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Glossary |
Glossary 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - N - NAV (Net Asset Value) The market value of a fund share, synonymous with a bid price. In the case of no-load funds, the NAV, market price, and offering price are all the same figure, which the public pays to buy shares; load fund market or offer prices are quoted after adding the sales charge to the net asset value. NAV is calculated by most funds after the close of the exchanges each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding. The number of shares outstanding can vary each day depending on the number of purchases and redemptions. NASD National Association of Securities Dealers. NASDAQ National Association of Securities Dealers Automated Quote.
Nasdaq SmallCap Market The Nasdaq SmallCap Market comprises of over 1,400 companies that want the sponsorship of market makers, have applied for listing and meet specific and financial requirements. Once a company is approved and listed on this market, market makers are able to quote and trade the company's securities through a sophisticated electronic trading and surveillance system. The Nasdaq SmallCap Market operates from 9:30 A.M. to 4:00 P.M. EST., with extended trading in SelectNet from 8:00 A.M. to 9:30 A.M. EST and from between 4:00 P.M. and 5:15 P.M. EST. Negotiated Underwriting/Deal A means by which firms choose the underwriter for a new security issue. See competitive bidding. Net Asset Value (NAV) The market value of a fund share, synonymous with a bid price. In the case of no-load funds, the NAV, market price, and offering price are all the same figure, which the public pays to buy shares; load fund market or offer prices are quoted after adding the sales charge to the net asset value. NAV is calculated by most funds after the close of the exchanges each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding. The number of shares outstanding can vary each day depending on the number of purchases and redemptions. Net Change The difference between today's price of last trade and the previous day's last price. For mutual funds, it is the difference between today's closing Net Asset Value (NAV) and the previous day's closing. The previous day's close on the Nasdaq web site, for example, is updated at 3:30 A.M. Net Present Value (NPV) A project's net contribution to shareholders wealth, which is determined by the present value of a project's cash flows less initial investment.
New Working Capital (NWC) Current assets minus current liabilities. Net Worth Book value of a company's common stock, surplus, and retained earnings. NL No Load No Load (NL) See Load Nominal Interest Rate Interest as expressed in money terms. See real interest rate Note Unsecured debt with a maturity of up to 10 years at the time of issue. NPVGO Net Present Value of Growth Opportunities. A firm valuation model where NPV of investment opportunities is explicitly examined. NWC Net Working Capital is the difference between current assets and current liabilities. NYSE New York Stock Exchange. 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - O -Odd Lot refers to buying stocks in a quantity that is not a multiple of 100. Off-Balance-sheet Financing Financing that is not shows as a liability in a company's balance sheet. OID Debt Original Issue Discount Debt Open The price at which a security opens the trading day. Open-End Fund A mutual fund that stands ready to redeem stocks and issue new stock. Also see closed-end funds. Open Order An order to buy or sell a security that remains in effect until it is either canceled by the customer or executed. Operating Leverage Amount of fixed operating costs. Opportunity Cost of Capital The expected return that is foregone by investing in a project rather than a financial security with comparable risk. Option The choice to take a specific action in the future. The action considered in finance are the purchase (call option) or sale (put option) of an asset.
