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DRIP Glossary

Broker - An intermediary which provides investors the ability to purchase stock in publicly traded companies.

Capital Gains - Realized profits which come from selling shares of a company at a higher price than the original cost of purchase.

Cost Basis - The actual cost to the investor of purchasing a security, accounting for commissions, fees and the price paid.

DRIP - Dividend Reinvestment Plan, which is a plan sponsored and offered by a public corporation where dividends that might usually be paid to the investor in the form of cash are instead reinvested as a means of purchasing additional shares of a particular company.

Dollar Cost Averaging - Investing a fixed dollar amount in regular intervals, such as weekly, monthly, or quarterly, where an investor attempts to purchase stock at an average price and remove emotion and the risks of market timing.

Diversification - The practice of spreading one's investments over several industries and company sizes in order to minimize risk while maintaining favorable reward potential.

Long-Term Investing - The practice of buying and holding shares of financially strong, growing companies over five, even ten years, or more in order to minimize tax ramifications and remove emotion from the investment process.

Market Timing - Practiced by many but mastered by few, an attempt to buy low and sell high.

NYSE - The New York Stock Exchange, where the most respected and financially stable public companies in the world reside.

NASDAQ - The National Association of Securities Dealers Automated Quotations, where younger more aggressive companies trade in the public market.

Shareholder - Owner of shares in a publicly traded company, who is registered and on file with that company.

Transfer Agent - An institution that maintains and manages the records of a company's stock and its shareholders.

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