credit historyand its ability to pay its obligations.

24. Current Assets

Those assets of a company that are reasonably expected to be realized incash, or sold, or consumed during one year. These include cash,Government bonds, receivables and money due usually within one year,and inventories.

25.Current Liabilities

Money owed and payable by a company, usually within one year.

Capital Gains and Losses

Investors contact the SEC asking about the tax consequences when theysell securities. In particular, investors want to know whether they willhave to pay a capital gains tax or can take a capital loss. The SEC doesnot regulate this area. The Internal Revenue Service does instead

Central Registration Depository or CRD

The Central Registration Depository, called the CRD, is a computerizeddatabase that contains information about most brokers, some investment

advisers, their representatives, and the firms they work for. For instance,you can find out if brokers are properly licensed in your state and if theyhave had run-ins with regulators or received serious complaints frominvestors. You'll also find information about the brokers' educational

backgrounds and where they've worked before their current jobs.

Executive Compensation

The federal securities laws require clear, concise and understandabledisclosure about compensation paid to CEOs and certain other high-

ranking executive officers of public companies. Several types ofdocuments that a company files with the Commission includeinformation about the company's executive compensation policies and

practices. You can locate information about executive pay in: (1) thecompany's annual proxy statement; (2) the company's annual report onForm 10-K; and (3) registration statements filed by the company to

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register securities for sale to the public. The easiest place to look upinformation on executive pay is probably the annual proxy statement.

Forex - Foreign Currency Transactions

The foreign exchange markets are sometimes referred to as "forex."Operating 24 hours a day, the forex market is highly liquid and most ofthe trading is conducted electronically or over the phone. Banks,insurance companies, large corporations and other large financialinstitutions all use the forex markets to manage the risks associated withfluctuations in currency rates. In recent years, retail investors have alsolooked to the forex markets as yet another possible investmentopportunity.

The Commodity Futures Trading Commission cautions investors to bewary of websites that purport to offer high yield investment opportunitiesin forex transactions, because this is a common area of internet fraud.

Convertible Securities

A "convertible security" is a security - usually a bond or a preferred stock- that can be converted into a different security - typically shares of thecompany's common stock. In most cases, the holder of the convertibledetermines whether and when a conversion occurs. In other cases, the

company may retain the right to determine when the conversionoccurs.Companies generally issue convertible securities to raise money.Companies that have access to conventional means of raising capital(such as public offerings and bank financings) might offer convertiblesecurities for particular business reasons.

26.Agent

A person who buys or sells for the account and risk of another. Generally, anagent takes no financial risk and charges a commission for his services.27.American Depositary Receipt (ADR)

A receipt that is issued by a U.S. depositary bank which represents shares ofa foreign corporation held by the bank. Because ADRs are quoted in U.S.dollars and trade just like any other stock, they make it simple for investorsto diversify their holdings internationally.

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28.American Stock Exchange (Amex)

An open auction market where buyers and sellers compete in a centralizedmarketplace. The Amex typically lists small to medium cap stocks ofyounger or smaller companies. Until 1921 it was known as the New YorkCumulative Exchange.

Arbitration

Arbitration often allows you to resolve disputes more quickly and cheaplythan by going to court. Instead of judges or juries, arbitrators decide ifwrongdoing occurred and how to correct or compensate you for it.

When the arbitration is over, the decisions of the arbitrators are final. If youare unhappy with the result, you cannot go to court to try again. The

arbitrators' decisions can only be appealed under very limited circumstancesfor example, if you can demonstrate that an arbitrator was biased. If youwant to appeal an arbitrator's decision you must do so within three months orless in a "motion to vacate

Cumulative Voting

Cumulative voting is a type of voting process that helps strengthen theability of minority shareholders to elect a director. This method allowsshareholders to cast all of their votes for a single nominee for the board

of directors when the company has multiple openings on its board. Incontrast, in "regular" or "statutory" voting, shareholders may not givemore than one vote per share to any single nominee.

Derivatives

Derivatives are financial instruments whose performance is derived, atleast in part, from the performance of an underlying asset, security orindex. For example, a stock option is a derivative because its valuechanges in relation to the price movement of the underlying stock.

Employee Stock Options Plans

Many companies use employee stock options plans to compensate, retain,and attract employees. These plans are contracts between a company andits employees that give employees the right to buy a specific number ofthe companys shares at a fixed price within a certain period of time.

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Employees who are granted stock options hope to profit by exercisingtheir options at a higher price than when they were granted.

Employee Stock Ownership Plans (ESOPs)

An employee stock ownership plan (ESOP) is a retirement plan in whichthe company contributes its stock to the plan for the benefit of thecompanys employees. With an ESOP, you never buy or hold the stockdirectly. This type of plan should not be confused with employee stockoptions plans, which are not retirement plans. Instead, employee stockoptions plans give the employee the right to buy their companys stock ata set price within a certain period of time.

29.Debenture

Debt not secured by a specific asset of the corporation, but issued againstthe issuers general credit.

30.Director

Person elected by shareholders, usually during an annual meeting, toserve on the Board of Directors of a corporation. The directors appointthe president, vice president and all other operating officers. Directorsdecide, among other matters, if and when dividends shall be paid.

31.LOAN SYNDICATION

The process of involving numerous different lenders in providing various portions of a loan. Mainly used in extremely large loan situations,syndication allows any one lender to provide a large loan whilemaintaining a more prudent and manageable credit exposure becausethey aren't the only creditor.

32.TRUSTEES

One, such as a bank, that holds legal title to property in order to

administer it for a beneficiary.

A member of a board elected or appointed to direct the funds and policyof an institution.

A country responsible for supervising a trust territory.

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33.Does a banker sign the annual report who has sanctioned loan to the

Company?

NO, the banker doesnt sign the annual report but he sees the documents arecharged in favour of him.

34.What is synergy?

The idea that the value and performance of two companies combined will begreater than the sum of the separate individual parts

This term is used mostly in the context of mergers and acquisitions. Forexample, if Company A has an excellent product but lousy distribution

whereas Company B has a great distribution system but poor products, the

companies could create synergy with a merger.

35.What is meant by liability and Contingent Liability?

Liability -legal debt or obligation estimated via accrual accounting

Contingent Liability-An asset in which the possibility of ownershipdepends solely upon future events uncontrollable by the company.

An example might be a settlement from a lawsuit

36.Who is a general partner?

partner in a business who has unlimited liability.

37.What is limited Liability Company?

A corporate structure whereby the shareholders of the company have alimited liability to the company's actions

Basically, an LLC is a hybrid between a partnership and a corporation

38.Who is Merchant Banker?

Abankthat deals mostly in (but is not limited to) international finance,long-term loans for companies and underwriting. Merchant banks do not

provide regularbanking services to the general public.

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39.What is public float?

The total number of shares publicly owned and available for trading. Thefloat is calculated by subtracting restricted shares from outstandingshares.

