Investment Glossary

Factor

The amount of mortgages remaining in a pool of mortgage-backed securities as represented by a decimal between 0 and 1.

Factor Table

A table used to compute the outstanding principal on pass-through securities including Ginnie Mae, Freddie Mac and Fannie Mae.

Fannie Mae

See Federal National Mortgage Association.

Fast Market

A market condition where a large number of orders for a particular security are received within a short period of time, faster than what market makers can handle effectively. These situations are usually the results of unexpected news and may lead to price volatility.

Fed

See Federal Reserve Board.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the federal government created by the Banking Act of 1933. It provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 per depositor, per insured bank, for each account ownership category.

FDIC Insured Deposit Account

A program where investors can enroll to earn equal or higher interest rate than their brokerage cash account. Investor’s available cash balance will automatically transfer (Sweep) into a FDIC Insured Deposit Account. Please click here to review the Terms and Conditions in details.

Federal Farm Credit System

An issuer of agency securities, established by Congress to provide credit for farms and farm-related enterprises.

Federal Funds Rate

The interest rate that banks charge each other for the use of Fed funds. The Feds control this rate indirectly through setting the yield of Treasury security issues.

Federal Home Loan Mortgage Corporation (FHLMC)

Also known as Freddie Mac, it is a government-chartered corporation created with the goal of strengthening the existing secondary market in residential mortgages.

Federal Housing Administration (FHA)

A government-sponsored agency that provides a system of mutual mortgage insurance for buyers of homes and mortgage-lending institutions.

Federal National Mortgage Association (FNMA)

Also known as Fannie Mae, a congressionally-chartered corporation created to provide liquidity to mortgage investments. It does this by purchasing mortgages on the secondary market, pools them, then sells them as mortgage backed securities to investors.

Federal Reserve Board

The 7 member board governing the Federal Reserve System, board members are appointed by the President to serve 14-year terms. The actions of the Feds help shape government monetary policy, most notably interest rates and the U.S. economy.

Federal Reserve System

The nation's central monetary authority and the Treasury Department's agent for selling new Treasuries.

FHA

See Federal Housing Administration.

FHA Experience

An estimate of the average life of a pool of mortgage-backed securities in relation to experience tables developed by the Federal Housing Administration.

FHLMC

See Federal Home Loan Mortgage Corporation.

Fill or Kill (FOK)

An order instruction requesting the immediate execution of the entire order quantity at the specified price. If not, then the order is automatically cancelled.

Financial Industry Regulatory Authority (FINRA)

(formerly known as National Association of Securities Dealers or NASD) FINRA, a nonprofit, self-regulating association supervised by the Securities and Exchange Commission (SEC), sets standards and establishes rules for the way that its members, including brokerage firms active in the over-the-counter (OTC) market and investment banks, operate. FINRA is responsible for licensing of individuals and brokerage firms.

FINRA also has the authority to discipline members who violate those standards. Among FINRA's other responsibilities are reviewing and approving sales and marketing literature that its members use to promote their products. The goal is to protect investors from misleading information on the risks and rewards of investing.

Fiscal Agent

The authority responsible for issuing new agency securities.

Fiscal Year

The twelve-month period during which businesses or the government maintain financial records. This cycle does not necessarily coincide with the calendar year, therefore it is known as the fiscal year.

Fixed Annuity

Guaranteed payments of a specified fixed dollar amount annually for the period covered under the contract.

Flat

A security position that is neither long nor short in a portfolio.

Flat (Bonds)

A bond trading without accrued interest is said to be trading "flat".

Floor Broker

An exchange member permitted to conduct business on the exchange floor.

Flotation

A company's shares offered on the market for the first time.

FNMA

See Federal National Mortgage Association.

FOK

See Fill-or-Kill.

Footsie

See FT-SE 100 Share Index.

Fractional Shares

A share of equity that is less than one full share. Fractional shares usually come about from stock splits, dividend reinvestment plans (DRIPs) and similar corporate actions. Normally, fractional shares cannot be acquired from the market.

Freddie Mac

See Federal Home Loan Mortgage Corporation.

Free Cash Flow

Free cash flow is calculated as operating cash flow minus capital expenditures and dividends. Free cash flow can be used to pay dividends, buy back stock or pay off debt.

Free Cash Flow per Share

Free cash flow divided by the number of common shares outstanding.

Free Stock

The securities that can be used for a loan.

Friendly Takeover

A takeover supported by the target company's management and board members.

Frozen Account

An account that had failed to make timely payments in the past, thereby requires all purchases to be paid for in cash in advance for a period of 90 days.

FT Index

The Financial Times Industrial Ordinary Share Index, composed of 30 stocks chosen to be representative of British industry, excluding government stocks, banks and insurance companies. The index is calculated hourly during the day with a "closing index" at 4:30 p.m.

FT-SE 100 Share Index

Popularly known as "Footsie", this index of 100 leading UK shares listed on the London Stock Exchange providing an overview of how the UK stock markets are performing.

Fully Diluted Earnings per Share

Earnings per share expressed as though all outstanding convertible securities and warrants have been exercised.

Fully Diluted Shares Outstanding

All shares outstanding, including common stock, warrants, and convertible securities.

Fully Paid Securities Lending

A strategy used by investors to generate additional income in their portfolios. Securities lending is when an individual temporarily lends fully paid securities to a financial institution (the borrower). The transaction is usually facilitated by an intermediary, like a clearing firm. All parties enter into a lending agreement (Master Securities Lending Agreement) that covers the rights of all counterparties and governs all transactions.

Fund Exchange

Ability to shift a mutual fund investment from one fund to another within same mutual fund family.

Fund Family

The group of mutual funds managed by a single company.

Fundamental Analysis

The security valuation method involving the analysis of the company's financials and operations, especially sales, earnings, growth potential, assets/ debt ratio, management, and competition. This valuation method seeks to find the intrinsic value of a company, and locate undervalued stock in the market.

Futures

An agreement to buy or sell a set amount of a commodity or financial instrument at a certain price on a predetermined date.

Futures Contract

Agreement to buy or sell a set number of shares of a specific stock in a predetermined future month at a price agreed upon by both sides of the transaction. The contracts themselves are traded on the futures market. The difference between a futures contract and an options contract is that the futures contract is an agreement to actually make a transaction, whereas the option contract is the right to buy or sell.