ExpertGlossary

A corporation goes public when it issues shares of its stock in the open market for the first time, in what is known as an initial public offering (IPO).

That means that at least some of the shares will be held by members of the public rather than exclusively by the investors who founded and funded the corporation initially or the current owners or management.

When you enter a futures contract that commits you to sell or deliver the underlying product, you go short or have a short position.

You're also going short when you write an options contract, giving the buyer the right to exercise the contract. With stocks, you go short when you borrow shares of stock through your broker and sell them at their current market price.

In contrast, you go long when you enter a futures contract to buy, when you purchase an options contract, or buy a stock either to hold in your portfolio or sell at some point in the future.

The term government bond is used to describe the debt securities issued by the federal government, such as US Treasury bills, notes, and bonds. They're also known as government obligations.

You can buy and sell these issues directly using a Treasury Direct account or through a broker.

Treasurys are backed by the full faith and credit of the US government, and the interest they pay is exempt from state and local, though not federal, income taxes. The cash raised by the sale of Treasurys is used to finance a variety of government activities.

Debt instruments issued by government agencies are also described as government bonds, or government securities, though they are not backed by the government's ability to collect taxes to pay them off.

For example, bonds issued by the Government National Mortgage Association (Ginnie Mae) and the Tennessee Valley Authority (TVA) are government bonds.