For example, a company may have 5 million outstanding shares, but only3 million are trading on the stock market. So, the float would be 3

million.40.Secondary Market

A market on which an investor purchases an asset from another investorrather than an issuing corporation.

good example is the New York Stock Exchange. Here all stock exchangesare part of the secondary market, as investors buy securities from other

investors instead of an issuing company.

41.What is balance of trade?The largest component of a country's balance of payments. It is thedifference between exports and imports. Debit items include imports,foreign aid, domestic spending abroad and domestic investments abroad.Credit items include exports, foreign spending in the domestic economyand foreign investments in the domestic economy. A country has a tradedeficit if it imports more than it exports, and the opposite scenario is atrade surplus.

42.What is balance of payments?

A record of all transactions made by one particular country during acertain period of time. It compares the amount of economic activity

between a country and all other countries.This includes trade balance, foreign investments, and investments by

foreigners among other things.43.What is corporate governance?

The relationship between all the stakeholders in a company. Thisincludes the shareholders, directors, and management of a company, asdefined by the corporate charter, bylaws, formal policy, and rule of law.

44.Who is a factor?

financial intermediary that purchases receivables from companies

45.what is W.T.O

An international organization dealing with the global rules of tradebetween nations. Its main function is to ensure that trade flows assmoothly, predictably, and freely as possible.

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46.What is dumping?

In international trade, this occurs when one country exports a significantamount of goods to another country at prices much lower than in thedomestic market.

47.What is globalization?

The tendency of investment funds and businesses to move beyond domesticand national markets to other markets around the globe,

48.Diversification

Spreading investments among different types of securities and variouscompanies in different fields.

49.Depreciation

Charges against earnings to write off the cost, less salvage value, of anasset over its estimated useful life. It is a bookkeeping entry and does notrepresent any cash outlay nor are funds earmarked for the purpose.

50.Dividend

The payment designated by the Board of Directors to be distributed prorata among the shares out-standing. For preferred shares, the dividend isusually a fixed amount. For common shares, the dividend varies with thefortunes of the company and the amount of cash on hand, and may be

omitted if business is poor or if the directors determine to withholdearnings to invest in plants and equip-ment.

51.Dow Jones Industrial Average (DJIA)

The Dow Jones Industrial Average (DJIA) is an index used to measurethe performance of the U.S. financial markets. Introduced on May 26,1896 by Charles H. Dow, it is the oldest stock price measure incontinuous use. Over the past century "the Dow" has become the most

widely recognized stock market indication in the U.S. and probably in theentire world. Most of the stocks included in the index are listed on theNew York Stock Exchange, and are all large blue-chip companies thatreflect the health of the U.S. economy. All but a handful of these havemajor business operations throughout the world, thus providing someinsight into the economic well-being of the global economy

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52.Income Statement

A report on a company's financial status over a period of time. It totalsprofits, subtracts expenses and pinpoints how much money the companycan reinvest.

53.Market Order Processing

Super Dot's market order system is designed to process member firms'market orders of up to 30,099 shares. The system provides for rapidexecution and reporting of market orders. In 1994, market orders wereexecuted and reported back to the originating member firm on averagewithin 24 seconds.

54.Market Price

The last reported price at which the stock or bond sold, or the currentquote.

Going Private

A company "goes private" when it reduces the number of its shareholdersto fewer than required and is no longer required to file reports with theSEC.

A number of transactions can result in a company going private,including:

Another company or individual makes a tender offer to buy all or most ofthe companys publicly held shares;

The company merges with or sells the companys assets to anothercompany; or

The company can declare a reverse stock split that not only reduces thenumber of shares but also reduces the number of shareholders. In thistype of reverse stock split, the company typically gives shareholders asingle new share in exchange for a block10, 100, or even 1,000 shares

of the old shares. If a shareholder does not have a sufficient number ofold shares to exchange for new shares, the company will usually pay theshareholder cash based on the current market price of the companysstock.

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55.Face Value

The value of a bond that appears on the face of the bond, unless the valueis otherwise specified by the issuing company. Face value is ordinarilythe amount the issuing company promises to pay at maturity. Face valueis not an indication of market value. Sometimes referred to as par value.

56.Fiscal Year

Any consecutive 12-month period of financial accountability for acorporation or government. For example, because of the Christmas rushmany department stores find it easier to wind up their yearly accountingon January 31 instead of December 31. Fiscal year is often abbreviatedFY with a date. For example, FY May 31 means that the company's fiscalyear goes from June 1 to May 31 of the following year.

57.Fixed Charges

A company's fixed expenses, such as bond interest, which it has agreed topay whether or not earned, and which are deducted from income beforeearnings in equity capital are computed.

58.General Mortgage Bond

A bond that is secured by a blanket mortgage on the issuing company'sproperty, though it may be outranked by one or more other mortgages.

59.Going Public: When a company sells shares of itself to the public toraise capital.

60.Government Bonds

Obligations of the Government, regarded as the least risky, highest-gradesecurities issues. The major types of debt instruments issued by thegovernment are: Treasury Bills, Saving Bonds, Treasury Notes, andTreasury Bonds.

61.Hedging

The purchase or sale of a derivative security (such as options or futures)in order to reduce or neutralize all or some portion of the risk of holdinganother security.

62.Holding Company

A corporation that owns a large number of shares in other companies.

Holding companies use the voting rights that come with their shares toexert influence over the companies under them.

63.Initial Public Offering (IPO)

An issue of new stock by a once private company to transform itself intoa publicly held one. IPOs are usually done to raise cash for growingyoung companies that need larger sources of capital than the private

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sector can provide. The new shares are sold to one or more investmentbanks, which then sell them to the public.

64.Institutional Investors

Organizations whose primary purpose is to invest their own assets or

those entrusted to them by others. The most common are employee pension funds, insurance companies, mutual funds, universityendowments, and banks.

65.Investment Banker

One whose principal business consists of acting as investment adviserand rendering investment supervisory services.

66.Investment Counsel

One whose principal business consists of acting as investment adviserand rendering investment supervisory services.

67. IssuerA corporation, government, or other authority, that borrows moneythrough the sale of bonds or notes.

Insider Trading

"Insider trading" is a term that most investors have heard and usuallyassociate with illegal conduct. But the term actually includes both legaland illegal conduct. The legal version is when corporate insidersofficers, directors, and employeesbuy and sell stock in their own

companies. When corporate insiders trade in their own securities, theymust report their trades to the SEC.

68.Examples of insider trading cases that have been brought by the SEC

are cases against:

Corporate officers, directors, and employees who traded the corporation'ssecurities after learning of significant, confidential corporatedevelopments;

Friends, business associates, family members, and other "tippees" of suchofficers, directors, and employees, who traded the securities afterreceiving such information;

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69.Leverage

Any means of increasing value and return by borrowing funds orcommitting less of one's own. For corporations, it refers to the ratio ofdebt (in the form of bonds and preferred stock outstanding) to equity (inthe form of common stock outstanding) in the company's capitalstructure.

