| The ever increasing number of investment | | | | the price of gold by dealers (especially in a |
| products and financial services in the | | | | twice daily London meeting at the central |
| marketplace today can be confusing. We have | | | | bank); the fix is the fundamental worldwide |
| put together this glossary of financial | | | | price for setting prices of gold bullion and |
| definitions designed to help you understand | | | | gold-related contracts and products.Good |
| some of the more common investment and | | | | Delivery - Certain basic qualifications must |
| financial terms you may encounter. Your | | | | be met before a security sold on the Exchange |
| financial advisor can explain these terms | | | | may be delivered. The security must be in |
| more completely and discuss with you those | | | | proper form to comply with the contract of |
| which are relevant to your situation.Face | | | | sale and to transfer title to the |
| Value - The value of a bond that appears on | | | | purchaser.Good 'Til Canceled (GTC) or Open |
| the face of the bond, unless the value is | | | | Order - An order to buy or sell that remains |
| otherwise specified by the issuing company. | | | | in effect until it is either executed or |
| Face value is ordinarily the amount the | | | | canceled.Government Bonds - Obligations of |
| issuing company promises to pay at maturity. | | | | the U.S. Government, regarded as the |
| Face value is not an indication of market | | | | highest-grade securities issues.Growth Stock |
| value. Sometimes referred to as par | | | | - Stock of a company with a record of growth |
| value.Financial Futures - Futures contracts | | | | in earnings at a relatively rapid |
| based on financial instruments such as U.S. | | | | rate.Hedging - The purchase or sale of a |
| Treasury bonds, CDs and other | | | | derivative security (such as options or |
| interest-sensitive issues, currencies and | | | | futures) in order to reduce or neutralize all |
| stock market indicators.Fiscal Year - A | | | | or some portion of the risk of holding |
| corporation's accounting year. Due to the | | | | another security.Holding Company - A |
| nature of their particular business, some | | | | Corporation that owns the securities of |
| companies do not use the calendar year for | | | | another, in most cases with voting |
| their bookkeeping. A typical example is the | | | | control.Hypothecation - The pledging of |
| department store that finds December 31 too | | | | securities as collateral - for example, to |
| early a date to close its books after the | | | | secure the debit balance in a margin |
| Christmas rush. For that reason many stores | | | | account.Income Bond - Generally income bonds |
| wind up their accounting year January 31. | | | | promise to repay principal but to pay |
| Their fiscal year, therefore, runs from | | | | interest only when earned. In some cases |
| February 1 of one year through January 31 of | | | | unpaid interest on an income bond may |
| the next. The fiscal year of other companies | | | | accumulate as a claim against the corporation |
| may run from July 1 through the following | | | | when the bond becomes due. An income bond may |
| June 30. Most companies, though, operate on a | | | | also be issued in lieu of preferred |
| calendar year basis.Fixed Charges - A | | | | stock.Indenture - A written agreement under |
| company's fixed expenses, such as bond | | | | which bonds and debentures are issued, |
| interest, which it has agreed to pay whether | | | | setting forth maturity date, interest rate, |
| or not earned, and which are deducted from | | | | and other terms.Index - A statistical |
| income before earnings on equity capital are | | | | yardstick expressed in terms of percentages |
| computed.Flat Income Bond - This term means | | | | of a base year or years. For instance, the |
| that the price at which a bond is traded | | | | NYSE Composite Index of all NYSE common |
| includes consideration for all unpaid | | | | stocks is based on 1965 as 50. An index is |
| accruals of interest. Bonds that are in | | | | not an average.Institutional Investor - An |
| default of interest or principal are traded | | | | organization whose primary purpose is to |
| flat. Income bonds that pay interest only to | | | | invest its own assets or those held in trust |
| the extent earned are usually traded flat. | | | | by it for others. Includes pension funds, |
| All other bonds are usually dealt in "and | | | | investment companies, insurance companies, |
| interest," which means that the buyer pays to | | | | universities and banks.Interest - Payments |
| the seller the market price plus interest | | | | borrowers pay lenders for the use of their |
| accrued since the last payment date.Floor - | | | | money. A Corporation pays interest on its |
| The huge trading area - about the size of a | | | | bonds to its bondholders.Interrogation Device |
| football field - where stocks, bonds and | | | | - A computer terminal that provides market |
| options are bought and sold on the New York | | | | information - last sale price, quotes, |
