Financial instruments whose performance is derived, at least in part, from the performance of an underlying asset, security or index. For example, a stock option is a derivative because its value changes in relation to the price movement of the underlying stock.
Category: Investor Definitions
Definitions from the SEC’s glossary of terms, and investor.gov resources.
DEFINED CONTRIBUTION PLAN
A retirement savings plan, such as a 401(k) plan, that does not promise a specific payment upon retirement. In these plans, the employee or the employer (or both) contribute to the employee’s individual account. The employee bears the investment risks.
DEFINED BENEFIT PLAN
Defined benefit plans also are known as pension plans. Employers sponsor defined benefit plans and promise the plan’s investments will provide you with a specified monthly benefit at retirement. The employer bears the investment risks.
DEFERRED SALES CHARGE
A sales charge, also known as a “Back-end Load,” investors pay when they redeem (sell) mutual fund shares. Funds generally use these to compensate brokers.
DEFERRED ANNUITY
With a deferred annuity, you make payments to an insurance company, which will be free from taxes until you reach a particular age or a date specified in your contact.
DEFAULT
A failure by an issuer to pay principal or interest when due, or to fulfill other obligations, such as reporting requirements.
DEBENTURES
An unsecured bond backed solely by the general credit of a company.
DAY TRADING
Day traders rapidly buy, sell and short-sell stocks throughout the day in the hope that the stocks continue climbing or falling in value for the seconds or minutes they hold the shares, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short… Continue reading DAY TRADING
DAY TRADE
FINRA rules define a “day trade” as the purchase and sale, or the sale and purchase, of the same security on the same day in a margin account. This definition encompasses any security, including options. Selling short and purchasing to cover a position in the same security on the same day is also considered a… Continue reading DAY TRADE
DAY ORDER
Unless an investor specifies a time frame for the expiration of an order, orders to buy and sell a stock are “Day” orders, meaning they are good only during that trading day. Day orders that do not execute during regular trading hours expire and will not automatically carry over into after-hours trading or the next regular trading… Continue reading DAY ORDER