Securities Markets

Glossary

• bond ratings - Letter grades assigned to bond issues to indicate their quality or level of risk; assigned by rating agencies such as Moody's and Standard & Poor's (S&P).
• exchange traded fund (ETF) - A security similar to a mutual fund; holds a broad basket of stocks with a common theme but trades on a stock exchange so that its price changes throughout the day.
• futures contracts - Legally binding obligations to buy or sell specified quantities of commodities or financial instruments at an agreed-on price at a future date.
• institutional investors - Investment professionals who are paid to manage other people's money.
• investment bankers -Firms that act as intermediaries, buying securities from corporations and governments and reselling them to the public.
• municipal bonds - Bonds issued by states, cities, counties, and other state and local government agencies.
• mutual fund - A financial-service company that pools investors' funds to buy a selection of securities that meet its stated investment goals.
• options - Contracts that entitle holders to buy or sell specified quantities of common stocks or other financial instruments at a set price during a specified time.
• primary market - The securities market where new securities are sold to the public.
• secondary market - The securities market where old (already issued) securities are bought and sold, or traded, among investors; includes broker markets, dealer markets, the over-the-counter market, and the commodities exchanges.
• securities - Investment certificates issued by corporations or governments that represent either equity or debt.
• stockbroker - A person who is licensed to buy and sell securities on behalf of clients.
• underwriting - The process of buying securities from corporations and governments and reselling them to the public; the main activity of investment bankers.