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Ordinary interest
Interest based on a 360-day year instead of a 365-day year, resulting in what can be a significant difference.

Ordinary shares
Apples mainly to international equities. Shares of non-U.S. companiestraded in their individual home markets. Usually cannot be delivered in the U.S. See: ADR.

Organic growth
Refers to growth achieved by internal investments of the firm. This could be the day to day business of the firm or a division of the firm starting a new business from scratch. This is distinguished from growth by acquisition or merger which involves an outside firm.

Organization chart
A chart showing the hierarchical interrelationships of positions within an organization.

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Counterpart items
In the balance of payments, counterpart items are analogous to unrequited transfers in the current account. They arise through the double-entry system in balance of payments accounting and refer to adjustments in reserves owing to monetization or demonetization of gold, allocation or cancellation of SDRs, and revaluation of the various components of total reserves.

Counterparties
The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position.

Counterparty

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APFinancial Seminars & Workshops: Butterfly
In the context of equities, a firm with two divisions may split into two companies and issue original shareholders two shares (one in each of the new companies) for every old share they have.

Butterfly shift
A nonparallel shift in the yield curve involving the height of the curve.

Butterfly spread
Applies to derivative products. Complex optionstrategy that involves buying a call option with a relatively low strike price; buying a call option with a relatively high strike price; and selling two call options with an intermediate strike price. Essentially, this is a bear call spread stacked on top of a bull call spread. One can also do this with puts. The investor buys a put with a low strike, buys a put at high strike and sells two puts at intermediate strike price. The payoff diagram resembles the shape of a butterfly.

Buy
To purchase an asset; taking a long position.

Buy-and-hold strategy
A passive investment strategy with no activebuying and selling of stocks from the time the portfolio is created until the end of the investment horizon. Opposite of active strategy.
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Municipal bond insurance
An insurance policy which guarantees payment on municipal bonds in the event of default .

Municipal bond fund
A mutual fund that invests in bondsissued by state, city, and/or local governments. The interest obtained from these bonds is passed through to shareholders and is generally free of federal (and sometimes state and local) income taxes.

Municipal improvement certificate
A certificate used to finance local government projects and services which is financed by a special tax assessment and provides tax-free interest .

Municipal Investment Trust (MIT)
A unit investment trust that buys municipal bonds and usually holds them until maturity, passing the bond income on to shareholders, usually tax-free.

Municipal notes
Short-termnotesissued by municipalities in anticipation of tax receipts, proceeds from a bond issue, or other revenues.

Municipal revenue bond
A bondissued to finance a public project that is funded by the revenues of the project.

APFinancial Comprehensive Proposals
APFinancial Investment: Approved list
A list of equities and other investments that a financial institution or mutual fund is allowed to invest in. See: Legal list.

APS
Auction Preferred Stock. A type of Dutch Auction Preferred Stock (Goldman Sachs product).

Arbitrage
The simultaneous buying and selling of a security at two different prices in two different markets, resulting in profits without risk. Perfectly efficient markets present no arbitrage opportunities. Perfectly efficient markets seldom exist, but, arbitrage opportunities are often precluded because of transactionscosts.

Arbitrage bonds
Municipalityissuedbonds issued intended to gain an interest rate advantage by refunding a higher-rate bond in ahead of their call date. Lower-rate refunding issue proceeds are invested in Treasuries until the first call date of the higher-rate issue.

Arbitrage-free option-pricing models
Yield curve option-pricing models.

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Oversold
Used in the context of general equities. Technically too low in price, and hence a technical correction is expected. Antithesis of overbought.

Oversubscribed issue
Investors are not able to buy all the shares or bonds they want, so underwriters must allocate the shares or bonds among investors. This occurs when a new issue is underpriced or in great demand because of growth prospects.

Oversubscription
The excess number of shares or bonds that investors want to buy but are not available due to high demand.

Oversubscription privilege
In a rights issue, arrangement by which shareholders are given the right to apply for any shares that are not taken up.

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Market interest rate
Rates of interest paid on deposits and other investments, determined by the interaction of the supply of and demand for funds in the money market.

Market internalization advantages
Conditions that allow a corporation to exploit the failure of an arm's length market to deliver goods or services efficiently.

Market jitters
Anxiety among many investors, causing them to sell stocks and bonds, pushing prices down.

Market letter
A newsletter analyzing the market that is written by an SEC-registered investment adviser who sells the letter to subscribers. See: Hulbert Rating.

