What Does Accelerated Share Repurchase - ASR Mean?

A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company. The shares are returned to the client through purchases in the open market, often purchased over a period that can range from one day to several months. Investopedia explains Accelerated Share Repurchase - ASR Accelerated share repurchases allow corporations to transfer the risk of the stock buyback to the investment bank in return for a premium. The corporation is therefore able to immediately transfer a predetermined amount of money to the investment bank in return for its shares of stock. ASRs are often used to buy shares back at a faster pace and reduce the amount of shares outstanding right away. What Does Acceleration Covenant Mean? A clause included in certain debt securities and swap agreements stating that the immediate collection of payment and termination of contract will take place should any number of clauses being violated by the borrower including default or a downgrade of debt. Also referred to as "acceleration clause." Investopedia explains Acceleration Covenant This covenant helps to protect parties that extend financing to businesses in need of capital. Under an acceleration covenant, the borrowing party must maintain a specified credit rating in order to prevent termination of the contract and immediate repayment. What Does Accommodation Trading Mean? A type of trading in which a trader accommodates another by entering into a non-competitive purchase or sale order. An accommodation trade is often executed when two traders are participating in illegal trading. Investopedia explains Accommodation Trading An accommodation trade could occur when two traders agree to exchange a stock for a price well below the market value, allowing the seller to realize a large capital loss on the shares. For example, suppose that Bill purchased stock in Company XYZ at $55 per share. With tax season coming soon, Bill decides to sell the stock to Joe for $45, even though the shares are currently trading at $60. Bill realizes a capital loss of $10 per share, which he can use to lower the taxes paid on any capital gains on other investments. After the taxes are filed, Joe sells the stock back to Bill at $45. This trade, also known as a wash sale, allows Bill to cheat the tax system, while never actually losing any value on the stock. What Does Accounts Payable Turnover Ratio Mean? A short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers and dividing it by the average accounts payable amount during the same period.

Investopedia explains Accounts Payable Turnover Ratio The measure shows investors how many times per period the company pays its average payable amount. For example, if the company makes $100 million in purchases from suppliers in a year and at any given point holds an average accounts payable of $20 million, the accounts payable turnover ratio for the period is 5 ($100 million/$20 million). If the turnover ratio is falling from one period to another, this is a sign that the company is taking longer to pay off its suppliers than it was before. The opposite is true when the turnover ratio is increasing, which means that the company is paying of suppliers at a faster rate. What Does Accrued Dividend Mean? An accounting term referring to the balance sheet item that accounts for dividends that have been declared but not yet paid to shareholders. Accrued dividends are booked as a liability from the declaration date and remain as such until the dividend payment date.

Accrued dividends should not be confused with accumulated dividends, which refer to dividends due to holders of cumulative preferred stock. Investopedia explains Accrued Dividend There are no accounting rules that mandate a time frame in which the accrued dividend entry should be recorded, though most companies usually book it a few weeks before the payment date. After the dividend is declared, it becomes property of the record-date shareholder and is considered separate from the stock. This separation allows the shareholders to become creditors of the company, due their dividend payment, should a merger or some other corporate action occur. What Does Accumulated Dividend Mean? A dividend on a share of cumulative preferred stock that has not yet been paid to the shareholder. Accumulated dividends are the result of dividends that are carried forward from previous periods and shareholders of cumulative preferred stock receive dividends before any other shareholders. Investopedia explains Accumulated Dividend Preferred stock can either be "non-cumulative", which is traditionally the case or cumulative" when it comes to dividends. Noncumulative shares are entitled to dividends only if dividends are declared. Some investors may want a guaranteed return on a preferred stock. A cumulative preferred stock allows the investor to earn dividends regardless of the companys ability to pay them immediately or in the future. In some instances, when some companies are not in a financial position to pay a dividend during a certain year, accumulated dividends are created. These dividends must be paid before any other dividends can be paid.

