Commercial banking vocabulary

Common Stock

ownership in a company with voting rights and possible dividends

Preferred Stock

stock that get dividends before common stocks holders , usually without voting rights

Cumulative Preferred Stock

missed dividends buils up and must be paid before common dividens

Convertible Preferred Stock

preferred stock that can be changed into common stock

Authorized Shares

maximum number of shares a company is allowd to issue

Issued Shares

Shares the company has sold or distributed to investors

Outstanding Shares

issued shares currently owned by investors' excludes treasury stock

Treasury Stock

Company shares that were issued and later bought back by the company

Preemptive Rights

Right to buy new shares first to maintain ownership percentage

Proxy

Agent, substitute, person authorized to act on behalf of another

Warrent

gives an investor the right to buy stock at a fixed price in the future

Stock split

When a company increases the number of shares while lowering the price per share. Your total investment value initially stays the same.

Dividend Yield

the annual dividend compared to the stock's current price, expressed as a percentage.

Par Value

the face value of. a bond, usually $1,000, that is paid back at maturity

Coupon Rate

the fixed annual interest rate paid by a bond issuer to an investor, calculated as a percentage of the bond’s face value

Maturity Date

The date when the bond issuer must pay the principal back to the investor.

Principal

the original amount of money borrowed or invested, amount you get back at maturity

Premium

when a bond is selling for more that ts par value

Discount

when a bond is selling for less than its par value

Current Yield

The bond’s annual interest divided by its current market price.
Formula: Annual Interest ÷ Market Price

Yield to Maturity (YTM)

the total return you expect to earn if you hold it until maturity

Credit Risk

The risk that the issuer may not be able to make interest payment or repay the principal

Interest rate risk

risk that the interest rate rise and the bond’s price falls

Purchasing- power risk

risk that inflation will reduce the buying power of your money

Reinvestment risk

risk that interest or principal you receive will have to reinvested at a lower interest rate

Call Provision

allows the issuer to redeem the bond early, before maturity

Put Provision

Allows the bondholder to sell the bond back to the issuer early at a set price

Sinking Fund

Money the issuer sets aside over time to help repay bond debt

Debenture

an unsecured corporate bond backed only by the company’s credit and promise to pay

Mortgage Bond

A corporate bond secured by real property, such as land or buildings.

Equipment Trust Certificate

A bond secured by equipment, such as airplanes, trains, or other company assets.

Convertible Bond

A bond that can be converted into common stock of the issuing company.

Zero-Coupon Bond

A bond that does not pay regular interest. It is bought at a discount and pays face value at maturity.

Treasury Bill (T-Bill)

A short-term U.S. government security with a maturity of 1 year or less.

Treasury Note (T-Note)

U.S. government security with a maturity of 2 to 10 years.

Treasury Bond (T-Bond)

A long-term U.S. government security with a maturity of more than 10 years.

Treasury Inflation-Protected Securities

The principal adjusts with inflation to help protect purchasing power.

General Obligation Bond (GO Bond)

A municipal bond backed by the taxing power of the state or local government.

Revenue Bond

A municipal bond repaid using money earned from a specific project or facility, such as a toll road or hospital.

Tax Anticipation Note (TAN)

A short-term municipal security issued because the government needs money now and expects to repay it with future tax revenue.

Commercial Paper

A short-term unsecured debt security issued by corporations to raise money.

Banker’s Acceptance

A short-term debt instrument guaranteed by a bank, often used in international trade.

Negotiable Certificate of Deposit (CD)

A large CD that can be bought and sold in the secondary market, usually issued by banks.

Mutual Fund

An investment company that pools money from many investors to buy a portfolio of securities.

Net Asset Value (NAV)

The value per share of a mutual fund.
Formula: Assets − Liabilities ÷ Shares Outstanding

Exchange-Traded Fund (ETF)

A fund that holds a group of investments but trades on an exchange like a stock.

Broker

A person or firm that acts as an agent and executes trades for customers.

Dealer

A firm that buys and sells securities for its own account.

Bid Price

The price a dealer is willing to pay to buy a security.

Ask Price

The price a dealer is willing to sell a security for.