- CDOs: Collateralized debt obligation. A very confusing investment product. Basically, it's when someone "tranches" or slices an original pool of mortgage backed securities. So you make a new pool from the existing pool, most likely with the worst / highest risk mortgages.
- NINA: No Income No Job/Asset Loan. A term used in the United States mortgage industry to describe one of many documentation types which lenders may allow when underwriting a mortgage.
- Mutual Funds: An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. - According to Investopedia
- Bonds: A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities. - According to Investopedia
- Morningstar Rating: rating given by analysts of the company Morningstar.
(Definitions from Rule your Freakin Retirement)
- Annuity: the right to reserve amounts of money regularly, and usually in equal installments, over a period of time. Often over the remaining life or lives of one or more beneficiaries.
- Ask: the price at which a seller will sell a stock.
- Bid: the price at which a buyer will buy a stock.
- Call: an option to buy a stock at at future date at a specific price.
- Coupon rate: the annual interest rate of a bond.
- Covered option: a stock call option that you would sell against the underlying security you own.
- Dollar cost averaging: when you buy a stock and it declines in value you buy more at a lower price to average the cost
- ETF: exchange-traded fund that usually tracks a certain sector or country or index in the stock market.
- Extrinsic value: the excess value of an option, over and above the actually underlying equity’s price of value
- Gap down: a significant price move down from the previous day’s close.
- Gap up: a significant price move up from the previous day’s close.
- IPO: initial public offering (first time a company sells a stock to the public)
- Intrinsic value: the real value of an equity or stock versus the strike price of an option
- January Effect: a trend that often occurs at the end of December into the beginning of January whereby stocks that underperformed the market heading into the new year will get bought up by funds, thus driving the prices up abnormally in a short time frame.
- Margin: the capacity to borrow against the securities in your account. Buying on margin means using the shares you hold long as collateral to borrow money to buy more stock.
- Naked option: a call or put option that is sold without the seller holding an underlying security or stock position.
- Option: a contract giving the owner the right but not the obligation to purchase (call) or sell short (put) a stock at a particular price by a specified date.
- Put: an option to sell short a security at a future date at a predetermined price.
- Sell short: to sell a security you do not own in order to make money on a downward price movement.
- Window dressing: a technique whereby fund managers “dress up” their portfolios to make them look better then they actually are by adding outperforming stocks, and subtracting underperforming ones, at the end of each quarters.
