Words Of Wall Street

A swift glossary of the more common words and phrases that make up the special language of the market.

Accrued interest: The amount of interest accumulated on a bond, and due to the owner, since the last interest payment.

Amortization: The writing off of depreciation, depletion, expenses and deferred charges; also reduction of indebtedness by regular principal payments. Arbitrage: A technique designed to take advantage of price differences between different markets, or between securities of equal value. A share may sell higher in London than in New York at the same moment so that buying in New York and selling an equal amount in London at the same time would create a profit. Exercising the rights to buy a stock may be cheaper than outright share purchase so you subscribe, and then sell at a profit. Assets: Anything or everything that a corporation owns or that is owed to it.

At the market: An order to buy or sell immediately at the best prevailing price obtainable. Balance Sheet: A complete statement of financial condition on a specified date, revealing the company's net worth.

Bear: A person who believes the immediate market trend is downward. Bull: A person who believes the immediate market trend is upward.

Bid and Asked: Also called a "quote." It is a report subject to almost immediate change, of the best price that will be paid, and the lowest offering price for a security, at a given moment.

Big Board: Slang name for the New York Stock Exchange.

Blue Chip: A stock of high investment quality usually of a large, well-known company.

Boiler Room: A stock swindler's office, from which high pressure telephone selling of dubious or mythical securities is carried on.

Bond: A long term corporate promise to pay the holder a given sum of money on a given date, with regular interest at a stated rate in the meantime. Bonds are usually in $1000 denominations and pay interest semi-annually.

Book Value: A bookkeeping term for net worth per share. It is arrived at by adding all the company's assets, deducting from that total all liabilities and debts (and par value of preferred stock if any), and dividing this remainder by the number of outstanding common shares.

Broad Tape: Slang for Dow-Jones news ticker. Broker: An agent handling customer's orders to buy or sell securities or commodities, on a commission basis.

Callable: A bond or preferred stock that may be redeemed by the company under certain conditions at a certain price.

Capital Gain or Loss: Profit or loss resulting from the sale of a capital asset.

Capital Stock: All the securities representing ownership in a business, including both preferred and common stocks.

Capitalization: The entire amount of securities, of all descriptions, issued by a corporation.

Certificate: The engraved or printed piece of paper that evidences stock ownership in a corporation.

Collateral: Property or securities pledged by a borrower to assure repayment of a loan.

Common Stocks: Securities representing the ownership of a corporation. Holders of a common stock usually have the sole right to elect directors.

Convertible: A bond, debenture, or preferred stock that may be exchanged for common stock (or another security) on certain stated terms.

Coupon Bonds: Bonds carrying interest coupons to be clipped when due and presented for payment by the holder. (Usually the coupon is deposited at the holder's bank for collection and credit). Cumulative: A provision in preferred stocks and in certain income bonds, that payments, not made when due, may be made up at a later date. Such accumulations must be paid off prior to dividends on common stocks.

Curb Exchange: Former name of American Stock Exchange.
Day Order: Order either to buy or sell that expires at the end of the day it is given, if not executed. Dealer: An individual or firm in the securities business doing business as a principal rather than as agent or broker.

Debenture: An unsecured long term promissory note of a corporation.

Director: A person nominated and elected by shareholders to join the board of directors which guides the corporate destiny.

Dividend: A payment either in stock or in cash distributed pro rata among outstanding shares.

Dow Theory: A system of projection of future market trends based on market performance of the Dow Jones Industrial and Railroad averages.

Equity: Ownership of either preferred or common shares in a company.

Ex Dividend: A phrase denoting that any one buying a given stock will not be entitled to receive the dividend last declared and payable.

Extra: Denotes any additional or extra dividend either in stock or cash, above the regular rate.

Face Value: The amount in dollars written upon the face of a bond.

Fixed Charges: Usually interest charges which must be paid, whether earned or not, before any payment to equity holders.

Flat: Means that a bond trades without any accrual of interest from the last payment date. Floor: The trading area of a security or commodity exchange.

Funded Debt: Long term indebtedness whether bonds, or bank loan.

Gilt-Edged: Slang for a very well secured bond quite certain to pay interest under any economic condition. Good delivery: A security offered in proper form to assure correct passage of title to a new owner. G.T.C. order: One which remains good (in effect) until canceled.

Guaranteed Security: One which has interest, principal, or dividend payment guaranteed by an agency other than the issuer.

