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with earnings tax-deferred until withdrawals begin at age 59 1/2 or later (or earlier, with a 10 percent penalty). |
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initial public offering (IPO) A company's first sale of stock to the public. |
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inside day A day in which the total range of prices falls between the range of prices of the prior day. |
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inside market The highest bid and the lowest ask prices made by Nasdaq market makers. |
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institutional investor Entity with large amounts to invest, such as investment companies, mutual funds, brokerages, insurance companies, pension funds, investment banks, and endowment funds. Institutional investors are constricted by fewer protective regulations because the SEC assumes they are more knowledgeable and better able to protect themselves. |
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Institutional Networks Corporation (Instinet) A computerized service that allows subscribers to display bid and ask quotes, and to execute transactions in the Fourth Market, bypassing brokers entirely. |
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investing Refers to a "buy and hold" strategy that many people follow. If you are in and out of positions frequently, or if you are willing to go both long and short, then you are trading, not investing. |
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January effect The tendency for securities prices to recover in January after tax-related selling is completed before year-end. |
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level I A computer subscription service that provides the highest and lowest price offers of securities traded through the Nasdaq. |
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level II A computer subscription service that provides the names of market makers and their bids and offers on securities traded through the Nasdaq. |
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level III A computer subscription service, available only to registered market makers, that allows market makers to revise their bids and offers on securities traded through the Nasdaq. |
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liquidity The ease and availability of trading in a particular stock. When the volume of trading is high, there usually is a lot of liquidity. |
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listed Instruments traded on a major exchange (NYSE or AMEX), as opposed to Nasdaq or over-the-counter. |
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long Owning a tradeable item in anticipation of a future price increase. Also see selling short. |
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long bond The 30-year U. S. Treasury bond. The most widely-traded bond and the benchmark against which all other bonds are measured. |
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loss A reduction in the value of an investment. |
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margin In stock trading, an account in which purchases of stock may be financed with borrowed money. |
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margin call A call from a broker to a customer demanding the deposit of cash or marginable securities to satisfy the SEC Regulation T requirements and the house maintenance requirement for the purchase or short sale of securities, or to cover adverse price movement. |
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