Back-end Load
A sales charge, also known as a "deferred sales charge," investors pay when they redeem (sell) mutual fund shares. Funds generally use these to compensate brokers.
Banking Regulators
The SEC routinely receives questions and complaints from investors about the investment products they have purchased. But not all investments are considered securities under the securities laws. For…
Bankruptcy
Filing for protection under the federal bankruptcy laws can help companies make plans to repay their debts. A bankrupt company might use Chapter 11 of the Bankruptcy Code to reorganize its…
Bankruptcy for a Public Company
A company may decide to declare bankruptcy when it suffers from crippling debt. Federal bankruptcy laws govern how the assets and business of a company will be used to clear its debts.
There…
Basis Point
One one-hundredth (.01) of a percentage point. For example, eight percent is equal to 800 basis points.
Bear Market
A time when stock prices are declining and market sentiment is pessimistic. Generally, a bear market occurs when a broad market index falls by 20% or more over at least a two-month period.
Beneficial Owner
A beneficial owner holds stocks indirectly, for example, through a bank or broker-dealer. Beneficial owners are sometimes said to be holding shares in "street name."
Bid Price
The term "bid" refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time. The term ask refers to the lowest price at which a seller…
Bid Price/Ask Price
The term "bid" refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time. The term "ask" refers to the lowest price at which a…
Binary options
A binary option is a type of options contract in which the payout depends entirely on the outcome of a yes/no proposition and typically relates to whether the price of a particular asset will rise…
Blank Check Company
A blank check company is a development stage company that has no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with an unidentified…
Blue Sky Laws
In addition to the federal securities laws, every state has its own set of securities laws—commonly referred to as "Blue Sky Laws"—that are designed to protect investors against fraudulent sales…
Board of Directors
A group of people elected by shareholders to oversee the management of a corporation.
Boiler Room Schemes
Boiler room schemes are large-scale operations designed to lure in as many investors to an investment scam as possible, often using high-pressure sales tactics. Boiler room scheme…
Bond Funds and Income Funds
What is a bond fund?
"Bond funds" and "income funds" are terms used to describe a type of investment company…
Bond Swap
The investor sells one bond and uses the proceeds to buy another bond, often at the same price.…
Bonds
A bond is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time.
When you buy a bond, you are lending…
Bonds, Corporate
Corporate bonds are bonds issued by companies. Companies issue corporate bonds to raise money for a variety of purposes,…
Bonds, Municipal
Municipal bonds (or “munis” for short) are debt securities issued by states, their political subdivisions (such as cities, towns, counties, and school districts), their agencies and instrumentalities…
Bonds, Selling Before Maturity
Investors who hold a bond to maturity (when it becomes due) get back the face value or "par value" of the bond. But investors who sell a bond before it matures may get a far different amount. For…
Bono de cupón cero
Los bonos de cupón cero son bonos que no pagan intereses durante la vida de los bonos. En vez, los inversionistas compran bonos de cupón cero con un gran descuento de su valor nominal, que es la…
Bonos de Grado de Inversión (o Bonos de Alto Grado)
Son aquellos bonos que se supone tienen un menor nivel de riesgo de impago y que reciben calificaciones más altas por parte de las agencias de calificación crediticia, es decir los bonos clasificados…
Bonos rescatables o redimibles
Los bonos rescatables o redimibles son bonos que el emisor puede rescatar o cancelar antes de la fecha de…
Bonos: venta antes de su vencimiento
Los inversionistas que mantienen un bono hasta el vencimiento (cuando se vence) recuperan el valor nominal o valor de paridad del bono. Pero los inversionistas que venden un bono antes de su…
Bonus Credits for Annuities
In an attempt to attract purchasers, some insurance companies offer variable annuity contracts with "bonus credits." A bonus credit is the extra amount an insurance company agrees to add to the value…
Breakpoint Discounts
Some mutual funds that charge front-end sales loads will charge lower sales loads for larger investments. For…
Broker
A broker is a
firm or individual
that engages in the business of buying and selling securities – stocks, bonds, mutual funds, exchange-traded funds (ETFs), and certain other investment…
Broker Vote
For certain routine matters to be voted upon at shareholder meetings, if you don’t vote by proxy or at the meeting in person, brokers may vote on your behalf at their discretion. These votes may also…
Broker-Dealers: Record-Keeping Requirements
Investors should always keep good records of their securities transactions, including copies of…
Broker-Dealers: Why They Ask for Personal Information
Brokers generally request personal information from their customers, including financial and tax identification information, to comply with U.S. government laws and rules, as well as rules imposed by…
Brokerage Account – Closing Your Brokerage Account
Generally, either you or your brokerage firm may close your brokerage account at any time. The specific steps you will need to follow to close your account are usually found in the terms and…
Bull Market
A time when stock prices are rising and market sentiment is optimistic. Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period.
Business Development Companies (BDCs)
BDCs are a type of closed-end investment fund. They are a way for retail investors to…
Buying Long
Purchasing or owning shares of stock, with the expectation that the stock will rise in value.