Holding company: A company owning the securities of another (usually a controlling interest). Income Bond: A bond fixed as to amount and date of principal payment, but which pays interest only if and when earned.
Indenture: A legal document reciting the terms and conditions under which debt securities are issued, and defining rates and dates of interest payments, the bond maturity date, and any "call" provisions. Investment Banker: Usually an underwriter of securities who buys from a company or individual and resells to the public.

Investor: A security buyer interested in protection of principal and reliability of income and to less degree, capital gains.

Investment Trust: A company whose business it is to invest in other companies; most commonly, a mutual fund.

Legal List: A list of securities (in any state) which qualify as legal investments for savings banks and trust funds in that state.

Leverage: The use of other people's money to multiply the buying or earning power of your own.

Liabilities: All claims against a corporation. Lien: A legal claim against property pledged to secure a loan.

Listed Stock: A stock listed on a stock exchange. Long: Owning specific securities.

Management: The board of directors and the actual operating officials of a company elected by it. Margin: Buying a security by providing some of the funds needed and borrowing the rest.

Market Price: The last reported sale price of a given security.

MIP: Monthly investment plan for buying listed stocks with minimum payments of $40 a month. Mortgage: A lien on property to assure repayment of money borrowed.

Mutual Fund: A closed-end investment trust. N AS D: National Association of Securities Dealers, regulating and policing the trading in over-the-counter securities.

New Issue: A corporate security offered to the public for the first time.

No Par: A security without stated or nominal value. Not a New Issue: Securities not being offered for account of issuer.

Odd Lot: An amount of stock traded in less than the standard unit (usually 100 shares).
Over-the-counter: A market for securities which are usually not listed on any exchange; used interchangeably with "unlisted market."

Paper profit: Unrealized capital gain on a security holding.

Par: The face amount of a bond, or the value in dollars (or cents) assigned to an equity security by the company's charter.

Point: Usually a change of $1 in the price of a stock and $10 in the price of a bond.

Preferred Stock: A class of equity entitled to dividends before common stock; and to a certain amount in liquidation ahead of any distribution to common stockholders.

Premium: The amount by which a bond sells above its face amount; or the amount of an advance of new issue over its offering price.

Prospectus: A circular, required by, and submitted to SEC, which describes securities to be offered to the public.

Proxy: The designation by a stockholder of the right to vote his shares at a corporate meeting, by another person eligible to vote,

Puts and Calls: Option contracts permitting their owner to buy or sell a certain amount of stock at a specified price during a stated period of time. Rally: A market rise following a decline. Redemption Price: The price at which a bond may be called in before its maturity or a preferred stock retired at the option of the company.

Refinancing: New securities sold to replace old ones. Registered Representative: A customers' broker. Registration: The supplying of information to SEC about a company and the security it proposes to issue; or the recording of securities in the name of an owner (individual, joint or corporate).

Regular delivery: Delivery of securities to buyer on or by the fourth business day after a sale.

Right: The privilege going with each share of stock, to subscribe to new securities in a given company. Scrip: A certificate exchangeable for either stock or cash during a specified time period. SEC: Securities and Exchange Commission.

Secondary Distribution: Resale of stock already outstanding, usually for account of large holders.
Short Sale: The sale by a person of a security he does not own, in the belief that he can buy it back cheaper at a later date. Meanwhile he borrows the security in order to make delivery.

Sinking Fund: Money set aside in a special account to redeem, or buy in the market, bonds or preferred stock of a company.

Specialist: A broker on the floor of an exchange whose duty it is to make an orderly market in a particular issue, and to act as broker for other brokers in those issues in which he specializes. Over-the-counter, an individual or firm making markets in a specialized group of securities, such as banks, utilities, etc.

Split: The division of outstanding shares of a company into a larger total number.

Stock Dividend: A dividend declared and paid in stock instead of cash.

Stockholder of Record: The name of the stockholder as registered on the transfer books of a company. Switching: Selling of one stock to buy another. Syndicate: A group of investment bankers or brokerage firms who join together in the underwriting and offering of a security issue.

Ticker: The electronic machine that prints on a tape, in a matter of moments, records of transactions which have just taken place on the floor of an exchange. Times/Earning Ratio: The multiple of last reported annual earnings at which a stock currently sells.

Tips: Rumors or gossip usually without solid foundation about the probable price trend in a stock. Transfer Agent: An agency, often a bank or trust company, which keeps a record of the name, address, and holdings of registered shareholders.

Unlisted: See "Over-the-counter."

Warrant: A certificate permitting the holder to buy a share (or shares) of stock at a certain price for a specified period of time.

Wire House: A securities firm with branch offices in several cities and wire services connecting them. Yield: The return on a security at a given price, calculated by dividing the interest or dividend rate into the market price.

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