70.Listed Companies: Companies whose shares of stock trade on asecurities market.

71. Locked In:

Investors are said to be "locked in" when a security they own is trading ata higher price than they paid for, but they choose not to sell in order to

avoid having their profit become subject to the capital gains tax.72.MarginThe amount paid by the customer when using a broker's credit to buy orsell a security. Under Federal Reserve regulations, the initial marginrequired since 1934 has ranged from 40% of the purchase price up to100%. Since 1974 the current rate of 50% has been in effect.

73.Margin Call

A demand upon a customer to put up money or securities with the broker.The call is made when a purchase is made; also if a customer's equity in amargin account declines below a minimum standard set by the Exchange

or by the firm.

74.Market Data System (MDS)

Captures and displays, worldwide, trade and volume informationcontinuously generated by trading floor activity. MDS is the core of the

NYSE international communications network.75.New Issue or IPO

A stock or bond sold by a corporation for the first time. Proceeds may beused to retire outstanding securities of the company, for new plants or

equipment, for additional working capital, or to acquire a publicownership interest in the company for private owners.76.New York Stock Exchange (NYSE)

The NYSE marketplace blends public pricing with assigned dealerresponsibilities. Aided by advanced technology, public orders meet andinteract on the trading floor with a minimum of dealer interference. Theresult is competitive price discovery at the point of sale. Liquidity in the

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NYSE market is provided by individual and institutional investors,member firms trading for their own accounts, and assigned specialists.The NYSE is linked with other markets trading listed securities throughthe Intermarket Trading System (ITS).

77.Nominating & Governance Committee

Appointed by the NYSE Board of Directors and charged with(i)recommending to the Board candidates for the Board of Directors, theBoard of Executives and for Trustees of the Gratuity Fund, (ii) reviewingthe Exchanges governance principles and practices, (iii) establishing andoverseeing self-assessment by the Board and the Board of Executives,(iv) recommending director compensation, and (v) succession planningfor the Chairman and Chief Executive Officer of the Exchange.

78.Notes:Generally, a bond issue maturing in more than two years but nomore than ten years.

79.NYSE Composite Index

The NYSE Composite Index is designed to measure the performance ofall common stocks listed on the NYSE, including ADRs, REITs andtracking stocks. Under its methodology, all closed-end funds, ETFs,limited partnerships and derivatives are excluded from the index. It is ameasure of the changes in aggregate market value of all NYSE-listed

common stocks, adjusted to eliminate the effects of capitalizationchanges, new listings and delistings. The index is weighted using free-float market capitalization and calculated on both price and total return

basis.

80.NYSE Hybrid Market

The NYSE Hybrid Market is the NYSEs new market model, integratinginto one venue the best aspects of both the auction market and automatedtrading while providing customers with the broadest choice of trade-execution preferences.

Net Asset Value

"Net asset value," or "NAV," of an investment company is the companystotal assets minus its total liabilities. For example, if an investmentcompany has securities and other assets worth $100 million and hasliabilities of $10 million, the investment companys NAV will be $90

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million. Because an investment companys assets and liabilities changedaily, NAV will also change daily. NAV might be $90 million one day,$100 million the next, and $80 million the day after.

Mutual funds and Unit Investment Trusts (UITs) generally must calculatetheir NAV at least once every business day, typically after the major U.S.exchanges close. A closed-end fund, whose shares generally are not"redeemable"that is, not required to be repurchased by the fundis notsubject to this requirement.

81.Market Performance Committee (MPC)

Focuses primarily on evaluating and seeking to strengthen the performance of NYSE specialist organizations, administering tradingprocedures, and recommending to the QOMC ways to improve NYSE

markets' quality and competitiveness. Members include specialists, non-specialist floor members, allied members, and institutional traders.HypothecationThe pledging of securities as collateral for example, to secure the debit

balance in a margin account.82.Market Value

The current resale value of a security. The market value of an issue iseasily computed as the closing price multiplied by the shares outstanding.

83.Market-On-Close (MOC) Order

A market order, which is to be executed in its entirety at the closing

price, on the Exchange, of the stock named in the order, and if not soexecuted, is to be treated as cancelled. The term "at the close order'' shallalso include a limit order that is entered for execution at the closing price,on the Exchange, of the stock named in the order pursuant to such

procedures as the Exchange may from time to time establish.84.Merger:Combination of two or more corporations.85.Money Market Account

An account in which your money is reinvested in short-term securities bythe bank or investment firm managing the account.

86.Municipal Securities Rulemaking Board (MSRB)The organization responsible for rules regulating dealers who deal inmunicipal bonds, municipal notes, and other municipal securities.

87.Mutual Fund

A portfolio of stocks, bonds, or other securities administered by a team ofone or more managers from an investment company who make buy andsell decisions on component securities. Capital is contributed by smaller

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investors who buy shares in the mutual fund rather than the individualstocks and bonds in its portfolio. The return on the fund's holdings isdistributed back to its contributors, or shareholders, minus various feesand commissions. This system allows small investors to participate in thereduced risk of a large and diverse portfolio that they could not otherwise

build themselves. They also have the benefit of professional managersoverseeing their money who have the time and expertise to analyze and

pick securities.

There are two types of mutual funds, open and closed-ended. Shares inclosed-end funds, some of which are listed on the New York StockExchange, are readily transferable in the open market and are bought andsold, like other stock. These funds do not accept new contributions frominvestors, but only reinvest the return on the existing portfolio.

Open-end funds sell their own new shares to investors, stand ready to buyback their old shares, and are not listed on exchanges. Open-end fundsare so called because their capitalization is not fixed; they issue moreshares as people want them. Many open-ended funds allow contributorsextra perks, such as the ability to write checks with their portion.

Mergers

Mergers are business transactions involving the combination of two or

more companies into a single entity. Most state laws require that mergersbe approved by at least a majority of the company's shareholders if themerger will have a significant impact on the company.

The proxy or information statement will describe the terms of the merger,including what you will receive if the merger is approved. If you believethe amount you will receive is not fair, check the statement forinformation on appraisal or dissenter's rights under state law. You mustfollow the procedures precisely or your rights may be lost.

Mortgage-Backed Securities

Mortgage-backed securities (MBS) are debt obligations that representclaims to the cash flows from pools of mortgage loans, most commonlyon residential property. Mortgage loans are purchased from banks,mortgage companies, and other originators and then assembled into pools

by a governmental, quasi-governmental, or private entity. The entity then

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issues securities that represent claims on the principal and interestpayments made by borrowers on the loans in the pool, a process knownas securitization.

