The Letter A

Accretion-growth by gradual addition. This term might come up during mergers and acquisitions. A merger that is first year accretive will add to earnings in the first year of operations for the new combined company.

American Depositary Receipts (ADR) -receipt for the shares of a foreign based corporation held in the vault of a U.S. bank and entitling the shareholder to all dividends and capital gains. Instead of buying shares of foreign based companies in overseas markets, Americans can buy shares in the United States in the form of an ADR. These shares track the foreign companies but trade on U.S. exchanges. These trade as easy as U.S. stock and follow SEC rules, which are more stringent than most foreign nations. One disadvantage is that they can move in correlation with U.S. markets. ADRs are available for hundreds of stocks from many countries. Two of the best ADR websites are ADR.com which is run by JP Morgan and also ADRBNY.com which is maintained by the Bank of NY.

Annuities-an investment product that is sold by insurance companies. A deposit is made with the promise to pay back a specified amount over a specified time period. The amount of the payments can be variable or fixed depending on the terms of the contract. There are many different types of annuities. They can have large fees including high surrender charges & are usually best used after you have maxed out on IRAs & 401(k)s. Screening tools can be found at both are Annuityscout.com and variableannuityonline.com.

Arbitrage-the technique of simultaneous purchasing and selling identical or similar securities to take advantage of small differences in price. This is usually done with large transactions in different markets with little or no risk.

Asked price-the sell price for a security.

Authorized stock-maximum number of shares of stock that a company can issue. A company might need to get shareholder approval to increase the number of authorized shares for acquisitions or stock splits.

Updated 1/7/01