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IV. Glossary:

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401(k)--A popular retirement plan adopted by many employers which allows either employer or employee--or both--to contribute. Money put into these accounts is tax-exempt until retirement.

403(b)--Similar to a 401(k) only used more in universities and non-profit institutions.

AAA--Highest rating given by bond rating agencies--highly unlikely to default.

ADR(American Depositary Receipt)--A way U.S. investors can invest in foreign companies without buying shares in overseas markets. Receipts for shares of foreign companies are in U.S. banks for U.S. shareholders and entitle the ADR purchaser to all dividends and capital gains.

Agency Bonds--Bonds issued by U.S. government-related agencies, such as Fannie Mae and Freddie Mac. These bonds are very safe and backed by assets, such as home mortgages. They pay slightly more interest than U.S. Treasury bonds.

Annuity--An investment product offered by insurance companies, which usually guarantees a fixed or variable rate of interest for a period of time. These investments can be quite safe, depending on the insurance company's financial stability; however, they tend to provide low-yields investments.

Assets--Cash, stocks, bonds, mutual funds, real estate or anything else with value.

Asset Allocation--The mix of assets in an investor's portfolio (e.g., cash equivalents, stocks & bonds). The proper balance of assets depends on the expected return and risk of each asset class as well as the investor's risk tolerance, age, and goals.

Average Annual Return--On average, how much the investment gains in value each year. Make sure that the average annual return of the investments you are looking into include, gains from dividends, interest and distributions, not just gains in the price of the asset.

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Back-End Load--Some mutual funds charge investors a fee when they sell shares of the fund they are invested in.

Bill--Bond maturing in less than one year (generally refers to the government's Treasury Bills)

Bond--Long-term, interest-paying debt obligation issued by governments and corporations and government-related entities. Secured bonds are backed by collateral, such as real estate, machinery, etc. Debentures are unsecured bonds, backed solely by the integrity of the issuer.

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Capital Appreciation (or loss)--An increase (or decrease) in the price of securities you own. For example, you bought 5 shares of company Y for $5/ share, or $25. Now they are $15/share, or $75, so your capital appreciation is $50.

Capital Gain (or loss)--The profit or loss you incur when you sell securities.

$ Change to Date--How much your shares in the game are up or down in dollar terms since you bought them.

% Change to Date--How much your shares in the game are up or down in percentage terms since you bought them.

Compound Interest--Interest earned on the prinicipal plus interest that is reinvested.

Commercial Paper--Short-term debt obligations maturing in 2 to 270 days, issued by banks and corporations.

Combined Weighted Expected Return--The sum of the average annual return of each asset in the portfolio multiplied by its weighting in the portfolio. For example, an investor who had $2 invested in bonds yielding 7 percent, $3 invested in a growth fund which experienced a gain of 10 percent a year and $1 invested in a money market fund yielding 4 percent a year could expect a combined weighted expected return of 8 percent a year.

Company Name--Public name for company.

Convertible Bond--Under certain conditions, it may be exchanged for other securities of the issuing organization, usually stock.

Corporate Bonds--Bonds issued by corporations as opposed to governments. Corporate bonds are generally traded on major exchanges, have a face/par value of $1,000, and mature in a set period of time. Interest earned is fully taxable.

Current Price--Current price in the game reflects at least a 15 minute delay from real time quotes.

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Defined Benefit Plan (aka Pension)--Retirement plan which defines the specific benefit (pension) an employee receives at retirement, based on salary history and years of service.

Debenture--a bond which is not backed or secured by collateral.

Defined Contribution Plan--A plan that defines the contribution made each year (usually a percentage of pay) to an employee's retirement plan.

Diversification--Spreading investment dollars among different kinds of securities, asset classes and time horizons to balance ones portfolio and reduce risk.

Dividend--A distribution of the earnings of a corporation. Dividends are usually paid in cash or additional shares of stock.

Dividend Reinvestment Plan--An investment plan allowing shareholders to automatically reinvest cash dividends and capital gain distributions into more shares of the security rather than receiving a check.

Dollar Cost Averaging--A technique for reducing risk in an investment portfolio. The investor buys a fixed dollar amount of securities at regular time intervals so that she can buy more shares when the price is low and fewer shares when the price is high, resulting in an average cost between high and low.

Dow Jones Industrial Average--An index of 30 large industrial stocks. Though often cited by analysts and the media, this index is far less representative of the market as a whole than the broader indices, such as the S&P 500 and the Wilshire 5000.

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Earnings--The profits a company makes after all expenses are paid. Earnings per share is the net income of a company divided by the number of outstanding shares of stock.

Emerging Market Stocks--Stocks issued by companies in developing countries, such as Chile, Thailand and Mexico.

Expense Ratio--A measure of a mutual fund's operating expenses including management fees, expressed as a percentage of average net assets. The higher the ratio, the higher the operating expenses and therefore, the lower the fund's return to the investor.

