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Stock Market Glossary

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1XRTT: A phase 1 implementation of the 3G standard CDMA2000; phase 2 will be referred to as 3XRTT.

3G: Third generation wireless format, that allows for higher data transmission rates for mobile devices such as cell phones and PDAs.

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Accrued Interest: Interest due from last coupon date to present on an interest bearing security. Buyer of security pays the quoted price plus accrued interest.

ADR: American Depositary Receipt. A tool for allowing American investors to buy shares of foreign-based corporations in the U.S. rather than in overseas markets. ADRs are receipts for the shares of a foreign-based corporation held in the vault of a U.S. bank which entitles the shareholders to all dividends and capital gains. ADS (American Depository Share - a term often used interchangeably with ADR) is the share representing the underlying ordinary share which trades in the issuer's home market. Technically, ADS is the instrument which actually trades, while ADR is the certificate that represents a number of ADSs.

Advance-Decline (A/D) Line: is a measurement of market breadth. It is calculated by subtracting the number of stocks that decline in price over a given period (weekly or daily) from the number that advance, and accumulating the differences. When advancing issues outnumber declining issues, the A/D line moves upward. Conversely, if the majority of issues fall in price the line trends downward. The basic calculation should be adjusted slightly to facilitate historical comparability. Each week (assuming a weekly A/D line) divide the difference of advances minus declines by the total number of issues changing in price. For example, if there were 6000 advancers and 4000 decliners the ratio would be (6000-4000)/10,000, or 0.20. Then accumulate the weekly ratio readings. Without this adjustment the A/D line exhibits a bullish bias given the long-term increase in the number of issues traded. When this adjusted A/D line is in a uptrend, the odds are that stocks are in a bull market. If the adjusted A/D line is falling, the likelihood of a major downtrend increases. The A/D line is in an established uptrend when the current weekly figure is above the average A/D line reading of the last 52-weeks. A downtrend is established when the current A/D line reading is below the average A/D line reading of the last 52-wks.

Agencies: Federal agency securities, i.e. FNMA, GNMA.

Amortization: An accounting method that allows a company to write-off intangible rights or assets over the period of their existence.

Annual Report: A firm's annual statement of operating and financial results. It contains an income statement, a balance sheet, a statement of changes in financial position, an auditor's report and a summary of operations.

Arbitrage: The simultaneous purchase and sale of substantially identical assets in order to profit from a price difference between the two assets.

ASIC: Application Specific Integrated Circuit. A chip that is custom designed for a specific application rather than a general-purpose chip such as a microprocessor.

ASP: Application Service Provider, or Average Selling Price.

ATM: Asynchronous Transfer Mode. A data-link layer protocol allowing integration of voice and data with the ability to provide quality-of-service guarantees.

Auto Sales: See release details.

Averaging Down: Buying shares of the same security at successively lower prices in order to reduce the average purchasing price.

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Balance Sheet: The summary of a company's assets, liabilities, and shareholders' equity. Since balance sheets do not list items at their current monetary value, they may overstate or understate the real value of certain corporate assets and liabilities. Also called the statement of financial condition.

Bankers' Acceptance (BA): A bill of exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill.

Basis: The spread between a bond futures price and the cash price of a bond deliverable to the bond futures contract.

Basis Point: One one-hundredth of one percent (1/100 of 1%).

BBK: Bundesbank - the German central bank.

Bear Market: An extended period of general price declines in an individual security or other asset.

Beige Book: A Federal Reserve report on economic conditions released roughly two weeks prior to each FOMC meeting. The report is compiled by the 12 Fed district banks based primarily on anecdotal information. The Fed does not place much emphasis on the Beige Book when making policy decisions; more emphasis is placed on the Blue and Green Books, which are only made available to FOMC members.

Big Board: The New York Stock Exchange.

Bill Pass (or Sale): An outright sale of Treasury Bills by the Federal Reserve to primary dealers. Such an action is used during periods of excess liquidity in the banking system, and allows the Fed to drain reserves from the system.

Block Trade: A trade of 10,000 shares or more.

Blue Chip Stocks: Nationally known companies which usually have large-capitalizations and long records of profitable growth and dividend payments. Examples include General Motors, 3M, Coca Cola, and IBM. Blue chip stocks are generally considered less risky than small-cap companies but have less potential for large short-term gains.

Blue Sky Laws: State regulations covering the offering and sale of securities within state boundaries.

BOC: The Bank of Canada - the Canadian. central bank.

BOE: The Bank of England - the U.K. central bank.

BOJ: The Bank of Japan - the Japanese central bank.

Bond Equivalent Yield: Annual yield on a short term, non-interest bearing security calculated so as to be comparable to yields of interest-bearing securities.

Book-to-Bill Ratio: A measure of sales trends particularly watched in the semiconductor industry. A number over 1.0 indicates an expanding market, while a number below 1.0 indicates a contracting market. A ratio of 1.10 means that for every $100 of products shipped, $110 of new orders was received. However, as with every ratio, it is important to look at the underlying numbers for trends which a ratio might conceal.

