Glossary / Business

Finance Glossary

10-K: Annual report required by the SEC each year. Provides a comprehensive overview of a company's state
10-Q: Quarterly report required by the SEC each quarter. Provides a comprehensive overview of a company's
1040 Form: The standard individual tax return form of the IRS.
1099: A statement sent to the IRS and taxpayers by the payers of dividends and interest and by issuers of
12B-1 Fees: The percent of a mutual fund's assets used to defray marketing and distribution expenses. The amount
12B-1 Funds: Mutual funds that do not charge an up-front or back-end commission, but instead take out up to 1.25%
144 Stock: Used in the context of general equities. Restricted stock.
19c3 Stock: A stock listed on a national securities exchange after April 26, 1979, that is exempt from the Secur
48-Hour Rule: PSA Unifor Practices requirement that all pool information in a to be announced (T.B.A.) transaction
A: Fifth letter of a Nasdaq stock symbol specifying Class A shares.
A-D: Advance-Decline, or measurement of the number of issues trading above their previous closing prices
Abandonment: Controlling party giving up rights to property voluntarily.
Abandonment Option: The option of terminating an investment earlier than originally planned.
ABC Agreement: A contract between an employee and a brokerage firm outlining the rights of the firm purchasing an N
Ability To Pay: Refers to the borrower's ability to make interest and principal payments on debts. See: Fixed charge
Abnormal Returns: The component of the return that is not due to systematic influences (market-wide influences). In ot
Absolute Priority: Rule in bankruptcy proceedings requiring senior creditors to be paid in full before junior creditors
Absorbed: Used in context of general equities. Securities are 'absorbed' as long as there are corresponding or
Abusive Tax Shelter: A limited partnership that the IRS judges to be claiming tax deductions illegally.
Accelerated Cost Recovery System (ACRS): Schedule of depreciation rates allowed for tax purposes.
Accelerated Depreciation: Any depreciation method that produces larger deductions for depreciation in the early years of a ass
Acceleration Clause: A contract stating that the unpaid balance becomes due and payable if specific actions transpire, su
Acceptance: Contractual agreement instigated when the drawee of a time draft 'accepts' the draft by writing the
Accommodative Monetary Policy: Federal Reserve System policy to increase the amount of money available to banks for lending. See: M
Account: In the context of bookkeeping, refers to the ledger pages upon which various assets, liabilities, in
Account Balance: Credits minus debits at the end of a reporting period.
Account Executive: The brokerage firm employee who handles stock orders for clients. See: Broker.
Account Reconciliation: The reviewing and adjusting of the balance in a personal checkbook to match your bank statement.
Account Statement: In the context of banking, refers to a summary of all balances. In the context of securities, a summ
Accountants Opinion: A signed statement from an independent public accountant after examination of a firm's records and a
Accounting Earnings: Earnings of a firm as reported on its income statement.
Accounting Exposure: The change in the value of a firm's foreign currency-denominated accounts due to a change in exchang
Accounting Insolvency: Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.
Accounting Liquidity: The ease and quickness with which assets can be converted to cash.
Accounts Payable: Money owed to suppliers.
Accounts Payable: Amounts owed by the business for purchases made on credit. These amounts are paid by the business af
Accounts Receivable: Money owed by customers.
Accounts Receivable: Amounts due to the business from customers for merchandise or services purchased on credit. The busi
Accounts Receivable Financing: A short-term financing method in which accounts receivable are collateral for cash advances. See: Fa
Accounts Receivable Turnover: The ratio of net credit sales to average accounts receivable, which is a measure of how quickly cust
Accredited Investor: Refers to a wealthy investor (net worth $7 million or annual income >200,000) who does not count to
Accretion (Of A Discount): In portfolio accounting, a straight-line accumulation of capital gains on a discount bond in anticip
Accrual Basis: In the context of accounting, practice in which expenses and income are accounted for as if they are
Accrual Bond: A bond on which interest accrues but is not paid to the investor during the time of accrual. The amo
Accrued Benefits: The pension benefits earned by an employee accourding to the years of the employee's service.
Accrued Expenses: Expenses that the business has incurred for which it has not received, or will not receive, an invoi
Accrued Interest: Applies mainly to convertible securities. Interest that has accumulated between the most recent paym
Accrued Market Discount: The rise in the market value of a discount bond as it approaches maturity (when it is redeemable at
Accumulate: Broker/analyst recommendation that could mean slightly different things depending on the broker/anal
Accumulated Benefit Obligation (ABO): An approximate measure of the liability of a pension plan in the event of a termination at the date
Accumulated Depreciation: The total amount of depreciation expense recorded to date for the company's fixed assets. On the bal
Accumulated Dividend: A dividend that has reached its due date, but is not paid out. See: Cumulative preferred stock.
Accumulated Profits Tax: A tax on earnings kept in a firm to prevent the higher personal income tax rate that would obtain if
Accumulation: In the context of corporate finance, refers to profits that are added to the capital base of the com
Accumulation Area: A price range within which a buyer accumulates shares of a stock. See: On-balance volume and distrib
Acid Test Ratio: Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid it
Acquired Surplus: The surplus acquired when a company is purchased in a pooling of interests combination, i.e. the net
Acquiree: A firm that is being acquired.
Acquirer: A firm or individual that is acquiring something.
Acquisition: When a firm buys another firm.
Acquisition Cost: The amount actually paid to purchase an asset. This includes all costs associated with the purchase,
Acquisition Cost: Refers to the price (including the closing costs) to purchase another company or property. In the co
Acquisition Of Assets: A merger or consolidation in which an acquirer purchases the selling firm's assets.
Acquisition Of Stock: A merger or consolidation in which an acquirer purchases the acquiree's stock.
Across The Board: Movement or trend in the stock market that affects almost all stocks in all sectors to move in the s
Act Of State Doctrine: This doctrine says that a nation is sovereign within its own borders, and its domestic actions may n
Acting In Concert: Investors working together and performing identical actions to attain the same investment goal.
Active: A market in which there is frequent trading.
Active Account: Refers to a brokerage account in which many transactions occur. Brokerage firms may levy a fee if an
Active Bond Crowd: Refers to members of the bond department of the NYSE who trade the most bonds. Antithesis of cabinet
Active Box: Securities that are held in safekeeping and are available as collateral for securing brokers' loans
Active Portfolio Strategy: A strategy that uses available information and forecasting techniques to seek better performance tha
Actual Market: Used in context of general equities. Firm market. Antithesis of Subject market.
Actuals: The physical commodities underlying a futures contract. Cash commodity, physical asset.
Actuals: Financial statements describing the actual operations of the business. Actuals often pertain to the
Additional Bonds Test: A test for ensuring that bond issuers can meet the debt service requirements of issuing any new addi
Additional Hedge: A protection against borrower fallout risk in the mortgage pipeline.
Additional Paid-In Capital: The amount paid by investors for stock over and above its par value. See also contributed capital.
Adequacy Of Coverage: A test that measures the extent to which the value of an asset is protected from potential loss eith
Adjustable Rate: Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted perio
Adjustable-Rate Mortgage (ARM): A mortgage that features predetermined adjustments of the loan interest rate at regular intervals ba
Adjustable-Rate Preferred Stock (ARPS): Publicly traded issues that may be collateralized by mortgages and MBS
Adjusted Balance Method: Method of calculating finance charges that uses the account balance remaining after adjusting for al
Adjusted Basis: Price from which to calculate and derive capital gains or losses upon sale of an asset. Account acti
Adjusted Debit Balance (ADB): The account balance for a margin account that is calculated by combining the balance owed to a broke
Adjusted Exercise Price: Term used in options on Ginnie Mae (Government National Mortgage Association) contracts. The final e
Adjusted Gross Income (AGI): Gross income less allowable adjustments, is the income on which an individual is taxed by the federa
Adjusted Present Value (APV): The net present value analysis of an asset if financed solely by equity (present value of unlevered
Adjustment Bond: A bond issued in exchange for outstanding bonds when a corporation facing bankruptcy is recapitalize
Administrative Pricing Rules: IRS rules used to allocate income on export sales to a foreign sales corporation.
Advance: Increase in the market price of stocks, bonds, commodities, or other assets.
Advance Commitment: A promise to sell an asset before the seller has lined up purchase of the asset. This seller can off
Advance Computerized Execution System (ACES): Refers to the Advance Computerized Execution System, run by Nasdaq. ACES automates trades between or
Advance Funded Pension Plan: A pension plan in which funds are set aside in advance of the date of retirement.
Advance Refunding: In the context of municipal bonds, refers to the sale of new bonds (the refunding issue) before the
Adverse Opinion: An independent auditor's opinion expressing that a firm's financial statements do not reflect the co
Adverse Selection: Refers to a situation in which sellers have relevant information that buyers lack (or vice versa) ab
Advisory Letter: A newsletter offering financial advice to its readers.
Affiliate: Relationship between two companies when one company owns substantial interest, but less than a major
Affiliated Corporation: A corporation that is an affiliate to the parent company.
Affiliated Person: An individual who possesses enough influence and control in a corporation as to be able to alter the
Affirmative Covenant: A bond covenant that specifies certain actions the firm must take.
Affordability Index: An index that measures the financial ability of consumers to purchase a home.
After Acquired Clause: A contractual clause in a mortgage agreement stating that any additional mortgageable property attai
After Tax Income: Another term for net income.
After-Hours Dealing Or Trading: Securities trading after regular trading hours on organized exchanges.
After-Tax Basis: The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a mun
After-Tax Profit Margin: The ratio of net income to net sales.
After-Tax Real Rate Of Return: The after-tax rate of return minus the inflation rate.
Aged Fail: An account between two broker/dealers that remains intact after 30 days after the settlement date. T
Agency: In context of general equities, buying or selling for the account and risk of a customer. Generally,
Agency Bank: A form of organization commonly used by foreign banks to enter the U.S. market. An agency bank canno
Agency Basis: A means of compensating the broker of a program trade solely on the basis of commission established
Agency Cost View: The argument that specifies that the various agency costs create a complex environment in which tota
Agency Costs: The incremental costs of having an agent make decisions for a principal.
Agency Incentive Arrangement: A means of compensating the broker of a program trade using benchmark prices for issues to be traded
Agency Pass-Throughs: Mortgage pass-through securities whose principal and interest payments are guaranteed by government
Agency Problem: Conflicts of interest among stockholders, bondholders, and managers.
Agency Securities: Securities issued by federally related institutions and U.S. government-sponsored entities. Such age
Agency Theory: The analysis of principal-agent relationships, in which one person, an agent, acts on behalf of anot
Agent: The decision-maker in a principal-agent relationship.
Aggregate Exercise Price: The exercise price multiplied by the number of shares in a put or call contract. The option premium
Aggregation: Process in corporate financial planning whereby the smaller investment proposals of each of the firm
Aggressive Growth Mutual Fund: A mutual fund designed for maximum capital appreciation that places its money in companies with high
Aggressively: Used in context of general equities. For a customer it means working to buy or sell one's stock, wit
Aging Schedule: A table of accounts receivable broken down into age categories (such as 0-30 days, 30-60 days, and 6
Agreement Among Underwriters: A contract amoung participating members of a syndicate that defines the members' proportionate liabi
Ahead Of Itself: In context of general equities, refers to equities that are overbought or oversold on a fundamental
Ahead Of You: Used for listed equity securities. At the same price but entered ahead of your order/interest, usual
AIBD: Association of International Bond Dealers
AIMR Performance Presentation Standards Implementation Committee: The Association for Investment Management and Research (AIMR) Performance Presentation Standards Imp
Air Pocket Stock: A stock whose price drops precipitously, often on the unexpected news of poor results.
Alien Corporation: A company incorporated under the laws of a foreign country regardless of where the company conducts
All Equity Rate: The discount rate that reflects only the business risks of a project, distinct from the effects of f
All In: Refers to an issuer's interest rate after accounting for commissions and various related expenses.
All Or None Order (AON): Used in context of general equities. A limited price order that is to be executed in its entirety or
All Ordinaries Index: The major index of Australian stocks comprising 330 of the major companies listed on the Australian
All-In Cost: Total costs, explicit and implicit.
All-Or-None Underwriting: An arrangement whereby a security issue is cancelled if the underwriter is unable to resell the enti
Allied Member: A partner or stockholder of a firm that is a member of the NYSE, the partner or stockholder is not p
Alligator Spread: The term used to describe a spread in the options market that generates such a large commission that
Allotment: The number of securities assigned to each of the participants in an underwriting syndicate.
Alpha: Measure of risk-adjusted performance. An alpha is usually generated by regressing the security or mu
Alpha Equation: Regression usually run over 36-60 months of data: Return-Treasury bill= alpha + beta (S&P 500 - Trea
Alphabet Stock: Categories of common stock of a corporation associated with a particular subsidiary resulting from a
Alternative Minimum Tax (AMT): A federal tax aimed at ensuring that wealthy individuals, estates, trusts, and corporations pay a mi
Alternative Mortgage Instruments: Variations of mortgage instruments such as adjustable-rate and variable-rate mortgages, graduated-pa
Alternative Order: Used in context of general equities. Order giving a broker a choice between two courses of action, e
American Association Of Individual Investors (AAII): A not-for-profit organization to educate individual investors about stocks, bonds, mutual funds, and
American Depository Receipt (ADR): Certificates issued by a U.S. depository bank, representing foreign shares held by the bank, usually
American Depository Receipt Fees: Fees associated with the creating or releasing of ADRs from ordinary shares, charged by the commerci
American Depository Receipt Ratio: The number of ordinary shares into which an ADR can be converted.
American Depository Share (ADS): Foreign stock issued in the U.S. and registered in the ADR system.
American Option: An option that may be exercised at any time up to and including the expiration date. Related: Europe
American Shares: Securities certificates issued in the U.S. by a transfer agent acting on behalf of the foreign issue
American Stock Exchange (AMEX): Stock exchange with the third highest volume of trading in the U.S. Located at 86 Trinity Place in d
American-Style Option: An option contract that can be exercised at any time between the date of purchase and the expiration
Amman Financial Market (AFM): Established in 1976, the AFM is the only stock exchange in Jordan.
Amortization: The repayment of a loan by installments.
Amortization: The recognition of part of an intangible asset's cost as an expense during each year of its useful l
Amortization Factor: The pool factor implied by the scheduled amortization assuming no prepayments.
Amortizing Interest Rate Swap: Swap in which the principal or notional amount rises (falls) as interest rates rise (decline).
Amsterdam Exchange (AEX): Exchange that comprises the AEX-Effectenbeurs, the AEX-Optiebeurs (formerly the European Options Exc
AMTEL: Used in context of general equities. In-house message system entered and displayed through Quotron A
Analyst: Employee of a brokerage or fund management house who studies companies and makes buy-and-sell recomm
And Interest: An indication that the buyer will receive accrued interest in addition to the price quoted for a bon
Angel: An investment-grade bond. Antithesis to fallen angel. In the context of venture capital, the first i
Angels: Individuals providing venture capital.
Ankle Biter: Stock issued with a market capitalization of less than $500 million.
Announcement Date: Date on which particular news concerning a given company is announced to the public. Used in event s
Annual Basis: The technique in statistics of taking a figure covering a period of less than one year and extrapola
Annual Exclusion: A tax rule allowing the deduction of certain income from taxation.
Annual Fund Operating Expenses: For investment companies, the management fee and 'other expenses,' including the expenses for mainta
Annual Meeting: Meeting of stockholder held once a year at which the managers of a company report to the stockholder
Annual Percentage Rate (APR): The periodic rate times the number of periods in a year. For example, a 5% quarterly return has an A
Annual Percentage Yield (APY): The effective, or true, annual rate of return. The APY is the rate actually earned or paid in one ye
Annual Price Range : The Annual Price Range is a measure of a stock's average annual price movement to a high and low fro
Annual Rate Of Return: There are many ways of calculating the annual rate of return. If the rate of return is calculated on
Annual Report: Yearly record of a publicly held company's financial condition. It includes a description of the fir
Annualized Gain: If stock X appreciates 1.5% in one month, the annualized gain for that stock over a twelve month per
Annualized Holding-Period Return: The annual rate of return that when compounded t times generates the same t-period holding return as
Annuitant: An individual who receives benefits from an annuity.
Annuitize: To commence a series of payments from the capital that has accumulated in an annuity. The payments m
Annuity: A regular periodic payment made by an insurance company to a policyholder for a specified period of
Annuity Certain: An annuity that pays a specific amount on a monthly basis for a set amount of time.
Annuity Due: An annuity with n payments, where the first payment is made at time t = 0, and the last payment is m
Annuity Factor: Present value of $1 paid for each of t periods.
Annuity In Arrears: An annuity with a first payment one full period hence, rather than immediately.
Annuity Starting Date: The date when an annuitant starts receiving payments from an annuity.
Anticipated Holding Period: The period of time an individual expects to hold an asset.
Anticipation: Paying what is owed before it is due (usually to save interest charges).
Antidilutive Effect: Result of a transaction that increases earnings per common share (e.g., by decreasing the number of
Antitrust Laws: Legislation established by the federal government to prevent the formation of monopolies and to regu
Any-Interest-Date: A call provision in a municipal bond indenture that establishes the right of redemption for the issu
Any-Or-All Bid: Often used in risk arbitrage. Takeover bid in which the acquirer offers to pay a set price for all o
Any-Part-Of Order: In context of general equities, order to buy or sell a quantity of stock in pieces if necessary. Ant
Appraisal Ratio: The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard deviati
Appraisal Rights: A right of shareholders in a merger to demand the payment of a fair price for their shares, as deter
Appreciation: Increase in the value of an asset.
Appropriation Request: Formal request for funds for capital investment project.
Approved List: A list of equities and other investments that a financial institution or mutual fund is approved to
APS: Auction Preferred Stock. A type of Dutch Auction Preferred Stock (Goldman Sachs product).
Arbitrage: The simultaneous buying and selling of a security at two different prices in two different markets,
Arbitrage Bonds: Municipality issued bonds issued intended to gain an interest rate advantage by refunding a higher-r
Arbitrage Pricing Theory (APT): An alternative model to the capital asset pricing model developed by Stephen Ross and based purely o
Arbitrage-Free Option-Pricing Models: Yield curve option-pricing models.
Arbitrageur: One who profits from the differences in price when the same, or extremely similar, security, currenc
Are You Open: Used in context of general equities. 'Can a new customer still participate on opposing side of the t
Arithmetic Average (Mean) Rate Of Return: Arithmetic mean return.
Arithmetic Mean Return: An average of the subperiod returns, calculated by summing the subperiod returns and dividing by the
Arms Index: Also known as a trading index (TRIN) (total up volume)/(total down volume). An advance/decline marke
Arms Length Price: The price at which a willing buyer and a willing unrelated seller would freely agree to transact.
Around Us: Used in context of general equities. See: Away from you.
Arrearage: In the context of investments, refers to the amount by which interest on bonds or dividends on cumul
Articles Of Incorporation: Legal document establishing a corporation and its structure and purpose.
Artificial Currency: A currency substitute, e.g., special drawing rights (SDRs).
Ascending Tops: A chart pattern that depicts that each peak in a security's price over a period of time is higher th
Asian Currency Units (ACU): Dollar deposits held in Singapore or other Asian centers.
Asian Option: Option based on the average price of the underlying assets during the life of the option.
Ask: This is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically spe
Asked Price: In context of general equities, price at which a security or commodity is offered for sale on an exc
Asked To Bid-Offer: Used in context of general equities. Usually a seller (buyer) looking to aggressively sell (buy) sto
Aspirin: Australian Stock Price Riskless Indexed Notes. Zero-coupon four-year bonds repayable at face value p
Assay: Metal purity test to confirm that the metal meets the standards for trading on a commodities exchang
Assessed Valuation: The value assigned to property by a municipality for the purpose of tax assessment. Such an assessed
Asset: Anything that has future economic value. In addition to items such as cash and equipment, assets can
Asset: Any possession that has value in an exchange.
Asset Activity Ratios: Ratios that measure how effectively the firm is managing its assets.
Asset Allocation Decision: The decision regarding how an institution's funds should be distributed among the major classes of a
Asset Allocation Mutual Fund: A mutual fund that rotates amoung stocks, bonds, and money market securities to maximize return on i
Asset Classes: Categories of assets, such as stocks, bonds, real estate, and foreign securities.
Asset Depreciation Range System: A range of depreciable lives the IRS allows for particular classes of assets.
Asset For Asset Swap: Creditors exchange the debt of one defaulting borrower for the debt of another defaulting borrower.
Asset Management Account: Account at a brokerage house, bank, or savings institution that integrates banking services and brok
Asset Play: A company with assets that are not believed to be accurately reflected in its stock price, making it
Asset Pricing Model: A model for determining the required or expected rate of return on an asset. Related: Capital asset
Asset Stripper: A corporate raider (company A) that takes over a target company (company B) in order to sell large a
Asset Substitution: Occurs when a firm invests in assets that are riskier than those that the debtholders expected.
Asset Substitution Problem: Arises when the stockholders substitute riskier assets for the firm's existing assets and expropriat
Asset Swap: An interest rate swap used to alter the cash flow characteristics of an institution's assets in orde
Asset Turnover: The ratio of net sales to total assets.
Asset Value: The net market value of a corporation's assets on a per-share basis, not the market value of the sha
Asset-Backed Security: A security that is collateralized by loans, leases, receivables, or installment contracts on persona
Asset-Based Financing: Methods of financing in which lenders and equity investors look principally to the cash flow from a
Asset-Coverage Test: A bond indenture restriction that permits additional borrowing if the ratio of assets to debt does n
Asset-Equity Ratio: The ratio of total assets to stockholder equity.
Asset-Liability Management: The task of managing the funds of a financial institution to accomplish the two goals of a financial
Assets: A firm's productive resources.
Assets Requirements: A common element of a financial plan that describes projected capital spending and the proposed uses
Assignment: The receipt of an exercise notice by an options writer that requires the writer to sell (in the case
Assimilation: The public absorption of a new issue of stocks once the stock has been completely sold by underwrite
Assumed Interest Rate: Rate of interest used by an insurance company to calculate the payout on an annuity contract.
Assumption: Becoming responsible for the liabilities of another party.
ASX Derivatives And Options Market (ASXD): Options market trading options on more than 50 of Australia's and New Zealand's leading companies.
Asymmetric Information: Information that is known to some people but not to other people.
Asymmetric Taxes: When participants in a transaction have different net tax rates.
Asymmetric Volatility: Phenomenon that volatility is higher in down markets than in up markets.
Asymmetry: A lack of equivalence between two things, such as the unequal tax treatment of interest expense and
At Par: A price equal to nominal or face value of a security. See: Par.
At Risk: The exposure to the danger of economic loss. Frequently used in the context of claiming tax deductio
At The Bell: In context of general equities, at the opening or close of the market. See: MOC Order.
At The Close Order: In the context of securities, an all or none market order that is to be executed at the closing pric
At The Figure: In context of general equities, at the whole integer price (excluding the fraction) closest to the s
At The Full: Used in context of general equities. At the figure.
At The Opening Order: In context of general equities, market order or limited price order that is to be executed at the op
At-For: Used in context of general equities. Paramount terms used to differentiate an offering. Stock is off
At-The-Money: An option is at the money if the strike price of the option is equal to the market price of the unde
Athens Stock Exchange (ASE): Greece's principal stock exchange.
Attribute Bias: The tendency of stocks preferred by the dividend discount model to share certain equity attributes s
Auction Market Preferred Stock (AMPS): A type of Dutch Auction Preferred Stock (A Merrill Lynch product).
Auction Markets: Markets in which the prevailing price is determined through the free interaction of prospective buye
Auction Rate Preferred Stock (ARPS): Floating-rate preferred stock, whose dividend is adjusted every seven weeks through a Dutch auction.
Audit: An examination of a company's accounting records and books conducted by an outside professional in o
Audit Trail: Resolves the validity of an accounting entry by a step-by-step record by which accounting data can b
Auditors Report: A section of an annual report that includes the auditor's opinion about the veracity of the financia
Aunt Millie: An unsophisticated investor.
Australian Stock Exchange (ASX): Established in 1987 following the amalgamation of the six independent stock exchanges operating in t
Autex: Video communication network through which brokerage houses alert institutional investors of their de
Authentication: In the context of bonds, refers to the validation of a bond certificate.
Authority Bond: A bond issued by a government agency or a corporation created to manage a revenue-producing public e
Authorized Shares: Number of shares authorized for issuance by a firm's corporate charter.
Autocorrelation: The correlation of a variable with itself over successive time intervals. Sometimes called serial co
Automated Bond System (ABS): The computerized system that records bids and offers for inactively traded bonds until they are canc
Automated Clearing House (ACH): A collection of 32 regional electronic interbank networks used to process transactions electronicall
Automated Customer Account Transfer (ACAT): For transfers of securities from a non-equity trading account to your equity trading account with yo
Automated Order System (AOS): Investment banks, computerized order entry system that sends single order entries to DOT (Odd-Lot) o
Automated Pit Trading (APT): Introduced in 1989, APT is the LIFFE screen-based trading system that replicates the open outcry met
Automatic Extension: An automatic extension of time granted to a taxpayer to file a tax return.
Automatic Funds Transfer: A transfer of funds from one account or investment vehicle to another using electronic or telecommun
Automatic Investment Program: A program in which an investor can invest or withdraw funds automatically. A mutual fund, for exampl
Automatic Stay: The restricting of liabilityholders from collection efforts related to collateral seizure. Automatic
Automatic Withdrawal: A mutual fund that gives shareholders the right to receive a fixed payment from dividends on a quart
Autoquote: Autoquote indicative prices are generated for many of the financial options contracts traded at LIFF
Autoregressive: Using past data or variable of interest to predict future values of the same variable.
Availability Float: Checks deposited by a company that have not yet been cleared.
Available On The Way In: In context of general equities, stock is available to new customer as trade initiated by another cus
Average: An arithmetic mean return of selected stocks intended to represent the behavior of the market or som
Average (Across-Day) Measures: An estimation of price that uses the average or representative price of a large number of trades.
Average Accounting Return: The average project earnings after taxes and depreciation divided by the average book value of the i
Average Age Of Accounts Receivable: The weighted-average age of all the firm's outstanding invoices.
Average Annual Return: The expected annual return on an investment, including interest and dividends, expressed as a percen
Average Collection Period, Or Days Receivables: The ratio of accounts receivables to sales, or the total amount of credit extended per dollar of dai
Average Cost: In the context of investing, refers to the average cost of shares or stock bought at different price
Average Cost: A method of inventory valuation whereby the total cost of all units bought or produced is divided by
Average Cost Of Capital: A firm's required payout to bondholders and stockholders expressed as a percentage of capital contri
Average Daily Balance: A method for calculating interest in which the balance owed each day by a customer is divided by the
Average Down: A strategy used by investors to reduce the average cost of shares, in which the investor purchases m
Average Equity: A customer's average daily balance in a trading account at a brokerage firm.
Average Life: Also referred to as the weighted-average life (WAL). The average number of years that each dollar of
Average Maturity: The average time to maturity of securities held by a mutual fund. Changes in interest rates have gre
Average Rate Of Return (ARR): The ratio of the average cash inflow to the amount invested.
Average Tax Rate: Taxes as a fraction of income; total taxes divided by total taxable income.
Average Up: A strategy used by investors to lower the overall cost of shares by buying as many shares with a giv
Away: A trade, quote, or market that does not originate with the dealer in question, e.g., 'the bid is 98-
Away From The Market: In context of general equities, out of line with the inside market at this time, such as when a bid
Away From Us: Used in context of general equities, to characterize role of a competing broker/dealer. Trading away
Axe To Grind: Used in context of general equities. Involvement in a security, whether through a position, order, o
B: Fifth letter of a Nasdaq stock descriptor specifying that issue is the Class B shares of the company
B2B: An Internet strategy of dealing directly with businesses, rather than consumers, i.e. business to (2
Baby Bond: A bond with a par value of less than $1000.
Back Away: In the context of general equities, to withdraw from a previously declared interest, indication, or
Back Fee: The fee paid on the extension date if the buyer wishes to continue the option.
Back Months: In the context of futures and options trading, refers to the months of contracts with expiration dat
Back Office: Brokerage house clerical operations that support, but do not include, the trading of stocks and othe
Back On The Shelf: In the context of general equities, permanently cancelled order/interest in a stock by a customer. S
Back Taxes: Due taxes that have not been paid on time.
Back Up: (1) When bond yields rise and prices fall, the market is said to backup. (2) An investor who swaps o
Back Up The Truck: In the context of general equities, 'Prepare for a very large buyer.'
Back-End Load Fund: A mutual fund that charges investors a fee to sell (redeem) shares, often ranging from 4% to 6%. Som
Back-Testing: Creating a hypothetical portfolio performance history by applying current asset selection criteria t
Back-To-Back Financing: An intercompany loan channeled through a bank.
Back-To-Back Loan: A loan in which two companies in separate countries borrow each other's currency for a specific time
Backdating: In the context of mutual funds, a feature allowing fundholders to use an earlier date on a letter of
Backed In: In the context of general equities, to describe result of unanticipated events that allow for a purc
Backup Line: A commercial paper issuer's bank line of credit covering maturing notes if, for some reason, selling
Backwardation: A market condition in which futures prices are lower in the distant delivery months than in the near
Bad Debt: A debt that is written off and deemed uncollectible.
Bad Debt Expense: Losses for uncollectible accounts receivable.
Bad Delivery: Antithesis of good delivery.
Bad Title: Title to property that does not distinctly confer ownership, usually in the context of real estate.
Bai-Kai: Two-sided market picture, in Japanese terminology applies mainly to international equities.
Bailing Out: In the context of securities, refers to selling a security or commodity quickly, regardless of the p
Bailout Bond: A bond issued by the Resolution Funding Corporation (Refcorp) to save the failing savings and loan a
Baker Plan: A plan by former U.S. Treasury Secretary James Baker under which 15 principal middle-income debtor c
Balance Of Payments: A statistical compilation formulated by a sovereign nation of all economic transactions between resi
Balance Of Trade: Net flow of goods (exports minus imports) between two countries.
Balance Sheet: Also called the statement of financial condition, it is a summary of a company's assets, liabilities
Balance Sheet: A financial statement that lists the assets, liabilities, and equity of a company at a certain point
Balance Sheet Identity: Total assets = Total liabilities + Total stockholders' equity
Balanced Budget: A budget in which the income equals expenditure. See: budget.
Balanced Fund: An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
Balanced Mutual Fund: This is a fund that buys common stock, preferred stock, and bonds. The same as a balanced fund.
Balloon Interest: In the context of serial bond issues, the elevated coupon rate on bonds with late maturities.
Balloon Maturity: Any large principal payment due at maturity for a bond or loan with or without a sinking fund requir
Bank Anticipation Notes (BAN): Notes issued by states and municipalities to obtain interim financing for projects that will eventua
Bank Collection Float: The time that elapses between when a check is deposited into a bank account and when the funds are a
Bank Discount Basis: A convention used for quoting bids and offers for Treasury bills in terms of annualized yield, based
Bank Draft: A draft addressed to a bank.
Bank For International Settlements (BIS): An international bank headquartered in Basel, Switzerland, which serves as a forum for monetary coop
Bank Holding Company: A company that owns or has controlling interest in two or more banks and/or other bank holding compa
Bank Insurance Fund (BIF): A unit of the Federal Deposit Insurance Corporation (FDIC) that provides deposit insurance for banks
Bank Investment Contract (BIC): Interest guaranteed by the bank in a portfolio over a specific time frame with a specific yield.
Bank Line: Line of credit that by a bank grants to a customer.
Bank Trust Department: Bank department that deals with estates, administers trusts, and provides services such as estate pl
Bank Wire: A computer message system linking major banks. It is used not for effecting payments, but as a mecha
Bankers Acceptance: A short-term credit investment created by a nonfinancial firm and guaranteed by a bank as to payment
Bankmail: An agreement between a company engaged in a takeover bid and a bank that the bank will not finance t
Bankruptcy: Inability to pay debts. In bankruptcy of a publicly owned entity, the ownership of the firm's assets
Bankruptcy Cost View: The argument that expected indirect and direct bankruptcy costs offset the other benefits from lever
Bankruptcy Risk: The risk that a firm will be unable to meet its debt obligations. Also referred to as default or ins
Bankruptcy View: The argument that expected bankruptcy costs preclude firms from financing entirely with debt.
Bar: Slang for one million dollars.
Barbell Strategy: A fixed income strategy in which the maturities of the securities included in the portfolio are conc
Barefoot Pilgrim: A slang term for an unsophisticated investor who has lost everything on the stock market.
Bargain Hunter: In the context of general equities, purchaser who is extremely selective in the price sought on a tr
Bargain-Purchase-Price Option: Gives the lessee the option to purchase the asset at a price below fair market value when the lease
Barometer: Economic and market data that represent an overall trend. The Dow Jones Industrial Average is an exa
BARRAs Performance Analysis (PERFAN): A method developed by BARRA, a consulting firm in Berkeley, Calif. It is commonly used by institutio
Barrier Options: Option contracts with trigger points that, when crossed, automatically generate buying or selling of
Barrons Confidence Index: Index measuring the ratio of the average yield on 10 top-grade bonds to the average yield on 10 inte
Barter: The trading/exchange of goods or services without using currency.
Base: A technical analysis tool. A chart pattern depicting the period when the supply and demand of a cert
Base Currency: Applies mainly to international equities. Currency in which gains or losses from operating an intern
Base Interest Rate: Related: Benchmark interest rate.
Base Market Value: A group of securities, average market price at a specific time. Used for the purpose of indexing.
Base Period: A particular period of time used for comparative purposes when measuring economic data.
Base Probability Of Loss: The probability of not achieving a portfolio expected return. Related: Value at risk.
Base Rate: British equivalent of the U.S. prime rate.
Basic Balance: In a balance of payments, the basic balance is the net balance of the combination of the current acc
Basic Business Strategies: Key strategies a firm intends to pursue in carrying out its business plan.
Basic IRR Rule: Accept the project if IRR is higher than the discount rate; reject the project if it is lower than t
Basis: The price an investor pays for a security plus any out-of-pocket expenses. It is used to determine c
Basis Point: In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage p
Basis Price: Price expressed in terms of yield to maturity or annual rate of return.
Basis Risk: Uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for pr
Basket: Applies to derivative products. Group of stocks that is formed with the intention of either being bo
Basket Options: Packages that involve the exchange of more than two currencies against a base currency at expiration
Basket Trades: Related: Program trades.
BD Form: An SEC required document of brokerage houses that outlines the firm's finances and officers.
Bear: An investor who believes a stock or the overall market will decline. A bear market is a prolonged pe
Bear CD: A bear CD pays the holder a fraction of any fall in a given market index.
Bear Hug: Often used in risk arbitrage. Hostile takeover attempt in which the acquirer offers an exceptionally
Bear Market: Any market in which prices exhibit a declining trend. For a prolonged period, usually falling by 20%
Bear Raid: In the context of general equities, attempt by investors to move the price of a stock opportunistica
Bear Spread: Applies to derivative products. Strategy in the options market designed to take advantage of a fall
Bear Trap: The predicament facing short sellers when a bear market reverses its trend and becomes bullish. The
Bearer Bond: Bonds that are not registered on the books of the issuer. Such bonds are held in physical form by th
Bearer Form: Describes issue form of security not registered on the issuing corporation's books, and therefore pa
Bearer Share: Security not registered on the books of the issuing corporation and thus payable to possessor of the
Bearish: Words used to describe investor attitude.
Beating The Gun: In the context of general equities, gaining an advantageous price in a trade through a quick respons
Before-Tax Profit Margin: The ratio of net income before taxes to net sales.
Beggar-Thy-Neighbor: An international trade policy of competitive devaluations and increased protective barriers that one
Beggar-Thy-Neighbor Devaluation: A devaluation that is designed to cheapen a nation's currency and thereby increase its exports at th
Behind: Used for listed equity securities. At the same price but entered after your order/interest, such as
Bell: Signal on a stock exchange to indicate the open and close of trading.
Bellwether Issues: Related: Benchmark issues.
Below Par: Less than the nominal or face value of a security.
Benchmark: The performance of a predetermined set of securities, used for comparison purposes. Such sets may be
Benchmark Error: Use of an inappropriate proxy for the true market portfolio.
Benchmark Interest Rate: Also called the base interest rate, it is the minimum interest rate investors will demand for invest
Benchmark Issue: Also called on-the-run or current-coupon issue or bellwether issues. In the secondary market, the be
Beneath: Used for listed equity securities. 1) Behind; 2) Lower in price.
Beneficial Ownership: Often used in risk arbitrage. Person who enjoys the benefits of ownership even though title is in an
Beneficiary: Term used to refer to the person who receives the benefits of a trust or the recipient of the procee
Benefits: The total amount of indirect compensation that the business will provide to employees for each forec
Best-Efforts Sale: A method of securities distribution/underwriting in which the securities firm agrees to sell as much
Best-Interests-Of-Creditors Test: The requirement that a claim holder voting against a plan of reorganization must receive at least as
Bests Rating: A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obl
Beta: The measure of a fund's or a stock's risk in relation to the market or to an alternative benchmark.
Beta Equation (Security): The market beta of a security is determined as follows: Regress excess returns of stock y on excess
Bi-Weekly Mortgage Loan: A mortgage loan on which interest and principal payments are made every half-month (total of 26 paym
Biased Expectations Theories: Related: Pure expectations theory.
Bid: The price a potential buyer is willing to pay for a security. Sometimes also used in the context of
Bid Away: Refers to over-the-counter trading. Bid from another dealer exists at the same (listed) or higher (O
Bid Price: This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practi
Bid Wanted: Used in the context of general equities. Announcement that a holder of securities wants to sell and
Bid-Asked Spread: The difference between the bid and the asked prices.
Bid-To-Cover Ratio: The ratio of the number of bids received in a Treasury security auction compared to the number of ac
Bidder: A firm or person that wants to buy a firm or security.
Bidding Buyer: In the context of general equities, a nonaggressive buyer who prefers to await a natural seller in t
Bidding Through The Market: In the context of general equities, aggressive willingness to purchase a security at a premium to th
Bidding Up: Moving the bid price higher.
Big Bang: The term applied to the liberalization in 1986 of the London Stock Exchange (L.S.E.) when trading wa
Big Board: A nickname for the New York Stock Exchange (NYSE). Also known as The Exchange. More than 2,000 commo
Big Picture: To highlight trading interest due to the size of the trade.
Big Producer: A successful broker who generates a large volume of commission. See Rainmaker.
Big Uglies: Unpopular stocks.
Bill Of Exchange: General term for a document demanding payment.
Bill Of Lading: A contract between an exporter and a transportation company in which the latter agrees to transport
Billing Cycle: The time elapsed between billing periods for goods sold or services rendered.
Binder: An amount of money paid to indicate good faith in a transaction before the transaction is completed.
Binomial Option Pricing Model: An option pricing model in which the underlying asset can assume one of only two possible, discrete
Black Friday: A precipitous drop in a financial market . The original Black Friday occurred on September 24, 1869,
Black Market: An illegal market.
Black Monday: Refers to October 19, 1987, when the Dow Jones Industrial Average fell 508 points on the heels of sh
Black-Scholes Option-Pricing Model: A model for pricing call options based on arbitrage arguments. Uses the stock price, the exercise pr
Blank Check: A check that is duly signed, but the amount of the check is left blank to be supplied by the drawee.
Blank Check Offering: An initial public offering by a company whose business activities are undefined and therefore specul
Blanket Fidelity Bond: SEC-required insurance coverage that brokerage firms are required to have in order to cover fraudule
Blanket Inventory Lien: A secured loan that gives the lender a lien against all the borrower's inventories.
Blanket Recommendation: A recommendation by a brokerage firm sent to all its customers advising that they buy or sell a part
Blind Pool: A limited partnership that does not announce its intentions as to what properties will be acquired.
Blind Trust: A trust in which a fiduciary third party has total discretion to make investments on behalf of a ben
Blitzkrieg Tender Offer: In the context of a takeover, refers to a tender offer that is priced so attractively that the tende
Block: Large quantity of stock or large dollar amount of bonds held or traded. As a rule of thumb, 10,000 s
Block Call: In the context of general equities, conference meeting during which customer indications and orders,
Block House: Brokerage firms that help to find potential buyers or sellers of large block trades.
Block List: In the context of general equities, listing of stock the investment bank is looking for (wants to bu
Block Trade: A large trading order, defined on the New York Stock Exchange as an order that consists of 10,000 sh
Block Trader: A dealer who will take a position in the block trades to accommodate customer buyers and sellers of
Block Voting: Descirbes a group of shareholders banding together to vote their shares in a single block.
Blocked Currency: A currency that is not freely convertible to other currencies due to exchange controls.
Blow-Off Top: A steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen in
Blowout: The rapid sale of all shares in a new securities offering. See: hot issue.
Blue List: Daily financial publication featuring bonds offered for sale by dealers and banks that represent bil
Blue-Chip Company: Used in the context of general equities. Large and creditworthy company. Company renowned for the qu
Blue-Sky Laws: State laws covering the issue and trading of securities.
Bo Derek Stock: High quality stock.
Board Broker: Employee of the Chicago Board Options Exchange who manages away from the market orders, which cannot
Board Of Directors: Individuals elected by the shareholders of a corporation who carry out certain tasks established in
Board Of Governors Of The Federal Reserve System: The managing body of the Federal Reserve System, set which policies on bank practices and the money
Board Room: A room at a brokerage firm where its clients can watch an electronic board displaying stock prices a
Bogey: The return an investment manager is compared to for performance evaluation.
Boiler Room: Used to describe place or operation in which unscrupulous salespeople call and try to sell people sp
Boilerplate: Standard terms and conditions.
Bolsa: Spanish for stock exchange.
Bolsa De Commercio De Santiago (SSE): Chile's preeminent stock exchange.
Bolsa De Valores De Rio De Janeiro (BVRJ): Brazil's second-largest stock exchange.
Bolsa De Valores De Sao Paulo (BOVESPA): The largest stock exchange in Brazil.
Bolt: Used for listed equity securities. Block trading version of COLT.
Bond: Bonds are debt and are issued for a period of more than one year. The U.S. government, local governm
Bond Agreement: A contract for privately placed debt.
Bond Anticipation Note (BAN): A short-term debt instrument issued by a state or municipality to borrow against the proceeds of an
Bond Broker: A broker on the floor of an exchange who trades bonds.
Bond Buyer: A daily publication featuring many essential statistics and index figures relevant to the fixed inco
Bond Buyers Municipal Bond Index: A municipal bond price tracking index published daily by the Bond Buyer.
Bond Counsel: An attorney who prepares the legal opinion concerning a municipal bond issue.
Bond Covenant: A contractual provision in a bond indenture. A positive covenant requires certain actions, and a neg
Bond Crowd: Members of the stock exchange who transact bond orders on the floor of the exchange.
Bond Discount: The difference by which a bond's market price is lower than its face value. The antithesis of a bond
Bond Equivalent Yield: Bond yield calculated on an annual percentage rate method. Differs from annual effective yield.
Bond Indenture: Contract that sets forth the promises of a corporate bond issuer and the rights of investors.
Bond Indexing: Designing a bond portfolio so that its performance will match the performance of some bond index.
Bond Market Association: An international trade association of broker/dealers and banks in U.S. government and federal agency
Bond Mutual Fund: A mutual fund holding bonds.
Bond Points: A conventional unit of measure for bond prices set at $1 and equivalent to 1% of the $100 face value
Bond Power: A form used in the transfer of registered bonds from one owner to a different owner.
Bond Rating: A rating based on the possibility of default by a bond issuer. The ratings range from AAA (highly un
Bond Ratio: The percentage of a company's capitalization represented by bonds. The ratio is calculated by dividi
Bond Swap: The sale of one bond issue and purchase of another bond issue simultaneously. See: Swap; swap order.
Bond Value: With respect to convertible bonds, the value the security would have if it were not convertible. Tha
Bond-Equivalent Basis: The method used for computing the bond-equivalent yield.
Bondholder: The firm often has stockholders and bondholders. In a liquidation, the bondholders have first priori
BONDPAR: A system that monitors and evaluates the performance of a fixed income portfolio, as well as the ind
Bonds: Corporate bonds arranged so that specified principal amounts become due on specified dates. Related:
Bonds Enabling Annual Retirement Savings (BEARS): Holders of BEARS receive the face value of bonds underlying call option, which are exercised by CUBS
Boning: Charging a lot more for an asset than its worth.
Book: A banker or trader's positions.
Book Cash: A firm's cash balance as reported in its financial statements. Also calledledger cash.
Book Profit: The cumulative book income plus any gain or loss on disposition of assets.
Book Runner: The managing underwriter for a new issue. The book runner maintains the book of securities sold.
Book To Bill: In the context of general equities, high-technology industry's demand to supply ratio of orders on a
Book Value: The value of an asset for accounting purposes. For assets where depreciation is taken or reserves bo
Book Value: A company's total assets minus intangible assets and liabilities, such as debt. A company's book val
Book Value Per Share: The ratio of stockholder equity to the average number of common shares. Book value per share should
Book-Entry Securities: System in which securities are not represented by paper certificates but are maintained in computeri
Bootstrap: Term used to describe the start-up of a company with very little capital.
Bootstrapping: Creating a theoretical spot rate curve using one yield projection as the basis for the yield of the
Borrow: To obtain or receive money on loan with the promise or understanding that it will be repaid.
Borrowed Reserves: Funds borrowed from a Federal Reserve Bank by member banks to maintain the required reserve ratios.
Borrower Fallout: In the mortgage pipeline, the risk that prospective borrowers of loans committed to be closed will e
Boston Exchange Automated Communication Order-Routing Network (BEACON): This system permits the automatic execution of trades based on the current stock prices on the conso
Bot: Shorthand for bought. Antithesis of SL, meaning sold.
Bottom: Refers to the base support level for market prices of any type. Also used in the context of securiti
Bottom Fisher: An investor seeking stocks that have fallen to prices at or near their bottom, which he or she belie
Bottom-Up Equity Management Style: A management style that de-emphasizes the significance of economic and market cycles, focusing inste
Bought Deal: Security issue in which one or two underwriters buy the entire issue.
Bounce: A check returned by a bank because it is not payable, usually because of insufficient funds. Also us
Bourse: French for a stock market.
Boutique: A small, specialized brokerage firm that offers limited services and products to a limited number of
Box: The actual physical location at a brokerage house or bank where securities or other documents are st
Bracket: A term signifying the extent of an underwriter's commitment in a new issue, e.g., major bracket or m
Bracket Creep: The gradual movement into higher tax brackets when incomes increase as a result of inflation.
Brady Bonds: Bonds issued by emerging countries under a debt reduction plan.
Branch: An operation in a foreign country incorporated in the home country.
Breadth Of The Market: In the context of general equities, percentage of stocks participating in a particular market move.
Break: A rapid and sharp price decline. Related: Crash.
Break Price: Used in the context of general equities. Change one's offering or bid prices to move to a more reali
Break-Even Analysis: An analysis of the level of sales at which a project would make zero profit.
Break-Even Lease Payment: The lease payment at which a party to a prospective lease is indifferent between entering and not en
Break-Even Payment Rate: The prepayment rate of an MBS coupon that will produce the same cash flow yield (CFY) as that of a p
Break-Even Point: Refers to the price at which a transaction produces neither a gain nor a loss. In the context of opt
Break-Even Tax Rate: The tax rate at which a party to a prospective transaction is indifferent between entering into and
Break-Even Time: Related: Premium payback period.
Breakeven Analysis: An analysis tool that models how revenue, expenses, and profit vary with changes in sales volume. Br
Breakeven Point: The sales level at which revenues equal expenses (fixed and variable).
Breaking The Syndicate: Terminating an agreement among underwriters, specifically the investment banking group assembled to
Breakout: A rise in a security's price above a resistance level (commonly its previous high price) or a drop b
Breakpoint Sale: For mutual funds, refers to the investment amount necessary to make the fundholder eligible for a re
Breeden, Douglas T.: Inventor of one of the foundational asset pricing models in finance, the consumption based capital a
Bretton Woods Agreement: An agreement signed by the original United Nations members in 1944 that established the Internationa
Bridge Financing: Interim financing of one sort or another used to solidify a position until more permanent financing
Bring It Out: In the context of general equities, 'make stock available for sale to indicated buyers.'