What Does Accumulated Earnings Tax Mean? A tax imposed by the federal government upon companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary. Investopedia explains Accumulated Earnings Tax The federal government produced this tax to deter investors from negatively influencing a company's decision to pay dividends. Essentially, this tax persuades companies to issue dividends, rather than retaining the earnings. The premise behind this tax is that companies that retain earnings typically experience higher stock price appreciation. Although this is beneficial to stockholders, as capital gains taxes are lower than dividend taxes, it is detrimental to the government because tax revenues decrease. By adding an extra tax upon a firm's retained earnings, the taxman will either collect more taxes from the company or persuade them to issue dividends, thereby allowing the government to collect from the stockholders. What Does Accumulating Shares Mean? Common stock given to current shareholders of a company in place of or in addition to a dividend. By accumulating shares shareholders dont have to pay income tax on these shares; however, it is still mandatory to pay capital gains tax on them. Sometimes companies pay out these shares in addition to dividends paid in cash. These shares are one way companies replace annual income with capital growth. Also referred to as a stock dividend. Investopedia explains Accumulating Shares These types of shares are different from dividends in that dividends are a distribution made to shareholders directly out of company profits and usually paid in cash. In certain situations, these shares can also be paid in the form of property. Stock dividends are paid out to shareholders in the form of shares of stock that increases a stockholders share amount.

What Does Acquisition Loan Mean? A loan given to a company to purchase a specific asset or to be used for purposes that are laid out before the loan is granted. The acquisition loan is typically only able to be used for a short window of time, and only for specific purposes. Once repaid, funds available through an acquisition loan cannot be reborrowed as with a revolving line of credit at a bank. Investopedia explains Acquisition Loan Acquisition loans are sought when a company wants to complete an acquisition for an asset but doesn't have enough liquid capital to do so. The company may be able to get more favorable terms on an acquisition loan because the assets being purchased have a tangible value, as opposed to capital being used to fund daily operations or release a new product line

What Does Acting In Concert Mean? A slang term for when parties undertake identical investment actions to achieve the same goal. Acting in concert requires the cooperation of people or corporations to make the same transactions based on a previous arrangement. Investopedia explains Acting In Concert The issue of acting in concert is often examined in the world of acquisitions. Investors are usually required to declare any takeover intentions or place a tender offer after acquiring a specific percentage of shares in a company. However, some may try to spread the ownership percentage among friendly parties in an attempt to avoid declaring or bidding. Regulators have determined that if people are acting in concert and the sum of ownership exceeds the specified percentage, the group must declare its intentions.

What Does Active Stocks Mean? Listed shares on an exchange that are heavily traded. Active stocks are actively bought and sold, and often have a large number of shares outstanding. Because they are heavily traded, active stocks often have low bid-ask spreads as a result of their increased liquidity. Investopedia explains Active Stocks The most active stocks are listed each day with the volume and the day's gain or loss. They could be actively traded because they have a large number of shares outstanding, or because of a special situation such as there being a tender offer for the company or because of unexpected news.

What Does Actively Managed ETF Mean? An exchange-traded fund that has a manager or team making decisions on the underlying portfolio allocation or otherwise not following a passive investment strategy. An actively managed ETF will have a benchmark index, but managers may change sector allocations, market-time trades or deviate from the index as they see fit. This produces investment returns that will not perfectly mirror the underlying index.

What Does Activist Investor Mean? An individual or group that purchases large numbers of a public companys shares and/or tries to obtain seats on the companys board with the goal of effecting a major change in the company. A company can become a target for activist investors if it is mismanaged, has excessive costs, could be run more profitably as a private company or has another problem that the activist investor believes it can fix to make the company more valuable. Investopedia explains Activist Investor Private equity firms, hedge funds and wealthy individuals are types of entities that might decide to act as activist investors. One well-known activist investor is Carl Icahn. He has attempted to make major changes at Yahoo!, Blockbuster, Time Warner and RJR Nabisco, among other companies. Other big-name activist investors include Kirk Kerkorian, Bill Ackman, Eddie Lampert and Nelson Peltz. One indication that a company may have become a target for activist investors is the filing of SEC Form 13D, which must be filed when an investor purchases 5% or more of a companys shares

What Does Adaptive Price Zone - APZ Mean? A technical indicator that helps investors identify possible market turning points. The adaptive price zone (APZ) can be especially useful in a sideways-moving market. This indicator attempts to signal significant price movements by using a a set of bands based on short-term, double-smoothed exponential moving averages. It can help day traders profit in volatile markets by signaling price reversal points, which can indicate potentially lucrative times to buy or sell. The APZ can be implemented as part of an automated trading system. Investopedia explains Adaptive Price Zone - APZ Technical analysis is one of two major methods for making stock-trading decisions. Whereas fundamental analysis looks at the value of the company behind the stock, technical analysis ignores this completely and focuses solely on price movements. Technical traders use charts and other tools to analyze a stock's price and trade volume and predict how a stock will move

