Trading can often seem complicated, but TradesPrime are with you as you grow. To better understand the market we strongly suggest you follow the trading news that we provide, as well as other reputable financial news sites. To understand the trading news you’ll need to start learning the lingo, so we’ve put together the most commonly used words.
The interest that is accumulated on a security since the issue date.
A market where prices are rising.
AON (All or None)
Order that require that none of the orders to be executed unless at a specified price.
AMEX / ASE
American Stock Exchange. The main securities exchange located in New York.
A steady reduction of a debt by payments that balance interest charges.
Amortization of Premium
The periodic charges in interest received on bonds that offset premium prices.
Taking advantage of a market inefficiency and simultaneously buying and selling an asset in multiple markets to take advantage of price variances.
The valuation placed on the property for the purpose of taxation. In some areas, the property is assessed below 100 percent of the market value.
The ratio of the assessed value of property to the full or actual property value. Full value is the fair market value at the bid side of the market, less an allowance for sales and other expenses. The normal standard in California is of full value.
A trading term for an order that is to be executed at the opening of the market or not at all. Auction Coverage The ratio of the total bids offered in an auction to the number of accepted bids. This ratio is used to evaluate general interest in any given auction.
Authorized Capital Stock
The total amount of stock that a company is permitted to issue under its charter.
The average holding period of a mortgage-backed security. Average Life is mathematically calculated by measuring the investment time against the outstanding amount of principal returning each month.
Averaging Up or Down
The practice of purchasing the same security at various prices to arrive at a higher or lower average cost.
Bonds whose face value is usually $100 or less.
A book of mathematical tables used to convert yield-to-maturity to the equivalent dollar prices at different rates of interest.
One-hundredth of 1 percent. One hundred basis points equals 1 percent.
Price expressed in yield to maturity or the annual rate of return on the investment.
A period of generally pessimistic attitudes and declining market prices. Compare Bull Market.
Bid & Asked/Offer
The price at which an owner offers to sell (asked or offer) and the price at which a prospective buyer offers to buy (bid). It is often referred to as a quotation or a quote. The difference between the two is called the spread.
The New York Stock Exchange.
A bond secured by a company’s assets.
A unit measure for a large number of securities.
Stocks of major companies known for high earnings and price stability.
A daily trade publication that shows bond offerings by banks and bond.
Laws enacted by states to regulate the sale of securities.
An interest-bearing security issued by a corporation or government that usually has a maturity greater than one year.
BANS (Bond Anticipation Notes)
Short-term notes that will be later financed by the sale of bonds.
The reduced price difference between a bond's face value and a selling price.
A legal contract authorizing a bond issue that details bondholder’s rights and issuer’s obligations.
Securities that are maintained in computerized records of the issuer.
The original price of the security plus or minus amortization and accretion.
An optimistic period when market prices are increasing.
An option to buy an asset at a set price within a certain period of time.
A date prior to maturity when a bond can be redeemed at the option of the issuer.
Bonds redeemed prior to maturity.
Loans that may be terminated by the borrower or the lender.
Money loaned to a broker by a bank.
The excess paid for a bond or security above face value.
The price equal to the face value of the security plus premium.
The details of how a bond may be redeemed prior to maturity.
The amount made or lost, depending on the sale price and the purchase price.
The market in which individuals, corporations, banks, and governments trade debts and equities.
A transaction requiring delivery and payment of the security on the same day as the transaction.
Clearing House Funds
Funds within the New York Clearing House Interbank Payments System.
Property or security used to balance against an outstanding loan.
A promissory note specifying the collateral offered by the borrower as security against the repayment of a loan.
Short-term, unsecured, negotiable promissory notes issued by businesses.
A debt in which all of the separate entities of an organization are equally responsible for repayment of the debt.
Cornering the Market
Buying enough securities to gain control over the market price.
A bank that acts as a depository for other banks.
An issuer’s pledge to act in the best interests of a securities holder.
The ratio of income available to pay a specific obligation versus the total amount obligated. This is a measure of a firm's financial stability.
The amount of time left until an agreement comes to maturity.
The payments on a security price in percentage of the security's market price.
The Committee on Uniform Security Identification Procedures, created to develop a uniform method of identifying municipals and corporate securities.
