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Part: 5 Here's Our Advice > Glossary - Pg. 292

Glossary 292 negative yield curve An unusual relationship in which long-term bonds pay less in interest than short-term bonds. The word negative refers to the downward slope of the curve that is drawn to depict this rela- tionship. net asset value (NAV) per share A fund's assets (securities and cash) minus its liabilities, divided by the number of shares out- standing. Also called the bid price. For a no-load fund, shares are bought and sold at the net asset value. no-load mutual fund A fund that can be bought without a sales charge or fee. opportunity cost The cost of passing up one investment in favor of another. For instance, if you pull money out of an investment that is earning 7 percent to invest it in a stock that has promise but currently yields just 4 percent, your opportunity cost while you're waiting for a better return is 3 percent. option A contract that, depending on the type of option held, permits the owner to purchase or sell an asset at a fixed price until a specific date. An option to purchase an asset is a call , and an option to sell an asset is a put. Depending on how an investor uses options, the risks can be quite high. Investors in options must be correct on timing as well as valuation of the underlying asset to be successful. Pension Benefit Guaranty Corporation (PBGC) A government agency that insures benefits owed to employees of corporate pension plans, up to a specified dollar limit. The corporation, established under the Employee Retirement Income Security Act of 1974 (ERISA), is funded by charging companies a premium based on the number of covered employees.