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Glossary of Investment Terms

 

M

 

Maintenance Requirement

 

The minimum amount of equity that must be maintained in a margin account. As governed by the Federal Reserve's Regulation T, when a person buys on margin, required levels must be maintained throughout the life of the trade. The investor will receive a margin call if the value of securities falls below the minimum maintenance requirement and cash or securities must be deposited.

 

 

 

Margin Call

 

A request for additional funds resulting from a decline in the equity percentage or from purchases in the account. A margin call can be met by selling stock, depositing fully paid for stock into the account or by depositing cash.

 

 

 

Margin Debit

 

Money a margin customer owes a broker for loans to purchase securities.

 

 

 

Margin Sell-Out Letter

 

Prior notification of a liquidation of a margin account by a broker after a margin call has failed to produce additional equity to bring the margin to the required level. Also refers to the prior notification of action by a broker when a customer fails to pay for securities purchased and the securities received from the selling broker are sold to cover the transaction.

 

 

 

Market Order

 

Order to buy or sell a security at the best available price. The majority of orders executed are market orders.

 

 

 

Market Risk

 

Also known as systematic risk; risk that is common to all securities of the same general class and thus cannot be eliminated by diversification. A measurement of this is the Beta Coefficient.

 

 

 

Market Value

 

Is calculated as Current Price x Quantity of shares.

 

 

 

Maturity

 

Reaching the date at which a debt instrument is due and payable.

 

 

 

Medium Term Notes (MTN's)

 

Notes issued under Shelf Registration that may have maturities of any length or coupon type. Dated date, maturity and coupon is specified at the time of issuance.

 

 

 

Moody's

 

One of the best known bond rating agencies in the country. Moody's also rates commercial paper, preferred and common stock, and municipal short-term issues.

 

 

 

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