Mutual Funds

A mutual fund is a company that pools money from many investors andinvests the money in stocks, bonds, short-term money-market instruments,or other securities. Legally known as an "open-end company," a mutual fundis one of three basic types of investment company. The two other basic typesare closed-end funds and Unit Investment Trusts (UITs).

88.NASDAQ

An automatic information network that provides brokers and dealers with

price quotations on securities traded over-the-counter.89.National Securities Clearing Corporation (NSCC)Facilitates trade processing, clearance, delivery and settlement ofequities, and corporate and municipal bonds. NSCC is owned equally bythe New York and American Stock Exchanges and the NationalAssociation of Securities Dealers.

90.Negotiable:Refers to a security title that is transferable by delivery.91.Net Asset Value

Usually used in connection with investment companies to mean net assetvalue per share. An investment company computes its assets daily, or

even twice daily, by totaling the market value of all securities owned. Allliabilities are deducted, and the balance divided by the number of sharesoutstanding. The resulting figure is the net asset value per share.

92.Odd Lots:Stock transactions that involve less than 100 shares.93.Off-Board:

This term may refer to transactions over-the-counter in unlisted securitiesor to a transaction of listed shares that is not executed on a nationalsecurities exchange.

94.Offer:The price at which a person is willing to sell a security.

95.Open Interest:In options and futures trading, the number of outstanding option contractsat any given time which have not been exercised and have not yetreached expiration.

96.Open-End Investment Company

A company or trust that uses its capital to invest in other companies.There are two principal types: the closed end and the open end, also

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known as mutual fund. Shares of closed-end investment companies, mostof which are listed in the NYSE, are readily transferable in the openmarket and are bought and sold like shares of stock. Capitalization ofthese companies remains the same unless action is taken in change,which is rare. Open-end funds sell their own new shares to investors,stand ready to buy back their old shares, and are not listed. Open-endfunds are so called because their capitalization is not fixed; they issuemore shares as people want them.

97.Opening Automated Reporting System (OARS)

OARS, a feature of the Super Dot system, is designed to accept memberfirms' pre-opening market orders for all stocks up to 30,099 shares forrapid, systematic execution and immediate reporting. OARSautomatically and continuously pairs buy and sell orders and presents theimbalance to each specialist up to the opening of a stock, thus assisting

the specialist as he or she determines the opening price.98.Options

Options are derivative securities that give the holder the right to buy(call) or sell (Puts and Calls) a specified amount of the underlyingsecurity at a specific "strike price" and within a specified timeframe.

The NYSE withdrew from the options trading business in 1997.

99.Out-of-the-Money

A call option is out-of-the-money when the strike price is above the price

of the underlying security. Likewise, a put option is out-of-the-moneywhen the exercise price is below the price of the underlying security. Anout-of-the-money option is one that has no intrinsic value.

100. Over-the-Counter (OTC)

A market for securities made up of dealers who may or may not bemembers of a securities exchange. OTC firms conduct business over thetelephone and act either as principals or dealers (buying and selling stockfrom their own inventory and charging a markup) or as a broker or agent

and charging a commission.

Stock and Bond Certificates, Old

An old stock or bond certificate may still be valuable even if it no longertrades under the name printed on the certificate. The company may havemerged with another company or simply changed its name. You can use

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the resources below to find out if an old stock or bond certificate hasvalue. Even if you learn that a certificate has no value, you may find thatthe certificate itself has value as a collectable.

These resources may be found on the Internet, at public libraries, stockexchanges, or stockbrokers' offices. But please note that the SEC cannotrecommend or endorse any of these entities, their personnel, or their

products or services.

Online Trading

Although you may save time and money trading online, it does not takethe homework out of making investment decisions. To avoid costlymistakes, investors who trade online should understand how our

securities markets work and their options in placing trades in fast-movingmarkets when slow downs occur. Our publication, What You Need toKnow About Trading In Fast-Moving Markets, provides useful tips foronline traders.

101. Paper Profit (Loss)

An unrealized profit or loss on a security still held. Paper profits andlosses become realized only when the security is sold.

102. Par Value

Par value is ordinarily the amount the issuing company promises to pay,

per bond, at maturity, typically $1,000. Par value is not an indication ofmarket value. Also referred to asFace Value.

103. Passed Dividend:The omission by a company's board of a regular orscheduled dividend payment.

104. Penny Stocks

Low-priced issues, often highly speculative, selling at less than $1 ashare. Frequently used as a term of disparagement, although some pennystocks have developed into investment-caliber issues.

105. Portfolio

The collection of different investment instruments owned by oneindividual or institution. A portfolio can consist of any combination ofstocks, bonds, derivatives and such.

106. Preferred Stock

A type of stock that pays a fixed dividend regardless of corporateearnings, and which has priority over common stock in the payment ofdividends. However, it carries no voting rights, and should earnings rise

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significantly the preferred holder is stuck with the same fixed dividendwhile common holders collect more. The fixed income stream of

preferred stock makes it similar in many ways to bonds.

107. Premium

For bonds and preferred stock, the premium is the amount by which theprice exceeds the face, or par, value. For options markets, the premium issynonymous with the option's price. See alsoDiscount.

108. Price Improvement

When a buy order is executed at a price lower than the current quotedoffer, or when a sell order is executed at a price higher than the currentquoted bid. In addition to quoting the best prices more than 90 percent ofthe time, the NYSE continuous auction market typically improves uponthese quoted prices, allowing investors to get a better price for their

shares.109. Price/Earnings Ratio

A popular measure for comparing stocks selling at different prices inorder to single out over- or under-valued issues. The P/E ratio is simplythe price per share divided by the company's earnings per share.However, P/E is not always an accurate guide to a stock's quality. Some

people tend to think that a stock is inflated and drastically overvalued ifits price is many times its earnings. Yet that same stock may be quiteaccurately valued to reflect the company's rapid growth and potential forhigh future earnings. When comparing P/Es it is therefore important tochoose stocks in the same industry that are likely to face the sameearnings prospects.

110. Pricing

Bond prices may be stated in dollar or yield terms. In dollars, the priceis expressed as a percent of par value. Thus, a price of 90 means that thevalue of the bond is equal to 90% of the (usually) $1,000 face amount ofthe bond, or $900. Yield pricing expresses the price in terms of yield tomaturity.

111. Primary Market

The process by which a corporation's stock is issued for the first time. Itis then sold to the public on the secondary market.

112. Prime Rate

The lowest interest rate charged by commercial banks to their mostcreditworthy and largest corporate customers; other interest rates such as

personal, automobile, commercial and financing loans are often peggedto the prime.

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113. Profit-Taking

Selling stock that has appreciated in value since purchase, in order torealize the profit. The term is often used to explain a downturn in themarket following a period of rising prices.

114. Prospectus

The issuer must provide according to SEC regulations, the officialdocuments to potential purchasers of a new securities issue. It highlightsthe much longer registration statement filed with the Commission thatgives information on the financial well being of the issuer and thespecifics of the issue itself. Potential investors can consult thisinformation before buying.

