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Investing Glossary

Buy 1 call at a lower strike and sell 2 calls at higher strike using the same expiration. The strategy is a cheaper alternative to buying a call spread but with a similar upside risk profile to a short call strategy. This strategy should be implemented if the investor forecasts the stock to rise above the lower strike but not above higher strike. Risk Level: High

A public key is a unique wallet identifier that uses a string of letter and numbers as an address. It is viewable to the public and is used to receive cryptocurrencies. A private key is an investor's individual password for accessing their cryptocurrency wallet. This is not viewable to the public and should be protected.

Multi-asset ETFs that fall under the Absolute Returns category do not adhere to a specific investment strategy to achieve returns. Instead, multi-asset ETFs that are classified under the Absolute Return category take an opportunistic investing approach based on current market conditions and trends in order to achieve the highest level of returns possible, within the ETF’s risk parameters. The most common type of multi-asset ETFs that are classified under the Absolute Returns category include unconstrained ETFs and long/short ETFs.

Agencies bond ETFs generally invest in two different types of agency debt instruments: federal government agency bonds, which are issued by federal government agencies like the Federal Housing Administration or the National Mortage Association; or government-sponsored enterprise bonds, which are issued by agencies like the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage (Freddie Mac).

Agency MBS ETFs purchase mortage-backed securities that are sponsored by government agencies like the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage (Freddie Mac). Agency MBS ETFs often purchase mortage-backed securities from banks, who sell a large percentage of their active mortgages on the secondary mortage market. Mortage-backed securities are often grouped into pools based on common features, a process known as securitization. Agency MBS ETFs make either semi-annual or monthly interest payments to investors.

Alpha-seeking ETFs seek to outperform the broader equity market by employing some sort of investment strategy to give the ETF an “edge.” Alpha, also known as excess return, is the amount of which an investment outperforms or underperforms its benchmark. Alpha-seeking ETFs often maintain diversified portfolio allocations to manage the level of unsystematic risk, or risk specific to an individual security in a portfolio. Alpha-seeking ETFs may also employ Modern Portfolio Theory (MPT), which uses measures risk return metrics like a sharpe ratio to optimize a portfolio's holdings.

An altcoin is simply any cryptocurrency that is not Bitcoin. Since Bitcoin was the first cryptocurrency, the consensus is that an altcoin describes coins that are alternatives to Bitcoin.

An American Call Option is a contract that gives the buyer the right to buy 100 shares of an underlying equity at a predetermined price (the strike price) for a specific time period defined by the expiration date. The seller of a Call Option is obligated to sell the underlying security if the Call buyer exercises his or her right to buy on or before the option expiration date. For example, one contract of the XYZ May 21 60 Calls entitles the buyer to purchase 100 shares of XYZ common stock at $60 per share at any time prior to the option's expiration date of May 21.

American options can be exercised or assigned at any time prior to the expiration date.

An American put option is a contract that gives the buyer the right to sell 100 shares of an underlying stock at a predetermined price (the strike price) for a specific time period defined by the expiration date. The seller of a Put option is obligated to buy the underlying security if the Put buyer exercises his or her right to sell on or before the option expiration date. For example, 1 contract of the XYZ May 21 60 Puts entitles the buyer to sell 100 shares of XYZ common stock at $60 per share at any time prior to the option's expiration date of May 21st.

Asia-Pacific ETFs invest in securities from countries like China, Japan, Australia, and other notable Asia-Pacific countries. There are a variety of sub-categories that fall under Asia-Pacific ETFs, the most prominent being China-specific ETFs. China-specific ETFs are strong options for investors who believe that China will continue its rapid economic expansion and that Chinese companies will benefit from this expansion. General Asia-Pacific ETFs, meanwhile, are viable options for investors looking for exposure to a variety of emerging markets, like China and India, while remaining exposed to established and developed markets, like that of Japan.

Asian ETFs invest in the stocks of micro-cap, small-cap, mid-cap, and large-cap companies from countries like China, Japan, India, and other notable Asian countries. There are a variety of sub-categories that fall under Asian ETFs, the most prominent being China-specific ETFs. China-specific ETFs are strong options for investors who believe that China will continue its rapid economic expansion and that Chinese companies will benefit from this expansion. General Asia ETFs, meanwhile, are viable options for investors looking for exposure to a variety of emerging markets, like China and India, while remaining exposed to established and developed markets, like that of Japan.