British Clearers: The large clearing banks that dominate deposit taking and short-term lending in the domestic sterlin
Broad Tape: An expanded version of the ticker tape, which is displayed on a screen in the board room of a broker
Broken Up: Used for listed equity securities. Prevented from executing a trade (committed to upstairs) due to e
Broker: An individual who is paid a commission for executing customer orders. Either a floor broker who exec
Broker Loan Rate: Related: Call money rate.
Brokered CD: A certificate of deposit issued by a bank or thrift institution bought by a brokerage firm in bulk f
Brokered Market: A market in which an intermediary offers search services to buyers and sellers.
Brought Over The Wall: Compelling a research analyst of an investment bank to work in the underwriting department for a cor
Brussels Stock Exchange (BSE): Stock exchange that handles the majority of securities transactions in Belgium.
Bubble Theory: Security prices sometimes move wildly above their true values, or the price falls sharply until the
Buck: Slang for one million dollars.
Bucket Shop: An illegal brokerage firm that accepts customer orders but does not attain immediate executions. A b
Budget: A detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capit
Budget Deficit: The amount by which government spending exceeds government revenues.
Budget Surplus: The amount by which government revenues exceed government spending.
Budgeting: The process of determining and recording the expected financial results of a future period, generall
Build A Book: In the context of general equities, develop customer orders to gather demand/supply in order to make
Builder Buydown Loan: A mortgage loan on newly developed property that the builder subsidizes during the early years of th
Bulge: A short-lived stock price increase. Synonymous with bubble.
Bulge Bracket: A tier of firms in an underwriting syndicate that have the highest participation level. See: Mezzani
Bull: An investor who thinks the market will rise. Related: Bear.
Bull CD: A bull CD pays its holder a specified percentage of the increase in return on a specified market ind
Bull Market: Any market in which prices are in an upward trend.
Bull Spread: A spread strategy in which an investor buys an out-of-the-money put option, financing it by selling
Bull-Bear Bond: Bond whose principal repayment is linked to the price of another security. The bonds are issued in t
Bulldog Bond: Foreign bond issue made in London.
Bulldog Market: The foreign market in the United Kingdom.
Bullet Contract: A guaranteed investment contract purchased with a single (one-shot) premium. Related: Window contrac
Bullet Loan: A bank term loan that calls for no amortization.
Bullet Strategy: A fixed income strategy in which a portfolio is constructed so that the maturities of its securities
Bullion Coins: Metal coins consisting of gold, silver, platinum, or palladium that are actively traded. Some exampl
Bullish: Words used to describe investor attitudes. Bullish refers to an optimistic outlook, while bearish me
Bump-Up CD: A certificate of deposit granting the owner the right to increase its yield one time for the remaini
Bunching: Describes the act of traders combining round-lot orders for execution at the same time. Bunching can
Bundling, Unbundling: Creation of securities either by combining primitive and derivative securities into one composite hy
Burn Rate: Used in venture capital financing to refer to the rate at which a start-up company expends capital t
Burnout: Depletion of a tax shelter's benefits. In the context of mortgage backed securities it refers to the
Business Cycle: Repetitive cycles of economic expansion and recession. The official peaks and troughs of the U.S. cy
Business Day: A day in which financial markets are open for trading.
Business Failure: A business that has terminated operations with a loss to creditors.
Business Risk: The risk that the cash flow of an issuer will be impaired because of adverse economic conditions, ma
Business Segment Reporting: Reporting the results of the separate divisions or subsidiaries of a business.
Bust-Up Takeover: A leveraged buyout in which the buyer sells off the assets of the target_company to repay the debt t
Busted Convertible: Related: Fixed income equivalent. Mainly applies to convertible securities. Convertible bond selling
Butterfly: In the context of equities, a firm with two divisions may split into two companies and issue origina
Butterfly Shift: A nonparallel shift in the yield curve involving the height of the curve.
Butterfly Spread: Applies to derivative products. Complex option strategy that involves selling two calls and buying t
Buy: To purchase an asset; taking a long position.
Buy In: To cover, offset, or close out a short position. Related: Evening up, liquidation.
Buy Limit Order: A conditional trading order that indicates a security may be purchased only at the designated price
Buy Minus Order: In the context of general equities, rare market or limit order to buy a stated amount of a stock, pr
Buy On Close: Buying at the end of the trading session at a price within the closing range.
Buy On Margin: Borrowing to buy additional shares, using the shares themselves as collateral.
Buy On Opening: Buying at the beginning of a trading session at a price within the opening range.
Buy On The Bad News: Buying stock shortly after a price drop resulting from bad news from the company. Investors believe
Buy Order: An order to a broker to purchase a specific quantity of a security.
Buy Stop Order: A buy order not to be executed until the market price rises to the stop price. Once the security has
Buy The Book: An order, typically from a large institutional investor to a broker to purchase all the shares avail
Buy Them Back: Used for listed equity securities. 'Cover my short position.
Buy-And-Hold Strategy: A passive investment strategy with no active buying and selling of stocks from the time the portfoli
Buy-And-Write Strategy: An options strategy that calls for the purchase of stocks and the writing of covered call options on
Buy-Side Analyst: A financial analyst employed by a nonbrokerage firm, typically one of the larger money management fi
Buyback: The covering of a short position by purchasing a long contract, usually resulting from the short sal
Buydowns: Mortgages in which monthly payments consist of principal and interest. During the early part of the
Buyers Market: Market in which the supply exceeds the demand, creating lower prices. Antithesis of seller's_market.
Buyers-Sellers On Balance: Used for listed equity securities. Indicates that at a given time (usually before the opening of a s
Buying Climax: A rapid rise in the price of a stock resulting from heavy buying, which usually creates the market c
Buying Power: The amount of money available to buy securities, determined by adding the total cash held in brokera
Buying The Index: Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the same return.
Buyout: Purchase of a controlling interest (or percent of shares) of a company's stock. A leveraged buy out
Bylaws: Rules and practices that govern management of an organization.
C: Fifth letter of a Nasdaq stock descriptor specifying that issue is exempt from Nasdaq listing requir
Cabinet Crowd: NYSE members who trade bonds with a low daily traded volume. See: Automated Bond System.
Cabinet Security: A stock or bond listed on a major exchange with low daily traded volume.
Cable: Exchange rate between British pound sterling and the U.S. dollar.
CAC 40 Index: A broad-based index of common stocks composed of 40 of the 100 largest companies listed on the forwa
Cage: A section of a brokerage firm used for receiving and disbursing funds.
Calendar: List of new issues scheduled to come to market shortly.
Calendar Effect: Describes the tendency of stocks to perform differently at different times, including preformance an
Calendar Spread: Applies to derivative products. A strategy in which there is a simultaneous purchase and sale of opt
Call: An option that gives the holder the right to buy the underlying futures contract.
Call An Option: To exercise a call option.
Call Date: A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call Feature: Part of the indenture agreement between the bond issuer and buyer describing the schedule and price
Call Loan: A loan repayable on demand. Sometimes used as a synonym for broker loan or broker overnight loan.
Call Money Rate: Also called the broker loan rate , the interest rate that banks charge brokers to finance margin loa
Call Option: An option contract that gives its holder the right (but not the obligation) to purchase a specified
Call Premium: Premium in price above the par value of a bond or share of preferred stock that must be paid to hold
Call Price: The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a spe
Call Protection: A feature of some callable bonds that establishes an initial period when the bonds may not be called
Call Provision: An embedded option granting a bond issuer the right to buy back all or part of an issue prior to mat
Call Risk: The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
Call Swaption: A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The writer t
Callable: 0
Called Away: Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity und
Can Get : Convertible: Redeemed before maturity. Option: Call or put option exercised against the stockholder.
Canadian Agencies: Refers to over-the-counter trading. 'I have a buyer who will pay for the stock'. Uusually a standar
Canadian Dealing Network (CDN): Agency banks established by Canadian Banks in the U.S.
Canadian Exchange Group (CEG): The organized OTC market of Canada. Formerly known as the Canadian Over-the-Counter Automated Tradin
Cancel: The CEG is an association among the Toronto Stock Exchange, the Montreal Exchange, the Vancouver Sto
Cannot Compete: To void an order to buy or sell from (1) the floor, or (2) the trader/salesperson's scope. In Autex,
Cannot Complete: In the context of general equities, cannot accommodate customers at that price level (i.e., compete
Cap: In the context of general equities, inability to finish an order on a principal or agency basis, giv
Capacity: An upper limit on the interest rate on a floating-rate note (FRN) or an adjustable-rate mortgage (AR
Capital: Credit grantors' measurement of a person's ability to repay loans.
Capital Account: Money invested in a firm.
Capital Allocation Decision: Net result of public and private international investment and lending activities.
Capital Asset: Allocation of invested funds between risk-free assets and the risky portfolio.
Capital Asset Pricing Model (CAPM): A long-term asset, such as land or a building, not purchased or sold in the normal course of busines
Capital Budget: An economic theory that describes the relationship between risk and expected return, and serves as a
Capital Budgeting: A firm's planned capital expenditures.
Capital Builder Account (CBA): The process of choosing the firm's long-term capital assets.
Capital Expenditures: A Merrill Lynch brokerage account that allows investors to access the loan value of his or her eligi
Capital Flight: Amount used during a particular period to acquire or improve long-term assets such as property, plan
Capital Formation: The transfer of capital abroad in response to fears of political risk.
Capital Gain: Expansion of capital or capital goods through savings, which leads to economic growth.
Capital Gains Distribution: When a stock is sold for a profit, the capital gain is the difference between the net sales price of
Capital Gains Tax: A distribution to the shareholders of a mutual fund out of profits from selling stocks or bonds, tha
Capital Gains Yield: The tax levied on profits from the sale of capital assets. A long-term capital gain, which is achiev
Capital Goods: The price change portion of a stock's return.
Capital International Indexes: Goods used by firms to produce other goods, e.g., office buildings, machinery, equipment.
Capital Lease: Market indexes maintained by Morgan Stanleythat track major stock markets worldwide.
Capital Lease: A long-term lease of property, plant, or equipment in which the lessee acquires essentially all the
Capital Loss: A lease obligation that has to be capitalized on the balance sheet.
Capital Market: The difference between the net cost of a security and the net sales price, if the security is sold a
Capital Market Efficiency: The market for trading long-term debt instruments (those that mature in more than one year).
Capital Market Imperfections View: The degree to which the precent asset price accurately reflects current information in the market pl
Capital Market Line (CML): The view that issuing debt is generally valuable, but that the firm's optimal choice of capital stru
Capital Rationing: The line defined by every combination of the risk-free asset and the market portfolio. The line repr
Capital Requirements: Placing limits on the amount of new investment undertaken by a firm, either by using a higher cost o
Capital Shares: Financing required for the operation of a business, composed of long-term and working capital plus f
Capital Stock: One of two types of shares in a dual-purpose investment company, which entitle the holder to the app
Capital Structure: Stock authorized by a firm's charter and having par value, stated value, or no par value. The number
Capital Surplus: The makeup of the liabilities and stockholders' equity side of the balance sheet, especially the rat
Capital Turnover: Amounts of directly contributed equity capital in excess of the par value.
Capital-Intensive: Calculated by dividing annual sales by average stockholder equity (net worth). The ratio indicates h
Capitalization: Used to describe industries that require large investments in capital assets to produce their goods,
Capitalization Method: The debt and/or equity mix that funds a firm's assets.
Capitalization Rate: A method of constructing a replicating portfolio in which the manager purchases a number of the most
Capitalization Ratios: The rate of interest used to calculate the present value of a number of future payments.
Capitalization Table: Also called financial leverage ratios, these ratios compare debt to total capitalization and thus re
Capitalized: A table showing the capitalization of a firm, which typically includes the amount of capital obtaine
Capitalized Interest: Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for
Captive Finance Company: Interest that is not immediately expensed, but rather is considered as an asset and is then amortize
Caput: A company, usually a subsidiary that is wholly owned, whose main function is financing consumer purc
Car: An exotic option. It represents a call option on a put option. That is, you
Carrot Equity: A loose quantity term sometimes used to describe the amount of a commodity underlying one commodity
Carry: British slang for an equity investment with the added benefit of an opportunity to purchase more equ
Carrying Charge: Related: Net financing cost.
Carrying Costs: The fee a broker charges for carrying securities on credit, such as on a margin account.
Carrying Value: Costs that increase with increases in the level of investment in current assets.
Cartel: Book value.
Cash: A group of businesses or nations that act together as a single producer to obtain market control and
Cash and Carry: The value of assets that can be converted into cash immediately, as reported by a company. Usually i
Cash and Equivalents: Applies to derivative products. Combination of a long position in a stock/index/commodity and short
Cash And Equivalents: Cash plus investments of very high liquidity and safety, such as money market funds and treasury bil
Cash Asset Ratio: The value of assets that can be converted into cash immediately, as reported by a company. Usually i
Cash Basis: Cash and marketable securities divided by current liabilities. See: Liquidity ratios.
Cash Budget: Refers to the accounting method that recognizes revenues and expenses when cash is actually received
Cash Commodity: A forecasted summary of a firm's expected cash inflows and cash outflows as well as its expected cas
Cash Conversion Cycle: The actual physical commodity, as distinguished from a futures contract.
Cash Cow: The length of time between a firm's purchase of inventory and the receipt of cash from accounts rece
Cash Cycle: A company that pays out most of its earnings per share to stockholders as dividends. Or, a company o
Cash Deficiency Agreement: In general, the time between cash disbursement and cash collection. In net working capital managemen
Cash Delivery: An agreement to invest cash in a project to the extent required to cover any cash deficiency the pro
Cash Discount: The provision of some futures contracts that requires not delivery of underlying assets but settleme
Cash Dividend: An incentive offered to purchasers of a firm's product for payment within a specified time period, s
Cash Earnings: A dividend paid in cash to a company's shareholders. The amount is normally based on profitability a
Cash Flow: A firm's cash revenues less cash expenses, which excludes the costs of depreciation.
Cash Flow After Interest And Taxes: In investments, cash flow represents earnings before depreciation, amortization, and non-cash charge
Cash Flow Break-Even Point: Net income plus depreciation.
Cash Flow Coverage Ratio: The point below which the firm will need either to obtain additional financing or to liquidate some
Cash Flow From Operations: The number of times that financial obligations (for interest, principal payments, preferred stock di
Cash Flow Matching: A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary
Cash Flow Per Common Share: Also called dedicating a portfolio, this is an alternative to multiperiod immunization that calls fo
Cash Flow Statement: Cash flow from operations minus preferred stock dividends, divided by the number of common shares ou
Cash Flow Time Line: A financial report that expresses a company's performance in terms of cash generated and used.
Cash Management: Line depicting the operating activities and cash flows for a firm over a particular period.
Cash Management Bill: Refers to the efficient management of cash in a business in order to put the cash to work more quick
Cash Markets: Very short-maturity bills that the Treasury occasionally sells because its cash balances are down an
Cash Offer: Also called spot markets, these are markets that involve the immediate delivery of a security or ins
Cash On Delivery (COD): Often used in risk arbitrage. Proposal, either hostile or friendly, to acquire a target company thro
Cash Plus Convertible: In the context of securities, this refers to the practice of institutional investors paying the full
Cash Price: Convertible bond that requires cash payment upon conversion.
Cash Ratio: Applies to derivative products. See: Spot price.
Cash Sale-Settlement: The proportion of a firm's assets held as cash.
Cash Settlement Contracts: Transaction in which a contract is settled on the same day as the trade date, or the next day if the
Cash Transaction: Futures contracts such as stock index futures that settle for cash and do not involve delivery of th
Cash-Equivalent Items: An accounting book that is composed of cash receipts plus disbursements. This balance is posted to t
Cash-On-Cash Return: A check drawn directly on a customer's account, making the bank the primary obligor, and assuring fi
Cash-Surrender Value: Occurs when a firm runs out of cash and cannot readily sell marketable securities.
Cashbook: A transaction in which exchange is immediate in the form of cash, unlike a forward contract (which c
Cashiers Check: Examples include Treasury bills and Banker's Acceptances.
Cashout: A method used to find the return on investments when there is no active secondary market. The yield
Casualty Loss: The amount an insurance company will pay if the policyholder tende4s or cashes in a whole life insur
Casualty-Insurance: A financial loss caused by damage, destruction, or loss of property as a result of an unexpected or
Catastrophe Call: Insurance protecting a firm or homeowner against loss of property, damage, and other liabilities.
Cats And Dogs: Early redemption of a municipal revenue bond because a catastrophe has destroyed the project that pr
Caveat Emptor, Caveat Subscriptor: Speculative stocks with short histories of sales, earnings, and dividend payments.
CEDEL: Latin expressions for 'buyer beware' and 'seller beware,' which warn of overly risky, inadequately p
Ceiling: A centralized clearing system for Eurobonds.
Central Bank: The highest price, interest rate, or other numerical factor allowable in a financial transaction.
Certainty Equivalent: A country's main bank whose responsibilities include the issue of currency, the administration of mo
Certificate: An amount that would be accepted today (risk free) in lieu of a chance to receive a possibly higher,
Certificate Of Accrual On Treasury Securities (CATS): A formal document used to record a fact and used as proof of the fact, such as stock certificates, t
Certificate Of Deposit (CD): Refers to a zero-coupon U.S. Treasury issue that is sold at a deep discount from the face value and
Certificateless Municipals: Also called a time deposit this is a certificate issued by a bank or thrift that indicates a specifi
Certificates Of Amortized Revolving Debt (CARD): Municipal bonds with one certificate which is valid for the entire issue, and having no individual c
Certificates Of Automobile Receivables (CAR): Pass-through securities backed by credit card receivables.
Certified Check: Pass-through securities backed by automobile loan receivables.
Certified Financial Planner (CFP): A bank guaranteed check for which funds are immediately withdrawn, and for which the bank is legally
Certified Financial Statements: A person who has passed examinations accredited by the Certified Financial Planner Board of Standard
Certified Public Accountant (CPA): Financial statements that include an accountant's opinion.
CFAT: An accountant who has met certain standards, including experience, age, and licensing, and passed ex
Chair Of The Board: Cash flow after taxes.
Changes In Financial Position: Highest-ranking member of a Board of Directors, who presides over its meetings and who is often the
Characteristic Line: Sources of funds provided from operations that alter a company's cash flow position: depreciation, d
Charitable Remainder Trust: The market model applied to a single security; a regression of security returns on the benchmark ret
Chart Of Accounts: An irrevocable trust that pays income to a designated person or persons until the grantor's death, w
Chartered Financial Analyst (CFA): In an accounting system, the list of accounts to which transactions are posted.
Chartists: An experienced financial analyst who has passed examinations in economics, financial accounting, por
Chasing The Market: A technical analyst who charts the patterns of stocks, bonds, and commodities to find trends in patt
Chastity Bonds: Purchasing a security at a higher price than expected because prices are rapidly climbing, or sellin
Cheapest To Deliver Issue: Bonds redeemable at par value in the case of a takeover.
Check: The acceptable Treasury security with the highest implied repo rate; the rate that a seller of a fut
Checking The Market: A bill of exchange representing a draft on a bank from deposited funds that pays a certain sum of mo
Chicago Board Of Trade (CBOT): Searching for bid and offer prices from market makers to find the best deal.
Chicago Board Options Exchange (CBOE): The largest futures exchange in the U.S., and was a pioneer in the development of financial futures
Chicago Mercantile Exchange (CME): A securities exchange created in the early 1970s for the public trading of standardized option contr
Chicago Stock Exchange (CHX): A not-for-profit corporation owned by its members. Its primary functions are to provide a location f
Chief Executive Officer (CEO): A major exchange trading only stocks, with 90% of trades taking place on an automated execution syst
Chief Financial Officer (CFO): A title held often by the Chairperson of the Board, or the president. The person principally respons
Chief Operating Officer (COO): The officer of a firm is responsible for handling the financial affairs of a company.
Chinese Hedge: The officer of a firm responsible for day-to-day management, usually the president or an executive v
Chinese Wall: Applies mainly to convertible securities. Trading hedge in which one is short the convertible and lo
Choice Market: Communication barrier between financiers at a firm (investment bankers) and traders. This barrier is
Churning: Applies mainly to international equities. Locked market in London terminology.
Cincinnati Stock Exchange (CSE): Excessive trading of a client's account in order to increase the broker's commissions.
Circle: Stock exchange based in Cincinnati that is the only fully automated stock exchange in the U.S. It ha
Circuit Breakers: Underwriters, actual or potential, often seek out and 'circle' investor interest in a new issue befo
Circus Swap: Measures instituted by exchanges to stop trading temporarily when the market has fallen by a certain
Citizen Bonds: A fixed-rate currency swap against floating U.S. dollar LIBOR payments.
Claim Dilution: Certificateless municipals that can be registered on stock exchanges and are listed in newspapers.
Claimant: A decrease in the likelihood that one or more of a firm's claimants will be fully repaid, including
Class: A party to an explicit or implicit contract.
Class Action: In the case of derivative products, options of the same type-put or call-with the same underlying se
Classified Stock: A legal complaint filed by a lawyer or group of lawyers for a group of petitioners with an identical
Clean: The division of stock into more than one class of common stock, usually called Class A and Class B.
Clean Opinion: In the context of general equities, block trade that matches buy or sell orders/interests, sparing t
Clean Price: An auditor's opinion reflecting an unqualified acceptance of a company's financial statements.
Clean Up: Bond price excluding accrued interest.
Clean Your Skirts: In the context of general equities, purchase/sale of all the remaining supply of stock, or the last
Clear: In the context of general equities, 'make all your obligated calls'; check with all prior obligation
Clear A Position: To settle a trade is settled out by the seller delivering securities and the buyer delivering funds
Clear Title: To eliminate a long or short position, leaving no ownership or obligation.
Clearing Corporations: Title to ownership that is untainted by any claims on the property or disputed interests, and theref
Clearing House Automated Payments System (CHAPS): Organizations that are affiliated with exchanges and are used to complete securities transactions by
Clearing House Electronic Subregister System (CHESS): A computerized clearing system for sterling funds that began operations in 1984. It includes 14 memb
Clearing House Funds: CHESS is the automatic transfer and settlement system for the majority of Australian Stock Exchange
Clearing House Interbank Payments System (CHIPS): Funds from the Federal Reserve System, requiring three days to clear, that are passed to and from ba
Clearing Member: An international wire transfer system for high-value payments operated by a group of major banks.
Clearinghouse: A member firm of a clearing house. Each clearing member must also be a member of the exchange. Not a
Clientele Effect: An adjunct to a futures exchange through which transactions executed on its floor are settled by a p
Clone Fund: Describes the tendary of funds or investments to be followed by groups of investors who have a simul
Close: A new fund set up in a fund family to emulate another successful fund.
Close A Position: The close is the period at the end of the trading session. Sometimes used to refer to closing price.
Close Market: In the context of general equities, eliminate an investment from one's portfolio, by either selling
Closed Corporation: An active market in which there is a narrow spread between bid and offer prices, due to a high volum
Closed Fund: A corporation whose shares are owned by just a few people, having no public market.
Closed Out: A mutual fund that is no longer issuing shares, mainly because it has grown too large.
Closed-End Fund: Position that is liquidated when the client does not meet a margin call or cover a short sale.
Closed-End Management Company: An investment company that sells shareslike any other corporation and usually does not redeem its sh
Closed-End Management Company: An investment company that has only a set number of shares of the mutual fund that it manages, and d
Closed-End Mortgage: An investment company that has only a set number of shares of the mutual fund that it manages, and d
Closely Held: Mortgage against which no additional debt may be issued.
Closely Held Company: A corporation whose voting stock is owned by only a few shareholders.
Closely Held Shares: A company who has a small group of controling shareholders. In contrast, a widely-held firm has many
Closing Costs: The percentage of total outstanding common shares reported as held by officers, directors, their fam
Closing Price: All the expenses involved in transferring ownership of real estate.
Closing Purchase: Price of the last transaction of a particular stock completed during a day's trading session on an e
Closing Quote: A transaction in which the purchaser's intention is to reduce or eliminate a short position in a sto
Closing Range: The last bid and offer prices of a particular stock at the close of a day's trading session on an ex
Closing Sale: Also known as the range. The high and low prices, or bids and offers, recorded during the period des
Closing Tick: A transaction in which the seller's intention is to reduce or eliminate a long position in a stock,
Closing Transaction: The net of the number of stocks whose closing prices are higher than their previous trades (uptick)
Cloud On Title: Applies to derivative products. Buy or sell transaction that eliminates an existing position (sellin
Cluster Analysis: Any claim or encumbrance, usually discovered in a title search, that may impair the title to a prope
CMO REIT: A statistical technique that identifies clusters of stocks whose returns are highly correlated withi
Coattail Investing: A very risky type of Real Estate Investment Trust investing in the residual cash flows of Collateral
Code Of Procedure: A risky trading practice of making trades similar to those of other successful investors, usually in
Coefficient Of Determination: The guide of the National Association of Securities Dealers used to adjudicate complaints filed agai
Coffee, Sugar and Cocoa Exchange (CS and CE): A measure of the goodness of fit of the relationship between the dependent and independent variables
Coincident Indicators: The New York-based commodity exchange trading futures and options. The CS&CE shares the trading floo
Coinsurance Effect: Economic indicators that give an indication of the status of the economy.
Cold-Calling: Refers to the fact that the merger of two firms lessens the probability of default on either firm's
Collar: Calling potential new customers in the hope of selling stocks, bonds or other financial products and
Collateral: An upper and lower limit on the interest rate on a floating-rate note (FRN) or an adjustable-rate mo
Collateral Trust Bonds: Asset than can be repossessed if a borrower defaults.
Collateralized Bond Obligation (CBO): A bond in which the issuer (often a holding company) grants investors a lien on stocks, notes, bonds
Collateralized Mortgage Obligation (CMO): Investment-grade bonds backed by a collection of junk bonds with different levels of risk, called ti
Collection: A security backed by a pool of pass-through rates , structured so that there are several classes of
Collection Float: The presentation of a negotiable instrument for payment, or the conversion of any accounts receivabl
Collection Fractions: The period between the time is deposited a check in an account and the time funds are made available
Collection Policy: The percentage of a given month's sales collected during the month of sale and each month following
Collection Ratio: Procedures a firm follows in attempting to collect accounts receivables.
Collective Wisdom: The ratio of a company's accounts receivable to its average daily sales, which gives the average num
COLT (Continuous On-Line Trading System): The combination of all the individual opinions about a stock's or security's value.
Comanager: Computerized OTC traders assistance system that provides for trade entry and position monitoring, am
Combination: A bank that ranks just below a lead manager in a syndicated Eurocredit or international bond issue.
Combination Bond Plus: Applies to derivative products. Arrangement of options involving two long or two short positions wit
Combination Matching: A bond backed by the government unit issuing it as well as by revenue from the project that is to be
Combination Strategy: Also called horizon-matching, a variation of multiperiod immunization and cash flow-matching in whic
Combined Financial Statement: A strategy in which a put and call with the same strike price and expiration are either both bought
Come In: A financial statement that merges the assets, liabilities, net worth, and operating figures of two o
Come Out Of The Trade: In the context of general equities, a fall in price.
Comeout: In the context of general equities, trader's position in a security that results from executing a tr
COMEX: In the context of general equities, the opening. Antithesis of the close.
Comfort Letter: A division of the New York Mercantile Exchange (NYMEX). Formerly known as the Commodity Exchange, CO
Commercial Draft: A letter from an independent auditor in securities underwriting agreements to assure that informatio
Commercial Hedgers: Demand for payment.
Commercial Loan: Companies that take futures positions in commodities so that they can guarantee prices at which they
Commercial Mortgage Backed Securities: A short-term loan, typically 90 days, used by a company to finance seasonal working capital needs.
Commercial Paper: Similar to MBS but backed by loans secured with commercial rather than residential property. Commerc
Commercial Property: Short-term unsecured promissory notes issued by a corporation. The maturity of commercial paper is t
Commercial Risk: Real estate that produces some sort of income-producing property.
Commingling: The risk that a foreign debtor will be unable to pay its debts because of business events, such as b
Commission: In the context of securities, this involves mixing customer-owned securities with brokerage firm-own
Commission Broker: The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or their
Commission House: A broker on the floor of an exchange who acts as agent for a particular brokerage house and buys and
Commitment: A firm that buys and sells futures contracts for customer accounts. Related: futures commission merc
Commitment Fee: Describes a trader's obligation to accept or make delivery on a futures contract. Related: Open inte
Committee On Uniform Securities Identification Procedures (CUSIP): A fee paid to a commercial bank in return for its legal commitment to lend funds that have not yet b
Commodities Exchange Center (CEC): Committee that assigns identifying numbers and codes for all securities. These 'CUSIP' numbers and s
Commodity: The location of five New York futures exchanges: Commodity Exchange, Inc. (COMEX); the New York Merc
Commodity Futures Contract: A commodity is food, metal, or another fixed physical substance that investors buy or sell, usually
Commodity Futures Trading Commission (CFTC): An agreement to buy a specific amount of a commodity at a specified price on a particular date in th
Commodity Indexs: An agency created by the U.S. Congress in 1974 to regulate exchange trading in futures.
Commodity Paper: Indexs measuring the price and performance of physical commodities, often by the price of futures co
Commodity-Backed Bond: A loan or advance secured by commodities.
Common Code: A bond with interest payments tied to the price of an underlying commodity.
Common Equity: A nine-digit identification code issued jointly by CEDEL and Euroclear. As of January 1991 common co
Common Market: Shareholder's total equity at corporate book values.
Common Shares: An agreement between two or more countries that permits the free movement of capital and labor as we
Common Stock: In general, a public corooration has two types of shares, common and preferred. The common shares us
Common Stock Equivalent: Securities that represent equity ownership in a company. Common shares let an investor vote on such
Common Stock Equivalents: A convertible security that is traded like an equity issue because the optioned common stock is trad
Common Stock Fund: Convertible preferred stock plus convertible bonds, stock options, and warrants.
Common Stock Market: A mutual fund investing only in common stock.
Common Stock Ratios: The market for trading equities, not including preferred stock.
Common Stock-Other Equity: Ratios that are designed to measure the relative claims of stockholders to earnings (cash flow per s
Common-Base-Year Analysis: Value of outstanding common shares at par, plus accumulated retained earnings. Also called sharehold
Common-Size Analysis: The representing of accounting information over multiple years as percentages of amounts in an initi
Common-Size Statement: The representing of balance sheet items as percentages of assets and of income statement items as pe
Common-Sized: A statement in which all items are expressed as a percentage of a base figure, useful for purposes o
Companion Bonds: A term used to refer to a financial statement in which all items are expressed as percentages of ano
Company: A class of a Collateralized Mortgage Obligation (CMO) whose principal is paid off first when the und
Company Doctor: A proprietorship, partnership, corporation, or other form of enterprise that engages in business.
Company-Specific Risk: An executive, usually appointed from outside, brought in to turn a company around and make it profit
Comparative Credit Analysis: Related: Unsystematic risk
Comparative Statements: Comparing a firm to others that have a desired target debt rating in order to deduce an appropriate
Comparison: Financial statements for different periods, that allo the comparson of figures to illustrate trends
Comparison Universe: Short for 'comparison ticket,' a memorandum between two brokers that confirms the details of a trans
Compensating Balance: A group of money managers of similar investment style used to assess relative performance of a portf
Competence: An excess balance that is left in a bank to provide indirect compensation for loans extended or serv
Competition: Sufficient ability or fitness for one's needs. The necessary abilities to be qualified to achieve a
Competition Ahead: Intra- or intermarket rivalry between or among businesses trying to obtain a larger piece of the sam
Competitive Bidding: Often used in risk arbitrage. Situation whereby another O.T.C. market maker has transacted with inve
Competitive Offering: A securities offering process in which securities firms submit competing bids to the issuer for the
Complete: An offering of securities through competitive bidding.
Complete Capital Market: In the context of general equities, to fill an order.
Complete Portfolio: A market in which there is a distinctive marketable security for each and every possible outcome.
Completion Bonding: The entire portfolio, including risky and risk-free assets.
Completion Risk: Insurance that a construction contract will be completed successfully.
Completion Undertaking: The risk that a project will not be brought into operation successfully.
Compliance Department: An undertaking either (1) to complete a project so that it meets certain specified performance crite
Composition: A department in all organized stock exchanges to ensure that all companies, traders, and brokerage f
Compound Growth Rate: Voluntary arrangement to restructure a firm's debt, under which payment is reduced.
Compound Interest: The rate of growth of a figure, compounded over some period of time.
Compound Option: Interest paid on previously earned interest as well as on the principal.
Compounding: Option on an option.
Compounding Frequency: The process of accumulating the time value of money forward in time. For example, interest earned in
Compounding Period: The number of compounding periods in a year. For example, quarterly compounding has a compounding fr
Comprehensive Due Diligence Investigation: The length of the time period that elapses before interest compounds (a quarter in the case of quart
Comptroller Of The Currency: The investigation of a firm's business in conjunction with a securities offering to determine whethe
Computerized Market Timing System: A government official, appointed by the president, who keeps control over all national banks, and re
Concave: A computer system that compiles large amounts of trading data in search of patterns and trends to ma
Concentration Account: Property that a curve is below a straight line connecting two end points. If the curve falls above t
Concentration Services: A single centralized account into which funds collected at regional locations (lockboxes) are transf
Concession: Movement of cash from different lockbox locations into a single concentration account from which dis
Concession Agreement: The per-share or per-bond compensation of a selling group for participating in a corporate underwrit
Conditional Call: An understanding between a company and the host government that specifies the rules under which the
Conditional Call Options: Applies mainly to convertible securities. Circumstances under which a company can effect an earlier
Conditional Sales Contracts: A protective guarantee that, in the event a hign yield bond is called, the issuing corporation will
Condor: Similar to equipment trust certificates, except that the lender is either the equipment manufacturer
Conduit Theory: Applies to derivative products. Option strategy consisting of both puts and calls at different strik
Confidence Indicator: A theory that because investment companies are merely conduits for capital gains, dividends, and int
Confidence Letter: A measure of investors' faith in the economy and the securities market. A low or deteriorating level
Confidence Level: Statement by an investment bank that it is highly confident that the financing for its client/acquir
Confirm Me Out: In risk analysis, the degree of assurance that a specified failure rate is not exceeded.
Confirmation: Used for listed equity securities. 'Go to the floor and check with the specialist or floor broker th
Conflict Between Bondholders And Stockholders: The written statement that follows any 'trade' in the securities markets. Confirmation is issued imm
Conforming Loans: Bondholders and stockholders may have interests in a corporation that conflict. Sources of conflict
Conglomerate: Mortgage loans that meet the qualifications of Freddie Mac or Fannie Mae, which are bought from lend
Conglomerate Merger: A firm engaged in two or more unrelated businesses.
Consensus Forecast: A merger involving two or more firms that are in unrelated businesses.
Consol: The mean of all financial analysts' forecasts for a company.
Consolidated Financial Statement: A government bond with no maturity . Popular in Great Britain. The formula for valuing these bonds i
Consolidated Mortgage Bond: A financial statement that shows all the assets, liabilities, and operating accounts of a parent com
Consolidated Tape: A bond that covers several units of property, sometimes refinancing mortgages on the properties.
Consolidated Tax Return: Used for listed equity securities. Combined ticker tapes of the NYSE and the curb. Network A covers
Consolidation: A tax return combining the reports of affiliated companies, that are at least 80% owned by a parent
Consolidation Loan: The combining of two or more firms to form an entirely new entity.
Consortium: A loan that is used to combine and finance payments on other loans.
Consortium Banks: A group of companies that cooperate and share resources in order to achieve a common objective.
Constant Dollars: A merchant banking subsidiary set up by several banks that may or may not be of the same nationality
Constant Ratio Plan: Dollars of a base year used as a general measure of purchasing power.
Constant Yield Method: Maintaining a predetermined ratio between stock and fixed income investments through regular adjustm
Constant-Dollar Plan: Allocation of annual interest on a zero-coupon security for income tax use.
Constant-Growth Model: Method of purchasing securities by investing a fixed amount of money at set intervals. The investor
Construction Loan: Also called the Gordon-Shapiro model, an application of the dividend discount model that assumes (1)
Constructive Receipt: A short-term loan to finance building costs.
Consumer Credit: The date a taxpayer receives dividends or other income, for use in the determination of taxes.
Consumer Credit Protection Act Of 1968: Credit a firm grants to consumers for the purchase of goods or services. Also called retail credit.
Consumer Debenture: Federal legislation establishing rules for the disclosure of the terms of a loan to protect borrower
Consumer Durables: An investment note issued directly to the public by a financial institution.
Consumer Goods: Consumer products that are expected to last three years or more, such as an automobile or a home app
Consumer Interest: Goods not used in production but, bought for personal or household use such as food, clothing, and e
Consumer Price Index: Interest paid on consumer loans; e.g., interest on credit cards and retail purchases.
Contagion: The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the
Contango: Excess correlation of equity or bond returns. For example, under usual conditions we might observe a
Contingency Order: A market condition in which futures prices are higher in the distant delivery months.
Contingent Claim: In the context of general equities, order to buy one security, if the trader can sell another, usual
Contingent Deferred Sales Charge (CDSC): A claim that can be made only if one or more specified outcomes occur.
Contingent Immunization: The formal name for the load of a back-end load fund.
Contingent Pension Liability: An arrangement in which the money manager pursues an active bond portfolio strategy until an adverse
Continuous Compounding: Under ERISA, a firm is liable to its pension plan participants for up to 39% of the net worth of the
Continuous Net Settlement (CNS): The process of accumulating the time value of money forward in time on a continuous, or instantaneou
Continuous Random Variable: Method of securities clearing and settlement using a clearing house, which matches transactions to s
Contra Accounts: A random value that can take any fractional value within specified ranges, as contrasted with a disc
Contra Broker: Accounts, such as Accumulated Depreciation, that offset a related account, usually an asset. The con
Contract: The broker on the buy side of a sell order or the sell side of a buy order.
Contract Month: A term of reference describing a unit of trading for a financial or commodity future. Also, the actu
Contractual Plan: The month in which futures contracts may be satisfied by making or accepting a delivery.
Contramarket Stock: A plan in which fixed dollar amounts of mutual fund shares are purchased through periodic investment
Contrarian: In the context of general equities, stock that tends to go against the trend of the market as a whol
Contributed Capital: An investment style that leads one to buy assets that have performed poorly and sell assets that hav
Contribution Margin: The total amount paid to the business for its common and preferred stock.
Contribution Margin: The difference between variable revenue and variable cost.
Control: The difference between revenue and the associated variable costs. This is an important concept in br
Control Stock: 50% of the outstanding votes plus one vote.
Controlled Commodities: The shares owned by the controlling shareholders of a corporation.
Controlled Disbursement: Commodities regulated by the Commodities Exchange Act of 1936 in order to prevent fraud and manipula
Controlled Foreign Corporation (CFC): A service that provides for a single presentation of checks each day (typically in the early part of
Controller: A foreign corporation whose voting stock is more than 50% owned by U.S. stockholders, each of whom o
Convenience Yield: The corporate manager responsible for the firm's accounting activities.
Convention Statement: The extra advantage that firms derive from holding the commodity rather than a future position.
Conventional Mortgage: An annual statement filed by a life insurance company in each state where it does business in compli
Conventional Option: A loan based on the credit of the borrower and on the collateral for the mortgage.
Conventional Pass-Throughs: An option contract arranged off the trading floor and not traded regularly.
Conventional Project: Also called private-label pass-throughs, any mortgage pass-through security not guaranteed by govern
Convergence: A project with a negative initial cash flow (cash outflow), which is expected to be followed by one
Conversion: The movement of the price of a futures contract toward the price of the underlying cash commodity. A
Conversion Factors: In the context of securities, refers to the exchange of a convertible security such as a bond into s
Conversion Feature: Rules set by the Chicago Board of Trade for determining the invoice price of each acceptable deliver
Conversion Parity Price: Specification of the right to transform a particular investment to another form of investment, such
Conversion Parity-Value: Related: Market conversion price
Conversion Premium: Applies mainly to convertible securities. Common stock price at which a convertible bond can become
Conversion Price: The extent by which the conversion price of a convertible security exceeds the prevailing common sto
Conversion Ratio: Applies mainly to convertible securities. Dollar value at which convertible bonds, debentures, or pr
Conversion Value: Applies mainly to convertible securities. Relationship that determines how many shares of common sto
Convertibility: The value of a convertible security if it is converted immediately. Also called parity value.
Convertible 100: The ability to exchange a currency without government restrictions or controls.
Convertible Adjustable Preferred Stock (Caps): Goldman Sachs index of the 100 convertibles of greatest institutional importance. Weighted by issue
Convertible Arbitrage: The interest rate on caps is adjustable and is pegged to Treasury security rates. They can be exchan
Convertible Bond: A practice, usually of buying a convertible bond and shorting a percentage of the equivalent underly
Convertible Eurobond: General debt obligation of a corporation that can be exchanged for a set number of common shares of
Convertible Exchangeable Preferred Stock: A eurobond that can be converted into another asset, often through exercise of attached warrants.
Convertible Preferred Stock: Convertible preferred stock that may be exchanged, at the issuer's option, into convertible bonds th
Convertible Price: Preferred stock that can be converted into common stock at the option of the holder. See also: parti
Convertible Security: The contractually specified price per share at which a convertible security can be converted into sh
Convex: A security that can be converted into common stock at the option of the securityholder; includes con
Convexity: Curved, as in the shape of the outsid of a circle. Usually referring to the price/required yield rel
Cook The Books: Property that a curve is above a straight line connecting two end points. If the curve falls below t
Cooling-Off Period: To deliberately falsify the financial statements of a company. This is an illegal practice.
Cooperative: The period of time between the filing of a preliminary prospectus with the Securities and Exchange C
Copenhagen Stock Exchange: An organization owned by its members. Examples are agriculture cooperatives that assist farmers in s
Core Capital: The only securities exchange in Denmark. It features electronic trading of stocks, bonds, futures, a
Core Competence: The capital required of a thrift institution, which must be at least 2% of assets to meet the rules
Cornering The Market: Primary area of expertise. Narrowly defined fields or tasks at which a company or business excels. P
Corporate Acquisition: Purchasing a security or commodity in such volume as to achieve control over its price. An illegal p
Corporate Bonds: The acquisition of one firm by another firm.
Corporate Charter: Debt obligations issued by corporations.
Corporate Equivalent Yield: A legal document creating a corporation.
Corporate Finance: A comparison of the after-tax yield of government bonds selling at a discount and corporate bonds se
Corporate Financial Management: One of the three areas of the discipline of finance. It deals with the operation of the firm (both t
Corporate Financial Planning: The application of financial principles within a corporation to create and maintain value through de
Corporate Financing Committee: Financial planning conducted by a firm that encompasses preparation of both long-and short-term fina
Corporate Income Fund (CIF): A committee of the NASD that reviews underwriters' SEC-required documents to ensure that proposed ma
Corporate Information: A unit investment trust featuring a fixed portfolio of high-grade securities and other investments,
Corporate Processing Float: This section will usually present (1) the company's executive office address and telephone number; (
Corporate Repurchase: The time that elapses between receipt of payment from a customer and the deposit of the customer's c
Corporate Tax View: Active buying by a corporation of its own stock in the marketplace. Reasons for repurchase include p
Corporate Taxable Equivalent: The argument that double (corporate and individual) taxation of equity returns makes debt a cheaper
Corporation: Rate of return required on a par bond to produce the same after-tax yield to maturity that the quote
Correction: A legal entity that is separate and distinct from its owners. A corporation is allowed to own assets
Correlation: Reverse movement, usually downward, in the price of an individual stock, bond, commodity, or index.
Correlation Coefficient: Statistical measure of the degree to which the movements of two variables (stock/option/convertible
Correspondent: A standardized statistical measure of the dependence of two random variables, defined as the covaria
Cost: A financial organization that performs services (acts as an intermediary) in a market for another or
Cost Accounting: Another term for expenditure. See also expenses.
Cost Basis: A branch of accounting that provides information to help the management of a firm evaluate productio
Cost Company Arrangement: The original price of an asset, used to determine capital gains.
Cost Me: Arrangement whereby the shareholders of a project receive output free of charge but agree to pay all
Cost Of Capital: Refers to over-the-counter trading. 'The price I must pay to obtain the securities you wish to buy i
Cost Of Carry: The required return for a capital budgeting project.
Cost Of Equity: Out-of-pocket costs incurred while an investor has an investment position. Examples include interest
Cost Of Funds: The required rate of return for an investment of 100% equity.
Cost Of Goods Sold: Interest rate associated with borrowing money.
Cost Of Goods Sold: The total cost of buying raw materials, and paying for all the factors that go into producing finish
Cost Of Lease Financing: Another term for cost of sales.
Cost Of Limited Partner Capital: A lease's internal rate of return.
Cost Of Sales-Services (COS): The discount rate that equates the after-tax inflows with outflows for capital raised from limited p
Cost Records: All the costs associated with the goods or services that were sold during a specified accounting per
Cost-Benefit Ratio: The records maintained by an investor of the prices at which securities transactions are made, so th
Cost-Of-Carry Market: The net present value of an investment divided by the investment's initial cost. Also called the pro
Cost-Plus Contract: Applies to derivative products. Futures contracts trade in a 'cost-of-carry market' where the underl
Cost-Push Inflation: A contract in which the selling price is based on the total cost of production plus a fixed percenta
Council Of Economic Advisers: Inflation caused by rising prices, usually from increased raw material or labor costs that push up t
Counter Trade: A group of economists appointed by the President of the United States to provide economic counsel an
Countercyclical Stocks: The exchange of goods for other goods rather than for cash; barter.
Counterpart Items: Stocks whose price tends to rise when the economy is in recession or the market is bearish, and vice
Counterparties: In the balance of payments, counterpart items are analogous to unrequited transfers in the current a
Counterparty: The parties to an interest rate swap.
Counterparty Risk: Party on the other side of a trade or transaction.
Country: The risk that the other party to an agreement will default. In an options contract, the risk to the
Country Beta: The country in which this company is registered.
Country Economic Risk: Covariance of a national economy's rate of return and the rate of return of the world economy divide
Country Financial Risk: Developments in a national economy that can affect the outcome of an international financial transac
Country Risk: Centers around the ability of a national economy to generate enough foreign exchange to meet payment
Country Selection: General level of political, financial, and economic uncertainty in a country affect which the value
Coupon: A type of active international management that measures the contribution to performance attributable
Coupon Bond: The periodic interest payment made to the bondholders during the life of the bond.
Coupon Equivalent Yield: A bond featuring coupons that must be presented to the issuer in order to receive interest payments.
Coupon Pass: True interest cost expressed on the basis of a 365-day year.
Coupon Payments: Canvassing by the desk of primary dealers to determine the inventory and maturities of their Treasur
Coupon Rate: A bond's interest payments.
Covariance: In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually p
Covenants: A statistical measure of the degree to which random variables move together. A positive covariance i
Covenants: Provisions in a bond indenture or preferred stock agreement that require the bond or preferred stock
Cover: A set of conditions agreed to in a formal debt agreement and designed to protect the lender's intere
Coverage Initiated: The purchase of a contract to offset a previously established short position.
Coverage Ratios: Usually refers to the fact that analysts begin following a particular security. This usually happens
Covered Call: Ratios used to test the adequacy of cash flows generated through earnings for purposes of meeting de
Covered Call Writing Strategy: A short call option position in which the writer owns the number of shares of the underlying stock r
Covered Interest Arbitrage: A strategy that involves writing a call option on securities that the investor owns. See: Covered or
Covered Option: Occurs when a portfolio manager invests dollars in an instrument denominated in a foreign currency a
Covered Or Hedge Option Strategies: Option position that is offset by an equal and opposite position in the underlying security. Antithe
Covered Put: Strategies that involve a position in an option as well as a position in the underlying stock, desig
Covered Writer: A put option position in which the option writer also is short the corresponding stock or has deposi
CPI: An investor who writes options only on stock that he or she owns, so that option positions may be co
Cram-Down Deal: The ability of the bankruptcy court to confirm a plan of reorganization over the objections of some
Cramdown: A measure of inflation. See: Consumer Price Index.
Crash: A merger in which stockholders are forced to accept undesirable terms, such as junk bonds instead of
Crawling Peg: Dramatic loss in market value. The last great crash was in 1929. Some refer to October 1987 as a cra
Credible Signal: An automatic system for revising the exchange rate. It involves establishing a par value around whic
Credit: A signal that provides accurate information; a signal that can distinguish among senders.
Credit Analysis: Money loaned.
