A type of mutual fund, sold by
insurance brokers, which is guaranteed to return
all or part of your initial investment.
Segregated funds may be protected from creditors
under certain circumstances. When a
preferred beneficiary is designated, the funds are
paid to the beneficiary upon death, avoiding
The settlement date for securities
transactions is the date on which payment is made
to settle the trade. The settlement date for
stocks and bonds is normally 3 days after the trade
date, and for options and mutual
funds it is
normally the day after the trade date. The
settlement date is the date on which possession of
the security is transferred from the seller to the
buyer. If you sell an investment at the end
of the year, and the settlement date is after
yearend, the sale is not recorded for tax purposes
until after yearend.
A person is "short"
a security when they sell shares they do not own, by borrowing them
from their brokerage company. This is
called making a "short sale", or "selling
short". This is normally done when the person believes that
the price of the security is going to fall, so that they can cover the
sale by buying back the stock later at a lower price. See also
One who will take on additional
risk in order to increase returns.
This is when a corporation
issues additional shares to its shareholders. For instance, a 2 for 1 stock split
would result in each shareholder holding twice the number of shares
that they previously held. However, the market value per share
would be only half of the previous market value per share.
Stop loss order
An instruction to a broker to sell
a stock if it falls to a specified price.
A security registered in street
name is registered in the name of the brokerage company, not
the owner. This is how most shares are held when purchased
through a brokerage company.
A strip bond is a bond that
pays no interest. It is purchased at a discount from face value,
and face value is paid upon maturity. See
principal protected notes (PPNs),
which may guarantee the original invested amount,
and they enable the investor to share in any
gains in the financial vehicle to which they
are attached, such as the S&P500,
Dow Jones, commodities, etc.
tax-structured products, which
provide the investor with income treated in a
certain way for tax purposes.
More caution should be used if the structured
product is sold without a prospectus.
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