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Data Tagging

Data tagging, in formats like XBRL or “eXtensible Business Reporting Language,” is gaining popularity as a way to enhance financial reporting.

By using computer codes to "tag" different kinds of data in financial reports, the information companies file with the Commission can be made much easier to find and analyze. For example, specific items in a financial statement, such as net income or gross sales, are given computer-readable labels. At the same time, the task of preparing the reports can be automated for the companies who file them.

Day Order

Unless an investor specifies a time frame for the expiration of an order, orders to buy and sell a stock are “Day” orders, meaning they are good only during that trading day.  Day orders that do not execute during regular trading hours expire and will not automatically carry over into after-hours trading or the next regular trading day.

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Day Trade

FINRA rules define a “day trade” as the purchase and sale, or the sale and purchase, of the same security on the same day in a margin account.  This definition encompasses any security, including options.  Selling short and purchasing to cover a position in the same security on the same day is also considered a day trade.

Exceptions to this definition include:

Day Trading

Day traders rapidly buy, sell and short-sell stocks throughout the day in the hope that the stocks continue climbing or falling in value for the seconds or minutes they hold the shares, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time.

Debentures

An unsecured bond backed solely by the general credit of a company.

Default

A failure by an issuer to pay principal or interest when due, or to fulfill other obligations, such as reporting requirements.

Deferred Annuity

With a deferred annuity, you make payments to an insurance company, which will be free from taxes until you reach a particular age or a date specified in your contact.

Deferred Sales Charge

A sales charge, also known as a "Back-end Load," investors pay when they redeem (sell) mutual fund shares. Funds generally use these to compensate brokers.

Defined Benefit Plan

Defined benefit plans also are known as pension plans. Employers sponsor defined benefit plans and promise the plan's investments will provide you with a specified monthly benefit at retirement. The employer bears the investment risks.

Defined Contribution Plan

A retirement savings plan, such as a 401(k) plan, that does not promise a specific payment upon retirement. In these plans, the employee or the employer (or both) contribute to the employee's individual account. The employee bears the investment risks.

Derivatives

Financial instruments whose performance is derived, at least in part, from the performance of an underlying asset, security or index. For example, a stock option is a derivative because its value changes in relation to the price movement of the underlying stock.

Disclosure

Information about a company’s financial condition and business that it makes public. Investors can use this information to make informed investment decisions about the company’s securities. 

Discount

A bond sold before it matures might not sell at full par value. If it sells below par, it is selling at discount.

Discount Note

Short-term obligations issued at a discount from face value. Discount notes have no periodic interest payments; the investor receives the note's face value at maturity. For example, a one-year, $1,000 face value discount note purchased at issue at a price of $950, would yield $50 or 5.26% ($50/$950).

Distribution Fees

Fees paid out of fund assets to cover marketing and selling fund shares. These fees may cover advertising costs, compensating brokers and others who sell fund shares, payments for printing and mailing prospectuses to new investors, and providing sales literature to prospective investors. Distribution fees sometimes are referred to as "12b-1 fees."

Distribution [and/or Service] (12b-1) Fees

 

So-called “12b-1 fees” are fees paid out of mutual fund or ETF assets to cover the costs of distribution – marketing and selling mutual fund shares – and sometimes to cover the costs of providing shareholder services.

12b-1 fees get their name from the SEC rule that authorizes a fund to charge them.  The rule permits a fund to pay these fees out of fund assets only if the fund has adopted a plan (“12b-1 plan”) authorizing their payment.

Diversification

Diversification is a strategy that can be neatly summed up as "Don't put all your eggs in one basket." The strategy involves spreading your money among various investments in the hope that if one loses money, the others will make up for those losses.

Dividend

A portion of a company's profit paid to shareholders. Public companies that pay dividends usually do so on a fixed schedule although they can issue them at any time. Unscheduled dividend payments are known as special dividends or extra dividends.

DTC Chills and Freezes

Should problems arise with a company or its securities on deposit at The Depository Trust Company (DTC), DTC may impose a “chill” or a “freeze” on all the company’s securities.

A “chill” is a restriction placed by DTC on one or more of DTC’s services, such as limiting a DTC participant’s ability to make a deposit or withdrawal of the security at DTC.  A chill may remain imposed on a security for just a few days or for an extended period of time depending upon the reasons for the chill and whether the issuer or transfer agent corrects the problem.