Brokerage Accounts

Stocks: A certificate of ownership (share) in a corporation.

Ownership of a corporation represented by shares that are a claim on the corporation’s earnings and assets. Stockholders share a portion of the profit the company may make as well as the loss. As the company grows the stock price rises will benefit the shareholders. Also the company may issue dividends to disperse revenue. In short, the better the company does, the better the investor does.

Common Stock : Usually entitles the shareholder to vote in the election of directors and other matters taken up at shareholders meetings or by proxy.

Proxy: a power of attorney authorizing a specified person to vote corporate stock.

Preferred Stock: Usually does not grant voting rights, but have a prior claim on assets and earnings. Dividends must be paid on preferred stock before being paid on common stock. The value of a stock will fluctuate with the company’s performance and the stock market in general.

Blue Chips: The high-quality stocks of major corporations with long records of uninterrupted earnings and dividends, capable management, and good growth prospects.

Growth Stock: the stock of a corporation whose sales and earnings are expanding faster than the general economy.

Market risk is an overall decline in the stock market will have a negative impact on the securities you own. All though your company is doing well a general decline in stock prices may decline your share’s value.

A Portfolio is an individual’s total investment holding.

Capital gain (loss) is the profit (loss) from the sale of securities or other capital assets.

Bonds: A certificate of debt (interest-bearing or discounted) issued by a government or corporation in order to raise money. The issuer is required to pay a fixed sum annually until maturity and then the principal at maturity.

  • A bond (debenture) is a debt instrument (essentially an I.O.U. contract.)
  • Usually issued in multiples of $1,000 or $5,000.
  • Bondholder, unlike stockholder, has no corporate ownership privileges.
  • Interest on corporate bonds is fully taxable, while government bond interest yield may be exempt.

Junk bonds: Below investment-grade bonds that provide high yields with high risk.

Treasuries: Negotiable debt obligation issued by the U.S. government at various schedules and maturities (Treasury bills, Treasury bonds, Treasury note)

U.S. Savings bond: A nontransferable, registered bond issued by the U.S. government in the denominations of $50 to $10,000.

Corporate bond: A bond issued by a corporation.

Convertible Bonds: a feature that allows the bondholder to convert the par amount of the bond for common stock.

Zero-Coupon Bonds : Don not pay interest during the term but is sold at a discount of face value. The bond generally increase in value as it approaches maturity and the return comes solely form its appreciation.