Credit Balance: Evaluating information on companies and bond issues in order to estimate the ability of the issuer t
Credit Bureau: The surplus in a cash account with a broker after purchases have been paid for, plus the extra cash
Credit Enhancement: An agency that researches the credit history of consumers so that creditors can make decisions about
Credit Insurance: Purchase of the financial guarantee of a large insurance company to raise funds.
Credit Period: Insurance against abnormal losses due to unpaid accounts receivable.
Credit Rating: The length of time for which a firm's customer is granted credit.
Credit Risk: An evaluation of an individual's or company's ability to repay obligations or its likelihood of not
Credit Scoring: The risk that an issuer of debt securities or a borrower may default on its obligations, or that the
Credit Spread: A statistical technique that combines several financial characteristics to form a single score to re
Credit Union: Applies to derivative products. Difference in the value of two options, when the value of the one so
Credit Watch: A not-for-profit institution that is operated as a cooperative and offers financial services such as
Crediting Rate: A warning by a bond rating firm indicating that a company's credit rating may change after the curre
Creditor: The interest rate offered on an investment type insurance policy.
Creditors Committee: Lender of money.
Creditworthiness: A group representing firms that have claims on a company facing bankruptcy or extreme financial diff
Creeping Tender Offer: Eligibility of an individual or firm to borrow money.
CREST: The process by which a group attempting to circumvent certain provisions of the Williams Act gradual
Cross: CREST is CrestCo's real-time settlement system for U.K. and Irish shares and other corporate securit
Cross Hedging: Securities transaction in which the same broker acts as agent for both sides of the trade; a legal p
Cross Rates: Applies to derivative products. Hedging with a futures contract that is different from the underlyin
Cross-Border Risk: The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that a
Cross-Default: Describes the volatility of returns on international investments caused by events associated with a
Cross-Holdings: The prohibited practice of offsetting buy and sell orders without recording the trade on the exchang
Cross-Sectional Approach: The return at which two alternative projects have the same net present value.
Cross-Share Holdings: A statistical methodology applied to a set of firms at a particular time.
Crossed Market: A provision under which default on one debt obligation triggers default on another debt obligation.
Crossed Trade: In the context of general equities, happens when the inside market consists of a highest bid price t
Crossover Rate: The holding by one corporation of shares in another firm. One needs to allow for cross-holdings when
Crowd Trading: Often used in risk arbitrage. Corporations' or governments' equity share ownership in another corpor
Crowding Out: Used for listed equity securities. Group of exchange members with a defined area of function tending
Crown Jewel: Heavy federal borrowing that drives interest rates up and prevents businesses and consumers from bor
Cum Dividend: A particularly profitable or otherwise particularly valuable corporate unit or asset of a firm. Ofte
Cum Rights: With dividend; said of a stock whose buyer is eligible to receive a declared dividend. Stocks are us
Cumulative Abnormal Return (CAR): With rights.
Cumulative Auction Market Preferred Stocks (CAMPS): Sum of the differences between the expected return on a stock (systematic risk multiplied by the rea
Cumulative Dividend Feature: Stands for Cumulative Auction Market Preferred Stocks, Oppenheimer & Company's Dutch Auction preferr
Cumulative Preferred Stock: A requirement that any missed preferred or preference stock dividends be paid in full before any com
Cumulative Probability Distribution: Preferred stock whose dividends accrue, should the issuer not make timely dividend payments. Related
Cumulative Translation Adjustment (CTA) Account: A function that shows the probability that the random variable will attain a value less than or equa
Cumulative Voting: An entry in a translated balance sheet in which gains and/or losses from translation have been accum
Currency: A system of voting for directors of a corporation in which shareholder's total number of votes is eq
Currency Arbitrage: Money.
Currency Basket: Taking advantage of divergences in exchange rates in different money markets by buying a currency in
Currency Future: The value of a portfolio of specific amounts of individual currencies, used as the basis for setting
Currency Hedge: A financial future contract for the delivery of a specified foreign currency.
Currency In Circulation: Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctu
Currency Option: Paper money, coins, and demand deposits that constitute all the money circulating in the economy.
Currency Overvaluation: An option to buy or sell a foreign currency.
Currency Risk: Applies mainly to international equities: (1) consideration that a currency is overvalued if private
Currency Risk Sharing: Related: Exchange rate risk
Currency Selection: An agreement by the parties to a transaction to share the currency risk associated with the transact
Currency Swap: Asset allocation in which the investor chooses among investments denominated in different currencies
Current Account: An agreement to swap a series of specified payment obligations denominated in one currency for a ser
Current Assets: Net flow of goods, services, and unilateral transactions (gifts) between countries.
Current Assets: Value of cash, accounts receivable, inventories, marketable securities and other assets that could b
Current Coupon: Assets that are convertible to cash within one year in the normal course of business. This usually i
Current Income: A bond selling at or close to par, that is, a bond with a coupon close to the yields currently offer
Current Issue: Money that is routinely received from investments in the form of dividends, interest, and other inco
Current Liabilities: In Treasury securities, the most recently auctioned issue. Trading is more active in current issues
Current Liabilities: Obligations that will come due within a year from the current date. These usually include accounts p
Current Market Value: Amount owed for salaries, interest, accounts payable and other debts due within 1 year.
Current Maturity: The value of a client's portfolio at today's market price, as listed in a brokerage statement.
Current Production Rate: Current time to maturity on an outstanding debt instrument.
Current Rate Method: The highest interest rate permissible on current Government National Mortgage Association, mortgage-
Current Ratio: The translation of all foreign currency balance sheet and income statement items at the current exch
Current Ratio: The ratio of current assets to current liabilities. For Utilities and Financial companies, long-term
Current Ratio: Indicator of short-term debt-paying ability. Determined by dividing current assets by current liabil
Current Yield: Current assets divided by current liabilities. This ratio is a measure of a company's ability to mee
Current-Coupon Issues: The translation of all of a foreign subsidiary's current assets and liabilities into home currency a
Current-Noncurrent Method: For bonds or notes, the coupon rate divided by the market price of the bond.
Cushion: Related: Benchmark issues
Cushion Bonds: The minimum period between the time a bond is issued and the time it is called.
Cushion Theory: High-coupon bonds that sell at only at a moderate premium because they are callable at a price below
CUSIP Number: The theory that a stock with many short positions taken in it will rise, because these positions mus
Custodial Fees: Unique number given to a security to distinguish it from other stocks and registered bonds. See: Com
Custodian Bank: Fees charged by an institution that holds securities in safekeeping for an investor.
Customary Payout Ratios: Applies mainly to international equities. Bank or other financial institution that keeps custody of
Customer Picking Prices: A range of payout ratios that is typical according to an analysis of comparable firms.
Customers Loan Consent: Customer is firm on price and has set the price at which to transact.
Customers Net Debit Balance: Agreement signed by a margin customer that allows a broker to borrow margined securities up to the l
Customized Benchmarks: The total amount of credit given by NYSE member firms to finance customers purchasing securities.
Customs Union: A benchmark that is designed to meet a client's requirements and long-term objectives.
Cutoff Point: An agreement by two or more countries to erect a common external tariff and to abolish restrictions
Cyclical Stock: The lowest rate of return acceptable on investments.
D: Stock that tends to rise quickly when the economy turns up and fall quickly when the economy turns d
Daily Price Limit: Fifth letter of a Nasdaq stock symbol specifying that it is a new issue, such as the result of a rev
Daisy Chain: The level at which many commodity, futures, and options markets are allowed to rise or fall in a day
Data Reported In: Manipulation of the market by traders to create the illusion of active volume to attract investors.
Date Of Issue: The local currency of the country where this company is registered.
Date Of Payment: Used in the context of bonds to refer to the date on which a bond is issued and when interest accrue
Date Of Record: Date dividend checks are mailed.
Dated Date: Date on which holders of record in a firm's stock ledger are designated as the recipients of either
Dates Convention: The date one uses to calculate accrued interest on various debt instruments, specifically bonds.
Dating: Treating cash flows as being received on exact dates-date 0, date 1, and so forth-as opposed to the
Dawn Raid: Credit extension beyond normal terms of a credit supplier.
Day Around Order: A term of British origin used to describe the purchase of all available shares of a target company a
Day Loan: A day order that supersedes (cancels and replaces) the previous order by altering its size or price
Day Of Deposit To Day Of Withdrawal Account: A loan from a bank to a broker prior to the delivery of securities. Upon the delivery of the securit
Day Order: A bank account that pays interest according to the number of days that the money is actually on depo
Day Trading: In the context of general equities, request from a customer to either buy or sell stock, that, if no
Days In Receivables: Establishing and liquidating the same position or positions within one day's trading.
Days Payable Outstanding (DPO): Average collection period.
Days Sales In Inventory Ratio: The number of days a business takes to pay its accounts payable, on average.
Days Sales Outstanding: The average number of days' worth of sales that is held in inventory.
Days Sales Outstanding (DSO): Average collection period.
De Facto: The number of days a business takes to collect on its accounts receivable, on average.
Dead Cat Bounce: Existing in actual fact although not by official recognition.
Deal Flow: A small upmove in a bear market.
Deal Stock: In investment banking, the rate at which new deals are referred to a brokerage firm.
Dealer: Stock subject to merger or acquisition, either publicly announced or rumored.
Dealer Loan: An entity that stands ready and willing to buy a security for its own account (at its bid price) or
Dealer Market: Overnight, collateralized loan from a money market bank made to a dealer financing his position by b
Dealer Options: Where traderss specializing in particular commodities buy and sell assets for their own accounts.
Dear Money: Over-the-counter options, such as those offered by government and mortgage-backed securities dealers
Death Play: British term for tight money.
Death Valley Curve: A stock strategy that buys stock on the belief that a key executive will die, the company will be di
Death-Backed Bonds: In venture capital, refers to the period before a new company starts generating revenues, when it is
Debenture: Bonds backed by loans of a policyholder against a life insurance policy. The policyholder will repay
Debenture Bond: Any debt obligation backed strictly by the borrower's integrity, e.g. an unsecured bond. A debenture
Debenture Stock: An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not p
Debit Balance: A type of stock that makes fixed payments at scheduled intervals of time. Debenture stock differs fr
Debit Spread: The amount that is owed to a broker by a margin customer for loans the customer uses to buy securiti
Debt: Applies to derivative products. Difference in the value of two options, when the value of the option
Debt: Money borrowed.
Debt Bomb: A form of liability that represents money borrowed from banks or other institutions.
Debt Capacity: A default on debt and obligations by a major financial institution that disrupts the stability of th
Debt Displacement: Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer incre
Debt Instrument: The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in thei
Debt Leverage: An asset requiring fixed dollar payments, such as a government or corporate bond.
Debt Limit: Amplification of the return earned on equity when an investment or firm is financed partially with b
Debt Limitation: The maximum amount that a municipality can borrow.
Debt Market: A bond covenant that restricts the firm's ability to incur additional indebtedness in some way.
Debt Ratio: The market for trading debt instruments.
Debt Relief: Total debt divided by total assets.
Debt Retirement: Reducing the principal and/or interest payments on Less developed country loans.
Debt Securities: The complete repayment of debt. See: Sinking fund.
Debt Service: IOUs created through loan-type transactions-commercial paper, bank CDs, bills, bonds, and other inst
Debt Service Coverage: Interest payment plus repayments of principal to creditors (retirement of debt).
Debt Service Parity Approach: The ratio of cash flow available to the borrower to the annual interest and principal payments on a
Debt Swap: Payment alternatives that provide the firm with the exact same schedule of after-tax debt payments (
Debt To Equity Ratio: A set of transactions in which a firm buys a country's dollar bank debt at a discount and swaps this
Debt To Tangible Equity Ratio: The ratio of total debt to owners' equity, used as a measure of leverage and ability to repay obliga
Debt-Equity Ratio: The ratio of total debt to tangible equity, used as a measure of leverage and solvency. Typical valu
Debt-Service Coverage Ratio: New debt obtained by a firm during the Chapter 11 bankruptcy process.
Debtor: Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareho
Debtor In Possession: Borrower of money.
Debtor-In-Possession Financing: A firm that continues to operate under the Chapter 11 bankruptcy process.
Decile Rank: Earnings before interest and income taxes, divided by interest expense plus the quantity of principa
Decimal Trading: Performance over time, rated on a scale of 1-10. 1 indicates that a mutual fund's return is in the t
Decision Tree: The quotation and trading of stock prices in decimals, as opposed to the quotation of stock prices i
Declaration Date: Schematic way of representing alternative sequential decisions and the possible outcomes from these
Declare: The date on which a firm's directors meet and announce the date and amount of the next dividend.
Dedicated Capital: The Board of Directors motion to authorize dividend payments.
Dedicating A Portfolio: Total par value (number of shares issued, multiplied by the par value of each share). Also called de
Dedication Strategy: Related: Cash flow matching
Deduction: Refers to multiperiod cash-flow matching.
Deductive Reasoning: An expense that is allowable as a reduction of gross taxable income by the IRS e.g., charity donatio
Deep In-Out Of The Money: Using known fact to draw a conclusion about a specific situation.
Deep-Discount Bond: A call option with an exercise price substantially below the underlying stock's market price (deep i
Default: A bond issued with a very low coupon or no coupon that sell at a price far below par value. A bond t
Default Premium: Failure to make timely payment of interest or principal on a debt security or to otherwise comply wi
Default Risk: A differential in promised yield that compensates the investor for the risk inherent in purchasing a
Defeasance: The risk that an issuer of a bond may be unable to make timely principal and interest payments. Also
Defensive Securities: The setting aside by a borrower of cash or bonds sufficient to service the borrower's debt. Both the
Deferred Account: Low-risk stocks or bonds that will provide a predictable and safe return on an investor's money.
Deferred Annuities: A type of account that delays taxes on that account until some later date.
Deferred Call: Tax-advantaged life insurance products. Deferred annuities offer deferral of taxes with the option o
Deferred Charge: A provision that prohibits the company from calling the bond before a certain date. During this peri
Deferred Compensation: An expenditure treated as an asset that carries forward until it becomes pertinent to the business a
Deferred Equity: An amount that has been earned but is not actually paid until a later date, typically through a paym
Deferred Futures: A common term for convertible bonds, which recognizes their equity component and the expectation tha
Deferred Interest Bond: The most distant months of a futures contract.
Deferred Nominal Life Annuity: A bond that pays interest at a later date, usually in one lump sum, effectively reinvesting interest
Deferred Payment Annuity: A monthly fixed-dollar payment beginning at retirement age. It is nominal because the payment is fix
Deferred Revenue: An annuity that stipulates payments be made to the annuitant at a later date, such as when the annui
Deferred Taxes: A liability that arises when a customer pays for goods or services before delivery is complete; for
Deficiency Letter: A non-cash expense that provides a source of free cash flow. Amount allocated during the period to c
Deficit: Notification from the SEC to a prospective issuer of securities that revisions or additions need to
Deficit Spending: An excess of liabilities over assets, of losses over profits, or of expenditure over income.
Defined Asset Fund: When government spending overwhelms government revenue resulting in government borrowing. See: Defic
Defined Benefit Plan: A unit investment trust consisting of a fixed portfolio of securities, including blue chips, REITs,
Defined Contribution Plan: A pension plan obliging the sponsor to make specified dollar payments to qualifying employees. The p
Deflation: A pension plan whoae sponsor is responsible only for making specified contributions into the plan on
Deflator: Decline in the prices of goods and services. Antithesis of inflation.
Delayed Issuance Pool: A statistical factor used to convert current dollar purchasing power into inflation-adjusted purchas
Delayed Opening: Refers to mortgage backed securities (MBS) that at the time of issuance were collateralized by seaso
Delayed Settlement-Delivery: Postponement of the start of trading in a stock until correction of a gross imbalance in buy and sel
Delinquency: In the context of general equities, transaction in which a contract is settled in excess of five ful
Delisting: Failure to make a payment on a debt or obligation by the specified due date.
Deliver: Removal of a company's security from listing on an exchange because the firm has not abided by speci
Deliverable Bills: The sale of a futures or forward contract may require the seller to deliver the commodity.
Deliverable Instrument: The Treasury bills that fulfill a set of guidelines set forth by the exchange on which the bills are
Delivery: The asset in a forward contract that will be delivered in the future at an agreed-upon price.
Delivery Date: The tender and receipt of an actual commodity or financial instrument in settlement of a futures con
Delivery Notice: Date by which a seller must fulfill the obligations of a forward or futures contract.
Delivery Options: The written notice given by the seller of its intention to make delivery against an open, short futu
Delivery Points: The options available to the seller of an interest rate futures contract, including the quality opti
Delivery Price: Locaations designated by futures exchanges at which the financial instrument or commodity covered by
Delivery Versus Payment: The price fixed by the clearinghouse at which deliveries on futures are invoiced; also the price at
Delta: A transaction in which the buyer's payment for securities is due at the time of delivery (usually to
Delta Hedge: The ratio of the change in price of a call option to the change in price of the underlying stock. Al
Delta Neutral: A dynamic hedging strategy using options that calls for constant adjustment of the number of options
Demand Deposits: Describes value of a portfolio not affected by changes in the value of the asset on which the option
Demand Line Of Credit: Checking accounts that pay no interest and from which funds can be withdrawn upon demand.
Demand Loan: A bank line of credit that enables a customer to borrow on a daily or on-demand basis.
Demand Master Notes: A loan which can be called by the lender at any time and carries no set maturity date.
Demand Shock: Short-term securities that are repayable immediately upon the holder's demand.
Demand-Pull Inflation: An event that affects the demand for goods and services in an economy.
Denomination: A theory of inflation or price increases resulting from so-called excess demand. Related: Cost-push
Department: Corresponds to the face value of currency units, coins, and securities.
Dependent: An entity defined for reporting purposes.
Depository Institutions Deregulation And Monetary Control Act: Acceptance of a capital budgeting project contingent on the acceptance of another project.
Depository Preferred: The 1980 federal legislation that ended the regulation of the banking industry.
Depository Transfer Check (DTC): Device enabling an issuer to circumvent an arbitrary corporate limit on the number of preferred shar
Depository Trust Company (DTC): Check made out directly by a local bank to a particular firm or person.
Depreciate: DTC is a user-owned securities depository that accepts deposits of eligible securities for custody,
Depreciated Cost: To allocate the purchase cost of an asset over its life.
Depreciation: In terms of economics: The measure of cost of capital consumption during production, e.g., machine a
Depreciation: The recognition of part of an asset's cost as an expense during each year of its useful life. There
Depreciation Tax Shield: A non-cash expense that provides a source of free cash flow. Amount allocated during the period to a
Depressed Market: The value of the tax write-off on depreciation of plant and equipment.
Depressed Price: Market in which supply overwhelms demand, leading to weak and lower prices.
Depression: In the context of stocks, stock whose market price is low in comparison to stocks in its sector.
Deregulation: Period when excess aggregate supply overwhelms aggregate demand, resulting in falling prices, unempl
Derivative Instruments: The reduction of government's role in controlling markets, which lead to freer markets, and presumab
Derivative Markets: Contracts such as options and futures whose price is derived from the price of an underlying financi
Derivative Security: Markets for derivative instruments.
Descending Tops: A financial security such as an option or future whose value is derived in part from the value and c
Designated Order Turnaround System (DOT): A chart pattern which in which each successive peak in a security's price is lower than the precedin
Desk: Computerized order entry system that allows orders to buy or sell large baskets of stock to be trans
Detachable Warrant: The New York Federal Reserve Bank's trading desk (or securities department) where all transactions o
Deterministic Models: A warrant entitles the holder to buy a given number of shares of stock at a stipulated price. A deta
Detrend: Liability-matching models that assume that the liability payments and the asset cash flows are known
Deutsche Börse AG (DBAG): To remove the general drift, tendency, or bent of a set of statistical data as related to time. Ofte
Deutsche Terminbörse (DTB): Deutsche Börse AG (DBAG) is the operating company for the German cash and derivatives markets. It h
Devaluation: Formerly the German financial futures and options market. Merged with the Swiss Options and Financia
Diagonal Spread: A decrease in the spot price of a currency. Often initiated by a government announcement.
Dialing For Dollars: An options strategy requiring a long and a short position in the same class of option at different s
Diamonds: A term used to describe the practice of cold calling, but which has negative implications as it is f
Diff: Units of interest in the diamonds trust, a unit investment trust that serves as an index to the Dow
Difference From S and P: Short version of Euro rate differential, which is a Chicago Mercantile Exchange Futures contract tha
Differential: A mutual fund's return minus the change in the Standard & Poor's 500 index for the same time period.
Differential Disclosure: A small charge, typically 1/8 point, added to the purchase price and subtracted from the selling pri
Differential Swap: The practice of reporting conflicting or markedly different information in official corporate statem
Diffusion Process: Swap between two LIBOR rates of interest, e.g., yen LIBOR for dollar LIBOR Payments are in one curre
Digits Deleted: A conception of the way a stock's price changes that assumes that the price takes on all intermediat
Dilution: Designation on securities exchange tape meaning that because the tape has been delayed, some digits
Dilution Protection: Diminution in the proportion of income to which each share is entitled.
Dilutive Effect: Standard provision that changes the conversion ratio in the case of a stock dividend or extraordinar
Dip: Result of a transaction that decreases earnings per common share (EPS).
Direct Costs: Slight drop in securities prices after a sustained uptrend. Analystsoften advise investors to buy on
Direct Estimate Method: Expenses, such as labor, overhead, and materials, that vary in direct proportion to units produced o
Direct Investment: A method of cash budgeting based on detailed estimates of cash receipts and cash disbursements categ
Direct Labor: The purchase of a controlling interest in a company or at least enough interest to have enough influ
Direct Lease: Wages paid for activities directly related to production of units sold or services delivered, consid
Direct Overhead: Contract in which a lessor purchases new equipment from the manufacturer and leases it to the lessee
Direct Paper: A fraction of overhead costs devoted to the manufacturing sector of a firm to cover expenses such as
Direct Participation Program: Commercial paper sold directly by the issuer to investors.
Direct Placement: An investment program enabling investors to directly participate in the cash_flow and tax benefits o
Direct Quote: Selling a new issue not by offering it for sale publicly, but by placing it with one of several inst
Direct Search Market: For foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency.
Direct Stock-Purchase Programs: Buyers and sellers seek each other directly and transact directly.
Directorship: Investors purchase securities directly from the issuer.
Dirty Float: Used in the context of general equities. Stock status whereby a trader may not maintain positions in
Dirty Price: A system of floating exchange rates in which a government may intervene to change the direction of t
Dirty Stock: Bond price including accrued interest, i.e., the price paid by the bond buyer.
Disability Income Insurance: A stock that fails to fulfill prerequisites to attain good delivery status.
Disbursement Float: An insurance policy that insures a worker in the event of an occupational mishap resulting in disabi
Discharge Of Bankruptcy: A decrease in book cash but no immediate change in bank cash, generated by checks written by the fir
Discharge Of Lien: The termination of bankruptcy proceedings, resulting in cancellation of the debtor's obligations.
Disclaimer Of Opinion: An order terminating a lien on property.
Disclosure: An auditor's statement that does not express any opinion regarding the company's financial condition
Discontinued Operations: A company's release of all information pertaining to the company's business activity, regardless of
Discount: Divisions of a business that have been sold or written off and that no longer are maintained by the
Discount Bond: Convertible: Difference between gross parity and a given convertible price. Most often invoked when
Discount Broker: Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero
Discount Factor: A brokerage house featuring relatively low commission rates in comparison to a full-service broker.
Discount Period: Present value of $1 received at a stated future date.
Discount Rate: The period during which a customer can deduct the discount from the net amount of the bill when maki
Discount Securities: The interest rate that the Federal Reserve charges a bank to borrow funds when a bank is temporarily
Discount Window: Non-interest-bearing money market instruments that are issued at a discount and redeemed at maturity
Discount Yield: Facility provided by the Fed enabling member banks to borrow reserves against collateral in the form
Discounted Basis: The yield or annual interest rate on a security sold to an investor at a discount. A bond that is so
Discounted Cash Flow (DCF): To sell below maturity value, so that the difference makes up all or part of the interest.
Discounted Dividend Model (DDM): Future cash flows multiplied by discount factors to obtain present values.
Discounted In-By Market: A formula to estimate the intrinsic value of a firm by figuring the present value of all expected fu
Discounted Payback Period Rule: Unannounced information that is widely accepted or anticipated, and hence is already taken into acco
Discounting: An investment decision rule in which cash flows are discounted at an interest rate and one determine
Discounting The News: Calculating the present value of a future amount. Discounting is opposite to compounding.
Discrete Compounding: An adjustment of a stock's price as speculators bid the price up or down in anticipation of news abo
Discrete Random Variable: Compounding the time value of money for separate time intervals.
Discrete Variable: A random variable that can take only a certain specified set of individual possible values-for examp
Discretionary Account: Variable like 1, 2, 3. Bond ratings are examples of discrete classifications.
Discretionary Cash Flow: Accounts over which an individual or organization, other than the person in whose name the account i
Discretionary Income: Cash flow that is available after the funding of all positive net present value (NPV) capital invest
Discretionary Order: The amount of income a consumer has available after purchasing essentials such as food and shelter.
Discretionary Trust: A type of buy order that gives the broker the freedom and power to make the execution at any time an
Discriminant Analysis: In the context of mutual funds, refers to a mutual fund or unit trust whose management decides on th
Dishonor: A statistical process that links the probability of default to a specified set of financial ratios.
Disinflation: A refusal to pay.
Disintermediation: A decrease in the rate of inflation.
Disinvestment: Withdrawal of funds from a financial institution in order to invest them directly.
Disposable Income: A reduction in capital investment reflected by a decrease in capital goods and a company's decision
Distress Sale: The amount of personal income an individual has after taxes and government fees, which can be spent
Distributed: The selling of assets under adverse conditions, e.g., an investor may have to sell securities to cov
Distributing Syndicate: As new Treasury issues in dealers' hands are said to be distributed.
Distribution: A syndicate consisting of a number of brokerage firms or investment bankers that work together to se
Distribution Area: Selling a large lot of a security in such a way that the security price is not heavily influenced.
Distribution Period: An established price range in which a stock has been trading in for a significant amount of time. Se
Distribution Plan: The few days between the board of directors' declaration of a stock dividend (declaration date) and
Distribution Stock: A mutual fund's plan to charge distribution costs such as advertising to the investors of the fund.
Distributions: A small amount of a specific stock that forms part of a larger block of stock that is sold small amo
Divergence: Payments from fund or corporate cash flow. May include dividends from earnings, capital gains from s
Diversifiable Risk: When two or more averages or indexes fail to show confirming trends.
Diversification: Related: Unsystematic risk
Diversified Investment Company: Dividing investment funds among a variety of securities with different risk, reward, and correlation
Divestiture: An investment vehicle such as a mutual fund that invests in an assortment of securities.
Dividend: A complete asset or investment disposal such as outright sale or liquidation.
Dividend Clawback: A portion of a company's profit paid to common and preferred shareholders. A stock selling for $20 a
Dividend Clientele: An arrangement under which sponsors of a project agree to contribute as equity any prior dividends r
Dividend Discount Model (DDM): A group of shareholders who prefer that the firm follow a particular dividend policy. Such a prefere
Dividend Growth Model: A method to value the common stock of a company that is based on the present value of the expected f
Dividend In Arrears: An approach that assumes dividends grow at a constant rate in perpetuity. The value of the stock equ
Dividend Limitation: Accumulated dividends on cumulative preferred stock that are deemed payable to the current holder.
Dividend Payout Ratio: A bond covenant that restricts in some way the firm's ability to pay cash dividends.
Dividend Policy: Percentage of earnings paid out as dividends.
Dividend Rate: Standards by which a firm determines the amount of money it will pay as dividends.
Dividend Record: The fixed or floating rate paid on preferred stock based on par value.
Dividend Reinvestment Plan (DRP): S&P publication stating companies' payment histories and corporate policies.
Dividend Requirement: Automatic reinvestment of shareholder dividends in more shares of a company's stock, often without c
Dividend Rights: The annual earnings minimum required for payment of dividends on a preferred stock.
Dividend Rollover Plan: A shareholder's rights to receive per-share dividends identical to those other shareholders receive.
Dividend Trade Roll-Play: An investment strategy that entails the purchase and selling of a stock right before its ex-dividend
Dividend Yield: Used for listed equity securities. Method of buying and selling stocks around their ex-dividend date
Dividend Yield (Funds): Annual dividends per share as a percent of the average annual High-Low price. Current yield is based
Dividend Yield (Stocks): Indicated yield represents return on a share of a mutual fund held over the past 12 months. Assumes
Dividends 12 Months: Each year's cash dividends per share as a percent of earnings per share reported for the same year.
Dividends Payable: Cash dividends declared per share for the last 12 months. All stock dividends are noted and all per
Dividends Per Share: The declared dividend dollar amount that a company is obligated to pay.
Dividends Percent Of Earnings: Indicated yield represents annual dividends divided by current stock price.
Dividends-Received Deduction: Dividend paid for the past 12 months divided by the number of common shares outstanding, as reported
Divisor: A corporate tax deduction on income allowed by company A that is in ownership of shares of company B
DM: Used in construction of stock indices. Suppose you have 10 stocks in an index, each worth $10 and th
Do Not Increase (DNI): Deutsche (German) marks.
Do Not Reduce Order (DNR Order): A restriction that an investor places on a good til' cancelled order to prevent an order increase in
Doctrine Of Sovereign Immunity: Limit order to buy or to sell, or a stop limit order to sell that is not to be reduced by the amount
Documented Discount Notes: Principle that a nation may not be tried in another country without its consent.
Dogs Of The Dow: Commercial paper backed by normal bank lines of credit plus a letter of credit from a bank stating t
Dollar Bears: T 10 stocks of the 30 on the Dow Jones Industrial Average with the most depressed prices and consequ
Dollar Bonds: Traders who capitalize on a falling dollar by buying other foreign currencies directly.
Dollar Drain: Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with 'U.S. D
Dollar Duration: The impact of importing from foreign countries more than exporting to them. The money required to fi
Dollar Price Of A Bond: The product of modified duration and the initial price.
Dollar Return: Percentage of face value at which a bond is quoted.
Dollar Roll: The return realized on a portfolio for any evaluation period, including (1) the change in market val
Dollar Safety Margin: Similar to the reverse repurchase agreement-a simultaneous agreement to sell a security held in a po
Dollar Shortage: The dollar equivalent of the safety cushion for a portfolio in a contingent immunization strategy.
Dollar-Weighted Rate Of Return: Results when a nation importing U.S. goods cannot pay for them without the aid of the United States.
Domestic Corporation: Also called the internal rate of return; the interest rate that makes the present value of the cash
Domestic International Sales Corporation (DISC): A corporation that is conducting business and is based in the country in which it is established, as
Domestic Market: A US corporation that receives a tax incentive for export activities.
Donor: A nation's internal market representing the mechanisms for issuing and trading securities of entitie
Dont Fight The Tape: One who gives property or assets to someone else through the vehicle of a trust.
Dont Know (DK, Dked): Phrase advising not to trade against the market trend. If stock prices are rising, do not sell.
Double Auction Market: Don't know the trade. A Street expression used whenever one party lacks knowledge of a trade or rece
Double Auction System: Systems by which listed securities are bought and sold through brokers on the securities exchanges,
Double Bottom: A market consisting of many sellers and many buyers, as opposed to a conventional auction with one m
Double Declining Balance (DDB): A term used in technical analysis to refer to the drop of a stock's price, a rebound, and then a dro
Double Dip: A method of recording accelerated depreciation. Also called the 200 percent declining balance method
Double Taxation: Used for listed equity securities. Dividend roll in which the 'dividend capturer' already owns the s
Double Top: Government taxation of the same money twice; specifically, taxation of earnings at the corporate lev
Double Up: A term used in technical analysis to refer to the rise of a stock's price, a drop, and then a rise b
Double Witching Day: A stock buying strategy that doubles the risk when the price moves in the opposite direction from th
Double-Barreled: A trading day when of two related classes of options and futures expire, resulting in a variety of a
Double-Declining-Balance Depreciation: Describes backing of the principal and interest of a smaller municipal revenue bond the large munici
Double-Declining-Balance Depreciation Method (DDB): Method of accelerated depreciation.
Double-Dip Lease: An accounting methodology in which depreciation is accelerated to twice the rate of annual depreciat
Double-Tax Agreement: A cross-border lease in which the different rules of the lessor's and lessee's countries let both pa
Doubling Option: Agreement between two countries that taxes paid abroad can be offset against domestic taxes levied o
Dow Jones Industrial Average: A sinking fund provision that may allow repurchase of twice the required number of bonds at the sink
Dow Theory: The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks
Down Round: Used in the context of general equities. Technical theory that a major trend in the stock market mus
Down-And-In Option: Refers to a round of venture capital financing that is raised at a lower firm valuation than the pre
Down-And-Out Option: Barrier option that comes into existence if asset price hits a predetermined price level.
Downgrade: Barrier option that expires if asset price hits a predetermined price level.
Downside Risk: A negative change in ratings for a stock, or other rated security.
Downsizing: The risk that a security will decline in value in includng the implications of risk.
Downstream: A company's reduction in the number of employees, number of bureaucratic levels, and overall size in
Downtick: The transfer of corporate activity from the larger parent to the smaller subsidiary.
Downturn: Move down in a particular stock. On U.S. stock exchanges, you cannot sell a stock short on a downtic
DPO: The transition point between a rising, expanding economy to a falling, contracting one.
Draft: See days payable outstanding.
Draining Reserves: An unconventional order in writing-signed by a person, usually the exporter, and addressed to the im
Draw A Call: Federal Reserve System's course of action to tighten the money supply by (1) raising a bank's minimu
Drawback: In the context of general equities, provoking a customer indication/inquiry/order by up or doing lar
Dressing Up A Portfolio: A tax or duty rebate on imported goods that are exported at a later date.
Drip Feed: Money managers' strategy to make transactions for the sole purpose of making a portfolio look good t
Drive-By VC: The continual investment of capital in a small and growing company as the company needs it, rather t
Drop: A type of venture capitalist. In the usual model, the venture capitalist (VC) is involved in managem
Drop Lock: Refers to over-the-counter trading. Remove from O.T.C. trading list; hence, no longer making a marke
Drop, The: The fixing of the interest rate on a floating-rate note or preferred stock if it falls to a specifie
Drop-Dead Day: In a dollar roll transaction, the difference between the sale price of a mortgage-backed pass-throug
Drop-Dead Fee: The date on which a deadline is final, with no exceptions.
DSO: A term of British origin referring to fee that must be paid if a deal falls through because of finan
Dual Banking: See days sales outstanding.
Dual Listing: Describes United States custom in which a bank is chartered by the state or federal government.
Dual Syndicate Equity Offering: Listing of a security on more than one exchange, thus increasing the competition for bid and offer p
Dual Trading: An international equity placement that splits the offering is split into two tranches - domestic and
Dual-Currency Issues: The custom of a trader on the commodities market to deal for its own account and the investor's acco
Dual-Purpose Fund: Eurobonds that pay coupon interest in one currency but pay the principal in a different currency.
Due Bill: A closed-end fund consisting of two classes of shares. The two classes are preferred shares, on whic
Due Date: An instrument evidencing the obligation of a seller to deliver securities sold to the buyer. Occasio
Due Dilengence: Date on which a debt must be paid.
Due Diligence Meeting: An internal audit of a target frim by an acquiring firm. Offers are often made contingent upon resol
Due-On-Sale Clause: Meeting legally required to be held by an underwriter to enable brokers to question a new issuer abo
Dumping: A mortgage contract clause stipulating that the borrower to pay off the full remaining principal on
Duplicative Portfolio: In the context of general equities, offering large amounts of stock with little or no concern for pr
Dupont System Of Financial Control: Applies mainly to derivative products. Basket of stocks that imitates the price movement of another
Duration: Expressing return on assets (ROA) in terms of the profit margin and asset turnover.
Dutch Auction: A common gauge of the price sensitivity of a fixed income asset or portfolio to a change in interest
Dutch Auction Preferred Stock: Auction in which the lowest price necessary to sell the entire offering becomes the price at which a
Duty: A form of adjustable-rate preferred stock in which the dividend is ascertained in a Dutch auction pr
Dwarfs: A tax on imports, exports, or consumption goods.
Dynamic Asset Allocation: Fannie Mae-issued mortgage-backed securities pool that has an original maturity of 15 years.
Dynamic Hedging: An asset allocation strategy in which the asset mix is shifted in response to changing market condit
E: A strategy that involves rebalancing hedge positions as market conditions change; a strategy that se
Each Way: Fifth letter of a Nasdaq stock symbol specifying that an issue has not met the reporting date for th
Early Withdrawal Penalty: A broker's commission from his or her involvement on both the purchase and the sale side of a securi
Earn-Out: The ratio of earnings per share, after allowing for tax and interest payments on fixed interest debt
Earned Equity Growth: Penalty paid by the holder of a fixed-term investment penalizing an investor who withdraws money bef
Earned Income Credit: The annual rate, as a % of equity, at which retained earnings, after dividend payout, are added to e
Earnest Money: A tax credit for taxpayers with children.
Earning Asset: Money given to a seller by a buyer to demonstrate the buyer's good faith. If the deal falls through,
Earning Power: An asset that generates income, e.g., income from rental property.
Earnings: Earnings before interest and taxes (EBIT) divided by total assets.
Earnings Before Interest After Taxes (EBIAT): Net income for the company during a period.
Earnings Before Interest And Taxes (EBIT): A financial measure defined as revenues less cost of goods sold and selling, general, and administra
Earnings Before Interest And, Taxes (EBIT): Net income before income tax expense and interest expense. This is a popular measure for comparing t
Earnings Before Interest, Taxes, And Depreciation (EBITD): A financial measure defined as revenues less cost of goods sold and selling, general, and administra
Earnings Before Interest, Taxes, Depreciation, And Amortization (EBITDA): A financial measure defined as revenues less cost of goods sold and selling, general, and administra
Earnings Before Taxes (EBT): A financial measure defined as revenues less cost of goods sold and selling, general, and administra
Earnings Change Percentage: A financial measure defined as revenues less cost of goods sold and selling, general, and administra
Earnings Momentum: The percent increase or decrease in earnings per share from those of the preceding calendar year. Th
Earnings Per Share (EPS): An increase in the earnings per share growth rate from one reporting period to the next.
Earnings Per Share (EPS): Net income divided by the number of outstanding shares of common stock and equivalents.
Earnings Retention Ratio: A company's profit divided by its number of outstanding shares. If a company earning $2 million in o
Earnings Stability: Plowback rate.
Earnings Surprises: The complement of the standard deviation of annual earnings from those which would be plotted on rec
Earnings Yield: Positive or negative differences from the consensus forecast of earnings by institutions such as Fir
Eating Stock: Refers to an additional payment in a merger or acquisition that is not part of the original acquisit
EBIT: When an underwriter can't find buyers for a stock and therefore has to buy them for his own account.
EBIT-DA: See earnings before interest and taxes.
Economic Assumptions: See earnings before interest, taxes, depreciation, and amortization.
Economic Dependence: General market environment a firm expects to operate in over the life of a financial plan.
Economic Earnings: When the costs and/or revenues of one project depend on those of another.
Economic Exposure: The real flow of cash that a firm could pay out forever in the absence of any change in the firm's p
Economic Growth Rate: The extent to which the value of a firm will change because of an exchange rate change.
Economic Income: The annual percentage rate of change in the Gross National Product.
Economic Indicators: Cash flow plus change in present value.
Economic Indicators: The key statistics of the economy that reveal the direction the economy is heading in; for example,
Economic Order Quantity (EOQ): Technical measures that analysts use to forecast events in economic systems; for example, Gross Dome
Economic Profit: The order quantity that minimizes total inventory costs.
Economic Rents: A general term for various technical measures of profit in which adjustments are made to the traditi
Economic Risk: Profits in excess of the competitive level.
Economic Surplus: In project financing, the risk that the project's output will not be salable at a price that will co
Economic Union: For any entity, the difference between the market value of all its assets and the market value of it
Economics: An agreement between two or more countries that allows the free movement of capital, labor, and all
Economies Of Scale: The study of the economy. See also: Macroeconomics; microeconomics; Keynesian economics, monetarism,
Economies Of Scope: The decrease in the marginal cost of production as a firm's extent of operations expands.
EDGAR: Scope economies exist whenever the same investment can support multiple profitable activities less e
Edge Corporations: The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit compan
Education IRA: Specialized banking institutions, authorized and chartered by the Federal Reserve Board of Goverors
Effective Annual Interest Rate: A type of individual retirement account enabling the contribution of up to $500 per year for each ch
Effective Annual Yield: An annual measure of the time value of money that fully reflects the effects of compounding.
Effective Call Price: Annualized interest rate on a security computed using compound interest techniques.
Effective Convexity: The strike price in a market redemption provision plus the accrued interest to the redemption date.
Effective Date: The convexity of a bond calculated using cash flows that change with yields.
Effective Debt: In an interest rate swap, the date the swap begins accruing interest.
Effective Duration: The total debt owed by a firm to its creditors.
Effective Margin (EM): The duration calculated using the approximate duration formula for a bond with an embedded option, r
Effective Net Worth: Used with SAT performance measures, the amount equal to the net earned spread, or margin of income,
Effective Rate: Net worth plus subordinated debt.
Effective Sale: A measure of the time value of money that fully reflects the effects of compounding.
Effective Spread: A sale based on the most recent round-lot price, which determines the price of the next odd lot. The
Effective Tax Rate: The gross underwriting spread adjusted for the impact that a common stock offering's announcement ha
Efficiency: The net rate a taxpayer pays on income that includes all forms of taxes. It is calculated by dividin
Efficient Capital Market: The degree and speed with which a market accurately incorporates information into prices.
Efficient Diversification: A market in which new information is very quickly reflected accurately in share prices.
Efficient Frontier: The organizing principle of modern portfolio theory, which maintains that any risk-averse investor w
Efficient Market Hypothesis: The combinations of securities portfolios that maximize expected return for any level of expected ri
Efficient Portfolio: States that all relevant information is fully and immediately reflected in a security's market price
Efficient Set: A portfolio that provides the greatest expected return for a given level of risk (i.e., standard dev
Eighth[-Ed]: Graph representing a set of portfolios that maximize expected return at each level of portfolio risk
Either-Or Facility: Used in the context of general equities. A specialist or another broker is bidding higher or offerin
Either-Way Market: An agreement permitting a bank customer to borrow either domestic dollars from the bank's head offic
Elasticity Of An Option: In the interbank Eurodollar deposit market, an either-way market is one in which the bid and offered
Elasticity Of Demand And Supply: Percentage change in the value of an option given a 1% change in the value of the option's underlyin
Elect: The degree of buyers' responsiveness to price changes. Elasticity is measured as the percent change
Electronic Data Interchange (EDI): The conversion of a conditional order into a market order.
Electronic Depository Transfers: The direct exchange of information electronically, from one firm's computer to another firm's comput
Elephants: The transfer of funds between bank accounts through the Automated Clearing House (ACH) system.
Eleven Bond Index: A term used to refer to large institutional investors.
Eligible Bankers Acceptances: An index based on the average yield of 11 municipal bonds that mature in 20 years and carry an avera
Elliott Wave Theory: In the BA market, an acceptance may be referred to as eligible because it is acceptable by the Fed a
Elves: Technical market timing strategy that predicts price movements on the basis of historical price wave
Embedded Option: A term the host uses to refer to guests on the PBS television show, 'Wall Street Week', who are tech
Emergency Fund: An option that is part of the structure of a bond that gives either the bondholder or the issuer the
Emergency Home Finance Act Of 1970: A reserve of cash kept available to meet the costs of any unexpected financial emergencies.
Emerging Company Marketplace (ECM): The federal legislation creating the Federal Home Loan Mortgage Corporation, a partially government-
Emerging Markets: A service once offered by the American Stock Exchange to help small growth companies fulfill special
Emerging Markets Free Index (EMF): The financial markets of developing economies.
Employee Retirement Income Security Act (ERISA): A Morgan Stanley Capital International index created to track stock markets in selected emerging mar
Employee Stock Fund: The law that regulates the operation of private pensions and benefit plans.
Employee Stock Ownership Plan (ESOP): A firm-sponsored program that enables employees to purchase shares of the firm's common stock on a p
Empty Head And Pure Heart Test: A company contributes to a trust fund that buys stock on behalf of employees.
Encumbered: Securities and Exchange Commission rule that allows only the bidder of a tender offer to trade in th
End-Of-Year Convention: A property owned by one party on which a second party reserves the right to make a valid claim, e.g.
Endogenous Variable: Treating cash flows as if they occur at the end of a year as opposed to the date convention. Under t
Endorse: A value determined within the context of a model. Related: Exogenous variable.
Endowment: Transfering asset ownership by signing the back of the asset's certificate.
Endowment Funds: Gift of money or property to a specified institution for a specified purpose.
Energy Mutual Fund: Investment funds established for the support of institutions such as colleges, private schools, muse
Enhanced Indexing: Mutual fund investing in energy stocks only, e.g., oil and gas companies.
Enhancement: Also called indexing-plus, an indexing strategy whose objective is to exceed or replicate the total
Enterprise: An innovation that has a positive impact on one or more of a firm's existing products.
Entrepreneur: A business firm.
Environmental Fund: A person starting a new company who takes on the risks associated with starting the enterprise, whic
Equal Dollar Swap: A mutual fund that invests strictly in stocks of companies that are environmentally friendly and/or
Equal Shares Swap: Selling common stock/convertibles in one company and reinvesting the proceeds in as many shares of (
Equalizing Dividend: Applies mainly to convertible securities. Selling the underlying common and reinvesting the proceeds
Equilibrium Market Price Of Risk: Special dividends received by investors of a firm for income the investor lost because the firm alte
Equilibrium Price: The slope of the capital market line (CML). Since the C.M.L. represents the expected return offered
Equilibrium Rate Of Interest: The price when the supply of goods matches demand.
Equipment Leasing Partnership: The interest rate that clears the market. Also called the trade-clearing interest rate.
Equipment Trust Certificates: A limited partnership that receives income and tax benefits such as depreciation costs by purchasing
Equitable Owner: Certificates issued by a trust that is formed to purchase an asset and lease it to a lessee. When th
Equity: The beneficiary of a property held in a trust.
Equity: Ownership interest in a firm. Also, the residual dollar value of a futures trading account, assuming
Equity Cap: Also known as net worth or owners' equity. Equity is the net value of a company's total assets, less
Equity Capital At Beginning Of Year: An agreement in which one party, for an up-front premium, agrees to pay the other at specific time p
Equity Claim: Net worth per share of common shareholder's equity investment (including retained earnings) at corpo
Equity Collar: Also called a residual claim; a claim to a share of earnings after debt obligations have been satisf
Equity Contribution Agreement: The simultaneous purchase of an equity floor and sale of an equity cap.
Equity Floor: An agreement to contribute equity to a project under certain specified conditions.
Equity Funding: An agreement in which one party agrees to pay the other at specific time periods if a specific stock
Equity Kicker: An investment consisting of a life insurance policy and a mutual fund. The insurance policy is paid
Equity Market: Stock warrants issued attached to privately placed bonds.
Equity Multiplier: Related: stock market
Equity Options: Total assets divided by total common stockholders' equity; the total assets per dollar of stockholde
Equity REIT: Securities that give the holder the right (but not the obligation) to buy or sell a specified number
Equity Swap: A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling
Equity-Linked Policies: Stockholders; those holding shares of the firm's equity.
Equityholders: A swap in which the cash flows exchanged are based on the total return on some stock market index an
Equivalent Annual Annuity: Related: Variable life
Equivalent Annual Benefit: The amount per year for some number of years that has a present value equal to a given amount.
Equivalent Annual Cash Flow: The annual annuity with the same value as the net present value of an investment project.
Equivalent Annual Cost: Annuity with the same net present value as the company's proposed investment.
Equivalent Bond Yield: The cost per year of owning an asset over its entire life.
Equivalent Loan: Annual yield on a short-term, noninterest-bearing security calculated for comparison to yields quote
Equivalent Taxable Yield: Given the after-tax stream associated with a lease, the maximum amount of conventional debt that the
Erosion: The yield that must be offered on a taxable bond issue to give the same after-tax yield as a tax-exe
Escalator Clause: A negative impact on one or more of a firm's existing assets.
Escrow: Provision in a contract allowing cost increases to be passed on. In an employment contract, for exam
Escrow Receipt: Property or money held by a third party until the agreed upon obligations of a contract are met.