A one-day loan given for the purpose of purchasing securities.
The buying or selling of securities on a specified day expires at the end of that trading session if not used.
A bond secured only by the general credit of the issuer rather than by a specific lien on the property, as with a mortgage bond. Agency bonds are frequently called debentures.
The safety margin for debt payment.
Failure to promptly pay the principal or interest when due.
A loan that is payable upon demand and does not give fixed maturity date.
A book of tables used to determine the rate of return on a bond at a discounted.
A facility provided by the Federal Reserve Bank.
A securities transaction by a broker acting on behalf of a customer.
Exemption from both state and federal income taxes.
The maximum amount that can be lost in an investment.
Selling large units of an asset without regard for marketplace reaction.
Securities that are exempt from the Securities and Exchange Commission.
A condition where a security is not entitled to any rights to purchase a new issue.
Unusual circumstance for redemption occurring such as natural disaster.
The displayed value of a security appearing on the face of the instrument.
FNMA (Fannie Mae)
The Federal National Mortgage Association
An individual or group that acts a third party to hold in trust an asset or property.
Firming of the Market
A period when security prices are on the rise or stabilizing.
A flexible accounting or tax period of 12-month period.
An asset with a fluctuating interest rate, adjusted periodically in relation to specific market indicators.
A total amount of securities available for immediate purchase.
FHLMC (Freddie Mac)
Trade name for the Federal Home Loan Mortgage Corporation.
Full Faith and Credit
The unconditional guarantee of the United States government to back the debt repayment.
GOs (General Obligation Bonds)
General Obligation Bonds are secured in full faith and have unlimited taxing power.
The Government National Mortgage Association affectionately referred to as Ginnie Mae.
GTC (Good Till Canceled)
An order for securities that may be limited in terms of price but not in terms of time. See Open Order.
The sum total of a debtor's obligations.
The percentage of return on a security, determined by dividing the dollar price into the annual interest payment and calculating the return to maturity. Also, the return on an investment before deduction of costs.
A tactic used by traders that works similarly to insurance. Hedging can minimize losses that sometimes occur with unexpected price fluctuations in the market. Hedging acts as a counterbalance to offset losses.
An agreement that acts as security on a loan lacking title transfer.
In and Out
Describes the purchase and sale of the same security within a short period of time to take advantage of price fluctuations.
Bonds on which an interest payment is due when the issuer has attained sufficient income.
A written agreement used in connection with a security issue. The document sets the maturity date, interest rate, security, and other terms for the issue holder, the issuer, and (when appropriate) the trustee.
A collection of securities held by a bank, individual, institution, or government agency for investment purposes.
Securities purchased for an investment portfolio, as opposed to those purchased for resale to customers.
The price of a group of newly issued securities is put on the market.
Joint and Several Obligation
A guarantee to a holder of a security where liability for a bond is enforced against all parties individually or jointly.
A list of securities where insurance companies or banks may invest with protection afforded to the liability and holders depositors.
An order to buy or sell a set amount of securities at a minimum price within a specified period of time.
A bond guaranteed by a special tax or specified portion of real estate tax with a limited rate.
A condition when security can be bought or converted to cash with ease.
Securities that have been admitted for trading on an exchange.
A securities market in where the bid price and asked price are the same.
The London Interbank Offered Rate. An interest rate on deposits traded between banks that depends on the maturity of the deposit and which bank gives the rate.
Making a Market
A financial specialist permitted to act as a dealer in the capacity of a block positioner, willing to buy and sell a security on a regular or continuous basis.
The difference between a pledged collateral to secure a loan and the amount of the actual loan.
Indicating an easy sell in the secondary market.
An order to buy or sell a security at the market asking price.
The current price of a security is being sold in the market.
The period of time between an issue date and a due date when the principal becomes due and payable.
Money Market Securities
Short-term securities that hold a market price closely tied to current interest rates, as opposed to a company's standing.
Moral Obligation Bond
The Moral Obligation bond comprises a structure that is subject to legislative appropriation and describes a promise to make up any shortfalls in a debt.
Securities issued by an agency or a state where the interest is exempt from federal income tax, state tax, and local income tax.
