Glossary - T. Rowe Price
Alphabetical Listing
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Automated Clearing House. A collection of regional electronic interbank networks used to process transactions electronically with a guaranteed one-day bank collection float.


American Depository Receipt. Certificate issued by a U.S. depository bank, which represents foreign shares held by the bank in the country of issue. One ADR may represent a portion of a foreign share, one share, or a bundle of shares of a foreign corporation. Instead of buying shares of foreign-based companies in overseas markets, American citizens can purchase shares in the form of ADRs from domestic broker-dealers. ADRs trade on national Exchanges and are available for hundreds of stocks from numerous countries.


American Stock Exchange. Located in downtown New York City, the AMEX processes the third highest volume of trading in the U.S. The AMEX also houses the trading of options on many NYSE traded stocks, and recently merged with the Nasdaq.

Account Equity

The aggregate value of all holdings in a unique account, minus any pending Debit Balance, plus any pending Credit Balance which may be the result of an unsettled transaction.

Account Type

If a separate account is approved for Margin trading, the cash and margin portion of the account is distinguishable by account type. Within a single approved account, there will be a cash and margin account type.

Accrued Interest

Interest that has accumulated between the most recent payment, and the sale of a bond or other fixed-income security.

Agency Security

Securities issued by federally related institutions and U.S. government-sponsored entities, (GSEs). Such agencies were created to reduce borrowing costs for certain sectors of the economy. Agency securities are backed by the full faith and credit of the U.S. government. Examples include the Federal Home Loan Mortgage Corporation, or Fannie Mae (FNMA), and the Student Loan Marketing Association (SLMA).


A service offered to online investors which provides for either an on-screen or e-mail notification of a predefined price movement parameter, volume parameter, or trade execution.

All or None

An order qualifier employed to mark limit orders to signify that no partial transaction is to be executed. If the order cannot be executed for the entire quantity selected, then no part of the transaction may be filled. The all or none qualifier may be used for order quantities of 200 shares or more, and may be utilized both on orders good for the day or 90 days.


An investment contract typically sold by insurance companies, which guarantees a fixed or variable payment, usually at retirement. In a Fixed Annuity, the amount is paid out in regular installments, and varies only with the payment method elected. For a Variable Annuity, payout is based on a guaranteed number of units, unit values, and payments, dependent on the value of the underlying investments. All capital in an annuity grows tax-deferred.

Ask Price

Price at which a security or commodity is offered for sale on an exchange or in the over-the-counter market. Practically speaking, this is the quoted price at which an investor can buy shares of stock; also called the Offer Price.


Accounting term frequently employed to define anything having commercial or exchange value that is owned by a business, institution, or individual.

Average Cost

In the context of investing, the average cost of shares of stock or Mutual Funds bought at different prices.

Back-End Load

The sales charge assessed at full or partial liquidation of an investment, typically applicable to a Mutual Fund transaction.

Balanced Fund

An investment company or Mutual Fund which invests in a mix of stocks and bonds.

Basis Point

In the bond market, a basis point is the smallest measure used for quoting yields on bills, notes, and bonds. Each percentage point of yield in a bond equals 100 basis points. Basis points are also used in interest rate calculations.

Basket Trading

An order requiring that multiple trades are executed in a large number of different stocks, as near the same time as possible. A basket trade is very similar to a Block Trade.

Bear Market

A market condition exhibited by a prolonged period of declining price movement. For stocks, an overall drop of 20% or more defines a bear market.

Below Par

Pertaining to bond prices, a bond trading below par is trading below its nominal value, or face value.


Term used to refer to individuals who receive the benefits of a trust, are recipients of proceeds of a life insurance policy, or inherit assets from a benefactor. Retirement and TOD accounts allow for owners to name beneficiaries.

Bid Price

The price a potential buyer is willing to pay for a security. In a stock quote, for example, there is a bid/ask spread which, is the difference between what buyers are willing to pay and what sellers are asking. A rule of thumb is that if you are selling a stock, you will generally receive the current bid price.

Big Board

Common popular nickname for the New York Stock Exchange (NYSE), located on Wall Street in New York City.

Block Trade

A large quantity of stocks or bonds held or traded as a single order, typically defined by the NYSE as 10,000 shares or more of stock, or $200,000 or more worth of bonds.


Debt securities issued by the federal government, state governments, or corporations, with maturities of 10 years or more from the date of issuance. Bonds pay interest every six months, and the principal is returned to the holder at maturity.


System in which securities are not represented by paper certificates. This is increasingly popular because it reduces paperwork for brokerage firms, and eliminates the requirement that investors must safeguard a certificate. Already in place for Municipal Bonds, this practice allows for transactions to be recorded on customer accounts, but does not require the issuance of an actual certificate.


When the total dollar amount of aggregate mutual fund purchases reaches a specified level, called a breakpoint, the purchaser is entitled to pay a smaller front-end sales load. For example, a purchase of $49,500 in Mutual Fund shares may be charged a front-end sales load of 5.75% or $2,846.25, while a purchase of $50,000 in fund shares might be charged a sales load of 4.50% or $2,250. In this example, by choosing to invest $500 more in funds, an investor would have $596.25 more invested in fund assets. Typically, there are several breakpoints, and the more an investor purchases to reach each of these thresholds, the greater the reduction in the sales load.

Broker Call Rate

The interest rate at which brokers borrow from banks to cover their securities positions for their clients. Margin loan rates are often expressed as a percentage above Broker Call. The rate is typically a percentage point above short-term interest rates such as the Fed Fund and Treasury Bill rates. The term Call Loan Rate is also used, particularly in published money rate tables.

Bull Market

Investment environment in which prices are in an upward trend. Typically defined as a period of at least a few months where stock or bond prices are on the rise, and overall volumes are higher than usual.

Bulletin-Board Securities

Primarily stocks that trade on the over-the-counter Bulletin Board. The OTC Bulletin Board« (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equity securities. An OTC equity security generally is any equity that is not listed or traded on Nasdaq or a national securities exchange. OTCBB securities include national, regional, and foreign equity issues, warrants, units, American Depository Receipts (ADRs), and Direct Participation Programs (DPP).

