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Investment Terms (I to O)

(A to C)   (D to H)   (P to R)   (S to Y)

INDICATED DIVIDEND Total amount of dividends that would be paid on a share of stock over the next 12 months if each dividend were the same amount as the most recent dividend. Usually represent by the letter e in stock tables.

INDICATED YIELD The yield, based on the most recent quarterly rate times four. To determine the yield, divide the annual dividend by the price of the stock. The resulting number is represented as a percentage.

INDUSTRY The category describing a company's primary business activity. This usually is determined by the largest portion of revenue.

INITIAL PUBLIC OFFERING (IPO) A company's first sale of stock to the public. Securities offered in an IPO are sometimes those of young, small companies seeking outside equity capital and a public market for their stock.

INSIDER INFORMATION Relevant information about a company that has not yet been made public. It is illegal for holders of this information to make trades based on it, however received.

IN-THE-MONEY A "call" option is in-the-money if the strike price is less than the market price of the underlying security. A "put" option is in-the-money if the strike price is greater than the market price of the underlying security. For example, an xyz "call" option with a 52 strike price is in-the-money when xyz trades at 52 1/8 or higher. An xyz "put" option with a 52 strike price is in-the-money when xyz is trading at 51 7/8 or lower.

INVENTORY For companies: Raw materials, items available for sale or in the process of being made ready for sale. They can be individually valued by several different means, including cost or current market value, and collectively by FIFO, LIFO or other techniques. The lower value of alternatives is usually used to preclude overstating earnings and assets. For security firms: securities bought and held by a broker or dealer for resale.

INVENTORY TURNOVER The ratio of annual sales to inventory. Low turnover is an unhealthy sign, indicating excess stocks and/or poor sales.

LAST SPLIT After a stock split, the number of shares distributed for each share held and the date of the distribution. 

LIMIT ORDER An order to buy a stock at or below a specified price or to sell a stock at or above a specified price. For instance, you could tell a broker "Buy me 100 shares of xyz Corp at 10 or less" or to 'sell 100 shares of xyz at 12 or better.

LOAD FUND A mutual fund with shares sold at a price including a sales charge--typically 1% to 8% of the net amount indicated. Some "no-load" funds have distribution fees; these are typically 0.25%. A "true no-load" fund has neither a sales charge not load fees. A load implies that the fund purchaser receives some investment advice or other service worthy of the charge.

LONG POSITION Occurs when an individual owns securities. An owner of 1000 shares of stock is said to be "Long the Stock.

LONG POSITION (OPTIONS) An options position where a person has executed one or more options trades where the net result is that they are an "owner" or holder of options (i.e. the number of contracts bought exceeds the number of contracts sold).

LONG TERM ASSETS Value of property, equipment and other capital assets minus the depreciation. This is an entry in the bookkeeping records of a company, usually on a "cost" basis and thus does not necessarily reflect the market value of the assets.

LONG TERM DEBT Value of obligations of over 1 year that require that interest be paid.

LONG TERM DEBT/CAPITALIZATION Indicator of financial leverage. Shows long term debt as a proportion of the capital available. Determined by dividing long term debt by the sum of long term debt, preferred stock and common stockholders equity.

LONG TERM LIABILITIES Amount owed for leases, bond repayment and other items due after 1 year.

LOW PRICE The lowest (intraday) price of a stock over a certain period of time.

MANAGEMENT/CLOSELY HELD SHARES Percentage of shares held by persons closely related to a company. Part of these percentages often is included in Institutional Holdings --sometimes making the combined total of these percentages at 100%.

MARGIN ACCOUNT (STOCKS) A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

MARGIN REQUIREMENT (OPTIONS) The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intra- day price changes.

MARKET CAPITALIZATION  The total dollar value of all outstanding shares. Computed as shares times current market price. It is a measure of corporate size.

MARKET ORDER An order to buy or sell a stock at the going price.

MINIMUM PURCHASES For mutual funds, the amount required to open a new account (Minimum Initial Purchase) or to deposit into an existing account (Minimum Additional Purchase). These minima may be lowered for buyers participating in an automatic purchase plan.

MONEY MARKET FUND A mutual fund that invests only in short term securities, such as bankers acceptances, commercial paper, repurchase agreements and government bills.

MOVING AVERAGE Used in charts and technical analysis, the average of security or commodity prices constructed in a period as short as a few days or as long as several years and showing trends for the latest interval. As each new variable is included in calculating the average, the last variable of the series is deleted.

MUTUAL FUND An open end investment company that pools investors money to invest in a variety of stocks, bonds, or other securities. A mutual fund issues and redeems shares to meet demand, and the redemption value per share is the net asset value per share, less in some cases a redemption fee which represents a rear-end load. A closed end fund, often incorrectly called a mutual fund, is instead an investment trust.

NET ASSET VALUE (NAV) The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed end fund, the market price may vary significantly from the net asset value.

NET INCOME The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses.

NOISE Price and volume fluctuations that can confuse interpretation of market direction. 

NO LOAD MUTUAL FUND  An open-end investment company, shares of which are sold without a sales charge. There can be other distribution charges, however, such as Article 12b-1 fees. A true "no load" fund will have neither a sales charge nor a distribution fee.

OBJECTIVE (MUTUAL FUNDS) The fund's investment strategy category as stated in the prospectus. There are more than 20 standardized categories.

OPENING PURCHASE A transaction in which the purchaser"s intention is to create or increase a long position in a given series of options.

OPENING SALE A transaction in which the seller's intention is to create or increase a short position in a given series of options.

OPEN INTEREST The number of outstanding option contracts in the exchange market or in a particular class or series.

OPTION Gives the buyer the right, but not the obligation, to buy or sell stock at a set price on or before a given date. Investors, not companies, issue options. Investors who purchase call options bet the stock will be worth more than the price set by the option (the strike price), plus the price they paid for the option itself. Buyers of put options bet the stock"s price will go down below the price set by the option.

OTHER CURRENT ASSETS Value of non-cash assets, including prepaid expenses and accounts receivable, due within 1 year.

OTHER LONG TERM LIABILITIES value of leases, future employee benefits, deferred taxes and other obligations not requiring interest payments that must be paid over a period of more than 1 year.

OTHER SOURCES Amount of funds generated during the period from operations by sources other than depreciation or deferred taxes. Part of Free Cash Flow calculation.

OUT OF THE MONEY A call option is out-of-the-money if the strike price is greater than the market price of the underlying security. A put option is out-of-the-money if the strike price is less than the market price of the underlying security.

OVERBOUGHT\OVERSOLD INDICATOR An indicator that attempts to define when prices have moved too far and too fast in either direction and thus are vulnerable to reaction.

(A to C)   (D to H)   (P to R)   (S to Y)

   

   
 
 
 
 
 

 

 
 
 
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