Debenture. A corporate IOU that is not backed by the company's assets and is therefore somewhat riskier than a bond.
Discount broker. A cut-rate firm that executes orders but provides little if anything in the way of research or other investment aids.
Discretionary account. A brokerage account in which the customer has given the broker the authority to buy and sell securities at his or her discretion--that is, without checking with the customer first.
Dividend. A share of company earnings paid out to stockholders. Dividends are declared by the board of directors and paid quarterly. Most are paid as cash, but they are sometimes paid in the form of additional shares of stock.
Dividend reinvestment plan. Also called a DRIP, this is a program under which the company automatically reinvests a shareholder's cash dividends in additional shares of common stock, often with no brokerage charge to the shareholder.
Dollar-cost averaging. A program of investing a set amount on a regular schedule regardless of the price of the shares at the time. In the long run, dollar-cost averaging results in your buying more shares at low prices than you do at high prices.
Dow Theory. A belief that a major trend in the stock market isn't signaled by one index alone but must be confirmed by two--specifically, a new high or low must be recorded by both the Dow Jones industrial average and the Dow Jones transportation av erage before it can safely be declared that the market is headed in one direction or the other.
Due diligence. The work performed by a broker or other representative in order to investigate and understand an investment thoroughly before recommending it to a customer.
Earnings per share. A company's profits after taxes, bond interest and preferred stock payments have been subtracted, divided by the number of shares of common stock outstanding.
Education IRA. This account, available for the first time in 1998, allows up to $500 a year to be saved for a child's college education. Contributions are not deductible, but earnings are tax-free if used to pay college bills. Contributions depend on the contributor's AGI. No contributions can be made after the child reaches age 18.
Ex-dividend. The period between the declaration of a dividend by a company or a mutual fund and the actual payment of the dividend. On the ex-dividend date, the price of the stock or fund will fall by the amount of the dividend, so new investors do n't get the benefit of it. Companies and funds that have "gone ex-dividend" are marked by an X in the newspaper listings.
Expense ratio. A measure of the costs of running a mutual fund. Expressed as a percentage of the fund's assets, the expense ratio is the best tool for comparing the management costs you'll incur by investing in different funds. The ratio includes management and 12b-1 fees, but not sales loads.