Buy Order

An order (market, limit, stop, or stop limit) to purchase a security or take a long position.

Buy to Close

Primarily refers to an option order to purchase or buy back an existing covered or uncovered short position in an option contract.

Buy to Cover

An order to buy back a previously established short position.

Buy to Open

Refers to an option order to purchase or initiate a long position in an option contract.

Buying Power

Also referred to as Purchasing Power, buying power is the amount of money available to buy securities, determined by tabulating the cash held in a brokerage account, and adding the amount that could be spent if securities were margined to the limit. Primarily used in the context of a margin account, it is the amount of credit available to a customer for the purchase of additional securities, determined by the dollar amount of securities which can be margined.


Chicago Board Options Exchange. Created in the early 1970s for the public trading of standardized options contracts, activity on the CBOE is regulated by the SEC. Securities traded on the CBOE include stock options, foreign currency options, and index options.


Certificate of Deposit. An investment certificate issued by a bank to indicate a specific sum is on deposit. CDs generally have maturity dates of up to five years, a specified interest rate, and can be issued in any denomination.


A provision of a bond indenture, which obliges the issuer the right to redeem an outstanding bond prior to its scheduled maturity. If called, a bond may be redeemed at Par, or at a slight premium to par. It is important to a purchaser to know a bond's call date because it cannot be assumed that interest will be paid on a bond beyond that date.

Call Option

An option contract that gives its holder the right (but not the obligation) to purchase a specified number of shares (usually 100) of the underlying stock at a given strike price, on or before the expiration date of the contract. For investors who think a stock will go up dramatically, the purchase of a call option enables them to make a smaller investment then would typically be required to buy the stock.

Capital Gain

The difference between the purchase price of a security and the price at which it was sold, assuming the difference is positive and the investment gained in value.

Cash Balance

The cash portion of a brokerage account. As opposed to a margin balance, the cash balance typically pertains to debit or credit in a cash account, usually the result of a transaction pending settlement. An account's cash balance can be positive or negative.


Most frequently used in the context of corporate reorganizations, Cash-in-lieu refers to a cash payment made instead of shares, or in conjunction with a stock disbursement. Rather then issue fractional shares, for example, companies may opt to pay cash-in-lieu of shares to complete an allocation.

Clearing Corporations

Organizations affiliated with an Exchange that facilitate the validation, delivery, and settlement of securities transactions.

Closing Transation

Pertaining to derivatives (options), a closing transaction is a purchase or sale that eliminates an existing position (selling a long option or buying back a short option to close).


The fee paid to a broker to execute a trade. Traditionally based on the dollar amount of a transaction, the number of shares, or both; however, since regulation ended in 1975, brokers have complete discretion to determine and publish a schedule of commissions charged for all transaction types.

Common Stock

Securities that represent equity ownership in a company. Owners of common stock have the right to vote on such matters as the election of directors, and are entitled to share in the company's profits via dividend payments or the capital appreciation of the security.

Corporate Bond

A debt instrument issued by a corporation, in contrast to that issued by a government agency or municipality. Corporate Bonds typically have a par value of $1,000.00, are taxable, and have specified term maturities. They trade on major exchanges or via the over-the-counter market.

Cost Basis

In the context of investing, cost basis is the original price, or average price paid for an asset, used to determine the profit/loss, or capital gain.

Covered Calls

An option position in which the writer owns the representative number of shares of the underlying stock. Covered calls are frequently employed to hedge a long stock position, and limit the risk the writer takes because the stock does not have to be bought at the market price if the holder of that option decides to Exercise it.

Covering a Short Position

The purchase of stock or option contracts to cover a previously established Short position.

Credit Balance

In general, any account balance in a customer's favor is considered a credit balance. Specifically, a credit balance in a brokerage account represents the proceeds from the sale of a long position after the debit or initial obligation has been satisfied.

Custodial Account

An account created for a minor by a custodian who is responsible for making securities transactions and managing cash or other property gifted to the minor, under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA). When the minor reaches the age or majority, he or she has full discretion over the account, unless the account is set up in a trust controlled by the parent.


Bank or other financial institution that retains custody of certificates and other assets of a Mutual Fund, individual, or corporate client.

Day Order

An order to buy or sell a security that, if not canceled or executed, is good for the duration of one business day only. Market orders are by definition day orders, and generally if another time in force qualifier is not specified, then day is the Time-in-Force default. Day orders submitted on weekends or market holidays are good for the following business day only.


The purchase and subsequent sale of the same position on the same trading day. There are specific guidelines that address prohibitions and requirements relative to the practice of day-trading. For additional information, please click on Margin Guidelines and Disclosure.

Debit Balance

The amount owed to a brokerage firm by a Margin customer for loans used to buy securities. Interest is generally paid to the broker on the outstanding balance, typically determined by the size of the debit.


A specific class of investment vehicles, typically contracts, whose value is based on or "derived" from another underlying security, usually a stock or bond. Examples of derivative investments are Options and Futures.


The predetermined distribution of earnings to equity shareholders, as determined by security class (common, preferred). Dividends may be paid in the form of cash, stock, or (rarely) corporate products or property, and are typically paid quarterly.

Dividend Reinvestment

The automatic reinvestment of shareholder dividends in more shares of the company's stock, often without commission. Dividend Reinvestment Plans, or DRPS, allow shareholders to accumulate stock over the long term using dollar cost averaging. Each time a dividend is paid, the dividend amount is used to purchase more shares, usually at the market price, but sometimes at a discounted price.

Do Not Reduce

An order qualifier which may be employed on Buy Limit or Sell Stop orders to provide standing instruction not to reduce the order price by the amount of the company's dividend payment. Unless specified as Do Not Reduce, open Buy Limit or Sell Stop orders are automatically reduced by the amount of the dividend payment.

Dollar Cost Averaging

The practice of buying the same dollar amount of a security at regularly scheduled intervals. Dollar cost averaging facilitates the purchase of different quantities of an underlying security at set intervals, so that the overall cost is lower then if a constant number of shares were bought at set intervals.

Duplicate Order

An order submitted in an account for which other orders exist for the same security. Also know as dupe order or poss dupe (possible duplicate).

