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A mortgage program available only to first-time homebuyers within the State of Maine . Income limitations are applicable.
State of Maine, Department of Professional and Financial Regulation - Cite This Source - This Definition- Browse Related Terms: Balloon Payment, Conventional Mortgage, Department of Veterans Affairs (VA), Federal Housing Authority (FHA), floating, Loan Term, Locking, Maine State Housing Authority (MSHA), Pest Inspection, Rate Lock, Rescission, Rural Development (RD), Underwriting
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A dealer who specializes in a specific security, such as a bond or stock, is said to make a market in that security. That means the dealer is ready to buy or sell at least one round lot of the security at its publicly quoted price.
Other broker-dealers turn to a market maker when they want to buy or sell that particular security either for their own account or for a client's account.
Electronic markets, such as NASDAQ, tend to have several market makers in a particular security. The overall effect of multiple market makers is greater liquidity in the marketplace and more competitive pricing.
- Browse Related Terms: Ask, BID, bid and ask, Dealer, Firm quote, Make a market, Market maker, Pink Sheets, Quotation (Quote), Trading floor
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A managed account is a portfolio of stocks or bonds chosen and managed by a professional investment manager who makes the buy and sell decisions.
Each managed account has an investment objective, and each manager oversees multiple individual accounts invested in the same basic portfolio to meet the same objective.
While managed accounts resemble mutual funds in some ways, with a managed account you own individual securities rather than shares of a common fund.
You may also be able to request that the manager avoid certain investments, which you can't do with a mutual fund. And, through your broker you might ask the manager to sell certain holdings in your account to realize capital gains or losses.
There are no phantom gains in managed accounts. Those gains can occur if a mutual fund realizes a profit from selling an investment and credits you with a capital gain even if there's no actual increase in your account value.
However, the minimum investment is usually substantially higher for a managed account - often $100,000. Plus, the annual fees, which are included in the amount you pay the financial professional who recommends the account, may be higher than the fees on a mutual fund of similar value.
- Browse Related Terms: Actively managed fund, Buy side, Closed-end fund, Economy, Enhanced index fund, index fund, Institutional investor, Managed account, Management fee, Money manager, Passively managed, Portfolio manager, Prudent man rule, Public company, Wrap account
The business entity that establishes, promotes and manages a fund or funds.
- Browse Related Terms: annual and semi-annual reports, Back-end load, expense ratio, front-end load, load, management company, management expense ratio, Mutual Fund, net asset value, net asset value per share, no-load fund, open-ended fund, Redemption, Sales charge, total return
The sum paid to the investment company's advisor or manager for supervising its portfolio and administering its operations.
- Browse Related Terms: Asset allocation, assets, diversification, dollar cost averaging, fixed income investments, growth fund, investment adviser, Investment Company, leveraging, management expense fee, portfolio, systematic withdrawal plans
A measure of the total cost of operating a fund as a percentage of average total assets.
- Browse Related Terms: annual and semi-annual reports, Back-end load, expense ratio, front-end load, load, management company, management expense ratio, Mutual Fund, net asset value, net asset value per share, no-load fund, open-ended fund, Redemption, Sales charge, total return
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A management fee is the percentage of your account value that an investment company or manager charges to handle your account.
Fees for passively managed index funds typically cost less than the fees for actively managed funds, though fees differ significantly from one fund company to another.
- Browse Related Terms: Actively managed fund, Buy side, Closed-end fund, Economy, Enhanced index fund, index fund, Institutional investor, Managed account, Management fee, Money manager, Passively managed, Portfolio manager, Prudent man rule, Public company, Wrap account
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Under the provisions of the Flood Disaster Protection Act of 1973, individuals, businesses, and others buying, building, or improving property located in identified areas of special flood hazards within participating communities are required to purchase flood insurance as a prerequisite for receiving any type of direct or indirect federal financial assistance (e.g., any loan, grant, guaranty, insurance, payment, subsidy, or disaster assistance) when the building or personal property is the subject of or security for such assistance.
- Browse Related Terms: Flood Disaster Protection Act (FDPA) of 1973, Flood Hazard Boundary Map (FHBM), Flood Insurance Rate Map (FIRM), Flood Zone (Zone), Mandatory Purchase, Special Flood Hazard Area (SFHA), zone
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A structure built on a permanent chassis, transported to its site in one or more sections, and affixed to a permanent foundation. "Manufactured (mobile) home" does not include recreational vehicles.
- Browse Related Terms: 2 to 4 Family Residence, Condominium, Manufactured (mobile) home, Mobile home, Non-Residential, Other Residential, Residential Condominium Building Association Policy (RCBAP), Single-Family Residence
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The amount paid by clients when they use credit to buy a security. The remainder is loaned by their brokers.