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Compound Annual Growth Rate
Annual return calculated based on each year's previous balances where each previous balance includes both the original principal and all interest accrued from prior years. Best defined by example. If you invest $100 today and make 5% in the first year and reinvest ($105) and make 8% in the second year, the compound annualgrowth rate is 6.489%. The calculation is $100x1.05x1.08=$113.4 which is what you end up with at the end of year two. The average return is [square root(113.4/100) -1]= 0.06489 or 6.489%. Note 1. If we had three compounding periods we would take the cubic root (power of 1/3). Note 2. If we had invested at exactly 6.489 in both periods, we get $100x1.06489x1.06489=$113.4. Note 3. The example is directed to a return - but CAGR could be applied to earnings growth, GDP growth, etc.

Compound Annual Return
See: Compound Annual Growth Rate

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APFinancial investment products: Target investment mix
The percentage mix of stocks, bonds, and short-termreserves that an investor considers appropriate based on his/her personal objectives, time horizon, risk tolerance, and financial resources.

Target Leverage Ratio
The ratio of the market value of debt to the total market value of the firm that management seeks to maintain.

Target payout ratio
A firm's long-run dividend-to-earnings ratio. The firm's policy is to attempt to pay out a certain percentage of earnings, but it pays a stated dollar dividend and adjusts it to the target as base line increases in earnings occur.
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Carriage and Insurance Paid To (CIP)
Seller is responsible for the payment of freight to carry goods to a named overseas destination. The seller is also responsible for providing cargo insurance at minimum coverage against the buyer's risk of loss or damage to the goods during transport. The risk of loss or damage is transferred from the seller to the buyer once the goods are delivered into the carrier's custody. This term may be used for any mode of transport.

Carriage Paid To (CPT)
Seller is responsible for the payment of freight to carry goods to a named overseas destination. The risk of loss or damage is transferred from the seller to the buyer when the goods have been delivered into the carrier's custody. This term may be used for any mode of transport.

Carrot equity
British slang for an equityinvestment with the added benefit of an opportunity to purchase more equity if the company reaches certain financial goals.

Carry
Related: Net financing cost.

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APFinancial Investment: Residuals
(1) Part of stockreturns not explained by the explanatory variable (the market index return). Residuals measure the impact of firm-specific events during a particular period. (2) Remainder cash flows generated by poolcollateral and those needed to fund bonds supported by the collateral.

Residual value
Usually refers to the value of a lessor's property at the time the lease expires.

Resiliency
Speed with which new orders respond to a change in prices.

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Simple IRA
A salarydeduction plan for retirement benefits provided by some small companies with no more than 100 employees.

Simple linear regression
A regression analysis between only two variables, one dependent and the other explanatory.

Simple linear trend model
An extrapolative statistical model that asserts that earnings have a base level and grow at a constant amount each period.

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Payments System
Collective term for mechanisms (both paper-backed and electronic) for moving funds, payments and money among financial institutions throughout the nation. The Federal Reserve plays a major role in the nation's payments system through distribution of currency and coin, processing of checks, electronic transfer of funds and the operation of automated clearinghouses that transfer funds electronically among depository intitutions; various private organizations also perform payments system functions.

Payoff diagram
In option pricing, a graph of the value of the option position at expiration as a function of the underlying asset price.

Payoff profile
The slope of a line graphed according to the value of an underlying asset on the x-axis and the value of a position taken to hedge against risk exposure on the y-axis. Also used with changes in value. See: Risk profile.

Payout period
The time period during which withdrawals from a retirement account or annuity are paid.

APFinancial Seminars & Workshops

Variable
An element in a model. For example, in the model RS&Pt+1 = a + b Tbill t + et, where RS&Pt+1 is the return on the S&P in month t+1 and Tbill is the Tbill return at month t, both RS&P and Tbill are "variables" because they change through time; i.e., they are not constant.

Variable annuities
Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlyingportfolio.

Variable cost
A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero.

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APFinancial traditional bank instruments: Valuation
Determination of the value of a company's stock based on earnings and the market value of assets.

Valuation Clause
Stipulates a fixed sum for insured property in the event of loss when included in a marine cargo insurance policy.

Valuation Opportunity Cost
The potential increase in firm value associated with investments that are for gone due to capital rationing.

Valuation reserve
An allowance to provide for changes in the value of a company's assets, such as depreciation.
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Bottomline growth
Growth in net profit. Also see topline growth.

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APFinancial Net: Neural Nets
Models which mimic the massive parallel processing that occurs in the brain.

Neutral period
In the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not start or end on either a Friday or the day before a holiday.

Neutral stock
A stock with a beta of 1.0.

New account report
A broker's document including information about a new client. See: Know your customer.

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Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to financemarginloans to investors. The broker charges the investor the call money rate plus a service charge.