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Fannie Mae (FNMA)--Federal National Mortgage Association, a public company whose debt is implicitly backed by the U.S. government. Fannie Mae sells bonds which are secured by home mortgages. They are quite safe bonds.

Fixed Income--Another term for "bonds," which generally pay a fixed amount of interest on the principal invested.

Front-End Load--Some mutual fund companies charge a sales commission to buy shares.

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Ginnie Mae (GNMA)--A government agency which guarantees payment of mortgage-backed securities representing a pooling of residential mortgages.

Guaranteed Income Contract--An insurance industry investment that pays a fixed rate of interest. GICs are generally considered low-risk investments but long-term bonds, stocks and other investments generally have a greater return.

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High Risk--Compared to other assets over a specific time frame, the risk of losing the money you invested is relatively high (but implicitly acceptable) given the return.

House Call--The amount of money an investor needs to deposit to their brokerage account to meet the broker's minimum maintenance level in a margin account.

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Inflation--A rise in prices that results in decreased purchasing power. For example, $1.00 buys less today than it did a decade ago because of inflation.

Inflation Rate--The rate at which prices are rising. The higher the rate, the faster the value of your money erodes.

Individual Retirement Accounts (IRA)--An account that allows you to invest money tax deferred until retirement.

Interest--Money a borrower pays to a lender. When you get interest on a bond, for example, you are lending money to a company at a fixed rate of interest.

Intermediate-Term--Generally viewed as 2-5 years and refers to the length of time until maturity of an investment (e.g., bond).

International Bonds--Bonds issued by foreign companies and governments. These investments are similiar to U.S. government bonds and corporate bonds except an additional risk factor is that fluctuations in foreign exchange rates can help or hurt your total return in dollars. Another difference is that accounting standards abroad are different and often less strict than in the U.S.

International Stocks--Stocks issued by companies in foreign, usually industrialized, countries, such as France and Japan.

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Junk Bonds--Bonds issued by companies with poor credit histories or limited track records of sales and growth. These bonds are rated below investment grade by bond rating companies. Junk bonds are considered risky.

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Keogh Plans--A retirement (pension) plan for self-employed people that allows taxes to be defered.

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Large-Cap Stocks--Stock issued by large companies, such as those that make up the Standard & Poor's 500 Index of stocks. These companies usually have market capitalizations of $2 billion or more.

Liabilities--Money you owe (usually due to an obligation that has already occurred).

Liquidity--The ability to convert assets quickly into cash.

Load--A sales charge when you buy or sell some load mutual funds.

Long--Investing long means buying and owning a security.

Long-term--5 years or more (Generally refers to the length of time until the maturity of an investment such as a bond).

Low Risk--Compared to other assets over a specific time frame, the risk of losing the money you invested is relatively low but implicitly acceptable given the return.

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Margin--Using eligible securities to back a margin loan through a broker-dealer.

Medium-Cap Stocks--Stock issued by medium-sized companies, such as those that comprise the Standard & Poor's Midcap Index of stock. Mid-cap companies generally have market capitalizations between $1-2 billion.

Medium-Term--Generally viewed as 2-5 years and refers to the length of time until maturity of an investment (e.g., bond).

Money Market Fund--A mutual fund that invests in short-term securities, such as CDs and commercial paper. Money market funds are generally considered lower risk, interest-earning investments. Some money market funds are FDIC insured.

Municipal Bond--Debt issued by states and local governments; public purpose bonds are exempt from federal taxes. There are several kinds of bonds, such as General Obligation (repaid from the issuer's general revenue, and backed by the full faith and credit of issuer) and Revenue (repaid from and backed by the revenue from a specific project, such as sewer systems).

Mutual Fund--An investment company pools small amounts of money from many people and invests it in bonds, stocks, and other assets. These funds are run by investment professionals who seek to research the best investments available and diversify the investor's assets across those investments.

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NAV (Net Asset Value)--Market value of a single mutual fund share. For a no-load fund, this is also the offering price.

No-load Fund--A mutual fund that has no sales commission when buying or selling shares.

Note--Intermediate-term debt obligations maturing in 1 to 10 years.

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Odd Lot--Less than the normal unit of trading, which generally means less than 100 shares of stock.

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Pending Orders--Orders that have not yet been executed in our stock market game, which include both buy and sell orders.

Pension--A retirement plan which defines the specific benefit (pension) an employee receives at retirement, based on salary history and years of service.

Penny Stocks--Stock typically selling for less than $1.00 per share.

Portfolio--All securities, cash and real estate owned by a person.

Preferred Stock--Preferred Stock has a fixed dividend, has preference over common stock when paying dividends and liquidating assets, and generally carries no voting rights.

Principal Risk--The risk of losing the money you invested due to default, bankruptcy or some other calamity that the company or government experienced which prevents them from paying you back.

Prospectus--Legal document describing the objective, terms, risks, and expenses of investing in a registered security. Mutual funds may be sold only by prospectus.