Earnings Per Share

Defined as a company's profit divided by the number of shares outstanding, or a portion of the company's profit allocated to each outstanding share of common stock. For example, a corporation that earned $10 million last year and has 10 million shares outstanding would report earnings of $1.00 per share.


The ownership interest in a company or property is defined as equity. For example, Stock is considered equity, while bonds are debt instruments. In the context of a brokerage account, however, equity is also defined as the portfolio value of the account minus any debit balance. In that context there is no distinction in asset class.


The interval between an announcement of a dividend and the actual Pay Date. An investor who purchases a stock during this period is not entitled to the dividend. Intrinsically, a stock price moves up by the dollar amount of the dividend as the ex-dividend date approaches, and declines by that amount on paydate. The ex-dividend date occurs typically three weeks before the dividend is paid to shareholders of record. Shares listed on the NYSE go ex-dividend four business days prior to Record Date, a rule generally followed by the other exchanges.


A central location where security or futures trading takes place. For example, the NYSE and AMEX are the largest centralized exchanges in the United States. An exchange also refers to an offer by a corporation to exchange one security for another. A company in financial distress, for example, may want its bondholders to exchange bonds for common stock to reduce debt obligation. In the context of a Mutual Fund transaction, an exchange is a transaction whereby shares of one fund are switched for those of another, usually within the same fund family.

Exchange Call

Type of margin call, which requires customers to deposit sufficient funds or securities to a margin account, due to exchange-specific requirements. See also House Call.


In the context of investing, to exercise is to make use of a right available in a contract. For option traders, for example, the buyer of a call contract may exercise the right to purchase the underlying shares at a particular price. A put buyer's right is exercised when the underlying shares are sold at the previously agreed upon price.

Exercise Price

In the context of option trading, the exercise price is the price per share at which the underlying stock may be purchased (call option) or sold (put option) over a specified period. Also know as the Strike Price.

Extended Quote

Securities quote in which additional, expanded information is provided. Including Earnings Per Share, Dividend amounts, and Open Interest.

Face Value

Related to bonds, and also know as Par Value, it is the amount the issuer is obligated to pay at maturity.

Federal Funds Rate

The interest rate charged by banks with excess reserves to other banks for overnight loans. The Fed Funds Rate is the most sensitive indicator of interest rates, since it is set daily.

Federal Reserve

System established to regulate the U.S. monetary policy and banking system. All national and state banks are part of this system, which serves to regulate money supply and set requirements for member banks. The Federal Reserve also supervises the printing of currency, acts as a clearinghouse for fund transfers, and performs periodic examinations of banks to ensure compliance with federal banking regulations.

Fill or Kill Order

A qualifier employed on a market or limit order, which specifies that the order must be executed immediately in its entirety, or canceled entirely. This qualifier is not allowed on orders entered via the T. Rowe Price Account Access system. However it may be employed on orders placed with a representative.

Financial Industry Regulatory Authority

As the largest non-governmental regulator for all securities firms doing business in the United States, the primary role of FINRA is to enforce equitable rules of securities trading, standardize industry practices, and provide a representative body to consult with the government and investors on matters of common interest. FINRA was created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange.

First In - First Out

An accounting term, also know as FIFO, it implies that inventory is assumed to be sold in the chronological order in which it was purchased. In the context of a securities transaction, from a cost basis perspective, FIFO implies that for sales of multiple lots, transactions are assumed to be first in-first out. The IRS assumes this method unless it is advised of the application of an alternative method.

Fixed Annuity

An investment contract typically sold by insurance companies, which guarantees a fixed payment, usually at retirement. In a fixed annuity, the amount is paid out in regular installments, and varies only with the payment method elected. The investor takes both the investment and mortality risks in a fixed annuity, and capital grows tax deferred.

Fixed-Income Investment

A security which pays a fixed rate of return. This term usually refers to government, corporate, and municipal bonds, which pay a fixed interest rate until maturity. Preferred Stock is also considered a fixed-income investment, because it generally pays a fixed dividend.


A trading violation resulting from the purchase of a security in a Cash Account and subsequent sale of the security without making payment on the full purchase price by Settlement Date. This practice constitutes unauthorized borrowing to pay for a trade.

Front-End Load

The sale charge assessed at the time of the initial purchase of an investment, typically on Mutual Fund transactions. Such fees are also common for purchases of an Annuity, life insurance policy, Limited Partnership.


A derivative investment vehicle, in which contracts for future delivery of a commodity or a security are bought or sold.

Ginnie Mae

The nickname for Government National Mortgage Association, or GNMA, a Ginnie Mae pass-through security is backed by a pool of mortgages and guaranteed by the full faith and credit of the U.S. government. For investors, the rate of return on a GNMA pass-through is uncertain. When interest rates fall, principal is repaid faster, since homeowners refinance. When interest rates rise, principal is repaid more slowly, since homeowners hold on to the underlying mortgages.

Good Till Canceled

A brokerage order to buy or sell a security, at a particular price, which remains in effect until executed or canceled. The duration of GTC orders is typically at the discretion of the brokerage firm. T. Rowe Price Brokerage offers GTC orders with a Time-in-Force of 90 days.

Government Bonds

A bond, issued by the U.S. government. Also referred to as Treasury Securities, government bonds include Treasury bonds, T-Bills, and T-Notes, all of varying maturity.

Halted Security

Indicates that trading on a particular security has been suspended. If trading of a security has been halted, orders may be entered, but not executed until the halt has been lifted. Once trading resumes on a halted security, the price may be significantly higher or lower than the most recent trade price.


Denotes the highest price at which a trade occurred on a particular security, for the day or the year

House Call

Notification that equity in a margin account has declined below the maintenance level. If account equity declines below that point, brokerage firms have a responsibility to attempt to contact their customer and request that additional cash or securities be delivered to satisfy the call. If the customer fails to deliver, securities may be liquidated to meet the margin requirement.


Individual retirement account in which all or some of the contribution may be deducted from current taxes, contingent on an individual's adjusted gross income, and/or participation in an employer sponsored retirement plan. Withdrawals from an IRA prior to age 59½ are generally subject to a 10%, of principal penalty.

