Macroeconomics:

The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.

Managed Account:

An investment account that is owned by an individual investor and looked after by a hired professional money manager. In contrast to mutual funds (which are professionally managed on behalf of many mutual-fund holders), managed accounts are personalized investment portfolios tailored to the specific needs of the account holder.

Margin:

1. Borrowed money that is used to purchase securities. This practice is referred to as “buying on margin”.

2. The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account.

3. In a general business context, the difference between a product’s (or service’s) selling price and the cost of production.

4. The portion of the interest rate on an adjustable-rate mortgage that is over and above the adjustment-index rate. This portion is retained as profit by the lender.

Market Average:

A measure of the overall price level of a given market, as defined by a specified group of stocks or other securities. A market average equals the sum of all current values of stocks in the group divided by the total number of shares in the group.

Market Risk:

The day-to-day potential for an investor to experience losses from fluctuations in securities prices. This risk cannot be diversified away. Also referred to as “systematic risk”.

Market Sentiment:

The feeling or tone of a market (i.e. crowd psychology). It is shown by the activity and price movement of securities.

Market Share:

The percentage of total industry sales that is made up by a particular company’s individual sales.

Master Limited Partnership (MLP):

A limited partnership that is publicly traded.

Maturity:

1. The length of time until the principal amount of a bond must be repaid.

2. The end of the life of a security.

Micro Cap:

Companies having a market capitalization between $50 million and $300 million.

Mid-Cap:

Companies having a market capitalization between $2 billion and $10 billion. Shortened form of “middle cap”.

Minimum Margin:

The initial amount required to be deposited in a margin account before trading on margin or selling short. For example, the NYSE and the NASD require investors to deposit a minimum of $2,000 in cash or securities to open a margin account. Keep in mind that this amount is only a minimum—some brokerages may require you to deposit more than $2,000.

Mirror Fund:

A type of mutual fund, typically run by a life insurance company, that enables an investor to access another company’s mutual fund through his or her life insurance policies.

Modern Portfolio Theory:

A theory on how risk-averse investors can construct portfolios in order to optimize market risk for expected returns, emphasizing that risk is an inherent part of higher reward. Also called portfolio theory or portfolio management theory.

Money Market Account:

A savings account that offers the competitive rate of interest (real rate) in exchange for larger-than-normal deposits.

Mosaic Theory:

A method of analysis used by security analysts to gather information about a corporation. Mosaic theory involves collecting public, non-public and non-material information about a company in order to determine the underlying value of the company’s securities and to enable the analyst to make recommendations to clients based on that information.

MSCI Emerging Markets Index:

An index created by Morgan Stanley Capital International (MSCI) that is designed to measure equity market performance in global emerging markets.

The Emerging Markets Index is a float-adjusted market capitalization index. As of May 2005, it consisted of indices in 26 emerging economies: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela.

Multiples Approach:

A valuation theory based on the idea that similar assets sell at similar prices. This assumes that a ratio comparing value to some firm-specific variable (operating margins, cash flow, etc.) is the same across similar firms.

Municipal Bond:

A debt security issued by a state, municipality, or county, in order to finance its capital expenditures. Municipal bonds are exempt from federal taxes and from most state and local taxes, especially if you live in the state the bond is issued.

Mutual Fund:

A security that gives small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed.