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Brokerage: Glossary G
Good Delivery: Designation meaning a certificate has the necessary endorsements and meets all requirements so that title can be transferred by delivery on the settlement date to the buying broker. Good Til Canceled (GTC): An order to buy or sell which remains in effect until it is either executed or canceled. For GTC orders executed over several days, a commission is charged based on each day's activity. Customer's are responsible for monitoring GTC orders to avoid duplication. Green Shoe: The underwriting agreement for an IPO may include this clause which stipulates that the issuer will sell additional shares if there is exceptionally high public demand. Gross Spread: The difference between an IPO's offering price and what the underwriter pays to the issuing company. This is a percentage of the offering price which covers the underwriters costs of an offering. HHeld: A situation where a security is temporarily not available for trading (e.g. Market Makers in OTC stocks or the Exchange in listed stocks are not allowed to display quotes). Hot Issue: If the price for an IPO increases in the first day of trading, it is considered a hot issue. Owners and employees of broker-dealers and other industry insiders are prohibited from participating in hot issues. A prohibited owner or employee is generally allowed to begin trading in the aftermarket. House Maintenance Requirement: Internally set and enforced rules of individual brokerages regarding customer's margin accounts. See the explanation of margin for more complete information on using margin leverage in your investing. IIndex: A statistic to measure market performance. A popular index is the Standard & Poor's 500, which incorporates a broad base of 500 stocks, including 400 industrial companies, 20 transportation companies, 40 utilities, and widely considered the benchmark for large stock investors. Some of the stocks in the index have a greater influence on the direction of the market than other stocks do, so the S&P 500 is calculated by giving a greater weight to some stocks. Index Arbitrage: Trading in order to profit by temporary differences between the value of stocks in an index and the price of the future contract for a derivative index. Index Options: Calls and Puts on indexes of stocks. Broad-based indexes cover a wide range of companies, narrow-based indexes consist of stocks in one industry or sector of the economy. Owning an option provides investors with the opportunity to buy or sell, but they aren't committed to do so. See the explanation of options trading for more complete information on options. Initial Public Offering (IPO): An IPO is the first public issuance of stock by a company. After the initial offering, the stock begins trading to the general public and the price may fluctuate up or down based on the supply and demand for the shares. Insiders: In general, employees of a company that have knowledge that is not known to the public are considered insiders. Management, directors, and significant stockholders fall in this category, as well as others with knowledge of the operations of a company. The SEC restricts the time periods and manner in which insiders can trade stocks. In-the-Money: For a call option, the market price of the underlying security is higher than the exercise price. For a put option, the market price of the underlying security is lower than the exercise price. Individual Retirement Account (IRA): Personal retirement account for employed persons. Contributions may be deductible against income earned that year. Interest and profits accumulate tax-deferred until the funds are withdrawn at age 59 1/2 or later. Early withdrawals are subject to a 10% penalty. IRA ROLLOVER provision of the law enables persons receiving lump-sum payments from their company's pension or profit sharing plan because of retirement or other termination of employment to ROLL OVER the amount into an IRA account. Once rolled over, the account continues to accumulate tax-deferred until withdrawal. Initial Margin: Amount of cash or eligible securities required to be deposited with a broker before engaging in margin transactions. The minimum equity to establish a margin account is currently $2,000, and 50% of the price of a new purchase must be in customer equity. See the explanation of margin for more complete information on using margin leverage in your investing. Inside Market: The highest bid and the lowest offer prices among all competing Market Makers in a NASDAQ security, i.e., the best bid and offer (ask) prices.
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