Glossary
F
Face Value: Either the stated value of a bond (e.g., $1,000) or an arbitrary
bookkeeping value of stocks. Also known as Par Value, Nominal Value.
Fair Market Value: Value based on current market value and supply
and demand conditions.
Family of Funds: Group of mutual funds managed by the same investment
management company.
Fannie Mae: Federal National Mortgage Association. Government-sponsored, publicly
owned corporation that buys and sells FHA-insured and other agency-guaranteed
or insured mortgages and some conventional mortgages.
Federal National Mortgage Association (FNMA): see Fannie Mae.
FDIC: Federal Deposit Insurance Corporation. Government agency that
insures repayment of savings and time deposits if a member bank
becomes insolvent. Mutual fund shares are not bank deposits and
are not FDIC-insured.
Federal Funds: Any immediately usable funds that can be utilized to
pay for money market instruments and U.S. government securities transactions.
Federal Funds Conversion: Process in which an investment check for a
money market fund is converted into cash. Also known as Overnight
Conversion.
Federal
Funds Rate: Negotiated interest rate charged by a bank that
loans excess funds to another bank that needs to increase its reserves.
The rate is determined by the forces of supply and demand.
Federal
Home Loan Bank: System supplying credit reserves for savings
and loan associations, cooperative banks and mortgage lenders in
a manner similar to the Federal Reserve's role with commercial banks.
Federal
Reserve System: Its main functions are to regulate the national
money supply, sets reserve requirements for members, supervise the
printing of currency at the mint, act as a clearing house for the
transfer of funds throughout the banking system and examine member
banks to make sure they meet various Federal Reserve regulations.
Fiduciary:
Person, company or association holding assets in trust for another.
FINRA:
Financial Industry Regulatory Authority. The largest non-governmental regulator for all securities firms doing business in the United States. Created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.
Fiscal
Year: Firm's accounting year. Annual financial statements are
as of this date.
Fixed
Annuity: A fixed annuity is an insurance contract that offers a fixed
payment and a guaranteed interest rate on the contract.
Fixed
Income Security: Security that pays a fixed rate of return.
This usually refers to government, corporate, or municipal bonds,
which pay a fixed rate of interest until the bonds mature and to
preferred stock, paying a fixed dividend.
Foreign
Exchange: Transactions methods used to make payments between countries.
Foreign
Investment: Investment check in U.S. dollars drawn from banks outside
of the United States.
Foreign Risk: The prices and yields
of foreign bonds can be affected by political and economic instability or
changes in currency exchange rates.
Form
1099-DIV: Reports
taxable income and capital gain distributions over $10; provides
general reporting instructions.
Form
1099-B: Reports
gross proceeds from any sales (redemptions) of mutual fund shares,
excluding money market funds, IRAs and certain qualified retirement
accounts.
Form
1099-R: Reports
a distribution made from a retirement plan or IRA. If this distributed
amount was not rolled over into another tax-deferred account
you will need to include all or part of it in your ordinary
income for tax purposes.
Form
5498: Reports
all IRA, SEP, and SIMPLE rollover and regular contributions
for the 2000 tax year.
Fractional
Share: Portion of a share of stock.
Freddie
Mac: Federal Home Loan Mortgage Corporation. Private corporation that
sells participation certificates and CMOs backed by pools of conventional
mortgage loans.
Federal
Home Loan Mortgage Corporation (FHLMC): see Freddie Mac.
Front-end
Load: Sales charge paid by the client at the time of purchase
of mutual fund shares; deducted out of the client's initial investment
amount.
"Full
Faith and Credit": Guarantee by the U.S. Government to
repay the principal and interest on certain government-issued debt
obligations.
Fundamental
Analysis: Method of analyzing the prospects of a company's security
by assessing sales, assets, earnings and other factors to forecast its future
stock price movements.
Futures
Contract: Transferable obligation to buy or sell a specific
amount of a commodity or financial instrument at a particular price
on a specified future date.
Futures
Option: Ability to buy and/or sell a commodity or financial
instrument at a particular price on a specific future date.
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