| Stock Exchange.Floor Broker - A member of the | | | | volume, etc. - on a screen or paper |
| Stock Exchange who executes orders on the | | | | tape.Intrinsic Value - The dollar amount of |
| floor of the Exchange to buy or sell any | | | | the difference between the exercise price of |
| listed securities.Formula Investing - An | | | | an option and the current cash value of the |
| investment technique. One formula calls for | | | | underlying security. Intrinsic value and time |
| the shifting of funds from common shares to | | | | value are the two components of an option |
| preferred shares or bonds as a selected | | | | premium, or price.Investment - The use of |
| market indicator rises above a certain | | | | money for the purpose of making more money, |
| predetermined point - and the return of funds | | | | to gain income or increase capital, or |
| to common share investments as the market | | | | both.Investment Banker - Also known as an |
| average declines.Free and Open Market - A | | | | underwriter. The "middleman" between the |
| market in which supply and demand are freely | | | | corporation issuing new securities and the |
| expressed in terms of price. Contrasts with a | | | | public. The usual practice is for one or more |
| controlled market in which supply, demand and | | | | investment bankers to buy outright from a |
| price may all be regulated.Fundamental | | | | corporation a new issue of stocks or bonds. |
| Research - Analysis of industries and | | | | The group forms a syndicate to sell the |
| companies based on such factors as sales, | | | | securities to individuals and institutions. |
| assets, earnings, products or services, | | | | Investment bankers also distribute very large |
| markets and management. As applied to the | | | | blocks of stocks or bonds - perhaps held by |
| economy, fundamental research includes | | | | an estate.Investment Company - A Company or |
| consideration of gross national product, | | | | trust that uses its capital to invest in |
| interest rates, unemployment, inventories, | | | | other companies. There are two principal |
| savings, etc.Funded Debt - Usually | | | | types: the closed-end and the open-end or |
| interest-bearing bonds or debentures of a | | | | mutual fund. Shares in closed-end investment |
| company. Could include long-term bank loans. | | | | companies, some of which are listed on the |
| Does not include short-term loans, preferred | | | | New York Stock Exchange, are readily |
| or common stock.Futures - Exchange traded | | | | transferable in the open market and are |
| contracts specifying a future date of | | | | bought and sold like other shares. |
| delivery or receipt of a certain amount of a | | | | Capitalization of these companies remains the |
| specific tangible or intangible product. The | | | | same unless action is taken to change, which |
| commodities traded in futures markets include | | | | is seldom. Open-end funds sell their own |
| stock index futures, agricultural products | | | | shares to investors, stand ready to buy back |
| like wheat, soybeans and pork bellies; | | | | their old shares, and are not listed. |
| metals; and financial instruments. Futures | | | | Open-end funds are so called because their |
| are used by business as a hedge against | | | | capitalization is not fixed; they issue more |
| unfavorable price changes, and by speculators | | | | shares as people want them.Investment Counsel |
| who hope to profit from such changes.General | | | | - One whose principal business consists of |
| Mortgage Bond - A bond that is secured by a | | | | acting as investment adviser and rendering |
| blanket mortgage on the company's property | | | | investment supervisory services.IRA - |
| but may be outranked by one or more other | | | | Individual Retirement Account. A pension plan |
| mortgages.Gilt-Edged - High-grade bond issued | | | | with tax advantages. IRA permits investment |
| by a company that has demonstrated its | | | | through intermediaries like mutual funds, |
| ability to earn a comfortable profit over a | | | | insurance companies and banks or directly in |
| period of years and pay its bondholders their | | | | stocks and bonds through stockbrokers.Issue - |
| interest without interruption.Give-Up - A | | | | Any of a company's securities, or the act of |
| term with many different meanings. For one, a | | | | distributing such securities.Keogh Plan - Tax |
| member of the Exchange on the floor may act | | | | advantaged personal retirement program that |
| for a second member by executing an order for | | | | can be established by a self-employed |
| him or her with a third member. The first | | | | individual.More financial definitions can be |
| member tells the third member that he or she | | | | found by visiting SorensenAmerica's |
| is acting on behalf of the second member and | | | | Financial Guide can be found at ==> Subscribe |
| "gives up" the second member's name rather | | | | to Money Basics via - Are you ready for |
| than his or her own.Gold Fix - The setting of | | | | financial freedom? |