Abbreviation used in stock listings of newspapers to indicate stock dividends that have either been declared or paid in the preceding 12 months.
Individual or corporation who purchases a controlling interest in a company's stock. The raider's purpose is to gain control of the target company and to instate new management. Accumulation of more than 5% of the target company's outstanding shares must be reported to the SEC, the exchange in which the target is listed, and the target itself.
A marked rise that follows a period of decline or sideways movement in the general level of the market or in individual securities.
A stock market theory that hypothesizes that past prices are of no use in forecasting future price movements. The theory maintains that prices move in a random pattern and that they are no more predictable than the walking pattern of a wandering person. This directly contradicts technical analysts' use of charts to forecast stock prices.
A security's, or the general market's, highest and lowest price in which it has traded over a specified time--usually a rolling 52 week time period. In newspaper stock listings, a security's 52 week high and low price range is published. Technical analysts watch trading ranges carefully because they believe it is of great importance when a security breaks out of its trading range--high or low end.
Rate Of Return
1: In common stock, the rate of return equals its dividend yield--calculated by dividing the annual dividend by the original purchase price. Rate of return may also refer to the total return, which is capital appreciation plus the dividend.
2: In fixed-income securities such as bonds and preferred stock, the rate of return equals the current yield, which is the coupon or dividend rate divided by the original purchase price.
The evaluation of credit risk of securities by an established rating service such as Moody's Investors Services, Standard & Poor's Corporation, Fitch Investors Service or Value Line Investment Survey.
Realized Profit (Loss)
Any profit or loss attributable to a security's sale or the transfer of title representing ownership of the security.
Real Rate Of Return
An investment's return that is adjusted for inflation.
As reflected in the gross national product, a decline in economic activity in at least two consecutive quarters.
The procedure whereby certificates, already delivered to settle a transaction, are returned because they are in non-deliverable form. The party who is affected by the bad delivery may recover any losses incurred.
The date on which a shareholder must officially own a stock's shares in order to receive a company's declared dividend or, among other things, to vote on company issues.
The repayment of the principal (par) amount of a debt security, or a preferred stock, at or before its maturity. Mutual fund shares are redeemed at net asset value when a shareholder liquidates their shares.
1: In bonds and preferred stocks, it is the call price.
2: In mutual funds, it is the net asset value.
Regional Stock Exchanges
National exchanges located around the United States that are registered with the SEC. When referring to a regional exchange, the NYSE is not included. Regional exchanges include Boston, Cincinnati, Midwest (Chicago), Pacific, and Philadelphia. These exchanges list regional issues and many issues that are also listed with the NYSE.
A company that has issued securities in compliance with the registration requirements of the Securities Exchange Act of 1934.
Registered Options Principal (ROP)
A brokerage firm employee who supervises registered representatives regarding their client's options account activities and their solicitation of new options clients.
Registered Representative (RR)
A brokerage firm employee who acts as an account executive for clients. In a full brokerage house, a registered representative solicits clients' business and provides advice on when to buy and sell securities. For this advice, the RR may receive a percentage of the commission that is charged to the client for making such transactions. In a discount firm, a RR facilitates the execution of client orders. The RR does not solicit new customers or give investment advice.
A securities certificate that is recorded in the name of the owner on the books of the issuer. Ownership of the security can only be transferred when the certificate is endorsed by the registered owner.
An agency, usually a trust company or bank, who has the responsibility of keeping a record of the owners of a corporation's securities and the issuance of securities.
Regular Way Delivery (Settlement)
As of June 1995, the completion of securities transactions, unless otherwise specified, on the third business day following the transaction. Prior to June 1995, the industry standard was five business days following the transaction. To effect settlement, the securities sold are delivered to the buyer and payment is made to the seller.
Regular way delivery for government securities and options is the next business day following the transaction.
Regulation T (Reg T)
Federal Reserve Board regulation that governs the extension of credit to clients of broker-dealers. The rules specify the amount and type of credit that may be extended or must be maintained when clients purchase, carry, or trade eligible securities. It defines eligible securities and establishes initial margin requirements. Reg T does not cover the extension or maintenance of credit by a broker-dealer for clients who purchase or trade in exempt securities. Regulation T of the Federal Reserve Board is commonly abbreviated as Reg T.
Shareholders' right that allows them to reinvest their dividends to purchase additional shares in a mutual fund or a corporation, typically without any additional fees.
In a rising market, the rate at which a security's price rises in relation to other securities. In a declining market, the rate at which a security's price drops in relation to other securities. Analysts contend that a security that holds its value in a down market will be a solid performer on the upside and vice versa.
1: Financial restructuring of a corporation in bankruptcy.
2: A department within a brokerage firm that handles client's securities that are merging, being taken over, etc. The department is usually just called "Reorg."
Required Rate Of Return
Return that an investor requires before they are willing to earmark money for an investment that has a certain risk level. The expected return must be greater than the required return for the investment to be acceptable.
A department within a brokerage firm, or other institutional investing organization, that analyzes securities and markets using both fundamental analysis and technical analysis. The analyst makes trading recommendations for firm accounts, institutions and retail clients (provided by their broker). If followed by many investors, an analyst's recommendations can have an impact on security prices.
