Coordinated Capital Securities, Inc. - Glossary

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Day order - An order which remains in effect only until executed or till the end of the trading day.

Day traders - Speculators who take positions in securities and liquidate them prior to the close of the same trading day.

Day trading - In the current volatile market, there are investors who have created an industry around buying and selling stocks on a very short-term basis. Usually the transactions are completed within one day. There are small brokerage firms that specialize in offering terminals and real-time quotes to individuals who choose to day trade.

Dealer - Any person or company in the business of buying and selling securities for his or her own account, through a broker or otherwise.

Dealer market - Nasdaq is a competing dealer market, different from an auction market in that many dealers, called Market Makers, use their own capital, research, retail, and/or systems resources to represent a stock. Many Market Makers can represent the same stock; thus, they compete with each other to buy and sell that stock. Auction markets have only one person, a specialist, who in a centralized location or "floor," matches incoming orders to buy and sell each stock. Specialists are not allowed to provide research or retail sales support, and are limited to only one firm's available capital. The average Nasdaq stock has eleven Market Making firms that risk and invest their capital.

Death distribution - Distributions taken by the beneficiary or beneficiaries after the death of the IRA accountholder. This type of distribution is not subject to the 10% Premature Distribution Penalty. Beneficiaries have a number of distribution options.

Debenture - An unsecured bond backed solely by the general credit of a company.

Debit balance - The total amount owed to the brokerage firm including any loans, interest charges, commissions, etc.

Decedent IRA - An IRA established by a beneficiary to hold the assets that they inherited from a deceased IRA account holder. This provides the beneficiary with the ability to keep the assets in a tax deferred status though the beneficiary may be required to withdraw a minimum distribution each year from the account. Also referred to as a "Inherited" IRA.

Deep discount bond - A bond that trades substantially below its face value--usually more than 20% from its face value. The term is usually used in reference to zero coupon bonds. Although original issue discount bonds and deep discount bonds are similar, deep discount bonds are issued at a par value of $1,000. The value of a deep discount bond generally increases faster as interest rates fall and declines faster as rates rise.

Delivery Versus Payment (DVP) - Securities industry procedure whereby the sold securities are delivered to the buyer's bank in exchange for payment. From the seller's perspective, it is called "receive versus payment." Institutional customers customarily use delivery versus payment to make settlement on transactions. It is also referred to as COD (cash on delivery) transactions.

Delta - The sensitivity of an option's value to a change in the price of the underlying futures contract also referred to as an option's futures-equivalent position. Deltas are positive for calls, and negative for puts. Deltas of deep in-the-money options are approximately equal to one; deltas of at-the-money options are 0.5; and deltas of deep out-of-the-money options approach zero.

Delta Neutral Spread - A spread where the total delta position on the long side and the total delta on the short side add up to approximately zero.

Demand Deposit Account (DDA) - Bank Industry language for a Checking Account. Literally, a type of bank account whereby the account balance can be withdrawn by the depositor without prior notice to the bank. The balance can be withdrawn via check, automatic teller machine or by transfers to other accounts using a PC or telephone. The Federal Reserve uses demand deposits as a primary indicator as to when to implement monetary policy because they are the largest component of the money supply.

Depositary bank - When a company decides to issue American Depositary Receipts, it appoints an authorized depositary, normally part of a large U.S. banking institution or trust company.

Depository Trust Company (DTC) - A central securities certificate repository that is a member of the Federal Reserve System and is industry-owned. The New York Stock Exchange is the majority owner. DTC members deliver securities to each other via computerized debit and credit entries. This reduces the need to actually move paper certificates.

Depth of market - The number of shares of a security that can be bought or sold at the bid and ask prices near the market without causing a dramatic change in price.

Derivative - A generic term often applied to a wide variety of financial instruments that derive their cash flows, and therefore their value, by reference to an underlying asset, reference rate, or index.

Diagonal Spread - An investment strategy that entails buying or selling of two different option positions of the same class (two call positions or two put positions in the same stock). Both the strike prices and the expiration dates of the options are different. For instance, a three month ABC call sold with a strike price of 30 and a two month call sold with a strike price of 25. Investors gain or lose as the difference in price narrows or widens.

Direct Participation Programs (DPP) - A business venture, usually organized as a limited partnership, that is structured to pass-through income and "tax losses" of the underlying investments to investors. However, its use as a tax shelter has been severely reduced by tax legislation.

Direct rollover - A reportable tax-free movement of assets from an employer sponsored retirement plan directly to a Traditional IRA or Qualified Retirement Plan. Qualified Plan's are required to offer this distribution option. All or part of the distribution can be paid directly to a traditional IRA or another eligible retirement plan that accepts rollovers. If the Direct Rollover option is selected, no tax is withheld from the designated distribution that is directly paid to the trustee or custodian of the traditional IRA or other plan. If any part is paid to the participant, the payer must withhold 20% of that part's taxable amount. See IRS Publication 590 for further information.

Disability distribution - Withdrawals by clients who are under the age of 59½ and who are considered disabled by IRS definition (see DISABLED). These distributions are not subject to the 10% premature distribution penalty. FCC as custodian cannot make the determination as to whether an individual's condition qualifies for a disability distribution.

Disabled - The IRS considers an individual disabled if they can furnish proof that they cannot do any substantial gainful activity because of their physical or mental condition. A physician must determine that the condition is expected to result in death or to be of a long continued and indefinite duration.

