Terms and Definitions
American Depositary Receipt (ADR)
is a negotiable certificate issued by a U.S. bank representing a specific number of shares of a foreign stock traded on a U.S. stock exchange. ADRs make it easier for Americans to invest in foreign companies, due to the widespread availability of dollar-denominated price information, lower transaction costs, and timely dividend distributions.
Call Option
is a short-term contract entitling the purchaser, in return for a premium paid, the right to buy the underlying security at a specified price upon exercise of the option at any time prior to its expiration. Writing a covered call is the selling of a call option for an equity that is currently held in the portfolio. If the underlying security reaches the strike price of the option, the writer of the option is obligated to deliver the number of shares for which the call option is written.
Cash Flow
equals cash receipts minus cash payments over a given period of time.
Debt/Capital Ratio
is a measurement of a company's financial leverage.
Dividend Yield
is calculated by dividing annual dividends per share by the current price per share.
Market Capitalization
represents the total value of a company's outstanding equity securities.
MSCI EAFE Index
is an unmanaged market capitalization-weighted index based on the average weighted performance of widely held common stocks and includes developed markets outside of North America. You can not invest directly in an index.
Price/Earnings (P/E)
refers to the price of a stock divided by its earnings per share.
Price to Book (P/B)
refers to the measurement of a stock's market value to its reported book value.
Russell 2000 Value Index
is an unmanaged capitalization-weighted index based on the average weighted performance of 2000 widely held common stocks. One cannot invest directly in an index.
Russell 2500 Value Index
is an unmanaged capitalization-weighted index based on the average weighted performance of 2500 widely held common stocks. One cannot invest directly in an index.
S&P 500 Index
is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. One cannot invest directly in an index.
Turnover Ratio
is the percentage of a fund's assets that have changed over the course of a given time period, usually a year. Mutual funds with higher turnover ratios tend to have higher expenses.
Convertible Debt
A security which can be exchanged for a specified amount of another, related security, at the option of the issuer and/or the holder.
Warrant
A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame.
Rights
A security giving stockholders entitlement to purchase new shares issued by the corporation at a predetermined price (normally less than the current market price) in proportion to the number of shares already owned.