What Does Add-On Mean? Additional shares put on the market by a company that has already gone public. Reasons why a company might use add-on financing include raising cash to fund existing operations, expanding operations or paying for a new project. While an add-on is useful for raising money, it can cause the company's share price to decline, and current shareholders to be diluted. Investopedia explains Add-On From the existing shareholders' perspective, the issuance of add-on stock is a bad thing because it usually reduces the value of the stock they own. More shares mean that existing shareholders will see their percentage of ownership in the company decrease. They may also see the stock's earnings per share decline. However, if the add-on is able to increase earnings and shareholder value in the long-term, it will generally be viewed as a positive decision What Does Adjustable-Rate Preferred Stock - ARPS Mean? A type of preferred stock where the dividends issued will vary with a benchmark, most often a T-bill rate. The value of the dividend from the preferred share is set by a predetermined formula to move with rates, and because of this flexibility preferred prices are often more stable then fixed-rate preferred stocks. Investopedia explains Adjustable-Rate Preferred Stock - ARPS The preferred category of stocks are more secure as they will be one of the first of the equity holders to receive dividend payments in the event of the company's liquidation. There is often a limit to the amount the rate can change on the dividend, adding further security to the issue What Does Adjusted Debit Balance Mean? The amount of money owed by a customer to his/her broker after paper profits and losses are taken into consideration. Investopedia explains Adjusted Debit Balance This value is calculated by subtracting the accountholder's profits on short sales and balances in a special miscellaneous account. According to the SEC's Regulation T, withdrawals from margin accounts can only be made if there is a small adjusted debit balanc What Does Adjustment in Conversion Terms Mean? A term used to describe the adjustment made to a convertible securities' conversion factor when the exchangeable stock underlying the convertible undergoes a split. Investopedia explains Adjustment in Conversion Terms In some convertibles, an adjustment in conversion terms is a scheduled event. Otherwise, these adjustments are made in order to ensure that the holder of the convertible remains unaffected by any related changes. For example, if a convertible security CBC has an exchange privilege of 1 common for $50, and the common share of CBC splits 2 for 1, then the exchange ratio will be adjusted to 1 common for $25.

What Does Advance Commitment Mean? A promise or agreement to take some future action. For example, a promise by a buyer to purchase goods at a price set beforehand is an advance commitment.

Investopedia explains Advance Commitment In financial markets, parties may make an advance commitment to sell an asset before they own it; the seller often buys a futures contract to offset the risk of a price increase at the time of purchase. In banking, a financial institution will make an advance commitment to a borrower to lend funds on a specified date on agreed-upon terms. What Does Affidavit Of Loss Mean? A written statement declaring the physical loss of a security - usually through theft or destruction by fire/flood. The affidavit contains all details regarding the loss, the owner's name and any information pertaining to the security, such as serial number or date of issue. Once the statement has been made, one can issue a letter of indemnity, requesting the replacement of the security. Investopedia explains Affidavit Of Loss When holding a physical record of a security, such as a stock certificate, one face's the chance of losing the copy. If the record is stolen, misplaced or destroyed, the owner is required to swear an affidavit pertaining to the loss of the item. This is an oath