115. Proxy

A ballot by which stockholders can transmit their votes on corporatematters without needing to attend the actual shareholders meeting. A

proxy could also state the stockholder's intention to transfer voting rightsto someone else. A company's shareholders are commonly asked to voteon such matters as electing a board of directors, approving mergers andacquisitions, and sometimes on proposals that other stockholders havesubmitted to management. One share generally equals one vote.

116. Primary Distribution

The sale of a new issue of securities by a company. Initial publicofferings (IPOs) are primary distributions by companies that were not

publicly traded prior to the offering.

117. Put OptionA contract that gives the holder the right to sell the underlying stock, tothe writer of the put, at a specified price (the strike price) within a fixed

period of time.118. Quote:The highest bid to buy and the lowest offer to sell any stock at

a given time.119. Rate of Return

In stocks and bonds, the amount of money returned to investors on theirinvestments. Also known as yield.

120. Record Date

The date on which you must be registered as a shareholder of a companyin order to receive a declared dividend or, among other things,to vote oncompany affairs.

121. Redemption Price

The price at which a bond may be redeemed before maturity, at theoption of the issuing company. Redemption value also applies to the

price the company must pay to call in certain types of preferred stock.

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122. Registered Representative (RR)

Also known as account executive, customers' broker, or similar title.Describes full-time NYSE member organization sales persons who havemet the NYSE's background and industry knowledge requirements.

123. Registrar

Usually a trust company or bank charged with the responsibility ofkeeping a record of the owners of a corporation's securities and

preventing the issuance of more than the authorized amount.124. Retained Earnings:Profits a company keeps for its operations, after

paying taxes and dividends.125. Right to Vote

The right of common stockholders to vote on matters of corporate policyat an annual stockholder's meeting. The impact of a stockholder's vote is

proportionate to the amount of stock owned.

126. RightsWhen a company wants to raise more funds by issuing additionalsecurities, it may give its stockholders the opportunity, ahead of others, to

buy the new securities in proportion to the number of shares each owns.The piece of paper evidencing this privilege is called a right. Because theadditional stock is usually offered to stockholders below the currentmarket price, rights ordinarily have a market value of their own and areactively traded. In most cases they must be exercised within a relativelyshort period. Failure to exercise or sell rights may result in monetary lossto the holder.

127. S&P 500

A capitalization weighted index of 500 stocks. Standard and Poor's 500index represents the price trend movements of the major common stockof U.S. public companies. It is used to measure the performance of theentire U.S. domestic stock market.

128. Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002 addresses a wide range of corporate-accountability issues. Key provisions of the legislation, which apply to

both U.S. and foreign private issuers, will:

Create a Public Company Accounting Oversight Board to establishauditing standards and regulate accountants who audit public companies;

Prohibit auditors from providing non-audit services to audit clients,except with oversight board pre-approval;

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Require CEOs and CFOs to certify their companies annual and quarterlyfinancial reports, subject to civil and criminal penalties;

Require CEOs and CFOs to forfeit bonuses, incentive compensation orgains from the sale of company securities during the 12-month periodafter the initial publication of financial statements that have to bereinstated as a result of misconduct;

Demand real-time disclosure, in plain English, of material changes to anissuers financial condition or operations;

Require public companies to have an audit committee composed entirelyof independent directors;

Require public companies to disclose the adoption of, and any changesto, corporate codes of ethics;

Prohibit issuers from extending new personal loans to directors andexecutive officers;

Accelerate the reporting of insider transactions to within two businessdays;

Prohibit directors and executive officers from trading company stock

during company benefit plan blackout periods;

Provide criminal penalties for destroying audit records or falsifyingdocuments;

Enhance criminal penalties for violations of antifraud rules, federalsecurities laws and other white-collar crimes;

Protect employees of public companies against retaliation for whistle-blowing;

Increase the frequency of SEC reviews of public-company filings to atleast once every three years.

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129. Secondary Market

When stocks or bonds are traded or resold, they are said to be sold on asecondary market. The majority of all securities transactions take placeon a secondary market.

130. Securities and Exchange Commission (SEC)

A watch-dog agency created by the U.S. Congress to monitor thesecurities industry and enforce punishments of those that violate theindustry's regulations.

131. Seller's Option

A special transaction that gives the seller the right to deliver the stock or bond at any time within a specified period, ranging from not lessthan two business days to not more than 60 business days.

132. Shares Outstanding

The number of authorized shares in a company that are held by investors,

including employees and executives of that company. Unissued shares ortreasury shares are not included in this figure.

133. Short Position

Stock options, or futures contracts sold short and not covered as of aparticular date. On the NYSE, a tabulation is issued once a month listingall issues on the Exchange in which there was a short position of 5,000 ormore shares and issues in which the short position had changed by 2,000or more shares in the preceding month. Short position also means thetotal amount of stock an individual has sold short and has not covered, asof a particular date.

134. Sinking Fund

Money regularly set aside by a company to redeem its bonds, debenturesor preferred stock from time to time as specified in the indenture orcharter.

135. Slow Market

The Market becomes slow or converts temporarily from a HybridMarket to an Auction Market only mode so as to enable specialists, floor

brokers, and customers to interact with Quotes and Orders manually,with the objective of enhancing liquidity and reducing volatility. Certain

market conditions temporarily trigger a Slow Market including GapQuotes, Trading Halts or reaching LRPs. The Slow Market can be tradedthrough.

136. Sole Proprietorship

Any business that is owned and operated by a single individual.

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137. Speculation

The employment of funds by a speculator. Safety of principal is asecondary factor.

138. Spin-Off

The separation of a subsidiary or division of a corporation from its parentby issuing shares in a new corporate entity. Shareowners in the parentreceive shares in the new company in proportion to their original holdingand the total value remains approximately the same.

139. Split

The division of the outstanding shares of a corporation into either a largeror smaller number of shares, without any immediate impact in individualshareholder equity. For example, a 3-for-1 forward split by a companywith 1 million shares outstanding results in 3 million shares outstanding.Each holder of 100 shares before the split would have 300 shares worth

less, although the proportionate equity in the company would stay thesame. A reverse split would reduce the number of shares outstanding andeach share would be worth more.

140. Stock Index

A basket of stock used to track the market. Typically, this is used forlong-term evaluation. The performance of a group of stocks is averaged,and over time, that average serves as an indicator of the market's generalmovement.

141. Stock Split

When a company increases the number of shares outstanding by splittingexisting shares. A 2-for-1 split means every stockholder gets two newshares for each one they own, and a 3-for-2 split means they get threeshares for every two they own. The price of an individual share falls, butstockholders do not lose money because they are being given theequivalent number of new shares.

