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Glossary content provided by Financial
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margin
The amount of money supplied by an investor as a portion of
the total funds needed to buy or sell a security, with the
balance of required funds loaned to the investor by a broker,
dealer, or other lender.
margin account
A special account set up by a broker for a client who wants
to buy and sell securities using margin.
margin call
A call from a broker to a client asking for more money to
back up a security purchased on margin when such a security
has declined in value. If more money is not supplied, the
broker usually sells the security.
market order
An order to buy at the lowest price going, or sell at the
highest price possible.
market risk
Every investment carries some element of market risk, the
risk that the entire market will decline, reducing the investment's
value regardless of other factors.
medical power of attorney
This special power of attorney document allows you to designate
another person to make medical decisions on your behalf.
minimum distributions
An individual must start receiving distributions from a qualified
plan by April 1 of the year following the year in which he/she
reaches age 70 ? . Subsequent distributions must occur by
each December 31st. The minimum distributions can be based
on the life expectancy of the individual or the joint life
expectancy of the individual and beneficiary.
money purchase plan
A Money Purchase Plan has contributions that are a fixed percentage
of compensation and are not based on the employer's profits.
For example, if the plan requires that contributions be 10%
of the participant's compensation, the plan is a Money Purchase
Pension Plan. With this type of plan, the employer is committed
to making contributions each year even if the employer has
no profits or is experiencing cash flow problems. Employee
contributions are limited to 25% of compensation. Employer
contributions are limited to the smaller of $30,000 or 25
percent of a participant's compensation.
mortality
Mortality is the risk of death of a given person based on
factors such as age, health, gender, and lifestyle.
mortgage
A legal instrument providing a loan to the mortgagee to be
used to purchase a real property in exchange for a lien against
the property.
mortgage broker
A mortgage broker acts as an intermediary between a borrower
and a lender. A broker's expertise is to assist the borrower
in identifying mortgage lenders and products that they might
not identify otherwise.
mortgage insurance (mi)
Mortgage insurance protects the lender against the default
of higher risk loans. Most lenders require mortgage insurance
on loans where the loan-to-value ratio is higher than 80%
(less than 20% equity).
municipal bonds
A bond offered by a state, county, city or other political
entity (such as a school district) to raise public funds for
special projects. The interest received from municipal bonds
is often exempt from certain income taxes.
mutual funds
A mutual fund is a pooling of investor (shareholder) assets,
which is professionally managed by an investment company for
the benefit of the fund's shareholders. Each fund has specific
investment objectives and associated risk. Mutual funds offer
shareholders the advantage of diversification and professional
management in exchange for a management fee.
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net asset value
The value of all the holdings of a mutual fund, less the fund's
liabilities [also describes the price at which fund shares
are redeemed].
net worth
Your net worth is the difference between your total assets
and total liabilities.
non-conforming loan
A loan that does not conform to Federal National Mortgage
Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC) guidelines. Such loans include jumbo loan, sub-prime
loans and high risk loans.
note
A note is a legal document that acknowledges a debt and the
terms and conditions agreed upon by the borrower.
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odd lot
An uneven number of securities that represents less than a
board lot.
offer price
The price that a buyer is willing to pay for an investment.
open-end fund
An open-end mutual fund continuously issues and redeems units,
so the number of units outstanding varies from day to day.
Most mutual funds are open-end funds. The opposite of closed-end
fund.
origination fee
The origination fee on a mortgage is usually the amount charged
by the lender for originating the loan. Origination fees vary
by lender and are expressed in points where one point is equal
to 1% of the original loan balance.
over-the-counter (otc) market
Market created by dealer trading as opposed to the auction
market, which prevails on most major exchanges.
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