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