Escrowed To Maturity (ETM): A document provided by a bank in options trading to guarantee that the underlying security is on dep
Estate Tax: Holding of the proceeds from a new bond issue to pay off an existing bond issue at its maturation da
Ethics: A federal or state tax imposed on an individual's assets inherited by heirs.
EUREX: Standards of conduct or moral judgment.
Euro: The European derivatives exchange formed in 1998 by a merger of the Deutsche Terminbörse (DTB) and
Euro Cds: Originally for a deposit outside one's home country but in the home country currency. This terminolo
Euro Lines: CDs issued by a U.S. bank branch or foreign bank located outside the U.S. Almost all Euro CDs are is
Euro Straight: Lines of credit granted by banks (foreign or foreign branches of U.S. banks) for Eurocurrencies.
Euro-Commercial Paper: One of two principal clearing systems in the Eurobond market. It began operations in 1968, is locate
Euro-Medium Term Note (Euro-MTN): Securities sold in the Euromarket. That is, securities initially sold to investors simultaneously in
Euro-Note: A nonunderwritten Euronote issued directly to the market. Euro-MTNs are offered continuously rather
Euro.NM: A fixed-rate coupon Eurobond.
Eurobank: Created on March 1, 1996, Euro.NM is a pan-European network of regulated markets dedicated to growth
Eurobond: A bank that regularly accepts foreign currency-denominated deposits and makes foreign currency loans
Euroclear: A bond that is (1) underwritten by an international syndicate, (2) issued simultaneously to investor
Eurocredits: Short-term notes with maturities up to 360 days that are issued by companies in international money
Eurocurrency: Intermediate-term loans of Eurocurrencies made by banking syndicates to corporate and government bor
Eurocurrency Deposit: Instrument issued outside your country, but denominated in your currency. A Eurodollar is a Certific
Eurocurrency Market: A short-term fixed-rate time deposit denominated in a currency other than the local currency (i.e.,
Eurodollar: The money market for borrowing and lending currencies that are held in the form of deposits in banks
Eurodollar Bonds: Refers to a certificate of deposit in U.S. dollars in a bank that is not located in the U.S. Most of
Eurodollar Certificate Of Deposit: Eurobonds denominated in U.S.dollars.
Euroequity Issues: A certificate of deposit paying interest and principal in dollars, but issued by a bank outside the
Europea, Australia, And Far East Index (EAFE Index): Short- to medium-term debt instrument sold in the Eurocurrency market.
European Association Of Securities Dealers Automated Quotation (EASDAQ): Stock index, computed by Morgan Stanley Capital International.
European Central Bank (ECB): European equivalent of NASDAQS.
European Currency Unit (ECU): Bank created to monitor the monetary policy of the 11 countries that have converted to the Euro from
European Monetary System (EMS): An index of foreign exchange consisting of European currencies, originally devised in 1979. See also
European Option: An exchange arrangement formed in 1979 that governs the currencies of European Union member countrie
European Options Exchange (EOE): Option that may be exercised only at the expiration date. Related: American option.
European Union (EU): Now AEX-Optiebeurs. See: Amsterdam Exchanges (AEX).
European-Style Exercise: An economic association of European countries founded by the Treaty of Rome in 1957 as a common mark
European-Style Option: A method of exercising options contracts in which the buyer can exercise the contract on the last da
Euroyen Bonds: An option contract that can be exercised only on the expiration date.
Evaluation Period: Eurobonds denominated in Japanese yen.
Evening Up: The time interval over which funds assess a money manager's performance.
Event Risk: Buying or selling to offset an existing market position.
Event Study: The risk that the ability of an issuer to make interest and principal payments will change because o
Events Of Default: A statistical study that examines how the release of information affects prices at a particular time
Evergreen Credit: Contractually specified events that allow lenders to demand immediate repayment of a debt.
Evergreen Funding: Revolving credit without maturity.
Ex Ante Return: A British term referring to the gradual injection of capital into a new or existing enterprise.
Ex Post Return: The expected return or anticipated return of an asset or portfolio.
Ex-All: A bond portfolio management strategy that involves finding the lowest cost portfolio generating cash
Ex-Dividend: In the context of general equities, having sole possession of the customer order/indication; not in
Ex-Dividend Date: This literally means 'without dividend.' The buyer of shares when they are quoted ex-dividend is not
Ex-Legal: The low price at which a broker must liquidate a client's holding in a stock purchased in a margin a
Ex-Pit Transaction: The last day (in the case of American-style) or the only day (in the case of European-style) on whic
Ex-Rights: Used in the context of general equities. Remove any trace of an Autex indication's existence at any
Ex-Rights Date: Shares of stock that are trading without rights attached.
Ex-Stock Dividends: The date on which a share of common stock begins trading ex-rights.
Ex-Warrants: Models that apply a formula to historical data and project results for a future period. Such models
Exact Interest: Related: Holding-period return
Exact Matching: Interest paid based on the basis of a 365-day/year schedule by a bank or other financial institution
Except For Opinion: The sale of a security without the privileges associated with the security such as dividends, voting
Excess Kurtosis: An auditor's opinion reflecting the fact that the auditor is unable to audit certain areas of the co
Excess Margin: Kurtosis measures the 'fatness' of the tails of a distribution. Excess kurtosis means that distribut
Excess Profits Tax: Equity present in an individual's account above the legal minimum required for a margin account or t
Excess Reserves: Additional federal taxes placed on the earnings of a business, used only in time of national emergen
Excess Return On The Market Portfolio: Actual reserves that exceed required reserves.
Excess Returns: Difference between the return on the market portfolio and the riskless rate.
Exchange: Difference between asset return and riskless rate. Sometimes confused with abnormal returns, returns
Exchange Controls: A marketplace in which shares, options and futures on stocks, bonds, commodities, and indexes are tr
Exchange Distribution: Government restrictions on the purchase of foreign currencies by domestic citizens or on the purchas
Exchange Fund (Also Known As Swap Fund): A sale on an exchange floor of a large block of stock in a single transaction. A broker bunches a la
Exchange Of Assets: Investment vehicle introduced in 1999 that appeals to wealthy investors with large holdings in a sin
Exchange Of Stock: Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange Offer: Acquisition of another company by purchase of its stock in exchange for cash or shares.
Exchange Privilege: An offer by a firm to give one security, such as a bond or preferred stock, in exchange for another
Exchange Rate: A mutual fund shareholder's right to switch from one fund to another within one fund family, usually
Exchange Rate Mechanism (ERM): The price of one country's currency expressed in another country's currency.
Exchange Rate Risk: The methodology by which members of the EMS maintain their currency exchange rates within an agreed-
Exchange Risk: Also called currency risk; the risk that an investment's value will change because of currency excha
Exchange, The: The variability of a firm's value that results from unexpected exchange rate changes, or the extent
Exchangeable: A nickname for the New York Stock Exchange. Also known as the Big Board, where more than 2000 common
Exchangeable Instrument: Applies mainly to convertible securities. Means the issuer, if so stated, may substitute a convertib
Exchangeable Security: Applies mainly to convertible securities. Bond or preferred stock that may be exchangeable into the
Excise Tax: Investment instrument that grants its holder the right to exchange it for the common stock of a firm
Exclusionary Self-Tender: Federal or state tax placed on the sale or manufacture of a commodity, typically a luxury item e.g.,
Exclusive: A firm's offer to buy a given amount of its own stock while excluding targeted stockholders.
Execution: The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the
Execution Costs: The process of completing an order to buy or sell securities. Once a trade is executed, it is report
Exempt Securities: The difference between the execution price of a security and the price that would have existed in th
Exemption: Instrumentsexempt from the registration requirements of the Securities Act of 1933 or the margin req
Exercise: Direct reductions from gross income allowed by the IRS.
Exercise Limit: To implement the right of the holder of an option to buy (in the case of a call) or sell (in the cas
Exercise Notice: Cap on the number of option contracts of any one class of contract. that can be exercised within a f
Exercise Price: A broker's notification a client want to exercise a right to buy or sell (depending on the type of c
Exercise Value: The price at which the security underlying a future or options contract may be bought or sold.
Exercising The Option: The amount of advantage over a current market transaction provided by an in-the-money option.
Exhaust Price: The act of buying or selling the underlying asset via the option contract.
Exogenous Variable: A municipal bond offered without a law firm's legal opinion. As the majority of bonds are issued wit
Exotic Option: A variable whose value is determined outside the model in which it is used. Related: Endogenous vari
Expectations Hypothesis Theories: Refers to options that are more complex than simple puts or call options. For example, a Caput is a
Expectations Theory Of Forward Exchange Rates: Theories of the term structure of interest rates, which include the pure expectations theory; the li
Expected Dividend Yield: A theory of foreign exchange rates that states that the expected future spot foreign exchange rate t
Expected Future Cash Flows: Total amount of dividends received during the life of a futures contract or total dividends received
Expected Future Return: Projected future cash flows associated with an asset.
Expected Return: The return that is expected to be earned on an asset in the future. Also called the expected return.
Expected Return On Investment: The expected return on a risky asset, given a probability distribution for the possible rates of ret
Expected Return-Beta Relationship: The return one can expect to earn on an investment. See: Capital asset pricing model.
Expected Value: Implication of the CAPM that security risk premiums will be proportional to beta.
Expected Value Of Perfect Information: The weighted average of a probability distribution. Also known as the mean value.
Expenditures: The expected value if the future uncertain outcomes could be known minus the expected value with no
Expense Ratio: All purchases made by a business, whether in cash or on credit; not equivalent to expenses. Also kno
Expensed: The percentage of the assets that are spent to run a mutual fund (as of the last annual statement).
Expenses: Charged to an expense account, fully reducing reported profit of that year, as is appropriate for ex
Experience Rating: Resources used to support the ongoing operations of a business for a specified time period; not equi
Expiration: A technique insurance companies use to determine the correct price of a policy premium.
Expiration Cycle: The time an option contract lapses.
Expiration Date: Dates on which options on a particular security expire. A given option will be placed in one of thre
Exploding Term Sheet: The purchase of commodities off the exchange's floor.
Export-Import Bank (Ex-Im Bank): Venture capital jargon. Often a proposed term sheet, might explode or be null and void in a fixed pe
Exposure Netting: The U.S. federal government agency that extends trade credits to U.S. companies to facilitate the fi
Expropriation: Offsetting exposures in one currency with exposures in the same or another currency, when exchange r
Expunge: The official seizure by a government of private property. Any government has the right to seize such
Extendable Bond: The time period between the announcement of a stock dividend and its actual payment. The buyer of sh
Extendable Notes: Bond whose maturity can be extended at the option of the lender or issuer.
Extension: Note with maturity that can be extended by mutual agreement between the issuer and investors.
Extension Date: Voluntary arrangements to restructure a firm's debt, under which the payment date is postponed.
Extension Swap: The day on which the first option either expires or is extended.
External Efficiency: Extending maturity through a swap, e.g. selling a 2-year note and buying one with a slightly longer
External Finance: Related: Pricing efficiency
External Funds: Funding that is not generated by a firm's operations: new borrowing or a stock issue.
External Market: Funds originating from a source outside the corporation to increase cash flow and to aid in expansio
Extinguish: Also referred to as the international market, the offshore market, or, more popularly, the Euromarke
Extra Or Special Dividends: Retire or pay off debt.
Extraordinary Call: A dividend that is paid in addition to a firm's established or expected quarterly dividend.
Extraordinary Item: Early redemption of a revenue bond because the revenue source paying the interest on the bond has be
Extraordinary Positive Value: An unusual and unexpected one-time event that must be explained to shareholders in an annual or quar
Extrapolative Statistical Models: A positive net present value.
F: Describes a stock sale in which the buyer is not entitled to the warrant accompanying the stock.
Face-Amount Certificate: Fifth letter of a Nasdaq stock symbol specifying that the issue is a foreign company.
Factor: A debt security issued by face amount. The holder makes payments periodicaly to the issues, and the
Factor Analysis: A financial institution that buys a firm's accounts receivable and collects the accounts.
Factor Model: A statistical procedure that seeks to explain a certain phenomenon, such as the return on a common s
Factor Portfolio: A way of decomposing the forces that influence a security's rate of return into common and firm-spec
Factoring: A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of zero on a
Fade: Sale of a firm's accounts receivable to a financial institution known as a factor.
Fail: Refers to over-the-counter trading. Fill another OTC dealer's bid for or offer of stock.
Fair Game: A deal is said to fail if on the settlement date either the seller does not deliver securities in pr
Fair Market Price: An investment prospect that has a zero risk premium.
Fair Price: Amount at which an asset would change hands between two parties, that both have knowledge of the rel
Fair Rate Of Return: The equilibrium price for futures contracts. Also called the theoretical futures price, which equals
Fair Value: The rate of return that state governments allow a public utility to earn on its investments and expe
Fair-And-Equitable Test: In the context of futures, the equilibrium price for futures contracts. Also called the theoretical
Fairness Opinion: A set of requirements for a plan of reorganization to be approved by the bankruptcy court.
Fall Down: An investment banker's professional opinion as to the price an acquiring firm is offering in a takeo
Fall Out Of Bed: In the context of general equities, may not be able to produce as indicated in one's advertised mark
Fallen Angels: A sudden drop in a stock's price resulting from failed or poor business deals gone bad or falling th
Fallout Risk: Bonds that at the time of issue were considered investment grade but that have dropped below that ra
Fama, Eugene F.: A type of mortgage pipeline risk that is generally created when the terms of the loan to be originat
Far Month: Finance professor at the University of Chicago. Developer of the Efficient Markets Hypothesis.
Farther Out; Farther In: Used in the context of option or futures to refer to the trading month of the contract that is farth
FASB No. 52: Used in the context of options to refer to the relative length of option contract maturities.
FASB No. 8: The U.S. accounting standard that replaced FASB No. 8. U.S. companies are required to translate fore
Fast Market: U.S. accounting standard that requires U.S. firms to translate their foreign affiliates' accounts by
Favorable Trade Balance: Excessively rapid trading in a specific security that causes a delay in the electronic updating of i
Feasible Portfolio: Condition that total exports of a nation exceed total imports, creating a net export.
Feasible Set Of Portfolios: A portfolio that an investor can construct, given the assets available.
Feasible Target Payout Ratios: The collection of all feasible portfolios.
FED Pass: Payout ratios that are consistent with the level of excess funds available to make cash dividend pay
Federal Agency Securities: A Federal Reserve action adding more reserves to the banking system, increasing the money available
Federal Agricultural Mortgage Corporation (Farmer Mac): Securities issued by corporations and agencies created by the U.S. government, such as the Federal H
Federal Credit Agencies: A federal agency chartered in 1988 to provide a secondary market for farm mortgage loans.
Federal Deficit (Surplus): Agencies of the federal government set up to supply credit to various classes of institutions and in
Federal Deposit Insurance Corporation (FDIC): When federal government expenditures are exceeded by federal government revenue.
Federal Farm Credit Bank: A federal institution that insures bank deposits.
Federal Farm Credit System: An institution created by the government with the purpose of uniting the financing activities of the
Federal Financing Bank: A system chartered in 1971 through the farm credit act providing farmers with credit services throug
Federal Funds: A federal institution that lends to a wide array of federal credit agencies funds it obtains by borr
Federal Funds Market: Noninterest-bearing deposits held in reserve for depository institutions at their district Federal R
Federal Funds Rate: The market in which banks can borrow or lend reserves, allowing banks temporarily short of their req
Federal Gift Tax: The interest rate that banks with excess reserves at a Federal Reserve district bank charge other ba
Federal Home Loan Banks: A federal tax imposed on assets conveyed as gifts to individuals.
Federal Housing Administration (FHA): The institutions that regulate and lend to savings and loan associations. The Federal Home Loan Bank
Federal Housing Finance Board (FHFB): Federally sponsored agency chartered in 1934 whose stock is currently owned by savings institutions
Federal Intermediate Credit Bank: U.S. government agency chartered in 1989 to assume the responsibilities formerly held by the Federal
Federal Land Bank: A bank sponsored by the federal government to provide funds to institutions making loans to farmers.
Federal National Mortgage Association (Fannie Mae): A bank administered under the U.S. Farm Credit Administration that provides long-term mortgage credi
Federal Open Market Committee (FOMC): A publicly owned, government-sponsored corporation chartered in 1938 to purchase mortgages from lend
Federal Reserve Bank: The body that is responsible for setting the interest rates and credit policies of the Federal Reser
Federal Reserve Board (FRB): One of the 12 member banks constituting the Federal Reserve System that is responsible for overseein
Federal Reserve System: The seven-member governing body of the Federal Reserve System, which is responsible for setting rese
Federal Savings And Loan Association: The monetary authority of the U.S., established in 1913, and governed by the Federal Reserve Board l
Federally Related Institutions: An institution chartered by the federal government whose primary function is to collect savings depo
Fedwire: Arms of the federal government exempt from SEC registration whose securities are backed by the full
FHA Prepayment Experience: A wire transfer system for high-value payments operated by the Federal Reserve System.
Fiat Money: The percentage of loans in a pool of mortgages outstanding at the origination anniversary, based on
Fictitious Credit: Nonconvertible paper money.
Field Warehouse: A margin account's credit balance. Fictitious credit exists after the proceeds from a short sale are
FIFO: Warehouse rented by a company on another firm's premises.
Figure: See first in, first out.
Figuring The Tail: Refers to details about price including the bid and ofter. See: Handle
Fill: Calculating the yield at which a future money market (one available some period hence) is purchased
Fill Or Kill Order (FOK): The price at which an order is executed.
Filter: A trading order that is cancelled unless executed within a designated time period. A market or limit
Finance: A rule that stipulates when a security should be bought or sold according to its price action.
Finance Charge: A discipline concerned with determining value and making decisions. The finance function allocates r
Finance Company: The total cost of credit a customer must pay on a consumer loan, including interest.
Financial Accounting Standards Board (FASB): A company whose business and primary function is to make loans to individuals, while not receiving d
Financial Adviser: Board composed of independent members who create and interpret Generally Accepted Accounting Princip
Financial Analysis: A professional offering financial advice to clients for a fee and/or commission.
Financial Analysts: Analysis of a company's financial statement, often by financial analysts.
Financial Assets: Also called securities analysts and investment analysts,. Pofessionals who analyze financial stateme
Financial Control: Claims on real assets.
Financial Distress: The management of a firm's costs and expenses in relation to budgeted amounts.
Financial Distress Costs: Events preceding and including bankruptcy, such as violation of loan contracts.
Financial Engineering: Legal and administrative costs of liquidation or reorganization. Also includes implied costs associa
Financial Future: Combining or carving up existing instruments to create new financial products.
Financial Guarantee Insurance: A contract entered into now that provides for the delivery of a specified asset in exchange for the
Financial Institution: Insurance created to cover losses from specified financial transactions.
Financial Institutions Reform, Recovery And Enforcement Act Of 1989 (FIRREA): An enterprise such as a bank whose primary business and function is to collect money from the public
Financial Intermediaries: Legislation that established the Office of Thrift Supervision, which was created in the wake of the
Financial Lease: Institutions that provide the market function of matching borrowers and lenders or traders.
Financial Leverage: Long-term, noncancellable rental agreement.
Financial Leverage Clientele: Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio o
Financial Leverage Ratios: A group of investors who have a preference for investing in firms that adhere to a particular financ
Financial Market: Common ratios are debt divided by equity a debt divided by the sum of debt plus equity. Related: cap
Financial Needs Approach: An organized institutional structure or mechanism for creating and exchanging financial assets.
Financial Objectives: A method of establishing the amount of life insurance required by an individual by estimating the fi
Financial Plan: Goals related to returns that a firm will strive to accomplish during the period covered by its fina
Financial Planning: A blueprint relating to the financial future of a firm.
Financial Position: Evaluating the investing and financing options available to a firm. Planning includes attempting to
Financial Press: The account status of a firm's or individual's assets, liabilities, and equity positions as reflecte
Financial Public Relations: Media devoted to reporting financial news.
Financial Pyramid: Public relations division of a company charged with cultivating positive investor relations and prop
Financial Ratio: A risk structure that spreads investor's risks across low-, medium-, and high-risk vehicles. The bul
Financial Risk: The result of dividing one financial statement item by another. Ratios help analysts interpret finan
Financial Structure: The risk that the cash flow of an issuer will not be adequate to meet its financial obligations. Als
Financial Supermarket: The way in which a company's assets are financed, such as short-term borrowings, long-term debt, and
Financial Tables: A company offering a wide variety of financial services such as a combination of banking services, s
Financial Times (F-T)-Actuaries Indexes: Tables found in newspapers listing prices, dividends, yields, price-earnings ratios, trading volume,
Financing Corporation (FICO): Share price indexes for U.K. companies The denominator in the index formula is the market capitaliza
Financing Decisions: A government agency chartered in 1987 to bail out the Federal Savings and Loan Insurance Corporation
Finders Fee: Decisions concerning the liabilities and stockholders' equity side of the firm's balance sheet, such
FINEX: A fee a person or company charges for service as an intermediary in a transaction.
Finished Goods: The financial futures and options division of the New York Cotton Exchange (NYCE), with a trading fl
Finite-Life Real Estate Investment Trust (FREIT): Inventory ready for sale.
Firewall: A Real Estate Investment Trust whose priority is to sell its holdings within a specified period to r
Firm: The legal barrier between banking and broker/dealer operations within a financial institution create
Firm Commitment Underwriting: Refers to an order to buy or sell that can be executed without confirmation for some fixed period. A
Firm Market: An underwriting in which an investment banking firm commits to buy and sell an entire issue of stock
Firm Order: In the context of general equities, prices at which a security can actually be bought or sold in dec
Firm Quote: In the context of general equities, (1) order to buy or sell for the proprietary account of the brok
Firms Net Value Of Debt: A definite price on a round-lot bid or offer declared by a market maker on a given security and not
First Board: Total firm value minus total firm debt.
First Call: The Chicago Board of Trade's established dates for delivery on futures contracts.
First Call Date: With collateralized mortgage obligation (C.M.O.s), the start of the cash flow cycle for the cash flo
First In, First Out (FIFO): A date stated in an indenture, that is the first date on which the issuer may redeem a bond either p
First In, First Out (FIFO): An accounting method for valuing the cost of goods sold that uses the cost of the oldest item in inv
First Mortgage: A method of inventory valuation whereby the goods first purchased or manufactured are considered the
First Notice Day: A type of mortgage that through a lien gives precedence to the lender of the first mortgage over all
First Preferred Stock: The first day, varying by contracts and exchanges, on which notices of intent to deliver actual fina
First-Pass Regression: A type of preferred stock that has priority over other preferred issues and common stock when claimi
Fiscal Agency Agreement: A time series regression to estimate the betas of securities portfolios.
Fiscal Policy: An alternative to a bond trust deed. Unlike the trustee, the fiscal agent acts as a representative o
Fiscal Year: Government spending and taxing for the specific purpose of stabilizing the economy.
Fiscal Year (FY): The 12-month period, not necessarily coinciding with the calendar year, chosen to constitute a singl
Fiscal Year End: Accounting period covering 12 consecutive months over which a company determines earnings and profit
Fisher Effect: The last month of a company's fiscal year.
Fishers Separation Theorem: A theory that nominal interest rates in two or more countries should be equal to the required real r
Fit: Thte notion that a firm's choice of investments is separate from its owner's attitudes toward invest
Fitch Sheet: The matching of the investor's requirements and needs such as risk tolerance and growth potential pr
Five Cs Of Credit: Used in the context of general equities. Chronological listing of trades in a security showing the p
Five Hundred Dollar Rule: Five characteristics that are used to form a judgment about a customer's creditworthiness: character
Five Percent Rule: A rule of the Federal Reserve that excludes deficiencies of $500 or less in margin requirements as a
Fixation: A rule of the National Association of Securities Dealers providing ethical guidelines for spreads cr
Fixed Annuities: The process of setting a price of a commodity, whether in the present or the future. See: Gold fixin
Fixed Asset: Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount
Fixed Asset Turnover Ratio: Long-lived property owned by a firm that is used by a firm in the production of its income. Tangible
Fixed Assets: The ratio of sales to fixed assets.
Fixed Assets To Tangible Equity Ratio: Another term for Property, Plant and Equipment. See also depreciation.
Fixed Benefits: The ratio of net Property, Plant and Equipment book value to tangible equity, used as a type of effi
Fixed Cost: Payments to a beneficiary that are paid in fixed preset amounts and are not variable.
Fixed Costs: A cost that is fixed in total for a given period of time and for given production levels.
Fixed Dates: Expenses that are assumed not to vary with sales volume within the expected range of sales volumes,
Fixed Exchange Rate: In the Euromarket, the standard periods for which Euros are traded (one month out to a year out) are
Fixed Income Equivalent: A country's decision to tie the value of its currency to another country's currency, gold (or anothe
Fixed Income Instruments: Also called a busted convertible. Convertible security that is trading like a straight security beca
Fixed Income Market: Assets that pay a fixed dollar amount, such as bonds and preferred stock.
Fixed Premium: The market for trading bonds and preferred stock.
Fixed Price Basis: Payments of a fixed, equal amounts paid to an insurance company for insurance or an annuity.
Fixed Trust: An offering of securities at a fixed price.
Fixed-Charge Coverage Ratio: A unit investment trust consisting of securities that were agreed upon at the time of investment and
Fixed-Dollar Obligations: A measure of a firm's ability to meet its fixed-charge obligations: the ratio of (net earnings befor
Fixed-Dollar Security: Conventional bonds for which the coupon rate is set at a fixed percentage of the par value.
Fixed-Price Tender Offer: A nonnegotiable debt security that can be redeemed at some fixed price or according to some schedule
Fixed-Rate Loan: A one-time offer to purchase a stated number of shares at a stated fixed price, usually at a premium
Fixed-Rate Payer: A loan whose rate is fixed for the life of the loan.
Fixed-Term Reverse Mortgage: In an interest rate swap, the counterparty who pays a fixed rate, usually in exchange for a floating
Flag: A mortgage in which the lending institution provides payments to a homeowner for a fixed number of y
Flash: A pattern reflecting price fluctuations within a narrow range, generating a rectangular area on a gr
Flat: Value of a security displayed, or flashed across the tape, when the tape display cannot keep up with
Flat Benefit Formula: Convertibles: Earning interest on the date of payment only. General: Having neither a short nor a lo
Flat Price (Also Clean Price): Method used to determine a participant's benefits in a defined benefit plan by multiplying months of
Flat Price Risk: The quoted newspaper price of a bond that does not include accrued interest. The price paid by the p
Flat Scale: Taking a position either long or short that does not involve spreading.
Flat Tax: The pattern for new issues where shorter- and longer-term yields display very little difference over
Flat Trades: A tax which is levied at the same rate on all levels of income. Antithesis of progressive tax.
Flattening Of The Yield Curve: A bond in default trades flat; that is, the price quoted covers both principal and unpaid accrued in
Flexible Budget: A change in the yield curve when the spread between the yield on long-term and short-term Treasuries
Flexible Expenses: A budget that shows how costs vary with different rates of output or at different levels of sales vo
Flexible Mutual Fund: Expenses for an individual or corporation that can be adjusted or completely dispessed with, e.g., l
Flight To Quality: Fund that invests in a variety of securities in varying proportions in order to maximize shareholder
Flip Side: The tendency of investors to move toward safer investments (often government bonds) during periods o
Flip-Flop Note: In the context of general equities, opposite side to a proposition or position (buy, if sell is the
Flipping: Note that allows investors to switch between two different types of debt.
Float: Buying shares in an initial public offering (IPO), and then selling the shares immediately after the
Floater: Currency: Exchange rate policy that does not limit the range of the market rate. Equities: Number of
Floating Debt: A bond whose interest rate varies with the interest rate of another debt instrument, e.g., a bond th
Floating Exchange Rate: Short-term debt that is renewed and refinanced contantly to fund capital needs of a firm or institut
Floating Lien: A country's decision to allow its currency value to change freely. The currency is not constrained b
Floating Securities: General attachment against a company's assets or against a particular class of assets.
Floating Supply: Securities bought in a broker's name and resold quickly to attain a profit in a short amount of time
Floating-Rate Contract: The aggregate of securities believed to be available for immediate purchase, that is, in the hands o
Floating-Rate Note (FRN): An guaranteed investment instrument whose interest payment is tied to some variable (floating) inter
Floating-Rate Payer: Note whose interest payment varies with short-term interest rates.
Floating-Rate Preferred: In an interest rate swap, the counterparty who pays a rate based on a reference rate, usually in exc
Floor: Preferred stock paying dividends that vary with short-term interest rates.
Floor Broker: The area of a stock exchange where active trading occurs. Also the price at which a stop order is ac
Floor Official: Member of an exchange who is an employee of a member firm and executes orders, as agent, on the floo
Floor Picture: An employee of a stock exchange who settles disputes related to the auction process on the floor of
Floor Planning: Details of the trading crowd for a stock, such as the major players, their sizes, and the outside ma
Floor Ticket: Arrangement used to finance inventory. A finance company buys the inventory, which is then held in t
Floor Trader: Summary of a stock or commodities exchange order ticket by the registered representative on receipt
Flotation (Roatation) Cost: A stock exchange member who generally trades only for his own account or for an account controlled b
Flow Of Funds: The costs associated with creating capital through the issue of new stocks or bonds, including the c
Flow-Through Basis: Government bonds that when owned at the time of death are acceptable at par in payment of federal es
Flow-Through Method: An account for an investment credit to show all income statement benefits of the credit in the year
Flower Bond: In the context of municipal bonds, refers to the statement displaying the priorities by which munici
Fluctuation: The practice of reporting to shareholders using straight-line depreciation but using accelerated dep
Fluctuation Limit: A price or interest rate change.
Flurry: The limit created by the commodity exchange that halts trading on a future if the price of the futur
Focus List: A drastic volume increase in a specific security.
Footsie (FTSE): Used in the context of general equities. Investment banks published list of buy and sell recommendat
For A Number: Financial Times (F-T)-Actuaries 100 index: 'Dow average' of London.
For Your Information (FYI): Used in the context of general equities. Implies that the quantity mentioned is not his total but in
For-At: A prefix to a security price indicating that the quote is for information purposes only, and not an
Forbes 500: Used in the context of general equities. Conjunctions used in an order, market summary, or trade rec
Force Majeure Risk: Forbes magazine's list of the largest publicly owned corporations in the United States according to
Forced Conversion: The risk that there will be prolonged interruption of operations for a project finance enterprise du
Forecast Period: Occurs when a convertible security is called in by the issuer, usually when the underlying stock is
Forecast Start Date: The period of time for which a business is modeled. Depending on the forecast start month, the first
Forecast Year: The month and year on which the forecast period begins. See also Forecast Year.
Forecasting: Most people choose the forecast year to coincide with either the January-December calendar year or t
Forecasting: Making projections about future performance on the basis of historical and current conditions data.
Foreclosure: Financial forecasting is the process of estimating future financial performance. The projected finan
Foreign Banking Market: Process by which the holder of a mortgage seizes the property of a homeowner who has not made intere
Foreign Bond: That portion of domestic bank loans supplied to foreigners for use abroad.
Foreign Bond Market: A bond issued on the domestic capital market of another company.
Foreign Corporation: In the domestic bond market Issues floated by foreign companies or government.
Foreign Corrupt Practices Act: A corporation conducting business in another country from the one it is chartered in and that abides
Foreign Credit Insurance Association (FCIA): An amendment to the Securities Exchange Act created to sanction bribery of foreign officials by publ
Foreign Crowd: A private consortium of U.S. insurance companies that offers trade credit insurance to U.S. exporter
Foreign Currency: NYSE members who trade in foreign bonds on the floor.
Foreign Currency Forward Contract: Money of another country from one's own.
Foreign Currency Futures Contract: Agreement that obligates its parties to exchange given quantities of currencies at a prespecified ex
Foreign Currency Option: Standardized and easily transferable obligation between two parties to exchange currencies at a spec
Foreign Currency Translation: An option that conveys the right (but not the obligation) to buy or sell a specified amount of forei
Foreign Direct Investment (FDI): The process of restating foreign currency accounts of subsidiaries into the reporting currency of th
Foreign Equity Market: The acquisition abroad of physical assets such as plant and equipment, with operating control residi
Foreign Exchange: Issues floated by foreign companies in the domestic equity market.
Foreign Exchange Controls: Currency of another country. Abbreviated Forex.
Foreign Exchange Dealer: Various forms of controls imposed by a government on the purchase/sale of foreign currencies by resi
Foreign Exchange Risk: A firm or individual that buys foreign exchange from one party and then sells it to another party. T
Foreign Exchange Swap: The risk that a long or short position in a foreign currency might have to be closed out at a loss d
Foreign Market: An agreement to exchange stipulated amounts of one currency for another currency at one or more futu
Foreign Market Beta: Part of a nation's internal market, representing the mechanisms for issuing and trading securities o
Foreign Sales Corporation (FSC): A measure of foreign market risk that is derived from the capital asset pricing model.
Foreign Tax Credit: A special type of corporation created by the Tax Reform Act of 1984 that is designed to provide a ta
Forfaiter: Home country credit against domestic income tax. Received in return for foreign taxes paid on foreig
Forfeiture: Purchaser of promises to pay issued by importers.
Form 10-K: The loss of rights to an asset outlined in a legal contract if a party fails to fulfill obligations
Form 3: A report required by the SEC from exchange-listed companies that provides for annual disclosure of c
Form 4: A form required by the SEC and the stock exchange from all holders of 10% or more of a company's sto
Form 8-K: The form required by the SEC for a change in the holdings of an individual owning 10% or more of the
Form T: The form required by the SEC when a publicly held company incurs any event that might affect its fin
Formula Basis: The form required by the NASD to report equity transactions after the market's regular hours.
Formula Investing: A method of selling a new issue of common stock in which the S.E.C. declares the registration statem
Fortune 500: A formula-based investment technique in which investment decisions are made using predetermined timi
Forward Contract: Fortune magazine's listing of the top 500 U.S. corporations determined by an index of 12 variables.
Forward Cover: A contract that specifies the price and quantity of an asset to be delivered on in the future. Forwa
Forward Delivery: The purchase in the cash market of the difference between what you are obligated to deliver in a for
Forward Differential: A transaction in which the settlement will occur on a specified date in the future at a price agreed
Forward Discount: Annualized percentage difference between spot and forward rates.
Forward Exchange Rate: A currency trades at a forward discount when its forward price is lower than its spot price.
Forward Exchange Transaction: Exchange rate fixed today for exchanging currency at some future date.
Forward Fed Funds: Foreign currency purchase or sale at the current exchange rate but with payment or delivery of the f
Forward Forward Contract: Fed funds traded for future delivery.
Forward Interest Rate: In Eurocurrencies, a contract under which a deposit of fixed maturity is agreed to at a fixed price
Forward Market: Interest rate fixed today on a loan to be made at some future date.
Forward Premium: A market in which participants agree to trade some commodity, security, or foreign exchange at a fix
Forward Pricing: A currency trades at a forward premium when its forward price is higher than its spot price.
Forward Rate: Practice mandated by the SEC that open-end investment companies establish all incoming buy and sell
Forward Rate Agreement (FRA): A projection of future interest rates calculated from either spot rates or the yield curve.
Forward Sale: Agreement to borrow or lend at a specified future date at an interest rate that is fixed today.
Forward Trade: A method for hedging price risk that involves an agreement between a lender and an investor to sell
Forward-Looking Multiple: A transaction for which settlement will occur on a specified date in the future at a price agreed up
Fourth Market: A truncated expression for a P/E ratio that is based on forward (expected) earnings rather than on t
Fractional Discretion Order: Refers to the practice of institutional investors trading large blocks of securities directly to avo
Fractional Share: A type of order that gives the broker discretion to alter the price, up or down, within a specific f
Frankfurt Stock Exchange: Stocks ammounting to less than one full share, usually resulting from splits, acquisitions, exchange
Freddie Mac (Federal Home Loan Mortgage Corporation): The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS.
Free Box: A Congressionally chartered corporation that purchases residential mortgages in the secondary market
Free Cash Flows: A bank vault or other suitable storage place for the securities of a firm's customer.
Free Delivery: Cash not required for operations or for reinvestment. Often defined as earnings before interest (oft
Free Float: Securities industry procedure whereby delivery of securities sold is made to the buying customer's b
Free On Board (FOB): An exchange rate system characterized by the absence of government intervention. Also known as clean
Free Reserves: Implies that distribution services like transport and handling performed on goods up to the customs
Free Rider: Excess reserves minus member bank borrowings at the Fed.
Free Right Of Exchange: A follower who avoids the cost and expense of finding the best course of action simply by mimicking
Free Stock: An investor's right to transfer securities from one name to another name without paying charges that
Free To Trade: A stock that is paid for in full and is not pledged in any way as collateral.
Free-Riding: A term used to indicate that an underwriting syndicate's members are no longer restricted to the fix
Freed Up: Used in the context of general equities. Not subject to any internal (restricted list) or external r
Freeze Out: A forbidden practice in which the member of an underwriting syndicate retains a portion of an initia
Frequency Distribution: The action of pressurizing shareholders with relatively minor amounts of stock to sell their shares
Fresh Picture: The organization of data to show how often certain values or ranges of values occur.
Fresh Signal: Updated estimation of a stock or market, usually following recent trading activity or news that has
Friction Costs: Piece of information (fundamental or technical) leading one to believe a stock will move in a certai
Frictional Cost: Costs, both implied and direct, associated with a transaction. Such costs include time, effort, mone
Frictions: The difference between an index fund return and the index it represents. The typically lower rate of
Friendly Takeover: The 'stickiness' involved in making transactions; the total process including time, effort, money, a
Front Fee: Merger when the target firm's management and board of directors is in favor of the takeover. Antithe
Front Office: The fee initially paid by the buyer upon entering a split-fee option contract.
Front Running: Refers to revenue generating sales personnel in a brokerage, insurance, or other financial services
Front-End Load: Entering into options or futures contracts with advance knowledge of a block transaction that will i
Frozen Account: The fee applied to an investment at the time of initial purchase, e.g., on a mutual fund purchased f
Fry A Bigger Fish: A disciplinary action taken by the Federal Reserve Board for some violation of Regulation T, an indi
Full: Used in the context of general equities. Work on a trade of larger size than a trade just disclosed.
Full Coupon Bond: Handle.
Full Disclosure: A bond with a coupon equal to the going market rate; the bond is therefore selling at par.
Full Faith-And-Credit Obligations: Describes exchange and government regulations providing for the release and free exchange of all inf
Full Price: The security pledges for larger municipal bond issuers, such as states and large cities that have di
Full Trading Authorization: Also called dirty price; the price of a bond including accrued interest. Related: Flat price.
Full-Service Broker: Indication that a broker with a discretionary account can operate free of all trading guidelines fro
Full-Service Lease: A broker who provides clients an all-inclusive selection of services such as advice on security sele
Fully Depreciated: Also called rental lease. Arrangement in which lessor promises to maintain and insure the equipment
Fully Diluted Earnings Per Shares: An asset that has already been charged with the maximum amount of depreciation allowed by the IRS fo
Fully Distributed: Earnings per share expressed as if all outstanding convertible securities and warrants have been exe
Fully Invested: A new stock issue that has been completely resold to the investing public and is no longer held by d
Fully Modified Pass-Throughs: Used to describe an investor whose assets are totally committed to investments, typically stock.
Fully Valued: Agency pass-throughs that guarantee the timely payment of both interest and principal. Related: Modi
Fun Money: Used in the context of general equities. Said of a stock that has reached a price at which analysts
Functional Currency: Money that can be used to invest in risky investments with high potential return.
Fund Family: As defined by FASB No. 52, an affiliate's functional currency is the currency of the primary economi
Fund Manager: Set of funds with different investment objectives offered by one management company. In many cases,
Fund Of Funds: The person whose responsibility it is to oversee the allocation of the pool of money invested in a p
Fund Switching: A mutual fund or hedge fund that invests in other funds.
Fundamental Analysis: Moving money within a mutual fund family from one mutual fund to another.
Fundamental Beta: Security analysis that seeks to detect misvalued securities through an analysis of the firm's busine
Fundamental Descriptors: The product of a statistical model to predict the fundamental risk of a security using not only pric
Funded Debt: In the model for calculating fundamental beta, ratios in risk indexes other than market variability,
Funded Pension Plan: Debt maturing after more than one year.
Funding: A pension plan in which all liabilities, including payments to be made to pensioners in the immediat
Funding Ratio: Used to describe the refinancing of a debt prior to its maturity (the same as refunding). In corpora
Funding Risk: The ratio of a pension plan's assets to its liabilities.
Funds From Operations (FFO): Related: Interest rate risk
Fungibility: Used by real estate and other investment trusts to define the cash flow from trust operations; earni
Furthest Month: The substitutability of listed options, which is dependent upon their common expiration dates and st
FUTOP: Used in the context of commodities or options trading to refer to the month that is away from the co
Future: The Danish derivatives market, merged with the Copenhagen Stock Exchange in 1997.
Future Investment Opportunities: A term used to designate all contracts covering the sale of financial instruments or physical commod
Future Value: The identification of additional, more valuable, investment opportunities in the future that result
Futures: The amount of cash at a specified date in the future that is equivalent in value to a specified sum
Futures Commission Merchant (FCM): A term used to designate all contracts covering the sale of financial instruments or physical commod
Futures Contract: A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of
Futures Contract Multiple: Agreement to buy or sell a set number of shares of a specific stock in a designated future month at
Futures Market: A constant set by an exchange, which when multiplied by the futures price gives the dollar value of
Futures Option: A market where contracts for future delivery of a commodity or a security are bought or sold.
Futures Price: An option on a futures contract. Related: Options on physicals.
G: The price at which parties to a futures contract agree to transact upon the settlement date.
GAAP: Fifth letter of a Nasdaq stock symbol specifying that the issue is the first convertible bond of the
Gaijin: An acronym for Generally Accepted Accounting Principles. Accountants follow GAAP standards, conventi
Gain: Japanese term used to describe a nonJapanese investor in Japan.
Gamma: A profit on a securities transaction recognized by selling a security for more than the security ori
Gap: The ratio of a change in the option delta to a small change in the price of the asset on which the o
Gap Opening: Financing that is required, but for which no provision has been made. The difference in total fundin
Garage: In the context of general equities, opening price that is substantially higher or lower than the pre
Garbatrage: The floor of the NYSE, which is situated on the north side of the main trading floor.
Garman-Kohlhagen Option Pricing Model: Rising stock prices and increased market activity in an entire sector caused by a psychology change
Gather In The Stops: A model widely used to price foreign currency options.
GDP Implicit Price Deflator: A market strategy in which investors sell stocks to drive prices to a level that breaks through stop
Gearing: An economic technique used to account for inflation by comparing the current-dollar gross domestic p
GEM (Growing Equity Mortgage): Financial leverage.
General Account: Mortgage in which annual increases in monthly payments are used to reduce outstanding principal and
General Agreement On Tariffs And Trade (GATT): Federal Reserve Board's term for a margin account provided to a customer by a brokerage firm. Govern
General Cash Offer: A treaty adopted by the United Nations aimed at elimination of international trade barriers between
General Ledger: A public offering made to investors at large.
General Lien: Accountint records that show all the financial statement accounts of a business.
General Loan And Collateral Agreement: An attachment that gives the lender the right to seize the personal property of a borrower who has n
General Mortgage: The agreement governing the broker-dealer's borrowing against listed securities from a bank for the
General Obligation Bonds: A type of obligation that covers all a borrower's mortgageable properties, not just one specific pro
General Partner: Municipal securities secured by the issuer's pledge of its full faith, credit, and taxing power.
General Partnership: A participant who has unlimited liability for the obligations of a partnership.
General Revenue: A partnership in which all participants are general partners.
Generally Accepted Accounting Principals (GAAP): The sum of taxes, charges, and miscellaneous income taken in at the state and local level while negl
Generation-Skipping Transfer Or Trust: The overall conventions, rules, and procedures that define accepted accounting practice at a particu
Generic: A trust in which a principal amount is placed in a trust on the death of person A and is transferred
Geographic Risk: Describes the characteristics and/or experience of the total universe of a coupon of MBS sector type
Geometric Mean Return: Risk that arises when an issuer issues policies concentrated within certain geographic areas, such a
Gestation Repo: Also called the time-weighted rate of return, a measure of the compound rate of growth of the initia
Get Hit: A reverse repurchase agreement between mortgage firms and securities dealers. Under the agreement, t
Get Out: Go lower in price, when bids in the stock or market are hit, causing those bids to vanish and be rep
Ghosting: Used in the context of general equities. Sell interest ('We could get out big size in Humana.')
Gift Inter Vivos: The illegal practice that one firm drives a stock's price higher or lower, while other conspiring fi
Gift Splitting: A piece of property or asset given from one living person to another.
Gift Tax: A technique used to avoid a gift tax in which a large sum of money to be given by two parents to a c
Gilt-Edged Securities: A tax assessed on the giver of a property or asset as a gift. A $10,000 federal gift tax exemption e
Gilts: British and Irish government securities. Blue Chip.
Ginnie Mae Pass-Through: British and Irish government securities. Blue Chip.
Give Up: A security guaranteed by the Government National Mortgage Association that is backed by a collection
Glamor Stock: Used for listed equity securities. (1) Term used in a securities transaction involving three brokers
Glass-Steagall Act: A popular stock characterized by high earnings growth rate and a price that rise is faster than the
Global Bonds: 1933 legislation prohibiting commercial banks to own, underwrite, or deal in corporate stock and cor
Global Depository Receipt: Bonds designed to qualify for immediate trading in any domestic capital market and in the Euromarket
Global Fund: A receipt denoting ownership of foreign-based corporation stock shares which are traded in numerous
Globalization: A mutual fund that can invest anywhere in the world, including the U.S.
GNMA Midget: Tendency toward a worldwide investment environment, and the integration of national capital markets.
GNMA-I: A GNMA pass-through certificate backed by fixed-rate mortgages with a 15-year maturity. GNMA Midget
GNMA-II: Mortgage-backed securities (M.B.S.) on which registered holders receive separate principal and inter
Gnomes: Mortgage-backed securities (M.B.S.) on which registered holders receive an aggregate principal and i
Go Along: Freddie Mac's 15-year fixed-rate pass-through securities issued under its cash program.
Go Around: Used for listed equity securities. Buy or sell at prices that randomly occur on the floor, participa
Go To: Describes the N.Y. Federal Reserve Bank's trading desk practice of communicating with primary dealer
Go-Go Fund: Used in the context of general equities. (1) Trades ('10 IBM goes on at 115 '); see Print; (2) indic
Goal: Used in the context of general equities. Sell interest ('we've got 50 IBM to go'.).
Godfather Offer: An individual's or institution's financial objective.
Goes: An aggressive takeover technique in that the proposed offer of the acquiring company is so large tha
Going Ahead: A type of mutual fund in highly aggressive growth stocks. The fund has high levels of risk and poten
Going Away: A broker-dealer trades in a personal account prior to filling the orders of his or her clients. Proh
Going Into The Trade: The type of bond purchased by dealers for immediate resale to investors, as opposed to purchasing bo
Going Long: Used in the context of general equities. 1) Condition of the traders position in the security and ex
Going Out: The investor's purchase of a security for investment or speculation that the price will rise resulti
Going Private: Used in the context of general equities. Soliciting/advertising over the SS1, NASDSAQ, or Autex.
Going Public: When publicly owned stock in a firm is replaced with complete equity ownership by a private group. T
Going Short: When a private company first offers shares to the public market and investors. See: IPO.
Going-Concern Value: Selling stock that an investor does not own by borrowing shares from a broker. The assumption is tha
Gold Bars: The value of a company to another company or individual in terms of an operating business. The diffe
Gold Bond: Bars with a minimum content of 99.5% gold, which may be held by central banks or traded by investors
Gold Bullion: Bonds issued by gold-mining companies and backed by gold. The bonds make interest payments based on
Gold Certificate: Investment-grade, pure gold, which may be smelted into gold coins or gold bars.
Gold Coins: Certificate of an investor, that shows proof of ownership of gold bullion.
Gold Exchange Standard: Coin minted in gold, such as the American Eagle or the Canadian Maple Leaf.
Gold Fixing: A fixed exchange rate system adopted in the Bretton Woods agreement. It required the U.S. to peg the
Gold Mutual Fund: The process of determining the price of gold based on supply and demand forces of the market; which
Gold Standard: A mutual fund that primarily invests in gold-mining companies' stock.