Municipal Securities Rulemaking Board. Registered under the Maloney Act in 1975, MSRB is designed to create rules and regulations for municipal bond trading among brokers, dealers, and banks.
National Association of Securities Dealers. A self-regulatory organization that regulates the over-the-counter market.
Negative carry is a circumstance that occurs when the cost of a loan for financing security holdings is in excess of the income on those securities.
Net Interest Cost. The average interest rate over the life of a bond that an issuer must pay in order to borrow.
New Issue Market
The market for new issues of securities, as opposed to the secondary market, in which securities that have already been issued are sold.
New York Stock Exchange
A corporation operated by a board of directors responsible for observing member activities, supervising the exchange in its entirety, setting policy, listing securities, and judging new applicants intending to hold specialist status.
A statement issued by an attorney that no legal suits are pending against the issuer, nor any threat of litigation that might affect the validity of the bonds.
A security that does have a call provision.
Securities that do not conform to a state's legal list of lawful investments.
Describes a security that has a none-transferable title or ownership.
The price at which a new issuer will offer securities to investors.
The buying or selling of a security to counterbalance the purchase or sale of a similar security.
An order to buy or sell a security at a specified price within a certain time limit.
The right to trade a security during a specified period of time.
A right to retire or drop an issue prior to the stated maturity date.
Original Issue Discount
A municipal bond treated as tax-exempt income rather than capital gain that qualifies for special treatment under federal tax law.
a security or a market that has suffered a sharp rise or fall due to volatile buying or selling, or oversold creating inflated or deflated prices.
An amount that will likely not be collected, but included in the general property tax to cover abatements and taxes.
Over the Counter
A securities market in which dealers negotiate directly, instead of through an organized securities exchange auction.
Unrealized capital gain or loss on a security, based in comparison with market price and the original cost of the security that appreciates or depreciates when sold.
The value of a security displayed at a specific amount marked on the amount of money due at the maturity date.
The reduction of debt when the amount of a new issue is less than the maturing issue.
A commercial entity or bank that dispenses the principal and interest payable on a maturing issue.
Securities owned by a Bank that is pledged as collateral for deposits by a government, specified by law.
A collection of securities or capital funds.
A condition where the yield of a security is larger than the cost of borrowing funds.
The price paid for a security that exceeds par value and must be paid to call or refund an issue before maturity.
An unscheduled payment on a security that acts as collateral against a mortgage-backed security.
The initial sale and distribution of an issuer's security.
The recognized demand for any and all first issues of securities.
Pro Forma Statement
A financial statement that is based on assumptions made on previous account relationships that can indicate a possible change in the future pertaining to financial development.
An official document issued by a registered company prior to the sale or sales of a new issue of securities which gives a detailed information package about a company, their offering, and prospects, and includes possible risks, as per the requirements of the Securities and Exchange Commission.
Prudent Man Rule
A long-standing common-law rule that requires a trustee such as an investor who is acting on behalf of another party to behave prudently with reasonable discretion to preserve of capital.
The Public Securities Association prepayment is a model commonly used in the mortgage-backed securities market to measure prepayment speeds. A 100% PSA model indicates that a new mortgage will prepay at a specified annualized rate in the first month and increase in percentage point each month until the 30th month.
A sharp rise in the price of a security or a rapid recovery in the market.
Rate of Return
The returning yield that is attained on a security, based on its purchase price or its current market price, the rate of return being the amortized yield to maturity or current return. Also refers to income earned on an investment, expressed as a percentage of the cost of the investment.
Profit or loss occurring from the sale of a security.
Liquidating debt that occurs when an outstanding obligation is dropped or retired, which often occurs at maturity but commonly occurs at the issuer's preference when an asset is retired in advance of the maturity date.
A fund that is created for the specific purpose of retiring a “callable” obligation that is maturing in stages and will only later become fully available.
The price at which a bond is redeemed at the issuer's option prior to maturity.
A bond that has a principal or interest payable only to a person or an organization that is registered with the issuer, and can be transferred when endorsed by the owner.
A state bond or local bond secured by revenues deriving from the operations of public enterprises that act like a bridge, and are not generally backed by the issuer unless specified in the bond indenture.