outlining that, to the best of the person's knowledge, the record is truly gone. If the lost copy appears after the owner received a replacement security, the original record must be forwarded to the company for disposal What Does Affirmative Obligation Mean? An obligation of NYSE specialists to enter the market on a particular security (either by posting or bidding and ask) when there is not sufficient market demand and supply to efficiently match orders. Investopedia explains Affirmative Obligation The affirmative obligation requires specialists to create a market for a security when public demand or supply is ineffective and can not create it for itself What Does After-Hours Trading - AHT Mean? Trading after regular trading hours on the major exchanges. Also known as the "after-hours market". Investopedia explains After-Hours Trading - AHT This was once reserved for institutional investors, but now individuals may also trade after hours. Participation by market makers and electronic communication networks (ECNs) is voluntary and, as a result, this kind of trading may offer less liquidity than that done during normal hours of trading. If you are trading in pre-market or after-hours trading, you should always use a limit order What Does After-Market Performance Mean? The price level performance of a newly issued stock after its IPO. There is no standard ending time period that is considered, but after-market performance begins on the first day of trading on the exchange. Typically after-market performance will be measured through the lock-up period, anywhere from three to nine months after the IPO date. This allows for the market to "digest" the insider shares that might be sold quickly after the lock-up period ends. By looking at the after-market performance of all IPOs over a certain time period (as in a calendar year), analysts and investment bankers can determine the overall market demand for new issues, and possibly move up or delay a schedule IPO as a result. Investopedia explains After-Market Performance To the company management and employees, the after-market performance of the stock is vital. If the company can reach and sustain a higher market valuation than originally estimated by the underwriting syndicate in open market trading, equity funding will be much more affordable than other methods of raising capital. Investors should keep in mind that an IPO may only represents a small percentage of total shares outstanding (usually about 20%). The remaining bulk of shares can be used to raise capital down the road as the company looks to grow and enter new markets What Does Agency Cost Of Debt Mean? A problem arising from the conflict of interested created by the separation of management from ownership (the stockholders) in a publicly owned company. Corporate governance mechanisms, such as boards of directors and the issuance of debt, are used in an attempt to reduce this conflict of interest. However, introducing debt into the picture creates yet another potential conflict of interest because there are three parties involved: owners, managers and lenders (bondholders), each with different goals. Investopedia explains Agency Cost Of Debt For example, managers may want to engage in risky actions they hope will benefit shareholders, who seek a high rate of return. Bondholders, who are typically interested in a safer investment, may want to place restrictions on the use of their money to reduce their risk. The costs resulting from these conflicts are known as the agency cost of debt. What Does Agency Costs Mean? A type of internal cost that arises from, or must be paid to, an agent acting on behalf of a principal. Agency costs arise because of core problems such as conflicts of interest between shareholders and management. Shareholders wish for management to run the company in a way that increases shareholder value. But management may wish to grow the company in ways that maximize their personal power and wealth that may not be in the best interests of shareholders. Investopedia explains Agency Costs Some common examples of the principal-agent relationship include: management (agent) and shareholders (principal), or politicians (agent) and voters (principal). Agency costs are inevitable within an organization whenever the principals are not completely in charge; the costs can usually be best spent on providing proper material incentives (such as performance bonuses and stock options) and moral incentives for agents to properly execute their duties, thereby aligning the interests of principals (owners) and agents

What Does All-Holders Rule Mean? An SEC regulation that requires tender offers to be available to all holders of the identical class of the security. Investopedia explains All-Holders Rule For example, if company ABC has tendered an offer to buy back its B shares, then all holders of this class must be allowed to participate in the buy back. The SEC does not require ABC co. to offer this buy back to the shareholders of its other classes. This rule is especially important during takeover bids, ensuring that any tender offers made by the acquiring company cannot be directed only to those shareholders in favor of the takeover What Does All-Ordinaries Stock Index Mean? A stock index comprised of common shares from the Australian Stock Exchange. The All-Ordinaries Index is the most quoted benchmark for Australian equities. The ASX is responsible for calculating and distributing the index and its returns

What Does All-Purpose Financial Statement Mean? A record of financial activity that is suitable for a variety of users to properly assess the financial health of a company. An allpurpose financial statement is a type of financial statement that is intended for review by diverse groups, such as potential investors, creditors, employees, shareholders and suppliers. Investopedia explains All-Purpose Financial Statement All-purpose financial statements include the balance sheet, income statement, cash flow statement and could include the statement of retained earnings. A public company produces all-purpose financial statements on a quarterly and annual basis

What Does Allied Member Mean? A person who is not a member of the New York Stock Exchange (NYSE) but is an officer or voting shareholder of a firm with a membership. Allied members can complete transactions on the NYSE and are granted access to the trading floor. Investopedia explains Allied Member People who want to be recognized as allied members must meet the rules outlined in the NYSE's Rules of the Exchange. In addition to fulfilling these requirements, the person must complete a written examination. In order to be eligible to write the exam, shareholders must own at least a 5% stake in the member firm. Other eligible people include the company's directors or other controlling partners, and anyone the firm deems a principal executive

What Does Alphabet Rounds Mean? The early rounds of funding for a startup company, which get their name because the first is known as Series A financing, followed by Series B financing, and so on. Alphabet rounds of financing are provided by early investors and venture capital (VC) firms, which are willing to invest in companies with limited operational histories on the hope of larger future gains. These investors will typically wait until the startup has shown some basic signs of maturity and has exhausted its initial seed capital.

Investopedia explains Alphabet Rounds When a company is seeking venture capital funding, it will still have little or no revenue/cash flow, but will generally have an established business model and a clear path to a designated market segment. Venture capital firms are looking to invest with a time horizon in the five- to seven-year range, at which point they can hopefully cash out to a private equity firm or through an initial public offering of stock. Depending on the needs of the company, a Series A round of financing may be enough to propel the company to the point at which it can stand on its own operating cash flow. If a VC firm is participating in a later round of financing - a Series C financing, for example - its potential equity stake in the company will already be diluted, and it will need strong conviction that the company will earn a solid return before committing any funds to the startup What Does Alphabet Stock Mean? An equity share that is tied to a specific subsidiary of a corporation. It called an alphabet stock because the classification system uses letters to distinguish the stock from the parent company's stock. Alphabet stock has different voting rights from the parent company's stock. Moreover, alphabet stock typically pays a dividend that is tied to the operating performance of the particular subsidiary rather than the parent company.

