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Take-Over Bid – an offer made to security holders of a company to purchase voting securities of the company which, with the offerer’s already owned securities, will in total exceed 20% of the outstanding voting securities for the company. For federally incorporated companies, the equivalent requirement is more than 10% of the outstanding voting shares of the target company.
Target Price – as used by analysts, this refers to the price that the analyst estimates the stock will trade at in the future. The assumptions the analyst is making can vary, with two key assumptions being how far into the future the analyst is looking, and what assumption is being made about the overall market. The most commonly used assumptions about the length of time are one year ahead (or a range that includes one year, such as 6 months to one year, or one year to 18 months). For the market assumption, some analysts assume no change in the market (“flat market”), and others assume a long-term average, or around 10% per year.
Tax Deferred – investments such as “Qualified Plans” (e.g., IRAs, Keogh Plans) and annuities in which payments on capital gains and interest are deferred until a later date. This allows the money to grow at a faster rate because of compounding and allows it to be taxed at a later date and often lower tax rate (at retirement).
Tax Exempt – usually refers to municipal bonds. Security in which owners are free from paying taxes on the interest earned.
Tax-loss Selling – selling securities in order to realize a loss in value for tax purposes.
10-K – an annual report required by the SEC each year. Provides a comprehensive overview of a company’s state of business. Must be filed within 90 days after fiscal year end. A “10Q” report is filed quarterly.
Technical Analysis – the use of price and volume data (as revealed in charts) to make predictions about future movement in stock prices. Technical analysis feeds on fundamental analysis in the sense that when fundamentally-based investors start to buy or sell, then their buying or selling behavior can be detected via technical analysis. Technical analysis is easier and faster to do than fundamental analysis. The technical analyst does not claim to get an investor in at the bottom or out at the top, but rather to predict when a trend of rising or falling prices looks like it will continue for a while. Key concepts include support and resistance levels, which are price levels at which investors have in the past been willing to buy (support) and sell (resistance) the stock. All investors should use both approaches: fundamental analysis to decide which stocks to buy and sell, and technical analysis to assist in timing these transactions.
Theta – a measurement of how much an option’s price decays for every one day that passes.
Tick Indicator – a market indicator based on the number of stocks whose last trade was an uptick or a downtick. Used as an indicator of market sentiment or psychology to try to predict the market’s trend.
Ticker Symbol – the two to five letter symbol that is used to represent the shares of a company on an exchange.
Time Value – the portion of the premium that is based on the amount of time remaining until the expiration date of the option contract, and that the underlying components that determine the value of the option may change during that time. Time value is generally equal to the difference between the premium and the intrinsic value.
Total Revenue – total sales and other revenue for the period shown. Known as “turnover” in the UK.
Trade – a verbal (or electronic) transaction involving one party buying a security from another party. Once a trade is consummated, it is considered “done” or final. Settlement occurs 1-5 business days later.
Tracking Stock – a special type of stock issued by a publicly held company to track the value of one segment of that company. By issuing a tracking stock, the different segments of the company can be valued differently by investors. For example, if an old-economy company trading at a P/E of about 10 happens to own a wildly growing internet business, the company might issue a tracking stock so the market could value the new business separately from the old one (hopefully at a P/E of at least 100). A company has many good reasons to issue a tracking stock for one of its subsidiaries (as opposed to spinning it off to shareholders). First, the company gets to keep control over the subsidiary (although they don’t get all the profit). Second, they might be able to lower their costs of obtaining capital by getting a better credit rating. Third, the businesses can all share marketing, administrative support functions, a headquarters, etc. Finally, and most importantly, if the tracking stock shoots up, the parent company can make acquisitions and pay in stock instead of cash. When a tracking stock is issued, the company can choose to sell it to the markets (i.e., via an initial public offering or IPO) or to distribute new shares to existing shareholders.
Trade Date – the date on which a trade occurs. Trades generally settle (are paid for) 1-5 business days after a trade date.
Treasuries – securities issues by the Federal Government. They offer the benefit of a guarantee by the Government but the drawback of low interest rates.
Treasury Bill – a zero-coupon obligation of the US government issued with a maturity of one year or less. As they are zero-coupon securities, they are issued on a discount basis – that is, they are sold originally at a price below their face value payable at maturity. The difference between the price and face value constitutes the interest payment.
Treasury Bond – a coupon-bearing obligation of the US government issued with a maturity of over ten years. The longest bonds that are currently issued have an original maturity of thirty years.
Treasury Note – a coupon-bearing obligation of the US government issued with a maturity of over one to ten years.
Trending Market – in technical analysis: a situation when the price of a security moves in a single direction and it usually closes on an extreme for the day.
Trendline – in technical analysis: a line constructed by connecting a series of descending peaks or ascending troughs. The more times a trendline has been touched increases the significance of a break in the trendline. It can act as either support or resistance.
Trust – assets that are administered by one individual or entity for the benefit of another. Trusts are often set up for tax benefits or asset protection.
Turnover – Corporate: the ratio of annual sales to net worth, representing the extent to which a company can grow without outside capital. Markets: The volume of shares traded as a percent of total shares listed during a specified period, usually a day or a year.
12B-1 Fees – the percent of a mutual fund’s assets used to defray marketing and distribution expenses.
Type – the classification of an option contract as either a put or a call.