To immediately reinvest in a new issue of a similar security after receiving funds from a matured security.
A measuring term that describes a normal minimum unit of trading for a specific issue or type of security.
The act of holding securities in a bank vault for security and protection, commonly provided by service banks to customers for without charge.
SLMA (Sallie Mae)
The name used for the Student Loan Marketing Association.
Common securities that are generally accepted by the public.
A market in which previously issued securities are commonly traded, purchase, or sold as a special offering or through regular channels of trading.
A loan that is known to be secured by a marketable valuable or securities.
The Securities and Exchange Commission is an agency created by Congress and is tasked with the responsibility to regulate securities and trading and enforce various securities acts intended to protect investors.
Someone such as an individual or a firm that buys and sells securities for their own trading account, and acts as principal by taking the title of the securities until they are able to be sold to someone else.
A debt that has certain requirements pertaining to the support of taxes that have been designated for repayment and cannot be used for any other purpose.
Selling below the Market
A security that is being quoted at a price level less than what has been quoted for similar securities.
Bonds serialized as a single issue that has different maturities dates over a long period of time which allows the issuer the opportunity to retire the issue in small amounts with some flexibility.
Buying back certain securities that were previously sold, to make delivery of a short sale.
The selling of securities that are not actually owned by the seller, who is operating on the expectation that the security can and will be borrowed or bought from a broker in time to be delivered to the buyer.
A reserve fund isolated or set aside for a period of time for the specific purpose of liquidation or retirement.
A commission of sorts that is calculated by the difference between two figures or percentages, such as bid price and ask price of a quote, or between the amounts paid when a security is bought and the amount received when sold.
The bottom price that the US. Treasury will accept for a new issue of notes, bills, and bonds in a particular auction that is subject to an agreement to purchase a certain offering for a specific price. Not binding unless the offer is accepted by a properly authorized representative of the issuer.
The sale or rather exchange of a block of securities with another block of similar market value and often used establishing tax losses, extending or shortening maturity, or upgrading credit levels.
Taking a Position
The activities of a dealer or trader who purchases a block of a certain asset or security for inventory purposes with the intention of reselling at a profit.
Tax and Revenue Anticipation Notes are short-term notes issued by municipalities or states to finance operations in anticipation of future revenue and tax receipts that will be then used to repay the debt.
Tax Anticipation Notes are Short-term notes that are issued by municipalities or states to finance active operations that are used to repay debts in anticipation of future tax collections.
A depressed market in which trading volumes are low, with very few offers to sell or bids to buy.
Treasury Bills are an obligation of the U.S. government which commonly have a maturity of one or less years and are sold at a discount but bear no interest.
Treasury Bonds and Notes
Treasury bonds and notes have maturities of up to ten years and have and have obligations to the U.S. government to bear interest.
A trustee is responsible for enforcing a bondholders' contract with an issuer and is commonly a bank designated as the custodian of the funds acts as an official representative of bondholders.
A financial institution or bank that arranges the sale and distribution of securities and then assumes the responsibility of paying the net purchase price, while dealing with the issuing entity. In addition, the underwriter guarantees the sale securities by purchasing the entire issue from a company and then sells it to the public.
Unlimited Tax Bond
Unlimited Tax Bonds are municipal bond secured by a pledge of taxes that are not limited by amount or rate.
Over-the-counter securities that are traded in the unregulated markets rather than through a recognized exchange.
A legal proceeding that requires courts to decide on the validity of proposed bond issues.
When-Issued Basis describes certain securities that are traded before being issued, with the stipulation that said transactions are null and void if the security is not issued.
The successful bid for a particular issue being sold on the market. Generally, it produces the lowest net interest cost for a municipal borrower and offers the highest premium.
Expressed in percentage it is an investment’s annual rate of return. The income yield is obtained by dividing the current income by the current market price for the security and is the current income yield above par premium with an adjustment spread over a period from the date of purchase to the date of maturity.
Yield to Maturity
The average annual yield of a security held to maturity and equal to the rate at which all interest payments are be discounted to produce a present value equal to the purchase price of the bond.
The Zero Coupon Bonds do not pay periodic coupon payments and are instead are sold at a discount from face value.