Descriptionary

freeriding the buying and selling of securities quickly on margin and without paying any cash, a violation of fair credit use.

friendly takeover a takeover of one company by another that is welcome and unopposed.

front-end load a sales charge paid when mutual fund shares are purchased.

fungible securities, bearer instruments, or commod­ities that are interchangeable in value.

futures commodities such as metals, grains, foods.

futures market a commodity exchange, such as the New York Coffee, Sugar and Cocoa Exchange or the Minneapolis Grain Exchange.

gilt-edged security any high-quality stock or bond.

Ginnie Mae nickname for the Government National Mortgage Association (GNMA) and the securities it guarantees.

going public the process of a private company offer­ing shares to the public and subsequently becoming a publicly held company.

gold bond a bond through which interest is paid according to the price of gold.

goldbug an analyst or investor who specializes in gold.

graveyard market a bear market.

greenmail a payment made by a company takeover candidate to the potential acquiring company to pre­vent the takeover, a form of legal blackmail.

gun jumping trading securities on information that has not yet reached the public.

hard money strong, secure currency of an economi­cally stable country. Also, gold.

hedge any means of protecting one's investments against losses.

hemline theory the theory that stock prices rise and fall with the hemlines of women's dresses and skirts.

homerun a highly profitable gain in a stock in a brief period of time.

hot issue a newly issued stock that proves extremely popular with investors.

hung up of a stock or bond that has dropped below its purchase price, that cannot be sold with­out a loss.

in-and-out trader a trader who takes advantage of sharp price movements by buying and then reselling a security in the same day.

Individual Retirement Account (IRA) a plan that allows a taxpayer to put away $2,000 of income per year tax-deferred until withdrawal at retirement.

inside information privileged information concern­ing a corporation that has not been made public and is therefore illegal to trade on.

insider in a corporation, one who is privy to such information as an impending takeover attempt, a future earnings report, or other development affecting stock prices. Insiders would include top executives, directors, and large shareholders.

institutional investor banks, insurance companies, mutual funds, and others who trade in large blocks of securities.

IPO initial public offering. A company's first sale of stock to the public.

IRA see Individual Retirement Account.

junk bond a high-risk, high-yield bond with a credit rating of BB or less, often used to finance takeovers.

Keogh plan a retirement plan in which a self- employed person can put away up to 20 percent of earnings and deduct them from his income for tax deferral.

killer bees law firms, PR firms, investment bankers, and others involved in warding off a company take­over attempt.

lamb an inexperienced or naive investor.

leg a long-lasting trend in the market. A trend on its second or third leg is a very long trend.

leveraged buyout the takeover of a company with the use of borrowed money.

leveraged stock a stock bought with credit.

liquidity the ease or speed with which an invest­ment can be converted into cash.

load a mutual fund sales or service charge.

long of an investment posture, holding on to securi­ties in the belief they will rise in value.

long bond a bond that takes more than 10 years to mature.

manipulation the buying and selling of large blocks of securities to give the illusion of activity and to influence other investors into buying or selling.

margin the amount of money an investor must have on deposit with a broker in order to purchase securi­ties on credit, specifically at least 50 percent of the purchase price.

margin account an account held by a broker, which allows a client to buy securities on credit.

melon slang for a large dividend.

meltdown the stock market crash of October 1987.

money market fund a mutual fund that invests in short-term corporate and government debt.

mortgage-backed security a residential mortgage loan, purchased from banks and mortgage companies in large bundles or pools, either by a government institution or a private investment firm and converted into security based on the collective principal and interest payments to be made by borrowers.

municipal bond a bond issued by a state or local government agency to finance a large project.