Investopedia explains Alphabet Stock Also referred to as a special class stock. An example of an alphabet stock would be Berkshire Hathaway's class A and class B shares. Alphabet stocks typically result from acquisitions or restructuring, but a company may issue them for other reasons. What Does Alternative Energy ETF Mean? An exchange-traded fund that invests in companies engaged in industries serving alternative energy production and research. Some companies found within alternative energy ETFs may only receive a portion of their revenues from alternative energy goods and services, while other (typically smaller) companies are wholly engaged in alternative or clean energy production. The underlying group of securities used to passively invest assets within these funds varies widely depending on the issuer. Some include many stocks while others have a narrower focus and are thus less diversified.

What Does Alternative Investment Market - AIM Mean? A sub-market of the London Stock Exchange that permits smaller companies to participate with greater regulatory flexibility than applies to the main market, including no set requirements for capitalization or the number of shares issued. The Alternative Investment Market is the London Stock Exchange's global market for smaller and growing companies. Investopedia explains Alternative Investment Market - AIM As of 2010, more than 3,000 international companies have joined the Alternative Investment Market (AIM) since its launch in 1995. AIM seeks to assist smaller and growing companies in raising growth capital. Early stage businesses, venture capitalbacked companies and more established businesses may join AIM to help raise the capital necessary for expansion. The FTSE Group maintains three indexes for tracking the AIM: the FTSE AIM UK 50 Index, the FTSE AIM 100 Index and the FTSE AIM All-Share Index. AIM is owned by the London Stock Exchange Group.

What Does Altiplano Option Mean? A type of mountain range option that offers a specific coupon payout in addition to the features of a vanilla option. Altiplano options are a type of basket option, in that there is more than one underlying security. As such, the pricing is determined not only by the implied volatility of each security, but also by the correlations between them. If none of the securities in the Altiplano basket outperforms a specified benchmark rate of return during the life of the option, then the option payout is just the specified coupon. But if any one of the underlying passes the benchmark, then the option converts to a vanilla call option on each of the underlying securities or assets. What Does Andersen Effect Mean? A reference to auditors performing more careful due diligence when auditing companies in order to prevent accounting errors. This extra level of accounting scrutiny often leads to companies restating earnings even though they have not necessarily intentionally misrepresented material accounting information. Investopedia explains Andersen Effect The Andersen effect takes its name from the accounting firm Arthur Andersen LLP, which was indicted in a number of accounting scandals in relation to the Enron collapse. The Andersen effect usually occurs as a result of a change in accountants What Does Angelina Jolie Stock Index Mean? An index made up of a selection of stocks from companies associated with actress Angela Jolie. Seen as one of the world's most influential celebrities, some analysts believe that companies connected with Jolie will outperform their competition. What Does Ankle Biter Mean? Stock issues with a market capitalization of less than $500 million. Also known as "small cap" stocks. Investopedia explains Ankle Biter These issues can appear to be more speculative than stocks with high market capitalization. However, smaller issues often have great growth potential and tend to outperform larger market capitalization stocks. Small cap stocks are often biting at the ankles of the larger cap stocks and will one day - through capitalization growth - move up into the larger market capitalizations, as a child grows into adulthood.

What Does Annapurna Option Mean? A form of option contract from the "mountain range" series of exotic options. Annapurna options offer a combination of a fixed coupon rate and participation in the equity gains of an underlying basket of securities. The coupon rate is dependent on when the

worst-performing stock of the group falls below a prespecified level. The longer it takes for the worst-performing stock to reach the predetermined low point, the higher the coupon payment the investor will receive. The equity participation rate (in the underlying securities) also rises as the Annapurna option lasts longer before the payout phase.

What Does Announcement Effect Mean? The impact on markets from the news that a change will occur at some future date. It can be used as a general term for the reaction to any development that affects trading, such as a change in dividend policy or a stock split. It is most often used, however, to describe investor reactions to changes in monetary policy, such as a hike or cut in a key interest rate level. Also known as a "signal effect."