In a reverse stock split, a company reduces the number of the sharesoutstanding by consolidating existing shares. A 1-for-5 reverse split forexample, means that for each five shares owned one receives a single

new share instead. The price of the new shares is five times higher, butonly to reflect the shortened supply. If a company's stock is trading at avery low price, this process makes the company look more attractive toinvestors

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142. Stockholder Record

A stockholder whose name is registered on the books of the issuingcorporation.

143. Swapping

Selling one security and buying a similar one at almost the same time totake a loss, usually for tax purposes.

144. Tick

The tick is the direction in which the price of a stock moved on its lastsale. An up-tick means the last trade was at a higher price than the one

before it and a down-tick means the last sale price was lower than the onebefore it. A zero-plus tick means the transaction was at the same price asthe one before, but still higher than the nearest preceding different price.The tick becomes especially important when large market movementstrigger the implementation of certain circuit breakers meant to stabilize

the market.145. Ticker

A telegraphic system that continuously provides the last sale prices andvolume of securities transactions on exchanges. Information is either

printed or displayed on a moving tape after each trade.146. Ticker Symbol

A three or four letter abbreviation used to identify a security whether onthe floor, a TV screen, or a newspaper page. Ticker symbols are part ofthe lore of Wall Street. They were originally developed in the 1800s bytelegraph operators to save bandwidth. One-letter symbols were thereforeassigned to the most active stocks. Railroads were the dominant issues atthe time, so they retain a majority of the one-letter designations.

Ticker symbols today are assigned on a first-come, first-served basis.Each marketplace -- the NYSE, the American Stock Exchange, andothers -- allocates symbols for companies within its purview, workingclosely to avoid duplication. A symbol used for one company cannot beused for any other, even in a different marketplace.

147. Transfer

The legal change in ownership after the sale of a security. This task mayinvolve the physical delivery of a stock certificate or the change ofownership on the books of the corporation by the transfer agent.

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148. Transfer Agent

A transfer agent keeps a record of the name of each registeredshareowner, his/her address, the number of shares owned, and sees thatthe certificates presented for transfer are properly cancelled and newcertificates issued in the name of the new owner.

149. Transparency: Accurate and timely information regarding stockprices and volume.

150. Treasuries:

Debt obligations of the U.S. government. Treasuries are among the safestinvestments, since the full faith and credit of the government securethem. The interest of Treasuries is exempt from state and local taxes butis subject to federal income tax. There are three types of treasuries:Treasury Bills, with maturities of one year or less; Treasury Notes, with

maturities ranging from one to 10 years; and Treasury Bonds, long-terminstruments with maturities of 10 years or more.

151. Treasury Stock

Shares, formerly outstanding, that were repurchased by the issuingcompany. Companies often repurchase stock to benefit existingshareholders. Those who sell receive a premium price from the companyfor their shares, thus substituting a large capital gain for future dividends.This ploy is used when dividend taxes are higher than capital gains taxes.Remaining investors who keep their shares benefit from a tightenedsupply, which raises the share price. Companies may later resell treasurystock, or retire it according to a shareholder vote.

152. Trustee

A bank designated by the issuer as the custodian of funds and the officialrepresentative of the bond holders.

153. Turnover Rate

The volume of shares traded in a year as a percentage of total shareslisted on an Exchange, outstanding for an individual issue or held in aninstitutional portfolio.

154. Underlying

The security that one has the right to buy or sell according to the terms ofan option contract.

155. Voting Right

The common stockholders' right to vote their stock in the affairs of acompany. Preferred stock usually has the right to vote when preferreddividends are in default for a specified period. The right to vote may bedelegated by the stockholder to another person.

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156. underwriter for options

A person who assumes the obligation to sell (call) or buy (put) theunderlying security at an options exercise

157. Yield

In stocks and bonds, the amount of money returned to investors on theirinvestments. Also known as Return. For bonds, also see: CurrentYield; Yield-to-Maturity; and Yield-to-Call.

158. Yield to Call

A yield that would be realized on a callable bond, if the bond wasredeemed on the next call date.

159. Yield to Maturity

A yield calculated on the combination of the annual coupon (interest)payments to maturity, the realized difference between the (discount orpremium) acquisition price of the issue and the par value at maturity. For

interest bearing issues, the calculation includes the assumption thatinterest is earned on the interest received is at the same rate as thecalculated yield to maturity.

160. Zero-Coupon Bonds

Bonds that pay no interest but are priced, at issuance, at a discountfrom their redemption par value, which usually is $1,000. The longer theterm of the issue the greater the discount at issuance.

Proxy Statement

The SEC requires that shareholders of a company whose securities areregistered under Section 12 of the Securities Exchange Act of 1934receive a proxy statement prior to a shareholder meeting, whether anannual or special meeting. The information contained in the statementmust be filed with the SEC before soliciting a shareholder vote on theelection of directors and the approval of other corporate action.Solicitations, whether by management or shareholders, must disclose allimportant facts about the issues on which shareholders are asked to vote.

Reverse Stock Splits

A reverse stock split reduces the number of shares and increases the share price proportionately. For example, if you own 10,000 shares of acompany and it declares a one for ten reverse split, you will own a totalof 1,000 shares after the split. A reverse stock split has no affect on thevalue of what shareholders own. Companies often split their stock when

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they believe the price of their stock is too low to attract investors to buytheir stock. Some reverse stock splits cause small shareholders to be"cashed out" so that they no longer own the companys shares.

Short Sales

A short sale is generally the sale of a stock you do not own. Investorswho sell short believe the price of the stock will fall. If the price drops,you can buy the stock at the lower price and make a profit. If the price ofthe stock rises and you buy it back later at the higher price, you will incura loss.

When you sell short, your brokerage firm loans you the stock. The stockyou borrow comes from either the firms own inventory, the margin

account of another of the firms clients, or another brokerage firm.

Spin-Offs

In a "spin-off," a parent company distributes shares of a subsidiary on apro rata basis to the parent company's shareholders. As a result, thesubsidiary becomes a separate company. State law and the rules of thestock exchanges determine whether a company must seek shareholderapproval for a spin-off. A subsidiary does not have to register the sharesof the spin-off under the Securities Act of 1933 if it meets certain

conditions. One of the conditions requires the parent company to provideadequate information about the spin-off to its shareholders and thetrading markets. But when registration is required, the subsidiary mustfile a registration statement with the SEC.

Spread

The "spread" is the difference between the "bid" price and the "ask" priceon over-the-counter market securities. The term "bid" refers to thehighest price a market maker will pay at any given time to purchase a

specified number of shares of a stock. The term "ask" refers to the lowestprice at which a market maker will sell the stock.

Stock and Bond Certificates, Old

An old stock or bond certificate may still be valuable even if it no longertrades under the name printed on the certificate. The company may have

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merged with another company or simply changed its name. You can usethe resources below to find out if an old stock or bond certificate hasvalue. Even if you learn that a certificate has no value, you may find thatthe certificate itself has value as a collectable.

