Investment Glossary

Interest that has been accumulated but not paid out. Accrued interest occurs as a result of the difference in timing of cash flows and the measurement of these cash flows. For example, accrued interest receivable occurs when interest on an outstanding receivable has been earned by the company, but has not yet been received. A loan to a customer for goods sold would result in interest being charged on the loan.

A strategy where an investor regularly contributes large or small amounts to a fund while reinvesting related income in an attempt to increase the value of the portfolio over time. With mutual funds, an accumulation plan can be a formal arrangement in which an investor contributes a pre-determined amount to the fund on a regular basis. The investor can then accumulate a larger and larger investment in the fund via these contributions and the increase in value of the fund's portfolio. An accumulation plan can be useful for investors who wish to build their positions in a mutual fund over time.

A financial document public corporations are required to send each year to their shareholders. This report discloses financial and operational information, and will usually be audited by an outside, independent authority.

Typically, an annual report will contain:

• financial highlights
• letter to the shareholders
• discussion and analysis
• financial statements
• notes to financial statements
• auditor's report
• corporate information

With mutual funds, an annual report must be provided to fund shareholders each fiscal year. The report explains the fund’s operations and finances.

The beneficiary who receive payments from an annuity; the age of the annuitant influences how an annuity contract acts. For example, when the annuitant seeks to receive lifetime payouts from the annuity, the insurer looks at statistics on life expectancy to determine payment sums; this makes sure the annuity can reasonably be expected to last the full life of the recipient.

A financial product that is designed to provide a steady cash flow at a future date based on an initial lump sum investment, and really refers to any terminating stream of fixed payments over a specified period of time. This term is often used in the world of finance, and usually describes how the stream of payments is valued; valuation considers the time value of money, and concepts such as interest rate and future value.

The lowest price a seller is willing to accept for a security; the ask price will always be higher than the “bid” price. "Market makers" make money on the difference between the bid price and the ask price. That difference is called the "spread." A market maker is a company, or an individual, that quotes both a buy and a sell price in hopes of making a profit on the spread between bid price and offer price.

Something with economic value that an individual, corporation or country owns or controls, such as cash, securities, inventory, office equipment, real estate, and other property. On a balance sheet, assets are equal to the sum of liabilities, common stock, preferred stock, and retained earnings. From an accounting perspective, assets are divided into the following categories: current assets (e.g., cash), long-term assets (e.g., real estate, plant), prepaid and deferred assets (e.g., future costs such as insurance, rent, interest), and intangible assets (e.g., patents, goodwill).