Call option
An optioncontract that gives its holder the right (but not the obligation) to purchase a specified number of shares of the underlyingstock at the given strike price, on or before the expiration date of the contract.

Call an option
To exercise a call option.

APFinancial Insurance

Mortgage
A loansecured by the collateral of some specified real estate property which obliges the borrower to make a predetermined series of payments.

Mortgage-Backed Securities Clearing Corporation (MBSCC)
"Founded" in 1979, MBSCC is the sole provider of automated post-trade comparison, netting, risk management and pool notification services to the mortgage-backed securities market. The organization is a registered clearing agency with the Securities and Exchange Commission and majority-owned by its members -- MBS dealers, inter-dealer brokers and other non-broker/dealers. MBSCC provides its specialized services to major market participants active in various Government National Mortgage Association (GNMA), Fannie Mae(FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) MBS programs.

Mortgage-backed securities (MSBs)
Securities backed by a pool of mortgageloans.

Mortgage banker
A company or individual that originates mortgageloans and sells them to investors, while taking care of borrowers'loan payments, records, taxes, and insurance.

Mortgage bond
A bond in which the issuer has granted the bondholders a lien against the pledgedassets. See: Collateral trust bonds

APFinancial Personal

Mr. Perrin explained that the company AP Financial has grown by leaps and bounds due to their dedication to help their cliens to achieve their goals. New plans are to open in a few months another office in Southern California and they will make sure contributs to the community is highly encouraged. The goal being to help those less fortunate achieve their goals and make happy all the clients.

Habitat for Humanity is a home ownership program for hard working families that need safe and affordable homes. Habitat of Metro Denver is the 16th highest producing Habitat in the United States and only the 5th affiliate to raise over a million dollars to aid Habitat affiliates in over 30 different countries. Habitat’s says that everyone should have and deserves a decent place to live and together with the help of organizations like AP Financial, that is becoming a reality. Step by step with one community, one home, and one family at a time the say will become reality.

APFinancial traditional bank instruments

: Seller's points
In reference to a loan, seller's points consist of a lump sum paid by the seller to the buyer'screditor to reduce the cost of the loan to the buyer. This payment is either required by the creditor or volunteered by the seller, usually in a loan to buy real estate. Generally, one point equals one percent of the loan amount.

Selling climax
A sudden drop in security prices as sellers dump their holdings.

Selling concession
The discountunderwriters offer the selling group on securities in a new issue.

Selling dividends
Inducing a prospective customer tobuyshares in order to profit from a dividend scheduled in the near future.
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Commission-only compensation
Payment to a financial advisers of only commissions on investmentspurchased when the client implements the recommended financial plan.

Commitment
Describes a trader'sobligation to accept or make delivery on a futures contract. Related: Open interest.

Committee on Uniform Securities Identification Procedures (CUSIP)
Committee that assigns identifying numbers and codes for all securities. These "CUSIP" numbers and symbols are used when recording all buy or sell orders.

Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity Exchange, Inc. (COMEX); the New York Mercantile Exchange (NYMEX); New York Cotton Exchange, Coffee, Sugar & Cocoa Exchange (CS&CE), and New York Futures Exchange (NYFE).

Commodity
A commodity is food, metal, or another fixed physical substance that investorsbuy or sell, usually via futures contracts.

Commodity-backed bond
A bond with interest payments tied to the price of an underlyingcommodity.

APFinancial Contact
APFinancial Net: Last trading day
The final day under an exchange's rules during which trading may take place in a particular futures or options contract. Contracts outstanding at the end of the last trading day must be settled by delivery ofunderlyingphysical commodities or financialinstruments, or by agreement for monetary settlement, depending futures contract specifications.

Late charge
A fee a creditgrantor charges a borrower for a late payment.

Late tape
A delay in the display of price changes on the tape of an exchange because of heavy trading. In severe instances the first digit of each price is intentionally deleted.

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Post-trade benchmarks
Prices after the decision to trade.

Pot
The portion of stock or bondissue that is returned to the managing underwriter by the participating investment bankers for sale to institutional investors.

Pot is clean
Phrase used when managing underwriter has sold the entire pot.

Potential Default
A condition where a default may occur in time.

APFinancial Seminars & Workshops

Sarbanes Oxley Act of 2002
Legislation passed largely as a result of a number of accounting scandals. Among the many features is the creation of the Public Company Accounting Oversight Board. This board is charged to: The Board shall: 1) register public accounting firms; 2) establish, or adopt, by rule, auditing, quality control, ethics, independence, and other standards relating to the preparation of audit reports for issuers; (3) conduct inspections of accounting firms; (4) conduct investigations and disciplinary proceedings, and impose appropriate sanctions; (5) perform such other duties or functions as necessary or appropriate; (6) enforce compliance with the Act, the rules of the Board, professional standards, and the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto; (7) set the budget and manage the operations of the Board and the staff of the Board.