Immediate or Cancel

Applicable only to Limit Orders on listed stocks, the IOC qualifier implies that an order is to be filled immediately, partially or entirely, or canceled.


Term referring to the condition when an option contract on a stock or index has a market price above the Strike Price for a Call Option or below the strike price for a Put Option.


A statistical composite which measures changes in financial markets. Typically referenced as a benchmark to measure performance of a particular asset class, investment vehicle, or financial sector. Well known indexes include the Dow Jones Industrial, the Standard and Poor's 500, and Nasdaq Composite.

Initial Public Offering

Commonly referred to as an IPO, an initial public offering represents a company's first sale of stock to the public. Investors who purchase IPOs are generally assumed to be accepting of considerable risk in return for the possibility of a sizable gain.

Insider Trading

The practice of buying or selling a company's stock by company management, a member of the board of directors, or a holder of more then 10% of the shares outstanding. While these individuals may trade company stock provided they disclose their activity within 10 days prior to the close of the month in which the activity took place, it is illegal for insiders to trade based on their knowledge of material corporate developments not yet disclosed to the public.


The cost of using money, typically expressed as a rate per period of time, usually one year. In the context of investing, interest most frequently refers to income paid to secure creditors who hold Bond positions.

Intrinsic Value

There are several applicable definitions in the financial vernacular. In the context of financial analysis, intrinsic value is the valuation determined by applying data inputs to a valuation model. In option trading, intrinsic value is the difference between the Strike Price of an option and the market value of the underlying security.

Joint Tenants

Typically know as Joint Tenants with Rights of Survivorship, this is a form of a brokerage or bank account registration whereby two or more people maintain ownership. A characteristic of a joint account is that it is normally agreed that upon the death of one account holder, ownership of the account assets pass to the remaining account holders. See also Tenants in Common.

Journal Funds

Common brokerage term referring to the process of moving money or securities between a cash or margin account, which are typically separate account types within one unique account.

Know Your Customer Rule

The prevailing ethical concept in the securities industry which implies that brokerage firms have a responsibility to obtain financial information about prospective customers in advance of offering any investment recommendation. A part of the NASD's "Rules of Fair Practice", this guideline is also applicable to firms who do not offer specific investment advice, and extends their responsibility to include the process of reviewing accounts for Margin and Option trading approval.


In the context of a securities quotation, the last refers to the price at which the last trade was executed. During market hours, last refers to the most recently executed trade. After market hours, last is the closing price.


Nickname for Long-Term Equity Anticipation Securities, Leaps are equity options traded on a U.S. Exchange, or Over the Counter. Leaps have a term of two to three years, and afford investors a greater window of opportunity for investment strategies to come to fruition.

Letter of Intent

A Letter of Intent, (LOI), is a statement that expresses intent to invest an amount over the breakpoint within a given period of time specified by a Mutual Fund. Many fund companies consider purchases completed within 90 days before, or up to 13 months after the LOI is signed, in determining the dollar amount of the breakpoint threshold.

Level Load

Sales charge, primarily applicable to Mutual Funds, which does not change over time. A level load, usually equivalent to 1% to 2% of fund assets, is typically lower than a front-end or back-end load. However, it may result in a higher charges on funds held for many years.


Accounting term indicating there is a claim on the assets of a company or individual, typically excluding ownership equity.

Limit Order

Order to buy or sell a security at a specific price or better. Limit orders do not guarantee execution, but may be employed to avoid exposure to market fluctuation. A limit Buy Order must execute at or below a prescribed buy limit price, a limit Sell Order at or above the sell limit price. T. Rowe Price Brokerage accepts limit orders with a Time In Force of one day, or Good Till Canceled (for 90 Days).

Long Position

The ownership of a security, established by its purchase in an account. A long position represents an investor's stake in a security.

Long-Term Capital Gain

Realized profit or gain on the sale of a security that has been held for more then one year.

Maintenance Call

The request for additional funds or securities to be deposited into a margin account due to the account equity falling below the requirement of the exchange or brokerage firm.

Margin Account

A brokerage account that allows customers to buy securities with money borrowed from the brokerage firm. Margin accounts are all governed by Regulation T, the NASD, the NYSE, and by individual brokerage house rules. A margin account is also required to trade uncovered options, and sell short. For a complete overview of risks inherent to margin trading, access the Margin Discussion link in the Investor Education section.

Margin Agreement

A firm-specific document detailing rules and guidelines governing a Margin Account. Traditionally, these documents were also referred to as Hypothecation Agreements, and typically provide information pertinent to the amount of equity required in an account and applicable margin loan rates. For additional information, or to download a Margin Application and Agreement, click on the following link(s): Margin Application and Agreement, Margin Guidelines and Disclosure.

Margin Call

The demand that a customer deposit sufficient funds or securities required to bring a margin account up to the initial margin or maintenance call requirement. See also house call.

Mark to Market

Periodic adjustment of the valuation of securities, or a portfolio, to reflect current market values.

Market Hours

Currently 9:30 a.m. ET to 4 p.m. ET, market hours are standard hours of operation for the Exchanges and Nasdaq markets.

Market Maker

Individuals, corporations, partnerships, or groups that establish the bid and ask prices for OTC or Nasdaq traded securities. Market makers generally maintain inventory and manage the purchase and sale of securities to insure they are traded at quoted prices in orderly markets. The specialist serves a similar purpose for securities traded on an exchange.

Market On Close Order

An order to buy or sell a stock or option as near as possible to the time the market closes for the day. This order qualifier does not specify a price, but leaves the investor vulnerable to receive an unknown execution price, at or near the last trade of the day.

Market Order

Order to buy or sell a security at the next best available price. A market order does not guarantee a price, but generally guarantees an immediate execution if placed during Market Hours. Most orders executed on the exchanges are market orders.

Market Value

The current market price of a security or account, as indicated by the lasttrade recorded for all underlying securities.

Money Market Fund

Created in the mid-1970s, money market funds are mutual funds which hold various short term, highly liquid, investments, and seek to maintain a stable $1.00 per share value. Many money market funds are part of a Mutual Fund Family, and while typically not federally insured, are considered safe, secure investments.

