Home  |  Getting Started  | Personal Finance  | Q & A |  Sample Portfolio  | Glossary | About Us  

Date: Tuesday 13th 2008f May 2008 08:57:48 AM

Glossary
 

N
 

Naked Call:  Selling a call option without first buying the common stock.

Our take: Naked Call option is a high risk high reward proposition. Investors can lose more than 100% of their money and earn more than 100% of their money when they win.
 

Naked Option: Selling call or put option without having any position in the common stock.
Our take: This is a high risk high reward investment types. When price moves in one direction, investor can be rewarded or punished in extreme
 

Naked Put: A term used where investors do not have a short position in a put that he wrote.

Our take: If the stock price falls down, the writer of the put will suffer huge loss due to the naked position. Loss can be 1000% of its initial investment.
 

Nasdaq: The first electronic stock market trading in the market.
Our take: Established in 1971, NASDAQ stands for National Association of Securities Dealers Automated Quotation
 
Natural Unemployment: The lowest level of unemployment an economy can sustain without sparking inflation.
Our take: 0% unemployment is impossible due to the fact that wage price will increase to an outrageous level due to shortage of labor.
 
Near Term: Also referred to as short term.
Our take: Short term means different things to different people. For long term investors, one month holding period is considered short term while for day traders, one minute is considered short term.
 
Nest Egg: Refers to an investor's total savings saved for specific purpose.
Our take: For example retirement nest egg is money set aside to be used at retirement.
 
Net Debt: The difference of long term debt minus its cash.
Our take: Net debt is useful in determining the leverage used by a company.
 
Net Interest Margin: The difference between interest expense and interest income expressed in percentage term.
Our take: For banking sector, it indicates on how much spread they can charge for the loan they lend to others versus the cost of acquiring that loan.
 
Net Investment Income: Income earned from investment assets such as bond, stock or real estate.
Our take: For investment companies, income earned from investment assets need to be subtracted with the operating expenses associated with the investing activities.
 
Net Profit Margin: The percentage of net profit with respect to sales.
Our take: A profit margin of 10% indicates that for every dollar of revenue, the company keeps 10 cents as a profit.
 
Net Receivables: The net value of accounts receivable after subtracting bad debts.
Our take: Bad debts vary between companies. It generally falls between 2-5% of total receivables.
 
Net Sales: The amount of money received from the buyer after cost associated with the sale are subtracted.
Our take: Net sales is obtained by subtracting returned merchandise, allowance for damage and missing goods, cash discounts and freight costs to gross sales.
 
Net Tangible Asset: Calculated as the total assets of a company reduced by the amount of goodwill, trademark and patent.
Our take: This is the amount of money a company will get when it sell off all its assets.
 
Nifty 50: 50 Stocks that were considered to be blue chips by institutional investors during the 1960 and 1970s.
Our take: Example of the nifty 50 stock was: Coca Cola, General Electric, IBM and Polaroid.
 
No-Load Fund: A mutual fund which can be bought without commission or sales charge.
Our take: Since it is cheaper to buy a no-load fund, therefore no-load fund should perform better than loads.
 
Nominal GDP: An unadjusted inflation figure of Gross Domestic Product.
Our take: Without the inflation adjustment, the GDP figure would be higher than it is.
 
Nominal Interest Rate: Interest rate that is not adjusted with inflation.
Our take: A more sensible way of measuring interest rate is by taking inflation into accounts.
 
Nominal Yield: Interest rate stated on the bond at face value.
Our take: Another way to call it is the coupon rate.
 
Nominee Dividend: Dividend payment that a person receives on behalf of somebody else.
Our take: In this case, the person that received the dividend, will be taxed.
 
Nominee Interest: Interest payment that a person receives on behalf of somebody else.
Our take: The person that received the interest, will be taxed.
 
Non-Cash Charge: A reduction in earning without the cash flow affected by it.
Our take: For example, the impairment of goodwill will reduce net earnings but not cash flow.
 
Non-Financial Asset: Asset with some kind of physical value such as land, machinery, computers or furniture.
Our take: Financial Asset includes bonds, stocks or cash that has value other than its physical value.
 
Non-Negotiable: Financial term that cannot be changed once agreed.
Our take: One example includes the face value written on the bond issued by US government. Its value is non-negotiable.
 
Non-Operating Asset: Assets that are not used in the business operation of a company.
Our take: It is also referred to as redundant asset.
 
Non-Operating Cash Flows: Cash inflow or outflow that is not due to business operation.
Our take: Dividend payment would be one example of non-operating cash flow.
 
Non-Recourse Finance: A type of loan where the borrower receives cash flow from the project the loan is funding.
Our take: Projects funded with this type of loan normally is a high capital expenditure project, with uncertain revenue stream.
 
Noncallable: Securities that cannot be redeemed by the issuers until maturity.
Our take: Preferred and common stock is considered noncallable since the issuers cannot take it away anytime they want to.
 
Nonprofit organization: Organization that exists primarily not to make money.
Our take: Nonprofit organization earns a tax-free status due to its purpose. Charities and hospitals can be considered nonprofit organization.
 
Nonrecurring Charge: An expense that occur only once and won't happen again in the future.
Our take: For example non-cash charge associated with the value of a trademark or patent can be considered nonrecurring charge.
 
Note: A debt maturing between one to ten years.
Our take: In comparison, bond matures more than ten years.
 
Notice of Seizure: A written notice by the IRS allowing it to liquidate individual's assets to pay for income tax due.
Our take: This occurs if individuals did not pay income taxes in due time.
 

Back to top

 

 [Resources] [Forum] [Link Partner ] [Novice Investing Directory ] [ Submit Your Article Here ]
 

 Novice Investing 2004-2008. All Rights Reserved.