Accrued Interest:
Interest accumulated but not yet paid. When buying a bond, buyer pays seller any interest accrued since the last payment date. When the buyer eventually sells the bond, the new buyer pays any accrued interest.

Adjusted Option:
An option created as the result of a special event such as a stock split or a stock dividend (e.g., a 3-for-2 stock split). An adjusted option may cover more than the usual one hundred shares. For example, after a 3-for-2 stock split, the adjusted option will represent 150 shares. For such options, the premium must be multiplied by a corresponding factor. Example: buying 1 call (covering 150 shares) at 4 would cost $600. See also STRIKE PRICE INTERVAL.

Advances/Declines:
Advances are the number of issues on the New York Stock Exchange that have risen in price since the previous trading day's closing price. Declines represent those that have fallen in price. Sometimes the advances and declines are expressed as a ratio and plotted as a line graph. A rising A/D line indicates that the market has good breadth (a majority of issues are rising in price) while a falling A/D line would indicate the opposite.

After Tax Real Rate of Return:
The percentage gains on an investment or portfolio after taxes and inflation has been deducted.

All-or-none Order (AON):
A type of order that requires that the order be executed completely or not at all.

American Depository Receipt (ADR):
Receipt for shares of foreign companies held in American banks. It allows investors to trade foreign stocks without going overseas. see also 'ADS' definition below.

American Depositary Share (ADS):
Represent the ADR and it is ADS that is actually traded. These two terms are often interchanged but technically it is the ADS that is traded. See also 'ADR' definition above.

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. Most useful 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.

Arbitrage:
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.