RES 97031 - Laserfiche WebLink

Glossary Asked: The price at which securities are offered for sale by prospective sellers. Bankers' Acceptance (BA): Usually a 3 or 6 month investment where the investor has an interest in the import/export of intern_ational trade merchandise backed by a bank. There has never been a default in the history of this investment primarily because the investment is backed by the bank and the actual goods being transported. Bid: The price offered for securities by prospective buyers. Broker: A broker brings buyers and sellers together for a commission paid by the initiator of the transaction or by both sides. Collateral: Securities pledged by financial institutions to secure CDs over $100,000. The first $100,000 is federally insured and the excess is collaterized. In the event of bank default, the depositor would have legal claim to the pledged securities. Certificate of Deposit (CD): Time deposit with a certificate specifying the amount, maturity date, rate of interest, etc. Coupon: The coupon rate is the interest rate at date of issuance on a security and is the rate paid over the life of the investment. At time of purchase/sale the market rate is compared to coupon and a premium (market rate is lower than coupon rate) or discount (market rate is higher than coupon) is added to the face value. Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. Discount Securities: Securities sold at a discount or less than face value. The security is redeemed at full face value upon maturity. Discount securities are usually short-term with maturities less than one year. Diversification: Dividing investment funds among various types of securities to mitigate risk. Concept of "not putting all your eggs in one basket." (fgloss.sy2) 1