Goldbug: An international monetary system in which currencies are defined in terms of their gold content, and
Golden Handcuffs: Analysts who recommends gold as an investment/hedge.
Golden Handshake: A contract that binds a broker to a brokerage firm by offering the broker commissions and bonuses, b
Golden Hello: A large payment to a senior employee who is forced into retirement or fired as a result of a takeove
Golden Parachute: A bonus a securities firm pays to attract an employee from a competing firm.
Goldilocks Economy: Compensation paid to top-level management by a target firm if a takeover occurs.
Good Delivery: A term developed in the mid 1990s to describe the positive performance of the economy as 'not too ho
Good Delivery And Settlement Procedures: A delivery in which everything - order-endorsement, any necessary attached legal papers.
Good Faith Deposit: Refers to PSA Uniform Practices such as cutoff times on delivery of securities and notification, all
Good Money: Used in the context of commodities. Refers to the initial margin account deposit needed when buying
Good Through-Until Date Order: Federal funds that clear on the same day, unlike clearinghouse funds, which require three days to cl
Good Til Cancelled Order (GTC): Used in the context of general equities. Market or limited price order that remains viable for a sta
Good-This-Month Order (GTM): An order to buy or sell stock that is good until you execute or cancel it. Brokerages usually set a
Goodwill: An order to buy or sell securities that continues to be a valid order until the end of the current m
Goodwill: The accounting term for amounts paid for assets over and above their fair market value. Goodwill ari
Government National Mortgage Association (Ginnie Mae): Excess of purchase price over fair market value of net assets acquired under the purchase method of
Government Obligations: A wholly owned U.S. government corporation within the Department of Housing & Urban Development. Gin
Government Securities: U.S. government-backed debt instruments, which are considered among the safest investments possible,
Government Sponsored Enterprises: Negotiable U.S. Treasury securities.
Governments: Privately owned, publicly chartered entities, such as the Student Loan Marketing Association, create
Grace Period: U.S. government-issued securities, such as Treasury bills, bonds, and notes, and savings bonds. Gove
Graduated Call Writing: The time period stipulated in most loan contracts and insurance policies during which a late payment
Graduated Lease: Selling covered call options at incrementally rising exercise prices, so that as the price of the un
Graduated Security: A type of long-term lease whose payments are variable rather than fixed, and depend upon a benchmark
Graduated-Payment Mortgage (GPM): A security that has moved from listing on an exchange of less prominence to one of more prominence.
Graham And Dodd Method Of Investing: A type of stepped-payment loan in which the borrower's payments are initially lower than those on a
Graham-Harvey Measure 1: An investment strategy based on security analysis and identification. Investors buy stocks with unde
Graham-Harvey Measure 2: Performance measure developed by John Graham and Campbell Harvey. The idea is to lever a fund's port
Grandfather Clause: Performance measure developed by John Graham and Campbell Harvey. The idea is to lever the S&P 500 p
Grantor: A provision included in a new rule or regulation that exempts a business that is already conducting
Grantor Retained Income Trust (GRIT): A trader in the options market who makes premium income by selling options.
Grantor Trust: A tax-saving trust in which a grantor transfers property to a beneficiary, but receives income until
Graveyard Market: A mechanism of issuing MBS wherein the mortgages' collateral is deposited with a trustee under a cus
Gray Knight: Bear market in which investors who sell are faced with substantial losses, while potential investors
Gray List: In a merger or acquisitions, a gray knight is an acquiring company that outbids a white knight in pu
Gray Market: Formal roster of stocks that can be traded by the block desks, but not in risk arbitrage because an
Great Call: Describes the sale of securities that have not officially been issued to firms other than the underw
Greater Fool Theory: Used in the context of general equities. Potential customer who may have an interest in participatin
Greenmail: An investment notion that even when a stock is fully valued by conventional standards, there is room
Greenshoe Option: The holding of a large block of stock of a target company by an unfriendly company, with the object
Gross Domestic Product (GDP): Option that allows the underwriter for a new issue to buy and resell additional shares.
Gross Earnings: The market value of goods and services produced over time including the income of foreign corporatio
Gross Estate: A person's total taxable income prior to adjustments. See: adjusted gross income.
Gross Income -: The total value of a person's property and assets before accounting for debts, taxes, and liabilitie
Gross Interest: A person's total income prior to exclusions and deductions.
Gross Lease: Interest earned before taxes are deducted.
Gross Margin: A type of property lease in which the lessor (owner of the property being leased) pays expenses asso
Gross National Product (GNP): Net Sales less cost of sales (including both fixed and variable costs), often expressed as a percent
Gross Parity: Measures and economy's total income. It is equal to G.D.P. plus the income abroad accruing to domest
Gross Per Broker: Applies mainly to convertible securities and international equities. Antithesis of net parity. For t
Gross Profit: The dollar amount of commissions generated by a broker or registered representative over a specific
Gross Profit Margin: Sales minus the cost of goods sold.
Gross Sales: Gross profit divided by sales, which is equal to each sales dollar left over after paying for the co
Gross Sales: Total sales calculated by summing all sales at invoice values, neglecting any adjustments such as cu
Gross Spread: The total of amounts received (sales for cash) and amounts expected (sales on credit) in return for
Ground Lease: The fraction of the gross proceeds of an underwritten securities offering that is paid as compensati
Group Insurance: A lease of land, as opposed to a lease of a building.
Group Of Eight (G-8): Insurance coverage for a group, which can usually be obtained at a cheaper rate than insurance for a
Group Of Five (G-5): The G-7 countries plus Russia.
Group Of Seven (G-7): The five leading countries (France, Germany, Japan, the U.K., and the U.S.) that meet periodically t
Group Of Ten: The G-5 countries plus Canada and Italy.
Group Rotation: A group of the ten major industrialized countries whose mission is to create a more stable world eco
Group Rotation Manager: The tendency of stocks in one sector of the market to outperform and then underperform other industr
Group Sales: A top-down manager who deduces the phases of the business cycle and allocates assets accordingly.
Group Universal Life Policy (GULP): Block sale (of large amounts) of securities to institutional investors.
Growing Equity Mortgage (GEM): Universal life insurance on a group basis. See: Group insurance.
Growing Perpetuity: Mortgage with a fixed interest rate and payments that increase throughout the term of the mortgage.
Growth And Income Fund: A constant stream of cash flows without end that is expected to rise indefinitely.
Growth Fund: A mutual fund that invests primarily in stocks with a history of capital gains (growth) and consiste
Growth Manager: A mutual fund that invests primarily in stocks with a history of and future potential for capital ga
Growth Opportunity: A money manager who seeks to buy stocks that typically sell at relatively high P/E ratios due to hig
Growth Phase: Opportunity to invest in profitable projects.
Growth Rates: A phase of development during which a company experiences rapid earnings growth as it produces new p
Growth Stock: Compound annual growth rate for the number of full fiscal years shown. If there is a negative or zer
Guarantee: Common stock of a company that has an opportunity to invest money and earn more than the opportunity
Guarantee Letter: The assumption of responsibility for payment of a debt or performance of some obligation if the liab
Guaranteed Bond: A commercial bank's letter assuring payment of the exercise price of a client's put option.
Guaranteed Insurability: A type of bond for which a firm other than the issuer guarantees its interest and principal payments
Guaranteed Insurance Contract: A life and health insurance policy feature that enables the insured to add coverage at future times
Guaranteed Investment Contract (GIC): A contract promising a stated nominal interest rate over some specific time period, usually several
Guaranteed Mortgage Certificates (GMC): A pure investment product in which a life company agrees, for a single premium, to pay at a maturity
Guaranteed Renewable Policy Insurance: First issued by Freddie Mac in 1975, G.M.C.s, like PCs, represent undivided interest in specified co
Guaranteed Replacement Cost Coverage Insurance: A type of insurance policy that requires the insurer to renew the policy to an individual regardless
Guarantor Program: A policy that covers the full cost of replacing damaged property without any allowances or deduction
Gun Jumping: Under the Freddie Mac program, the aggregation by a single issuer (usually an S&L) for the purpose o
Gunslinger: In the context of securities trading, refers to trading in a security on the basis of information th
H: An aggressive portfolio manager who makes risky investments, typically in margin accounts, in search
H-H Page: The risk of loss in foreign exchange trading that one party will deliver foreign exchange but the co
Haircut: Fifth letter of a Nasdaq stock symbol specifying that the issue is the second preferred bond of the
Half-Life: The margin or difference between the actual market value of a security and the value assessed by the
Half-Stock: The point in the life of a mortgage-backed security guaranteed or issued by the Government National
Hammering The Market: Stock, common or preferred, with a $50 par value.
Handle: Heavy selling of stocks by speculators who think that the stock is overvalued and is about to drop.
Hands-Off Investor: The whole-dollar price of a bid or offer is referred to as the handle (e.g., if a security is quoted
Hands-On Investor: An investor who has a large stake in a company, but does not wish to play an active role in the mana
Hang Seng Index: An investor who has a large stake in a corporation and takes an active role in its management. Antit
Hard Capital Rationing: The major index in Hong Kong.
Hard Currency: A capital budget that under no circumstances can be violated.
Hard Dollars: A freely convertible currency that is not expected to depreciate in value in the foreseeable future.
Harmless Warrant: Actual separate payments made by a customer for services, including research, provided by a brokerag
Hart-Scott-Rodino Act: Warrant that allows the user to purchase a bond only by surrendering an other bond with similar term
Harvey, Campbell R.: Often used in risk arbitrage. Antitrust act administered by U.S. Department of Justice and the FTC t
Head and Shoulders: Finance professor at Duke University. Author of research on international finance, asset allocation,
Heavy: In technical analysis, a pattern that results where a stock price reaches a peak and declines; rises
Hedge: An equities market now dominated by sellers, or oversupply, resulting in falling prices. See: Overbo
Hedge Clause: A transaction that reduces the risk of an investment.
Hedge Fund: A clause in a research report or any published document, that attempts to absolve the writer of resp
Hedge Ratio (Delta): A fund that may employ a variety of techniques to enhance returns, such as both buying and shorting
Hedge Wrapper: For options, ratio between the change in an option's theoretical value and the change in price of th
Hedged Portfolio: An options strategy in which an investor with a long position in an underlying stock buys an out-of-
Hedged Tender: A portfolio consisting of a long position in the stock and a long position in the put option on the
Hedgie: An investor sells a portion of a stock holding short a tender offer in the event all shares tendered
Hedging: Slang for a hedge fund.
Hedging Demands: A strategy designed to reduce investment risk using call options, put options, short-selling, or fut
Held At The Opening: Demands for securities to hedge particular sources of consumption risk, beyond the usual mean-varian
Held Order: Used for listed equity securities. Not open for trading because specialists or regulators are not al
Hell-Or-High-Water Contract: Order that must be executed without hesitation (Hit the bid or take the offer in line) or if the sto
Helsinki Exchanges (HEX): A contract that obligates a purchaser of a project's output to make cash payments to the project in
Hemline Theory: The Helsinki Exchanges (HEX Ltd., Helsinki Securities and Derivatives Exchange and Clearing House) w
Herstatt Risk: A theory that stock prices move in the same direction as the hemlines of women's dresses. For exampl
HIBOR: Quotron display page that shows new listed inquiries/orders received after the block call.
Hidden Load: Hong Kong Interbank Offer Rate, the annualized offer rate banks pay to attain Hong Kong three-month
Hidden Values: A sales charge that is not explicitly disclosed or is buried in the fine print of a mutual fund pros
High Credit: Valuable assets owned by a company, that are not accurately reflected in its stock price at a partic
High Current Income Mutual Fund: The maximum amount of outstanding loans for a particular customer on a bank's record.
High Flyer: A mutual fund whose primary goal is to produce a high level of income by making higher-risk investme
High Price: High-priced and highly speculative stock that moves up and down sharply over a short period. General
High-Coupon Bond Refunding: The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.
High-Grade Bond: Replace a high-coupon bond with a new, lower-coupon bond.
High-Premium Convertible Debenture: Bank loan to a highly leveraged firm.
High-Tech Stock: Stocks that have hit an all-time high for the current 52-week time period.
Highjacking: A bond with Triple-A or Double-A rating in Standard & Poor's, or Moody's rating system.
Highly Confident Letter: Japanese term for a takeover.
Highly Leveraged Transaction (HLT): An investment banking firm's letter indicating that the firm is highly confident it will be able to
Highs: A bond with a long-term, high-premium, common stock conversion feature. It also offers a competitive
Historical Cost: Stocks of companies operating in high-technology fields.
Historical Exchange Rate: Describes the accounting cost carried in the books for a current cost of the item.
Historical Trading Range: An accounting term that refers to the exchange rate in effect at the time an asset or liability is a
Historical Yield: The range of price over which a security or a commodity has traded since listing on a exchange.
Hit The Bid: A measure of a mutual fund's yield over a specific period of time, e.g., 1 year, 2 year, 5 year, or
Hold: A dealer who agrees to sell at the bid price quoted by another dealer is said to 'hit' that bid. Ant
Holder Of Record Date: To maintain ownership of a security over a long period of time. 'Hold' is also a recommendation of a
Holding Company: The date on which holders of record in a firm's stock ledger are designated as the recipients of eit
Holding Period: A corporation that owns enough voting stock in another firm to control management and operations by
Holding The Market: Length of time a security is held.
Holding-Period Return: The illegal practice of maintaining and/or placing a sufficient number of buy orders to create price
Home Run: Rate of return on an investment over a given period.
Homemade Dividend: Large capital gain in a stock in a short period of time.
Homemade Leverage: Sale of some shares of stock to get cash in an amount similar to that of a cash dividend.
Homeowners Equity Account: Idea that as long as individuals borrow (or lend) on the same terms as the firm, they can duplicate
Homeowners Insurance Policy: A credit line offered by mortgage lenders allowing a homeowner a second mortgage that uses the equit
Homogeneity: An insurance policy protecting a homeowner against damage or loss to property.
Homogeneous: The degree to which items are similar.
Homogeneous Expectations Assumption: Exhibiting a high degree of homogeneity.
Hong Kong Futures Exchange (HKFE): An assumption of Markowitz portfolio construction that investors have the same expectations with res
Horizon Analysis: Established in 1976, the Hong Kong Futures Exchange (H.K.F.E.) operates futures and options markets
Horizon Return: An analysis of returns using total return to assess performance over some investment horizon.
Horizontal Acquisition: Total return over a given horizon.
Horizontal Analysis: Merger between two companies producing similar goods or services.
Horizontal Merger: The process of dividing each expense item of a given year by the same expense item in the base year.
Horizontal Price Movement: A merger involving two or more firms in the same industry that are both at the same stage in the pro
Horizontal Spread: Stock price movement within a narrow price range over an extended period of time which creates the a
Hospital Revenue Bond: The simultaneous purchase and sale of two options that differ only in their exercise dates.
Host Security: A bond issued to finance construction of a hospital by a municipal or state agency.
Hostile Takeover: The security to which a warrant is attached.
Hot: A takeover of a company against the wishes of the current management and the board of directors by a
Hot Money: Used in the context of general equities. Active, usually with positive price implications.
House: Money that moves across country borders in response to interest rate differences and that moves away
House Account: Firms that conduct business as broker-dealers in securities or in the investment banking field are c
House Call: A type of account at a brokerage firm that is given a high level of priority and is handled by the m
House Maintenance Requirement: Notification by a brokerage house that a customer's margin account is below the minimum maintenance
House Of Issue: The internal rules of a brokerage house that govern the minimum amount of equity that must be presen
House Poor: An investment banking firm whose business it is to underwrite stock or bond issues and offer the sec
House Rules: People who are short on cash because most of their money is tied up in their homes are 'house poor.'
Housing Bond: Internal rules of broker-dealer firm that govern the handling of its customers' accounts.
How Are You Making XXX: Bonds issued by a local housing authority to finance housing projects.
Hubris: What is your market in a particular stock? See: Quotation.
Hulbert Rating: An arrogance due to excessive pride and an insolence toward others. A classic character flaw of a tr
Human Capital: A rating by Hulbert Financial Digest, a service of CBS MarketWatch, of how well the recommendations
Hung Up: The unique capabilities and expertise of individuals.
Hunkering Down: Used to describe the position of an investor whose stocks or bonds have dropped in value below their
Hurdle Rate: A term used to describe a trader selling off a big position in a stock.
Hybrid: The required return in capital budgeting. For example, if a project has an expected rate of return h
Hybrid Annuity: A package of two or more different kinds of risk management instruments that are usually interactive
Hybrid Security: A type of insurance company investment that combines the benefits of both a fixed annuity and a vari
Hypothecation: A convertible security whose optioned common stock is trading in a middle range, causing the convert
I: In banking, refers to the commitment of property to secure a loan. In securities, refers to the comm
I-Bonds: Report giving the average yield of all major money market funds.
I-I Page: Unsystematic risk or risk that is uncorrelated to the overall market risk. In other words, the risk
IBCs Money Fund Report Average: Fifth letter of a Nasdaq stock symbol specifying that it is the third preferred bond of the company.
Identified Shares: Treasury savings bonds with a 30-yeat maturity indexed to account for inflation.
Idiosyncratic Risk: Stock or mutual fund whose purchase date and price may be identified for capital gains and tax purpo
Illegal Dividend: In over-the-counter trading, same as H-H page, but exclusively for OTC stocks.
Illiquid: A corporation's dividend that is declared in violation of its charter and/or of state laws, typicall
Imbalance Of Orders: In the context of finance. absence of cash flow needed to fulfill financial debts and meet obligatio
Immediate Family: Used for listed equity securities. Too many market orders of one kind-buy or to sell or limit orders
Immediate Or Cancelled Order (IOC Order): Term used in the NASD rules of fair practice to refer to one's parents, brothers, sisters, children,
Immediate Payment Annuity: Market or limited price order that is to be executed in whole or in part as soon as such order is re
Immediate Settlement: An annuity contract paid by a single payment and with a specified payment plan the starts immediatel
Immunization: Delivery and settlement of securities within five business days.
Immunization Strategy: The construction of an asset and a liability match that benefits from offsetting changes in value.
Impaired Capital: A bond portfolio strategy whose goal is to eliminate the portfolio's risk, in case of a general chan
Impaired Credit: When a company's total capital is less than the par value of all its capital stock.
Implied Call: Result of a borrower's reduced credit rating.
Implied Repo Rate: The right of the homeowner to prepay, or call, a mortgage at any time.
Implied Volatility: The rate that a seller of a futures contract can earn by buying an issue and then delivering it at t
Import Substitution Development Strategy: The expected volatility in a stock's return derived from its option price, maturity date, exercise p
Imputation Tax System: A development strategy followed by many Latin American countries and other L.D.C.s that emphasize im
Imputed Interest: Arrangement by which investors who receive a dividend also receive a tax credit for corporate taxes
Imputed Value: Used in accounting to refer to interest that has effectively been paid to a bondholder, even though
In and Out: Refers to the value of an asset, service, or company that is not physically recorded in any accounts
In Between: Refers to over-the-counter trading. Trade in which the trader has both the buyers and sellers lined
In Competition: Used in the context of general equities. Priced higher than the bid price but lower than the offer p
In Hand: Indication that the customer has revealed trading interest to multiple brokers and that the trade wi
In Play: Used in the context of general equities. Firm indicating control of a bid, offer, or order.
In The Box: Often used in risk arbitrage. Company that has become the target of a takeover, and whose stock has
In The Hole: Means that a dealer has a wire receipt for securities, indicating that effective delivery on them ha
In The Middle: Used in the context of general equities. Below the inside market when one is attempting to sell the
In The Tank: Used in the context of general equities. At a price exactly in between the bid and offer prices.
In Touch With: Used in the context of general equities. Slang expression meaning market prices are dropping rapidly
In-And-Out Trader: A security that trades in very small volume on a daily basis. See:: Illiquid.
In-House: Tax form required to determine the amount of state tax due on an inheritance.
In-House Processing Float: In the context of general equities, keeping an activity within the firm. For example, rather than go
In-Line: (1) Firm is now followed by analysts at a particular securities house; (2) Indication to cover short
In-Substance Defeasance: Financial securities, such as money market instruments or capital market instruments.
In-The-Money: A put option that has a strike price higher than the underlying futures price, or a call option with
Inactive Asset: Used in the context of general equities. Having a sell inquiry in a stock (not a firm customer sell
Inactive Post: Asset not used in a productive manner at all times.
Inactive Stock-Bond: Trading post on NYSE floor where inactive, lightly traded stocks are traded in 10-share lots as oppo
Incentive Fee: A daytrader, or a speculator who buys and sells the same security on the same day.
Incestuous Share Dealing: Compensation paid to commodities trading advisers or to any practitioner who achieves above-average
Income: Trading of shares between companies in order to create a tax or financial benefit for the companies
Income Beneficiary: Another term for net income.
Income Bond: One who receives income from a trust.
Income Dividend: A bond whose payment of interest is contingent on sufficient earnings. These bonds are commonly used
Income Exclusion Rule: Any payout to mutual fund shareholders resulting from interest, dividends, or other income.
Income Fund: The IRS rule that excludes certain types of income from taxation, e.g., welfare payments.
Income Investment Company: A mutual fund that seeks to provid to liberal current income from investments.
Income Limited Partnership: A management company focused on managing a mutual fund whose primary purpose is income generation, t
Income Property: A limited partnership whose main goal is income generation, e.g., real estate, oil equipment.
Income Statement: Real estate purchased for the reasons of income generation.
Income Statement (Statement Of Operations): A financial report that shows a company's performance over a specified period of time by subtracting
Income Stock: A statement showing the revenues, expenses, and income (the difference between revenues and expenses
Income Tax: Common stock with a high dividend yield and few profitable investment opportunities.
Income Tax Expense: A state or federal government's levy on individuals as personal income tax and on the earnings of co
Incontestability Clause: Levies on the income of a business imposed by federal and state governments. This expense appears on
Incorporation: Clause in a life insurance contract preventing the insurer from revoking the policy after it has bee
Incremental Cash Flows: A legal process through which a company receives a charter and the state in which it is based allows
Incremental Cost Of Capital: Difference between the firm's cash flows with and without a project.
Incremental Costs And Benefits: Average cost applicable to the issue of each additional unit of debt and equity.
Incremental Internal Rate Of Return: Costs and benefits that would occur if a particular course of action is taken, compared to those tha
Indemnify: Internal rate of return (I.R.R.) on the incremental investment from choosing a larger instead of a s
Indenture: Used in insurance policy agreements as to compensation for damage or loss. Hold harmless
Independent Auditor: Agreement between lender and borrower that details specific terms of the bond issuance. Specifies le
Independent Broker: A certified public accountant operating outside the company who can provide an accountant's opinion.
Independent Project: NYSE member who executes orders for floor brokers and firms other than its own.
Index: A project whose acceptance or rejection is independent of the acceptance or rejection of other proje
Index And Option Market (IOM): Statistical composite that measures changes in the economy or in financial markets, often expressed
Index Arbitrage: A division of the CME established in 1982 for trading stock index products and options.
Index Fund: An investment/trading strategy that exploits divergences between actual and theoretical futures pric
Index Model: Investment fund designed to match the returns on a stock market index. Mutual fund whose portfolio m
Index Option: A model of stock returns using a market index such as the S&P 500 to represent common or systematic
Index Warrant: A call or put option based on a stock market index.
Indexed Bond: A stock index option issued by either a corporate or a sovereign entity as part of a security offeri
Indexing: Bond whose payments are linked to an index, e.g., the consumer price index.
Indicated Dividend: A passive instrument strategy calling for construction of a portfolio of stocks designed to track th
Indicated Yield: Total amount of dividends that would be paid on a share of stock over the next 12 months if each div
Indication: The yield, based on the most recent quarterly rate times four. To determine the yield, divide the an
Indication Of Interest: (1) Notice given by a dealer (through Autex) or customer of an interest in buying or selling stock,
Indicator: A dealer's or investor's interest in purchasing (not commitment to buy) securities that are still in
Indifference Curve: Used in the context of general equities. Technical or fundamental measurement that securities analys
Indirect Quote: The expression in a graph of a utility function, where the horizontal axis measures risk and the ver
Individual Retirement Account (IRA): For foreign exchange, the number of units of a foreign currency needed to buy one U.S. dollar.
Individual Retirement Account (IRA) Rollover: A retirement account that may be established by an employed person. IRA contributions are tax deduct
Individual Tax Return: A provision of the law governing IRA's that enables a retiree or anyone receiving a lump-sum payment
Inductive Reasoning: A tax return filed by an individual to account for their personal income and taxes payable.
Industrial Production: The attempt to use information about a specific situation to draw a conclusion.
Industrial Revenue Bond (IRB): A statistic determined by the Federal Reserve Board focusing on the total output of all U.S. factori
Industrials: A bond issued by local government agencies on behalf of corporations.
Industry: General term used in the financial markets to refer to companies manufacturing, producing, or distri
Infant Industry Argument: The category describing a company's primary business activity. This category is usually determined b
Inflation: Argument that industries in the developing and emerging sectors of the economy need protection again
Inflation Accounting: The rate at which the general level of prices for goods and services is rising.
Inflation Hedge: Accounting practices allowing for the effects of inflation.
Inflation Risk: Investments designed to hedge against inflation and the loss of purchasing power associated with it.
Inflation Uncertainty: Also called purchasing power risk, the risk that changes in the real return the investor will realiz
Inflation-Escalator Clause: The fact that future inflation rates are not known. It is a possible contributing factor to the make
Inflation-Indexed Securities: A clause in a contract providing for increases or decreases in inflation depending on fluctuations i
Inflexible Expenses: Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the s
Information Asymmetry: Expenses that cannot be adjusted or eliminated such as car payments or rental payments. Antithesis o
Information Coefficient (IC): Condition that information is known to some, but not all, participants.
Information Content Effect: The correlation between predicted and actual stock returns, sometimes used to measure the contributi
Information Costs: The rise in the stock price following a dividend signal, or publication of some other related news.
Information Services: Transactions costs that include the assessment of the investment merits of a financial asset. Relate
Information-Motivated Trades: Trades that are the result of either a reallocation of wealth or an implementation of an investment
Informational Efficiency: Organizations that furnish investment and other types of information, such as information that helps
Informationless Trades: The speed and accuracy with which prices reflect new information.
Infrastructure: Trades in which an investor believes he or she possesses pertinent information not currently reflect
Ingot: A country's fundamental system of transportation, communications, and other aspects of its physical
Inheritance Tax Return: A bar of metal such as the type that the Federal Reserve System uses to store gold reserves.
Initial Filing: The time it takes the receiver of a check to process a payment and deposit it in a bank for collecti
Initial Margin: Has various meanings. It could refer to a form that is filed with the Securities and Exchange Commis
Initial Margin Requirement: (1) Amount of money deposited by both buyers and sellers of futures contracts to ensure performance
Initial Public Offering (IPO): When buying securities on margin, the proportion of the total market value of the securities that th
Initiate Coverage: A company's first sale of stock to the public. Securities offered in an IPO are often, but not alway
Input-Output Tables: Used in the context of general equities. (1) An order or market in a specific security within the in
Inquiry: Tables that indicate how much each industry requires of the production of each other industry in ord
Inside Market: Used in the context of general equities. In-line expression of interest in a particular stock, usual
Insider Information: Refers to over-the-counter trading. Best (highest) bid and best (lowest) offer, often used in the O.
Insider Trading: Material information about a company that has not yet been made public. It is illegal for holders of
Insider Trading Sanctions Act Of 1984: Trading by officers, directors, major stockholders, or others who hold private inside information al
Insiders: Act imposing civil and criminal penalties for insider trading violations.
Insolvency Risk: These are directors and senior officers of a corporation-in effect, those who have access to inside
Insolvent: The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk.
Installment Sale: A firm that is unable to pay debts (its liabilities exceed its assets).
Instinet (Institutional Networks Corporation): The sale of an asset in exchange for a specified series of payments (the installments).
Institutional Broker: Computerized subscriber service that serves as a vehicle for the fourth market. 'Instinet' is regist
Institutional Brokers Estimate System (IBES): A broker who buys and sells securities for institutional investors such as banks, and mutual funds,
Institutional Investors: Service that assembles analysts' estimates of future earnings for thousands of publicly traded compa
Institutional Investors : Organizations that invest, including insurance companies, depository institutions, pension funds, in
Institutionalization: The number of financial institutions, e.g. investment companies, fire, casualty, and life insurance
Instrumentality: The gradual domination of financial markets by institutional investors, as opposed to individual inv
Instruments: Notes issued by a federal agency whose obligations are guaranteed by the full-faith-and-credit of th
Insurable Interest: Process through which debt is removed from the balance sheet but not cancelled.
Insurance: An insurance term referring to the relationship between a policy's insured person or property and th
Insurance Agent: Guarding against property loss or damage making payments in the form of premiums to an insurance com
Insurance Broker: The insurance company representative and adviser who sells insurance policies.
Insurance Claim: A broker, independent of any insurance company, who represents the interests of the buyer in searchi
Insurance Dividend: A claim for reimbursement from the insurance company when the insured has suffered a loss that is co
Insurance Policy: Money paid annually to policyholders participating in cash value life insurance policies.
Insurance Premium: A contract detailing an insurance policy and outlining what risks are insured, what insurance premiu
Insurance Principle: Payments calculated by the insurance company based on risk factors that must be made by the insured
Insurance Settlement: The law of averages. The average outcome for many independent trials of an experiment will approach
Insured: The payment of proceeds by an insurance company to the insured to settle an insurance claim within t
Insured Account: The property or persons covered by an insurance policy.
Insured Bond: A bank or financial account that is insured for the benefit of the depositor, protecting against los
Insured Plans: A municipal bond backed both by the credit of the municipal issuer and by commercial insurance polic
Intangible Asset: Defined benefit pension plans that are guaranteed by life insurance products. Related: Non-insured p
Intangible Asset: A long-term asset that represents a financial, legal, or accounting concept rather than a physical i
Integer Programming: A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual prope
Inter Vivos Trust: Variant of linear programming in which the solution values must be integers.
Intercommodity Spread: A trust created between living persons. Antithesis of a testamentary trust.
Intercompany Loan: In the commodities market, a spread consisting of a long position and a short position in different
Intercompany Transaction: Loan made by one unit of a corporation to another unit of the same corporation.
Interdelivery Spread: Transaction carried out between two units of the same corporation.
Interest: Used in futures or options market to refer the purchase of one month of a contract and selling anoth
Interest Basis: The price paid for borrowing money. It is expressed as a percentage rate over a period of time and r
Interest Coverage Ratio: The interest rate, such as prime or LIBOR, that is used as a reference point for quoting borrowing r
Interest Coverage Test: The ratio of earnings before interest and taxes to annual interest expense. This ratio measures a fi
Interest Deduction: A debt limitation that prohibits the issuance of additional long-term debt if the issuer's interest
Interest Equalization Tax: An interest expense, such as interest on a margin account, that is allowed as a deduction for tax pu
Interest Expense: Tax on foreign investment by residents of the U.S. which was abolished in 1974.
Interest Expense: Money paid by a business in exchange for the use of capital for a specified time period. On the inco
Interest Income: Interest expense is the money the corporation or individual pays out in interest on loans.
Interest On Interest: Money received by a business in exchange for the use of capital for a specified time period. On the
Interest Payments: Interest earned on reinvestment of each interest payment on money invested. See: compound interest.
Interest Rate: Contractual debt payments based on the coupon rate of interest and the principal amount.
Interest Rate: The monthly effective interest rate. For example, the periodic rate on a credit card with an 18% ann
Interest Rate Agreement: The cost of borrowing money, expressed as a percentage per period of time, usually one year.
Interest Rate Cap: An agreement whereby one party, for an up-front premium, agrees to compensate the other at specific
Interest Rate Floor: An interest rate agreement in which payments are made when the reference rate exceeds the strike rat
Interest Rate Futures Contract: An interest rate agreement in which payments are made when the reference rate falls below the strike
Interest Rate On Debt: A futures contract based on an interbank deposit rate or an underlying debt security. The value of t
Interest Rate Parity Theorem: Expression that the interest rate differential between two countries is equal to the difference betw
Interest Rate Risk: The chance that a security's value will change due to a change in interest rates. For example, a bon
Interest Rate Swap: A binding agreement between counterparties to exchange periodic interest payments on some predetermi
Interest Subsidy: The value of a firm's deduction of the interest payments on its debt from its earnings before calcul
Interest Tax Shield: The reduction in income taxes that results from the tax-deductibility of interest payments.
Interest-Only Loan: A loan in which payment of principal is deferred and interest payments are the only current obligati
Interest-Only Strip (IO): A security based solely on the interest payments from a pool of mortgages, Treasury bonds, or other
Interest-Sensitive Insurance Policy: A cash value life insurance policy whose insurance dividend rates vary with respect to inflation, en
Interest-Sensitive Stock: Stocks whose earnings are dependent upon and change with the interest rate, e.g., bank stocks.
Interim Dividend: The declaration and payment of a dividend prior to annual earnings determination.
Interim Financing: A short-term loan made to a company on the condition that a takeout will follow with long-term or in
Interim Statement: A financial statement that reflects only a limited period of a company's financial statement, not th
Interlocking Directorate: Describes cross-memberships of directors on each other's company Board of Directors.
Intermarket Sector Spread: The spread between the interest rate offered in two sectors of the bond market for issues of the sam
Intermarket Spread Swaps: An exchange of one bond for another based on the manager's projection of a realignment of spreads be
Intermarket Surveillance Information System (ISIS): A database that distributes information from all the major stock exchanges in the United States.
Intermarket Trading System (ITS): Electronic communications network linking the trading floors of seven registered exchanges to permit
Intermediate-Term: Typically one-ten years.
Intermediation: Investment through a financial institution. Related: Disintermediation.
Internal Auditor: An employee of a company who analyzes the company's accounting records to that the company is follow
Internal Expansion: Growth of assets resulting from internal financing or internally generated cash flow.
Internal Finance: Finance generated within a firm by retained earnings and depreciation.
Internal Growth Rate: Maximum rate a firm can expand without outside sources of funding. Growth generated by cash flows re
Internal Market: The mechanisms for issuing and trading securities within a nation, including its domestic market and
Internal Measure: The number of days that a firm can finance operations without additional cash income.
Internal Rate Of Return (IRR): Dollar-weighted rate of return. Discount rate at which net present value (NPV) investment is zero. T
Internal Revenue Code: The various statutes and regulatilons making up federal tax law.
Internal Revenue Service (IRS): The federal agency responsible for the collection of federal taxes, including personal and corporate
Internal Revenue Service Restructuring And Reform Act Of 1998: The legislation targeted at IRS reform, particularly related to the time period required for capital
International Arbitrage: Simultaneous buying and selling of foreign securities and A.D.R.s to capture the profit potential cr
International Bank For Reconstruction And Development (IBRD): IBRD or World Bank makes loans at nearly conventional terms to countries for projects of high econom
International Banking Facility (IBF): A branch that an American bank establishes in the United States to do Eurocurrency business.
International Bonds: A collective term that refers to global bonds, Eurobonds, and foreign bonds.
International Depository Receipt (IDR): A receipt issued by a bank as evidence of ownership of one or more shares of the underlying stock of
International Diversification: The attempt to reduce risk by investing in more than one nation. By diversifying across nations whos
International Finance Corporation (IFC): A corporation owned by the World Bank that produces a number of well-known stock indexes for emergin
International Finance Subsidiary: A subsidiary incorporated in the U.S., usually in Delaware, whose sole purpose once was to issue deb
International Fisher Effect: States that the interest rate differential between two countries should be an unbiased predictor of
International Fund: A mutual fund that can invest only outside the United States.
International Market: Related: External market
International Market Index: An index listed on the American Stock Exchange tracking the performance of 50 American Depository Re
International Monetary Fund (IMF): An organization founded in 1944 to oversee exchange arrangements of member countries and to lend for
International Monetary Market (IMM): A division of the CME established in 1972 for trading financial futures. Related: Chicago Mercantile
International Mutual Fund: A mutual fund that invests strictly in securities markets throughout the world, excluding the United
International Petroleum Exchange (IPE): Energy futures and options exchange based in London.
International Security Market Association (ISMA): Swiss law association located in Zurich that regroups all the participants on the Eurobond primary a
International Stock Exchange Of The U.K. And The Republic Of Ireland (ISE): Organization that replaced the London stock exchange after its merger with the International Securit
International Swap Dealers Association (ISDA): Formed in 1985 to promote uniform practices in the writing, trading, and settlement of swaps and oth
Interpolation: A method of approximating a price or yield that is unknown by using numbers that are known.
Interpositioning: The practice of using a second broker in a securities transaction, which is considered illegal it is
Intracommodity Spread: Used in the context of futures trading to refer to a trader holding, buying, and selling contracts i
Intraday: Term meaning 'within the day,' often to refer to the high and the low price of a stock.
Intramarket Sector Spread: The spread between two issues of the same maturity within a market sector. For instance, the differe
Intrastate Offering: A securities offering limited to just one state in the United States.
Intrinsic Value Of A Firm: The present value of a firm's expected future net cash flows discounted by the required rate of retu
Intrinsic Value Of An Option: The amount by which an option is in the money. An option that is not in the money has no intrinsic v
Inventory: Goods purchased or manufactured by a business and held for production or sale. Inventory is often su
Inventory: For companies: Raw materials, items available for sale or in the process of being made ready for sal
Inventory Financing: Used in the context of factoring and general finance to refer to loans to consumer product producers
Inventory Loan: A secured short-term loan to purchase inventory. The three basic forms are a blanket inventory lien,
Inventory Targets: The numbers of months of inventory that the user requires to be in stock at a given point in time. F
Inventory Turnover: The ratio of annual sales to average inventory, which measures the speed at which inventory is produ
Inventory Turns: The ratio of annual cost of sales to inventory, commonly used as a rough measure of inventory manage
Inverse Floater: A derivative instrument whose coupon rate is linked to the market rate of interest in an inverse rel
Inverse Floating-Rate Note: A variable-rate security whose coupon rate increases as a benchmark interest rate declines.
Inverted Market: A futures market in which the nearer months are selling at price premiums to the more-distant months
Inverted Scale: A serial bond offering whose bonds with earlier maturity dates have higher yields than bonds with la
Inverted Yield Curve: When short-term interest rates are higher than long-term rates. Antithesis of positive yield curve.
Investment: The expenditure of cash to create additional capital. Investment can be in income-producing vehicles
Investment: The creation of more money through the use of capital.
Investment Advisers Act: Legislation passed in 1940 requiring financial advisers to register with the Securities and Exchange
Investment Advisory Service: A business that specializes in providing investment advice for a fee. All advisers of an advisory se
Investment Analysts: Related: Financial analysts
Investment Bank: Financial intermediaries who perform a variety of services, including aiding in the sale of securiti
Investment Certificate: A document that serves as proof that an individual has an investment in a savings and loan associati
Investment Climate: Factors such as economic, monetary, and other conditions that affect the performance of investments.
Investment Club: A group of people who combine their money into a larger pool, then invest collectively in stocks and
Investment Company: A firm that that invests the funds of investors in securities appropriate for their stated investmen
Investment Company Act Of 1940: Legislation that requires investment companies to register with the SEC and that outlines standards
Investment Decisions: Decisions concerning the asset side of a firm's balance sheet, such as the decision to offer a new p
Investment History: The history of a member firm that establishes certain norms in respect of its investment practice.
Investment Income: The revenue from a portfolio of invested assets.
Investment Letter: A letter of intent between the issuer of new securities and the buyer, in the private placement of t
Investment Management: The process of managing money. Also called portfolio management and money management.
Investment Manager: The individual who manages a portfolio of investments. Also called a portfolio manager or a money ma
Investment Objective: The financial objective of an investor. Whether the investor requires income or capital appreciation
Investment Philosophy: The style and general ideology of investment practiced by an investor. Certain investors favor small
Investment Product Line (IPL): The line of required returns for investment projects as a function of beta (nondiversifiable risk).
Investment Software: Computer software that helps investors make investment decisions by identifying situations that meet
Investment Strategy: A strategy, or plan of attack, an investor uses when deciding how to allocate capital among several
Investment Strategy Committee: A committee within a brokerage firm that conducts research and makes recommendations on the firm's s
Investment Tax Credit: Proportion of new capital investment that could be used to reduce a company's tax bill (abolished in
Investment Trust: A closed-end fund regulated by the Investment Company Act of 1940. These funds have a fixed number o
Investment Value: Applies mainly to dealer securities. Fixed income value of a convertible, the price at which the con
Investment-Grade Bonds: A bond that is assigned a rating in the top four categories by commercial credit rating companies. S
Investments: As a discipline, the study of financial securities, such as stocks and bonds, from the investor's vi
Investor: The owner of a financial asset.
Investor Fallout: In the mortgage pipeline, risk that occurs when the originator commits loan terms to the borrowers a
Investor Relations: The process by which the corporation communicates with its investors.
Investors Equity: The balance of a margin account. Related: Buying on margin, initial margin requirement.
Investors Service Bureau: NYSE service that deals with all general inquiries concerning securities investments.
Invoice: Bill written by a seller of goods or services and submitted to a purchaser for payment.
Invoice Billing: Billing system in which invoices are sent off at the time of customer orders and are all separate bi
Invoice Date: Usually the date when goods are shipped. Payment dates are set relative to the invoice date.
Invoice Price: The price that the buyer of a futures contract must pay the seller when a Treasury bond is delivered
Involuntary Liquidation Preference: A premium that must be paid to preferred or preference stockholders if the issuer of the stock is fo
IRA-Keogh Accounts: Special accounts that allow saving taxes deferred until money is withdrawn. These plans are subject
Irrational Call Option: The implied call imbedded in a MBS. Irrational because the call is sometimes not exercised when it i
Irredeemable Bond: A bond lacking a call feature or a right of redemption. Also refers to a perpetual bond.
Irrelevance Result: The Modigliani and Miller theorem that a firm's capital structure is irrelevant to the firm's value.
Issue: A particular financial asset.
Issued Share Capital: Total amount of shares that have been issued. Related: Outstanding shares.
Issuer: An entity that puts a financial asset in the marketplace.
Italian Derivatives Market (IDEM): A derivatives market operated by the Italian Stock Exchange Council. It trades futures and options o
Italian Stock Exchange (ISE): The Milan-based stock exchange, which came into effect after the unification of Italy's ten national
Itemized Deduction: Specific deductions allowed by the IRS outlined in the tax return.
Its Us,: Used in the context of general equities. 'The firm, and not a customer, is the party involved.'
J: Fifth letter of a Nasdaq stock symbol specifying the issue is the voting stock of the company.
J-Curve: Theory that says a country's trade deficit will initially worsen after its currency depreciates beca
January Barometer: A statistic from 'The Stock Traders Alamanac' reflecting, with 88% accuracy, that the overall stock
January Effect: Refers to the historical pattern that stock prices rise in the first few days of January. Studies ha
Japanese Association Of Securities Dealers Automated Quotation System (Jasdaq): Japanese equivalent of Nasdaq.
Jensen Index: An index that uses the capital asset pricing model to determine whether a money manager outperformed
Jobber: A term for a market maker used on the London Stock Exchange.
Johannesburg Stock Exchange (JSE): Established in 1886, the Johannesburg Stock Exchange is the only stock exchange in South Africa. Gol
Joint Account: An agreement between two or more firms to share risk and financing responsibility in purchasing or u
Joint And Survivor Annuity: A type of annuity opened by and intended for two people, that makes payments for the entire lifetime
Joint Bond: A bond that is guaranteed by the issuer and a party other than the issuer.
Joint Clearing Members: Firms that clear on more than one exchange.
Joint Stock Company: A form of business organization that falls between a corporation and a partnership. The company sell
Joint Tax Return: Tax return filed by two people, usually spouses.
Joint Tenants With Right Of Survivorship: In the case of a joint account, on the death of one account holder, ownership of the account assets
Joint Venture: An agreement between two or more firms to undertake the same business strategy and plan of action.
Jointly And Severally: Municipal bond underwriting in which the account is undivided and syndicate members are responsible
Jonestown Defense: An extreme defensive tactic employed by the management of a target corporation to prevent a hostile
Jumbo Certificate Of Deposit: A certificate of deposit in increments of $100,000.
Jumbo Loan: Loans of $1 billion or more. Or, loans that exceed the statutory size limit eligible for purchase or
Jump Ball: Used in the context of general equities. (1) Deal in which no trading house has exclusivity (each fi
Junior Debt (Subordinate Debt): Debt whose holders have a claim on the firm's assets only after senior debtholder's claims have been
Junior Issue: A debt or equity issue from one corporation over which the issue of another firm takes precedence wi
Junior Mortgage: A mortgage that will be satisfied only after more senior mortgages have been satisfied. e.g., a firs
Junior Refunding: Issuing of new securities to refinance government debt that matures in one to five years.
Junior Security: A security that has a lower-priority claim on a company's assets and income than a senior security.
Junk Bond: A bond with a speculative credit rating of BB (S&P) or Ba (Moody's) or lower. Junk or high-yield bon
Jury Of Executive Opinion: A method of forecasting using a composite forecast prepared by a number of individual experts. The e
Just Me Asking: Used in the context of general equities. 'Not a customer request for information.'
Just-In-Time Inventory Systems: Systems that schedule materials to arrive exactly when they are needed in the production process.
Justified Price: The fair market price of an asset.
K: Fifth letter of a Nasdaq stock symbol specifying the issue has no voting rights.
Kaffirs: South African gold mining shares that trade on the London Stock Exchange.
Kangaroos: Australian stocks.
Kansas City Board Of Trade (KCBT): The U.S.-based futures and options exchange for no. 2 red wheat futures and, options, Value Line Ind
Kappa: The ratio of the dollar price change in the price of an option to a 1% change in the expected volati
Keiretsu: A network of Japanese companies organized around a major bank.
Keogh Plan: A type of pension account in which taxes are deferred. Available to those who are self-employed.
Key Industry: An industry that plays a critical role in a nation's economy.
Key Man (Or Woman) Insurance: A life insurance policy purchased by a company to insure the life of a key executive. The company is
Keynesian Economics: An economic theory of British economist, John Maynard Keynes that active government intervention is
Kick It Out: Used in the context of general equities. 'Liquidate a position (sell a long/cover a short) without r
Kickback: In the context of finance, refers to compensation of dealers by sales finance companies for discount
Kicker: An additional feature of a debt obligation that increases its marketability and attractiveness to in
Kiddie Tax: Tax owed for the investment income of children if the amount is more than $1,400.
Killer Bees: Those who aid a company in fending off a takeover bid, usually investment bankers who devise strateg
Kiting: Used in of banking to refer to the practice of depositing and drawing checks at two or more banks an
Knock-Out Option: An option that- is worthless at expiration if the underlying commodity or currency price reaches a s
Know Your Customer: An ethical foundation of securities brokers that an adviser who recommends the purchase or sale of a
Kondratieff Wave: An economic theory of the Soviet economist Kondratieff stating that the economies of the western wor
Kruggerand: A gold coin minted by the republic of South Africa that typically sells for slightly higher prices t
Kuala Lumpur Commodities Exchange (KLCE): The Malaysian commodity exchange for trading futures in crude palm oil, crude palm kernel oil, tin,
Kuala Lumpur Options And Financial Futures Exchange (KLOFFE): Established in 1995, the Kuala Lumpur Options and Financial Futures Exchange offers equity derivativ
Kuala Lumpur Stock Exchange (KLSE): Established in 1973, the Kuala Lumpur Stock Exchange (KLSE) is the only stock exchange in Malaysia.
Kurtosis.: Measures the fatness of the tails of a probability distribution. A fat-tailed distribution has highe
L: Fifth letter of a Nasdaq stock symbol specifying that the issue is a class of stock such as third pr
Labor: Another term for direct labor. See also salaries and benefits.
Ladder Strategy: A bond portfolio construction strategy that invests approximately equal amounts in every maturity wi
Lady Macbeth Strategy: Strategy in which a third party poses as a white knight in a takeover bid, and then joins forces wit
Laffer Curve: A curve conjecturing that economic output will increase if marginal tax rates are cut. Named after e
Lag: Payment of a financial obligation later than is expected or required, as in lead and lag. Also, the
Lag Response Of Prepayments: A delay of typically about three months between the time the weighted-average coupon of an MBS pool
Lagging Indicators: Economic indicators that follow rather than precede the country's overall pace of economic activity.
Lagging Indicators: Economic indicators that follow rather than precede the country's overall pace of economic activity.
Laisse-Faire: Doctrine that a government should not interfere with business and economic affairs.