Book Value: Book Value is often used as an indicator for selecting undervalued stocks. It is also used to determine the ultimate value of securities in a liquidation. Book value is calculated by the following: Total assets minus intangible assets (goodwill, patents etc) minus any long-term liabilities EQUALS total net assets. This figure, divided by the number of shares of preferred and/or common stock, gives the Net Asset Value - or Book Value - per share of preferred or common stock.

bp: Short for basis point, or 1/100 of a percentage point.

bps: Bits Per Second. The measurement of the speed of data transfer in a communications system.

Breadth of the Market: The percentage of stocks participating in a particular market move. If two thirds of the stocks listed on an exchange rise during a given trading day, it is generally considered good breadth. Analysts look to this as an indicator that the trend is probably more significant and longer-lasting than one with limited breadth.

Breakout: The advance of a stock price above a resistance level, or the fall of a stock price below a support level. If a stock experiences a breakout on heavy volume, it indicates to market technicians that the stock is about to engage in a major price move in the direction of the breakout.

Budget, Monthly Treasury Statement: See release details.

Bull Market: An extended period of generally rising prices in an individual item (a stock), group of items (an industry group), or the market as a whole.

Bunds: German Treasuries.

Business Inventories: See release details.

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Cable: Slang for the British pound/U.S. dollar exchange rate.

CAGR: Compound Annual Growth Rate.

Call Option: An option that permits the owner (option holder) to purchase a specific asset at a predetermined price until a certain date.

Callable Bond: A bond which the issuer may redeem prior to maturity by paying a stated call price.

Capacity Utilization: See release details.

Capitalization: A term usually referring to Market Capitalization which is the value of a company as determined by the most recent stock price multiplied by the number of shares outstanding.

Carry: The interest cost of financing securities in one's possession.

Cash Management Bill: A bill issued occasionally by the Treasury to cover cash needs over a specific, typically brief, time frame.

Cash Flow: Cash flow is an important aspect of a company's performance. It is an analysis of all the changes affecting cash in the categories of operations, investments, and financing. A positive cash flow means that more cash is taken in than is paid out, and the opposite is a negative cash flow. A company might be forced into bankruptcy, even with assets well in excess of liabilities, if it does not have enough cash to meet current obligations.

Cash Market: In the Treasury market, this term refers to trading in Treasuries for immediate delivery, as opposed to the futures market, where securities are traded for future delivery.

CBOE: Chicago Board Options Exchange.

CBT: Chicago Board of Trade.

CDMA: Code Division Multiple Access. A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM (QCOM) that operates in the 800MHz band and 1.9GHz PCS band. wCDMA: Wideband CDMA: a 3G implementation of CDMA. CDMA2000: a 3G implementation which competes with wCDMA and which is favored by QUALCOMM.

CEA: Council of Economic Advisors - a three person panel appointed by the president.

Certificate of Deposit (CD): A time deposit with a specific maturity.

CFRA: Center for Financial Research and Analysis. An independent financial research organization that warns investors and creditors about companies experiencing operational problems, or that employ unusual or aggressive accounting practices.

Chicago Purchasing Managers Index (PMI): See release details.

CLEC: Competitive Local Exchange Carrier.

Comm IC: Communications Integrated Circuit. An ASIC made specifically for the telecommunications equipment or networking industries.

Commercial Paper: An unsecured promissory note with a fixed maturity of 270 days or less.

Common Stock: Often called Capital Stock, it is units of ownership in a public corporation which typically entitles the holder to vote on the selection of directors and receive dividends. In the event of a liquidation, claims of secured and unsecured creditors and bond and preferred stock holders take precedence over common stock holders.

Competitive Bid: Bid submitted at a Treasury auction for a specific amount of securities at a specific price.

Construction Spending: See release details.

Consumer Confidence: See release details.

Consumer Credit: See release details.

Cost of Goods Sold: The expenses directly associated with the production of goods or services the company sells (such as material, labor, and overhead) excluding depreciation, depletion, and amortization.

Coupon: The annual rate of interest on a bond's face value that the issuer must pay to the holder of the bond.

Coupon Pass (or Sale): An outright sale of Treasury Coupons (bonds or notes) by the Federal Reserve to primary dealers. Such an action is used during periods of excess liquidity in the banking system, and allows the Fed to drain reserves from the system.

CPI: Consumer Price Index. See release details.

CPI-Indexed Treasury Notes (or TIPS): Treasury issues which protect the investor from inflation as determined by the CPI.

CRM: Customer Relations Management. Enterprise Resource Planning software that either helps a business manage sales leads, or Internet software that helps a business communicate with potential customers via the net.

Current Yield: A measure of an investor's return on a bond calculated by dividing the annual interest on the bond by the market price. It is the actual income rate or the yield to maturity as opposed to the coupon rate (the two would be the same if a bond was purchased at par). For example, a 10% (coupon rate) bond with a face value (par) of $1000 is bought at a market price of $800. The annual income on the bond is $100, but since $800 was paid for the bond, the current yield is $100 divided by $800 or 12 1/2%.

Curve: See Yield Curve.

Curve Trader: Trader who does arbitrage trades along the yield curve.

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Dealer: A dealer acts as a principal in all transaction, both buying and selling for its own account.

