NASDAQ - The National Association of Securities Dealers
Automated Quotations system is a computerized system where prices are
quoted for many small over the counter (OTC) securities along with
many NYSE listed securities.
Net Asset Value (NAV) - The per share value of the portfolio at
the end of each day.
Net Income - For an individual, gross income minus expenses.
Net Worth - Total assets minus total liabilities of an
individual or company.
NYSE - The New York Stock Exchange is the largest national
stock exchange in the U.S. where the securities of large American
companies are bought and sold. The NYSE also maintains regulator
authority over firms that are members of the exchange.
Odd Lot - A purchase or sale of fewer than 100 shares of stock.
See round lot.
Offer - A written statement from the buyer to the seller
expressing the amount the buyer is wiling to pay for the home and the
terms of the offer. The terms of the offer are as important as the
price itself.
Option - A security that gives the owner the right, but not the
obligation, to buy (in the case of a call option) or sell (in the case
of a put option) a specific amount of a security or index, at a
specified price during a specified period of time.
Ordinary Life - A whole life insurance policy where the
premiums are paid throughout the life of the insured. Also known as
“straight life.”
Over-the-Counter Market - A market for trading stocks not
listed on an exchange.
Payable On Death Accounts (PODs) -Accounts that allow an
individual to name a beneficiary for the assets held in that
individual’s bank accounts. PODs are types of agreement that allow an
individual to transfer property upon his/her death and avoid probate.
Payout Phase - Specified period of time that begins when the
contract value is converted to an immediate annuity and regular
payments by the insurance company begin.
Pension Plan - A qualified retirement plan established by a
corporation or organization to provide income for its employees when
they retire.
Permanent Life Insurance Policy - A life insurance policy that
provides a cash value and insurance coverage throughout the insured’s
lifetime, providing the required premiums are paid.
Policy Holder - The individual or entity that owns the life
insurance policy. The policyholder may be different from the insured.
For example, a grandparent (the policyholder) may own a life insurance
policy on a grandchild (the insured).
Policy Value - A universal life insurance policy’s equivalent
of a cash value. The policy value is built by the accumulation of
premiums plus interest less charges for expenses and mortality costs
and other risk charges. In variable policies, this accumulation
depends on the performance of the underlying assets and not on an
interest rate set y the insurance company.
Political and Legislative Risk - The risk that governments of
may foreign nations are not as stable as the U.S. and any change in
power could affect the value or ownership rights of that nation’s
securities. It also includes the risk that new laws may adversely
affect the companies you invest in, including companies in the U.S.
Portability - The ability to transfer your retirement saving to
another plan.
Portfolio - An individual’s or institution’s total investment
holdings.
Portfolio Turnover - The rate of trading activity in a fund’s
portfolio of investments, equal to the lesser of purchases or sales,
for a year, divided by average total assets during that year. For
instance, a portfolio with a 20% turnover means that the portfolio
manager changed 20% of the holdings for that year.
Power of Attorney (POA) - Authority given to a person to act in
one’s behalf on most required activities.
Preferred Stock - A class of stock that has preference for
dividend payments over the common stock and, in many cases, also for
the liquidation of the company’s assets. See common stock.
Premium - The money the owner pays to the insurance company in
order to obtain life insurance protection.
Prime Rate - The base interest rate that commercial banks
charge on loans.
Private Mortgage Insurance (PMI) -Protects the lender in the
event that the homeowner fails to make mortgage payments resulting in
a default and the lender taking possession of the home.
Private Placements - Stocks, bonds or other investments sold
directly to an institutional investor that are intended to be
investments and not resold in the secondary market.
Probate - The courts process by which the assets of the
deceased are passed to the parties named under a will or under state
intestacy law, if there is no will.
Promissory Note - An individual’s promise to repay the lender
the amount of the loan plus interest.
Property Tax - Monies collected by your municipality based on
the assessed value of your home and the land upon which it is built.
The calculation of property taxes varies by municipality, but most
municipalities use a percentage of the assessed value of the home and
the municipality’s current tax rate to determine the annual tax.
Prospectus - A printed offering to sell a security which fully
discloses relevant information on that security.
Proxy - A shareholder’s written authorization that another
party may vote the shareholder’s shares in a corporation at a meeting
of its shareholders.
Put Option - A contract giving the right to sell a certain
number of shares of stock, at a definite price, within a specific
period of time.
