Dow Theory Forecasts

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Face Value

Also referred to as par value, the face value of a bond is the amount that the firm that issued the bond agrees to pay at maturity.

Fannie Mae

An acronym for the Federal National Mortgage Association, Fannie Mae is one of several government agencies (such as Ginnie Mae, Freddie Mac, and Sallie Mae) that is permitted to issue debt for sales to the investing public. Although the risk of default associated with such securities is remote since it is generally assumed that the U.S. Government would intervene, this does not mean that these securities are completely risk free or guaranteed. Because Fannie Mae securities are based on an underlying pool of mortgages and because homeowners tend to refinance their mortgages when interest rates fall, owners of Fannie Mae securities can be disappointed about the return on their investment during periods of sharply falling interest rates.

FASB

An acronym for the Financial Accounting Standards Board, the organization that writes guidelines followed by accountants in reporting financial information.

Federal Reserve Bank

The United States central bank which regulates the money supply and financial markets and directs monetary policy. Also known as "the Fed."

Financial Planner

See Certified Financial Planner

Financial Ratios

A variety of ratios which are used to help analyze financial statements.

Fiscal Year

The 12-month period that a company selects to be its operating year for accounting purposes. A fiscal year may or may not coincide with a calendar year.

Fixed Expenses

Those expenses that do not vary with the level of sales, such as rent, depreciation, and management's salaries. Also known as fixed charges.

Floor

Refers to the trading area — or floor — of an exchange. This term can also refer to the lowest price, or "investment floor," under which a security is not expected to trade.

Form 10-K

A report that is filed annually with the SEC by every U.S.-based publicly-traded company. It typically contains a comprehensive overview of a company's business operations, product lines, backlog, and management experience as well as some background history. It is also a great source for uncovering any negative developments at a particular firm, such as pending lawsuits or downturns in the firm's business operations.

Form 10-Q

A form that is required to be filed quarter with the SEC by every U.S.-based publicly-traded company. The purpose of a 10-Q is to "bridge the reporting gap" between the yearly submission of the firm's annual report.

Forward Contract

An agreement between a buyer and a seller to purchase (sell) a particular good at a later date at a fixed price. A forward contract is typically customized to meet the specific needs of the buyer and seller. A "real world" example of a forward contract is when an individual agrees to purchase a puppy from a breeder at a certain price when the puppy is six weeks old.

401(k)

A personal, tax-advantaged pension plan named after a particular section of the Internal Revenue Code.

Freddie Mac

An acronym for "Federal Home Loan Mortgage Corporation," is one of several government agencies (such as Fannie Mae, Ginnie Mae, and Sallie Mae) that is permitted to issue debt for sale to the investing public. See Fannie Mae.

Fundamental Research

Analysis of a company based on such items as sales, assets, earnings, products, services, markets, and management. Fundamental analysis is typically used in conjunction with technical analysis, which is a method of analysis that focuses on the price movements of a security.

Futures Contract

An agreement between a buyer and a seller to purchase (sell) a particular good at a later date at a fixed price. A futures contract is traded on an organized exchange and possesses certain standardized features, such as the size or the length of the contract. These standardized features differentiate it from a forward contract, which is not traded on an organized exchange and is typically custom tailored to the needs of the buyer and seller. A futures contract also differs from an options contract in that both parties are required to honor a futures contract when it matures. In contrast, the purchaser of an option has sole discretion whether it wishes to exercise the option prior to or at expiration.