Municipal Bonds

Debt obligation issued by a state or local government entity. Also called munis, these investment vehicles are typically issued to fund general governmental needs or special projects, and interest earned is often exempt from federal, state and local taxes.

Mutual Fund

An investment vehicle in which money is pooled from shareholders to invest in a variety of securities such as stocks, bonds, and money market instruments, depending on the individual fund's objective. Mutual funds typically offer investors the advantage of diversification and professional management, and a management fee is charged for these services.

Mutual Fund Family

The array of funds offered by a particular mutual fund company. A fund family will usually offer a broad spectrum of funds with varying objectives and risk.


In the context of a mutual fund price, the net asset value, or NAV is the total value of the assets, including stocks, bonds, and other securities, owned in a fund, less all liabilities, divided by the number of outstanding shares. The NAV does not include sales charges or loads, and is calculated once each day after the close of the market.


New York Stock Exchange. The NYSE is the oldest and largest stock exchange in the United States, located at 11 Wall St. in New York City. Also known as the "Big Board," or "The Exchange," the NYSE is an unincorporated association governed by a board of directors, and headed by a full time chairman. More then 1,600 companies are listed on the NYSE, representing large firms which meet the exchange's uniquely stringent listing requirements.


National Association of Securities Dealers Automated Quotations system, owned and operated by the NASD. The Nasdaq is a computerized system that provides broker-dealers with price quotations for OTC securities, as well as for many NYSE listed securities.

Net Amount

The proceeds or resultant charge for a trade after applicable commission charges or transaction fees.

Next Day Settlement

The standard settlement period for option and transactions is the following business day, as opposed to three business days for stock transactions. Mutual Fund transactions may settle the next day, or in three business days. See also settlement date.

No-Load Fund

A mutual fund for which there is no sales charge to buy or sell. Sometimes however, there may be a transaction fee or short-term redemption fee associated with a no-load Mutual Fundtrade, often contingent on the broker's arrangement with the specific fund family. All mutual funds in the T. Rowe Price fund family are no-load.

Odd Lot

Refers to a securities trade for a quantity of shares less then 100, which is considered a round lot.

Offer Price

The price at which a security is offered for sale, also known as the Ask Price. A rule of thumb is that if you are buying a stock, you will generally receive the current offer price.

Open Interest

In options trading, the total number of option contracts outstanding on a particular underlying security, or on a particular option. Open interest is reported in the newspaper daily or via the extended quote function.

Open Order

A buy or sell order which has not yet been executed. This typically includes limit, stop, or stop Limit orders, which may be good for the day or for 90 days.

Opening Price

The price at which a security starts a trading day. Investors may enter orders after market close to buy at the opening price, which may not be the same price as that previous day's close.

Opening Transaction

In the context of an options trade, an opening transaction is one in which an option position is initially established. This may be the purchase or sale of a call or put to open.


A derivative investment vehicle whereby options contracts permit the owner (depending on the type of option) to buy or sell securities at a specific price, called the strike price, until a specified expiration date. An option to purchase a security is a Call Option. An option to sell a security is a Put Option. The price of the option itself is the premium. To trade options in a T. Rowe Price Brokerage account, customers complete and submit an options agreement for approval. For additional information, or to download an options agreement, click on the following links: Option Agreement, Option Guidelines and Disclosure.

Option Expiration Date

The date an option contract expires, and the last day, or only day, on which an option may be exercised. For stock options, this date is the Saturday immediately following the third Friday of the expiration month. Typically however, most brokerage firms require that customer's notify them earlier, on Friday, if they intend to exercise an option. If Friday is a holiday, the last trading day is the preceding Thursday.

Option Premium

The price of an option contract, or the amount per share paid by an option buyer to a seller for the right to buy or sell the underlying security.


Term referring to the condition when an option contract on a stock or index has a market price below the strike price for a call option or above the strike price for a put option.

Over the Counter - OTC

Referred to as the OTC market, it is the securities market in which transactions are conducted via telephone and computer networks, as opposed to centralized exchange(s). Historically, securities which trade on the OTC market are those of smaller companies who do not meet the stringent listing requirements of the NYSE or AMEX. The rules of the OTC market are written and enforced by the NASD.

P/E Ratio

The price/earnings ratio, or P/E, is determined by dividing the price of a stock by its earnings per share. This ratio, also known as the multiple, provides potential investors with an indication of how much they are paying for a company's earning power. The higher the P/E, the more an investor is paying, which translates to a higher expectation for earnings growth.

Par Value

For common stock, par value is set at the time of issuance, and is defined as the original investment underlying each share, in goods, cash, and services. Recently however, par value has come to be defined as an assigned amount, used to compute the dollar accounting value of the common shares on the company's balance sheet. Par value has no relation to market value, which is determined by market conditions, and investor's expectations. For bonds, par has more importance, as the interest paid is based on a percentage of a bond's par or face value.

Partial Execution

An order which is filled in part, but not in its entirety. In the context of a stock or optiontrade, this practice is employed to avoid a compromise in price, and required if the order does not have an all or none provision.

Partnership Account

Account type whereby ownership is shared between two or more individuals. Liability may be limited to a partner's investment, as in the case with a limited partnership.

Pay Date

The date on which a declared stock dividend or bond interest payment is scheduled to be paid. See also Ex Dividend.


Term often used to sum up all holdings in an account, defined as a collection of investments. The purpose of a balanced portfolio is to reduce risk through diversification.


A position is an investor's stake in a security or market. An account may have long positions, stocks owned outright, or short positions, shares or contracts that are owed to a broker as the result of a short sale.

Preferred Stock

A class of stock that shares characteristics of both common stock and bonds, holders of preferred shares have preference over common stock holders, relative to the payment of dividends and liquidation of assets. Preferred dividends are usually paid at a specified rate, and must be paid prior to a common stock dividend.


In the context of bond pricing, the premium is the amount by which a bond is selling above its face or Par Value. An Option Premium is the price of an option contract, or the amount per share paid by an option buyer to a seller for the right to buy or sell the underlying security. In stock trading, the premium is the charge occasionally paid by the short seller when stock is borrowed to make delivery on a Short Sale.