Lambda: The ratio of a change in the option price to a small change in the option volatility. It is the part
Land Contract: A method of real estate financing; a mortgage-holding seller finances a buyer by taking a down payme
Landlord: A property owner who rents property to a tenant.
Lapsed Option: An option that no longer has any value because it has reached its expiration date without being exer
Large-Cap: A stock with a high level of capitalization, usually at least $5 billion market value.
Last In, First Out (LIFO): A method of inventory valuation whereby the goods most recently purchased or manufactured are consid
Last Sale: The most recent trade performed in a security.
Last Split: After a stock split, the number of shares distributed for each share held and the date of the distri
Last Trading Day: The final day under an exchange's rules during which trading may take place in a particular futures
Late Charge: A fee a credit grantor charges a borrower for a late payment.
Late Tape: A delay in the display of price changes on the tape of an exchange because of heavy trading. In seve
Launder: To move illegally acquired cash through financial systems so that it appears to be legally acquired.
Law Of Large Numbers: The mean of a random sample approaches the mean (expected value) of the population as sample size in
Law Of One Price: An economic rule stating that a given security must have the same price no matter how the security i
Lay Off: In the context of general equities, this eliminates all or part of a position by finding customers o
Layup: Used in the context of general equities. Easily executed trade or order. See: Lead pipe.
Lead: Payment of a financial obligation earlier than is expected or required.
Lead Manager: The commercial or investment bank with the primary responsibility for organizing syndicated bank cre
Lead Pipe: Used in the context of general equities. Virtually certain that trade will take place; lead pipe cin
Lead Regulator: A leading self-regulatory organization that over sees compliance with a particular section of the la
Lead Underwriter: The head of a syndicate of financial firms that are sponsoring an initial public offering of securit
Leader: A stock or group of stocks that is the first to move in a market upsurge or downturn.
Leading Economic Indicators: Economic series that tend to rise or fall in advance of the rest of the economy.
Leading The Market: In the context of general equities, this is a stock or group of stocks moving with the market as a w
Leakage: Release of information selectively or not before official public announcement.
Lease: A long-term rental agreement, and a form of secured long-term debt.
Lease: A long-term contract granting use of real estate, equipment or other fixed assets in exchange for pa
Lease Acquisition Cost: The legal fees and other expenses incurred when acquiring a lease.
Lease Rate: The payment per period stated in a lease contract.
Lease-Purchase Agreement: An agreement that allows for portions of lease payments to be used to purchase the leased property.
Leaseback: A transaction that involves the sale of some property, and an agreement by the seller to lease the p
Leasehold: An asset providing the right to use property under a lease agreement.
Leasehold Improvement: An improvement made to leased property.
Leaves: Used in the context of general equities. Remains to buy or sell of a previously entered order after
Ledger Cash: A firm's cash balance as reported in its financial statements. Also called book cash.
Leg: A prolonged trend in stock market prices, such as a multiple-period bull market; or, an option that
Leg Up: Used in the context of general equities. (1)Have a portion of the offsetting side of a trade in your
LEGAL: A computerized database maintained by the NYSE to keep track of enforcement actions, audits, and com
Legal Bankruptcy: A legal proceeding for liquidating or reorganizing a business.
Legal Capital: Value at which a company's shares are recorded in its books.
Legal Defeasance: The deposit of cash and permitted securities, as specified in the bond indenture, into an irrevocabl
Legal Entity: A person or organization that can legally enter into a contract, and may therefore be sued for failu
Legal Investments: Investments that a regulated entity is permitted to make under the rules and regulations that govern
Legal List: A list of high-quality debt and equity securities chosen by a state agency that are acceptable holdi
Legal Monopoly: A government-regulated firm that is legally entitled to be the only company offering a particular se
Legal Opinion: A statement, usually written by a specialized law firm, required for a new municipal bond issue stat
Legal Transfer: A stock transaction that requires special documentation in addition to standard stock or bond power
Legislative Risk: The risk that new or changed legislation will have a large positive or negative effect on an investm
Legitimate: Used in the context of general equities. Real interest in trading as compared to a profile stance. S
Lemon: An investment with poor results.
Lend: To provide money temporarily on the condition that it or its equivalent will be returned, often with
Lender: Businesses that provide loans to others.
Lender Of Last Resort: Traditionally the Federal Reserve Bank in the U.S., which assists banks that face large withdrawals
Lending Agreement: A contract regarding funds transferred between a lender and a borrower.
Lending At A Premium: A loan from one broker to another of securities to cover a customer's short position, with a borrowi
Lending At A Rate: Interest paid to a customer on the credit balance received from a short sale.
Lending Securities: Securities borrowed from a broker's inventory, from another customer's margin account, or from anoth
Less-Developed Countries (Ldcs): Also known as emerging markets. Countries who's per capita GDP is below a World Bank-determined leve
Lessee: An entity that leases an asset from another entity.
Lessor: An entity that leases an asset to another entity.
Letter Of Comment: A communication to the firm from the SEC that suggests changes to its registration statement.
Letter Of Credit (LOC): A form of guarantee of payment issued by a bank on behalf of a borrower that assures the payment of
Letter Of Intent: An assurance by a mutual fund shareholder that a certain amount of money will be invested monthly, i
Letter Stock: Privately placed common stock, so-called because the SEC requires a letter from the purchaser statin
Level: Used in the context of general equities. Price measure of an indication.
Level Debt Service: A municipal charter provision that debt payments must be relatively equal from year to year so that
Level Load: A mutual fund that charges a permanent sales charge, usually at some fixed percentage. See: Front-en
Level Pay: Scheduling principal and interest payments (P&I) due under a mortgage so that total monthly payment
Level Term Insurance: A life insurance policy with a fixed face value and increasing premiums.
Level-Coupon Bond: Bond with a stream of coupon payments that remain the same throughout the life of the bond.
Leverage: The use of debt financing, or property of rising or falling at a proportionally greater amount than
Leverage: The relationship between debt and equity. A company is considered highly leveraged if its levels of
Leverage Clientele: A group of shareholders who, because of their personal leverage, seek to invest in corporations that
Leverage Ratios: Measures of the relative value of stockholders, capitalization, and creditors obligations, and of th
Leverage Rebalancing: Making transactions to adjust (rebalance) a firm's leverage ratio to a target ratio.
Leveraged Beta: The beta of a leveraged required return; that is, the beta as adjusted for the degree of leverage in
Leveraged Buyout (LBO): A transaction used to take a public corporation private that is financed through debt such as bank l
Leveraged Company: A company that has debt in its capital structure.
Leveraged Equity: Stock in a firm that relies on financial leverage. Holders of leveraged equity experience the benefi
Leveraged Investment Company: An investment company or mutual fund entitled to borrow capital for its operations. Also, an investm
Leveraged Lease: A lease arrangement under which the lessor borrows a large proportion of the funds needed to purchas
Leveraged Portfolio: A portfolio that includes risky assets purchased with funds borrowed.
Leveraged Recapitalization: Often used in risk arbitrage. A public company takes on significant additional debt with the purpose
Leveraged Required Return: The required return on an investment when the investment is financed partially by debt.
Leveraged Stock: Stocks financed with credit, such as that purchased on a margin account.
Liabilities: Obligations used to fund the operations of a business, including bank loans, accounts payable, and a
Liability: A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contr
Liability Funding Strategies: Investment strategies that select assets so that cash flows will equal or exceed the client's obliga
Liability Insurance: Insurance guarding against damage or loss that the policyholder, may cause another person in the for
Liability Swap: An interest rate swap used to alter the cash flow characteristics of an institution's liabilities so
LIBOR: See London Interbank Offered Rate.
Lien: A security interest in one or more assets that lenders hold in exchange for secured debt financing.
Life Annuity: An annuity that pays a fixed amount for the lifetime of the annuitant.
Life Cycle: The lifetime of a product or business, from its creation to its demise or transformation.
Life Expectancy: The length of time that an average person is expected to live, which is used by insurance companies
Life Insurance: An insurance policy that pays a monetary benefit to the insured person's survivors after death.
Life Insurance In Force: The dollar amount of life insurance that a company has issued, measured as the sum of policy face va
Life Insurance Policy: The contract that sets out the terms of life insurance coverage.
Lifetime Reverse Mortgage: A type of mortgage in which a homeowner borrows against the value a home, while retaining title, and
LIFO: See last in, first out.
Lift: An increase in securities prices, as shown by some economic indicator.
Lifted: Refers to over-the-counter trading. Having an offer taken in a stock, followed by the market maker r
Lifting A Leg: Closing out one side of a long-short arbitrage before the other is closed.
Lighten Up: Selling some part of a stock or bond position in a portfolio to realize capital gains or to losses o
Limit On Close Order: An order to buy or sell stock at the closing price only if the price is at a predetermined level or
Limit Order: An order to buy a stock at or below a specified price, or to sell a stock at or above a specified pr
Limit Order Book: A record of unexecuted limit orders maintained by the specialist. These orders are treated equally w
Limit Order Information System: The electronic system supplying information about securities traded on participating exchanges so th
Limit Up, Limit Down: The maximum price change allowed for a commodity futures contract per trading day.
Limitation On Asset Dispositions: A bond covenant that restricts in some way a firm's ability to sell major assets.
Limitation On Conversion: Applies mainly to convertible securities. Possible delay in convertibility. More frequently, the rig
Limitation On Liens: A bond covenant that restricts in some way a firm's ability to grant liens on its assets.
Limitation On Merger, Consolidation, Or Sale: A bond covenant that restricts in some way a firm's ability to merge or consolidate with another fir
Limitation On Sale-And-Leaseback: A bond covenant that restricts in some way a firm's ability to enter into sale-and-leaseback transac
Limitation On Subsidiary Borrowing: A bond covenant that restricts in some way a firm's ability to borrow at the level of firm subsidiar
Limited Company: A form of business commonly used in the U.K. comparable to incorporation in the U.S.
Limited Discretion: Permission by a client that allows a broker to make certain stock and option trades without first co
Limited Liability: Limitation of loss to what has already been invested.
Limited Partner: A partner who has limited legal liability for the obligations of the partnership.
Limited Partnership: A partnership that includes one or more partners who have limited liability.
Limited Payment Policy: Life insurance providing full life protection but requiring premiums for only part of the customer's
Limited Risk: The risk inherent in options contracts, which is much lower than that of a futures contract, which h
Limited Warranty: A warranty with certain conditions and limitations on the parts covered, type of damage covered, and
Limited-Liability Instrument: A security, such as a call option, in which the owner can lose only the initial investment.
Limited-Tax General Obligation Bond: A general obligation bond of a government backed by specified or constrained revenue sources.
Line Of Credit: The amount of short-term credit available to a business from banks.
Line Of Credit: An informal loan arrangement between a bank and a customer allowing the customer to borrow up to a p
Linear Programming: Technique for finding the maximum value of some equation, subject to stated linear constraints.
Linear Regression: A statistical technique for fitting a straight line to a set of data points.
Lintners Observations: John Lintner's work (1956) suggests that dividend policy is related both a target level, and to the
Lipper Mutual Fund Industry Average: The average level of performance for all mutual funds, as reported by Lipper Analytical Services.
Liquid Asset: Asset that is easily and cheaply turned into cash-notably, cash itself and short-term securities.
Liquid Yield Option Note (LYON): Zero-coupon, callable, putable, convertible bond developed by Merrill Lynch & Co.
Liquidating Dividend: Payment by a firm to its owners from capital rather than from earnings.
Liquidation: Occurs when a firm's business is terminated. Assets are sold, proceeds are used to pay creditors, an
Liquidation Rights: The rights of a firm's securityholders in the event the firm liquidates.
Liquidation Value: Net amount that could be realized by selling the assets of a firm after paying the debt.
Liquidator: Person appointed by an unsecured creditor in the United Kingdom to oversee the sale of an insolvent
Liquidity: A high level of trading activity, allowing buying and selling with minimum price disturbance. Also,
Liquidity: A company's ability to generate cash in a timely manner in order to meet its obligations, often meas
Liquidity Diversification: Investing in a variety of maturities to reduce the price risk to which holding long bonds exposes th
Liquidity Fund: A California company that buys real estate limited partnership interests at 25% to 35% lower than th
Liquidity Preference Hypothesis: The argument that greater liquidity is valuable, all else equal. Also, the theory that the forward r
Liquidity Premium: Forward rate minus expected future short-term interest rate.
Liquidity Ratios: Ratios that measure a firm's ability to meet its short-term financial obligations on time, such as t
Liquidity Risk: The risk that arises from the difficulty of selling an asset in a timely manner. It can be thought o
Liquidity Theory Of The Term Structure: A biased expectations theory that asserts that the implied forward rates will not be a pure estimate
Lisbon Stock Exchange (LSE): Stock exchange trading stocks, bonds, and unit trusts. The BVL general index is the exchange's offic
Listed Firm: A company whose stock trades on a stock exchange, and conforms to listing requirements.
Listed Option: An option that has been accepted for trading on an exchange.
Listed Security: Stock or bond that has been accepted for trading by one of the organized and registered securities e
Listed Stocks: Stocks that are traded on an exchange.
Listing: In the context of real estate, written agreement between a property owner and a real estate broker t
Listing Broker: In the context of equity, when a stock is traded in exchange it is said to be listed. A licensed rea
Listing Requirements: Requirements, including minimum shares outstanding, market value, and income, that are laid down by
Living Benefits: Life insurance benefits from which the insured can draw cash while still living, usually in the case
Lloyds Of London: A marketplace in London for underwriting syndicates.
Load: The sales fee charged to an investor when shares are purchased in a load fund or annuity. See: Bank-
Load Fund: A mutual fund that sells shares with a sales charge-typically 4% to 8% of the net amount indicated.
Load Spread Option: A method of allocating the annual sales charge on load funds, often through percentage deductions fr
Load-To-Load: Arrangement whereby the customer pays for the last delivery when the next one is received.
Loan: Temporary borrowing of a sum of money. If you borrow $1 million you have taken out a loan for $1 mil
Loan Amortization Schedule: The timetable for repaying the interest and principal on a loan.
Loan Commitment: Assurance by a lender to make money available to a borrower on specific terms in return for a fee.
Loan Crowd: The group of member firms that lend or borrow securities needed to cover the positions of customers
Loan Syndication: Group of banks sharing a loan. See: Syndicate.
Loan Value: The maximum percentage of the value of securities that a broker can lend to a margin account custome
Loan-To-Value Ratio (LTV): The ratio of money borrowed on a property to the property's fair market value.
Loaned Flat: Securities lent interest-free between brokers to cover customers' short sale positions.
Local: A futures exchange member who trades securities for his or her own account.
Local Expectations Theory: A form of the pure expectations theory that suggests that the returns on bonds of different maturiti
Local Taxes: Property, sewer, school, or other community paid to a locality. Local taxes are usually deductible f
Lock: Used in the context of general equities. Make a market both ways (bid and offer) either on the bid,
Lock In: To ensure that an individual transacts all his or her business with a sole broker by providing super
Lock-Out: With PAC bond CMO classes, the period before the PAC sinking fund becomes effective. With multifamil
Lock-Up Cds: CDs that are issued with the tacit understanding that the buyer will not trade the certificate. Quit
Lock-Up Option: Often used in risk arbitrage. Privilege offered a white knight (friendly acquirer) by a target compa
Lockbox: A collection and processing service provided to firms by banks, which collect payments from a dedica
Locked In: When an investor is unable to take advantage of preferential tax treatment because of time remaining
Locked Market: A market is locked if the bid price equals the ask price. This can occur, for example, if the market
Log-Linear Least-Squares Method: A statistical technique for fitting a curve to a set of data points. One of the variables is transfo
Lognormal Distribution: Pattern of frequency of occurrence in which the logarithm of the variable follows a normal distribut
Lombard Rate: Applies mainly to international equities. Interest rate the German Bundesbank uses as an upper limit
London Commodity Exchange (LCE): Merged with the London International Financial Futures and Options Exchange in 1996.
London Interbank Offered Rate (LIBOR): The rate of interest that major international banks in London charge each other for borrowings. Many
London Interbank Offered Rate (LIBOR): The interest rate used among the most creditworthy international banks for large loans in eurodollar
London International Financial Futures Exchange (LIFFE): A London exchange where Eurodollar futures as well as futures-style options are traded.
London Metal Exchange (LME): A market for trading base metals, where traded options contracts are available against the underlyin
London Stock Exchange (LSE): The U.K.'s six regional exchanges joined together in 1973 to form the stock exchange of Great Britai
Long: One who has bought a contract to establish a market position and who has not yet closed out this pos
Long Bonds: Bonds with a long current maturity. The 'long bond' is the 30-year U.S. Treasury bond.
Long Coupons: (1) Bonds or notes with a long current maturity. (2) A bond on which one of the coupon periods, usua
Long Hedge: The purchase of a futures contract in anticipation of actual purchases in the cash market. Used by p
Long Leg: The part of an option spread in which an agreement to buy the underlying security is made.
Long Position: Owning or holding options (i.e., the number of contracts bought exceeds the number of contracts sold
Long Run: A period of time in which all costs are variable; longer than one year.
Long Straddle: Taking a long position in both a put and a call option.
Long-Term: In accounting terms, one year or longer.
Long-Term Anticipation Securities (LEAPS): Long-term options.
Long-Term Asset: Any asset that has an economic life greater than one year. Liquid items such as cash are considered
Long-Term Assets: Value of property, equipment, and other capital assets minus the depreciation. This is an entry in t
Long-Term Borrowing: Liabilities that represent money borrowed from banks or other lenders to fund the ongoing operations
Long-Term Debt: Total of all debt due after one year including bonds at face value.
Long-Term Debt: An obligation having a maturity of more than one year from the date it was issued. Also called funde
Long-Term Debt As A Percent Of Total Capital: Long-term debt including capitalized leases expressed as a percentage of total capital (common and p
Long-Term Debt Ratio: The ratio of long-term debt to total capitalization.
Long-Term Debt-Capitalization: Indicator of financial leverage. Shows long-term debt as a proportion of the capital available. Dete
Long-Term Debt-To-Equity Ratio: A capitalization ratio comparing long-term debt to shareholders' equity.
Long-Term Financial Plan: Financial plan covering two or more years of future operations.
Long-Term Financing: Liabilities repayable in more than one year plus equity.
Long-Term Gain: A profit on the sale of a capital assets held longer than 12 months, and eligible for long-term capi
Long-Term Goals: Financial goals expected to be accomplished in five years or longer.
Long-Term Investor: A person who makes investments for a period of at least five years in order to finance his or her lo
Long-Term Liabilities: Amount owed for leases, bond repayment, and other items due after 1 year.
Long-Term Loss: A loss on the sale of a capital asset held less than 12 months that can be used to offset a capital
Look-Thru: A method for calculating U.S. taxes owed on income from controlled foreign corporations that was int
Lookback Option: An option that allows the buyer to choose as the option strike price any price of the underlying ass
Looking For: In the context of general equities, this describing a buy interest in which a dealer is asked to off
Loophole: A technicality in some legislation or regulation that makes it possible to avoid certain consequence
Loose Credit: Policy by the Federal Reserve Board to make loans less expensive and more available by reducing inte
Loss: The opposite of profit.
Loss Ratio: The ratio of losses paid or accrued by an insurer to premiums collected over a year.
Loss-Control Activities: Actions that an insured person or company takes at the instigation of an insurance company in order
Loss-Of-Income Insurance: Insurance coverage that will pay out income that a policyholder loses as a result of a disability, i
Lots: In the context of general equities, this blocks or portions of trades. Can express a specific transa
Low: In the context of general equities, this is a specific minimum limit required by a seller in executi
Low Balance Method: A method of calculating interest on the basis of the lowest balance of an account over the applicabl
Low Ball: Slang for making an offer well below the fair value of an asset in hopes that the seller may be desp
Low Grade: A bond with a rating of B or lower.
Low Price: The day's lowest price of a security that has changed hands between a buyer and a seller.
Low Price-Earnings Ratio Effect: The tendency of portfolios of stocks with a low price-earnings ratio to outperform portfolios of sto
Low-Coupon Bond Refunding: Refunding of a low-coupon bond with a new, higher-coupon bond.
Lump Sum: A large one-time payment of money.
M: Fifth letter of a Nasdaq stock symbol specifying that the issue is the company's fourth class of pre
Macaroni Defense: A tactic used by a corporation that is the target of a hostile takeover bid involving the issue of a
Macaulay Duration: The weighted-average term to maturity of the cash flows from a bond, where the weights are the prese
Macroeconomics: Analysis of a country's economy as a whole.
Madrid Stock Exchange (Bolsa De Madrid): The largest of Spain's four stock exchanges.
Magic Of Diversification: The effective reduction of risk (variance) of a portfolio, achieved without reduction to expected re
Mail Float: Time period that checks for payment spend in the postal system.
Maintenance Call: A call for additional money or securities when a margin account falls below its exchange-mandated re
Maintenance Fee: A yearly charge to maintain brokerage accounts, such as asset management accounts or IRAs.
Maintenance Margin Requirement: A sum, usually smaller than but part of the original margin, that must be maintained on deposit at a
Major Exchange: Indicates listing on established national or regional stock exchange.
Major Industry: Each company is classified by its primary business.
Majority Shareholder: A shareholder who is part of a group that controls more than half the outstanding shares of a corpor
Majority Voting: Voting system under which corporate shareholders vote for each director separately. Related: Cumulat
Make A Market: Dealers are said to make a market when they quote bid and offered prices at which they stand ready t
Make Whole Provision: Related to the lump-sum payments made when a loan or bond is called, equal to the NPV of future loan
Making Delivery: Refers to the seller's actually turning over to the buyer the assets agreed upon in a forward contra
Malaysia Commodity Exchange: A subsidiary of the KLSE that trades interest rate futures on the three-month Kuala Lumpur Interbank
Maloney Act: 1938 legislation amending the Securities Exchange Act that regulates the OTC market.
Managed Account: An investment portfolio one or more clients entrusted to a manager who decides how to invest it.
Managed Float: Also known as 'dirty' float, this is a system of floating exchange rates with central bank intervent
Management: The people who administer a company, create policies, and provide the support necessary to implement
Management Buying: The acquisition of a controlling interest in a promising business by an outside investment group tha
Management Buyout (MBO): Leveraged buyout whereby the acquiring group is led by the firm's management.
Management Discussion And Analysis (MD and A): A report from management to shareholders that accompanies the firm's financial statements in the ann
Management Fee: An investment advisory fee charged by the financial adviser to a fund typically on the basis of the
Management Goals: A set of conditions a business is striving to achieve. These may include requirements for debt/equit
Management-Closely Held Shares: Percentage of shares held by persons closely related to a company, as defined by the Securities and
Managerial Decisions: Decisions concerning the operation of the firm, such as the choice of firm size, firm growth rates,
Managing Underwriter: The leading firm in an underwriting group, which originates the deal and acts as an agent for the gr
Mandatory Convertibles: A debt instrument that is exchangeable at some point for equity in the form of common stock or a new
Mandatory Redemption Schedule: Schedule according to which bond sinking fund payments must be made.
Manipulation: Dealing in a security to create a false appearance of active trading, in order to bring in more trad
Manufactured Housing Securities (MHS): Loans on manufactured homes-that is, factory-built or prefabricated housing, including mobile homes.
Maple Leaf: A gold, silver, or platinum coin minted in Canada that usually trades at slightly more than its curr
Margin: Allows investors to buy securities by borrowing money from a broker. The margin is the difference be
Margin Account (Stocks): A leverageable account in which stocks can be purchased for a combination of cash and a loan. The lo
Margin Agreement: The agreement governing customers' margin accounts.
Margin Call: A demand for additional funds because of adverse price movement. Maintenance margin requirement, sec
Margin Department: The department in a brokerage firm that monitors customers' margin accounts, ensuring that all short
Margin Of Profit: Gross profit divided by net sales. Used to measure a firm's operating efficiency and pricing policie
Margin Of Safety: With respect to working capital management, the difference between (1) the amount of long-term finan
Margin Requirement (Options): The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover h
Margin Security: A security that may be bought or sold in a margin account as defined in Regulation T.
Marginal: Incremental.
Marginal Cost: The increase or decrease in a firm's total cost of production as a result of changing production by
Marginal Efficiency Of Capital: The percentage yield earned on an additional unit of capital.
Marginal Revenue: The change in total revenue as a result of producing one additional unit of output.
Marginal Tax Rate: The tax rate that would have to be paid on any additional dollars of taxable income earned.
Marginal Utility: The change in total satisfaction as a result of consuming one additional unit of a specific good or
Marital Deduction: A tax deduction that allow spouses to transfer unlimited amounts of property to one another.
Mark-To-Market: Adjustment of the book value or collateral value of a security to reflect current market value.
Mark-To-Market: Adjustment of the book value or collateral value of a security to reflect current market value.
Markdown: The amount subtracted from the selling price of securities when they are sold to a dealer in the OTC
Marked-To-Market: An arrangement whereby the profits or losses on a futures contract are settled each day.
Market: Usually refers to the equity market. 'The market went down today' means that the value of the stock
Market Analysis: An analysis of technical corporate and market data used to predict movements in the market.
Market Capitalization: Total market value in millions of dollars (or local currency) is calculated as market price times pu
Market Capitalization: The total dollar value of all outstanding shares. Computed as shares times current market price. Cap
Market Capitalization Rate: Expected return on a security. The market-consensus estimate of the appropriate discount rate for a
Market Clearing: Total demand for loans by borrowers equals total supply of loans from lenders. The market, any marke
Market Conversion Price: Also called conversion parity price, the price that an investor effectively pays for common stock by
Market Cycle: The period between the two latest highs or lows of the S&P 500, showing net performance of a fund th
Market Eye: A financial information service based in the U.K. sponsored by the ISE (International Stock Exchange
Market Impact Costs: The result of a bid/ask spread and a dealer's price concession. Also called price impact costs.
Market Index: Market measure that consists of weighted values of the components that make up certain list of compa
Market Jitters: Anxiety among many investors, causing them to sell stocks and bonds, pushing prices down.
Market Letter: A newsletter analyzing the market that is written by an SEC-registered investment adviser who sells
Market Maker: Used in the context of general equities. One who maintains firm bid and offer prices in a given secu
Market Model: The market model says that the return on a security depends on the return on the market portfolio an
Market Opening: The start of formal trading on an exchange.
Market Order: Used in the context of general equities. Order to buy or sell a stated amount of a security at the m
Market Out Clause: A clause that may appear in an underwriting firm commitment that releases it from its purchase requi
Market Overhang: The theory that, in certain situations, institutions wish to sell their shares but postpone the sale
Market Penetration-Share: Used in the context of general equities. Percent of trading volume in a stock that a particular mark
Market Performance Committee (MPC): A group of NYSE market oversight specialists who monitor specialists' efficiency in maintaining fair
Market Portfolio: A portfolio consisting of all assets available to investors, with each asset held in proportion to i
Market Price: The last reported price at which a security was traded on an exchange.
Market Price: Annual High, Low, and Last prices. 5-10 year average 'Last' prices are the averages of the annual hi
Market Price Of Risk: A measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-ri
Market Prices: The amount of money that a willing buyer pays to acquire something from a willing seller, when a buy
Market Research: A technical analysis of factors such as volume, price trends, and market breadth that are used to pr
Market Return: The return on the market portfolio.
Market Risk: Risk that cannot be diversified away. Related: Systematic risk
Market Sectors: The classifications of bonds by issuer characteristics, such as state government, corporate, or util
Market Segmentation Theory Or Preferred Habitat Theory: A biased expectations theory that asserts that the shape of the yield curve is determined by the sup
Market Share: The percentage of total industry sales that a particular company controls.
Market Sweep: A second offering following a tender offer, allowing institutional investors to obtain a controlling
Market Timer: A money manager who assumes he or she can forecast when the stock market will go up and down.
Market Timing: Asset allocation in which investment in the equity market is increased if one forecasts that the equ
Market Timing Costs: Costs that arise from price movement of a stock during a transaction period but attributable to othe
Market Tone: The general state of well-being of a securities market, based mostly on trading activity.
Market Value: The price at which an asset would pass from an informed and willing seller to an informed and willin
Market Value: (1) The price at which a security is trading and could presumably be purchased or sold. (2) What inv
Market Value Ratios: Ratios that relate the market price of the firm's common stock to selected financial statement items
Market Value-Weighted Index: An index of a group of securities computed by calculating a weighted average of the returns on each
Market-Book Ratio: Market price of a share divided by book value per share.
Market-If-Touched (MIT): A price order, below market if a buy or above market if a sell, that automatically becomes a market
Market-On-Close (MOC) Order: An order to trade stocks, options, or futures as close as possible to the market close.
Marketability: A negotiable security is said to have good marketability if there is an active secondary market in w
Marketable Securities: Securities that can readily be converted into cash, including government securities, bankers' accept
Marketable Securities: Securities that are easily convertible to cash because there is high demand allowing them to be sold
Marketable Title: A clear, reasonably incontestable title to a piece of real estate that is good for transaction purpo
Marketed Claims: Claims that can be bought and sold in financial markets, such as those of stockholders and bondholde
Marketplace Price Efficiency: The degree to which the prices of assets reflect the available marketplace information. Marketplace
Marking Up Or Down: The amount by which a securities dealer raises or lowers the price of a stock or bond due to changes
Markowitz Diversification: A strategy that seeks to combine in a portfolio assets with returns that are less than perfectly pos
Markowitz Efficient Frontier: The graphical depiction of the Markowitz efficient set of portfolios representing the boundary of th
Markowitz Efficient Portfolio: Also called a mean-variance efficient portfolio, a portfolio that has the highest expected return at
Markowitz Efficient Set Of Portfolios: The collection of all efficient portfolios, which can be graphed as the Markowitz efficient frontier
Markowitz, Harry: Nobel laureate in economics. Father of modern portfolio theory.
Marriage Penalty: A tax that has the effect of penalizing a married couple because they pay more tax on a joint tax re
Married Put: A put option bought at the same time as its underlying securities in order to hedge the price paid f
Master Limited Partnership (MLP): A publicly traded limited partnership.
Matador Market: The foreign market in Spain.
Match-Fund: A bank is said to match-fund a loan or other asset when it does so by buying (taking) a deposit of t
Matched And Lost: The outcome of the flip of a coin used to determine which of two brokers who are locked in competiti
Matched Book: A bank runs a matched book when the of maturities of its assets and liabilities is distribution equa
Matched Maturities: The coordination by a financial institution of the maturities of its assets (loans) and liabilities
Matched Orders: Used for listed equity securities. Participate in equal amounts of a trade at a certain price, parti
Matched Sale Transaction: Applies mainly to convertible securities. Procedure whereby the Federal Reserve Bank of New York sel
Matching Concept: The accounting principle that requires the recognition of all costs that are associated with the gen
Materiality: The importance of an event or information in influencing a company's stock price.
Materials: The physical inputs to manufacturing, treated as part of cost of sales. Also known as raw materials.
Materials Requirement Planning: Computer-based systems that plan backward from the production schedule to make purchases in order to
Mathematical Programming: An operations research technique that solves problems in which an optimal value is sought subject to
Matif SA: The futures exchange of France.
Matrix Trading: Swapping bonds in order to take advantage of temporary differences in the yield spread between bonds
Mature: To cease to exist; to expire.
Mature Economy: The economy of a nation with a stable population and slowing economic growth.
Maturity: For a bond, the date on which the principal is required to be repaid. In an interest rate swap, the
Maturity Date: Usually used for bonds. Date that the bond finishes and is paid off. Date on which the principal amo
Maturity Factoring: An arrangement that provides collection and insurance of accounts receivable.
Maturity Phase: A stage of company development in which earnings to grow at the rate of the general economy. Related
Maturity Spread: The difference in returns between bonds of different time lengths.
Maturity Value: Related: Par value
Maximum Capital Gains Mutual Fund: A mutual fund whose objective is to produce capital gains by investing in small or risky rapid-growt
Maximum Price Fluctuation: The greatest amount by which the contract price can change, up or down, during one trading session,
May Day: The date of May 1, 1975, after which brokers were allowed to charge any brokerage commission, rather
May Expand: Used in the context of general equities. Warning that the size of the order/total may be increased.
MBS Depository: A book-entry depository for GNMA securities. The depository was initially operated by MBSCC and is n
MBS Servicing: The requirement that the mortgage servicer maintain payment of the full amount of contractually due
Meals And Entertainment Expense: A tax deduction allowed for meals and entertainment expenses incurred in the course of business.
Mean: The expected value of a random variable. Arithmetic average of a sample.
Mean Of The Sample: The arithmetic average; that is, the sum of the observations divided by the number of observations.
Mean-Variance Analysis: Evaluation of risky prospects based on the expected value and variance of possible outcomes.
Mean-Variance Criterion: The selection of portfolios based on the means and variances of their returns. The choice of the hig
Mean-Variance Efficient Portfolio: Related: Markowitz efficient portfolio
Measurement Error: Errors in measuring an explanatory variable in a regression, which leads to biases in estimated para
Medium-Term Bond: A bond maturing in two to ten years.
Medium-Term Note: A corporate debt instrument that is continuously offered to investors over a period of time by an ag
Meff Renta Fija: The derivatives exchange in Barcelona, Spain, listing futures and options on fixed interest securiti
Meff Renta Variable: Spain's screen-based trading of stock index and equity derivatives market in Spain trading futures a
Member Bank: A national- or state-chartered bank that is a member of the Federal Reserve System.
Member Firm: Used for listed equity securities. Brokerage firm that has at least one membership on a major stock
Member Short Sale Ratio: The total shares sold short by NYSE members divided by total short sales, which is used to analyze m
Membership Or A Seat On The Exchange: A limited number of exchange positions that enable the holder to trade for the holder's own accounts
Menu: Used in the context of general equities. Hierarchy of choices concerning price and volume of bids or
Mercantile Agency: An organization that supplies credit ratings and reports on firms that are prospective customers.
Mercato Italiano Futures (MIF): The Italian futures market trading Italian Treasury bond (BTF) futures.
Merchandise: All movable goods such as cars, textiles, or appliances.
Merchant Bank: A British term for a bank that specializes not in lending its own funds, but in providing various fi
Merger: (1) Acquisition in which all assets and liabilities are absorbed by the buyer. (2) More generally, a
Mexican Stock Exchange: The only stock exchange in Mexico. The Indice de Precios y Cotizaciones, or IPC index, consists of t
Mezzanine Bracket: The members of an underwriting group with involvement large enough to be just below the top tier.
Mezzanine Financing: The stage of financing that follows venture capital financing.
Mezzanine Level: The period in a company's development just before it goes public.
Microeconomics: Analysis of the behavior of individual economic units such as companies, industries, or households.
Midcap: A stock with a capitalization of usually between $1 billion and $5 billion.
Midcap Spdrs: This is the same as a SPDR, except that the index it tracks is Standard & Poor's Midcap 400. This SP
Milan Stock Exchange: The largest regional stock exchange in Italy, facilitating more than 90% of the country's trading vo
Miller, Merton: Nobel Laureate and co-author of the famous Miller-Modigliani theorems. Finance professor at the Univ
Mimic: An imitation that sends a false signal.
Mini-Manipulation: Trading in the underwriting security of an option contract in order to manipulate its price so that
Minimum Maintenance: The lowest required equity level that must be held with a broker in a margin account. See: Margin ca
Minimum Price Fluctuation: Smallest increment of price movement possible in trading a given contract. Also called point or tick
Minimum Purchases: For mutual funds, the amount required to open a new account (minimum initial purchase) or to deposit
Minimum-Variance Frontier: Graph of the lowest possible portfolio variance that is attainable for a given portfolio expected re
Minimum-Variance Portfolio: The portfolio of risky assets with lowest variance.
Minority Interest: An outside ownership interest in a subsidiary that is consolidated with the parent for financial rep
Minus: The symbol (-) that precedes the change figure in a stock table to indicate a closing sale lower tha
Miscellaneous Current Assets: An account for current assets that do not fall into the following categories: cash, marketable secur
Miscellaneous Current Liabilities: An account for current liabilities that do not fall into any of the categories already defined. Exam
Miscellaneous Expenses: An account for operating expenses that do not fall into any of the predefined categories such as sal
Miscellaneous Non-Current Assets: An account for assets not including current assets, property, plant and equipment, intangibles, depo
Miscellaneous Non-Current Liabilities: An account for non-current liabilities not including long-term debt (mortgage debt, lease debt, long
Misery Index: An index that sums the unemployment and inflation rates, used as a political rating or measure of co
Mismatch Bond: Floating-rate note whose interest rate is reset at more frequent intervals than the rollover period
Miss The Price-Market: Used for listed equity securities. (1) Have an order in hand but fail to execute a transaction on te
Mixed Account: A brokerage account holding both long and short positioned securities.
Mixed Bag: Used in the context of general equities. Group of stocks including some that are up, some down, and
Mob Spread: The yield spread between a tax-free municipal bond and a Treasury bond with the same maturity.
Mock Trading: The simulated trading of securities used as a learning device in training investors and brokers.
Modeling: The process of creating a depiction of reality, such as a graph, picture, or mathematical representa
Modern Portfolio Theory: Principles underlying the analysis and evaluation of rational portfolio choices based on risk-return
Modified Accelerated Cost Recovery System (MACRS): A 1986 act that set out rules for the depreciation of qualifying assets, allowing for greater accele
Modified Duration: The ratio of Macaulay duration to (1 + y), where y = the bond yield. Modified duration is inversely
Modified Pass-Throughs: Agency pass-throughs that guarantee (1) timely interest payments and (2) principal payments as colle
Modigliani And Miller Proposition I: A proposition by Franco Modigliani and Merton Miller that states that a firm cannot change the total
Modigliani And Miller Proposition II: A proposition by Franco Modigliani and Merton Miller that states that the cost of equity is a linear
Momentum: The amount of acceleration of an economic, price, or volume movement. A trader who follows a movemen
Momentum Indicators: Indicators used in market analysis to quantify the momentum of upward and downward price movements.
MONEP (Marche Des Options Negociables De Paris): A subsidiary of the Paris Bourse that trades stock and index options.
Monetarist: An economist who believes that changes in the money supply are the most important determinants of ec
Monetary Gold: Gold held by government authorities as a financial asset.
Monetary Indicators: Economic indicators of the effects of monetary policy, such as the condition of the credit market.
Monetary Policy: Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply
Monetary-Nonmonetary Method: Under this translation method, monetary items (e.g. cash, accounts payable and receivable, and long-
Monetize The Debt: Financing the national debt by printing new money, which causes inflation as a result of a larger mo
Money: Currency and coin that are guaranteed as legal tender by the government.
Money Base: Composed of currency and coins outside the banking system plus liabilities to the deposit money bank
Money Center Banks: Banks that raise most of their funds from the domestic and international money markets, relying less
Money Management: Related: Investment management
Money Manager: Related: Investment manager
Money Market: Money markets are for borrowing and lending money for three years or less. The securities in a money
Money Market Demand Account (MMDA): An account that pays interest based on short-term interest rates.
Money Market Fund: A mutual fund that invests only in short-term securities, such as banker's acceptances, commercial p
Money Market Hedge: The use of borrowing and lending transactions in foreign currencies to lock in the home currency val
Money Market Notes: Publicly traded issues that may be collateralized by mortgages and mortgage backed securities (MBS).
Money Order: A financial instrument backed by a deposit at a certain firm such as a bank that can be easily conve
Money Purchase Plan: A defined benefit contribution plan in which the participant contributes some part and the firm cont
Money Rate Of Return: Annual money return as a percentage of asset value.
Money Supply: M1-A: Currency plus demand deposits.
Monitor: To seek information about an agent's behavior; a mechanism that provides such information.
Monopoly: Market characterized by absolute control of all sales and distribution in the market by one firm, du
Monopsony: Market characterized by the existence of only one buyer in a market, forcing sellers to accept a low
Monte Carlo Simulation: An analytical technique for solving a problem by performing a large number of trail runs, called sim
Monthly Income Preferred Security (MIP): Preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to t
Monthly Investment Plan: A plan in which a certain amount is invested each month in order to benefit from dollar cost averagi
Montreal Exchange-Bourse De Montreal: The oldest stock exchange in Canada trading stocks, bonds, futures, and options. The Canadian Market
Moodys Investment Grade: A rating of one through four assigned by Moody's Investor Service to municipal short-term bonds.
Moodys Investors Service: A security and bond rating agency publishing bond manuals and a common stock handbook annually.
Moral Hazard: The risk that the existence of a contract will change the behavior of one or both parties to the con
Moral Obligation Bond: A tax-exempt bond issued by a municipality or a state financial intermediary that is backed by the m
More Behind It: Used in the context of general equities. More stock exists to be bought or sold by the same buyer or
Morgan Stanley Capital International (MSCI): Publisher of a number of well-known benchmarks, such as the MSCI World Index.
Morningstar Rating System: A proprietary ranking of mutual funds and annuities issued by Morningstar Inc. of Chicago.
Mortality Tables: Tables of probability that individuals of various ages will die within one year.
Mortgage: A long-term debt instrument for the purchase of property by which the borrower uses the property its
Mortgage: A loan secured by the collateral of some specified real estate property that obliges the borrower to
Mortgage Banker: A company or individual that originates mortgage loans and sells them to investors, while taking car
Mortgage Bond: A bond whose issuer has granted bondholders a lien against pledged assets. See: Collateral trust bon
Mortgage Broker: A company or individual that places mortgage loans with lenders, but does not originate or service l
Mortgage Duration: A modification of standard duration to account for the impact on duration of MBS of changes in prepa
Mortgage Interest Deduction: A federal tax deduction for interest paid on a mortgage used to acquire, construct, or improve a res
Mortgage Life Insurance: A life insurance policy that pays off the remaining balance of the insured person's mortgage at deat
Mortgage Pass-Through Security: Also called a pass-through, a security created when one or more mortgage holders form a collection (
Mortgage Pipeline: The period from the taking of applications from prospective mortgage borrowers to the marketing of t
Mortgage Pipeline Risk: The risk associated with taking applications from prospective mortgage borrowers who may opt to decl
Mortgage Pool: A group of mortgages with similar class, interest rate, and maturity characteristics.
Mortgage Rate: The interest rate on a mortgage loan.
Mortgage REIT: An REIT that invests in loans secured by real estate that derives income from mortgage interest and
Mortgage Servicing: The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, an
Mortgage-Backed Securities (MBS): Investment instruments backed by a pool of mortgage loans.
Mortgage-Backed Securities Clearing Corporation (MBSCC): A wholly owned subsidiary of the Midwest Stock Exchange that operates a clearing service for the com
Mortgagee: The lender of a loan secured by property.
Mortgager: The borrower of a loan secured by property.
Moscow Interbank Currency Exchange (MICEX): Established in 1992, the most liquid and best organized financial exchange in Russia.
Most Active List: The stocks with the highest volume of trading on a certain day.
Most Distant Futures Contract: When several futures contracts are considered, the contract settling last. Related: Nearby futures c
Moving Average: Used in charts and technical analysis, the average of security or commodity prices constructed in a
MTN: Medium-term notes issued by corporations, much like shorter-term commercial paper.
MUD: A municipal utility district, which is a political subdivision that administers utility-related serv
Multicurrency Clause: An agreement in the case of a Euro loan that permits the borrower to switch from one currency to ano
Multicurrency Loans: Give the borrower the flexibility of drawing a loan in different currencies.
Multifactor CAPM: A version of the capital asset pricing model derived by Robert Merton that includes extra-market sou
Multifamily Loans: Loans usually represented by conventional mortgages on multifamily rental apartments.
Multinational Corporation (MNC): A firm that operates in more than one country.
Multioption Financing Facility: A syndicated confirmed credit line with attached options.
Multiperiod Immunization: Creating a portfolio that will be capable of satisfying more than one predetermined future liability
Multiple Listing: An agreement used by a broker who is a member of a multiple-listing organization, providing the excl
Multiple Peril Insurance: Insurance policy that covers a wide variety of property damage.
Multiple Rates Of Return: More than one rate of return from the same project that makes the net present value of the project e
Multiple Regression: The estimated relationship between a dependent variable and more than one explanatory variable.
Multiple-Discriminant Analysis (MDA): Statistical technique for distinguishing between two groups on the basis of their observed character
Multiple-Issuer Pools: Under the GNMA-II program, pools formed through the aggregation of individual issuers' loan packages
Multiples: Another name for price-earnings ratios.
Multiplier: In the case of an investment a factor that quantifies the overall effects of investment spending on
Multirule System: A technical trading strategy that combines mechanical rules, such as the CRISMA (cumulative volume,
Municipal Bond: Represents borrowing by state or local governments to pay for special projects such as highways or s
Municipal Bond Insurance: An insurance policy that guarantees payment on municipal bonds in the event the issuer defaults.
Municipal Improvement Certificate: A certificate used to finance local government projects and services that are financed by a special
Municipal Investment Trust (MIT): A unit investment trust that buys municipal bonds and usually holds them until maturity, passing the
Municipal Notes: Short-term notes issued by municipalities in anticipation of tax receipts, proceeds from a bond issu
Municipal Revenue Bond: A bond issued to finance a public project that is funded by receipts from the project's operation.
Mutilated Security: A certificate on which the name of the issue, the issuer, or some other identifying detail cannot be
Mutual Association: A savings and loan association organized as a cooperative. Members purchase shares, vote on associat
Mutual Company: A corporation that is owned by a group of members and that distributes income in proportion to the a
Mutual Exclusion Doctrine: The tenet that rules municipal bond interest is federal tax-free. In return for this federal tax exe
Mutual Fund: Mutual funds are pools of money that are managed by an investment company and regulated by the Inves
Mutual Fund Cash-To-Assets Ratio: The cash instruments portion of a mutual fund as a proportion of its total assets.
Mutual Fund Custodian: A commercial bank or trust company that holds securities owned by a mutual fund and sometimes acts a
Mutual Fund Theorem: A result associated with the CAPM, asserting that investors will choose to invest their entire risky
Mutual Offset: A system, such as the arrangement between the Chicago Mercantile Exchange (CME) and Singapore Intern
Mutual Savings Bank: A state-chartered savings bank that is owned by its depositors and managed by a fiduciary board of t
Mutually Exclusive Investment Decisions: Investment decisions in which the acceptance of a project precludes the acceptance of one or more al
N: Fifth letter in a Nasdaq stock symbol specifying that the issue is the company's third class of pref
Naive Diversification: A strategy whereby an investor simply invests in a number of different assets in the hope that the v
Naked Option Strategies: An unhedged strategy making exclusive use of one of the following: Short call strategy (selling or w
Naked Strategies: Writing an option without owning the underlying asset. Holder is naked because holder may have agree
Named Perils Insurance: An insurance policy that names specific risks covered by the policy.
Narrow Market: An inactive market, which displays large fluctuations in prices due to a low volume of trading.
Narrowing The Spread: Reducing the difference between the bid and ask prices of a security.
NASD Form FR-1: A form required by the NASD of foreign dealers to ensure that firms participating in a new distribut
Nasdaq Small-Capitalization Companies: A group of 2000 companies with relatively small capitalization, which are listed separately and have
Nasdaq Stock Market: The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two
National Association Of Investors Corporation: A Michigan-based association that helps groups establish investment clubs.
National Association Of Securities Dealers (NASD): Nonprofit organization formed under the joint sponsorship of the investment bankers' conference and
National Association Of Securities Dealers Automatic Quotation System (Nasdaq): An electronic quotation system that provides price quotations to market participants about the more
National Bank: A commercial bank approved by the U.S. Comptroller of the Currency, which is required to be a member
National Credit Union Administration: Federal agency that oversees and insures the federal credit union system, and is funded by its membe
National Debt: Treasury bills, notes, bonds, and other debt obligations that constitute the debt owed by the federa
National Foundation For Consumer Credit: A nonprofit organization that seeks to help consumers who have taken on too much debt by helping the
National Futures Association (NFA): The futures industry self-regulatory organization established in 1982.
National Market: Related: Internal market
National Market Advisory Board: Group that advises the SEC on establishing a national exchange market system, which is a highly auto
National Market System (NMS): Refers to over-the-counter trading. System of trading OTC stocks under the sponsorship of the NASD.
National Quotation Bureau: A service that publishes bid and offer quotes from market makers in OTC transactions.
National Securities Clearing Corporation (NSCC): A clearing corporation that facilitates the settlement of accounts among brokerage firms, exchanges,
National Stock Exchange (NSE): Second-largest stock exchange based in India.
Nationalization: A government takeover of a private company.