Disclaimer - A statement made to free oneself from liability or clarify a claim, opinion, or other information (a hedge clause).

Disclosure - A release by companies of all relevant information, positive or negative, that might bear on an investment decision, as required by the Securities and Exchange Commission and the stock exchanges.

Discount – Bonds - The amount by which a bond may sell below its "par" value.

Discount method - A method of paying interest by issuing a security at less than par and repaying par value at maturity. The difference between the higher par value and the lower purchase price is the interest.

Discount rate - The rate of interest charged by a Federal Reserve Bank on a loan to a member bank, using government securities or eligible paper as collateral.

Discretionary account - A type of brokerage account whereby clients authorize their broker to buy and sell securities or commodities when the broker deems it is appropriate. The broker will decide when and which securities, the amount of shares, and price to be paid or received without the client's prior knowledge or consent. Some clients may set guidelines for the broker, such as limiting the type of securities in which to invest.

Dissent - An action taken by a shareholder to remove shares from consideration in a merger and to seek redress for fair value of shares through the courts.

Distribution capability - An investment banker or underwriter's ability to sell shares.

Divestiture - Disposal of an investment by sale, liquidation or other means. This legal term is also used to describe a corporation's systematic distribution of large blocks of another company's stock which were being held as an investment.

Dividend - A distribution of the earnings of a corporation Dividends may be in the form of cash, stock or property (other securities owned by the corporation). A dividend can only be paid by declaration of the board of directors of the corporation.

Ex-Dividend Date: Four business days before the record date. On the ex-dividend date the purchase of stock no longer carries with it the right to receive the dividend previously declared.
Record Date: Stockholders owning the stock on the record date are entitled to receive a dividend. In order to be listed as an owner on the corporate books on the record date, the investor must have bought the stock before the ex-dividend date.
Payment Date: The day on which a stockholder of record will receive his or her dividend.

Dividend notification - A requirement that companies notify the Uniform Practice Department of The Nasdaq Stock Market at least 10 days in advance of the record date of a stock dividend so that Nasdaq can set the ex-dividend date.

Dividend Reinvestment Plan (DRIP) - A program offered by companies that allow investors to buy their stock directly from the company, without using a brokerage firm.

Divorce distribution - This is a distribution due to divorce of the client and his or her spouse. Assets are being removed from the IRA and are being given to the ex-spouse as part of the divorce settlement. The assets can be placed into the ex-spouse's IRA or given directly to ex-spouse in the form of a distribution. The divorce agreement would indicate how this transaction is to be handled.

DJIA Dow Jones Industrial Average - Average of the prices of 30 well-known, predominantly blue-chip, industrial stocks. The following 30 stocks make up the DJIA as of February 1995: Allied Signal; Alcoa; American Express; A T & T; Bethlehem Steel; Boeing; Caterpillar; Chevron; Coca Cola; Disney; Dupont; Exxon; General Electric; General Motors; Goodyear; IBM; International Paper; Kodak; McDonalds; Merck; 3M; JP Morgan; Philip Morris; Proctor Gamble; Sears; Texaco; Union Carbide; United Tech; Westinghouse and Woolworth.

Dollar Cost Averaging - A system of buying securities at regular intervals with a fixed dollar amount. Under this system investors buy by the dollar's worth rather than by the shares.

Double bottoms - A chart pattern of the price movement of a security that shows resistance to a falling market; the inverse of double tops. The price patterns are used by technical analysts to recognize a reversal of a price trend.

Double tops - A chart pattern of security price movements that depict a rising market which hits resistance at a certain level, retreats, rises again, but still cannot breach the previous resistance point, and falls back again. The price patterns are used by technical analysts to recognize a reversal of a price trend.

Downtick - Also called "minus tick," the sale of a listed stock at a price that is less than the previous sale price. For example, if a stock traded at $12 a share, the next trade would be a downtick if it is at 11 7/8.

DPP Direct Participation Program - A business venture, usually organized as a limited partnership, that is structured to pass-through income and "tax losses" of the underlying investments to investors. However, its use as a tax shelter has been severely reduced by tax legislation.

DRIP Dividend Reinvestment Plan - A program offered by companies that allow investors to buy their stock directly from the company, without using a brokerage firm.

DTC Depository Trust Company - A central securities certificate repository that is a member of the Federal Reserve System and is industry-owned. The New York Stock Exchange is the majority owner. DTC members deliver securities to each other via computerized debit and credit entries. This reduces the need to actually move paper certificates.

Due diligence - A thorough investigation of a company that is preparing to go public, undertaken by the company's underwriter and accounting firm.

Dutch auction tender - An action taken by a company to repurchase some, but not all, of its outstanding shares. The company will set a price range in specified increments, and shareholders submit their shares at a "bid price" within the company's range. Pursuant to the terms of the prospectus, the company selects an "acceptance price" for a certain number of shares. Shares submitted at a bid price above the acceptance price are returned to the customers. Shares submitted at or below the acceptance price are tendered to the company at the acceptance price. The shares tendered may be subject to a prorated factor, so only a portion of the shares within the acceptance price will be accepted. Any shares not tendered will be returned to the holder. The price and number of shares finally accepted are not related in any way to the time at which the shares are submitted. See "Pro Rata".

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