See: Dividend; Rate Of Return

B/D (Broker-Dealer)

See: Broker; Dealer

Baby Bond
Bonds with a denomination of less than a $1,000 par value. Baby bonds are a source of funds to corporations that lack access to large institutional markets and bring the bond market within reach of small investors.

See: Bond; Institutional Investor; Par; Retail Investor

Back Office
Those departments of a broker-dealer that are not directly involved in sales or trading. Some back office functions include cashiering, accounting, and the record keeping of clients' cash or margin accounts.

See: Broker-Dealer; Front Office; Margin Account

Back-End Load
A fee that an investor pays when redeeming (withdrawing) funds from an investment--also called "deferred sales charge." The fee is usually dependent on how long the investment is held--the longer the time period, the smaller the fee. Mutual funds and annuities are the most common investments with back-end loads.

See: Annuity; Deferred Sales Charge; Exit Fee; Mutual Fund

Backing Away
The failure of a market maker to fulfill its obligation to buy or sell the minimum quantity of a particular security. Backing away is considered an unethical practice under the Financial Industry Regulatory Authority' Rules of Fair Practice.

See: Market Maker; Financial Industry Regulatory Authority; Rules Of Fair Practice

Backup
Lingo used to indicate a sudden reversal of a market trend.

See: Trendline

Bad Debt
Open balance or loan receivable that is considered uncollectible and is written off by a firm. (Reserves are usually maintained for uncollectible accounts.) The relationship of recoveries and write-offs to accounts receivable can indicate a firm's credit and charge-off policies.

See: Accounts Receivable

Balance Sheet
A financial report that entails the status of a corporation's assets, liabilities, and owners' equity for a specific date, usually at month end. It only captures this information as of that date; it does not cover a period of time.

See: Balance Sheet Equation; Fundamental Analysis

Balance Sheet Equation
Total liabilities plus stockholders' equity is equal to total company assets.

See: Asset; Balance Sheet; Equity; Liability

BAN (Bond Anticipation Note)
A short-term debt instrument that is issued by a municipality or a state. At maturity, the debt is paid from the proceeds of a new bond issue.

BANs usually provide an investor with a tax-free yield that may be higher than other comparable tax-exempt debt instruments of the same maturity.

See: Debt Instrument; Maturity Date; New Issue; Short Term Debt; Tax Exempt Security; Yield

Bank Guarantee Letter
The document furnished by a bank certifying that a put writer has enough funds on deposit at the bank to equal the aggregate exercise price of the put.

See: Exercise Price; Options; Put Option

Bankmail
An agreement between a bank and corporation involved in a takeover. The bank agrees not to finance another acquirer's bid.

See: Acquisition; Takeover

Base Market Value
Group of securities average market price at a specified time. It is used in plotting dollar or percentage changes for purposes of market indexing.

See: Indexing

Base Period
A period of time that is used as a measurement yardstick for economic data. A base period may be a month, year or average of years. For example, the US inflation rate is determined by measuring the current Consumer Price Index against those of its base year, 1967.

See: Consumer Price Index; Inflation Rate; Producer Price Index

Form BD
Document that broker-dealers must file and keep current with the SEC. It provides details about the firm's principals and officers, net capital compliance, and financial statements.

See: Broker-Dealer; Financial Statement; Principal

Bear
Investor who believes an individual security, an industry segment, or the overall market will decline.

See: Bear Market; Bull

Bearer Bond
A security, usually a bond, that does not have the owner's name registered on the books of the issuer or on the certificate. Interest and principal, when due, are payable to the person in possession of the bond. The holder sends in or presents a coupon for payment. Most securities issued today are in registered form.

See: Bond; Certificate; Principal; Registered Security

Bear Hug
Takeover bid so attractive that the target company's directors, who might be adverse to it for other reasons, must approve it or risk shareholder protest.

See: Takeover; Target Company

Bear Market
A prolonged decline in stock prices that may occur for months or years. A bear market in bonds is usually caused by rising interest rates while a bear market in stocks is usually caused by investors who expect economic activity to decline.

See: Bear; Bear Market Strategies; Bull Market; Economic Growth Rate

Bear Market Strategies
Some common strategies are: Buying Contramarket Stock, Buying Put Options, Writing Call Options, Short Selling

See: Bear Spread; Call Option; Put Option; Selling Short

Bear Spread
An option strategy wherein the investor profits when the underlying security's price declines. (Vs. Bull Spread).

See: Bear; Bear Market Strategies; Bull Spread; Option Spread; Spread Position; Underlying Security

Bell
Signal indicating that trading on major exchanges has either opened or closed.

Bellwether Security
A security that is perceived as an indicator of a market's direction. IBM, for example, is considered a bellwether stock. The 20-year US Treasury bond is considered a bellwether bond because it represents the direction in which all other bonds are likely to move.

Below Par

See: Par

Beneficial Owner
The person(s) entitled to the benefits of ownership even though another party such as a broker or bank--the nominal owner--actually has possession and title to the security.

See: Nominee; Street Name