Finance Dictionary ( daily finance terms and concepts will be added and discussed)

Mutual fund


Mutual funds are pools of money that are managed by an investment company.* They offer investors a variety of goals, depending on the fund and its investment charter.* Some funds, for example, seek to generate income on a regular basis.* Others seek to preserve an investor's money.* Still others seek to invest in companies that are growing at a rapid pace.* Funds can impose a sales charge, or load, on investors when they buy or sell shares.* Many funds these days are no load and impose no sales charge.
*
 
Net asset value
Listed as NAV in mutual fund listings, net asset value is the market value of a fund's shares.* It is calculated at the close of trading.
*
 
Net Profit
This is the difference between the total price you paid for a security, with the brokerage commission you paid, and the current value.* It will show either a profit or a loss.
*
 
Open-end mutual fund

A fund that sells its shares at net asset value is an open-end fund.* It creates shares as investors demand them.* Investors buy the shares at their market price.* Most mutual funds are open-end funds.* Those that aren't are closed-end funds that sell a fixed number of shares to investors.


*
 
Open order
An individual investor can place an order to buy or sell a security.* That open order stays active until it is completed or the investor cancels it.


*

*
 
Options

These contracts give the holder the right to buy or sell securities at a set price or a set period of time.* Investors often use them to protect, or hedge, an existing investment.* An option is part of a class of securities called derivatives, so named because these securities derive their value from the worth of an underlying investment.
*
 
Percent Profit

This is your profit or loss expressed as a percentage of your original investment and including the cost of your brokerage commission.* If you bought 1,000 shares of a stock at $10, paid a $100 commission and saw the shares rise to $14, your percentage would be 39.6 percent.


*
 
Preferred shares

Preferred shares give investors a fixed dividend from the company's earnings.* And more importantly: preferred shareholders get paid before common shareholders.
*




*
 
Premium

This generally refers to extra money an investor is willing to pay to buy or sell something.* For a bond, a premium is the amount for which the security sells above its par value.* For a stock, a premium is the amount that a security's price exceeds those of its peer group, or comparable stocks.


*
 
P/E

A stock has a price-to-earnings ratio: the share price divided by earnings per share for the company's most recent four quarters.* A projected P/E divides the share price by estimated earnings per share for the coming four quarters.


*
 
Put option

This security gives investors the right to sell fixed number of shares at a fixed price within a given time frame.* An investor, for example, might wish to have the right to sell shares of stock at a certain time in order to protect, or hedge, an existing investment.
*
 
Par


Also known as Face Value, Principal, and Stated Value. (1)The face value of a bond-- generally $1,000 for corporate issues and higher denominations for many government issues. (2) A dollar amount assigned to a security when first issued. For stocks, par is usually a small dollar amount that bears no relationship to the security’s market price.
 
Par


Also known as Face Value, Principal, and Stated Value. (1)The face value of a bond-- generally $1,000 for corporate issues and higher denominations for many government issues. (2) A dollar amount assigned to a security when first issued. For stocks, par is usually a small dollar amount that bears no relationship to the security’s market price.
 
Passive Income

Earnings derived from a rental property, limited partnership, or other enterprise in which the individual is not actively involved. Passive income therefore does not include earnings from wages or active business participation, nor does it include income from dividends, interest, and capital gains
 
You must log in or register to reply here.
Back
Top