Glossary
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Appreciation- An increase in an asset’s value
Asset allocation- Dividing investments among different kinds of assets, such as stocks, bonds, real estate and cash, to balance the risks of investing. Asset allocation models vary based on an individual’s specific financial goals and situation.
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Bear market- An extended period of falling value of the overall market, accompanied by widespread pessimism.
Broker/dealer- An individual or firm that is in the business of buying and selling securities. Broker/dealers are registered with the Securities and Exchange Commission (SEC).
Bull market- An extended period of rising value of the overall market.
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Capital appreciation- Increased market value of an asset as measured by share price.
Capital gain- The difference of an asset’s selling price above its original purchase price.
Class “A” property- Most prestigious buildings competing for premier office users with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility, and a definite market presence.
CUSIP (Committee on Uniform Securities Identification Procedures)- The committee which supplies a unique nine-character identification, called a CUSIP number, for each class of security approved for trading in the U.S.
Custodian- An organization which maintains and safeguards an individual's, mutual fund’s, or investment company’s assets for them.
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Depreciation- Decline in value of an asset. Property depreciation occurs due to general wear and tear.
Diversification- Similar to asset allocation, diversification is a strategy designed to reduce overall portfolio risk.
Dividend Reinvestment Plan (DRIP)- An investment plan that allows shareholders to automatically reinvest dividends and capital gains distributions, thereby accumulating more stock while avoiding brokerage commissions.
Due diligence- The practice of investigating a potential investment.
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Financial Industry Regulatory Authority (FINRA) - Formerly known as the National Association of Securities Dealers (NASD), FINRA is an industry organization representing persons and companies involved in the securities industry in the United States.
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Income property- Real estate that generates cash flow.
Index– A collection of unmanaged securities whose total financial or economic performance is used as a point of reference, such as the S&P 500 or the Consumer Price Index.
Index Mutual Fund- A passively managed mutual fund that attempts to reduce the risk associated with the selection of specific securities for investment by mirroring the performance of a specific index, such as the S&P REIT Composite Index.
Individual Retirement Account (IRA) - A tax-deferred retirement account for an individual who does not participate in a pension plan at work or who does participate and meet certain income.
IPO- Initial public offering; the first sale of stock by a company to the public.
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Leverage- The degree to which an investor or business is using borrowed money.
Limited Partnership- A business organization with a general partner who is responsible for managing the business and assumes legal debts and obligations, and one or more limited partners who do not participate in day-to-day operations and are liable only to the extent of their investments.
Liquidate- To convert assets into cash.
Liquidity- The ability of an asset to be converted into cash quickly.
Listed- Traded on an exchange, such as the NYSE or AMEX.
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Money market - Market for short-term debt securities with maturity of one year or less, and often 30 days or less. Highly liquid investments.
Money market fund- A mutual fund that invests only in money markets.
Mutual fund- A fund operated by an investment firm that raises money from shareholders and invests in a group of assets, in accordance with the prospectus’ stated set of objectives. Typically highly diversified.
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National Association of Securities Dealers (NASD)- See Financial Industry Regulatory Authority (FINRA)
NAV or net asset value- The daily dollar value of a single mutual fund share based on the value of the underlying assets.
Net lease- A property lease in which the tenant pays all expenses normally associated with ownership, such as utilities, maintenance, repairs, insurance, and taxes.
Net worth- Total assets minus total liabilities of an individual or company.
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Operating costs- The day-to-day expenses of running a business.
Ordinary income- Income other than capital gains.
Overvalued- Perceived to be too expensive.
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Passive income- Income derived from business investments in which the individual is not actively involved, such as a real estate limited partnership.
Portfolio- All investments collectively owned by the same individual or organization.
Private company- A company whose shares are not traded on the open market.
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Real Estate Investment Trust (REIT)- A Real Estate Investment Trust is a corporation whose primary business is owning and managing real estate properties, such as apartment buildings, office buildings, hotels, warehouses, health care facilities, shopping malls or golf courses. While many REITs invest directly in these properties, some types of REITS can also invest in real estate related loans, such as mortgages. A hybrid type of REIT can invest in a combination of real properties and mortgages. Structurally, a REIT is set up as a company, shares of which may be purchased by investors. The management of the REIT company uses those pooled investment dollars to buy and manage an array of properties. Collectively all shareholders indirectly own small pieces of each of the properties that the REIT owns and operates.
Return- The profit made on an investment, expressed annually as a percentage of the total amount invested.
Registered Representative- An individual who is licensed to sell securities and has the legal power of an agent, having passed the Series 7and Series 63 examinations. Usually works for a brokerage licensed by the SEC, NYSE, and NASD.
Risk- The possibility of loss of capital on an investment.
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Securities and Exchange Commission (SEC)- The primary federal regulatory agency for the securities industry, whose responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices in the securities markets.
Securities Investor Protection Corporation (SIPC)- A non-profit membership corporation established by Congress that insures securities and cash in customer accounts up to $500,000 (up to $100,000 in cash) in the event of brokerage bankruptcy.
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Tax-advantaged- Having other tax benefits that typically result in tax savings.
Tax shelter- A technique that allows an investment to be legally exempt from federal, state, and local taxes to varying degrees.
Ticker symbol- An abbreviation of a stock or mutual fund name that is used to identify it.
Transfer agent- An agent employed by a corporation or mutual fund to maintain shareholder records, including purchases, sales, and account balances.
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Undervalued- Perceived to be below its value.
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Valuation- Assessed value or price of an asset or company.
Value-added- Pertaining to something added to products and services to enhance value or price for customers.
Volatility- The rate at which the price of a security moves up and down
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Year-to-date (YTD)- For the period starting January 1 of the current year and ending at the current date.
Yield- The annual rate of return on an investment paid to investors in the form of dividend income and expressed as a percentage.