Expert: Paul Henneman - 9/23/2005

Question
PLease tell me the meaning of
"Trading house", "Open Market", "Trading bodies" and "Bonds"?

Yours truly,
Usman Zafar Paracha.

Answer
Usman,
  Thank you for your question! The first three are fairly general terms, and could be interepreted in various ways. I will try to provide the most likey definition.
Trading House: This is most likely the same thing as 'brokerage house'. These are companies or institutions that offer trading servies to clients, both individual investors and institutional clients. In order to have investments in the stock market, a person or company must buy and sell the stocks that they want to hold, and a Trading House provides this type of service. Fees are charged by the trading house, usually there is a set fee ranging between $7 and $15 for each stock traded.
Open Market: This probably refers to a stock exchange or other type of market that is open to any investor to participate in. For example, there are commodity markets that trade in futures rather than stocks, and would also be considered an open market. This would be the opposite to a market that restricted participate to some sort of limited group.
Trading Bodies: That unfortunately is such a general term that I am afraid I cannot be of much help. I also checked in the Barron's "Dictionary of Finance and Investment Terms", and it was not listed. Probably due to the general nature of the term, it could really mean anything.
Bonds: This is a big subject. However, the Barron's guide I mentioned above does a good job of summarizing it quickly: "BOND: any interest-bearing or discounted goverment or corporate security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals, and to repay the principal amount of the loan at maturity."(p. 59)
You can think of this like a loan that an investor gives to a government or corporation. The goverment or corporation needs money to grow, so agrees to borrow a specified amount from an investor and pay an interest rate on the loan each year. When the overall term of the loan expires (the maturity date), the government or corporation must then repay the original loan amount. The time frame for this can vary from a few months to many years. Typically the interest rate is larger as the term becomes longer, since the government or corporation can make use of the original loan amount for a longer period of time.

I hope this helps! Please do not hesitate to follow up with me if I can be of any further assitance.

Sincerely
Paul Henneman
ValuEngine, Inc.
(800) 381-5576
www.ValuEngine.com
www.VEInstitutional.com
www.VEReports.com