Investopedia explains Announcement Effect Stock traders eagerly await the announcement of changes in Federal Reserve policy, and stock volumes are notably higher on socalled Fed days; depending on the investment environment, volatility may be substantially heightened as well. Researchers have also found that trading on the day preceding announcements of Fed policy is relatively calm. What Does Annual Premium Equivalent - APE Mean? A common sales measure technique used by insurance companies in the United Kingdom where the sales of a given entity are estimated by taking the value of regular premiums, plus 10% of any new single premiums written for the fiscal year. The premiums earned by a firm can be extended to include all revenues of a given firm. Investopedia explains Annual Premium Equivalent - APE When estimating any future metric, it is important to consider any unforeseen events, and how these events may impact your estimate. For example, when forecasting a firm's sales revenues, you would want to consider the competition and what there product lines and pricing strategy will be over the forecasting period What Does Annual Report Mean? 1. An annual publication that public corporations must provide to shareholders to describe their operations and financial conditions. The front part of the report often contains an impressive combination of graphics, photos and an accompanying narrative, all of which chronicle the company's activities over the past year. The back part of the report contains detailed financial and operational information. 2. In the case of mutual funds, an annual report is a required document that is made available to fund shareholders on a fiscal year basis. It discloses certain aspects of a fund's operations and financial condition. In contrast to corporate annual reports, mutual fund annual reports are best described as "plain vanilla" in terms of their presentation. Investopedia explains Annual Report 1. It was not until legislation was enacted after the stock market crash in 1929 that the annual report became a regular component of corporate financial reporting. Typically, an annual report will contain the following sections: -Financial Highlights -Letter to the Shareholders -Narrative Text, Graphics and Photos -Management's Discussion and Analysis -Financial Statements -Notes to Financial Statements -Auditor's Report -Summary Financial Data -Corporate Information 2. A mutual fund annual report, along with a fund's prospectus and statement of additional information, is a source of multi-year fund data and performance, which is made available to fund shareholders as well as to prospective fund investors. Unfortunately, most of the information is quantitative rather than qualitative, which addresses the mandatory accounting disclosures required of mutual funds.

What Does Annual Return Mean? The return an investment provides over a period of time, expressed as a time-weighted annual percentage. Sources of returns can include dividends, returns of capital and capital appreciation. The rate of annual return is measured against the initial amount of the investment and represents a geometric mean rather than a simple arithmetic mean.

Annual return is the de facto method for comparing the performance of investments with liquidity, which includes stocks, bonds, funds, commodities and some types of derivatives. Different asset classes are considered to have different strata of annual returns.

Investopedia explains Annual Return For example, consider an investor that purchases a stock on January 1, 2000, for $20. The investor then sells it on January 1, 2005, for $35 a $15 profit. The investor also received a total of $2 in dividends over the five-year holding period. In this example, the investors total return over five years would be $17, or (17/20) 85% of the initial investment. The annual return required to achieve 85% over five years follows the formula for the compound annual growth rate (CAGR):

(37/20) ^(1/5 (yr)) 1 = 13.1% annual return Annual-return statistics are commonly quoted in promotional materials for mutual funds, ETFs and other individual securities. What Does Anonymous Trading Mean? Visible bids and offers on the market without the identity of the bidder and seller being revealed. Investopedia explains Anonymous Trading Anonymous trades allow the high profile investors to execute transactions without the scrutiny and speculation of the market.

What Does Anti-Dilution Provision Mean? A provision in an option or a convertible security. It protects an investor from dilution resulting from later issues of stock at a lower price than the investor originally paid. Also known as an "anti-dilution clause". Investopedia explains Anti-Dilution Provision These are common with convertible preferred stock, which is a favored form of venture capital investment. What Does Anti-Greenmail Provision Mean? A special clause located within a firm's corporate charter that acts as a deterrence against the board of directors passing a share buyback. Investopedia explains Anti-Greenmail Provision This provision acts as a preventative measure, restraining managers from buying back company stock at significant premiums due to greenmail. A majority shareholder may be able to influence the board into purchasing shares at a significant premium, so the anti-greenmail provision requires that a majority of shareholders (excluding the majority shareholder) agree to the buyback. What Does Anti-Takeover Measure Mean? Measures taken on a continual or sporadic basis by a firm's management in order to prevent or deter unwanted takeovers. What Does Antidilutive Mean? A term describing the effects of securities retirement, securities conversion or corporate actions (such as acquisitions made through the issuance of common stock or other securities) on earnings per common share (EPS), where EPS is increased for shareholders. A transaction is considered to be antidilutive if its effect is to increase the amount of EPS, either by lowering the share count or increasing earnings. A second use of the term refers to ownership rights, whereby existing shareholders in a certain class of shares have rights to purchase additional shares when there is a new issuance of securities that would otherwise reduce the ownership percentage of existing holders. This is called an anti-dilution provision.