Saturday night special
Often used in risk arbitrage. Sudden attempt by one company to take over another by making a publictender offer.

Saucer
Technical chart pattern depicting a security whose price has reached bottom and is moving up.

APFinancial a wide variety of investment

Auction markets
Markets in which the prevailing price is determined through the free interaction of prospective buyers and sellers, as on the floor of the stock exchange.

Auction rate preferred stock (ARPS)
Floating rate preferred stock, whose dividend is adjusted every seven weeks through a Dutch auction.

Audit
An examination of a company's accounting records and books conducted by an outside professional in order to determine whether the company is maintaining records according to generally accepted accounting principles. See: accountant's opinion.

Audit trail
Resolves the validity of an accounting entry by a step-by-step record by which accounting data can be traced to their source.

APFinancial Representatives

: Thrift plan
A defined contribution plan in which an employee contributes, usually on a before-tax basis, toward the ultimate benefits that will be provided. The employer usually agrees to match all or a portion of the employee's contributions.

Throughput agreement
An agreement to put a specified amount of product per period through a particular facility. An example is an agreement to ship a specified amount of crude oil per period through a particular pipeline.

Tick
Refers to the minimum change in price a security can have, either up or down. Related: Point.

Tick indicator
A marketindicator based on the number of stocks whose last trade was an uptick or a downtick. Used as an indicator of market sentiment or psychology to try to predict the market's trend.
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Buck
Slang for one million dollars.

Bucket shop
An illegal brokerage firm that accepts customer orders but does not attain immediate executions. A bucket shop broker promises the customer a certain price, but waits until a price discrepancy is present and the trade is advantageous to the firm and then keeps the difference as profit. Alternatively, the broker may never fill the customer's order but keep the money.

Budapest Stock Exchange Established in 1864, the major securities market of Hungary.

Budget surplus
The amount by which government revenues exceed government spending.

APFinancial Investments
APFinancial Net: Reorg (or Corporate Action or Reorganization)
Any transaction involving the issuance of stock or cash, or the cancellation of stock tendered by a shareholder, such as in the case of a merger, acquisition or tender offer.

Reorganization
Creation of a plan to restructure a debtor's business and restore its financial health.

Reorganization bond
A bondissued by a company undergoing a reorganization process.

Repatriation
The return from abroad of the financialassets of an organization or individual.

Replacement Chain
A concept that views a capital investment as an indefinite commitment to a specific type of technology. The replacement chain concept can be used to allow the comparison of mutually exclusive investments with unequal lives.

APFinancial Investment

Convertible
A financialinstrument that can be exchanged for another security or equity interest at a pre-agreed time and exchange ratio.

Convertible Arbitrage
In the context of hedge funds, a style of management that involves the simultaneous purchase of a convertible bond and the short sale of shares of the underlying stock. Interest rate risk may or may not be hedged.

Convergence
The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is usually higher because of time value. But as the contract nears expiration, and time value decreases, the futures price and the cash price converge.

Conversion
In the context of securities, refers to the exchange of a convertible security such as a bond into stock.

APFinancial Net

Maloney Act
1938 legislation amending the Securities Exchange Act that regulates the OTC market.

Managed account
An investmentportfolio one or more clients entrusted to a manager who decides how to invest it.

Managed float
Also known as "dirty" float, this is a system of floating exchange rates with central bank intervention to reduce currencyfluctuations.

Managed Futures
In the context of hedge funds, a style of management that focuses on short-termtrading in the futures market.

Management
The people who administer a company, create policies, and provide the support necessary to implement the owners' business objectives.

APFinancial Asociates

Casualty loss
A financial loss caused by damage, destruction, or loss of property as a result of an unexpected or unusual event.

Catastrophe call
Early redemption of a municipal revenue bond because a catastrophe has destroyed the project that provided the revenue source backing the bond.

Cats and dogs
Speculative stocks with short histories of sales, earnings, and dividend payments.

Caveat emptor, caveat subscriptor
Latin expressions for "buyer beware" and "seller beware," which warn of overly risky, inadequately protectedmarkets.

Cease-and-desist order
An order issued after notice and opportunity for hearing, requiring a depository institution, a holding company or a depository institution official to terminate unlawful, unsafe or unsound banking practices. Cease-and-desist orders are issued by the appropriate federal regulatory agencies under the Financial Institutions Supervisory Act and can be enforced directly by the courts.