Prime Rate

The base-lending rate used by banks in pricing commercial loans to creditworthy customers. Determined by the Federal Reserve's decision on raising or lowering short-term borrowing rates, the rate is a key interest rate, and tends to become the standard across the banking industry whose loan rates are often tied to the prime rate.


In the context of bond pricing it represents total face amount. The principal also represents the basic amount invested or gross proceeds of a sale, excluding earnings, fees, or commissions.

Profit Taking

While deflating prices temporarily, profit taking implies an upward market trend, representing action taken by securities traders to cash in on gains earned due to a sharp market rise.


Required reading for mutual fund investors, the prospectus is defined as a formal written offer to sell securities that sets forth the plan for a proposed business enterprise or facts concerning an existing one. A mutual fund prospectus describes the history and background of fund managers, the fund's objectives, financial statements, and other data critical to providing an investor with sufficient information to make a sound investment decision.


A document whose primary purpose is to provide shareholders with sufficient information to vote in an informed manner on issues up for review at a stockholders' meeting. Shareholders often give management their "proxy" to represent them, and vote their shares as specified in the proxy statement.


The same as a buy order, a purchase order is typically used in the context of a mutual fund transaction.

Purchasing Power

In the context of a brokerage margin account, and also referred to as buying power, it is the amount of money available to buy securities determined by tabulating the cash held in a brokerage account, and adding the amount that could be spent if securities were margined to the limit.

Put Contract

An option contract that grants the right to sell at a specified price a specific number of shares by a certain date. Put option buyers pay a premium to obtain this right, and hope the price of the underlying security will fall, while put option sellers grant this right in return for receiving the premium, and hope the price of the underlying security will rise.

Qualified Plan

A tax-deferred plan set up by an employer for its employees. Such plans, including profit sharing and pension plans, typically provide for employer contributions and may allow employee contributions as well.


A notation used to "mark" an order with a specific requirement or criteria. Examples of order qualifiers include all or none and do not reduce.


The numbers of shares in an order to buy or sell, sell short or buy to cover.


A quote is defined as the price at which the last sale and/or purchase of a particular security took place. It typically includes the highest bid price and lowest ask price currently available.

Real-Time Quotes

A Quote which states the most recent trading price of a security. In conjunction with real-time quotes, online brokerage systems may also offer delayed quotes, which are typically delayed approximately 20 minutes. The "freshness" of a quote should always be indicated when the quote is displayed.

Realized Gain/Loss

The actual profit or loss resulting from the disposal of a security or the closing of a position. A Capital Gain may be incurred when a profit is realized.


The same as a sell order, redemption is typically used in the context of a mutual fund transaction.

Registered Representative

A licensed employee of a stockexchange member, or financial services company, who may function as an account executive for clients. To qualify as a registered representative, individuals must pass a series of tests, including the General Securities Examination (GSE) and state securities tests.

Regular Way Settlement

For equity orders, regular way settlement is completion of a securities transaction by the third full business day following the date of the transaction, or the trade date. For Government bond and most mutual fund and option transactions, settlement is the next business day following trade date.

Regulation T

The Federal Reserve Board regulation which covers the extension of credit to customers by securities brokers, Reg-T establishes initial margin requirements, and defines what is an eligible or exempt security.

Repurchase Agreement (Repo)

An agreement between a buyer and seller, usually related to government securities, whereby one party sells a security to another and agrees to repurchase it on a specified date at a specific price.

Reverse Split

A procedure in which a corporation reduces the number of shares outstanding. As opposed to a conventional stock split, though the total number of shares has the same market value immediately after a reverse split, each share is worth more. Companies typically utilize reverse splits in an effort to raise the price of their stock because it's deemed too low to attract potential investors.


An investment vehicle that allows holders of a company's stock to purchase newly issued shares of common stock before it's offered to the general public, at a price below the eventual public offering price.

Rights of Accumulation

A right of accumulation, (ROA), typically gives an investor a discount on Mutual Fund purchases by combining both current and previous fund transactions to reach a breakpoint. For example, if an investor purchases $10,000 of a specific fund today, but previously had invested $40,000, those amounts can be combined to reach a $50,000 breakpoint, which may entitle them to a lower front-end sales load on the $10,000 purchase.

Rollover IRA

A nontaxable transfer of assets from one qualified retirement plan to another.

Round Lot

The basic unit of trading for a securities trade, or 100 shares. See also Odd Lot.

S&P 500 (Standard & Poor's)

S&P is the acronym for the Standard & Poor's Corporation, an investment firm who specializes in providing a broad range of investment services and publications including rating systems for bonds and stocks. Standard & Poor's also compiles and maintains various indexes, such as the S&P 500 Composite Index, and the S&P 400 Industrial Index, which provide broad based measurements of changes in stock market conditions based on aggregate performance. The S&P 500 index, considered to be a benchmark of the stock market, is composed of 500 bluechip stocks representing industrial, transportation, utility, and financial companies, accounting for nearly 70% of the market value of the NYSE.


Widely recognized acronym for the Securities and Exchange Commission. The SEC regulates U.S. financial markets, and administers statutes designed to promote full public disclosure and protect the investing public against malpractice in the securities markets. All issues offered in interstate commerce must be registered with the SEC.


Acronym for Securities Investor Protection Corporation, a government agency established by Congress to insure securities and cash in customer accounts of member brokerage firms against the failure of those firms. All broker-dealer firms registered with the SEC and with national stock exchanges are required to be members of SIPC.


As distinguished from regulatory agencies such as the SEC, an SRO is a self-regulatory agency which exists to enforce fair, ethical, and efficient practices in the securities industry.


The proprietary storage and protection of a customer's financial assets, safekeeping is a primary role of financial institutions that serve as agents or custodians. Individuals or corporations can rely on banks or brokerage firms to hold stock or bond certificates, keep track of trades, and provide periodic statements.

Secondary Market

The market where securities are traded after initially offered in the primary market, the secondary market is where most trading takes place. The NYSE and all other exchanges are essentially secondary markets.