Stock Splits

When a company declares a stock split, the price of the stock willdecrease, but the number of shares will increase proportionately. Forexample, if you own 100 shares of a company that trades at $100 a shareand it declares a two for one stock split, you will own a total of 200shares at $50 a share after the split. A stock split has no effect on thevalue of what shareholders own. If the company pays a dividend, yourdividends paid per share will also fall proportionately.

Stop Order

A stop order is an order to buy or sell a stock once the price of the stockreaches a specified price, known as the stop price. When the specified

price is reached, your stop order becomes a market order.

Buy Stop Order Investors typically use a stop order when buyingstock to limit a loss or protect a profit on short sales. The order is enteredat a stop price that is always above the current market price.

Sell Stop Order A sell stop order helps investors to avoid furtherlosses or to protect a profit that exists if a stock price continues to drop. Astop order to sell is always placed below the current market price.

Bond Swaps

A bond swap occurs when an investor sells one bond and uses theproceeds to purchase another bond, often at the same price. Investorsengage in bond swaps for a variety of reasons. For example, investors

may want to take a tax loss by selling one bond at a loss but then preservetheir investment by simultaneously buying a similar bond. At other times,investors swap bonds to obtain a higher yield and return on their bondinvestments

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Capital Gains and Losses

Investors contact the SEC asking about the tax consequences when theysell securities. In particular, investors want to know whether they willhave to pay a capital gains tax or can take a capital loss. The SEC doesnot regulate this area. The Internal Revenue Service does instead.

Treasury Securities

Treasury securitiesincluding Treasury bills, notes, and bondsare debtobligations issued by the U.S. Department of the Treasury. Treasurysecurities are considered one of the safest investments because they are

backed by the full faith and credit of the U.S. government. The incomefrom Treasury securities is exempt from state and local taxes, but not

from federal taxes.

Zero Coupon Bonds

Zero coupon bonds are bonds that do not pay interest during the life ofthe bonds. Instead, investors buy zero coupon bonds at a deep discountfrom their face value, which is the amount a bond will be worth when it"matures" or comes due. When a zero coupon bond matures, the investorwill receive one lump sum equal to the initial investment plus interestthat has accrued.

The maturity dates on zero coupon bonds are usually long-termmanydont mature for ten, fifteen, or more years. These long-term maturitydates allow an investor to plan for a long-range goal, such as paying for achilds college education. With the deep discount, an investor can put upa small amount of money that can grow over many years.

161. FORMS

10-Q - Quarterly report pursuant to sections 13 or 15(d)

10-QSB - Optional form for quarterly and transitionreports of small business issuers under section

10-K - Annual report pursuant

10KSB - Optional form for annual and transition reports

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of small business issuers

8-K - Current report filing

20-F - Annual and transition report of foreign privateissuers

40-F - Annual reports filed by certain Canadian issuers

Forms S-1& S-3 - Registration statement for face-amount

certificate companies

Forms N-

1 & N-1A - Registration statement for open-end managementinvestment companies

Form NCSR- Certified annual shareholder report of registeredmanagement investment companies

162. ANNUAL MEETING

meeting of shareholders that the law requires a corporation to holdeach year for the election of directors and the transaction of other

business163. SPECIAL MEETING

A meeting held for a special and limited purpose;specify A corporatemeeting held occasionally in addition to the annual meeting to conduct only

business described in a notice to the shareholders

164. STOCKHOLDER:One who owns a share or shares of stock in acompany. Also calledstockowner

165. STAKEHOLDER :One who has a share or an interest, as in anenterprise.

166. STOCK CERTIFICATE:A certificate establishing ownership of astated number of shares in a corporation's stock.

167. CLASS DIRECTORS

The Directors are appointed with specified tenure in the office. Forinstance, if three directors are appointed for a period of three years and

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two more directors appointed for period of two year, each of the groupwill be classified as two different classes.

168. VOTING SECURITIES (RECORD DATE CAN BE FIXED TODETERMINE THE ELIGIBLE STOCK HOLDERS)

The Board of Directors will fix a record date to list certain securitiesholders who are eligible to vote in an Annual Meeting or Specialmeeting. Those securities that are on record date are called votingsecurities.

169. BENEFICIAL OWNER :

A person who enjoys the benefits of ownership even though title is inanother name.

170. BYE LAWS OF A COMPANY1. A law or rule governing the internal affairs of an organization.2. A secondary law.

171. INDEPENDENT DIRECTORS

A director who does not have any other material pecuniary relationshipwith the company apart from drawing his remuneration.

172. EXECUTIVE AND NON EXECUTIVE DIRECTORS

An Executive Director is a person who is Member of the Board of

Directors and also part of the company's management team.

He looks after the Management functions apart from being the Memberof the Board of Directors.

A non Executive Director is a person who is Member of the Board ofDirectors and is not part of the management team.

The purpose of having Non-Executive Directors is to provide unbiased

and impartial perspectives on issues brought to the board.

He does not hold any Executive positions in the company.

173. EXECUTIVE AND NON EXECUTIVE CHAIRMAN

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He is one of the BODThe presiding officer of a meeting, committee, or boardHe could be Executive Chairman or Non Executive ChairmanAn Executive Chairman is an employee of the Company but not the NonExecutive ChairmanIt is his or her responsibility to determine the final agenda for eachmeeting and to conduct the Board Meetings and General MeetingsThe chairman has to be fair to allA good listener and a good communicator

Next to Chairman is Co- Chairman and Vice ChairmanCo- Chairman or Vice Chairman shares the duties along with thechairman

174. INTERNAL AUDITORSInternal auditor is a person appointed as per statutory requirements andaudits the day to day financial and accounting transactions of theCompany.

175. DIRECTOR NOMINEE

He is a person whose name is proposed for the directorship of thecompany and his chances of becoming director depend upon the electionin the meetingHe is not a director and only a proposed candidate for future Directorshipin the company.

176. NOMINEE DIRECTOR

A nominee director is a person appointed by the financial institution orbanks or such other government bodies to protect in their interest. Suchperson would be employee of those organizations.

177. WHO IS A PROXY

A person authorized to act for another; an agent or substitute.The authority to act for another.The written authorization to act in place of another.

178. GENERAL COUNSEL

A lawyer at the head of a legal department (as of a corporation orgovernment agency)

179. COMMITTEES

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A group of people officially delegated to perform a function, such asinvestigating, considering, reporting, or acting on a matter.

180. NON MANAGEMENT DIRECTORS

Non executive directors181. LISTING STANDARDS

The norms specified the concerned stock exchange to get a companylisted.

182. INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants are the external auditors to thecompany who shall report to the shareholders of the Company

183. ANNUAL FINANCIAL STATEMENTS

Balance sheet, Profit and loss account, cash flow statement are the annualfinancial statements. They are prepared to once in a year to find out the

net profit and to list out the assets and the liabilities of a company.184. CASH FLOW STATEMENT

One of the quarterly financial reports any publicly traded company isrequired to disclose to the SEC and the public. The document providesaggregate data regarding all cash inflows a company receives from bothits ongoing operations and external investment sources, as well as allcash outflows that pay for business activities and investments duringa given quarter.

