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

Bond Rating

An evaluation of the possibility of default by a bond issuer, based on an analysis of the issuer’s financial condition and profit potential. Bond rating services are provided by, among others, Standard & Poor’s 500, Moody’s Investors Service and Fitch Investors Service.
 
Bottom-Up Approach to Investing

The search for individual stocks which have outstanding performances, even within an industry which is not performing well.
 
Breakeven Point

(1) The point at which gains equal losses. (2) The market price that a stock must reach for an option buyer to avoid a loss if the Option is exercised. For a Call, it is the strike price plus the premium paid. For a Put, it is the strike price minus the premium paid.
 
Breakout

A Technical Analysis term, used to indicate a rise in a stock’s price above its resistance level (such as its previous high price) or drop below its support level (commonly the last lowest price.) The assumption is that the stock will continue to move in the same direction following the breakout, which generates a buy or sell signal.
 
Broad-Based Index

An index that is designed to reflect the movement of the market as a whole. Examples include the S&P 100, the S&P 500, the AMEX Major Market Index and the Value Line Composite Index.
 
Broker


(1) An individual or firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm. (2) The role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.
 
Broker-Dealer

A person or firm in the business of buying and selling securities. Also known as an Agent when buying securities and a Principal when selling them; one person may act as either, but not in the same transaction. Broker-dealers normally must register with the SEC, the appropriate SROs and any state in which they do business.
 
Business and Industry Risk


Uncertainty of an investment’s return due to a fall-off in business that is firm-related or industry-wide.
 
Business
A predictable long-term pattern of alternating periods of economic growth and decline. The cycle passes through four stages: expansion, peak, contraction, and trough.
 
Buy Stop Order


An order to buy a security that is entered at a price above the current offering price and that is triggered when the market price touches or goes through the buy stop price.
 
Buyout

The purchase of a company or a controlling interest of a corporation’s shares. A “leveraged buyout” is accomplished with borrowed money.
 
Call

(1) An option contract giving the owner the right to buy a specified amount of an underlying security at a specified price within a specified time. (2) The act of exercising a call option.
 
Callable Bond

A bond that can be redeemed by the issuer prior to its Maturity. Usually a premium is paid to the bond owner when the bond is called.
 
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