Back Office
Brokerage house clerical operations that support, but do not include, the trading of stocks and other securities. Includes all written confirmation and settlement of trades, record keeping and regulatory compliance.

Balance of Payments
A statement of a country's trade and financial transactions with the rest of the world over a period of time.

Balance Sheet
A statement which provides a picture of a financial position on a given date. Includes assets, liabilities and owners equity on that date.

Balanced Fund
Mutual fund that has three investment objectives: conserve investors' principal, pay steady income and promote long-term growth of both principal and income.

Banker's Acceptances (BA)
Form of financing used in import/export transactions.

Bankruptcy
Legal process governed by the U.S. bankruptcy code for people or companies unable to meet financial obligations. The bankruptcy code is divided into chapters that provide different types of relief. See specific Chapter for more detail.

Bankruptcy - Chapter 11
Chapter 11 provides for reorganization and repayment for individuals, partnerships, and corporations that are domiciled in the U.S.

Bankruptcy - Chapter 12
Chapter 12 governs reorganization and repayment for farmers or closely-held farming corporations having debt of no more than $1.5 million.

Bankruptcy - Chapter 13
Chapter 13 provides for individual debt adjustments and is an alternative to liquidation under Chapter 7.

Bankruptcy - Chapter 7
Chapter 7 governs liquidation rather than reorganization.

Bargain Element
The difference between the option price and the Fair Market Value at the time of exercise

Basis - Bonds
An investor's yield to maturity at a given bond price. A 10% bond selling at 100 has a 10% basis.

Basis - Commodity
The difference between the cash price of a hedged money market instrument and a futures contract.

Basis - General
Original cost plus out-of-pocket expenses that must be reported to the Internal Revenue Service when an investment is sold and must be used in calculating capital gains or losses.

Basis Point
A basis point is one hundredth (1/100) of a percentage point. It is a unit of measure for interest rates. If the interest rate on a 30 year Treasury bond increases one quarter of a percentage point from 6% to 6.25% the rate has increased 25 basis points.

Bear Market
Prolonged period of falling prices. A bear market in stocks is usually brought on by the anticipation of declining economic activity, and a bear market in bonds is caused by rising interest rates.

Bear Raid
An attempt by investors to manipulate the price of a stock by selling large numbers of shares short. The manipulators pocket the difference between the initial price and the new, lower price after this maneuver. Bear raids are illegal under the SEC rules, which stipulate that every short sale be executed on an up tick or a zero plus tick.

Bellwether Bond
For the U.S. market, it is the 30-year Treasury bond most recently offered by the government. Its performance is a benchmark for evaluating the bond market in general. Also called the long bond.

Beneficiary
A person named to receive property or other resources.

Beta
A quantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the S&P 500. Specifically, the performance the stock, fund or portfolio has experienced in the last 5 years as the S&P moved 1% up or down. A beta above 1 is more volatile than the overall market, while a beta below 1 is less volatile.

Bid Size
The number of shares that are being offered for purchase at the bid price, often expressed in terms of hundreds of shares. Some traders try to use the bid size and ask size to measure impending short term upward or downward pressure on the stock's price. This can work for stocks on exchanges such as NYSE and AMEX, but is far less useful on NASDAQ, which has market makers ready to buy and sell shares, rather than specialists who balance books of buy and sell orders.

Block Trade
A trade which involves 10,000 or more shares of stock.

Blue-Chip Stock
Shares in a large, mature company with a track record of profit, growth and paying dividends.

Bond
A certificate of indebtedness in which the borrower promises to pay a set rate of interest for a given number of years until the bond matures and the principal must be repaid. Obligations that are due in more than one year are classified as bonds whereas if the debt is for less than one year it is called a note.

Bond Fund
A mutual fund whose objective is to seek high income and preservation of capital by investing mainly in bonds. Some funds may aim to achieve a proper mix between short-term, intermediate-term and long-term maturities. The fund can be taxable or tax-free.

Bond Rating (debt rating)
An assessment of the likelihood that investors will receive the promised interest and principal payments on time. Bond ratings are assigned by independent agencies, such as Moody's Investors Service and Standard & Poor's.

Book Value of Common Shares
The total assets of a company minus liabilities and preferred stock divided by outstanding common shares.

Broker
A firm that can handle transactions for customers as well as its own account.

Brokerage Firm
Financial-services firm that provide the service of buying and selling securities. Brokerage firms fall into two main camps, full-service brokers and discount brokers. Discount brokers charge far lower commissions than full service brokers, and a growing number of deep discounters charge especially low commissions. But there is a trade-off. If you use a discount broker, you will get little or no investment advice, so you must be willing to make your own buy and sell decisions. A full-service broker, on the other hand, will help you pick investments and devise a financial plan.

Bull Market
Prolonged rise in the prices of stocks, bonds, or commodities. Bull markets usually last at least a few months and are characterized by high trading volume.

Bullion
Precious metals like gold, silver in the form of bars, plates or some coins. They are minted to contain a specific weight.