Multi-asset ETFs classified under the Asset Allocation category adhere to an investment strategy that diversifies holdings across multiple asset classes. Asset Allocation ETFs hold equities, fixed income, real estate, and other asset classes in their portfolio. Because multi-asset ETFs that fall under the Asset Allocation category are diversified across multiple asset classes, they are typically more stable and less risky than asset-specific ETFs.

Asset-backed ETFs invest in asset-backed securities, which are financial securities collateralized by a pool of assets like loans, leases, royalties, or receivables. Asset-backed ETFs purchase securities whose underlying assets are often illiquid. Asset-backed securities are often grouped into pools based on common features, a process known as securitization. Asset-backed securities are also separated into different tranches based on their default risk.

An assignment means that the seller has the obligation to either purchase or sell stocks at the strike price.

This is a term that simply means that you are willing to sell a stock at the market price. Please keep in mind, that is NOT the last price. The market price to buy a stock is the offer price. The market price to sell a stock is the bid price.

Basic materials ETFs invest in stocks of companies that discover, extract, develop, and process raw materials. Major sub-industries that basic materials ETFs invest in include chemicals, construction materials, mining, containers and packaging, and forestry production. Basic materials ETFs rely on industrial and commercial customers to drive the performance of its holdings, making demand for the ETF strategy volatile and susceptible to economic cycles.

The bid-ask spread refers to the difference between where you can buy or sell a security at a market price. A wide bid-ask spread would imply that a security is not very liquid. Investors/traders should be very careful about putting in market orders for stocks, etc that have wide bid-ask spreads: you may not get the price you expect.

ETFs classified under the Blended Development class invest in a blend of securities from developed economies, emerging markets, and frontier markets. ETFs with a Blended Development classification are diversified across different economies and can offer a variety of risk/reward profiles. Although the diversification across countries or regions with different development types eliminate certain risks associated with global investing, Blended Development ETFs remain exposed to currency conversion risks.

A blockchain is a cryptographically created digital ledger that chronologically and publicly records all the transactions in a particular cryptocurrency ever made. When applied to cryptocurrencies, the blockchain becomes a confirmed public database that is not stored in any single location. It comprises individual blocks that are chained to each other with a unique cryptographic identifier. All blocks are linked from the genesis block to the current block. Each cryptocurrency has its own blockchain.

Blocks are digital files in which cryptocurrency transactions are permanently recorded. A block contains recent transactions that have not been recorded in any prior blocks. When a block is completed, it is entered into the blockchain by the miner. Once completed, any new transactions must be recorded in a new block.

Bollinger bands are the plotted lines 2 standard deviations away from a given moving average. Many believe the closer the price is to the upper band, the more overbought the market. In contrast the closer the price is to the lower band, the more oversold the market.

Bond ETFs invest in the bonds, or debt, of companies, governments, central banks, or a combination of the three. Bond ETFs can add stability and reduce volatility of a portfolio. Additionally, bond ETFs often pay steady and predictable coupon payments. To decide their holdings, bond ETFs can employ a variety of different strategies that focus on different traits of bonds, including maturity, duration, and coupon payments. Bond ETFs trade throughout the day on a centralized exchange, making them more liquid than individual bonds or bond mutual funds. Individual bonds are sold over-the-counter by brokers, while bond mutual funds are only priced at the end of each trading day.

Bond spread ETFs employ strategies based on bond yield spread(s), or the difference between yields of two debt instruments with varying maturities or credit ratings. Bond yield spreads can be used to measure the risk a certain characteristic adds to a bond. For example, the yield spread between a 2-Year Treasury Bond and a 10-Year Treasury Bond measures the risk added by maturity length.

Broad debt ETFs invest in the bonds of companies, sovereign entities, central banks, or a combination of the three. Broad debt ETFs can add stability and reduce volatility of a portfolio. Additionally, broad debt ETFs often pay steady and predictable coupon payments. Broad debt ETFs trade throughout the day on a centralized exchange, making them more liquid than individual bonds or bond mutual funds—individual bonds are sold over-the-counter by brokers while bond mutual funds are only priced at the end of each trading day.

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