Category: Investor Definitions

Different types of shares issued by a single fund, often referred to as Class A shares, Class B shares, and so on. Each class of a fund holds identical investments and shares the same investment objectives and policies. But each class has different shareholder services with different fees and expenses, and therefore, each class will… Continue reading CLASSES

A broker typically earns a portion of the commissions or other fees on each purchase or sale of securities that the brokerage firm makes for an investor. When a broker engages in excessive buying and selling (i.e., trading) of securities in a customer’s account without considering the customer’s investment goals and primarily to generate commissions that benefit the… Continue reading CHURNING

A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years.  In exchange, the issuing bank pays you interest.  When you cash in or redeem your CD, you receive the money you originally invested plus… Continue reading CERTIFICATE OF DEPOSIT

Don’t assume that a “federally insured one-year non-callable” CD matures in one year. It doesn’t. These words mean the bank cannot redeem the CD during the first year. A “one-year non-callable” CD may still have a maturity date that is years in the future.

A cash account is a type of brokerage account in which the investor must pay the full amount for securities purchased.  An investor using a cash account is not allowed to borrow funds from his or her broker-dealer in order to pay for transactions in the account (trading on margin). The credit extension provisions of… Continue reading CASH ACCOUNT

Money that can be used to pay for goods or services.

The profit that comes when an investment is sold for more than the price the investor paid for it.

Callable or redeemable bonds are bonds that can be redeemed or paid off by the issuer prior to the bonds’ maturity date. When an issuer calls its bonds, it pays investors the call price (usually the face value of the bonds) together with accrued interest to date and, at that point, stops making interest payments. Sometimes a… Continue reading CALLABLE OR REDEEMABLE BONDS

These give the issuing bank the right to terminate – or “call” – the CD after a set period of time, but they do not give the CD holder the same right. If interest rates fall, the issuing bank might call the CD.

Bonds that can be redeemed or paid off by the issuer prior to the bond’s maturity date.