Qualified Domestic Relations Order (QDRO) - A judgment, a
decree, or an order issued by a court that recognizes the rights of
others (called alternate payees) to receive benefits from a qualified
plan (whether a pension plan or a defined contribution plan). A QDRO
can result from division of marital property due to divorce or alimony
and child support. The order must be acceptable to the plan sponsor
who must verify that it conforms to the plan provisions and to IRS
regulations.
Qualified Retirement Savings Plan - A plan that gives the
employer tax advantages in exchange for meeting certain
non-discrimination, eligibility, funding, and vesting requirements.
Under the non-discrimination rule, employers must make the plan
available to all employees, not just to officers and/or executives.
Real Estate Investment Trust (REIT) - An investment company
that invests in real estate properties and/or mortgages.
Rebalancing - The act of readjusting one’s portfolio and
reallocating some investments among different asset classes.
Rebalancing an asset allocated portfolio is usually necessary because
the performance of the different asset classes over time has caused a
portfolio to become over weighted or under weighted in one asset
class.
Recession - A period of general and sustained economic decline.
Registered Decline - A bond with its owner’s name recorded on
the issuer’s books. See bearer bond and coupon bond.
Renewal Rate - The fixed rate the insurance company will pay
after the initial rate period expires. Usually set annually at the end
of each policy year.
Renter’s Insurance - This insurance provides coverage or your
contents and personal property while you are renting an apartment,
condo, house, or mobile home.
Repurchase Agreement - An agreement between a buyer and seller,
where the seller of debt securities, usually Treasuries, agrees to buy
back the securities at a set time and price.
Return on Equity - A figure that measures the percentage a
company earns on the money invested in it. The figure shows investors
how effectively a company’s managers invest its assets.
Return on Investments - The money you earn or lose on your
investment, expressed as a percentage of your original investment.
Reverse Mortgage - A type of home equity loan where an
individual can convert some of the equity in his/her home into cash
while retaining home ownership. Rather than the individual making a
payment to his/her lender each month, the lender pays the individual.
Revocable Trust - A living trust that the creator of the trust
may amend or end (revoke). See living trusts and trust.
Risk - The measurable possibility of economic loss. There is a
risk involved if the outcome of an investment is uncertain at the time
the investment is made. Although the outcome is uncertain, it is
measurable.
Risk Tolerance - An investor’s ability to withstand declines in
the value of his/her portfolio, financially and emotionally.
“Rollover” IRA - An IRA (individual retirement account) started
to receive all or part of the taxable portion of an eligible
distribution form a tax-qualified retirement plan. The eligible
distribution amount transferred to the IRA (together with any earnings
on that amount while in the IRA) escape taxation until distributions
are made from the IRA.
Roth IRA - Contributions to a Roth IRA are not tax deductible.
However, contributions made to a Roth IRA grow tax-deferred and
qualified distributions of earnings from a Roth IRA are tax-free,
subject to certain restrictions. Check tax laws for applicable Roth
IRA contribution requirements.
Round Lot - A purchase or sale of stock in a number of shares
that is divisible by 100. For bonds, a round lot is normally $100,000
face value.
Russell 2000 Index - Tracks the 2000 smallest companies in the
Russell 3000.
Russell 3000 Index - Measures the performance of the 3,000
largest U.S. companies based on total market capitalization, which
represents approximately 98% of the investable U.S. equity market.
S&P 500 - The Standard & Poor’s 500 is an index made up of 500
blue chip stocks. The index is commonly used to measure stock market
performance.
Sales Commission - A fee an investor pays a broker for buying
or selling securities.
Savings Account - Savings and money market accounts are
available from banks and other depository institutions guaranteed by
the FDIC for up to $100,000. They provide ready access to your funds,
and the value does not fluctuate. Their yields are very low (typically
higher for money market accounts) and can vary based on size of
deposit.
Securities - An instrument issued by a corporation or
government that denotes a debt or ownership interest. Stocks and bonds
are referred to as securities.
SEP-IRA (Simplified Employee Pension IRA) - An IRA that a small
business employer contributes on behalf of an employee.
Shares Outstanding - The shares of a corporation’s stock that
have been issued to the public and are in the hands of investors.
Short Sale - A sale of stock before the seller owns it. The
seller believes that the stock’s market price will decline before the
shares that will cover the sale have to be bought. If the price falls,
the seller profits.
