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Appendix A. Glossary - Pg. 106

Glossary 106 orders Instructions to a broker on how stock should be traded. options A contract between two parties to trade stock at a predetermined price. over-the-counter Stocks that are traded over the largest stock trading network in this country, a computerized network known as NMS. P/E ratio A comparison of the current market value of the stock to its dividend payments. penny stock Highly speculative shares in a company with little or no real value other than uncertain growth potential. political/governmental risk The danger that domestic and international governmental actions will have ramifications affect- ing a stock's performance. portfolio reevaluation Periodic investment recalculations using newer and increased information to ensure the original decision is still correct or applicable. preferred stock A share of stock that is issued after common stock and whose dividends are a predetermined amount and paid prior to common stock's dividends. puts A contract that grants the option of selling stock at a predetermined price in the future regardless of the stock's actual market value at that time. principal The initial amount of money used to purchase an investment. qualifiers Symbols and initials on the stock tables that denote circumstances associated with the corre- sponding stock information. recommendation A request for, or the receipt of, information or insight from a person who may have a better insight into the stock's future performance. regional exchange One of 14 exchanges around the United States that offer the larger stocks of the NYSE or AMEX and proprietary-listed stock for trade. research Checking sources for information on a stock and/or its performance. round lots A predetermined number of shares of stock that is considered standard for trade. Russell Indices Three indices that rate the activities of stocks, based on their market capitalization. The smallest, the Russell 1000, measures the activities of the 1,000 largest capitalized companies, while the Russell 2000 measures those of the less capitalized companies. secondary stock Shares of a company with substantial backing that is not considered blue chip. short-term capital gains The total amount of profits from the sale of, or potential sale of, an investment asset that has been held for one year or less.