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The following definitions may help you better understand the capital markets.
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The maximum price advance or decline permitted for a futures contract in one trading session compared to the previous day's settlement price.
An order that is valid only for the day it is entered. If the order is still outstanding when the market closes, it will be purged overnight.
A certificate of indebtedness of a government or company backed only by the general credit of the issuer and unsecured by property or assets.
A stock purchased from a company that has maintained a record of stable earnings and continuous dividend payments through periods of economic downturn.
A special term order in which there is a clear understanding between the buying and selling parties that the delivery of the securities will be delayed beyond the usual three-day settlement period to the date specified in the order.
The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.
The tender and receipt of the underlying commodity or the payment or receipt of cash in the settlement of an open futures contract.
The calendar month in which a futures contract may be satisfied by making or taking delivery.
A ratio that measures an option's price movement compared to the underlying interest's price movement. Delta values have a range of 0 to 1. Deep in-the-money options have deltas that approach 1.
The combined desire, ability and willingness on the part of consumers to buy goods or services. Demand is determined by income and by price, which are, in part, determined by supply.
A securities account created when a client gives a partner, director or qualified portfolio manager of an investment dealer specific written authorization to select securities and execute trades on the client's behalf.
Limiting investment risk by purchasing different types of securities from different companies representing different sectors of the economy.
An amount distributed out of a company's profits to its shareholders in proportion to the number of shares they hold. A preferred dividend usually is for a fixed amount, while a common dividend may fluctuate with the profits of the company. A company is under no legal obligation to pay either preferred or common dividends.
The dividend yield on either common or preferred stock is the indicated annual dividend expressed as a percentage of the current market price of the stock.
A means of reinvesting dividends, which would otherwise be paid to the shareholder in cash, in additional stock of the company.
Investing a fixed amount of dollars in a specific security at regular set intervals over a period of time. Dollar cost averaging results in a lower average cost per share, compared with purchasing a constant number of shares at set intervals. The investor buys more shares when the price is low and buys fewer shares when the price is high.
An average made up of 30 actively traded stocks. The DJIA is calculated by adding the prices of each of the 30 stocks and dividing by a divisor. The DJIA is one of the most widely quoted stock market averages in the media.
A trade is on a downtick when the last trade occurred at a price lower than the previous one.
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