Short-term Disability - Generally pays the insured income
benefits for a period of disability up to 90 days.
SIMPLE (Savings Incentive Match Plan for Employees) - A
tax-advantaged retirement plan that a small business employer can
establish for the benefit of the employees. The plan can be structures
as an IRA or 401(k) and both the employer and employee can contribute.
Single-Pay Life - A while life insurance policy purchased with
one premium payment.
Small Cap Funds – Mutual funds that primarily invest in small,
start-up or very specialized companies. Small cap funds typically
invest in companies with a market capitalization greater than $300
million but less than $1 billion.
Special Situation - An unusual investment opportunity, such as
a company involved in a merger, takeover, liquidation, spin-off,
turnaround, or new product development.
Speculation - Assumption of above-average investment risk in
exchange for the opportunity to secure an above-average return.
Spin-off - Division of an existing corporation into two (or
more) separate corporations. The shareholders of the predecessor
company receive the shares of the spun-of corporation(s).
Stock - Stock represents ownership in a company. The stock
holder’s percentage of ownership can be calculated by dividing the
number of shares he or she owns by the total number of shares
outstanding. The value of stock will fluctuate with the company’s
performance and the stock market in general.
Stock Dividend - A dividend paid in stock (or other securities)
rather than in cash.
Stock Fund - A mutual fund that invests in many stocks,
offering investors diversification and professional management.
Stock Mutual Fund - Mutual funds invest pooled cash of many
investors to meet the fund’s stated investment objective through
investing in stock. Mutual funds sell and redeem their shares at any
time at the fund’s current net asset value (total fund assets divided
by shares outstanding).
Stock Split - an allocation of newly issued stock to
shareholders according to their current holdings so that there is no
change in the stockholder’s relative ownership positions. A company
generally uses a stock split to reduce its stock’s price to what the
company believes will be a more marketable trading level.
Street Name - Securities held in a broker’s name rather than
the owner’s. Stocks bought on margin are always held in a street name.
Surrender Charge - The fee an insurance company would assess
against the cash value of a life insurance policy if the owner were to
surrender the policy. The amount of the surrender charge will actually
be highest in the first year of a policy and decreases over time until
eventually it is zero.
Surrender Charge Period - The number of years during which the
insurance company would charge the owner a fee if the owner chooses to
surrender the life insurance policy.
Surrender Charge Schedule - A schedule showing the fee the
insurance company charges for making early withdraws from the annuity
contract. The surrender charge is generally on a sliding scale that
decreases the longer you have owned the annuity.
Survivors - Individuals, usually family members, who face
emotional and sometimes financial setbacks because of your death.
Taxable Income - The amount used in the calculation of an
individual’s income tax liability. It is equal to one’s income after
certain adjustments have been made and standardized or itemized
deductions and personal exemptions have been deducted.
Tax-Deferred Investment - An investment whose income and/or
capital gains are not taxed until they are removed from the
investment. Examples of tax-deferred investments include annuities and
the cash value of life insurance. Tax-deferral can also be
accomplished through the use of IRAs and corporate retirement plans
such as 401(k)s.
Tax-efficient Mutual Funds - Mutual funds that include
minimizing the tax consequences of investing as part of their
investment objective.
Tax Shelter - In general, any means used to provide favorable
tax treatment for all or part of an individual’s or corporation’s
income. More usually, “tax shelter” is an investment device that
generates tax deductions larger than the income from the investment.
Tender Offer - An offer to purchase all or a substantial
portion of a corporation’s shares in order to obtain control of the
company. Also, a corporation’s offer to buy back its own shares.
Testator - A person who makes a will.
30-Day Treasury Bill - A U.S. government security that matures
30 days after it is issued. They are sold at weekly auctions at a
discount and are redeemed at face value.
Time Horizon - The length of time a sum of money is expected to
be invested.
Transfer On Death Accounts (TODs) - Accounts that allow an
individual to name a beneficiary for the assets held in that
individual’s security accounts. TODs are types of agreements that
allow an individual to transfer property upon his/her death and avoid
probate.
Treasury Bills - U.S. government securities that mature (are
redeemed) sooner than one year after issue. They are sold at weekly
auctions at a discount and are redeemed at face value.
Treasury Bonds - U.S. government securities with a maturity
longer than seven years.