APFinancial Seminars & Workshops

: Placement ratio
The percentages of last week's new municipal bondofferings that have been bought from the underwriters, according to the Bond Buyer newspaper.

Plain vanilla
A term that refers to a relatively simple derivativefinancialinstrument, usually a swap or other derivative that is issued with standard features.

Plain vanilla swap
See: Fixed for floating swap

Plan agreement
A document detailing the terms and conditions of a retirement plan such as an IRA.

Plan participants
Employees or other beneficiaries who are eligible to receive benefits from a company's employee benefit plan.
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Skort-Swing Transaction
Any purchase and sale, or sale and purchase, of the issuer's equitysecurities by an insider within a period of less than six months, See: Section 16(b) above.

SLD last sale
Shortened version of "sold last sale," which shows up on the consolidated tape when a large change (one point for lower priced securities and two points for higher-priced securities) occurs between transactions.

Sleeper
Stock in which there is little investor interest but that has significant potential to gain in price once its attractions are recognized. Antithesis of high flyer.

APFinancial
APFinancial Personal: Collar
Refers to the ceiling and floor of the price fluctuation of an underlying asset. A collar is usually set up with options, swaps, or by other agreements. In corporate finance, the collar strategy of buying puts and selling calls is often used to mitigate the risk of a concentrated position in (sometimes) restricted stock. When the restricted owner can't sell the stock, but needs to diversify the risk, a collar transaction is one of the few tools available. Many corporate executives who receive chunks of their compensation in restricted stock need to employ this strategy to mitigate the diversification risk in their overall portfolio.

Collateral
In the context of project financing, additional security pledged to support the project financing.

Collateral trust bonds
A bond in which the issuer (often a holding company) grants investors a lien on stocks, notes, bonds, or other financial asset as security. Compare mortgage bond.

Collateralized Bond Obligation (CBO)
Investment-grade bonds backed by a collection of junk bonds with different levels of risk, called tiers, that are determined by the quality of junk bond involved. CBOs backed by highly riskyjunk bonds receive higher interest rates than other CBOs.

APFinancial a wide variety of investment

Nearest month
The expiration date of an option or future that is closest to the present.

"Need the tick"
Used for listed equity securities. A stock must trade up/down at least one tick (1/8) in order to comply with regulations governing short sales/corporate repurchases.

Negative amortization
A loan repayment schedule in which the outstandingprincipal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid interest is added to the outstandingprincipal, to be repaid later.

Negative NPV tie-in project
A negative-NPV infrastructure development project that a local government requires of a company engaged in a positive NPV investment project elsewhere in the country.

Negative carry
Related: Net financing cost

Negative cash flow
Occurs when spending in a business is greater than earnings.

APFinancial Asociates

Monitor
To seek information about an agent's behavior; a device that provides such information.

Monopoly
Absolute control of all sales and distribution in a market by one firm, due to some barrier to entry of other firms, allowing the firm to sell at a higher price than the socially optimal price.

Monopsony
The existence of only one buyer in a market, forcing sellers to accept a lower price than the socially optimal price.

Monte Carlo simulation
An analytical technique for solving a problem by performing a large number of trail runs, called simulations, and inferring a solution from the collective results of the trial runs. Method for calculating the probability distribution of possible outcomes.

APFinancial growth rate

Prepackaged bankruptcy
A bankruptcy in which a debtor and its creditors pre-negotiate a plan of reorganization and then file it along with the bankruptcy petition.

Prepaid interest
An asset account showing interest that has been paid in advance, which is expensed and charged to the borrower'sP & L statement.

Prepayment penalty
A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity.

Prepayment speed
Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities.

Prepayments
Payments made in excess of scheduled mortgageprincipal repayments.

Prerefunded bond
Refunded bond.

APFinancial Net

: Consumer credit
Credit a firm grants to consumers for the purchase of goods or services. Also called retail credit.

Consumer Credit Protection Act of 1968
Federal legislation establishing rules for the disclosure of the terms of a loan to protectborrowers. See: Truth in lending.

Consumer debenture
An investmentnoteissued directly to the public by a financial institution.

Consumer durables
Consumer products that are expected to last three years or more, such as an automobile or a home appliance.
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Risk-averse
Describes an investor who, when faced with two investments with the same expected return but different risks, prefers the one with the lower risk.

Risk-based capital ratio
Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset.

Risk classes
Groups of projects that have approximately the same amount of risk.

Risk controlled arbitrage
A self-funding, self-hedged series of transactions that generally use mortgage securities (MBS) as the primary assets.



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