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Investment Terms


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Backup withholding. Federal income tax withheld by a fund's withholding agent from reportable payments if an investor fails to furnish his certified taxpayer identification number (TIN), or is subject to backup withholding for other reasons. Payments that may be subject to backup withholding include taxable dividends, exempt interest dividends, capital gain distributions and gross proceeds from the sale of fund shares.

Bear market. A prolonged period of falling securities prices.

Beta. A measure of a fund's volatility in relation to a securities market, as measured by a stated index. By definition, the beta of the stated index is 1; a fund with a higher beta has been more volatile than the index, and a fund with a lower beta has been less volatile than the index.

Blue chip. Common stock of a nationally known company that has a long record of profit, growth and dividend payments; and a reputation for quality management, products and services.

Bond. Debt security or IOU issued by a government entity or corporation, which generally pays a stated rate of interest, and plans to return the principal amount of the loan on the maturity date. Unlike stockholders, bondholders do not have corporate ownership privileges.

Book value. Net asset value of a company's securities. Book value can be a guide in selecting underpriced stocks and is an indication of the ultimate value of securities in liquidation.

Bourse. French term for stock exchange.

Breakpoint. Mutual funds often offer discounts on front-end sales charges or loads for larger investments. The investment levels at which the discounts become available are called "breakpoints."

BRIC. An abbreviation for the regions of Brazil, Russia, India and China.

Bull market. Term used to describe a prolonged rise in the price of securities.

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