Glossary of Investment Terms (Definitions)


Glossary of Investment Terms (Definitions)

The following investment terms will help give your investment club a basic introduction into the language of investing.

The more that you understand about the world of investing the more you’ll enjoy your investment club. The information has been compiled from the following website:


A stipulation to either a buy or a sell order which instructs the broker to either fill the order in its entirety of to fill none at all, the customer won’t accept a partial execution (only 300 shares out of an order for 1000).


The increase in the value of an asset.


The lowest price that anyone has declared that he will sell his security for at a given time. In over-the-counter stocks, the “ask” is the best quoted price at which a Market Maker is willing to sell a stock.


An option where the strike (exercise) price is exactly equal to the trading price of the underlying security.


The highest price anyone has declared that he wants to pay for a security at a given time.


(1) An individual or a firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm. (2) The role of a brokerage firm when it acts as an agent for a customer and charges the customer for its services.


An option contract that gives the holder the right to purchase, and places upon the obligation to sell, a specified number of shares of the underlying stock at the given strike price on or before the expiration date of the contract.


Accumulated money or goods used to produce income


Short-term loans with maturities ranging from 2 to 270 days that are made to banks and corporations.


Bulk goods such as metals, foodstuffs and grains which have the price determined by competitive bids and offers.


An equity security that represents ownership in a corporation.


A unique 9-digit number code for a given class of security (i.e.: Microsoft common stock or Acorn International Fund). CUSIP stands for the Committee on Uniformed Security Identification Procedures.


An order to buy or sell which, if not executed, expires at the end of the trading day it was entered.


The role of a securities firm when it acts as a principal in a particular trade. A firm is acting as a dealer when it buys or sells a security for its own account and at its own risk and then charges the customer a markup or markdown.


Stipulation to order that instructs the broker not to decrease the limit price on buy-limit and sell-stop orders on the record date of a cash dividend.


Any organization, association or group of persons that maintains or provides a marketplace in which securities can be bought and sold. An exchange does not have to have a physical place of business and several electronic exchanges do business.

NASDAQ National Market Securities

The NASDAQ National Market consists of over 3,000 companies that have a national or international shareholder base, have applied for listing, meet stringent financial requirements and agree to specific corporate governance standards. To list initially, companies are required to have significant net tangible assets or operating income, a minimum public float of 500,000 shares, at least 400 shareholders, and a bid price of at least $5.

NASDAQ Small Cap Market Securities

The NASDAQ Small Cap Market consists of over 1,400 companies that want the sponsorship of Market Makers, have applied for listing and meet specific financial requirements. Once a company is approved and listed on this market, Market Makers are able to quote and trade the company’s securities through a sophisticated electronic trading and surveillance system.


Low prices stocks trading in the over-the-counter market. Typically refers to shares trading below one dollar a share.


Document granting power-of-attorney rights to an agent of the account holder(s). You will find downloadable forms for both Limited Trading Authorization and Full Trading Authorization in the Industry Forms Download area.