Debt to Asset Ratio: A coverage ratio that measures the amount of debt a company has in relation to its assets. It is calculated by dividing Total Debt by Total Assets. The amount of Debt to Asset may vary from industry to industry and should be compared as such.

Debt to Equity Ratio:A measurement of financial leverage - the use of borrowed money to enhance the return on owner's equity. It is calculated by Long-Term Debt divided by Common Stockholders Equity. The higher the ratio, the greater the leverage.

Depreciation: An accounting method to amortize fixed assets, such as plant and equipment, so as to allocate the cost over their depreciable life. Depreciation reduces taxable income but does not reduce cash. The most common methods are accelerated depreciation and straight-line depreciation.

Derivative: A financial instrument whose value is based on the performance of an underlying financial asset, index, or other investment. For example, as Option is a derivative because its value changes in relation to the performance of an underlying stock.

Devaluation: The lowering of the value of a country's currency relative to gold and/or the currencies of other nations. When a currency is devalued, imported goods become more expensive, while its exports become less expensive.

Discount Basis: Yield basis on which short term securities are quoted. Treasury bills are typically quoted on a discount basis, which understates their return relative to notes and bond.

Discount Rate: The interest rate that the Federal Reserve charges member banks for loans, using government securities as collateral. This provides a floor for interest rates since banks set their loan rates a notch above the discount rate. The discount rate is also used in determining the Present Value of future Cash Flows.

Discount Window: Facility provided by the Fed which enables banks to borrow at the discount rate.

Disintermediation: The placement of funds directly into securities rather than into a bank or thrift (which acts as an intermediary).

Distributed: A Treasury auction is said to be distributed when dealers successfully place the new securities from the auction with retail investors.

Dividends: A distribution of a company's earnings to shareholders prorated by class of security and usually paid in the form of cash or stock. The amount is decided by the Board of Directors and is usually paid quarterly.

Durable Goods Orders: See release details.

Duration: A measure of current maturity of a fixed income security as the weighted average of the time to receipt of the instrument's payments - the weights are the present values of the future payments.

Dutch Auction: Auction in which the lowest price necessary to sell the entire offering is the price at which all securities are sold.

DWDM: Dense Wavelength Division Multiplexing. Technology that uses multiple lasers/transmits several wavelengths of light (lamdas) simultaneously over a single optical fiber. WDM enables the existing fiber infrastructure of the telephone companies and other carriers to be dramatically increased.

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EAI: Enterprise Application Integration

Earnings: A term generalized term referring to corporate profits. Profits can be calculated in different ways depending upon the industry and accounting practices. Earnings is one of the frequently used measures of a company's financial condition. It is commonly used to determine the risk/reward profile of a given security - the ratio of stock price to earnings (see P/E Ratio).

Earnings per Share: The dollars of profit generated for each share of common stock. A company that earned $1 million last year and has 1 million shares outstanding would report earnings per share of $1.00. The figure is calculated after paying taxes, preferred shareholders and bond holders.

EBITA: Earnings before interest, taxes, and amortization

EBITDA: Earnings before interest, taxes, depreciation, and amortization

ECB: European Central Bank. The central bank for the European Monetary Union.

EDFA: Erbium Doped Fiber Amplifier. Optical amplifiers made of short lengths of optical fiber doped with the element "erbium."

Effective Date: In the securities industry, it is the date when an offering filed with the Securities and Exchange Commission may commence - usually 20 days after the filing of the registration statement.

ELEC: Ethernet Local Exchange Carriers. Companies that offer broadband data services to businesses using the Ethernet protocol.

Employment Cost Index (or ECI): See release details.

Employment Report: See release details.

EMU: European Monetary Union. A group of eleven European nations which will share a common currency and monetary policy. The initial eleven members are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain.

ERP: Enterprise Resource Planning. An integrated information system that serves all departments within an enterprise. ERP implies the use of packaged software rather than proprietary software written by or for one customer.

EU: European Union. A group of fifteen European nations that cooperate on trade and fiscal policy decisions. The fifteen members are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom.

Euro: The common currency of the European Monetary Union.

Eurodollars: Dollar-denominated deposits in banks outside the United States.

Excess Reserves: Balances held by banks at the Federal Reserve in excess of required balances.

Exercise Price: See Strike Price.

Existing Home Sales: See release details.

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Factory Orders: See release details.

Fannie Mae: (Federal National Mortgage Association) Publicly owned, government-sponsored corporation, established in 1938 to purchase both government-backed and conventional mortgages from lenders and securitize them. Its objective is to increase the affordability of home mortgage funds for low to middle income home buyers. It is the largest source of home mortgage funds in the U.S. and a large issuer of debt securities which are used to finance it activities. Equity shares of Fannie Mae trade on the NYSE.

FASB: Financial Accounting Standards Board.

FDA: Food and Drug Administration.

Federal Funds Rate: The interest rate banks charge on overnight loans to other banks in need of funds in order to meet reserve requirements. The rate is set by the Federal Reserve.

Fixed Exchange Rate: A set rate of exchange between currencies determined by agreement.

Float: The difference between the credits given by the Fed to banks' accounts on checks being cleared through the Fed and debits made to the banks' accounts on the same checks. Increased float (which can occur due to bad weather and transportation problems) adds liquidity to the banking system.