Out-of-the-money Option An option that would not be worth exercising if it matured immediately. See in-the-money option. OTC (Over The Counter Market). Financial markets that are not located in a single physical area. NASDAQ is an example. Organized Market A central physical location where exchange of securities takes place under a set of rules and regulations. This type of market is also referred to as "Auction Market." Over-Rewarded A security whose expected (average) return is above its required return. Also called under-priced. Over-Valued An asset whose market value is greater than its intrinsic (formula or theoretical) value. Overbought Typically a reference to a security or the general market after it exhibits a sharp rise in prices. Oversold Opposite of overbought. 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - P -PA (Professional Association) A type of corporation that provides most of the benefits of incorporation but do not relieve the participants of professional (malpractice) liability. This type of organization is common among accountants, doctors, and lawyers. Also called Professional Corporation (PC). PC (Professional Corporation) See PA. P/E Ratio Price to earnings ratio. The price of a share of stock divided by earnings per share of stock for a twelve-month period. PacMan The name comes from the video game. It is another takeover repellent devised by management. For example, Bendix Corp. tried to take control of Martin-Marietta by a tender offer. When the takeover effort failed, Martin-Marietta counterattacked by buying Bendix stock in an attempt to take control of Bendix. Thus, Martin-Marietta became the PacMan. To counter, Bendix successfully courted Allied Corporation to come to its rescue. Allied bought Bendix so that Martin-Marietta could not buy enough control. In this case Allied was a White Knight. Par Value (1) A stock's par value is the minimum price at which more shares can be issued. (2) A bond's par value = $1,000 to be paid at maturity. Also see principal. Partnership A form of organization with two or more persons associate to conduct a non-corporate business. Its main disadvantage is unlimited liability. The tax treatment of a partnership is similar to that for a proprietorship, in that the business avoids corporate taxes. Also see LLC, and PA
Passive Management An investment strategy that does not involve the periodic shuffling of a portfolio's components. A buy-and-hold strategy. Patient Capital Investors interested in long-term value maximization. Payment Date Date on which dividends are paid to registered owners. Payout Ratio Percent of earnings that is paid out as dividends. Pension Fund Assets held in trust to cover the costs of pension benefits to participants. Pension Plan Sponsor A group of employees with a pension plan under management. The California Public Employees' Retirement System (Calipers) is an example. Pension Plan A plan established by a firm, labor union, government, or other organization to provide for the payment of benefits to the plan participants over a period of years after retirement. Poison Pill An anti-takeover plan devised to automatically be activated when the company gets bought over in an unfriendly takeover. A Golden Parachute is one such device. Another might be a plan whereby all the firm's debt becomes due if the current management is removed. Portfolio A combination of assets. Portfolio Insurance
Preemptive Right The right of a shareholder to purchase newly issued shares of the company before the general public. Premium (1) This generally refers to extra money an investor is willing to pay to buy something. (2) For a bond, a premium is the amount for which the security sells above its par value. Primary Market is where firms sell new financial assets typically with the assistance of an investment banker. Principal Orders Refers to activity by a broker/dealer when buying or selling for its own account and risk. Preemptive Right Common shareholder's right to subscribe to any new issue of stock so as to maintain, undiminished, their fraction of total number of shares outstanding. Preferred Stock Stock that takes priority over common stock in regard to dividend and liquidation. The dividend is usually fixed at time of issue. Prime Rate The interest rate that banks charge their "best" clients, , i.e., those with the lowest possibility of default. Principal (1) Shareholders; (2) Amount of debt that must be paid at maturity. Private Placement A direct sale, by the issuing firm, of newly issued securities to a small group of investors.
Probability Distribution A graph that shows the different possible outcomes of a single variable and the probability of getting the outcome. Professional Association (PA) See PA. Professional Corporation (PC) See PA. Profit Taking Selling stock after a period of rising prices to realize the profit. The term is used to explain a downturn in the market. Pro Forma Projected Promissory Note (PN) Promise to pay. Prospectus Summary of the registration statement providing information to investors on an issue of securities. Protective Covenants Clauses in a loan agreement aimed at reducing default risk to the bondholders. Proxy Statement Information provided to stockholders in conjunction with the solicitation of proxies. (See: Proxy Vote)
Proxy Vote Vote cast by one person on behalf of another at the company's annual meeting. Put Option Option to sell an asset at a specified excise price on or before a specified exercise date. Also see call option. - Q - Quant Finance Quants are the "rocket scientists" of Wall Street. They use Quantitative techniques to solve financial problems. Quote The highest bid to buy and the lowest offer to sell a security at a given time. (See: Ask, and Bid) 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z |
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