Treasury Notes - U.S. government securities that mature between
one and seven years after issue.
Trust - A legal arrangement that one party (the grantor or
settler) uses to transfer assets to a second party (the trustee). The
assets are held and invested for the benefit of one or more third
parties (the beneficiaries). See living trust and revocable trust.
Trustee - The institution or individual that is named to hold,
manage, and distribute a trust’s assets.
Umbrella Policy - A policy that provides coverage for losses
above the limit of an underlying policy. Its terms of coverage are
sometimes broader than those of other insurance policies and may vary
from company to company.
Underwriter - Makes the determination of who can be insured and
at what rate.
Uninsurable - An individual who is unable to obtain life
insurance coverage due to the high risk he or she represents to the
insurance company. For example, most insurance companies would
consider an individual with a serious life threatening disease to be
uninsurable.
Unit Investment Trust (UIT) - An SEC-registered investment
company which purchases a fixed portfolio of securities and then sells
a fixed number of shares in the trust to investors.
Universal Life Insurance - A flexible type of permanent life
insurance policy. It is similar to whole life insurance in that it
provides life insurance protection ad builds policy value. Universal
life offers flexibility in the amount and timing of premium payments.
U.S. Treasury Bills - U.S. government securities that mature
(are redeemed) sooner than one year after issue. They are sold at
weekly auctions at a discount and are redeemed at face value.
ValueStocks - Overlooked or under performing companies
that have a low price to earning ratio (P/E), and are trading at
relatively low prices compared to their earnings.
VariableAnnuity - An annuity contract whose growth and
subsequent income payout are based on the performance of the
securities held in the underlying sub-accounts selected by the
contract owner. All income and capital gains produced by the
sub-accounts are tax-deferred.
VariableLife - A permanent insurance policy in which
you direct how the policy value is invested by selecting from a
variety of investment accounts (ranging in investment style and risk
from conservative to aggressive) rather than earning a fixed rate of
return determining by the insurance company.
Vesting - Refers to how much of your 401(k) plan account value
you are entitled to or own. Your contributions are always 100% vested.
The employer, however, may put a vesting schedule in place for
matching contributions that are made on your behalf. Depending upon
the vesting schedule used by your employer, you may be fully vested
immediately, or may not be fully bested in the employer’s matching
contributions for seven years from the time you began working for the
employer.
Volatility - A measure of price stability. An investment is
volatile if its price is subject to wide swings.
Waiting Period - The length of time a disability policy holder
must wait after submitting a claim before disability income benefits
begin.
Warrant - A certificate granting the right to buy securities at
a stipulated price within a specified time period or for an indefinite
time period.
Wash Sale - A tax term for the purchase of securities (or
options to purchase those securities) within 30 days before or after a
sale of substantially the same securities. A loss from selling the
original securities may not be deductible for income-tax purposes.
Will - A legal enforceable document allowing an individual to
direct the distribution after his/her property after death.
Wilshire500 - A very broad index that measures the
stock performance of all U.S. headquartered companies with readily
available price data. The index includes over 6,500 stocks.
Yield - The interest or dividend payable on a security,
expressed as a percentage of the price of the security. Some
investment advisors also include capital gain as part of the yield.
Zero Coupon Bond - A bond that pays no periodic interest, but
is sold at a deep discount from the face value payable at maturity.
See bond and municipal bond.
1155 E. Commerce Blvd.
P.O. Box 183
Fax (262) 644-7777
What We Can Do For You Accounting Services
Audit Assistance
Business Plans
1099 Preparation
401(k) Review/Rollover
Business Problem Solving
Buying Real Estate
Cash Flow Analysis
Commercial Real Estate
Compilation
Computerization
Consultation
Corporate Services
Disability Insurance
Educational Plan
Estate Tax
Financial Statements
Gift Tax Returns
Health Savings Accounts
IRA's, Roth's
Land Development
Liability Insurance
Like-Kind Exchanges
Long-term Care Insurance
Management Advisory
Medicare Supplements
Mutual Funds
Non-Profit
Partnerships
Payroll
Pension Plans
Personal Property Tax
Retirement Planning
Sales and Use Tax
S Corporation
Selling Real Estate
Simple/SEP
Tax Preparation
Trust Tax Returns
Umbrella Insurance
W2 Preparation
Website Assistance
Workers Compensation