The upper limit of a security's trading range in which selling pressure tends to cause the price of a stock to decline. For example, if ABC's stock ranges between a low of $24 and a high of $36 per share, $24 is the support level and $36 is the resistance level. When a security breaks through the resistance level, technical analysts believe the security will reach new high prices.
Stock that is not registered under the Securities Exchange Act of 1933. Restricted stock is either purchased through a company's stock option plan, or a private placement. The investor is required to sign a letter agreeing that the purchase is for investment and not short term profit. The investor is required to hold the stock for two years before it can be sold. Sale of restricted stock is governed by SEC Rule 144.
A brokerage firm that provides services to individual clients as opposed to institutions.
An investor who buys and sells securities for their own behalf--not for an organization. Retail investors typically trade in much smaller quantities than institutional investors.
Net profits that have been reinvested back to the business after dividends are paid to stockholders--also called "earned surplus." Retained earnings are customarily an important component of stockholders' equity.
In the securities industry, the term refers to the repayment of a debt obligation or the cancellation of securities that have been redeemed.
Realized profit on capital investments or securities stated as an annual percentage rate.
Return On Equity (ROE)
An amount, stated as a percentage, that informs common shareholders how effectively the funds invested are being utilized during a specific period. Trends can be found if current and prior periods are compared and if compared with industry composites, it shows whether or not the company is keeping up with its competitors. The rate is calculated by dividing net earnings by average stockholders' equity.
As charted by technical analysts, a sustained change in direction of stock or commodity markets. This may either be a change from a rising market to a declining market or vice versa.
Procedure whereby a corporation reduces the number of outstanding shares. The total market value of the shares remains the same after the reverse split, however, a share is worth more. A company, for example, executes a 1 for 2 split. An investor owning 1000 shares will deliver them to the issuer and they will receive half as many new shares--but the shares will have double the value of the original shares. Thus, the investor now has 500 shares with a value of $8, instead of 1000 at $4--that is, the investor shares are worth the same amount as before the split.
Reverse splits may be used by corporations whose shares are selling at very low market prices. They believe that if the security's price is raised, it will attract more investors.
A trust in which any of its provisions can be changed, or the trust itself can be canceled at any time by the grantor. The grantor receives income from the assets. This contrasts with an irrevocable trust in which the trust cannot be amended or canceled and the assets are not subject to estate taxes.
A certificate that evidences a shareholder's privilege to buy additional shares of new securities in proportion to the number of shares already owned. A company, when raising more funds by issuing new securities, may issue rights to its shareholders to give them the chance to buy additional shares before the general public. Because rights usually allow the stockholder to buy below the current market price, they ordinarily have a value of their own and are actively traded. Most rights are valid for a relatively short period. Failure to exercise or sell rights may result in monetary loss.
A chart pattern that shows a rising trend in the low prices of a security. This signifies that the security's support levels are increasing. If rising bottoms are combined with ascending tops, a technical analyst would call the pattern bullish.
A measurable possibility of losing capital (or not gaining value). The chance that invested capital will drop in value can be caused by many factors including, inflation, interest rates, default, politics, liquidity, call provisions, etc.
Said of an investor who, given the same return and different risk alternatives, will choose the security with the least amount of risk.
The greater the investment risk--the greater the expected return. The ratio places an investor's desire for capital preservation at one end of the scale and a desire to maximize returns at the other end.
A process whereby one option position is closed and a new one with a lower exercise price is established.
A process whereby one option position is closed and a new one with a later expiration date is established. If the new position also involves a lower exercise price, it is called a "roll-down and forward." If it involves a higher exercised price, it is called a "roll-up and forward."
A process whereby one option position is closed and a new one with a higher exercise price is established.
A standard unit of trading, or a multiple thereof, on a securities exchange. Generally, the unit of trading is 100 shares for stock and $1,000 or $5000 par value for bonds. In some inactive stocks, the unit of trading is 10 shares.
Rule that stipulates the conditions in which an unregistered security may be sold by a broker. Specific documentation must be completed by the owner and presented to a broker before a sell order can be placed. Moreover, a letter security may not be sold for at least two years from the date of purchase. Thereupon, during any three month period, the following amounts may be sold:
- If the corporation's securities are unlisted, 1% of the outstanding shares;
- If the corporation's securities are listed, the greater of 1% of the amount outstanding or the average trading volume within the past four weeks.
Rules Of Fair Practice
NASD rules that relate to a broker-dealer's conduct of business. In short, the basic rules are to:
- Promote just and equitable principles of trade for the protection of investors;
- Prevent fraud and manipulative practices;
- Consult with government and investors on matters of common concern and;
- Prevent excessive commissions and charges.
All exchanges and securities associations have similar rules.
A traders' term to describe the buying and selling of securities based on the rumor of a takeover.
Situation that occurs when a broker places an order to buy or sell a security for their own account before placing a comparable order for a client. A broker, for example, places an order to buy XYZ when the firm's analyst makes a positive recommendation. Afterwards, the broker informs the client of the recommendation and places a buy order. By buying before the client, the broker is attempting to obtain a better price than the client's.
The printing of closing prices on the ticker tape after the market has already closed. A runoff usually occurs in very heavy trading in which the tape has fallen behind.