The overall effect of having multiple marketmakers in a particular security, which is typical of electronic markets such as the Nasdaq Stock Market (Nasdaq), is greater liquidity in the marketplace and, ideally, more competitive prices.

Each individual fund sets its own fee, reflecting the level of management that's required though in the US the total expense can't be more than 8.5%. Generally, index funds cost the least and international equity funds cost the most, though fees differ significantly from one fund company to another.

With a margin account, the value of the investments in the account is recalculated continuously to determine whether it meets 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.

A markdown is comparable to the commission you would pay for selling the security through your broker, though the cost of the markdown, unlike a broker's commission, is not stated separately on a confirmation statement. A markdown is determined, in part, by the demand for securities of a certain type in the marketplace, since 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 price reduction on retail products and certain securities that a seller wants to unload and will sell at less than the original offering price.

MARKDOWN
	Market price
	Markdown
=	Price you get

Market capitalization, or cap, is one of the criteria investors use to choose stocks, which are often categorized as small-cap, mid-cap, 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.

For bonds and over-the-counter (OTC) stocks, the market price is the combined bid and ask price-for example, 14 1/2 / 15-currently being quoted by people making a market in the security.

Most experts agree that market timing is a risky approach because there is no way to predict changes accurately, and a small miscalculation can result in large losses. With the increasing popularity of online trading, the number of day traders has increased dramatically. So have concerns about the risks inexperienced investors take when trying to time the market. For one thing, there's no guarantee that an online transaction can be made quickly enough to lock in gains or prevent losses, especially in a volatile market.

To determine the markup you're paying, and whether it is in line with the 5% guideline set by the National Association of Securities Dealers (NASD), you must either ask the broker/dealer about the markup amount or compare the prices (including the markups) that a number of broker/dealers quote you for the same security. The differences in price generally reflect the differences in markups.

Employers are not required to match contributions, but may do so if they wish. Employers also determine, within federal guidelines, how long you have to work for the company in order to be fully vested in the matching contributions.

Employers aren't required to provide matching funds, and they can set their own contribution rules. For example, some employers match 50% of your contribution, up to a cap of 6% of your salary, while others may offer larger or smaller matches. Unlike the money you contribute, which is yours from the start, you must be vested before you can withdraw or roll over the matching funds your employer contributes to your account.

Technically, a merger occurs when two or more companies pool their interests, exchange their common stock, and one of them survives and continues to function. A merger is typically a tax-free transaction-meaning that shareholders owe no taxes on the stock that is pooled or merged, while an acquisition usually means that the owners or stockholders of the acquired company realize capital gains for the sale of their stock.

Despite their differences, mergers and acquisitions are invariably linked together, often simply described as M&A.

Micro-caps are not only the smallest of the publicly traded corporations, but they are also the most volatile, in part because they lack the reserves of a larger company to weather rough periods. And, because there are generally fewer shares of a micro-cap company in the market, a large transaction may affect the stock price more noticeably than a similar transaction would affect the stock price of a larger company that had many more shares in the market.

Investors buy mid-cap stocks for their growth potential and their prices, which are typically lower than for large-caps. At the same time, these companies tend to be less volatile than small-caps, in part because they have more resources with which to weather an economic downturn. Mutual funds that invest in this type of stock are known as mid-cap funds.

You calculate your MRD by dividing your account balance at the end of your plan's fiscal year &151; usually but not always December 31 &151; by your life expectancy. If your spouse is your beneficiary and more than ten years younger than you are, you can use a longer life expectancy than you can in all other circumstances.

Asset allocation is a primary tactic, according to theory practitioners, because it allows investors to create portfolios to get the strongest possible return without assuming a greater level of risk than they are comfortable with. Another tenet of portfolio theory is that investors must be rewarded (in terms of a greater return) for assuming greater risk. Otherwise, there would be little motivation to make investments that might result in a loss of principal.

Tax-free money market funds invest in short-term municipal bonds and other tax-exempt debt. With a single-state fund, investors who reside in the state that issues the bonds the fund buys can enjoy triple tax-free earnings, which means they owe no local, state, or federal income tax. While taxable funds offer a slightly higher yield than those that are tax-free, you must pay income tax on all earnings distributions.

Unlike bank money market accounts, money market funds are not insured by the Federal Deposit Insurance Corporation (FDIC). However, since they are considered securities at most brokerage firms, they may be insured by the Securities Investor Protection Corporation (SIPC) against the bankruptcy of the firm.

However, some small-company employers or self-employed people create a paired plan-as part of a Keogh, for example-that combines money purchase with profit sharing, requiring them to add at least a minimum percentage of each employee's salary to the plan each year.

In addition, the Fed can adjust the reserves that banks must maintain, and increase or decrease the rate at which banks can borrow money. This fluctuation in rates gets passed along to consumers and investors as changes in interest rates.

The money supply is grouped into four classes of assets, called money aggregates. The narrowest, called M1, includes currency and checking deposits. M2 includes M1 plus assets in money market accounts and small time deposits. M3, also called broad money, includes M2 plus assets in large time deposits, eurodollars, and institution-only money market funds. The biggest group, L, includes M3 plus assets such as private holdings of US savings bonds, short-term US Treasury bills, and commercial paper.

Specifically, financial analysts can use Monte Carlo simulations to project whether or not the investments you are making in your retirement accounts are likely to produce the return you need to meet your long-term goals.

These securities are described as self-amortizing because your earnings are part interest and part repayment of principal on the underlying mortgages. You can buy individual securities (often at a minimum of $25,000) or buy mutual funds that invest in mortgage-backed securities.

Investors use the multiple as a way to assess whether the price they are paying for the stock is justified by its earnings potential. The higher the multiple they are willing to accept, the higher their expectations for the stock. What's considered high, however, has changed dramatically in recent years as Internet stocks with low earnings (and very high multiples) or no earnings (and therefore no way to compute a multiple) have commanded high prices.

However, any capital gains you realize from selling a muni are taxable. Although munis generally pay interest at a lower rate than do commercial or Treasury bonds having similar maturity periods, they appeal to investors in the highest tax brackets, who benefit most from their tax-exempt status.

In addition, some mutual fund companies offer funds that invest exclusively in municipal bonds offered by a single state. In that case, the earnings are also free of state and local tax for residents of that state. For example, New Yorkers can buy shares of triple tax-free New York municipal bond funds and keep all of their earnings.

One advantage of muni bond funds is that buyers can invest a much smaller amount of money than they would need to buy a municipal bond on their own. Another advantage of these funds is that they pay income monthly rather than semi-annually.

Funds may vary from very aggressive and volatile, such as those specializing in the markets of developing countries, to conservative, such as those that buy only investment-grade bonds or blue chip stock. Because most mutual funds hold a large number of securities, they offer investors the opportunity to diversify, as well as the benefits of portfolio management.

Load funds-those that charge sales fees-are sold through brokers or other financial advisors. No-load funds, which don't charge sales fees (but may pass on other marketing expenses to shareholders through 12b-1 fees) are sold directly to investors.

All mutual funds charge management fees, though at different rates, and they may also levy other fees and charges. Details of a fund's objective, management, and expenses are spelled out in its prospectus.