Floating Exchange Rate: Rates determined by the response of the currencies to market forces.

FOMC: Federal Open Market Committee. Comprised of the seven members of the Board of Governors, the President of the NY Fed, and four other Fed district bank presidents on a rotating basis. Meets eight times each year to set monetary policy.

Foreign Exchange Rate: The price at which one currency trades for another.

Foreign Exchange Risk: The risk that a long or short position in a foreign security may be adversely affected by a change in the value of the foreign currency.

Forward Rate: The rate at which forward transactions (a transaction at a future date for a fixed price) are being made.

Free Reserves: Excess reserves less bank borrowings at the Federal Reserve discount window.

FTC: Federal Trade Commission.

Futures Contract: An agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated date. The price is established between the buyer and seller on the floor of an exchange. A contract obligates the buyer to purchase an underlying commodity and the seller to sell it, unless the contract is sold to another before the settlement date. This contrasts with options trading, in which the option buyer may choose whether or not to exercise the option by the exercise date.

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GAAP: Generally Accepting Accounting Procedures.

Gilts: British Treasuries.

Goodwill: In accounting, goodwill is any advantage, such as brand names, that enables a business to earn higher profits than its competitors.

GovPX: A consortium of five inter-dealer Treasury brokers, includes all inter-dealers brokers except Cantor Fitzgerald. GovPX figures for Treasury market volume include transactions that primary dealers execute through the five brokers. Average daily volume is about $200 bln per day in the Treasury market. Of this total, about $80 bln is conducted directly between dealers and customers. Of the remaining $120 bln, about $36 bln goes through Cantor Fitzgerald and $84 bln goes through GovPX brokers on an average day.

Gross Domestic Product (GDP): GDP is the total value of goods and services produced by a nation. See a release details.

Gross Margin: A measure calculated by dividing gross profit (net sales minus cost of goods sold) by net sales.

Gross National Product: GNP is the dollar value of all goods and services produced in a nation's economy, including goods and services produced abroad.

Group of Seven (G-7): The G-7 is an organization of the seven major industrialized nations including the U.S., Canada, Britain, France, Italy, Germany, and Japan.

Group of Eight (G-8): The G-7 plus Russia. Also known as the Political Eight, or P-8.

Growth Stock: Stock of a corporation that has exhibited faster-than-average gains in earnings over the last few years and is expected to continue to show high levels of profit growth. Over the long run, growth stocks tend to outperform slower-growing stocks but they also tend to have higher price/earnings ratios and are consequently, riskier investments.

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Handle: The whole dollar price of a bid or offer, or the whole yield figure of a bid or offer. In other words, the handle on a price of 99-25 is 99 and the handle on a yield of 6.97% is 6.

Hedge Fund: Investment vehicles, much like mutual funds, which are generally structured as partnerships wherein the number of investors is limited and whose general partner has made a substantial personal investment in the fund. The offering memorandum of most Hedge Funds allows them to use a combination of sophisticated investment strategies such as taking both long and short positions, using leverage and derivatives, and investing in many markets. The funds usually require investors to make a large fixed investment ( i.e. $100,000 ) and only allows withdrawals at certain times of the year. Because Hedge Funds move billions of dollars in and out of markets quickly, they can have a significant impact on the day-to-day trading developments in the stock, bond, and futures markets.

Hedging: Hedging is an investment strategy most often used to offset potential risk, although it can be used as a speculative investment in and of itself. Widely used hedging techniques include buying or selling Put or Call Options, Selling Short, and buying or selling the Futures market. (See Options)

Hit: Agreeing to sell at the bid price is also referred to as hitting the bid.

Housing Starts: See release details.

Human Genome Project: A bioinformatics project that has identified the 30,000 genes in human DNA, coordinated by the US Department of Energy and the National Institutes of Health. The purpose is to store the 3 bln chemical base pairs (the DNA sequence) in databases for use in biomedical research.

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ILEC: Incumbent Local Exchange Carrier. ILECs are typically Baby Bells or other incumbents carriers such as GTE.

IMF: International Monetary Fund.

IMM: International Monetary Market futures exchange.

Indexes - Domestic: An Index is a statistical composite that is used to indicate the performance of a market or a market sector over various time periods. The following is a variety of indices that are used to gauge the performance of stocks and other securities in the U.S.