Natural: Used in the context of general equities. Customer buyer or seller, versus a principal or profile int
Natural Logarithm: Logarithm to the base e (approximately 2.7183).
Near Money: Assets that are easily convertible into cash, such as money market accounts and bank deposits.
Nearby: The nearest active trading month of a financial or commodity futures market. Related: Deferred futur
Nearby Futures Contract: When several futures contracts are considered, the contract with the closest settlement date is call
Nearest Month: The expiration date of an option or future that is closest to the present.
Need The Tick: Used for listed equity securities. A stock must trade up/down at least one tick (1/8) in order to co
Negative Amortization: A loan repayment schedule in which the outstanding principal balance of the loan increases, rather t
Negative Carry: Related: Net financing cost
Negative Cash Flow: Occurs when spending in a business is greater than earnings.
Negative Convexity: A bond characteristic such that the price appreciation will be less than the price depreciation for
Negative Covenant: A bond covenant that limits or prohibits certain actions unless the bondholders agree.
Negative Duration: Occurs when the price of an MBS moves in the same direction as interest rates.
Negative Income Tax: A proposal to assist taxpayer with below-subsistence-level incomes. After filing a tax return, such
Negative Pledge Clause: A bond covenant that requires the borrower to grant lenders a lien equivalent to any liens that may
Negative Working Capital: Occurs when current liabilities exceed current assets, which can lead to bankruptcy.
Negative Yield Curve: When the yield on a short-term security is higher than the yield on a long-term security, partially
Neglected Firm Effect: The tendency of firms that are neglected by security analysts to outperform firms that are the subje
Negotiable: A security whose title is transferable by delivery . See also: Negotiable instrument.
Negotiable Instrument: An unconditional order or promise to pay some amount of money, easily transferable from one party to
Negotiable Order Of Withdrawal (NOW): Demand deposits that pay interest.
Negotiated Certificate Of Deposit: A large-denomination CD, generally $1MM or more, that can be sold but cannot be cashed in before mat
Negotiated Commission: An unfixed broker's commission that is determined through negotiation, depending on the specifics of
Negotiated Markets: Markets in which each transaction is separately negotiated between buyer and seller (i.e., an invest
Negotiated Offering: An offering of securities for which the terms, including underwriters' compensation, have been negot
Negotiated Sale: Determining the terms of an offering by negotiation between the issuer and the underwriter rather th
Negotiated Underwriting: A securities offering process in which the purchase price paid to the issuer and the public offering
NEO: Abbreviation for nonequity options, which are options contracts on foreign currencies, debt issues,
Net: The gain or loss on a security sale as measured by the selling price of a security less the adjusted
Net Adjusted Present Value: The adjusted present value minus the initial cost of an investment.
Net Advantage Of Refunding: The net present value of the savings from a refunding.
Net Advantage To Leasing: The net present value of entering into a lease financing arrangement rather than borrowing the neces
Net Advantage To Merging: The difference in total post- and pre-merger market value minus the cost of the merger.
Net After-Tax Gain: Capital gain after income taxes have been paid.
Net Asset Value (NAV): The value of a fund's investments. For a mutual fund, the net asset value per share usually represen
Net Assets: The difference between total assets on the one hand and current liabilities and noncapitalized long-
Net Benefit To Leverage Factor: A linear approximation of a number, that enables one to operationalize the total impact of leverage
Net Book Value: The current book value of an asset or liability; that is, its original book value net of any account
Net Book Value: The acquisition cost of an asset less any accumulated depreciation. See also book value and contra a
Net Capital Requirement: SEC requirement that member firms and nonmember securities broker-dealers maintain a maximum ratio o
Net Cash Balance: Beginning cash balance plus cash receipts minus cash disbursements.
Net Cash Provided By Operations: On a cash flow statement, net income plus non-cash transactions and the net amount of changes in ope
Net Change: This is the difference between a day's last trade and the previous day's last trade.
Net Current Assets: The difference between current assets and current liabilities, also known as working capital.
Net Errors And Omissions: In balance of payments accounting, net errors and omissions record the statistical discrepancies tha
Net Financing Cost: Also called the cost of carry or, simply, carry, the difference between the cost of financing the pu
Net Float: Sum of disbursement float and collection float.
Net Income: Total revenues minus total expenses, including taxes and depreciation, for a specified time. Also kn
Net Income: The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation
Net Income Before Taxes: Total revenues minus total expenses except the income tax expense, for a specified time. Also known
Net Interest Cost (NIC): The total amount of interest that will be paid on a debt obligation by a corporate or municipal bond
Net Investment: Gross, or total, investment minus depreciation.
Net Investment Income Per Share: Income received by an investment company from dividends and interest on investments less administrat
Net Lease: A lease arrangement under which the lessee is responsible for all property taxes, maintenance expens
Net Operating Loss (NOL): The excess of business expenses over income in a given tax year.
Net Operating Loss (NOL) Carryforward: The amount of Net Operating Losses accumulated over past tax years that is available for offsetting
Net Operating Losses: Losses that a firm can take advantage of to reduce taxes.
Net Operating Margin: The ratio of net operating income to net sales.
Net Parity: Antithesis of gross parity.
Net Period: The period of time between the end of the discount period and the date payment is due.
Net Position: The value of the position subtracting the initial cost of setting up the position. For example, if 1
Net Present Value (NPV): The present value of the expected future cash flows minus the cost.
Net Present Value (NPV): A measure of a project's future value in current dollars. Future income and expenses are summed and
Net Present Value Of Future Investments: The present value of the total sum of NPVs expected to result from all of the firm's future investme
Net Present Value Of Growth Opportunities: A model valuing a firm in which net present value of new investment opportunities is explicitly exam
Net Present Value Rule: An investment is worth making if it has a positive NPV Projects with negative NPVs should be rejecte
Net Proceeds: Amount received from the sale of an asset after deducting all transaction costs.
Net Profit Margin: Net income divided by sales; the amount of each sales dollar left over after all expenses have been
Net Property, Plant And Equipment: Gross property, plant and equipment minus accumulated depreciation. This number represents that port
Net Quick Assets: Cash, marketable securities, and accounts receivable less current liabilities.
Net Realized Capital Gains Per Share: Capital gains realized by an investment company minus any capital losses divided by the total number
Net Sales: Sales revenue less sales discounts and credit card fees.
Net Sales: Gross sales less returns and allowances, freight out, and cash discounts allowed.
Net Sales Transaction: Refers to over-the-counter trading. Securities deal in which the quoted prices include commissions (
Net Salvage Value: The after-tax net cash flow for terminating the project.
Net Tangible Assets Per Share: All of a company's assets except patents, trademarks, and other intangible assets minus all liabilit
Net Transaction: A securities transaction in which no commissions or extra fees are paid, such as in an initial publi
Net Working Capital: Current assets minus current liabilities. Often simply referred to as working capital.
Net Worth: Common stockholders' equity which consists of common stock, surplus, and retained earnings.
Net Yield: The rate of return on a security minus purchase costs, commissions, or markups.
Netting: Reducing transfers of funds between subsidiaries or separate companies to a net amount.
Netting Out: To get or bring in as a net; to clear as profit.
Neutral Hedge: Hedge that is expected to yield a dollar-neutral result of the combined position, regardless of pric
Neutral Period: In the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not sta
New Account Report: A broker's document including information about a new client. See: Know your customer.
New High-New Low: A stock valued at its highest or lowest price in the last year.
New Issue: Securities that are publicly offered for the first time, whether in an IPO or as an additional issue
New Listing: A security that has just been entered on a stock or bond exchange for trading.
New Money: In a Treasury auction, the amount by which the par value of the securities offered exceeds that of t
New York Cotton Exchange (NYCE): Commodities exchange in New York trading futures and options on cotton, frozen concentrated orange j
New York Futures Exchange (NYFE): A wholly owned subsidiary of the NYSE that trades futures and futures options on the NYSE composite
New York Mercantile Exchange (NYMEX): The world's largest physical commodity futures exchange.
New York Stock Exchange (NYSE): Also known as the Big Board or the Exchange.
New Zealand Stock Exchange: Automated, screen-based national trading system based in Wellington.
New-Issues Market: The market in which a new issue of securities is first sold to investors. This is not a separate mar
News Out: Refers to over-the-counter trading. A news story concerning the stock being considered has recently
Next Day Settlement: Transaction in which the contract is settled the day after the trade is executed. See: Settlement da
Next Futures Contract: The contract settling immediately after the nearby futures contract.
Nexus (Of Contracts): A set or collection of something.
Nics: Newly Industrialized Countries, which are countries with high-growth industrial economies, such as H
Nifty Fifty: Institutional investor' 50 most popular stocks.
Nikkei Stock Average: Applies mainly to international equities. Price-weighted average of 225 stocks of the first section
Nine-Bond Rule: An NYSE rule requiring that orders for nine bonds or fewer stay on the floor for one hour to seek a
NM: Abbreviation for 'not meaningful'.
No Autex: Used in the context of general equities. 'No buy or sell interest should be entered into the Autex (
No Book: Used for listed equity securities. Not much, if any, stock is being bid for or offered at the presen
No-Action Letter: A letter from the Securities and Exchange Commission agreeing that the commission will take no civil
No-Brainer: A market in which it does not take very complex analysis to figure out how securities are going to p
No-Load Fund: A mutual fund that does not impose a sales commission. Related: Load fund, no-load mutual fund.
No-Load Mutual Fund: An open-end investment company whose shares are sold without a sales charge. There can be other dist
No-Load Stock: Shares that can be purchased from the issuing companies themselves, so that broker fees and commissi
No-Par-Value Stock: A stock with no par value given in the charter or stock certificate.
NOB Spread: Notes over bonds spread. This is the difference in yield between Treasury notes (maturing in 2 to 10
Noise: Price and volume fluctuations that can confuse interpretation of market direction. Used in the conte
Nominal: In name only. Differences in compounding cause the nominal rate to differ from the effective interes
Nominal Annual Rate: An effective rate per period multiplied by the number of periods in a year. Same as annual percentag
Nominal Cash Flow: A cash flow expressed in nominal terms if the actual dollars to be received or paid out are given.
Nominal Dollars: Dollars that are not adjusted for inflation.
Nominal Exchange Rate: The actual foreign exchange quotation in contrast to the real exchange rate, which has been adjusted
Nominal Exercise Price: The exercise price of a GNMA option contract, which equals the unpaid principal balance multiplied b
Nominal Income: Income that has not been adjusted for inflation and decreasing purchasing power.
Nominal Interest Rate: The interest rate unadjusted for inflation.
Nominal Price: Price quotations on futures for a period in which no actual trading took place.
Nominal Quotation: Used in the context of general equities. Bid and offer prices given by a market maker for the purpos
Nominal Yield: The income received from a fixed income security in one year divided by its par value. See also: Cou
Nominee: A person or firm to whom securities or other properties are transferred to facilitate transactions,
Non-Current Assets: Assets that are not convertible to cash within one year in the normal course of business. Property a
Non-Current Liabilities: Obligations that will not come due within one year of the current date. See also current liabilities
Non-Operating Expense: Expenses not related to the ongoing operations of a company; for example, interest expense, one-time
Non-Operating Income: Income not related to the ongoing operations of a company; for example, interest income and sale of
Nonaccredited Investor: Wealthy, sophisticated investors who do not meet SEC net worth requirements. These investors require
Noncallable: A preferred stock or bond that cannot be redeemed whenever desired by the issuer.
Noncash Charge: A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow.
Nonclearing Member: An exchange member firm that is not able to clear transactions, and must pay another member firm to
Noncompete: A provision in a number of employment contracts that prohibits an employee from working for a compet
Noncompetitive Bid: In a Treasury auction, bidding for a specific amount of securities at the price, whatever it may tur
Noncontributory Pension Plan: A pension plan that is fully paid for by the employer, requiring no employee contributions.
Noncumulative: Applies mainly to convertible securities. Type of preferred stock on which unpaid or omitted dividen
Noncumulative Preferred Stock: Preferred stock whose holders must forgo dividend payments when the company misses a dividend paymen
Noncurrent Asset: Any asset that is expected to be held for the whole year, not sold or exchanged, such as real estate
Noncurrent Liability: A liability due in one year.
Nondiscretionary Trust: A personal trust whose trustee has no discretion in deciding how income will be distributed to the b
Nondiversifiability Of Human Capital: The difficulty of hedging one's human capital (the unique capabilities and expertise of individuals)
Nondiversifiable Risk: Risk that cannot be eliminated by having a large portfolio of many assets.
Nonfinancial Assets: Physical assets such as real estate and machinery.
Nonfinancial Services: Such things as freight, insurance, passenger services, and travel.
Noninsured Plans: Defined benefit pension plans that are not guaranteed by life insurance products. Related: Insured p
Noninterest-Bearing Note: A note without periodic interest payment, but selling at a discount and maturing at face value. See:
Nonmarketed Claims: Claims that cannot be easily bought and sold in the financial markets, such as those of the governme
Nonmember Firm: Used for listed equity securities. Brokerage firm that is not a member of an organized exchange (NYS
Nonparallel Shift In The Yield Curve: A shift in the yield curve in which yields do not change by the same number of basis points for ever
Nonparticipating Life Insurance Policy: Life insurance policy whose policyholders do not receive dividends, because they are not participant
Nonperforming Asset: An asset that is not effectively producing income, such as an overdue loan.
Nonproductive Loan: A loan that increases spending power, but is used in business that does not directly increase the ec
Nonpublic Information: Information about a company that is not known by the general public, which will have a definite impa
Nonpurpose Loan: A loan with securities pledged as collateral, but which is not to be used in securities trading or t
Nonqualifying Annuity: An annuity that does not fall under an IRS-approved pension plan. Contributions are made with after-
Nonqualifying Stock Option: An employee stock option that does not satisfy IRS qualifying rules and therefore is liable for taxa
Nonrated: A bond that has not been rated by a large rating agency, usually because the issue is too small.
Nonrecourse: In the case of default, the lender has ability to claim assets over and above what the limited partn
Nonrecourse Loan: A loan taken by limited partners used to finance their portion of the partnership, which is secured
Nonrecurring Charge: A one-time expense or credit shown in a company's financial statement.
Nonredeemable: Not permitted, under the terms of an indenture, to be redeemed.
Nonrefundable: Not permitted, under the terms of an indenture, to be refundable.
Nonreproducible Assets: A tangible asset with unique physical properties, like a parcel of land, a mine, or a work of art.
Nonsystematic Risk: Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called uniqu
Nontradables: Goods and services produced and consumed domestically that are not close substitutes to import or ex
Nonvoting Stock: A security that does not entitle the holder to vote on the corporation's resolutions or elections.
Normal Annuity Form: The manner in which retirement benefits are paid out.
Normal Backwardation Theory: Holds that the futures price will be bid down to a level below the expected spot price.
Normal Deviate: Related: Standardized value
Normal Investment Practice: The investment history of a customer, which is used as a benchmark to test the bona fide public offe
Normal Market Size (NMS): A system that categorizes the size of transactions that are normal for a particular security and for
Normal Portfolio: A customized benchmark that includes all the securities from which a manager normally chooses, weigh
Normal Probability Distribution: A probability distribution for a continuous random variable that forms a symmetrical bell-shaped cur
Normal Random Variable: A random variable that has a normal probability distribution.
Normal Retirement: The age or number of working years after which a pension plan beneficiary can retire and receive unr
Normalized Earnings: Earnings that have been adjusted in order to take into account the effect of cycles in the economy.
Normalizing Method: Making a change in the income account equivalent to the tax savings realized through the use of diff
Not A Name With Us: Refers to over-the-counter trading. Not a registered market maker in the security, especially in OTC
Not Held Order (NH Order): Applies mainly to international equities. Market or limit order in which the customer does not desir
Not Rated: A rating service indicator, neither positive nor negative, showing that a security or company has no
Not-For-Profit: An organization established for charitable, humanitarian, or educational purposes that is exempt fro
Not-Sufficient-Funds Check: A bank check having insufficient funds to back it.
Note: Debt instruments with initial maturities longer than one year and shorter than 10 years.
Note Agreement: A contract for privately placed debt.
Note Issuance Facility (NIF): An agreement by which a syndicate of banks indicates a willingness to accept short-term notes from b
Notes To The Financial Statements: A detailed set of notes immediately following the financial statements in an annual report that expl
Notice Day: A day on which notices of intent to deliver pertaining to a specified delivery month may be issued.
Notice Of Sale: A notice advertising a new issue of municipal securities and inviting underwriters to submit competi
Notification Date: The day the option is either exercised or expires.
Notional Principal Amount: In an interest rate swap, the predetermined dollar principal on which the exchanged interest payment
Nouveau Marche: An equity market unit of the Paris Bourse that deals solely in innovative, high-growth companies.
Novation: Defeasance whereby the firm's debt is cancelled.
NPV Profile: A graph of NPV as a function of the discount rate.
Numismatist: Collector of historical coins and currencies.
NYSE Composite Index: Composite index covering price movements of all new world common stocks listed on the New York Stock
O: Fifth letter of a Nasdaq stock symbol specifying that it is the company's second class of preferred
O.K. To Cross: Used for listed equity securities. 'Legal to cross the buy and sell orders on the exchange floor bec
Objective (Mutual Funds): The fund's investment strategy category as stated in the prospectus. There are more than 20 standard
Obligation: A legal responsibility, such as to repay a debt.
Obligation Bond: A municipal bond with a face value greater than the value of the underlying property. The difference
Obligor: A person who has an obligation to pay off a debt.
Odd Lot: A trading order for less than 100 shares of stock. Compare round lot.
Odd-Lot Dealer: A broker who combines odd lots of securities from multiple buy or sell orders into round lots and ex
Odd-Lot Short-Sale Ratio: The percentage of total odd-lot sales that is composed of short sales.
Odd-Lot Theory: The theory that profits can be made by making trades contrary to odd-lot trading patterns, since odd
OEX Index: Applies to derivative products. Quotron symbol for the S&P 100 index option.
Off-Balance-Sheet Financing: Financing that is not shown as a liability on a company's balance sheet.
Off-Board: Used for listed equity securities. Transacted away from a national securities exchange even though t
Off-Floor Order: Used for listed equity securities. (1) Order to buy or sell a security that originates off the floor
Offer: Indicates a willingness to sell at a given price. Related: Bid.
Offer Wanted: Used in the context of general equities. Notice by a potential buyer of a security that he or she is
Offering Date: Date on which a new set of stocks or bonds will first be sold to the public.
Offering Memorandum: A document that outlines the terms of securities to be offered in a private placement.
Offering Scale: The range of prices offered by the underwriter of a serial bond issue with different maturities.
Offerings: Often refers to initial public offerings. When a firm goes public and makes an offering of stock to
Office Of Thrift Supervision (OTS): An agency of the U.S. Treasury department responsible for the U.S. savings and loan industry.
Official Reserves: Holdings of gold and foreign currencies by official monetary institutions.
Official Statement: A statement published by an issuer of a new municipal security describing itself and the issue
Official Unrequited Transfers: Include a variety of subsidies, military aid, voluntary cancellation of debt, contributions to inter
Offset: Elimination of a long or short position by making an opposite transaction. Related: Liquidation.
Offshore Finance Subsidiary: A wholly owned affiliate incorporated overseas, usually in a tax haven country, whose function is to
Old-Line Factoring: Factoring arrangement that provides collection, insurance, and finance for accounts receivable.
Oligopoly: A Market characterized by a small number of producers who often act together to control the supply o
Oligopsony: A Market characterized by a small number of large buyers who control all purchases and therefore the
OM Stockholm AB: The derivatives market of Sweden, trading a wide variety of interest rate and bond futures. The exch
Omitted Dividend: A dividend that was scheduled to be declared, but that is not voted by the board of directors probab
Omnibus Account: An account carried by one futures commission merchant with another futures commission merchant in wh
On: Used in the context of general equities. Conjunction that denotes trade execution /indication, usual
On A Clean Up: Used in the context of general equities. Willingness to participate in part of a trade if all of the
On Balance: Used for listed equity securities. Left over after pairing off other market buy and sell orders, usu
On Board: Used in the context of general equities. Long.
On The Close Order: A market order that is to be executed as close as possible to the closing price of the day.
On The Money: Used in the context of general equities. In-line, or at the same price, as the last sale.
On The Opening Order: A market order that is to be executed at the price of the first trade of the day.
On The Print: Used in the context of general equities. To participate in a block trade that has already transpired
On The Run: The most recently issued (and typically the most liquid) government bond in a particular maturity ra
On The Sidelines: An investor who decides not to invest due to market uncertainty.
On The Take: Used in the context of general equities. Price moving upward, because more buyers are taking offerin
On The Tape: Used in the context of general equities. (1) Trade printed on the ticker tape; (2) news displayed on
On-Floor Order: Used for listed equity securities. Security order originating with a member on the floor of an excha
One-Decision Stock: A quality stock that is not actively traded, but rather held for its growth potential.
One-Factor APT: A special case of the arbitrage pricing theory that is derived from the one-factor model by using di
One-Man Picture: When both bid and the offered prices of a broker come from the same source.
One-Share-One-Vote Rule: The principle that all shareholders should have equal voting rights in public companies and each sha
One-Way Market: (1) A market in which only one side, the bid or asked, is quoted or firm. (2) A market that is movin
OPD: Tape symbol showing either the first transaction of the day in a security after a delayed opening or
Open: Used in the context of general equities. Having either buy or sell interest at the indicated price l
Open (Good-Till-Cancelled) Order (GTC Order): Order to buy or sell a security that stays active until it is completed or the investor cancels it.
Open Account: Arrangement whereby sales are made with no formal debt contract. The buyer signs a receipt, and the
Open Contracts: Contracts that have been bought or sold without completion of the transaction by subsequent sale or
Open Depending On The Floor: Used for listed equity securities. Having room for a customer buyer or seller contingent on the resu
Open Interest: The total number of derivatives contracts traded that have not yet been liquidated either by an offs
Open On The Print: Used in the context of general equities. Block trader's term for a block trade that has been complet
Open Position: A net long or short position whose value will change with a change in prices.
Open Repo: A repurchase agreement with no definite term. The agreement is made on a day-to-day basis, and eithe
Open Up: Used in the context of general equities. Disclose more information (e.g., the exact price and quanti
Open-End Credit: Revolving line of credit that is extended with every purchase or cash advance.
Open-End Fund: Used in the context of general equities. Mutual fund that continually creates new shares on demand.
Open-End Lease: A lease agreement that provides for an additional payment at the expiration of the lease to adjust f
Open-End Mortgage: Mortgage against which additional debts may be issued. Related: Closed-end mortgage.
Open-Market Operation: Purchase or sale of government securities by the monetary authorities to increase or decrease the do
Open-Market Purchase Operation: A systematic program of repurchasing shares of stock in market transactions at current market prices
Open-Market Rates: Interest rates that are determined in the open market by supply and demand, as opposed to being set
Open-Outcry: The method of trading used at futures exchanges, typically involving calling out the specific detail
Opening: The period at the beginning of the trading session officially designated by an exchange, during whic
Opening Price: The range of prices at which the first bids and offers are made or the first transactions are comple
Opening Purchase: Creation of or increase in a long position in a given series of options.
Opening Sale: Creation of or increase in a short position in a given series of options.
Opening Transaction: Applies to derivative products. (1)Buy or sell transaction that creates a position out of a flat one
Operating Cash Flow: Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting
Operating Cycle: The average time between the acquisition of materials or services and the final cash realization fro
Operating Expenses: All expenses related to the ongoing operations of a company, including research and development, sal
Operating Exposure: Degree to which exchange rate changes, in combination with price changes, will alter a company's fut
Operating In The Red: Doing business while losing money.
Operating Income: Sales revenue minus cost of sales and operating expenses. Similar to earnings before interest and ta
Operating Lease: Short-term, cancelable lease. A type of lease in which the contact period is shorter than the life o
Operating Lease: A type of lease, normally involving equipment, classified as a rental not as a purchase over time. A
Operating Leverage: Fixed operating costs, which are characterized as leverage because they accentuate variations in pro
Operating Profit: Another term for operating income.
Operating Profit (Or Loss): Revenue from a firm's regular activities less costs and expenses and before income deductions.
Operating Profit Margin: The ratio of operating profit to net sales.
Operating Rate: The percentage of total production capacity of a company, industry, or country that is being used.
Operating Ratio: A ratio that measures a firm's operating efficiency.
Operating Risk: The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is creat
Operationally Efficient Market: Market in which investors can obtain transactions services that reflect the true costs associated wi
Opinion Shopping: Attempts by a corporation to attain reporting objectives by following questionable accounting princi
OPM: Stands for 'other people's money,' which refers to borrowed funds used to increase the return on inv
Oporto: Portugal's derivatives exchange (Bolsa de Derivados do Oporto) trading futures on the ten-year gover
Opportunity Cost Of Capital: Expected return that is forgone by investing in a project rather than in comparable financial securi
Opportunity Costs: The difference in the performance of an actual investment and a desired investment adjusted for fixe
Opportunity Set: The possible expected return and standard deviation pairs of all portfolios that can be constructed
Optimal Contract: The contract that balances the three types of agency costs (contracting, monitoring, and misbehavior
Optimal Portfolio: An efficient portfolio most preferred by an investor because its risk/reward characteristics approxi
Optimal Redemption Provision: Provision of a bond indenture that governs the issuer's ability to call the bonds for redemption pri
Optimization Approach To Indexing: An approach to indexing that seeks to optimize some objective, such as to maximize the portfolio yie
Optimum Capacity: The amount of manufacturing output that creates the lowest cost per unit.
Option: Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or befo
Option Account: A brokerage account that is approved to hold option positions or trades.
Option Agreement: A form that an options investor opening an option account fills out guarantees the investor will fol
Option Cycle: The cycle of option expiration months. The most common cycles are: January, April, July, and October
Option Elasticity: The percentage increase in an option's value, given a 1 percentage point change in the value of the
Option Holder: A person who has an option that has not been exercised.
Option Margin: The margin requirement for options described in Regulation T and in brokers' individual policies.
Option Mutual Fund: A mutual fund that buys and sells options for aggressive or conservative investment.
Option Not To Deliver: In the mortgage pipeline, an additional hedge placed in tandem with the forward or substitute sale.
Option Premium: The option price.
Option Price: Also called the option premium; the price the buyer of the options contract pays for the right to bu
Option Seller: Also called the option writer; the party who grants a right to trade a security at a given price in
Option Series: A group of options on the same underlying security with the same exercise price and maturity month.
Option Spread: The trading of options of the same class at the same time in order to profit from changes in the siz
Option-Adjusted Spread (OAS): (1) The spread over an issuer's spot rate curve, developed as a measure of the yield spread that can
Optional Dividend: A dividends that the shareholder can elect to receive either in cash or in stock.
Optional Payment Bond: A bond whose principal and/or interest may be paid in foreign or domestic currency at the discretion
Options Clearing Corporation (OCC): Applies to derivative products. Financial institution that is the actual issuer and guarantor of all
Options Contract: A contract that, in exchange for the option price, gives the option buyer the right, but not the obl
Options Contract Multiple: A constant, set at $100, that when multiplied by the cash index value gives the dollar value of the
Options On Physicals: Interest rate options written on fixed income securities, as opposed to those written on interest ra
Or Better: Used in the context of general equities. Indication on the order ticket of a limit order to buy or s
Oral Contract: A contract not recorded on paper or on computer, buy made vocally which is usually enforceable.
Order: Instruction to a broker/dealer to buy, sell, deliver, or receive securities or commodities that comm
Order Imbalance: Orders of one kind for a stock not offset by the opposite orders, which causes a wide spread between
Order Room: The brokerage firm department receives and processes all orders to buy and sell securities.
Order Splitting: Breaking up orders so that they can be processed as small orders for execution by SOES. Prohibited b
Order Ticket: A form detailing an order instruction that a customer gives an account executive.
Ordinary Income: The income derived from the regular operating activities of a firm or individual.
Ordinary Interest: Interest based on a 360-day year instead of a 365-day year, resulting in what can be a significant d
Ordinary Shares: Apples mainly to international equities. Shares of non-U.S. companies traded in their individual hom
Organization Chart: A chart showing the hierarchical interrelationships of positions within an organization.
Organization Of Petroleum Exporting Countries (OPEC): A cartel of oil-producing countries.
Organized Exchange: A securities marketplace where purchasers and sellers regularly gather to trade securities according
Original Face Value: The principal amount of a mortgage as of its issue date.
Original Issue Discount Debt (OID Debt): Debt that is initially offered at a price below par.
Original Margin: The margin needed to cover a specific new position. Related: Margin, security deposit (initial).
Original Maturity: Maturity at issue. For example, a five-year note has an original maturity of five years; one year la
Origination: The making of mortgage loans.
Originator: A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a p
Orphan Stock: A stock that is ignored by research analysts and as a result may be trading at low price earnings ra
Oslo Stock Exchange: An exchange founded in 1819 and trading stocks, bonds, and stock options that is considered the opti
OTC Bulletin Board: An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requi
OTC Margin Stock: Shares traded over-the-counter that can be used as margin securities under Regulation T.
Other Assets: Assets exclusive of current assets and property, plant and equipment. Other assets can include intan
Other Capital: In the balance of payments, other capital is a residual category that groups all the capital transac
Other Current Assets: Value of noncash assets, including prepaid expenses and accounts receivable, due within one year.
Other Expenses: Expenses due to activities outside the normal operations of the business, for example, loss from for
Other Income: Income from activities that are not undertaken in the ordinary course of a firm's business.
Other Income: Income due to activities outside the normal operations of the business, for example, dividends from
Other Liabilities: Liabilities other than debt, line of credit, and accounts payable, for example, deferred taxes, accr
Other Long-Term Liabilities: Value of leases, future employee benefits, deferred taxes, and other obligations not requiring inter
Other Sources: Amount of funds generated during the period from operations by sources other than depreciation or de
Out: Used in the context of general equities. (1) No longer obligated to an order, as it has already been
Out Of Line: A stock price that is too high or too low in comparison with similar-quality stocks in the same indu
Out Of Print: Not open on the print. See: Clean.
Out Of The Name: Used in the context of general equities. To no longer have an active trading profile/position in the
Out There: Used in the context of general equities. Indication gained from their trading and inquiry activity t
Out With: Used in the context of general equities. Showing of an inquiry to another broker by a customer ('he'
Out-Of-Favor Industry Or Stock: An unpopular industry or stock that usually has a low price-earnings ratio.
Out-Of-The-Money Option: A call option is out of the money if the strike price is greater than the market price of the underl
Outright Rate: Actual forward rate expressed in dollars per currency unit, or vice versa.
Outside Director: A director of a company who is not an employee of that company and brings in outside experience to h
Outside Market: Used in the context of general equities. Outside the inside market (above the lowest offering and be
Outside Of You: Used for listed equity securities. Another order bidding for or offering stock at the same price tha
Outsourcing: Purchasing a significant percentage of intermediate components from outside suppliers.
Outstanding: Used in the context of general equities. Stock held by shareholders (verses the company's treasury s
Outstanding Share Capital: Issued share capital less the par value of shares that are held as the company's treasury stock.
Outstanding Shares: Shares that are currently owned by investors.
Over-The-Counter (OTC): A decentralized market (as opposed to an exchange market) where geographically dispersed dealers are
Overage: Apples mainly to convertible securities. Difference between how much common stock one party must sel
Overall Market Price Coverage: Total assets less intangibles divided by the total of the market value of the security issue and the
Overbought: Used in the context of general equities. Technically too high in price, and hence a technical correc
Overbought-Oversold Indicator: An indicator that attempts to define when prices have moved too far and too fast in either direction
Overdraft: Provision of instant credit by a lending institution.
Overfunded Pension Plan: A pension plan that has a positive surplus (i.e., assets exceed liabilities).
Overhang: Used in the context of general equities. Sizable block of securities or commodities contracts that,
Overhead: The expenses of a business that are not attributable directly) the production or sale of goods.
Overhead: Expenses incurred in operating a business, such as rent, executive salaries, and insurance, that are
Overheating: An economy that is growing very quickly, with the risk of high inflation.
Overissue: An excess of issued shares over authorized shares.
Overlap The Market: Used in the context of general equities. Create a crossed market by expressing a willingness to sell
Overlapping Debt: The portion of debt of political subdivisions or neighboring special districts that a municipality i
Overlay Strategy: A strategy of using futures for asset allocation by pension sponsors to avoid disrupting the activit
Overnight Delivery Risk: A risk brought about because differences in time zones between settlement centers require that payme
Overnight Position: A broker-dealer's position in a security at the end of a trading day.
Overnight Repo: A repurchase agreement with a term of one day.
Overperform: To appreciate at a rate faster than appreciation of the overall market.
Overreaching: Used in the context of general equities. Creating artificial volume in a stock through activity not
Overreaction Hypothesis: The supposition that investors overreact to unanticipated news, resulting in exaggerated movements i
Overshooting: The tendency of a pool of MBS to reflect an especially high rate of prepayments the first time it cr
Oversold: Used in the context of general equities. Technically too low in price, and hence a technical correct
Oversubscribed Issue: Investors are not able to buy all the shares or bonds they want, so underwriters must allocate the s
Oversubscription Privilege: In a rights issue, arrangement by which shareholders are given the right to apply for any shares tha
Overtrading: Excessive broker trading in a discretionary account. Underwriters persuade brokerage clients to purc
Overvalued: A stock price that is seen as too high according to the company's price-earnings ratio, expected ear
Overwithholding: Deducting and paying too much tax that may be refunded to the taxpayer or applied against the next p
Overwriting: A speculative options strategy that involves selling call or put options on stocks that are believed
Owners Equity: Paid-in capital plus donated capital plus retained earnings less liabilities.
Owners Equity: Another term for equity.
P: Fifth letter of Nasdaq stock symbol specifying issue is the company's first class of preferred share
P and I: Stands for principal and interest on bonds or mortgage-backed securities.
P and L: Profit and loss statement for a trader.
P and S: Purchase and sale statement. A statement provided by the broker showing change in the customer's net
P-Coast: Refers to west coast listed equity securities. See: Pacific Stock Exchange.
P-E Effect: That portfolios with low P-E stocks exhibit higher average risk-adjusted returns than those with hig
P-E Ratio: Current stock price divided by trailing annual earnings per share or expected annual earnings per sh
P2P: Business slang, usually used in reference to startups or internet startup, refers to 'path to profit
PAC Bond: Stands for Planned Amortization Class bond. A tranche class offered by some CMOs that has a sinking
Pac-Man Strategy: Takeover defense strategy in which the prospective acquiree retaliates against the acquirer's tender
Pacific Stock Exchange: Used for listed equity securities. Regional exchange located in Los Angeles and San Francisco; only
Package Mortgage: A mortgage on a house and property in the house.
Paid Up: When all payments that are due have been made.
Paid-In Capital: Capital received from investors in exchange for stock, but not stock from capital generated from ear
Paid-Up Policy: A life insurance policy in which all premiums that are due have been paid.
Painting The Tape: Illegal practice by traders who manipulate the market by buying and selling a security to create the
Paired Off: Used for listed equity securities. Matched buy and sell market orders, usually pertaining to the pre
Paired Shares: Stock of two companies under the same management that are sold as one unit with one certificate.
Pairoff: A buyback to offset and effectively liquidate a prior sale of securities.
Panic Buying Or Selling: Rapid trading of stocks or bonds in high volume in anticipation of sharply rising or falling prices,
Paper: Money market instruments, commercial paper, and other.
Paper Dealer: A brokerage firm that buys and sells commercial paper to make a profit.
Paper Gain (Loss): Unrealized capital gain (loss) on securities held in a portfolio based on a comparison of current ma
Par: Equal to the nominal or face value of a security. A bond selling at par is worth an amount equivalen
Par Bond: A bond trading at its face value.
Par Value: The stated value of a share of stock. Par is usually a minimal value (such as $.01) and bears no rel
Par Value: Also called the maturity value or face value; the amount that an issuer agrees to pay at the maturit
Par Value Of Currency: The official exchange rate between two countries' currencies.
Parallel Loan: A process whereby two companies in different countries borrow each other's currency for a specific p
Parallel Shift In The Yield Curve: A shift in economic conditions in which the change in the interest rate on all maturities is the sam
Parameter: A model is a combination of variables, such as GDP growth, and coefficients which multiply these var
Parent Company: A company that controls subsidiaries through its ownership of voting stock, as well as runs its own
Paris Bourse: National stock market of France.
Paris Interbank Offer Rate (PIBOR): The deposit rate on interbank transactions in the Eurocurrency market quoted in Paris.
Parity: For convertibles, level at which a convertible security's market price equals the aggregate value of
Parity Value: Related: Conversion value
Parking: Putting money into safe investments such as money market investments while deciding where to invest
Parking Violation: Often used in risk arbitrage. Illegal holding of stock by a third party, or the financing of such a
Partial: Used in the context of general equities. Trade whose size is only part of the total customer indicat
Participate But Do Not Initiate: Used for listed equity securities. 'Participate in the side of the market indicated by the order, bu
Participating Buyer-Seller: Used for listed equity securities. (1) Customer willing to buy-sell in line with market. (2) Buyer-s
Participating Convertible Preferred Stock: Preferred stock that can be converted into common stock at the option of the holder. In contrast, to
Participating Dividend: Dividend received from ownership of participating preferred stock.
Participating Fees: The portion of total fees in a syndicated credit that go to the participating banks.
Participating GIC: A guaranteed investment contract whose policyholder is not guaranteed a crediting rate, but instead
Participating Life Insurance Policies: Life insurance that pays dividends to policyholders depending on the company's success as provided b
Participating Preferred Stock: Preferred stock that provides the holder with a specified dividend plus the right to additional earn
Participation Certificates (PC): Used in the context of general equities. Investments representing an interest in a pool of funds or
Participation Loan: A large loan made by a group of lenders, that enables a borrower to obtain financing above the legal
Partner: Business associate who shares equity in a firm.
Partnership: Shared ownership among two or more individuals, some of whom may, but do not necessarily, have limit
Partnership Agreement: A written agreement among partners detailing the terms and conditions of participation in a business
Pass The Book: The process of transferring responsibility for a brokerage firm's trading account from one office to
Pass-Through Coupon Rate: The interest rate paid on a securitized pool of assets, which is less than the rate paid on the unde
Pass-Through Rate: The net interest rate passed through to investors after deducting servicing, management, and guarant
Pass-Through Securities: A pool of fixed income securities backed by a package of assets (i.e., mortgages) where the holder r
Passive: Income or loss from business activities in which a person does not materially participate, such as a
Passive Activity Loss (PAL): A loss incurred in participating in passive investing.
Passive Bond: A bond without any interest yield.
Passive Income Generator (PIG): An investment that favors passive income, such as an income-oriented real estate limited partnership
Passive Investing: Putting money into a profitable business opportunity that is deemed passive by the IRS and thus bene
Passive Investment Management: Buying a well diversified portfolio to represent a broad-based market index without attempting to se
Passive Portfolio: A market index portfolio.
Passive Portfolio Strategy: A strategy that involves minimal expectational input, and instead relies on diversification to match
Patent: The exclusive right to use documented intellectual property in producing or selling a particular pro
Path-Dependent Option: An option whose value depends on the sequence of prices of the underlying asset rather than just the
Pattern: A technical chart formation used to make market predictions by following the price movements of secu
Pay-As-You-Go Basis: A method of paying income tax in which the employer deducts a portion of an employee's monthly salar
Pay-Down: In a Treasury refunding, the amount by which the par value of the securities maturing exceeds that o
Pay-To-Play: Attempts by municipal bond underwriting businesses to gain influence with political officials who de
Pay-Up: The loss of cash resulting from a swap into higher-priced bonds or the need/willingness of a bank or
Payable Through Drafts: A method of making payment that is used to maintain control over payments made on behalf of the firm
Payables: Related: Accounts payable
Payables: Another term for accounts payable.
Payback: The length of time it takes to recover the initial cost of a project, without regard to the time val
Payee: A person receiving payment through any form of money transfer method.
Payer: The person making a payment to a payee.
Paying Agent: An agent who makes principal and interest payments to bondholders on behalf of the issuer.
Payment Date: The date on which shareholders of record will be sent a check for the declared dividend.
Payment Float: Company-written checks that have not yet cleared.
Payment-In-Kind (PIK) Bond: A bond that gives the issuer an option (during an initial period) either to make coupon payments in
Payments Netting: Reducing fund transfers between affiliates to only a netted amount. Netting can occur on a bilateral
Payments Pattern: Describes the collection pattern of receivables. The pattern might describe the probability that a 7
Payoff Diagram: In option pricing, a graph of the value of the option position at expiration as a function of the un
Payout Ratio: Generally, the proportion of earnings paid out to the common stockholders as cash dividends. More sp
Payroll: The total wages, not including benefits, paid by a business during each forecast year.
Peak: The high point at the end of an economic expansion until the start of a contraction.
Pecking-Order View (Of Capital Structure): The argument that external financing transactions costs, especially those associated with the proble
Pegging: Making transactions in a security, currency, or commodity in order to stabilize or target its value
Penalty Clause: A clause found in contract agreements that provides for a penalty in the event of default.
Pennant: A chart pattern resembling a pointed flag, with the point facing to the right, which shows a diminis
Penny Stock: Used in the context of general equities. Stock that typically sells for less than $1 a share, althou
Pension Benefit Guaranty Corporation (PBGC): A federal agency that insures the vested benefits of pension plan participants (established in 1974
Pension Fund: A fund set up to pay the pension benefits of a company's workers after retirement.
Pension Parachute: A form of poison pill providing that in the event of a hostile takeover attempt, any excess pension
Pension Plan: A fund that is established for the payment of retirement benefits.
Pension Reversion: Termination of an overfunded defined benefit pension plan and replacement of it with a life insuranc
Pension Sponsors: Organizations that have established a pension plan.
Penultimate Profit Prospect (PPP): The second-lowest-priced of the ten highest-yielding stocks in the Dow Jones Industrial Average that
People Pill: A form of poison pill providing that the entire management threatens to resign in the event of a tak
Per Capita Debt: The total bonded debt of a municipality divided by the population of the municipality.
Percent To Double: Percentage that the stock price has to rise (fall) to double the price of the call (put).
Percentage Order: Used for listed equity securities. Market limited price order to buy/sell a specified percentage (us
Percentage Premium: Applies mainly to convertible securities. Premium over parity of a convertible bond divided by parit
Perfect Capital Market: A market in which there are never any arbitrage opportunities.
Perfect Competition: An idealized market environment in which every market participant is too small to affect the market
Perfect Hedge: A situation in which the profit and loss from the underlying asset and the hedge position are equal.
Perfect Market View (Of Capital Structure): Analysis of a firm's capital structure decision, which shows the irrelevance of capital structure in
Perfect Market View (Of Dividend Policy): Analysis of a decision on dividend policy, in a perfect capital market environment, that shows the i
Perfected First Lien: A first attachment on an asset that is duly recorded with the relevant government body so that the l
Perfectly Competitive Financial Markets: Markets in which no trader has the power to change the price of goods or services. Perfect capital m
Performance Attribution Analysis: The decomposition of a money manager's performance results to explain the reasons why those results
Performance Bond: A surety bond between two parties, insuring one party against loss if the terms of a contract are no
Performance Evaluation: The assessment of a manager's results, which involves, first, determining whether the money manager
Performance Fund: A growth-oriented mutual fund investing in growth stock and performance stock with low dividends and
Performance Measurement: Calculation of the return a money manager realizes over some time interval.
Performance Shares: Shares of stock given to managers on the basis of performance as measured by earnings per share and
Performance Stock: High-growth stock in a company that retains earnings for further growth and therefore pays no divide
Period Expenses: A term for expenses recorded in the period in which they occur regardless of whether or not they per
Period Of Digestion: The time period of often high volatility after a new issue is released when the trading price of the
Period-Certain Annuity: An annuity that provides guaranteed payments to an annuitant for a specified period of time.
Periodic Payment Plan: Accumulation of capital in a mutual fund by making regular payments on a monthly or quarterly basis.
Periodic Purchase Deferred Contract: A fixed or variable annuity contract for which fixed-amount premiums are paid either monthly or quar
Periodic Rate: The monthly effective interest rate. For example, the periodic rate on a credit card with an 18% ann
Periodicity: The level of detail in terms of time at which data is forecast or reported, specified as months, qua
Periods: Discrete intervals of time. The word period generally refers either to the interval of the entire fo
PERLS: Principal Exchange-Rated-Linked Securities
Permanent Financing: Long-term financing using either debt or equity.
Perpendicular Spread: Option strategy involving the purchase of options with similar expiration dates and different exerci
Perpetual Bond: Nonredeemable bond with no maturity date that pays regular interest rates indefinitely.
Perpetual Inventory: Recordkeeping system in which book inventory is updated daily.
Perpetual Warrants: Warrants that have no expiration date.
Perpetuity: A constant stream of identical cash flows without end, such as a British consol.
Perquisites: Personal benefits, including direct benefits, such as the use of a firm car or expense account for p
Personal Article Floater: Insurance policy attachment designed to cover specified personal valuables.
Personal Exemption: Amount of money a taxpayer can exclude from personal income for each member of the household in calc
Personal Income: Total income received from all sources, including wages, salaries, or rents, and the like.
Personal Inflation Rate: The inflation rate as it affects a specific individual.
Personal Property: Any assets other than real estate.
Personal Tax View (Of Capital Structure): The argument that the difference in personal tax rates between income from debt and income from equi
Personal Trust: An interest in an asset held by a trustee for the benefit of another person.
Phantom Income: Income from a limited partnership that creates taxability without generating cash flow.
Phantom Stock Plan: An incentive scheme that awards management bonuses based on increases in the market price of the com
Philadelphia Board Of Trade (PBOT): A subsidiary of the Philadelphia Stock Exchange that trades currency futures.
Philadelphia Stock Exchange (PHLX): A securities exchange trading American and European foreign currency options on spot exchange rates.
Philippine Stock Exchange: Stock exchange based in the Philippines, which operates two trading floors, at Manila and Makati.
Phillips Curve: A graph that supposedly shows the relationship between inflation and unemployment. It is conjectured
Phone Switching: Transferring money between funds in the same mutual fund family by telephone request. There may be a
Physical Verification: A procedure auditors use to ensure that inventory recorded in the book is correct by actually checki
Pickup: The gain in yield that occurs when a block of bonds is swapped for another block of higher-coupon bo
Pickup Bond: A bond with a relatively high coupon that is close to the date at which it is callable, meaning that
Picture: Describes bid and asked prices a broker quotes for a given security. Used for listed equity securiti
Pie Model Of Capital Structure: A model of the debt-equity ratio of the firms, graphically depicted in slices of a pie that represen
Piece: Apply mainly to convertible securities. Increment of bonds that trade in portions of $1000 minimum.
Piggyback Registration: When a securities underwriter allows existing holdings of shares in a corporation to be sold in comb
Piggybacking: A broker who trading stocks, bonds or commodities in a personal account following a trade just made
PIK (Payment-In-Kind) Securities: Highly speculative bonds or preferred stock that pay interest or dividends through additional bonds
Pink Sheets: Refers to over-the-counter trading. Daily publication of the national quotation bureau that reports
Pip: Used for listed equity securities. Smallest unit of a currency (i.e., cents for U.S. dollars).
Pipeline: The underwriting process that must be completed with the SEC before a security can be offered for sa
Pit: A specific area of the trading floor that is designed for the trading of commodities, individual fut
Pit Committee: A committee of the exchange that determines the daily settlement price of futures contracts.
PITI: Stands for principal, interest, taxes, and insurance, the four main parts of monthly mortgage obliga
Pivot: Price level established as being significant by market's failure to penetrate or as being significan
Place: The marketing of new securities, usually through sales to institutional investors. See: Float.
Placement: A bank depositing Eurodollars with (selling Eurodollars to) another bank is often said to be making
Placement Ratio: The percentages of last week's new municipal bond offerings that have been bought from the underwrit
Plain Vanilla: A term that refers to a relatively simple derivative financial instrument, usually a swap or other d
Plan For Reorganization: A plan for reorganizing a firm during the Chapter 11 bankruptcy process.
Plan Participants: Employees or other beneficiaries who are eligible to receive benefits from a company's employee bene
Plan Period: Another term for Forecast Period.
Plan Sponsors: The entities that establish pension plans, including private business entities acting for their empl
Planned Amortization Class (PAC): (1) The class of CMO that has the most stable cash flows and the lowest prepayment risk of any class
Planned Capital Expenditure Program: Budgeted or projected outlays for major expenditures on permanent or fixed assets as outlined in the
Planned Financing Program: Budgeted or projected ways need for reasons or to obtain short-term and long-term financing as outli
Planning Horizon: The length of time a model or investor or plan projects into the future.
