Glossary

American Depository Receipt (ADR)
Issued by a U.S. bank, the receipt is title to a specified number of shares of a foreign security. The actual shares are held in the foreign country.

American Stock Exchange
The Amex, originally called the Curb Exchange, is in New York City. More than 700 small- to medium-size companies list on the Amex, with a heavy weighting to oil and oil-service companies.

Annual report
Corporate document issued each year to detail a company's financial results, its recent past and its outlook.

Assets
All the things a company owns or is due. They can range from buildings to bills owed the company.

Bear
One who believes the outlook for a particular market or stock is down and invests accordingly.

Beta
A measure of a security price's movement vs. the overall market. The higher the beta, the greater the volatility.

Bid and ask prices
Among less visible, over-the-counter stocks, a bid price and an ask price commonly have been listed instead of a "last" price. The bid is the highest price one would pay for a stock; the ask is the lowest one would accept to sell a stock.

Big Board
Nickname for the New York Stock Exchange.

Blue chip
The stocks of larger, historically solid companies. Many such as IBM, AT&T and Boeing are among the 30 stocks used in the Dow Jones industrial average.

Book value per share
The net worth, or net assets, of a company divided by the common shares outstanding. Known as a company's liquidation value.

Bull
One who believes a particular market or stock is headed higher and invests accordingly.

Capital
Money invested to start or expand a company.

CEO's compensation
Total compensation includes salary, bonuses, stock awards, other incentive pay, stock options exercised and the value of miscellaneous perks such as life insurance and health-club memberships. The figure can fluctuate greatly year to year, mostly due to the varying value of stock options exercised. Information is taken from company reports filed with the Securities and Exchange Commission and almost always cites data from fiscal year 1998.

Closely held
A company owned by a limited number of shareholders and whose stock is not generally available to outsiders.

Closing price
A stock's final trade of the day.

Common stock
A class of capital stock offering a percentage of ownership to the company.

Day trading
Buying and selling positions within one day, now frequently done at computer-equipped sites.

Dividend
A payment of cash or additional stock to shareholders as approved by the board of directors. Preferred shares usually have dividends that do not change.

Dow Jones industrial average
a composite index of stock prices representing 30 of the nation's biggest companies.

Earnings
Also known as profit, what a company makes over a period of time.

Equity
1. Another term for stock. 2. Stockholders' contributions to a company, coupled with retained earnings.

Fiscal year
A company's 12-month accounting period, which could differ from the calendar year.

Float
The part of a company's outstanding shares held by the investing public, not by insiders.

Fully diluted profit per share
Profit attributable to each common share of stock if all convertible securities were changed to common stock.

Institution
A large organization, such as a pension or mutual fund. Institutions account for most trading volume.

Initial public offering (IPO)
The first offering of a company's stock to the public.

Leverage
Using capital to enhance the rate of return. Buying stocks with borrowed money (on margin, as it is called) is an example. As leverage enhances potential return, so does it enhance the level of risk.

Long-term debt
Money owed, minus obligations due within one year.

Margin
1. Money deposited as credit toward the purchase of securities. 2. The amount of equity in one's account.

Market maker
A securities firm that buys and sells for its own account, hoping to profit through quick turnarounds. Specialists on exchanges and over-the-counter dealers are market makers.

Market value or market capitalization
Total value of a company, determined by number of shares outstanding times the stock price.

National Association of Securities Dealers (NASD)
Independent association charged with regulating over-the-counter securities and dealers.

Nasdaq National Market System
National Association of Securities Dealers Automated Quotations, a computerized national trading system for more than 4,000 issues.

Nasdaq SmallCap Market
About 2,000 stocks subject to real-time pricing but too small for the Nasdaq National Market System.

New York Stock Exchange
Founded in 1792, NYSE lists more than 2,900 stocks, the world's most prestigious stock exchange. Stringent listing requirements limit entry.

OTC Bulletin Board
An electronic display of quotes of over-the-counter stocks not eligible for the Nasdaq National Market System or SmallCap listings.

Penny stock
Low-priced, often speculative issues. Generally reserved for stocks priced less than $1.

Point
In stock listings, $1.

Portfolio
All the issues held by one investor or institution.

Preferred stock
A unit of corporate ownership, usually with fixed dividends. Such issues precede common shares if a company liquidates.

Price-to-earnings ratio
On a per-share basis, the price of a stock divided by the most recent 12 months' profit. A popular measure of comparing one stock to another.

Price-to-sales ratio
PSRs measure the froth in a stock. They are derived by dividing a company's market value (total number of shares outstanding times stock price) by a company's annual sales.

Privately held
A company whose shares are not offered publicly.

Profit
Also called net income or net earnings. It is what's left after deducting all expenses from sales and/or other revenues.

Publicly held
Companies whose shares are held widely, and can be freely transferred.

Return on equity
Profit divided by shareholder equity, or investment. Considered by some the best financial ratio for determining how well stockholders are being served.

Revenue
Sales of a company. Companies also incorporate interest and dividend income, and grant and contract money.

Score
This is the point total a company receives based on two-year return on average shareholder equity, the biggest factor, plus two-year growth in market value, sales and employees. A Seattle Times propriety weighting system is then applied to arrive at the final figure.

Securities
Most commonly means stocks or bonds, but they can be any financial investment.

Securities and Exchange Commission
Federal regulator of securities.

Short sale
Selling a stock you borrow from a broker. You expect to profit by buying the stock at a lower price later.

Stock
A unit of corporate ownership. Types are preferred and common, and any number of classes thereof.

Stock split
A distribution of additional shares that makes no value change in a shareholders' ownership of a company. In a common 2-for-1 split, an investor with 100 shares receives 100 more. To account for that, the share price drops in half.

Stock symbol
Assigned letters by which companies are recognized for stock-trading purposes. New York Stock Exchange symbols normally are one, two or three letters; American Stock Exchange symbols are usually three and Nasdaq symbols are usually four.

10-K
Annual report to shareholders containing broad financial details. A company may produce a single 10-K/annual report, or it may issue two documents simultaneously: a glossy report containing highlights and the more detailed 10-K.

Trading halt
Trading suspended to allow a company to disseminate material information to the marketplace.

Underwriter
An investment banker who agrees to purchase securities from an issuer and resell them to investors.

Warrant
The right to buy a security at a specific price within a specific time frame. Warrants are traded like stocks.

Yield
Dividends or interest from a security, expressed as a percent of purchase price or the original issuing price.

Sources: Seattle Times staff; "Wall Street Words," by David Scott; Barron's "Dictionary of Finance and Investment Terms," and "The Nasdaq Handbook," produced by the National Association of Securities Dealers.