Category: Investor Definitions

Before a company’s stock can begin trading on an exchange, the company must meet certain minimum financial and non-financial requirements, or “initial listing standards.” Initial listing standards generally include a company’s total market value and stock price, and the number of publicly traded shares and shareholders of the company. Once listed on an exchange, a… Continue reading LISTING STANDARDS

Liquidity generally refers to how easily or quickly a security can be bought or sold in a secondary market. Liquid investments can be sold readily and without paying a hefty fee to get money when it is needed. A stock’s liquidity generally refers to how rapidly shares of a stock can be bought or sold… Continue reading LIQUIDITY (OR MARKETABILITY)

A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

A diversified mutual fund that automatically shifts towards a more conservative mix of investments as it approaches a particular year in the future, known as its “target date.” A lifecycle fund investor picks a fund with the right target date based on his or her particular investment goal. The managers of the fund then make… Continue reading LIFECYCLE FUNDS

An amount owed to a person or organization for borrowed funds. Loans, notes, bonds, and mortgages are forms of debt. These different forms all call for borrowers to pay back the amount they owe, typically with interest, by a specific date, which is set forth in the repayment terms.

Investors sometimes complain to the SEC staff about late payments of interest owed to them on their bonds. The SEC, however, does not generally regulate this issue. Instead, the process for paying bondholders ordinarily involves banking transactions that are subject to the supervision of state and federal banking authorities. Here’s how the process should work: the… Continue reading LATE PAYMENT OF INTEREST ON BONDS

Terms used to describe a company’s size and market value (market capitalization).

The entity obligated to pay principal and interest on a bond.

Bonds that are believed to have a lower risk of default and receive higher ratings by the credit rating agencies, namely bonds rated Baa (by Moody’s) or BBB (by S&P and Fitch) or above. These bonds tend to be issued at lower yields than less creditworthy bonds.

A company that issues and invests in securities. The three types of investment companies are mutual funds, closed-end funds, and unit investment trusts.