Purchase Price--The price you bought the securities at in our stock market game.

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Quantity--The number of shares you purchased in our stock market game.

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Real Return--The return on your money after inflation is taken into account. Inflation normally lowers nominal, or unadjusted returns.

Repurchase Agreement (Repo)--A contract in which the seller of securities agrees to buy them back at a specified time at a predetermined price. Repos may be contracted for as short a period as overnight.

Return on Equity--How much investors make on a stock and a good yardstick to measure how profitable companies are. For example, if investors ponied up $100 for the initial public offering of a stock and the company earned $5 in net earnings and dividends in the first year, then investors enjoyed a 5 percent return on equity.

Risk--There are many types of risks in investing. For example, principal risk is the risk you take that you might lose your initial investment. Investment risk, also known as volatility, is the price swings that your investments experience during the period when you own them. Market risk is the inherent risk of just putting money into the market and cannot be diversified away. Interest rate risk is the risk that your investment will change in value with the fluctuation of interest rates.

Round Lot--Exactly 100 shares of stock. Ten round lots equal 1000 shares.

Rule 12b-1 fee--One type of ongoing fee that is taken out of mutual fund assets has come to be known as the rule 12b-1 fee. It most often is used to pay commissions to brokers and other salespersons, and occasionally to pay for advertising and other costs of promoting the fund to investors. It usually is between 0.25% and 1.00% of assets annually.

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Share averaging--A risk reduction technique for investing in equities. Shares are accumulated over a period of time by buying a set number of shares at fixed intervals of time regardless of price.

Shares--The legal ownership document of a company. People who own shares, own a share, or percentage, of a given company. Shares are the same thing as stock, or equity.

Short Cover--Buying back stock originally borrowed from the broker in a short sell transaction, in order to return it to the broker.

Short Position--A stock that has been borrowed from the broker. The value of short positions is simply the sum of each short position multiplied by the current price.

Short Sell--Selling stock borrowed from a broker.

Short-term--Six months to two years.

Simplified Employee Pension (SEP)--A retirement plan for self-employed people or owners of small companies which allows them to defer taxes on investments intended for retirement.

Small-cap stocks--Stocks of small companies and that have a market capitalization of $1 billion or less.

S&P 500 Stocks--A stock market index comprised of the top 500 large-cap stocks.

Stock--Equity or ownership in a publicly traded corporation. Common stocks are the voting shares of a corporation; dividend payments vary. Preferred stocks pay dividends at a specified rate, and take precedence over common stocks in dividend payments.

Stock Split--An increase or decrease in the total number of a company's shares you own. For example, a two-for-one stock split will double the number of shares in your portfolio.

Symbol--A one to five letter code for the name of a stock or mutual fund. MSFT, for example, is the symbol for Microsoft Corp. You need to know a company symbol in order to get its price and also to place an order.

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Taxable Equivalent Yield--The return a taxable investment must earn to provide the same after-tax return as a tax-free investment.

Tax-Exempt--A category of investments that refers to tax-exempt securities, such as Federal, state and local bonds. The IRS and state taxing authorities usually don't tax interest earned on these investments.

Ticker Symbol--A one to five letter code for the name of a stock or mutual fund. MSFT, for example, is the symbol for Microsoft Corp. You need to know a company symbol in order to get its price and also to place an order.

Time Horizon--How long you wait until you sell or need to sell your investment(s).

Total Return--The change in price of your investment plus any interest or dividends earned.

Trade Date--The day on which you purchased shares in our stock market game.

Turnover--Rate at which a portfolio (e.g., a mutual fund) trades its holdings.

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U.S. Agency--A government-related organization like Fannie Mae and Freddie Mac that issues securities such as bonds.

U.S. Treasury Bills--Short-term debt issued by the U.S. Treasury. T-Bills are considered a very safe investment since they are backed by the full faith and credit of the U.S. government.

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Value--The current worth of your securities.

Volatility--How rapidly the price of a security rises or falls within a short period of time. A relative measure of an equity fund's volatility is called its beta coefficient: For example, if the S&P 500 Index of stocks is set at 1, a stock or mutual fund with a beta of 1.3 means that it is 30 percent more volatile than the S&P 500 Index.

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Yield--Income from interest or dividends received from a bond or stock. For instance, if a share's price is $1 and the company pays a dividend of $0.05 a year, its dividend yield is 5%.

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Hot Stocks
MSFT: Microsoft Corporation $394.94
IBM: International Business Machines $152.58
INTC: Intel Corporation $33.85
CSCO: Cisco Systems, Inc. $46.84
ORCL: Oracle Corporation $103.66
AAPL: Apple Inc. $169.58
PFE: Pfizer, Inc. $30.84
XOM: Exxon Mobil Corporation $109.45
GE: General Electric Company $106.69
JPM: JP Morgan Chase & Co. $189.53