• Amex Index: Composite index of shares listed on the American Stock Exchange.
• Arms Index: Also known as the short-term trading index, is the average volume of declining issues divided by the average volume of advancing issues.
• Dow Jones Industrial Average: The best known of all U.S. stock indices, the Dow as it is often called, contains 30 stocks that trade on the NYSE (New York Stock Exchange) and is a general indicator of how shares of the largest U.S. companies are trading.
• Dow Jones Transportation Average: The DJIA monitors the stock performance of 20 airlines, railroads, and trucking companies.
• Dow Jones Utility Average: The DJUA monitors the stock performance of 15 gas, electric, and power companies.
• Dow Jones Composite Average: Tracks the stock performance of the 65 stocks which comprise the three averages listed above.
• Lehman Brothers Treasury Bond Index: An index of prices of long-term treasury bonds.
• Nasdaq Composite Index: A composite index of more that 3000 companies listed on the Nasdaq (also referred to as over-the-counter or OTC stocks). It is designed to indicate the stock performance of small-cap and technology stocks.
• New York Stock Exchange Composite Index: A composite index of shares listed on the NYSE.
• Russell 2000 Index: A market capitalization weighted index published by Frank Russell of Tacoma Washington, the Russell 2000 is one of the most widely regarded measures of the stock price performance of small companies. It is a part of the Russell 3000 Index consists of the 3000 largest U.S. stocks in terms of market capitalization. The highest-ranking 1000 stocks are in the Russell 1000 Index (which closely mirrors the S&P % Index). The remaining 2000 stocks, the Russell 2000 Index, represent approximately 11% of the Russell 3000 Index's total market capitalization.
• S&P 500 Index: A broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held stocks including industrial, transportation, financial, and utility stocks. The composition of the 500 stocks is flexible and the number of issues in each sector varies over time.
• Value Line Composite Index: An equal-weighted index which averages the price change from the previous day's close in each of the index's approximately 1700 component stocks. Smaller, more volatile stocks have the same impact on the index value as large-cap less volatile stocks, therefore, the index is more sensitive to economic changes than a broad-based index.
• Wilshire 5000 Index: A widely-watched "total market" index that attempts to track the direction of most of the widely-traded shares on U.S. exchanges including small-, mid-, and large-cap issues.

Indexes - International:

• CAC 40: Paris
• DAX 30: Frankfurt
• FT-SE 100: London
• Hang Seng: Hong Kong
• Nikkei 225: Tokyo

Industrial Production: See release details.

Initial Claims: See release details.

Initial Public Offering: Corporations first offering of stock to the public. The share prices of IPOs can fluctuate wildly, with what seems to be little regard for the current value of the underlying company.

Insider Trading: Refers to both the legal trading by corporate officers based on public information and illegal trading by anyone of securities from information not available to the public.

Institutional Investors: Holdings by organization that trade large volumes of securities such as banks, mutual funds, insurance companies, pension funds, college endowment funds, etc.

Interest Rate Swap: A derivative in which a party agrees to pay a fixed interest rate in return for receiving a floating interest rate from another party.

Interest Sensitive Stock: Stock of a company whose earnings change when interest rates move, such as a bank or utility. These stocks tend to go up or down on news of interest rate changes.

International Trade: See release details.

IXC: Interexchange Carrier. Also known as LDs, or long distance companies, these are companies that compete in the long distance voice and data sector, such as AT&T and Sprint.

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JGBs: Japanese government bonds.

Junk Bonds: High risk bonds with low credit ratings.

LAN: Local Area Network.

Leading Indicators: See release details.

Leverage Buyout: The purchase of a company by a small group of investors largely financed by debt. Most often, the target company's assets serve as security for the loans taken out by the acquiring firm, which repays the loan out of cash flow of the acquired company. When a company that has gone private in a leveraged buyout offers shares to the public again, it is called a Reverse Leveraged Buyout.

LIBOR: London Interbank Offered Rate - rate that the most creditworthy international banks dealing in Eurodollars charge each other for large loans. It is usually a basis for other large Eurodollar loans to less creditworthy corporate and government borrowers. For example, a Third World country may have to pay a point over LIBOR when it borrows money.

LIFFE: London International Financial Futures Exchange.

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MAN: Metropolitan Area Network.

Margin Account: A brokerage account allowing customers to buy securities with money borrowed from the brokerage firm. Margin accounts are governed by Regulation T, the NASD, the NYSE, and the firm's house rules. Margin requirements can be met with cash or eligible securities. Under Federal Reserve Board regulation, the initial margin required since 1945 has ranged from 50 to 100 percent of the security's purchase price.

Market Value: For purposes of the securities industry, market value is the current market price of a security - as indicated by the latest trade recorded.

Matched Sales: See reverse repurchase agreement.

MBS: Mortgage Backed Security; such as FNMAs, GNMAs.

MEMS: Micro-electro-mechanical Systems. Mirrors, no larger in diameter than a human hair, which can be arranged on special pivots so that they can be moved in 3 dimensions. Several hundred such mirrors can be placed together on mirror arrays no more than a few centimeters square in size, to form an optical cross connect, or switch.

Michigan, University of, Consumer Sentiment Index: See release details.

MOB Spread: The price spread between the municipal and Treasury bond futures contracts.

MOF: The Ministry of Finance - Japanese equivalent of the Treasury Department.

Momentum Investing: An investment style that is currently popular among investors. It involves targeting companies with rapidly growing earnings - i.e. a history of positive quarterly earning surprises. The strategy inevitably involves buying stocks with extremely high P/E ratios and carries a great deal of risk. Momentum investing is favored by aggressive managers of aggressive growth and capital appreciation mutual funds.

Money Center Bank: The largest U.S. banks (mostly in New York) which play an important role in the markets.

Money Market: Market in which short term debt instruments are traded.

Money Supply:

• M1: Currency + travelers checks + demand deposits + other checkable deposits (NOW accounts).
• M2: M1 + savings deposits + small time deposits + retail money market funds. Also, see release details.
• M3: M2 + large time deposits + institutional money market funds + RPs + Eurodollars

Mortgage Backed Securities: Debt issues backed by a pool of mortgages. Investors receive payments from the interest and principal payment to the underlying mortgages.