What Does Any-and-All Bid Mean? A bid made to purchase all stock being offered at a specific price. Add-and all bid is the actual order given for the purchase of shares at the price. Investopedia explains Any-and-All Bid Any and all bids are commonly used by companies attempting takeovers. The acquiring company will place an order to buy any stock being offered for a set duration or up to a set quantity. For example, if company A wanted to acquire 50% of company B's stock, they may place an any and all bid for $10. This would result in company A buying any shares being offered on public exchanges for $10 or less. What Does Appraisal Right Mean? The right of shareholders to demand the fair payment of securities undergoing a merger by a third party valuator. Investopedia explains Appraisal Right It's a protection policy for shareholders, preventing corporations involved in the merger from paying less than the company is worth to the shareholders.

What Does Arithmetic Index Mean? An index of securities that uses an arithmetic sum to determine changes in the index without taking the relative size of the securities into account. An arithmetic index of stocks does not incorporate weightings based on market capitalization, price, or any other metric, but merely calculates the raw changes in each component, then divides the sum by the number of index components. Also known as an "unweighted index".

Investopedia explains Arithmetic Index Most stock indexes are market-cap weighted, which means that the largest companies will exert a larger influence on the index that the smallest. The Standard & Poor's 500 Index and the Nasdaq-100 are both market-cap weighted, while the Dow Jones Industrial Average (DJIA) is price-weighted. The Value Line index is calculated arithmetically, although few other major indexes fail to account for the size of their components in some way. What Does Assessable Capital Stock Mean? The capital stock of any bank or financial institution that could be subject to assessment. Assessable capital stock makes shareholders liable for an amount greater than what they paid for their stock. However, the assessment of this stock only takes place in the event of bankruptcy or insolvency.

Investopedia explains Assessable Capital Stock Any capital stock that can be called and is not fully paid for can technically be referred to as assessable capital stock. However, the term is generally reserved for stock of banks or other financial institutions. Obviously, assessment of this stock will usually lead to a loss for the shareholders.

What Does Asset Base Mean? The underlying assets giving value to a company, investment or loan. The asset base is not fixed, it will appreciate or depreciate according to market forces. Lenders use physical assets as a guarantee that at least a portion of money lent can be recouped through the sale of the backed asset in the case that the loan itself cannot be repaid.

Investopedia explains Asset Base The value of a home might increase or decrease over time, affecting the underlying collateral in a mortgage. Similarly, the price of a commodity used as the asset base of derivative can also increase or decrease rapidly, changing the price that investors are

willing to pay for it. Examples of asset bases include a home (for a mortgage) and factory equipment (business loan). A derivative would "derive" its value from an underlying asset.

What Does Asset Mix Mean? The classification of all assets within a fund or portfolio. Assets are assigned to one of the core asset classes: stocks (equities), bonds (fixed income), cash and real estate. Other categories that are sometimes considered asset classes are commodities, international investments, hedge funds and limited partnership interests. The asset mix is usually shown as the set of percentages every asset class contributes to the total market value of the portfolio. It is a key determinant of the risk/reward profile of the fund, which in turn is largely determinant of long-term performance results. Investopedia explains Asset Mix Investors can expect the asset mixes of funds within a given strategy such as capital-appreciation funds, balanced funds, income funds and life-cycle funds to be similar to each other. What Does Asset Valuation Mean? The process of determining the current worth of a portfolio, company, investment, or balance sheet item. Investopedia explains Asset Valuation The tools used for asset valuation include quantitative methods and statistics, financial statement analysis, ratio analysis, fundamental analysis, and valuation economics. What Does At-Or-Better Mean? An order condition instructing a broker to only fill a transaction at a specific price or above it. Unlike a market order, an at-orbetter order will expire if a specific price target is not met or exceeded. The percentage of at-or-better trades in the market compared to the overall number of trades depends on liquidity and the state of the economy. Investopedia explains At-Or-Better If the price of a share of stock is falling, an investor is unlikely to be able to execute an at-or-better trade because buyers are more likely to wait in order to obtain a lower price. For example, if a share is trading at $10, a trader can put in an at-or-better order to sell the security at $10.10. Any price greater than or equal to $10.10 will trigger a sale What Does At-The-Close Order Mean? An order specifying that a trade is to be executed at the close of the market, or as near to the closing price as possible. Investopedia explains At-The-Close Order It's essentially a market order that doesn't get entered until the last minute (or thereabouts) of trading. With this type of order you are not necessarily guaranteed the closing price but usually something very similar

