American-style Option:
An option that can be exercised at any time prior to its
expiration date. See also EUROPEAN-STYLE
OPTION.
AMEX / ASE (American Stock Exchange):
Marketplace in the U.S. for equities, bonds, options, and
derivative securities located in New York City.
Annual Report:
Written report to shareholders summarizing the past year's
financial results and news items of importance about
products, law suits, board members, etc. A company's
annual report must be distributed to shareholders under
SEC regulations.
Annualized Return:
Projects the year to date returns over a full 12-month
calendar year. Mo.html#eful for projecting return for money
market funds, CDs, and bonds. Return for equities can be
misleading if YTD return is high and covers a shorter
period of time. See also TOTAL
RETURN.
Annuity:
Insurance product that pays an income benefit on a
specific date, for a specific time, or for the lifetime of
the person(s) receiving the annuity (the annuitant). A
fixed annuity guarantees fixed payments with a constant
rate of return. A variable annuity's value fluctuates with
that of the assets that are backing it. There is no
guaranteed rate of return for a variable annuity; the
annuitant bears the investment risk and receives the
return actually earned on invested assets less any charges
assessed.
Ar.html#ge:
A trading technique that involves the simultaneous
purchase and sale of identical assets traded on two
different exchanges with the intention of profiting by a
difference in price between exchanges.
Ask / ask price:
The lowest price at which a dealer or trader is willing to
offer a security at a particular time.
Asset:
Anything possessing commercial or exchange value owned by
you, a business, or an institution.
Asset Allocation:
The process of deciding what type of assets (stocks,
bonds, cash, real estate, precious metals and all tangible
investments) you want to own and the percentage of each.
Assigned:
Received notification of an assignment by The Options
Clearing Corporation. See also 'ASSIGNMENT' definition
below.
Assignment:
Notification by The Options Clearing Corporation to a
clearing firm member and to the writer of an option that
an owner of the option has exercised the option and that
the terms of settlement must be met. Assignments are made
on a random basis by The Options Clearing Corporation.
At-the-money Option:
An option with a strike price that is equal to the current
market price of the underlying stock.
Automatic Exercise:
A procedure used by The Options Clearing Corporation to
exercise in-the-money options at expiration. This
procedure protects the owner from losing the intrinsic
value of the option because of failure to exercise. Unless
instructed not to do so, The Options Clearing Corporation
will exercise all expiring equity options that are held in
customer accounts if they are in the money by 75 cents or
more.
Average Annual Return:
The cumulative return divided by the number of years of
the life of the investment or portfolio, with the
compounding effect factored in. In reverse, the average
annual return times a given number of years equals the
cumulative return for that time frame. AAR is used to
compare returns of two or more investments of unequal
track records.
Average Cost:
The average price paid for shares purchased at different
prices.
Average Daily Volume:
The consolidated trading volume for all exchanges averaged
for the last 20 trading days.
Average Proceeds:
The sum of net amounts received from all short open lots
divided by the total number of shares short for that
security. 'Average proceeds' for short investments is
equivalent to 'average cost' for long investments.
Averaging Down:
Purchasing additional stock or options below the original
purchase price to reduce average cost.
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