Back-end load. A fee charged by mutual funds to investors who sell their shares before owning them for a specified time.
Back office. The support operations of a brokerage firm that don't deal directly with customers. "Back office problems" usually refers to slow paperwork or other bottlenecks in the execution of customers' orders.
Basis. This is the original cost plus out-of-pocket expense that must be reported to the Internal Revenue Service when an investment is sold. It is used in calculating capital gains or losses.
Bearer bond. Also called a coupon bond, it is not registered in anyone's name. Rather, whoever holds the bond (the "bearer") is entitled to collect interest payments merely by cutting off and mailing in the attached coupons at the proper time. Bear er bonds are no longer being issued.
Bearish. A bear thinks the market is going to go down. This makes bearish the opposite of bullish.
Beta. A measure of price volatility that relates the stock or mutual fund to the market as a whole. A stock or fund with a beta higher than 1 is expected to move up or down more than the market. A beta below 1 indicates a stock or fund that usually jumps up and down less than the market.
Bid/asked. Bid is the price a buyer is willing to pay; asked is the price the seller will take. The difference, known as the spread, is the broker's share of the transaction.
Blue chips. There is no set definition of a blue-chip stock, but most would agree it has at least three characteristics: It is issued by a well-known, respected company, has a good record of earnings and dividend payments, and is widely held by inv estors.
Boiler room. A blanket term used to describe the place of origin of high-pressure telephone sales techniques, usually involving cold calls to unsuspecting customers who would be better off without whatever is being offered to them.
Bond. An interest-bearing security that obligates the issuer to pay a specified amount of interest for a specified time, usually several years, and then repay the bondholder the face amount of the bond. Bonds issued by corporations are backed by co rporate assets; in case of default, the bondholders have a legal claim on those assets. Bonds issued by government agencies may or may not be collateralized. Interest from corporate bonds is taxable; interest from municipal bonds, which are issued by stat e and local governments, is free of federal income taxes and, usually, income taxes of the issuing jurisdiction. Interest from Treasury bonds, issued by the federal government, is free of state and local income taxes but subject to federal taxes.
Bond rating. A judgment about the ability of the bond issuer to fulfill its obligation to pay interest and repay the principal when due. The best-known bond-rating companies are Standard & Poor's and Moody's. Their rating systems, although slightly different, both use a letter-grade system, with triple-A the highest rating and C or D the lowest.
Book value. For investing purposes, this is the net-asset value of a company, determined by subtracting its liabilities from its assets. Dividing the result by the number of shares of common stock issued by the company yields the book value per share, which can be used as a relative gauge of the stock's value.
Brokered CD. A large-denomination certificate of deposit sold by a bank to a brokerage, which slices it up into smaller pieces and sells the pieces to its customers.
Bullish. A bull is someone who thinks the market is going to go up, which makes