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Glossary of Investment Terms

 

B

 

Back End Load

 

Mutual fund term for a sales charge that is paid at the sale of mutual fund shares. The most common back end load is a Contingent Deferred Sales Charge (CDSC) which is calculated as a percentage of assets if shares are sold within a given time period the position is held.

 

 

 

Beta Coefficient

 

Measure of a stock's relative volatility. The beta is a covariance of a stock in relation to the rest of the stock market. The S&P 500 Index has a beta of 1. Any stock with a higher beta is more volatile, and a stock with a lower beta is less volatile—it can be expected to rise and fall less.

 

 

 

Bid

 

Price a prospective buyer is ready to pay.

 

 

 

Bid Price

 

A mutual fund term used to describe the price at which mutual fund shares are redeemed or bought back, by the fund. The bid or redemption price is usually the current net asset value per share.

 

 

 

Blackout

 

Sales restricted on a particular security at the discretion of the financial institution.

 

 

 

Blue-Sky Law

 

Law passed by various states to protect investors against securities fraud. The law requires sellers of new stock issues or mutual funds to register their offerings and provide financial details on each issue so investors can base their judgements on relevant data.

 

 

 

Bond

 

Any interest-bearing or discounted government or corporate security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals, and to repay the principal amount of the loan upon maturity.

 

 

 

Bond Ladders

 

Investment strategy where an investor would diversify the bond portion of a portfolio by buying bonds with differing maturities.

 

 

 

Bond Swap

 

Simultaneous sale of one bond issue and the purchase of another.

 

 

 

Book Entry Form

 

Securities not represented by a physical certificate.

 

 

 

Bulletin Board Stock

 

A security that is not listed and traded on an organized exchange.  Also called “pink sheets”

 

 

 

Buying Power

 

Amount of credit available to a client in a brokerage account for the purchase of additional securities, which is determined by the dollar amount of securities that are marginable.

 

 

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