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Account Executive
an individual, sometimes called a stockbroker or registered representative, who buys and sells securities for clients
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Asset Allocation
the process of spreading your money among several different types of investments to lessen risk
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Blue-Chip Stock
a safe investment that generally attracts conservative investors
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Buying Long
buying stock with the expectation that it will increase in value and then can be sold at a profit
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Capital Gain
the difference between a security’s purchase price and its selling price
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Discretionary Order
an order to buy or sell a security that lets the broker decide when to execute the transaction and at what price
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Family of Funds
a group of mutual funds managed by one investment company
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Financial Planner
an individual who has had at least two years of training in investments, insurance, taxation, retirement planning, and estate planning and has passed a rigorous examination
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Full Disclosure
requirement that investors should have access to all important facts about stocks, bonds, and other securities so that they can make informed decisions
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High-Risk Investment
an investment made in the uncertain hope of earning a relatively large profit in a short time
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Insider Trading
the practice of board members, corporate managers, and employees buying and selling a corporation’s stock
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Limit Order
a request that a security be bought or sold at a price that is equal to or better than some specified price
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Liquidity
the ease with which an investment can be converted into cash
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Margin Requirement
the portion of the price of a stock that cannot be borrowed
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Market Order
a request that a security be purchased or sold at the current market price
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Market Value
the price of one share of a stock at a particular time
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Municipal Bond
sometimes called a muni, a debt security issued by a state or local government
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Mutual Fund
a company that pools the money of many investors—its shareholders—to invest in a variety of different securities
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Nasdaq
computerized electronic exchange system through which most OTC securities are traded
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Net Asset Value (NAV)
current market value of a mutual fund’s portfolio minus the mutual fund’s liabilities divided by the number of outstanding shares
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Over-the-Counter (OTC) Market
a network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange
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Personal Budget
a specific plan for spending your income
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Personal Investment
the use of your personal funds to earn a financial return
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Primary Market
a market in which an investor purchases financial securities (via an investment bank) directly from the issuer of those securities
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Prospectus
a detailed, written description of a new security, the issuing corporation, and the corporation’s top management
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Rate of Return
the total dollar amount of return you receive on an investment over a specific period of time divided by the amount invested
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Secondary Market
a market for existing financial securities that are traded between investors
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Securities Exchange
a marketplace where member brokers meet to buy and sell securities
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Security Average (or security index)
an average of the current market prices of selected securities
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Selling Short
the process of selling stock that an investor does not actually own but has borrowed from a brokerage firm and will repay at a later date
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Stock Dividend
a dividend in the form of additional stock
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Stock Split
the division of each outstanding share of a corporation’s stock into a greater number of shares
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