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Margin is the minimum amount of collateral - in either cash or securities - you must have in your margin account to buy on margin, sell short, or invest in certain derivatives.
The initial margin requirement is set by federal law and varies from product to product. For example, to buy stock on margin, you must have at least 50% of the purchase price in your account.
After the initial transaction, maintenance rules set by the self-regulatory organizations, such as the New York Stock Exchange (NYSE) and NASD, apply.
Under those rules, you must have a minimum of 25% of the total market value of the margined investments in your account at all times. Individual firms may set their maintenance requirement higher - at 30% or 35%, for example.
If your equity in the account falls below the maintenance level, you'll receive a margin call for additional collateral to bring the account value back above the minimum level.
- Browse Related Terms: Circuit breaker, Commodity Futures Trading Commission (CFTC), Competitive trader, Margin, Margin requirement, Not-for-profit, Open outcry, Program trading, Regulation T, Securities and Exchange Commission (SEC), Self-regulatory organization (SRO), Trading range
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Percentage added to an index by a loan company to determine the interest rate; often used in conjunction with ARM's.)
State of Maine, Department of Professional and Financial Regulation - Cite This Source - This Definition- Browse Related Terms: Adjustable Rate Loans, Buy Down, CAP, Commitment, Credit Life & Disability Insurance, fixed-rate mortgage, Hazard Insurance/Homeowners Insurance, index, Margin, Prepayment Penalty (Mortgages), Principal, Interest, Taxes and Insurance (PITI), Variable-Rate Loans
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Arrangement with a broker or financial institution permitting a customer to borrow in order to cover the cost of investment purchases.
Margin accounts are brokerage accounts that allow you a much wider range of transactions than cash accounts.
In a cash account you must pay for every purchase in full at the time of the transaction. In a margin account, you can on margin, sell short, and purchase certain types of derivative products.
Before you can open a margin account, however, you must satisfy the firm's requirements for margin transactions. You must also agree in writing to the terms of the account, and make a minimum deposit of at least $2,000 in cash or qualifying securities.
If you buy on margin or sell short, you pay interest on the cash or the value of the securities you borrow through your margin account and must eventually repay the loan.
Because both types of transactions use leverage, they offer the possibility of making a substantially larger profit than you could realize by using only your own money.
But because you must repay the loan plus interest even if you lose money on the investment, using a margin account also exposes you to more risk than a cash account.
- Browse Related Terms: Automated Clearing House (ACH), Automated Teller Machine (ATM), Error Resolution, Frozen Account, Garnishment/Garnish, General account, Joint Account, Margin account, Minimum Amount to Open, Point of Sale (POS), Right of offset, statement
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To protect the margin loans they make, brokers issue a margin call if your equity in your margin account falls below the required maintenance level of at least 25%.
If you get a margin call, you must deposit additional cash or securities to meet the call, bringing the balance of the account back up to the required level.
If you don't meet the call, securities in your account may be sold, and your broker repaid in full. For example, if you buy 1,000 shares on margin when they are seliing at $10 a share, and the price falls to $7 a share, your equity would be $2,000 ($7,000 market value minus $5,000 loan is $2,000).
That's 28.6% of the market value. If your brokerage firm has a maintenance requirement of 30%, you would receive a margin call to bring your equity back to the required level - in this case $2,100, which is 30% of $7,000.
You might also get a margin call if you trade futures contracts and the value of your account drops below the required maintenance level. However, margin requirements for futures are different than for stock.
- Browse Related Terms: Bucket shop, Discretionary account, Frontrunning, Futures Commission Merchant (FCM), Introducing broker (IB), Margin call, Piggyback, Securities Investor Protection Corporation (SIPC), Sell side, unit trusts
The difference between the collateral deposited by the client and the amount borrowed (currently a maximum of 50 percent of the current market value of the securities) represents margin debt. Should the stock decrease in value, the investor must keep the proper maintenance level, either by putting up more money or by selling marginable securities. The use of borrowed money to purchase securities is referred to as "buying on margin." This strategy dramatically increases both upside potential and downside risk.
- Browse Related Terms: bid and ask, Broker, day order, futures, Limit order, Liquidity, Margin, margin debt, Market order, open order, options, registered representative, stock yield
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The margin requirement is the minimum amount the Federal Reserve, in Regulation T, requires you to deposit in a margin account before you can trade through that account.
Currently this minimum, or initial margin, is $2,000, or 50% of the purchase price of securities you buy on margin, or 50% of the amount that you receive for selling securities short.
In addition, there's a minimum maintenance requirement, a minimum of 25% and often more, of the market value of the securities in the account. The maintenance requirement is set by the New York Stock Exchange (NYSE), the National Association of Securities Dealers (NASD), and the individual brokerage firms.
