Bonds that can be redeemed or paid off by the issuer prior to the bond's maturity date.
These give the issuing bank the right to terminate – or "call" – the CD after a set period of time, but they do not give the CD holder the same right. If interest rates fall, the issuing bank might call the CD.
Callable or redeemable bonds are bonds that can be redeemed or paid off by the issuer prior to the bonds' maturity date. When an issuer calls its bonds, it pays investors the call price (usually the face value of the bonds) together with accrued interest to date and, at that point, stops making interest payments. Sometimes a call premium is also paid. Call provisions are often a feature of corporate and municipal bonds.
The profit that comes when an investment is sold for more than the price the investor paid for it.
Money that can be used to pay for goods or services.
A cash account is a type of brokerage account in which the investor must pay the full amount for securities purchased. An investor using a cash account is not allowed to borrow funds from his or her broker-dealer in order to pay for transactions in the account (trading on margin).
Don't assume that a "federally insured one-year non-callable" CD matures in one year. It doesn't. These words mean the bank cannot redeem the CD during the first year. A "one-year non-callable" CD may still have a maturity date that is years in the future.
A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years. In exchange, the issuing bank pays you interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest.
Certificates of deposit are considered to be one of the safest savings options. A CD bought through a federally insured bank is insured up to $250,000. The $250,000 insurance covers all accounts in your name at the same bank, not each CD or account you have at the bank.
A broker typically earns a portion of the commissions or other fees on each purchase or sale of securities that the brokerage firm makes for an investor. When a broker engages in excessive buying and selling (i.e., trading) of securities in a customer’s account without considering the customer’s investment goals and primarily to generate commissions that benefit the broker, the broker may be engaged in an illegal practice known as churning.
Red flags of excessive trading may include:
Different types of shares issued by a single fund, often referred to as Class A shares, Class B shares, and so on. Each class of a fund holds identical investments and shares the same investment objectives and policies. But each class has different shareholder services with different fees and expenses, and therefore, each class will have different performance results.
"Closing price" generally refers to the last price at which a stock trades during a regular trading session. For many U.S. markets, regular trading sessions run from 9:30 a.m. to 4:00 p.m. Eastern Time.
You will likely pay a commission when you buy or sell a stock through a financial professional. The commission compensates the financial professional and his or her firm when it is acting as agent for you in your securities transaction.
The Committee on Uniform Securities Identification Procedures (CUSIP) number identifies most securities, including U.S. government and municipal bonds. CUSIP numbers are unique nine-character alphanumeric identifiers assigned to each series of securities.
The SEC’s Office of Investor Education and Advocacy (OIEA) receives many types of complaints from individual investors, including complaints against brokers, brokerage firms, investment advisers, transfer agents, mutual funds, and other market participants.
Investors can submit a complaint form to OIEA to report problems with investments, an investment account, or a financial professional, including problems involving:
The "consolidated tape" is a high-speed, electronic system that reports the latest price and volume data on sales of exchange-listed stocks.
A type of back-end load, the amount of which depends on the length of time the investor holds his or her shares. For example, a contingent deferred sales load might be 5% if an investor holds his or her shares for one year, 4% after two years, and so on until the load disappears completely.
A feature some funds offer that allows investors to automatically switch from one fund class to another, typically one with lower annual expenses, after a set period of time. The fund's prospectus or profile will state whether the fund has a conversion feature.
A "convertible security" is a security—usually a bond or a preferred stock—that can be converted into a different security—typically shares of the company's common stock. In most cases, the holder of the convertible determines whether and when to convert. In other cases, the company has the right to determine when the conversion occurs.
A framework which may include rules and regulations, corporate charter and bylaws, formal policies, as well as customs and other processes, that determines the leadership, organization, and direction of a company.
Corporate reports can provide important information for investors by, for example, telling you whether a company is making money or losing money and why. You'll find this information in the company's quarterly reports on Form 10-Q, annual reports on Form 10-K, and periodic reports of significant events on Form 8-K.
It's usually easy to find information about publicly reporting companies from the companies themselves, newspapers, brokerage firms, and the SEC. By contrast, it can be extremely difficult to find information about privately held companies.
A feature of a bond that denotes the amount of interest due and the date that the payment will be made.
The dollar amount of interest paid to an investor. The amount is calculated by multiplying the interest of the bond by its face value.
The interest rate on a bond. It is expressed as a semi-annual rate.
Large blocks of shares in an ETF, typically 50,000 shares or more.
Provide their opinion on the creditworthiness of a corporate or government borrower by issuing a grade, or credit rating, on bonds issued by that borrower.
Cumulative voting is a type of voting system that helps strengthen the ability of minority shareholders to elect a director. This method allows shareholders to cast all of their votes for a single nominee for the board of directors when the company has multiple openings on its board. In contrast, in "regular" or "statutory" voting, shareholders may not give more than one vote per share to any single nominee.
The ratio of the interest rate payable on a bond to the actual market price of the bond, stated as a percentage. For example, a bond with a current market price of $1,000 that pays $80 per year would have a current yield of 8%.