Moving Average: A tool used in technical analysis and charts. It is the average prices of securities or commodities constructed over a given period and showing trends for the latest interval. For example, a thirty-day moving average includes yesterday's figures; tomorrow the same average will include today's figures and will no longer show those for the earliest date included in the average. Thus, every day the average includes figures for the latest day and drops figures for the earliest day.

MPLS: Multiprotocol Label Switching. A protocol for the swift routing of data streams, bringing improved performance and quality-of-service options to IP (internet protocol) traffic.

Municipals: Securities issued by state and local governments or their agencies.

Mutual Fund: A fund operated by an investment company that pools money from shareholders and invests in various instruments such as stocks, bonds, options, futures, currencies, or money market securities. Mutual funds vary in their focus - some invest solely in foreign securities, some target capital appreciation, while others invest to generate income. Investors in mutual funds can more easily diversify their holdings and take advantage of a professional management team . Investors can expect to pay management fees for the service.

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NAPM: National Association of Purchasing Managers. See release details.

NAS: Network Attached Storage.

NASDAQ: National Association of Securities Dealers Automated Quotations. The Nasdaq National Market is comprised of over 3,000 companies whose shares trade via a computerized system that provides brokers and dealers with price quotes. While companies have to meet certain requirements to be listed on the Nasdaq, Nasdaq stocks are usually small-cap companies without long histories of earnings and tend to be more volatile.

Nearby Contract: Futures contract closest to expiration.

Negative Carry: The cost incurred when the cost of carry on a security exceeds the yield of that security.

NAV: Net Asset Value.

New Cash: The amount by which the money being raised at a Treasury auction exceeds the amount of the issues maturing.

New Home Sales: See release details.

New York Stock Exchange: Founded in 1792, the NYSE is the oldest and largest stock exchange in the U.S. The Big Board, as it is known, lists more that 1,600 companies who meet stringent listing requirements. There are 1.366 seats on the NYSE, many of which are owned by partners or officers of securities firms, and which handle trades for the public.

NOB Spread: The price spread between the note and bond futures contracts.

Noncompetitive Bid: A bid submitted at a Treasury auction for a specific amount of securities but at an unspecified price. The buyer agrees to accept the average price of accepted competitive bids.

NYFE: New York Futures Exchange.

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OATs: French Treasuries.

OEM: Original Equipment Manufacturer.

Off-the-run Issue: A Treasury issue other than the "current" issue or on-the-run, which is the most recently issued security for each maturity.

Open Market Operation: One of the three means of conducting Monetary Policy used by the Federal Reserve. It involves the purchase and sale of government securities by the Federal Reserve Bank of New York (as directed by the Federal Open Market Committee) in an effort to regulate the money supply. The actions of the New York Fed effectively alter bank reserves which, in turn, effects the supply of credit . This effect is realized throughout the economy.

Operating Income: Essentially, it is the income derived from a company's regular business, excluding all income or losses from other sources. Operating income is defined as the revenues of a business minus related costs and expenses. It excludes extraordinary items such as, all realized gains and losses on investments or discontinued operations, taxes, prior year adjustments, write-offs of intangibles, bonuses and other profit distributions to employees, sales of divisions, etc.

Options: The right to buy or sell stock at a certain price before a specified date. If the buyer chooses not to exercise the option, the option expires and the option buyer forfeits the money.

Over-the-Counter Stocks: Stocks that are not listed and do not trade on an organized exchange, such as the NYSE or the AMEX. They are usually small-cap companies that do not meet the exchange requirements. Trading procedures are written and enforced by the National Association of Securities Dealers (NASD), a self-regulatory group. Transactions are conducted by phone and computer network which connects dealers and provides quotes. Some large companies (i.e. Intel and Microsoft) have chosen to remain as over-the-counter because they favor the system of multiple trading by many dealers over the centralized exchange system of specialists.

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P2P: Peer to Peer. Technology such as Napster that enables the CPU resources across a network to be shared so that all machines function as one large supercomputer

Par: The nominal or face values of a security. Bonds are issued at and mature at par which is usually $1000 per bond. Prior to maturity, they trade at, above or below par, depending on their coupon rate versus the current level of interest rates. Par value for Common Stocks is set by the issuing company and has no relation to market value. Par value is more important in the case of Preferred Stock, where dividends are often stated as a percentage of the par value of the preferred stock issue.

Pass-through: A mortgage-backed security on which payment of interest and principal on the underlying mortgages is passed through to the bondholder.

Paydown: The amount by which the value of maturing Treasury issues exceeds that of the those sold at auction.

PDA: Personal Digital Assistant, such as a Palm or Handspring device. Also: Prescription Drug Application.

PEG: A valuation measure which compares the P/E ratio of a company to its earnings growth rate (Price/Earnings to Growth, hence PEG). The P/E and earnings growth rates used can be either trailing numbers or forward estimates.

Personal Consumption Expenditures (PCE): See release details.

Personal Income: See release details.

Philadelphia Fed Survey: See release details.