An investment instrument that signifies ownership in a corporation (stock), a creditor relationship with a corporation or governmental entity (bond), or the right to ownership, which may be represented by an option, right, or warrant.

Sell Order

Any order (market, limit, stop, or stop limit) to liquidate a security, or part of a position, and transfer ownership in exchange for money.

Settlement Date

The date by which an executed order must be settled. For buyers, this means paying for the securities with cash, for sellers, delivering securities and receiving the proceeds of the sale. For equity orders, regular way settlement is completion of a securities transaction by the third full business day following the date of the transaction, or the trade date. For Government bond and most mutual fund, and option transactions, settlement is the next business day following trade date.

Short Against the Box

Selling short stock owned by the seller, but held in safekeeping in the brokerage account. This practice is employed to protect a capital gain in the shares that are owned, while deferring a Long-Term Capital Gain into another tax year.

Short Position

Stock position established by a short sale, which has not been covered as of a particular date. A short position represents a potential liability, as it must eventually be bought back to cover.

Short Sale

The sale of a security not owned by the seller. This transaction type is used to take advantage of an anticipated decline in the price of a security. To sell short, an investor must borrow stock from his or her broker at the time of the short sale. If the seller is able to buy to cover the short position at a lower price, a profit results, if not the seller incurs a loss. Short sales must be transacted in a margin account and are subject to specific requirements. For additional information about requirements for short selling, click on Margin Requirements.

Short-Term Capital Gain

Realized profit or gain on the sale of a security that has been held for less then one year.


Refers to the magnitude of an offering, order, or trade. In the context of a quote, size reflects the quantity of shares or bonds available for sale. A quote will include, for example, the number of shares available at the quoted bid and ask price(s). A size of 10 x 25 = 1000 shares available at the bid, 2500 at the ask.


The individual, corporation, partnership, or group responsible for an exchange-traded security. Similar to a market maker, the specialist is a member of a stock exchange who maintains a fair and orderly market in one or more securities.


In the context of a stock or bond, the spread is the difference between the bid and ask prices. The spread may narrow or widen depending on supply and demand for the underlying security. A spread also refers to a specific option strategy where a position is taken consisting of one long call or put, and one short call or put. The two "legs" of the option spread, if independent, would profit from opposite directional price movements.


Proportionate ownership of a company represented as shares, which are a claim on the company's earnings and assets. The type of stock held, common or preferred, determines what advantages or responsibilities a stockholder is entitled to; however by definition, all stockholders share in the profit or losses of a company.

Stock Split

An increase in a corporation's number of outstanding shares of stock, without any initial change in shareholder equity or the aggregate market value at the time of the split. When a stock split requires an increase in the number of authorized shares, or a change in par value, shareholder approval is required. Stock splits are frequently authorized in an effort to make shares more affordable to a potentially broader investor base.

Stop Order

An order to buy or sell at the market price, after a stock has traded at a specific price. Once the stock price moves to or through the stop price, the pending stop order becomes a market order to buy or sell. This guarantees execution of the order, but does not guarantee the price. Stop orders are sometimes called stop-loss orders, because they are often employed to protect a profit, or avoid a loss. T. Rowe Price Brokerage accepts stop orders with a time in force of one day, or good till canceled (for 90 days).

Stop-Limit Order

A combination of stop order and limit order(s), a stop limit is an order type employed for stock trades which specifies that a buy or sell order is to be executed at a specific price or better, but only after a given stop price has been reached. In contrast to a stop order, a stop limit becomes a limit order once the stock trades at the stop price. This guarantees that the order is only to be filled at the limit price or better, but does not guarantee an execution. As such, stop-limit orders are not always effective in protecting a profit or avoiding a loss. T. Rowe Price Brokerage accepts stop limit orders with a time in force of one day, or good till canceled (for 90 days).

Streaming Quotes

An application which provides investors with up-to-the-minute real-time quotes, usually in an applet, with a ticker style format. Streaming quotes are frequently offered to a select group of active online customers, who require the ability to more closely monitor their portfolios. The T. Rowe Price Brokerage streaming quote function is available to online customers on an individual account basis, who have executed 40 or more trades, or have $250,000.00 in assets in a Brokerage account, including the accompanying money market sweep account.

Street Name

Term describing securities held in the name of a brokerage firm or another nominee, rather than the customer. To facilitate liquidity, shares acquired or delivered to a brokerage firm are routinely held in street name rather than being registered in the customer's name, so physical certificates do not have to change hands at the time of sale.

Strike Price

In the context of option trading, the strike price is the price per share for which the underlying stock may be purchased (call option) or sold (put option) over a specified period. Also know as the exercise price.

Systematic Investing

A plan in which investors make regular payments, or scheduled investments, into stocks, bonds, mutual funds, or other investment vehicles. This action may be accomplished via automatic investment programs such as salary reductions through their employer, dividend reinvestment plans, or regularly scheduled bank drafts. By investing systematically, investors benefit from the advantages of dollar cost averaging.


A measure of market strength that relates the advance/decline ratio (number of issues that advanced in price divided by the number of issues that declined) to the advance volume-decline volume ratio (total number of shares that advanced divided by the total number of shares that declined). A TRIN of less than 1.00 is considered bullish (see bull market) while a TRIN over 1.00 is considered bearish, see bear market.

Tenants In Common

A form of brokerage or bank account registration, whereby two or more individuals share ownership. As opposed to a joint tenant account, however, ownership is not passed over to the other tenant(s) at death, but is part of the deceased owner's disposable estate.

Third Market

Refers to the practice of non-exchange member firms and/or institutional investors trading exchange-listed securities in the over-the-counter market. Prior to engaging in this practice, a member firm must satisfy all limit orders on the specialist's book at the same price or better.


The upward or downward price movement of a security's trading activity. Technical analysts watch the tick of a stock to derive its trend.

Ticker Symbol

A unique series of letters that identify a specific security. Ticker symbols are between one and five characters, and serve as the consistent identifier for a stock, bond, or mutual fund, or option, whenever a trading price is quoted.

Time In Force

The duration of an order. T. Rowe Price Brokerage accepts orders with a time in force of one day, or good till canceled (for 90 days). Market orders always have a time in force of one day.