185. QUARTERLY REPORTA quarterly report is a document required by all public companies,reporting the results for the quarter

186. EMPLOYMENT AGREEMENT OF A DIRECTOR

An employment contract is an agreement entered into between anemployer and an employee at the commencement of the period ofemployment and stating the exact nature of their business relationship,specifically what compensation the employee will receive in exchangefor specific work performed.

187. EXCERCISABLE OPTIONS: Options matured and yet to beconverted in stock.

188. STOCK PRICE PERFORMANCE

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Performance of a stock in a stock exchange in a considerable time. Thehigh and low price quotation of that is compared to study the movementof the stock of a company.

189. ELECTION AND RE ELECTION OF A DIRECTOR

The shareholders once a year in Annual Meeting shall elect the Directorsof the Company for a certain period of time at the end of which they haveto retire. The Directors who retire are eligible to be reappointed asdirectors and their proposal is put to vote for reelection.

190. ALTERNATE DIRECTOR

A person is appointed in the place of a Director who stays away from theplace where Board Meetings are usually held.

191. ADDITIONAL DIRECTOR

A person appointed by the Board of Directors.

192. SECRETARY AND LEGAL COUNSEL

An officer of a business concern who may keep records of directors' andstockholders' meetings and of stock ownership and transfer and helpsupervise the company's interests. He acts as a liaison officer between theBoard of Directors and the share holders.Looks after as the meetings of the Board of Directors and committeesAnattorney.

193. MANAGEMENT BOARD

The management board is in charge of the management of the companyaccording to its own business judgment and represents the company in its

business dealings and in litigation.194. SUPERVISORY BOARD

Supervisory Board functions like that of Board of Directors. In the DualBoard system that exist in Germany, France and other Europeancountries, these Boards assume the supreme position of the managementof the Company.

195. BOARD OF STATUTORY AUDITORS

There Boards are common in Japan and Italy. These are the auditors

elected by the members of the Company in Annual Meeting to overseethe audit aspects, supervision of decisions of the Company and assist inappointment of the Independent Auditors.

196. CHAIRMAN EMIRETUS

Emeritus is an honorific title given to a retired Chairman or otherprofessional

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The term is used when persons of importance in a given professionretires.

197. LEAD DIRECTOR

When in a company, same person holds both Chairmanship of the Boardand Chief Executive officer Position, in order to monitor the acts of such

person one of the board members will be appointed as Lead Director. Inorder to be appointed as Lead Director, the person should be anIndependent Director.

198. PRESIDENT AND CHAIRMAN

The chief officer of an organization (as a corporation or institution)usually entrusted with the direction and administration of its policies andDecision making and he is called as president

However in countries like Germany a President is like a chairman of

Board of Directors

He is one of the BODThe presiding officer of a meeting, committee, or boardHe could be Executive Chairman or Non Executive ChairmanAn Executive Chairman is an employee of the Company but not the NonExecutive Chairman

199. PROXY CARD

Proxy card is a form (card) to appoint a proxy on behalf of a stock holderto attend a annual or special meeting.

200. SUBSIDIARY AND WHOLLY OWNED SUBSIDIARY

A company whose voting stock is more than 50% controlled by anothercompany, usually referred to as the parent company.

A subsidiary whose parent company owns 100% of its common stock.

201. AFFILIATES

A corporation may be referred to as an affiliate of another when it isrelated to it but not strictly controlled by it, as with a subsidiaryrelationship, or when it is desired to avoid the appearance of control. Thisis sometimes seen with multinational companies that need to avoidrestrictive laws (or negative public opinion) on foreign ownership.

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202. TREASURER

Many organizations, particularly not-for-profit organizations such ascharities unions and churches, appoint treasurers, are responsible forgenerating income for the group, whether this be through pricing of a

product, organizing sponsorship, or arranging fundraising events.The treasurer would also be part of the group which would oversee howthe money is spent, either directly dictating expenditure or authorizing itas required.

203. CERTIFICATE OF INCORPORATION AND CERTIFICATE OFMERGER

A certificate issued by a state's secretary of state that shows acceptance ofa corporation's articles of incorporation. Certificate confirming the

merger of two entities by the concerned regulating authority.

204. PRINCIPAL EXECUTIVE OFFICER AND CHIEF EXECUTIVEOFFICER

The highest-ranking executive in an organization. Employed by andaccountable to its board of directors. He has the ultimate executiveresponsibility or authority within an organization responsible for carryingout the policies of the board of directors on a day-to-day basisAlthough it is possible to have more than one CEO in a company,

generally the job is not shared. All other management other than BODreports to the CEO.

205. CHIEF FIANANCIAL OFFICER AND CHIEF OPERATINGACCOUNTING OFFICER

This is the senior manager who is responsible for overseeing the financialactivities of an entire company.This includes signing checks, monitoring cash flow, and financial

planning. By comparison of CEO with CFO as strategic business partnerand statutory duties under SEC and Sarbanes-Oxley Act, both are equalranking top executive and separate posts.

Chief operating officer (or COO) is a corporate officer responsible formanagement of day-to-day activities of the corporation.

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The COO is one of the highest ranking members of an organization,monitoring the daily operations of the company and reporting to the chiefexecutive officer directly.The COO in some companies is also the president, but they are usually anexecutive or senior vice president

206. ATTORNEY-IN-FACT

attorneys-in-fact An attorney who may or may not be a lawyer who isgiven written authority to act on another's behalf esp. by a power ofattorney compare

207. POWER OF ATTORNEY

A legal instrument authorizing one to act as another's attorney or agent.

208. RELATED PARTY TRANSACTIONS

A business deal or arrangement between two parties who are joined by aspecial relationship prior to the deal. For example, a business transaction

between a major shareholder and the corporation, such as a contract forthe shareholder's company to perform renovations to the corporation'soffices, would be deemed a related-party transaction.

209. VENTURE CAPITAL

Money made available for investment in innovative enterprises or

research, especially in high technology, in which both the risk of loss andthe potential for profit may be considerable. Also called risk capital.

210. PORTFOLIO MANAGEMENT

The art and science of making decisions about investment mix andpolicy, matching investments to objectives, asset allocation forindividuals and institutions, and balancing risk vs. performance. Therebyincreasing the interconnectedness of different markets

211. Demat A/c:It is just like a bank a/c where actual money is replacesby shares.

212. Dividends:are payments made by companies to their stock holders inorder to share a portion of the profits.

213. Capital Mkt Definition: Capital mkt is market. This deals with longterm securities like corporate security govt security and long termsecurities

Stock Exchange Terminology 1

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