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Appendix A. Glossary - Pg. 103

Glossary 103 buy and hold An investment strategy characterized by purchasing stock to retain for an extended period of time. Additionally, buy and hold usually implies that dividends will be reinvested in subsequent purchases of the stock. call A contract that grants the bearer the option of purchasing stock for a predetermined price in the future regardless of the stock's actual market value at that time. capital appreciation The growth in the value of any type of investment asset such as stock or real estate. capital gains The total amount of profits from the sale of, or potential sale of, an investment asset. cash account A brokerage account stipulating that the investor can make no stock purchase larger than the amount of money within the account. closing price The amount at which the stock settled at the end of the trading day. commodity futures Contracts to buy or sell a specified amount of a product such as sugar, cotton, or precious metals for a predetermined price and date in the future. These contracts have value and are traded like stock. common stock A share of common stock is characterized by its owners receiving fluctuating dividends and voting one proxy per share. compound interest