|
|
 |
|
|
Back-End Load (Sales Charge) - A back-end load (sometimes referred to as a contingent deferred sales charge) is usually associated with Class B shares of a mutual fund. It is a sales commission, deducted from the net asset value of the shares redeemed, that is assessed at the time you sell shares you own. It's computed as a percentage of the total selling price, but is generally not assessed on any increase in the value of your shares, or any reinvested dividends or capital gains. As an example, if you sell 1000 shares at a share price of $30 with a 1% back end load, you'll receive $30,000 less a fee of $300, or $29,700. The maximum amount of the back end load, which usually declines over time, and the period over which the load is imposed, are contained in the front of your fund's prospectus, or ask your broker. Balance Sheet - An accounting statement that shows the amount of a company's assets, liabilities, and owner's equity on a certain date. Banker's Acceptance - A time draft drawn on and accepted by a bank that is often used to effect payment for import-export transactions and international trade. Bear - A person who believes that stock prices will fall. See bull. Bear Market Bearer Bond - A bond that provides for interest and principal to be paid to the bearer; an unregistered bond. See coupon bond and registered bond. Benchmark - A standard — typically an index such as the Standard and Poor's 500 — against which investors compare the performance of a mutual fund or other investment. Beneficiary - The party who will receive the death benefit of the contract upon the insured's death. Bereavement period - A period of time during which the survivors adjust emotionally and financially to the loss of a loved one. Bid Price - The highest amount a prospective buyer is willing to pay for a security at a given time. See ask price. Blue Chips - The high-quality stocks of major corporations with long records of uninterrupted earnings and dividends, capable management, and good growth prospects. Bonds - The debt instrument of an issuer (essentially an I.O.U. for money you lend to the issuer) that promises to pay the holder a specified amount of interest, for a specified time period, with principal to be repaid on the maturity date. Bond Mutual Fund - An investment company that invests primarily in bonds and debt securities. The objective of most bond funds is to provide current income while protecting the principal from decreasing in value. Both the net asset value and the monthly income can fluctuate with changes in interest rates. Book Value - An indicator of a company's value, calculated by subtracting the company's liabilities from its total assets. Broker - An agent who executes buy and sell orders for securities or commodities for a fee. Bull - A person who believes that stock prices will rise. See bear. Bull Market Business Cycle Risk - The risk that a company's business and, therefore, its revenue are tied to economic activity or market trends. As the economy grows, the revenues for these companies also increase. However, as the economy slows, their revenues decrease, as do their earnings. This cyclical impact on a company's earnings can be severe if the economic downturn lasts for an extended period. Generally, a decline in a company's earnings will result in a fall in its stock price. Business Risk - The risk associated with investing in companies in very competitive industries or those with low barriers to entry. The industry may also be dominated by one or two companies that have deep pockets and are able to ward off competition. Additionally, business risk includes the risk that an industry will be overtaken by new technology and become obsolete. These factors can lead to a significant decline in the financial health of a company. |
|
