Real estate investment trust (REIT)
A closed-end investment company that accumulates money by selling shares to investors, in order to
invest it in various forms of real estate including mortgages; these invest only in specific types of real
estate or rea
An item high enough to cover the principal portion of the loan.
A legal claim permitting the lender, in case the borrowed defaults, to liquidate the items serving as
collateral to satisfy the obligation.
A mortgage on
A special type of fixed-income obligation that carries a conversion feature permitting the investor to
convert it into a specified number of shares of common stock.
Provides income and possible price appreciation (capital gains)
Dividend reinvestment plan (DRP)
A program whereby stockholders can choose to take their cash dividends in the form of more shares of
the company's stock.
They are liabilitiesthey're publicly traded IOUs where the bondholders are actually lending mo
Load funds (front-end loads)
A fund that charges a fee at time of purchase. There is normally no charge or commission to pay when
you sell your shares.
A fund that has a low purchase fee.
Back-end load (redemption fee)
A commission charged
Price/earnings (P/E) ratio
A measure of investors' confidence in a given security; calculated by dividing market price per share by
earnings per share. The higher the price/earning multiple, the more confidence investors are presumed
to have in a given se
If you want greater return, you will most likely have to accept greater risk. (Amount of risk is directly
related to expected return.)
We must formulate expectations of its future current income and future capital appr
Tax-exempt money funds
A money fund that limits its investments to tax-exempt municipal securities with very short (30-to 90day) maturities. These appeal to investors in high tax brackets.
Government securities money funds
These money funds eliminate any
Securities Investor Protection Corporation (SIPC)
A nonprofit corporation, created by Congress and subject to SEC and congressional oversight that
insures customer accounts against the financial failure of a brokerage firm. (Not an agency of the U.S.
An issue that is broken down into a series of smaller bonds, each with its own maturity date and
A municipal bond serviced from the income generated by a specific project.
General obligation bond
A municipal bon
Loans made for specific purposes using formally negotiated contracts that specify the borrowing terms
They are one-time transactions made for specific purposes (big-ticket items).
Once it is paid off, there is no more credi