Pink Sheets: The daily sheets that contain the wholesale price quotations for thousands of over-the-counter stocks as listed by dealers who act as market-makers in the individual securities. Pink sheets are published by the National Quotation Bureau for brokers and dealers but not for the general public.

PLD: Programmable Logic Devices.

Positive Carry: The gain resulting from the yield earned on a security less the cost of financing that security.

PPI: Producer Price Index. See release details.

Preferred Shares: A class of stock that normally pays dividends at a fixed rate and carries no voting rights. Preferred shareholders do, however, carry a preference over shareholders of Common Stock in the payment of dividends and liquidation of assets.

Premium: The amount by which the price at which an issue is trading or is auctioned exceeds the par value of the issue.

Present Value: The current value of a future payment given an appropriate interest rate assumption.

Price/Earnings Ratio (P/E): A widely used valuation measure of the relationship between a stock's price and its earnings per share, it is also referred to as Multiple to Earnings or simply, The Multiple. Its formula is: current stock price per share divided by the most current earnings per share. It is an important tool for investors as it indicates how much they are paying for a company's earning power. Stocks with low P/E multiples (those below 20, although relative multiples do vary from industry to industry) tend to be slow growth, steady and perhaps mature companies. Those with higher P/E multiples are usually growth stocks and tend be more risky. Trailing P/E multiples use last year's earnings and the current price.

Price to Book Value: Also called Multiple to Book Value, it is a measure of the relative risk/reward profile of a stock. It is calculated by dividing the latest stock price per share by the most recent per share value of stockholders equity (book value). A company with a stock price of $12 per share and a book value of $6 per share is trading at two times book value. Generally, the higher the multiple to book value, the riskier the stock is , however, it is important to know that multiples vary from industry to industry and should be considered as such.

Prime Rate: The interest rate at which banks lend to their best customers.

Principal: The face amount or par value of a security.

Productivity: See release details.

Pro Forma: The term is Latin for "as a matter of form " and is used on balance sheets and income statements to refer to data that is hypothetical. For example, if company A buys company B mid-year, the year-end financials of Company A might show the current earnings results and the year ago results as Pro Forma - as if the two companies had been merged all along. This gives a more relevant earnings comparison year over year.

Put Option: An option that gives the owner (option holder) the right, but not the obligation, to sell a specific asset at a predetermined price until a certain date. Investors purchase put options in order to take advantage of a decline in the price of the asset.

- R -

R&D: Research and Development.

Ratings: An evaluation of a security's credit-worthiness by Moody's, Standard & Poor's, or other credit rating agencies.

RBA: The Reserve Bank of Australia - the Australian central bank.

Real Interest Rates: Nominal interest rates less the expected rate of inflation.

Refunding: Redemption of securities by funds raised through the sale of a new issue. In the Treasury market, the refunding typically refers to the quarterly auctions at which the Treasury sells 5, 10, and 30-year notes and bonds.

REIT: Real Estate Investment Trust. Publicly traded companies that manage portfolios of real estate to generate profits. The underlying assets are investments in shopping centers, medical facilities, office buildings apartment complexes, hotels, and various other real estate holdings. One type of REIT take equity positions in real estate and distribute the income from rents and capital gains (when properties are sold) to shareholders. Other REITs act as lenders to property developers and pass interest income on to shareholders. A third type of REIT combines equity and mortgage investments. To avoid taxation, REITs must distribute 95% of their taxable income to shareholders annually.

Reopening: The Treasury will occasionally sell more of an existing issue rather than offering a new issue - this practice is referred to as reopening an issue.

Repo or Repurchase Agreement: A holder of securities sells securities to another party with an agreement to repurchase the securities on a set date for a set price. The security seller is essentially borrowing money from the buyer. When the Fed conducts repos or RPs, it is buying securities with an agreement to resell them at a later date. The Fed is thus adding reserves to the banking system temporarily.

Reserve Requirements: The percentage of certain types of deposits which banks are required to hold at the Fed.

Retail: Individual and institutional investors.

Retail Sales: See release details.

Return on Equity (ROE): A measure of return for each dollar of shareholder investment - in essence, it is how effectively the shareholder's investment is being employed. The percentages can be compared year over year and considered relative to industry composites both to reveal trends and a company's position versus its competitors. ROE is calculated by dividing the annual earnings from operations (see Operating Income) by common shareholders equity (total assets minus total liabilities).

Reverse Repurchase Agreement: A repurchase agreement initiated by the lender of funds. In the case of the Fed, it is the opposite - when the Fed does reverse RPS, it is draining reserves from the banking system. This operation is also referred to as matched-sales.

Rights Offering: An offering of common stock to existing shareholders who hold rights which entitle them to purchase the newly issued shares at a discount to the market price.

ROE: Return on Equity.

ROIC: Return on Invested Capital.

Roll Over: Reinvest funds from a maturing issue into a new issue.

RP: See repo/repurchase agreement.

- S -

SAN: Storage Area Network.

SDH: Synchronous Digital Hierarchy. Physical-layer protocol that frames data for fast and reliable transmission over optical fiber. This is the European protocol comparable to the US protocol SONET: Synchronous Optical NETwork.