What Does Atlas Options Mean? An equity-based exotic option from the family of mountain range options. Atlas options have a payout that is based on the performance of the underlying securities, which are stocks. At maturity, some of the best- and worst-performing stocks are removed from this group of underlying securities, at which point the payout is calculated on the remainder of the securities. Investopedia explains Atlas Options Atlas options are typically only traded by sophisticated institutional investors who have the resources and risk tolerance to accept what can be an extremely complex security. As the time to maturity draws nearer, the price or value of an Atlas option may become more readily apparent as the top and bottom performers clearly separate themselves from the rest of the pack. These options were first introduced in the late 1990s, and were made up of European-based equities. Most are created as call options, with long terms to maturity. What Does Attribute Bias Mean? The tendency of stocks selected by a quantitative technique or model to have similar fundamental characteristics, such as high yields and low earnings valuations. Most investing models that provide investment choices as an output will have to establish parameters that, by definition, will exclude certain stocks and offer ones with similar traits in return.

Investopedia explains Attribute Bias An investing or research technique that produces choices with attribute bias is not necessarily a bad thing; the biggest danger is that the stocks may correlate closely in their returns, eliminating some of the value of a diversified portfolio. One thing in particular to watch out for is investing in several companies operating in the same industry, as industry peers will often have similar fundamental values. What Does Auction Mean? A system where potential buyers place competitive bids on assets and services. The asset or service in question will sell to the party that places the highest bid. In most cases, sellers will pay a listing fee to the auctioneer, regardless of whether the item actually sells for the desired price. Investopedia explains Auction For example, Google used a modified form of auctioning called the dutch auction when it issued its IPO. In this form of auction, prospective buyers submitted bids that included the number of shares desired and what the bidder was willing to pay for them. After the auction ended, the underwriters sorted through bids in order to determine the minimum priced bid they would accept from buyers. The IPO was priced at $85. What Does Authorized Stock Mean? The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation. This figure is usually listed in the capital accounts section of the balance sheet. Also known as "authorized shares" or "authorized capital stock". Investopedia explains Authorized Stock This number can be changed only by a vote of all the shareholders. Management will typically keep the number of authorized shares higher than those actually issued. This allows the company to sell more shares if it needs to raise additional funds. What Does Automated Confirmation Transaction Service - ACT Mean? An automated system designed to document and report the clearing of trades in the Nasdaq market. Investopedia explains Automated Confirmation Transaction Service - ACT All NASD members are required to participate in ACT. ACT provides faster access to trade information, it increases the efficiency of trade reconciliation and back-office transactions, and it also offers online access to the status of all trade entries What Does Average Cost Basis Method Mean? A way of calculating cost basis when figuring out gains or losses from a sale of mutual fund shares. This is done by adding up the number of shares owned as well as the total dollar amount of the shares; the dollar amount is divided by the number of shares. This number (the average cost basis) is then multiplied by the number of shares sold and compared to the actual sale amount to compute a gain or loss. Investopedia explains Average Cost Basis Method Many mutual fund companies include an average basis number on the confirmation statement, which is mailed to the client whenever shares are purchased or redeemed. The shareholder is not required to use this method What Does Average Down Mean? The process of buying additional shares in a company at lower prices than you originally purchased. This brings the average price you've paid for all your shares down. Investopedia explains Average Down Sometimes this is a good strategy, other times it's better to sell off a beaten down stock rather than buying more shares What Does Average Up Mean? The process of buying additional shares at higher prices. This raises the average price that the investor pays for all the shares. In the context of short selling, averaging up is achieved by selling additional shares at a price higher than that of the first transaction. Investopedia explains Average Up Say you buy XYZ at $20 per share, and as the stock rises you buy equal amounts at $24, $28 and $32 per share. This would bring your average purchase price to $26 per share What Does Away From The Market Mean? When the bid on an order is lower (or the ask price is higher) than the current market price for the security.

Investopedia explains Away From The Market In this case, the bid/ask spread is above or below the current price of the stock. What Does Ax Mean? The market maker who is most central to the price action of a specific security. The ax can be identified by spending several days studying level II quotes and noting which market maker seems to have the greatest effect on the security's price