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Brokerage: Glossary This glossary was complied to help you understand common investment terms. If you have any questions, please call our customer service center toll-free at
AAccrued Interest : Interest accrued on a bond or other fixed income security since the last interest payment was made. At the time of a sale, the buyer of a bond pays the market price plus accrued interest to the seller. Exceptions are bonds that are in default (termed to be 'trading flat'). Accrued interest is calculated by multiplying the coupon rate by the number of days that have elapsed since the last payment. Aftermarket : The trading that occurs after an initial public offering (IPO) is the aftermarket. The trading volume on the first day that an equity is publicly offered is extremely high. Flipping and aftermarket purchases can cause the volume to unexpectedly rise or drop in the days immediately following an IPO. Investors must be aware of the risks involved with trading in a fast aftermarket. The aftermarket performance is the appreciation or depreciation of an IPO from the offering price forward. However, to get a more realistic benchmark, some investors prefer to track the aftermarket performance from the first day close because of the high volatility during the first day of trading. All or None (AON) : A stipulation to either a buy or a sell order which instructs the broker to either fill the order in its entirety of to fill none at all, the customer won't accept a partial execution (only 300 shares out of an order for 1000). Allocation : The amount of stock granted by the underwriter to an investor in a traditional offering. The allocation may be less than the requested amount if demand for the offering was greater than the number of shares available. American Depository Receipt (ADR) : Certificate issued by an American bank which represents a foreign stock share held on deposit. The certificate, transfer, and settlement practices for ADRs are identical to those of U.S. securities. U.S. investors often prefer ADRs to direct purchase of foreign shares because of the ready availability of price information, lower transaction costs, and timely dividend distribution. For most practical purposes, trading an ADR is equivalent to trading the foreign stock. Appreciation : The increase in the value of an asset. Asked Price : The lowest price that anyone has declared that he will sell his security for at a given time. In over-the-counter stocks, the "ask" is the best quoted price at which a Market Maker is willing to sell a stock. Asset : Any item of value that an individual or a corporation owns. Assignment : Notice to an option writer (seller) that the holder (buyer) has exercised his option and the writer will be required to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price. See the explanation of options trading for more complete information on options. At-the-Money : An option where the strike (exercise) price is exactly equal to the trading price of the underlying security.
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