A completed transaction of buying or selling a security. Trades are consummated when buyers and sellers agree on a trade execution price.

Trade Confirmation

A document which provides all details of a security trade. Brokerage firms are required to send either a written or electronic trade confirmation to customers who complete securities transactions.

Trade Date

The date on which a securities transaction actually takes place. Settlement date follows trade date typically by either one or three days, depending on the transaction and method of delivery.

Transaction Fee (Mutual Funds)

Similar to a commission, a transaction fee is a cost associated with the purchase or redemption of a security. Charges associated with mutual fund transactions are typically referred to as transaction fees.

Transaction Fee (Stocks)

Previously referred to as the SEC Fee or Regulatory Transaction Fee, in the context of a stock sale, refers to a charge levied upon execution. The current formula to calculate the Transaction Fee, assessed on sales of all exchange and NASDAQ traded stocks, is as follows:

Sale proceeds x .0000056 = Transaction Fee (always round up to nearest penny)

Transfer Agent

Usually a commercial bank, transfer agents are appointed by corporations to maintain investor records/certificates, and to issue and cancel or resolve problems resulting from lost or stolen certificates.

Treasury Security

A debt obligation of the U.S. government issued through the Department of the Treasury. Backed by the full faith and credit of the government, Treasuries are virtually risk free of default, and exempt from state and local taxes. They include Treasury Bonds, Treasury notes and T-Bills.

Trust Account

An account type whereby a trustee holds title to property or assets for the benefit of others, called beneficiaries. A trust agreement is required to establish a trust, which contains all provisions, and sets forth the powers of the trustee.


Acronym for Uniform Gifts to Minors Act, enacted to provide a way to transfer property to a minor without the complications of a formal trust. UGMA accounts typically have a donor who may or may not be the custodian of the account, and who oversees it until the minor reaches the age of majority, specified in the UGMA statues of the state in which the gift account was established.


Acronym for Uniform Transfers to Minors Act. Similar to UGMA, the UTMA was enacted to provide a way to transfer property to a minor without the complications of a formal trust and will typically have a donor who may or may not be the custodian of the account in contrast to a UGMA account. However, the definition of an eligible gift, per UTMA, extends beyond cash and securities to include real estate, and minors are prohibited from taking ownership of the assets until age 21 (25 in California).

Uncovered Option

A short option position that is not fully collateralized. If the writer of an option does not have long stock to deliver, or does not own a call option on the same security with the same strike price, or a lower strike price, that position is considered uncovered. Taking an uncovered, or "naked," option position is typically a high-risk strategy and must be performed in an approved margin account.

Underlying Security

Defined as the asset that supports another security. For options contracts, the underlying security must be delivered if a put or call option contract is exercised. Common stock is the underlying security for most derivative products, as well as the deliverable on warrant or rights exercises.


Investment banking firm who assumes the risk of bringing a new issue of securities from an issuing corporation or government entity to the public, either directly or through dealers. Underwriting firms generally make a profit on the difference between the price paid to the issuer and the public offering price.

Unit Investment Trust

Commonly known as a UIT, a Unit Investment Trust is an SEC-registered investment vehicle that purchases a fixed portfolio of income-producing securities (bonds, mortgage-backed securities, or common and preferred stock) and creates units in a trust to resell to brokers. Unit holders receive an undivided interest in both the principal and income portion of the portfolio in proportion to their investment. Typically, brokerage firms maintain a secondary market in the UITs they sell to facilitate liquidity.

Unrealized Gain/Loss

An unrealized gain/loss represents the hypothetical profit or loss on an investment or portfolio, based on the original cost basis. It only becomes a realized gain/loss when the security or securities are actually sold.

Variable Annuities

An investment contract typically sold by insurance companies, which guarantees a variable payment, usually at retirement. Payout is based on a guaranteed number of units, unit values, and payments, dependent on the value of the underlying investments. All capital in a variable annuity grows tax-deferred, and the return to investors may be in the form of a periodic payment which varies with the market value of the portfolio, or a fixed minimum payment with add-ons based on the rate of appreciation.

Versus Purchase

An order qualifier that provides for the specification of a purchase date at the time of sale. Known by the abbreviation VSP, this function allows investors to dictate which specific lot of stock is to be sold, by identifying the date the shares being sold were originally purchased. While not required for tax purposes, the inclusion of the versus purchase date on the trade confirmation serves as an accounting convenience and assists investors by providing a clean "paper trail" for cost basis purposes when placing sell order(s).


The characteristic magnitude and frequency of changes in a security's value within a short-term period of time. Volatile stocks are typically aggressive investments, with higher risk but a greater potential for return.


Total number of shares or bonds traded in a particular period. Volume figures are reported daily by the exchanges, for both individual issues and indices. The quote on a security typically includes its daily volume.


Issued in conjunction with a bond or preferred stock, a warrant allows the holder to purchase a proportionate amount of common stock at a predetermined price. In contrast to a right, the subscription price for a warrant is usually above the market price at the time of issuance. Warrants are typically transferable and exchange-traded.


In the context of option trading, a writer is an investor who sells put or call option contracts and collects the premium. The writer may be selling covered or uncovered and is obligated to buy the underlying security at a predetermined price and date if the option is exercised.


Designated by the abbreviation XR, x-rights indicate that a particular stock is trading ex-rights, or without rights attached.


Designated by the abbreviation XW, x-warrants indicate that a particular stock is trading ex-warrants, or without warrants attached.


The return on an investor's capital investment. Yield may be the percentage rate of return paid on a common or preferred stock in dividends, or the amount of interest paid, or rate or return, on a bond.

Zero Coupon Bond

A security that makes no periodic interest payments but is sold at a deep discount from the face value. The most common zero coupon bonds are issued by corporations or government entities, or created by brokerage firms by stripping the coupons off a bond and selling the coupons separately. This technique is used frequently with Treasury bonds. The dollar amount difference between the purchase price and the bond's value at maturity represents a zero coupon bond's yield. There are distinct tax advantages with zero coupon bonds, and they generally increase in value as they approach maturity, making them attractive for retirement or UGMA accounts.