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

Investment Adviser
(1) Any person who makes investment recommendations in return for a flat fee or percentage of assets managed. (2) For investment companies, the individual who has the day-to-day responsibility of investing the cash and securities held in the fund’s portfolio in accordance with the objectives stated in the fund’s prospectus.
 
Investment Banker
An institution in the business of raising capital for corporations and municipalities. An investment banker may not accept deposits or make commercial loans.
 
Investment Trust
Commonly known as a Closed-End Fund. Closed-end funds invest in other securities (like a Mutual Fund) but have a fixed number of shares and are traded similarly to stocks. The market price may exceed the Net Asset Value (NAV) per share, in which case the fund is selling at a Premium. When the market price falls below the NAV, the fund is selling at a Discount.
 
Investor
A person who seeks to minimize risk in the purchase of securities. Companies with good track records are preferred and purchase at fair value is important. Companies are held for the long-term (at least 3 to 5 years) rather than trying to time the market.
 
Investor Sentiment
Investors’ expectations of how a market will perform. It is described as bullish (with expectation of higher prices) or bearish (lower prices)
 
Issuer
(1) The entity, such as a corporation or municipality, that offers or proposes to offer its securities for sale. (2) The creator of an option: the issuer of an over-the-counter option is the option writer, and the issuer of a listed option is the Options Clearing Corporation. There are two exceptions to the definition of issuer. In the case of voting-trust certificates or collateral-trust certificates, the issuer is the person who assumes the duties of depositor or manager. Also, there is considered to be no issuer for certificates of interest or participation in oil, gas, or mining titles or leases where payments are made out of production.
 
Judgment
The human element which is necessary for successful investing. Computers can crunch numbers, follow formulas, and provide some artificial intelligence, but judgment is crucial for making the careful decisions. The investor must be informed about the company’s past and future plans, and be prepared to make some educated estimates about future trends. In all cases, judgment must be applied when doing any stock analysis.
 
Keogh Plan
Also known as a HR-10 plan. A qualified tax-deferred retirement plan for persons who are self-employed and unincorporated or who earn extra income through personal services aside from their regular employment.
 
Keynesian Economics
The theory that active government intervention in the marketplace is the best method of ensuring economic growth and stability.
 
Last*Sale Reporting
The electronic entry by NASD members to The NASDAQ Stock Market of the price and the number of shares involved in a transaction in a NASDAQ security. The trade reported must be submitted to NASDAQ within 90 seconds of the execution of the trade.
 
Leading Indicator
A measurable economic factor that changes just before a particular pattern or trend emerges. Leading indicators are believed to predict changes in the economy. Examples include new orders for durable goods, slowdowns in deliveries by vendors, and numbers of building permits issued.
 
Least Squares
A method used to calculate the slope of a trend line. This growth calculation uses the logarithm of the values. As the log of numbers less than 1.0 is mathematically undefined, the computer tests for this condition and alters the data values so that a calculation can be made. Least squares produce a more conservative result than the mid-point method.
 
Leverage
The extent to which a company uses debt to finance expansion and growth. It is measured by the Debt to Equity and Debt to Capital Ratios. When comparing companies’ leverage ratios, do so within the same industry, to be fair.
 
Liabilities
Debts of a corporation, usually divided into current (those due within one year) and Long-Term Debt (those payable after one year).
 
Limit Order
An order placed with a broker to buy or sell at a price as good or better than the specified limit price. Sometimes known as an Or Better Order.
 
Liquidity
The ability of a company to convert assets into cash or equivalents without significant loss. Good liquidity enables a company to earn discounts, maintain a good credit rating, meet obligations promptly, and take advantage of market opportunities.
 
Long
Or Long Position. Describes the owning of a Security. An owner of shares of McDonald’s Corp. is said to be “long McDonald’s” or “has a long position in McDonald’s.”
 
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