Balanced Fund – A management company that invests in common stocks for growth and preferred stocks and bonds for income with the aim to achieve a balance for both.
Bank Note – A non-interest-bearing promissory note of a Federal Reserve Bank which is payable to the bearer on demand and can be used as cash.
Best Efforts Underwriting – A type of underwriting agreement in which the underwriter agrees to use all efforts to sell as much of an issue as possible to the public. Any amount of the securities that remains unsold is returned. The underwriter is not responsible for any unsold inventory.
Beta – A quantitative measure of the volatility of a given security relative to the overall index/market, usually the S&P 500. A beta of one (1) indicates the price of the security rises and falls in direct relationship to the movement of the index. A beta above one (1) is more volatile than the overall market, while a beta below one (1) is less volatile. A negative (-) beta indicated the security’s price moves in the opposite direction to the market as a whole.
Block – A large amount of securities being held or traded, typically at least ten (10) thousand shares or more of stock in the same issue or bonds with a face value of two (2) hundred thousand or more.
Blue Chip Stock – Stock of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times.
Blue Sky Laws – State regulations designed to protect investors against securities fraud by requiring broker/dealers, securities, and agents to register in each state and provide financial details. Commonly used name for the Uniform Securities Laws (state laws as opposed to federal laws).
Bond – A long-term debt investment or IOU in which an investor loans money to a corporate, municipal, or governmental entity that borrows the funds for a defined period of time at a fixed interest rate. Traditionally most bonds pay interest semi-annually. Bonds are used by companies, municipalities, states, and U.S. and foreign governments to finance a variety of projects and activities.
Bottom Up Approach – A method of investing that looks for specific companies/investments that are likely to have exceptional performance, regardless of overall economic conditions. Once these companies are selected then, the potential impact of overall economic conditions would be considered prior to making an investment.
Brochure – Form AVD Part II which gives descriptive information about the Advisory Firm and must be given to customers at least forty-eight (48) hours prior to entering into an advisory contract.
Brochure Rule – Under the Investment Advisor’s Act of 1940, the Brochure Rule requires federally registered investment advisors to provide a written disclosure statement to their clients at specified times during the advisory process.
Broker – Any person or firm engaged in effecting transactions in securities for the account of others. Brokers are usually licensed professionals in fields where specialized knowledge is required, such as finance, insurance, and real estate.
Broker/Dealer – Any person or firm engaged in effecting transactions in securities for its own account or the accounts of others.
Brokered CD – A large-denomination CD sold by a bank to a brokerage, which then divides it into smaller pieces for sale to its customers.
Business Risk – The risk that an issuer’s business declines, often due to technological change, bad business decisions, and law changes. This causes the value of that issuer’s securities to decline.
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