Selling Short: Selling a security or a futures contract which the seller does not own. It is a strategy used to take advantage of an anticipated decline in price or to protect a long position. In the case of stocks, the seller borrows the stock for delivery, betting that the market price will drop and that the stock can be bought later at a lower price. If a stock is sold short at $20 per share and the price of that stock drops to $15, then the seller can buy the shares at $15, making a profit of $5 per share. Short sellers can face a substantial loss if the stock price rises. They may be forced to buy back the stock at much higher prices then where it was originally sold.

Settlement Date: The date on which a security bought at auction or in the secondary market is delivered in exchange for funds.

Shareholders Equity: Also called Stockholder's Equity and Net Worth, it is Total Assets minus Total Liabilities of a corporation.

Short Coupons: Bonds and notes with short current maturities.

Short Interest:

SKU: Stock Keeping Unit. The number of one specific product available for sale.

SNB: The Swiss National Bank - the Swiss central bank.

SONET: SONET: Synchronous Optical NETwork. Physical-layer protocol that frames data for fast and reliable transmission over optical fiber. This is the US protocol comparable to the European protocol Synchronous Digital Hierarchy

Sovereign Risk: The risks attached to a security when the issuer's country of origin is different from that of the buyer.

Spot Market: Market for immediate delivery rather than future delivery.

Stock Split: Authorized by a company's Board of Directors, splits have the effect of increasing the number of shares outstanding without changing the total market value of the company or diluting a shareholder's percentage stake in the company. The theory behind splits is to lower the stock price so as to make investment in the company available to a broad base on investors. A 2-for-1 split, for example, would give a stockholder of 100 shares trading at $50 per share ownership of 200 shares trading at $25 per share.

Stop-out Price or Rate: The lowest price, or highest yield, at which the Treasury awards a new issue being auctioned.

Strike Price: Exercise price at which the owner of a call option can purchase the underlying stock or the owner of a put option can sell the underlying stock. The strike price is set by the exchange.

Swap: In foreign exchange, buying a currency spot and selling it forward.

Swissy: Slang for the Swiss franc.

- T -

TED Spread: The difference between Treasury bill and Eurodollar futures prices. A widening TED spread is seen as an indication of credit quality concerns in the banking sector.

Tick: A 1/32nd of a point price move in Treasury prices or bond futures prices.

Ticker Symbol: The abbreviation used to identify a company's securities for trading purposes, such as T for AT&T , and HWP for Hewlett Packard.

TIPS: Treasury Inflation Protected Securities, or CPI-Indexed Treasury Notes.

Total Return: Stocks: The annual increase or decrease in the investment including appreciation, dividends, and interest. the value of a security. Bonds: Held to maturity, it is the Yield to Maturity (see Yield to Maturity). Mutual Funds: The net asset value plus any capital gains and income distribution.

Trade Balance: See release details.

Treasury Bills, Notes, Bonds: Negotiable debt obligations of the U.S. government. T BILLS are short-term instruments with maturities of one year or less, issued at a discount from face value. T NOTES are intermediate securities with maturities of 1 to 10 years. T BONDS are long-term debt instruments with maturities of longer than 10 years.

Treasury Budget: See release details of the monthly report.

Triple Witching Hour: Term for the simultaneous expiration each quarter of stock-index futures, options on individual stocks, and stock-index options. The markets tend to be volatile on those days (the third Friday in March, June, September, and December) as there may be massive trades by hedge strategists, arbitrageurs and other investors.

Truck Sales: See Auto Sales.

TT&L Account: A Treasury tax and loan account at a bank.

- U - V -

Undervalued Security: A stock selling below its liquidation value or below the market value that analysts believe it deserves. Undervalued stocks are sought after for investment before the stock price rises and they become fully valued. Undervalued companies are often the target of take over attempts.

Vehicle Sales: See Auto Sales.

Visible Supply: New municipal issues scheduled to come to market in the next 30 days.

Volume: In the case of the exchanges, it is the total number of stock shares listed on a particular exchange that traded. It is usually measured on a daily basis. The volume of a particular stock, it is the number of shares of that security which traded on a given day.

VPN: Virtual Private Network.

- W - X - Y - Z -

WAN: Wide Area Network.

WAP: Wireless Access Protocol.

When-issued or wi: There is a lag between when a Treasury security is announced for sale and when it is actually issued. During this period, the security trades on a when-issued or w.i. basis, meaning that it trades as if it were issued.

Wholesale Trade: See release details.

WTO: World Trade Organization.

Yankee Bond: A foreign bond issued in the U.S. market and payable in dollars.

Yield Curve: A graph plotting the yields of all bonds of the same quality with maturities ranging from the shortest to the longest available. The resulting curve shows if short-term interest rates are higher or lower than long-term rates. It is used as a tool by analysts to help determine the direction of interest rates. A flat Yield Curve results when there is little difference between short-term and long-term rates. When short-term rates are lower than long-term rates, it is called a positive Yield Curve. Conversely, it is called a negative Yield Curve if short-term rates are higher than long-term rates.

Yield to Maturity (YTM) : The rate of return yielded by a debt security that is held to maturity when both interest payments and the investor's capital gain or loss on the security are taken into account.