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Because the US income tax system is progressive, your tax rate rises as your taxable income rises through two or more tax brackets.
Your marginal tax rate is the rate you pay on the taxable income that falls into the highest bracket you reach: 10%, 15%, 25%, 28%, 33%, or 35%.
For instance, if you have a taxable income that falls into three brackets, your would pay at the 10% rate on the first portion, the 15% rate on the next portion, and the 25% federal tax on only the third portion. Your marginal rate would be 25%.
However, your marginal tax rate is higher than your effective tax rate, which is the average rate you pay on your combined taxable income. That's because you're only paying tax at your marginal, or maximum, rate on the top portion of your income.
Keep in mind that your marginal tax rate only applies to tax on ordinary income and does not take into account other tax liabilities - such as realized long-term capital gains which are taxed at your long capital gains rate - or tax credits for which you may be eligible, which may reduce the actual tax you pay.
- Browse Related Terms: Effective tax rate, flat tax, Marginal tax rate, Private letter ruling, Progressive tax, Regressive tax, Tax bracket
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When an investment is marked to the market, its value is adjusted to reflect the current market price.
With mutual funds, for example, marking to the market means that a fund's net asset value (NAV) is recalculated each day based on the closing prices of the fund's underlying investments.
With a margin account to buy futures contracts, the value of the contracts in the account is recalculated at least once a day to determine whether it meets the firm's margin requirements.
If that value falls below the minimum specified, you get a margin call and must add assets to your account to return it to the required level.
- Browse Related Terms: American depositary receipt (ADR), Annuity unit, Block trade, Capital appreciation, Exchange-traded fund (ETF), expense ratio, Institutional fund, Mark to the market, Net asset value (NAV), Offshore fund, Open-end mutual fund, Proprietary fund, share, Standard & Poor's Depositary Receipt (SPDR), Underlying investment, Unit investment trust (UIT), Unit trust
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A markdown is the amount a broker-dealer earns on the sale of a fixed-income security and is the difference between the sales price and what the seller realizes on the sale.
The markdown may or may not appear in the commission column or be stated separately on a confirmation statement.
A markdown is determined, in part, by the demand for the security in the marketplace. A broker-dealer may charge a smaller markdown if the security can be resold at a favorable markup.
The term markdown also refers more generally to a reduced price on assets that a seller wants to unload and will sell at less than the original offering price.
- Browse Related Terms: capital gain or loss, Contingency order, Day trader, Floor trader, home equity, Limit order, Limit price, Markdown, markup, Stop price, Stop-limit order, Tailgating, Trader
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Traditionally, a securities market was a place - such as the New York Stock Exchange (NYSE) - where members met to buy and sell securities.
But in the age of electronic trading, the term market is used to describe the organized activity of buying and selling securities, even if those transactions do not occur at a specific location.
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Value of a corporation as determined by the market price of its issued and outstanding securities. It is calculated by multiplying the number of outstanding shares by the current market price of a share.
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Market capitalization is a measure of the value of a company, calculated by multiplying the number of either the outstanding shares or the floating shares by the current price per share.
For example, a company with 100 million shares of floating stock that has a current market value of $25 a share would have a market capitalization of $2.5 billion.
Outstanding shares include all the stock held by shareholders, while floating shares are those outstanding shares that actually are available to trade.
Market capitalization, or cap, is one of the criteria investors use to choose a varied portfolio of stocks, which are often categorized as small-, mid-, and large-cap. Generally, large-cap stocks are considered the least volatile, and small caps the most volatile.
The term market capitalization is sometimes used interchangeably with market value, in explaining, for example, how a particular index is weighted or where a company stands in relation to other companies.
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Market cycles are the recurrent patterns of expansion and contraction that characterize the securities and real estate markets.
While the pace of these recurrent cycles of gain and loss isn't predictable, certain economic conditions affect the markets in fairly reliable ways.
For instance, stock and real estate usually gain value when the economy is healthy and growing, whereas bonds often do well during periods of rising interest rates. And during times of economic uncertainty, investors often prefer to put their money into short-term cash equivalent investments, such as US Treasury bills.
The cyclical pattern in one type of asset sometimes works in opposition to what's occurring at the same time in another asset class or subclass. For example, when the stock market is gaining value, the bond market may be flat or falling, or vice versa. Similarly, sometimes large-company stocks increase in value faster than small caps, but sometimes the opposite is true.
But while the ups and downs of the markets are inevitable, it's also true that it's virtually impossible to pinpoint the peak of a rising market or the bottom of a falling market except in hindsight.
- Browse Related Terms: bull market, Correlation, Countercyclical stock, Crash, Cyclical stock, Defensive security, deflation, Depression, inflation, Market cycles, Secular market