Plant: The assets of a business including land, buildings, machinery, and all equipment permanently employe
Player: Used in the context of general equities. Customer or trader who is actively involved in a particular
Playing The Market: Trading in high, uncalculated risk usually refers to actions of amateur investors.
Plow Back: To reinvest earnings in a business rather than pay out them out as dividends. Common practice in hig
Plowback Rate: Related: Retention rate
Plug: A variable that handles financial slack in the financial plan.
Plus: Used to quote a price in 64ths. Dealers in government bonds normally give price quotes in 32nds. To
Plus A Match: Used for listed equity securities. Floor indication that someone is on the floor with equal priority
Plus Tick: Used in the context of general equities. Trade occurring at a price higher than the previous sale. U
Plus Tick Seller: Used for listed equity securities. A short seller (referring to the regulation requiring a plus tick
Point: The smallest unit of price change quoted, or one one-hundredth of a percent. Related: Minimum price
Point And Figure Chart: A price-only chart that takes into account only whole integer changes in price, i.e., a 2-point chan
Poison Pill: Anti-takeover device that gives a prospective acquiree's shareholders the right to buy shares of the
Poison Put: A covenant allowing the bondholder to demand repayment in the event of a hostile takeover.
Policy Asset Allocation: Way in which an investor seeks to assess an appropriate long-term 'normal' mix of assets that repres
Policy Limit: The maximum dollar amount of coverage provided by an insurance company for a certain policy.
Policy Loan: A loan often made at a below-market interest rate from an insurance company to a policyholder that i
Policyholder: An individual who owns an insurance policy.
Policyholder Loan Bonds: Packaged loans acquired by policyholders that are secured by the cash surrender value of the policie
Political Risk: Possibility of negative events such as expropriation of assets, changes in tax policy, restrictions
Pool: In capital budgeting, the concept that investment projects are financed out of a pool of bonds, pref
Pool Factor: The outstanding principal balance divided by the original principal balance with the result expresse
Pooling Of Interests: An accounting method for reporting acquisitions accomplished through the use of equity. The combined
Porcupine Provision: Often used in risk arbitrage. See: Shark repellent.
Portability: The character of benefits that may be carried from a previous job to the next.
Portfolio: A collection of investments, real and/or financial.
Portfolio Beta: Used in the context of general equities. The beta of a portfolio is the weighted sum of the individu
Portfolio Insurance: A strategy using a leveraged portfolio in the underlying stock to create a synthetic put option. The
Portfolio Internal Rate Of Return: The rate of return computed by first determining the cash flows for all the bonds in the portfolio a
Portfolio Management: Related: Investment management
Portfolio Manager: Used in the context of general equities. Professional responsible for the securities portfolio of an
Portfolio Opportunity Set: The expected return/standard deviation pairs of all portfolios that can be constructed from a given
Portfolio R2: Used in the context of general equities. Number between 0 and 1 that measures the strength of correl
Portfolio Restructuring: Applies to derivative products. Recomposition of a portfolio's asset mix by selling off undesired as
Portfolio Separation Theorem: Theory that an investor's choice of a risky investment portfolio is separate from his attitude towar
Portfolio Turnover Rate: For an investment company, an annualized rate found by dividing the lesser of purchases and sales by
Portfolio Variance: Weighted sum of the covariance and variances of the assets in a portfolio.
Position: A market commitment; the number of contracts bought or sold for which no offsetting transaction has
Position Building: Buying shares to build up a long position or selling shares to create a short position in a particul
Position Diagram: Diagram showing the possible payoffs from a derivative investment.
Position Limits: Applies to derivative products. Maximum position available in any one future or option contract for
Position Self: Used in the context of general equities. Going long or short in anticipation of a stock's movement.
Position Sheet: Used in the context of general equities. List of long and short positions for an individual trader o
Position Trader: A commodities trader who takes a long-term approach in maintaining positions in the market and does
Positive Carry: Related: Net financing cost
Positive Convexity: A property of option-free bonds that the price appreciation for a large downward change in interest
Positive Covenant (Of A Bond): A bond covenant that specifies certain actions the firm must take. Also called an affirmative covena
Positive Yield Curve: When long-term debt interest rates are higher than short-term debt rates (because of the increased r
Possessions Corporation: A type of corporation permitted under the U.S. tax code whose branch operation in a U.S. possession
Post: Particular place on the floor of an exchange where transactions in stocks listed on the exchange occ
Post-Audit: A set of procedures for evaluating a capital budgeting decision after the fact.
Post-Dated Check: A check that becomes payable and negotiable on a future date specified.
Post-Trade Benchmarks: Prices after the decision to trade.
Postponement Option: The option of deferring a project without eliminating the possibility of undertaking it.
Postponing Income: Purposely delaying receipt of income to a later year in order to reduce current tax liability.
Pot: The portion of stock or bond issue that is returned to the managing underwriter by the participating
Pot Is Clean: Phrase used when managing underwriter has sold the entire pot.
Power Of Attorney: A written authorization allowing a person to perform certain acts on behalf of another, such as movi
PP and E: See Property, Plant & Equipment.
Pre-Sold Issue: An issue that is sold out before the coupon announcement.
Pre-Tax Earnings Or Profits: Net income before federal income taxes are subtracted.
Pre-Tax Rate Of Return: Gain on a security before taxes.
Pre-Trade Benchmarks: Prices occurring before or at the decision to trade.
Prearranged Trading: Possibly fraudulent practice whereby commodities dealers carry out risk-free trades at predetermined
Preauthorized Checks (PAC): Checks that are authorized by a payer in advance, and written either by the payee or by the payee's
Preauthorized Electronic Debits (PAD): Debits to a bank account in advance by the payer. The payer's bank sends payment to the payee's bank
Precautionary Demand (For Money): The need to meet unexpected or extraordinary contingencies with a buffer stock of cash.
Precautionary Motive: A desire to hold cash in order to be able to deal effectively with unexpected events that require ca
Precedence: The established system of priorities of trades in an exchange. For example, the highest bid and lowe
Precious Metals: Gold, silver, platinum, and palladium, which are used for their intrinsic value or for their value i
Precision: The scale at which forecast numbers are displayed. Choices include dollars, hundreds, thousands, and
Precompute: Method of charging interest in which the annual interest is either deducted from the face amount of
Preemptive Right: Common stockholders' right to anything of value distributed by the company.
Preference: Refers to over-the-counter trading. Selection of a dealer to handle a trade despite the dealer's mar
Preference Stock: A security that ranks junior to preferred stock but senior to common stock in the right to receive p
Preferred Dividend Coverage: Net income after interest and taxes (before common stock dividends) divided by preferred stock divid
Preferred Equity Redemption Stock (PERC): Preferred stock that converts automatically into equity at a stated date. A limit is placed on the v
Preferred Habitat Theory: A biased expectations theory that believes the term structure reflects the expectation of the future
Preferred Shares: Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be
Preferred Stock: Total dollar amount. Generally based on redemption or liquidation price.
Preferred Stock: A security that shows ownership in a corporation and gives the holder a claim, prior to the claim of
Preferred Stock Agreement: A contract for preferred stock.
Preferred Stock Ratio: Preferred stock at par value divided by total capitalization, which gives the portion of capitalizat
PREG: Financial ratio defined as stock price divided by sales over earnings growth. Often used in the valu
Preliminary Prospectus: An initial or tentative version of a prospectus.
Premium: (1) A bond sold above its par value. (2) The price of an option contract; also, in futures trading,
Premium Bond: A bond that is selling for more than its par value.
Premium Income: The income received by an investor who sells an option.
Premium Raid: An attempt to acquire a large portion of a company's stock to gain control by offering stockholders
Prepackaged Bankruptcy: A bankruptcy in which a debtor and its creditors pre-negotiate a plan of reorganization and then fil
Prepaid Expenses: Services, goods, and intangibles paid for prior to the period in which they provide benefit. Prepaid
Prepaid Interest: An asset account showing interest that has been paid in advance, which is expensed and charged to th
Prepayment Penalty: A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity
Prepayment Speed: Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, cri
Prepayments: Payments made in excess of scheduled mortgage principal repayments.
Prerefunded Bond: Refunded bond.
Prerefunding: Procedure of floating a second bond at a lower interest rate in order to pay off the first bond at t
Presale Order: An order to purchase part of a new municipal bond issue that is accepted by an underwriting syndicat
Present Value: The amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be
Present Value Factor: Factor used to calculate an estimate of the present value of an amount to be received in a future pe
Present Value Of Growth Opportunities: Net present value (NPV) of investments the firm is expected to make in the future.
President: Highest-ranking officer in a corporation after the chief executive officer.
Presidential Election Cycle Theory: A theory that stock market trends can be predicted and explained by the four-year presidential elect
Previous Balance Method: Method of calculating finance charges based on the account balance at the end of the previous month.
Price Change: Increase or decrease in the closing price of a security compared to the previous day's closing price
Price Compression: The limitation of the price appreciation potential for a callable bond in a declining interest rate
Price Discovery Process: The process of determining the prices of assets in the marketplace through the interactions of buyer
Price Elasticities: The percentage change in quantity divided by a percentage change in the price. Answers the question:
Price Gap: A term used when the price of a stock rockets or dives in a direction away from its last price range
Price Give: Used in the context of general equities. Willingness of a buyer or seller to negotiate on price, wit
Price Impact Costs: Related: Market impact costs
Price Leadership: A price charged by the dominant producer that becomes the price adopted by all the other producers.
Price List: A schedule that associates prices with individual products. This list allows you to forecast sales i
Price Momentum: Related: Relative strength
Price Of Admission: Used in the context of general equities. Cost to become a player in a stock in an inordinately aggre
Price Persistence: Related: Relative strength
Price Range: The interval between the high and low prices over which a stock has traded over a particular period
Price Risk: The risk that the value of a security (or a portfolio) will decline in the future. Or, a type of mor
Price Spread: An options strategy that involves buying and selling two options on the same security with the same
Price Support: Government intervention to set an artificially high price through the use of a price floor designed
Price Takers: Individuals who respond to rates and prices by acting as though prices have no influence on them.
Price Value Of A Basis Point (PVBP): Also called the dollar value of a basis point; a measure of the change in the price of a bond if the
Price-Book Ratio: Compares a stock's market value to the value of total assets less total liabilities (book value). De
Price-Earnings Ratio: Shows the multiple of earnings at which a stock sells. Determined by dividing current stock price by
Price-Earnings Ratio (P-E): The market value of a company's stock divided by net income.
Price-Sales Ratio: Determined by dividing current stock price by revenue per share (adjusted for stock splits). Revenue
Price-Specie Flow Mechanism: Adjustment mechanism under the classic gold standard allowing disturbances in the price level in one
Price-Volume Relationship: A relationship espoused by some technical analysts that signals continuing rises or falls in securit
Price-Weighted Index: An index giving a greater influence to higher-valued stocks by weighting all component stocks by the
Priced Out: The market has already incorporated information, such as a low dividend, into the price of a stock.
Prices (Of Equity): Price of a share of common stock on the date shown. Highs and lows are based on the highest and lowe
Pricey: Term used for an unrealistically low bid price or unrealistically high offer price.
Pricing Efficiency: Also called external efficiency; a market characteristic that prices at all times fully reflect all
Primary Dealer: Usually refers to the select list of securities firms that are authorized to deal in new issues of g
Primary Distribution: Sale of a new issue of stock or bonds, as distinguished from a secondary distribution.
Primary Earnings Per (Common) Share: Earnings available for the payment of dividends to common stockholders divided by the number of comm
Primary Market: Where a newly issued security is first offered. All subsequent trading of this security occurs is do
Primary Offering: Direct/Sale of a firm's newly issued shares by the firm to investors.
PRIME: Stands for prescribed right to income and maximum equity, a certificate that entitles the owner to t
Prime Paper: The highest-quality, investment-grade debt of corporations as decided by rating agencies such as Moo
Prime Rate: The interest rate that banks charge to their most creditworthy customers. The prime rate is an impor
Prime Rate: The interest rate at which banks lend to their best (prime) customers. More often than not, a bank's
Prime Rate Fund: A mutual fund that buys portions of corporate loans from banks and pays the interest to shareholders
Primitive Security: An instrument such as a stock or bond for which payments depend only on the financial status of the
Principal: (1) The total amount of money being borrowed or lent. (2) The party affected by agent decisions in a
Principal Amount: The face amount of debt; the amount borrowed or lent. Often called principal.
Principal Exchange-Rated-Linked Securities (PERLS): A debt instrument with its principal and interest denominated in U.S. dollars, but with principal re
Principal Stockholder: A stockholder who owns 10% or more of the voting stock of a company. Such stockholders must report a
Principal-Agent Relationship: Occurs when one person, an agent, acts on the behalf of another person, the principal.
Principal-Only (PO): A mortgage-backed security (MBS) whose holder receives only principal cash flows on the underlying m
Principle Of Diversification: That portfolios of different sorts of assets differently correlated with one another will have negli
Print: Used in the context of general equities. As a verb execute a trade, evidenced by its printing on the
Prior-Lien Bond: A bond usually arising from reorganization with precedence over another bond of the same issuing com
Prior-Preferred Stock: Preferred stock that has a higher claim on all dividends and assets in liquidation than claims of ot
Priority: Used for listed equity securities. System used in an auction market, in which the first bid or offer
Private Export Funding Corporation (PEFCO): Company that mobilizes private capital for financing the export of big-ticket items by U.S. firms by
Private Letter Ruling: A ruling by the IRS in response to a request for interpretation of a tax law.
Private Limited Partnership: A limited partnership with no more than 35 participants that is not registered with the SEC.
Private Market Value (PMV): The break-up market value of all divisions of a company if divisions were each independent and estab
Private Mortgage Insurance (PMI): Policy protecting the holder against loss resulting from default on a mortgage loan.
Private Placement: The sale of a bond or other security directly to a limited number of investors. For example, sale of
Private Unrequited Transfers: Resident immigrant workers' remittances to their country of origin as well as, e.g., gifts, dowries,
Private-Label Pass-Throughs: Related: Conventional pass-throughs.
Private-Purpose Bond: A municipal bond allowing more than 10% of the proceeds go to private activities.
Privatization: The transfer of government-owned or government-run companies to the private sector, usually by selli
Pro Forma Capital Structure Analysis: A method of analyzing the impact of alternative possible capital structure choices on a firm's credi
Pro Forma Financial Statements: A firm's financial statements as adjusted to reflect a projected or planned transaction. 'What-if' a
Pro Forma Statement: A financial statement showing the forecast or projected operating results and balance sheet, as in p
Pro-Forma Financial Statements: A set of financial statements and other schedules that show projected results for a future period. T
Probability: The relative likelihood of a particular outcome among all possible outcomes.
Probability Density Function: The function that describes the change of certain realizations for a continuous random variable.
Probability Distribution: A function that describes all the values a random variable can take and the probability associated w
Probability Function: A measure that assigns a likelihood of occurrence to each and every possible outcome.
Proceeds Sale: OTC securities sale whose revenue is used to buy another security.
Producer Price Index (PPI): Index measuring changes in wholesale prices, published by the U.S. Bureau of Labor Statistics every
Product Cycle: The time it takes to bring new and/or improved products to market.
Product Risk: A type of mortgage pipeline risk that occurs when a lender has an unusual loan in production or inve
Production Payment Financing: A method of nonrecourse asset-based financing in which a specified percentage of revenue realized fr
Production Rate: The coupon rate at which a pass-through security guaranteed by Ginnie Mae is issued.
Production-Flow Commitment: An agreement by the loan purchaser to allow a monthly loan quota to be delivered in batches.
Productivity: The amount of output per unit of input, such as the quantity of a product produced per hour of capit
Profile Buyer-Seller: Trader trying to get involved in a stock who presents self as a buyer-seller to draw a call from a c
Profit: Revenue minus cost. The amount one makes on a transaction.
Profit: Another term for net income.
Profit and Loss Statement (P and L): Another term for the income statement.
Profit Center: A division of an organization held responsible for producing its own profits.
Profit Forecast: A prediction of future profits of a company, which may affect investment decisions.
Profit Margin: Indicator of profitability. The ratio of earnings available to stockholders to net sales. Determined
Profit Rate: Annual Earnings per share after taxes as a percentage of shareholders' equity capital per share at c
Profit Taking: Action by short-term securities traders to cash in on gains created by a sharp market rise, which pu
Profit-Sharing Plan: An incentive system providing that employees share in company profits through a cash fund or a defer
Profitability Index: The present value of the future cash flows divided by the initial investment. Also called the benefi
Profitability Ratios: Ratios that focus on how well a firm is performing. Profit margins measure performance with relation
Profitablity Stability: The complement of the standard deviation of annual profit rates from those which would have be plott
Program Trades: Orders requiring the execution of trades in a large number of different stocks at as near the same t
Program Trading: Trades based on signals from computer programs, usually entered directly from the trader's computer
Progress Payments: Periodic payments to a supplier, contractor, or subcontractor for work as it is completed as desired
Progress Review: A periodic review of a capital investment project to evaluate its continued economic viability.
Progressive Tax System: A tax system providing that the average tax rate increases for some increases in income, but never d
Project Financing: A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone b
Project Link: An econometric model forecasting and describing the effects of changes in different economies on oth
Project Loan Certificate (PLC): A primary program of Ginnie Mae for securitizing FHA-insured and coinsured multifamily, hospital, an
Project Loan Securities: Securities backed by a variety of FHA-insured loans-primarily multifamily apartment buildings, hospi
Project Loans: Usually FHA-insured and HUD-guaranteed mortgages on multiple-family housing complexes, nursing homes
Project Notes (PN): Notes issued by municipalities to finance federally sponsored programs in urban renewal and housing
Projected Benefit Obligation (PBO): A measure of a pension plan's liability at the calculation date assuming that the plan is ongoing an
Projected Maturity Date: With CMOs, the date at the end of the estimated cash flow window where final payment is made.
Projection: The use of econometric models to forecast the future performance of a company, country, or other fin
Promissory Note: Written pledge to pay.
Prompt Payment Discounts: Discounts that a business gives to credit customers who pay within a specified period of time; also
Property Inventory: A list of personal property with corresponding values and initial costs often used to substantiate i
Property Rights: Rights of individuals and companies to own and use property as they see fit and to receive the strea
Property Tax: A tax levied on real property based on its use and its assessed value.
Property, Plant And Equipment (PP and E): Assets used in the operations of a business that have a useful life greater than one year, including
Proportional Representation: A method of stockholder voting that allows minority shareholders and groups of small shareholders to
Proprietary Trading: Principal trading in which firm seeks direct gain rather than commission dollars.
Proprietorship: An unincorporated business that is owned and operated by only one person who has complete liability
Prospective Earnings Growth (PEG Ratio): Based on forecasts from proprietary sources such as Institutional Brokers' Estimate System (IBES), F
Prospectus: Formal written document to sell securities that describes the plan for a proposed business enterpris
Protect: Assure the salesperson or trader that interest, buy or sell, will be attended to, given any change i
Protectionism: Notion that governments should protect domestic industry from import competition by means of tariffs
Protective Covenant: A part of an indenture or loan agreement that limits certain actions a company may take during the t
Protective Put Buying Strategy: A strategy that involves buying a put option on the underlying security that is held in a portfolio.
Provision For Income Taxes: An amount on the P & I statement that estimates a company's total income tax liability for the year.
Provisional Call Feature: A stipulation in a convertible issue that allows the issuer to call the issue during the noncall per
Proxy: Authorization, whether written or electronic, that shareholders' votes may be cast by others. Shareh
Proxy Contest: A battle for the control of a firm in which a dissident group seeks, from the firm's other sharehold
Proxy Fight: Often used in risk arbitrage. Technique used by an acquiring company to attempt to gain control of a
Proxy Statement: Document intended to provide shareholders with information necessary to vote in an informed manner o
Proxy Vote: Vote cast by one person or entity on behalf of another.
Prudent-Man Rule: A common law standard against which those investing the money of others (fiduciaries) are judged.
PSA Prepayment Rate: The Bond Market Trade Association's Mortgaged Asset-Backed Securities Division's prepayment model ba
PSSG: Financial ratio defined as stock price divided by sales over sales growth. Often used in the valuati
Public Debt: Issues of debt by governments to compensate for a lack of tax revenues.
Public Housing Authority Bond: Bonds of local public housing agencies that are secured by the federal government and whose proceeds
Public Limited Partnership: A limited partnership with an unlimited number of partners that is registered with the SEC and is av
Public Offering: Used in the context of general equities. Offering to the investment public, after compliance with re
Public Offering Price: The price of a new issue of securities at the time that the issue is offered to the public.
Public Ownership: The portion of a company's stock that is held by the public.
Public Securities Administration (PSA): The trade association for primary dealers in U.S. government securities, including MBSs.
Public Utility Holding Company Act Of 1935: Legislation intended to eliminate many holding company abuses by reorganizing the financial structur
Public Warehouse: Storage facility operated by an independent warehouse company on its own premises.
Public-Purpose Bond: A specific type of municipal bond used to finance public projects such as roads or government buildi
Publicly Held: Describes a company whose stock is held by the public, whether individuals or business entities.
Publicly Traded Assets: Assets that can be traded in a public market, such as the stock market.
Puke: Slang for a trader selling a position, usually a losing position, as in, 'When in doubt, puke it out
Pullback: The downward reversal of a prolonged upward price trend.
Pulling In Their Horns: Investors selling off positions after a stock or bond market has increased sharply or setting up hed
Purchase: Buy; be long; have an ownership position.
Purchase Accounting: Method of accounting for a merger that treats the acquirer as having purchased the assets and assume
Purchase Agreement: Used in connection with project financing; an agreement to purchase a specific amount of project out
Purchase And Sale: A method of securities distribution in which a firm purchases securities from the issuer for its own
Purchase Fund: Resembles a sinking fund, except that money is used to purchase bonds only if they are selling below
Purchase Loan: A consumer loan taken to finance a purchase.
Purchase Method: Accounting for an acquisition using market value for the consolidation of the two entities' net asse
Purchase Order: A written order to buy specified goods at a stipulated price.
Purchase-Money Mortgage: A mortgage given by a buyer in lieu of cash when the buyer is unable to borrow commercially for the
Purchases Of PP and E: The acquisition cost of new property, plant and equipment assets in a given year, minus the proceeds
Purchasing Power: The amount of credit available for securities trading in a margin account, after taking margin requi
Purchasing Power Of The Dollar: The amount of goods and services that can be exchanged for a dollar as compared with amount of a pre
Purchasing Power Parity: The notion that the ratio between domestic and foreign price levels should equal the equilibrium exc
Purchasing Power Risk: Related: Inflation risk
Pure Discount Bond: A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or
Pure Expectations Theory: A theory that asserts that forward rates exclusively represent the expected future rates. In other w
Pure Index Fund: A portfolio that is managed so as to perfectly replicate the performance of the market portfolio.
Pure Monopoly: A market in which only one firm has total control over the entire market for a product due to some s
Pure Play: A company involved in only one line of business.
Pure Yield Pickup Swap: Moving to higher yield-bonds.
Purpose Loan: A loan that is backed by securities and that is used to buy other securities under certain governmen
Purpose Statement: A form filed by a borrower that describes the use of a loan backed by securities, and guarantees tha
Put: An option granting the right to sell the underlying futures contract. Opposite of a call.
Put An Option: To exercise a put option.
Put Bond: A bond that the holder may choose either to exchange for par value at some date or to extend for a g
Put Guarantee Letter: A bank's letter certifying that the person writing a put option has sufficient funds in an account t
Put It On : Used for listed equity securities. 'Go to the floor to transact.' See: Print.
Put On: Used for listed equity securities. Trade, or cross, a block of stock at the designated price and qua
Put Option: This security gives investors the right to sell (or put) a fixed number of shares at a fixed price w
Put Pants On It : Used in the context of general equities. 'Elaborate on your intentions or your inquiry,' especially
Put Price: The price at which an asset will be sold if a put option is exercised. Also called the strike or exe
Put Provision: Gives the holder of a floating-rate bond the right to redeem the note at par on the coupon payment d
Put Swaption: A financial instrument giving the buyer the right, or option, to enter into a swap as a floating-rat
Put To Seller: Exercise a put option; require that the option writer to purchase the stock at the strike price.
Put-Call Parity: Applies to derivative products. Option pricing principle that says, given a stock's price, a put and
Put-Call Parity Relationship: The relationship between the price of a put and the price of a call on the same underlying security
Put-Call Ratio: The ratio of the volume of put options traded to the volume of call options traded, which is used as
Pyramid Scheme: An illegal, fraudulent scheme in which a con artist convinces victims to invest by promising an extr
Q: Fifth letter of a Nasdaq stock symbol specifying that it is in bankruptcy proceedings.
Q Ratio Or Tobins Q Ratio: Market value of a firm's assets divided by replacement value of the firm's assets. Named after James
Quadratic Programming: Variant of linear programming in which the objective function is quadratic rather than linear. In po
Qualification Period: A period of time during the first few months or weeks of a new policy when an insurance company will
Qualified Endorsement: A signature on the back of a negotiable instrument transferring the amount to some other party but t
Qualified Opinion: An auditor's opinion expressing certain limitations of an audit.
Qualified Plan Or Trust: A tax-deferred plan allowing employer and employee contributions that build up savings, which are pa
Qualifying Annuity: An annuity allowable as investment for a qualified plan or trust.
Qualifying Share: Shares of common stock that a person must hold in order to qualify as a director of the issuing corp
Qualifying Stock Option: A benefit granted by a corporation that allows employees to purchase shares at a discount price.
Qualitative Analysis: An analysis of the qualities of a company that cannot be measured concretely, such as management qua
Qualitative Research: Traditional analysis of firm-specific prospects for future earnings. It may be based on data collect
Quality Of Earnings: Increased earnings due to increased sales and cost controls, as compared to artificial profits creat
Quality Option: Gives the seller choice of deliverables in Treasury bond and Treasury note futures contracts. Also c
Quality Spread: Difference between Treasury securities and non-Treasury securities that are identical in all respect
Quant: A person with numerical and computer skills who carries out quantitative analyses of companies.
Quantitative Analysis: An analysis of the mathematically measurable figures of a company, such as the value of assets or pr
Quantitative Research: Use of advanced econometric and mathematical valuation models to identify the firms with the best po
Quantize: To convert an asset or liability into a currency other than the regular trading currency.
Quantos: Currency options with a guaranteed exchange rate that enable buyers who like an asset, German bonds
Quarter Stock: Stock with a par value of $25 per share.
Quarterly: Occurring every three months.
Quarterly Dividend Rate: Amount of last quarterly dividend declared in each calendar year.
Quasi-Public Corporation: A corporation that is operated privately, but is supported by the government in its operations and t
Quick Assets: Current assets minus inventories.
Quick Ratio: Indicator of a company's financial strength (or weakness). Calculated by taking current assets less
Quick Ratio: Current assets, excluding inventory and prepaid expenses, divided by current liabilities. Also known
Quid Pro Quo: An arrangement allowing a firm to use research from another firm at no cost in exchange for executin
Quiet Period: Time period an issuer is 'in registration' with the SEC and may not promote its forthcoming issue.
Quorum: The minimum number of people who must be present or must provide a proxy to vote at a meeting in ord
Quotation: Highest bid and lowest offer (asked) price currently available on a security or a commodity.
Quotation Board: The electronic board at a brokerage firm displaying prices other financial data.
Quoted Price: The price at which the last trade of a particular security or commodity took place.
R: Fifth letter of a Nasdaq stock symbol specifying that the stock has rights.
R Square (R2): Square of the correlation coefficient. The proportion of the variability in one series that can be e
Radar Alert: Close monitoring of trading patterns in a company's stock by senior managers to uncover unusual buyi
Raider: Individual or corporate investor who intends to take control of a company (often ostensibly for gree
Rainmaker: A valuable employee or manager who buys new business to a financial services company and thus genera
Rally (Recovery): An upward movement of prices. Opposite of reaction.
Random Variable: A function that assigns a real number to each and every possible outcome of a random experiment.
Random Walk: Theory that stock price changes from day to day are accidental or haphazard; changes are independent
Randomized Strategy: A strategy of introducing into the decision-making process a chance element that is designed to conf
Range: The high and low prices, or high and low bids and offers, recorded during a specified time.
Range Forward: A forward exchange rate contract that places upper and lower bounds on the future cost of foreign ex
Rate Anticipation Swaps: An exchange of bonds in a portfolio for new bonds that will achieve the target portfolio duration, g
Rate Base: The value of a regulated public utility and its operations as defined by its regulators and on which
Rate Covenant: A provision governing a municipal revenue project financed by a revenue bond issue, which establishe
Rate Lock: An agreement between the mortgage banker and the loan applicant guaranteeing a specified interest ra
Rate Of Interest: The rate, as a proportion of the principal, at which interest is computed.
Rate Of Return: Calculated as the (value now minus value at time of purchase) divided by value at time of purchase.
Rate Of Return Ratios: Ratios that measure the profitability of a firm in relation to various measures of investment in the
Rate Risk: In banking, the risk that profits may drop or losses occur because a rise in interest rates forces u
Ratings: An evaluation of credit quality of a company's debt issue by Moody's, S&P, and Fitch Investors Servi
Ratio: A comparison of financial statement elements in the form of a quotient. Ratios such as the price/ear
Ratio Analysis: A way of expressing relationships between a firm's accounting numbers and their trends over time tha
Ratio Of Average Price To Equity: The ratio of average annual High-Low prices to equity capital per share at corporate book value at t
Ratio Writer: An option writer who does not own the number of shares required to cover the call options he or she
Rational Expectations: The idea that people rationally anticipate the future and respond today to what they see ahead. This
Ratios Of High-Low Prices To Earnings: High-Low prices as a multiple of earnings per share.
Raw Material: Materials a manufacturer converts into a finished product.
Raw Material Supply Agreement: As used in connection with project financing, an agreement to furnish a specified amount per period
Raw Materials: Another term for materials.
Reachback: The ability of a tax shelter or limited partnership to deduct certain costs and expenses at the end
Reaction: A decline in prices following an advance. Opposite of rally.
Reading The Tape: Judging the performance of stocks by monitoring changes in price as they are displayed on the ticker
Real: Used in the context of general equities. (1) natural, (2) not dividend roll-or program trading-relat
Real Assets: Identifiable assets, such as land and buildings, equipment, patents, and trademarks, as distinguishe
Real Capital: Wealth that can be represented in financial terms, such as savings account balances, financial secur
Real Cash Flow: Income expressed in current purchasing power terms.
Real Estate: A piece of land and whatever physical property is on it.
Real Estate Appraisal: An estimate of the value of property using various methods.
Real Estate Broker: An intermediary who receives a commission for arranging and facilitating the sale of a property for
Real Estate Investment Trust (REIT): REITs invest in real estate or loans secured by real estate and issue shares in such investments. A
Real Estate Mortgage Investment Conduit (REMIC): A pass-through tax entity that can hold mortgages secured by any type of real property and can issue
Real Exchange Rates: Exchange rates that have been adjusted for the inflation differential between two countries.
Real Gain Or Loss: A gain or loss adjusted for increasing prices by an inflation index such as the CPI.
Real Income: The income of an individual, group, or country adjusted for inflation.
Real Interest Rate: The rate of interest excluding the effect of expected inflation; that is, the rate that is earned in
Real Market: The bid and offer prices at which a dealer could execute the desired quantity of shares. Quotes in t
Real Property: Land plus all other property that is in some way attached to the land.
Real Rate Of Return: The percentage return on some investments that has been adjusted for inflation.
Real Time: A real-time stock or bond quote is one that states a security's most recent offer to sell or bid (bu
Realistic On Price: In trading, and indication that the size under consideration requires price give, especially with il
Realized Compound Yield: Yield assuming that coupon payments are invested at the going market interest rate at the time of th
Realized Profit (Or Loss): A capital gain or loss on securities held in a portfolio that has become actual by the sale or other
Realized Return: The return that is actually earned over a given time period.
Realtor: A specific designation given to members of real estate firms affiliated with the National Associatio
Rebalancing: Realigning the proportions of assets in a portfolio as needed.
Rebate: Negotiated return of a portion of the interest earned by the lender of stock to a short seller. When
Recapitalization Proposal: Often used in risk arbitrage. Plan by a target company to restructure its capitalization (debt and e
Recapture: A provision in a contract that allows one party to recover (recapture) some degree of possession of
Receivables: Another term for accounts receivable.
Receivables Balance Fractions: The percentage of a month's sales that remains uncollected (and part of accounts receivable) at the
Receivables Turnover Ratio: Total operating revenues divided by average receivables. Used to measure how effectively a firm is m
Receive Versus Payment: An instruction that only cash will be accepted in exchange for delivery of securities.
Receiver: A bankruptcy practitioner appointed by secured creditors to oversee the repayment of debts.
Receivers Certificate: A debt instrument issued by a receiver and serving as a lien on the property, which provides funding
Recession: A temporary downturn in economic activity, usually indicated by two consecutive quarters of a fallin
Reclamation: A claim for the right to return or the right to demand the return of a security that has been previo
Record Date: (1) Date by which a shareholder must officially own shares in order to be entitled to a dividend. Fo
Recourse: Term describing a type of loan. If a loan is with recourse, the lender has a general claim against t
Recovery: The use of depreciation of assets to offset costs; or a new period of rising securities prices after
Red Herring: A preliminary prospectus providing information required by the SEC. It excludes the offering price a
Red-Lining: Illegal discrimination in making loans, insurance coverage, or other financial services available to
Redeemable: Eligible for redemption under the terms of an indenture.
Redemption: Repayment of a debt security or preferred stock issue, at or before maturity, at par or at a premium
Redemption Charge: The commission a mutual fund charges an investor who is redeeming shares. For example, a 2% redempti
Redemption Cushion: The percentage by which the conversion value of a convertible security exceeds the redemption price
Redemption Date: The date on which a bond matures or is redeemed.
Redemption Or Call: Right of the issuer to force holders on a certain date to redeem their convertibles for cash. The ob
Rediscount: To discount short-term negotiable debt instruments for a second time, after they have been discounte
Reduction-Option Loan (ROL): A hybrid of a fixed-rate and adjustable-rate mortgage. An ROL the borrower to match the current mort
Reference Rate: A benchmark interest rate (such as LIBOR) used to specify conditions of an interest rate swap or an
Refinancing: An extension and/or increase in amount of existing debt.
Reflation: Government monetary action that causes a reversal of deflation.
Refund: To retire existing bond issues through the sale of a new bond issue, usually to reduce the interest
Refundable: Eligible for refunding under the terms of a bond indenture.
Refunded Bond: Also called a prerefunded bond, a bond that originally may have been issued as a general obligation
Refunding: Redeeming a bond with proceeds received from issuing lower-cost debt obligations with ranking equal
Refunding Escrow Deposits (Reds): A financial instrument involving a forward purchase contract that obligates investors to buy bonds a
Regional Bank: A bank operating in a specific region of the country, taking deposits and offering loans.
Regional Fund: A mutual fund that invests in a specific geographic area overseas, such as Asia or Europe.
Regional Stock Exchanges: Organized national securities exchanges located outside of New York City and registered with the SEC
Registered Bond: A bond whose issuer records ownership and interest payments. Differs from a bearer bond, which is tr
Registered Check: A check issued and guaranteed by a bank for a customer who provides funds for payment of the check.
Registered Company: A company that is listed with the SEC after submission of a required statement and compliance with d
Registered Competitive Market Maker: An NASD-registered dealer who acts as a market maker for a designated over-the-counter stock by buyi
Registered Equity Market Maker: Member firm of the American Stock Exchange registered as a trader to make stabilizing trades for its
Registered Investment Adviser: SEC-registered individual or firm that substantiates completion of education and work experience in
Registered Investment Company: An investment firm which is registered with the SEC and complies with certain stated legal requireme
Registered Options Trader: An American Stock Exchange specialist who monitors a certain group of options to help maintain a fai
Registered Representative: A person registered with the CFTC who is employed by and solicits business for a commission house or
Registered Retirement Savings Plan (RRSP): Tax-sheltered retirement plan for Canadian citizens, much like an American IRA.
Registered Secondary Offering: A reoffering of a large block of securities, previously publicly issued, by the holder of a large po
Registered Security: Used in the context of general equities. Securities whose owner's name is recorded on the books of t
Registered Trader: A member of the exchange who executes frequent trades for his or her own account.
Registrar: Financial institution appointed to record issue and ownership of company securities.
Registration: In the securities market describes process set up pursuant to the Securities Exchange Acts of 1933 a
Registration Statement: A legal document filed with the SEC to register securities for public offering that details the purp
Regression: A mathematical technique used to explain and/or predict. The general form is Y = a + bX + u, where Y
Regression Analysis: A statistical technique that can be used to estimate relationships between variables.
Regression Equation: An equation that describes the average relationship between a dependent variable and a set of explan
Regression Toward The Mean: The tendency that a random variable will ultimately have a value closer to its mean value.
Regressive Tax: A tax system that provides that average tax rates decrease with increases in individuals' income bra
Regular Settlement: Transaction in which a stock contract is settled and delivered on the fifth full business day follow
Regular Way Settlement: In the money and bond markets, the standard basis on which some security trades are settled is that
Regulated Commodities: The group of registered commodity futures and options contracts traded on organized U.S. futures exc
Regulated Investment Company: An investment company allowed to pass capital gains, dividends, and interest earned on fund investme
Regulation A: A Federal Reserve Board regulation that exempts small public offerings, valued at less than $1.5MM f
Regulation D: Federal Reserve Board regulation that currently requires member banks to hold reserves against their
Regulation G: Federal Reserve Board regulation of lenders other than commercial banks, brokers, or dealers that pr
Regulation M: Federal Reserve Board regulation that currently requires member banks to hold reserves against their
Regulation Q: Federal Reserve Board regulation imposing caps on the rates that banks may pay on savings and time d
Regulation T: Federal Reserve Board regulation that deals with granting credit to customers by securities brokers,
Regulation U: Federal Reserve Board limit on how much credit a bank can allow a customer for the purchase and carr
Regulatory Accounting Procedures (RAP): Accounting principles required by the FHLB that allow S&Ls to elect annually to defer gains and loss
Regulatory Pricing Risk: Risk that arises when insurance companies are subject to regulation of the premium rates that can th
Regulatory Surplus: The surplus as measured using regulatory accounting principles (RAP), which may allow the nonmarket
Rehypothecation: Pledging to banks by securities brokers of the amount in customers' margin account as collateral for
Reimbursement: Payment made to someone for out-of-pocket expenses has incurred.
Reinstatement: The restoration of an insurance policy after it has lapsed for nonpayment of premiums.
Reinsurance: The spreading of risk and division of client premiums among insurance companies allowing the sharing
Reinvestment Privilege: A shareholder's right to reinvest dividends and buy more shares in the corporation or mutual fund.
Reinvestment Rate: The rate at which an investor assumes interest payments made on a debt security can be reinvested ov
Reinvestment Risk: The risk that proceeds received in the future may have to be reinvested at a lower potential interes
Reinvoicing Center: A central financial subsidiary an MNC uses to reduce transaction exposure by billing all home countr
Rejection: Refusal by a bank to grant credit, usually because of the applicant's financial history, or refusal
Relative Purchasing Power Parity (RPPP): Idea that the rate of change in the price level of commodities in one country relative to the price
Relative Strength: Movement of a stock price over the past year as compared to a market index (like the S&P 500). A val
Relative Value: The attractiveness measured in terms of risk, liquidity, and return of one instrument relative to an
Relative Yield Spread: The ratio of the yield spread to the yield level. Used for bonds.
Release: Relieve party to a trade of any previously made obligation concerning that trade, hence allowing the
Release Clause: A mortgage provision that releases a pledged asset after a certain portion of the total payments has
Remainderman: One who receives the principal of a trust when it is dissolved.
Remaining Maturity: The length of time remaining until a bond comes due
Remaining Principal Balance: The amount of principal dollars remaining to be paid under a mortgage as of a given time.
Remargining: Putting up additional cash or securities after a margin call on a brokerage customer's margin accoun
Rembrandt Market: The foreign market in the Netherlands.
Remit: To pay for purchases by cash, check, or electronic transfer.
Remote Disbursement: Technique that involves writing checks drawn on banks in remote locations so as to maximize disburse
Renewable Term Life Insurance: A policy for a stated period that may be renewed if desired at the end of the term.
Renewal: Placement of a day order identical to one not completed on the previous day.
Rent: Regular payments to an owner for the use of some leased property.
Rent Control: Municipal regulation restricting the amount of rent that a building owner can charge.
Reoffering Yield: In a purchase and sale, the yield to maturity at which an underwriter offers to sell bonds to invest
Reopen An Issue: The Treasury, when it wants to sell additional securities, will occasionally sell more of an existin
Reorganization: Creation of a plan to restructure a debtor's business and restore its financial health.
Reorganization Bond: A bond issued by a company undergoing a reorganization process.
Repatriation: The return from abroad of the financial assets of an organization or individual.
Replacement Cost: Cost to replace a firm's assets.
Replacement Cost Accounting: An accounting method that includes as part of depreciation the difference between the original purch
Replacement Cost Insurance: Insurance that pays out the full amount required to replace damaged property with new property, with
Replacement Cycle: The frequency with which an asset is replaced by an equivalent asset.
Replacement Value: Current cost of replacing the firm's assets.
Replacement-Chain Problem: Idea that future replacement decisions must be taken into account in selecting among projects.
Replicating Portfolio: A portfolio constructed to match an index or benchmark.
Repo: An agreement in which one party sells a security to another party and agrees to repurchase it on a s
Report: Written or oral confirmation that all or part of one's order has been executed, including the price
Reported Earnings: Net income (after deducting preferred dividends) per common share. Fiscal year earnings are adjusted
Reported Factor: The pool factor as reported by the bond buyer for a given amortization period.
Reporting Currency: The currency in which the parent firm prepares its own financial statements; that is, U.S. dollars f
Reproducible Assets: A tangible asset with physical properties that can be matched or duplicated, such as a building or m
Repurchase Agreement: An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (cus
Repurchase Of Stock: Technique to pay cash to firm's shareholders that provides more preferential tax treatment for share
Required Reserves: The dollar amounts, based on reserve ratios, that banks are required to keep on deposit at a Federal
Required Return: The minimum expected return you would need in order to purchase an asset, that is, to make the inves
Required Yield: Generally referring to bonds; the yield required by the marketplace to match available expected retu
Rescheduled Loans: Bank loans that are usually altered to have longer maturities in order to assist the borrower in mak
Rescind: To cancel a contract because of misrepresentation, fraud, or illegal procedure.
Research And Development (R-D): Development of new products and services by a company in order to obtain a competitive advantage.
Research And Development Limited Partnership: A partnership whose investors put up money to finance new product R&D in return for profits generate
Research Department: The office in an institutional investing organizations that analyzes markets and securities.
Research Portable: Service offered to clients that transmits investment bank research electronically by computers.
Reserve: An accounting entry that properly reflects contingent liabilities.
Reserve Currency: A foreign currency held by a central bank or monetary authority for the purposes of exchange interve
Reserve Ratios: Specified percentages of deposits, established by the Federal Reserve Board, that banks must keep in
Reserve Requirements: The percentage of different types of deposits that member banks are required to hold on deposit at t
Reset Bonds: Bonds that allow the initial interest rates to be adjusted on specific dates in order that the bonds
Reset Frequency: The frequency with which the floating rate changes.
Residential Mortgage: Mortgage on a residential property, tax-deductible for individuals up to $1 million.
Residential Property: Property that consists of homes, apartments, townhouses, and condominiums.
Residual Assets: Assets that remain after sufficient assets are dedicated to meet all senior debtholders' claims in f
Residual Claim: Related: Equity claim
Residual Dividend Approach: An approach that suggests that a firm pay dividends if and only if acceptable investment opportuniti
Residual Method: A method of allocating the purchase price for the acquisition of another firm among the acquired ass
Residual Risk: Related: Unsystematic risk
Residual Value: Usually refers to the value of a lessor's property at the time the lease expires.
Residuals: (1) Part of stock returns not explained by the explanatory variable (the market index return). Resid
Resistance Level: A price level above which it is supposedly difficult for a security or market to rise. Price ceiling
Resolution: A document that records a decision or action by a board of directors, or a bond resolution by a gove
Resolution Funding Corporation (Refcorp): A government agency established by Congress in 1989 to issue bailout bonds and raise funds for the a
Resolution Trust Corporation (RTC): A government agency established in 1989 and disbanded in 1996 that administered federal savings and
Restricted: Placed on a list that dictates that the trader may not maintain positions, solicit business, or prov
Restricted Account: A margin account without enough equity to meet the initial margin requirement that is restricted fro
Restricted Stock: Stock that must be traded in compliance with special SEC regulations concerning its purchase and res
Restricted Surplus: A portion of retained earnings not allowed by law to be used for the payment of dividends.
Restrictive Covenants: Provisions that place constraints on the operations of borrowers, such as restrictions on working ca
Restrictive Endorsement: An endorsement signature on the back of a check that specifies the conditions under which the check
Restructuring: The reorganization of a company in order to attain greater efficiency and to adapt to new markets.
Resyndication Limited Partnership: The sale of existing properties to new limited partners, so that they can receive the tax advantages
Retail: Individual and institutional customers as opposed to dealers and brokers.
Retail Credit: Credit granted by a firm to consumers for the purchase of goods or services. See: consumer credit.
Retail House: A brokerage firm that caters to individual customers rather than large institutions.
Retail Investors: Small individual investors who commit capital for their personal account rater than on behalf of ano
Retail Price: The total price charged for a product sold to a customer, which includes the manufacturer's cost plu
Retained Earnings: Net profits kept within a business in the Owners' Equity account after stock dividends are paid.
Retained Earnings: Accounting earnings that are retained by the firm for reinvestment in its operations; earnings that
Retained Earnings Statement: A statement of all transactions affecting the balance of a company's retained earnings account.
Retention: The number of units allocated to an underwriting syndicate member less the units held back by the sy
Retention Rate: The percentage of present earnings held back or retained by a corporation, or one minus the dividend
Retire: To extinguish a security, as in paying off a debt.
Retired Liabilities: Debt paid off within a given period of the forecast.
Retirement: Removal from circulation of stock or bonds that have been reacquired or redeemed.
Retirement Of Long-Term Debt: The repayment of a non-current liability.
Retirement Protection Act Of 1994: Legislation designed to protect the pension benefits of workers and retirees by increasing required
Retracement: A price movement in the opposite direction of the previous trend.
Return: The change in the value of a portfolio over an evaluation period, including any distributions made f
Return Of Capital: A cash distribution resulting from the sale of a capital asset, or securities, or tax breaks from de
Return On Assets (ROA): Net income for a time period divided by total assets. This ratio is often used to measure profitabil
Return On Assets (ROA): Indicator of profitability. Determined by dividing net income for the past 12 months by total averag
Return On Equity (ROE): Net income divided by equity. This ratio is often used as a measure of the return on funds invested
Return On Equity (ROE): Indicator of profitability. Determined by dividing net income for the past 12 months by common stock
Return On Investment (ROI): Generally, book income as a proportion of net book value.
Return On Sales: A measurement of operational efficiency equaling net pre-tax profits divided by net sales expressed
Return On Tangible Equity: Net income for a time period divided by tangible equity. This ratio is sometimes used to measure pro
Return On Total Assets: The ratio of earnings available to common stockholders to total assets.
Return-To-Maturity Expectations: A variant of pure expectations theory that suggests that the return an investor will realize by roll
Reuters: International news and quotation service based in London.
Revaluation: An increase in the foreign exchange value of a currency that is pegged to other currencies or gold.
Revenue: The total income received in exchange for goods or services during a specific accounting period. Rev
Revenue Anticipation Note (RAN): A short-term municipal debt issue that will be repaid with anticipated revenues, such as sales taxes
Revenue Bond: A bond issued by a municipality to finance either a project or an enterprise in which the issuer ple
Revenue Fund: A fund accounting for all revenues from an enterprise financed by a municipal revenue bond.
Revenue Reconciliation Act Of 1993: Legislation created to reduce the federal budget deficit by cutting spending and increasing taxes.
Revenue Sharing: The percentage split between the general partner and limited partners of profits and losses resultin
Reversal: Turn, unwind. For convertible reversal, selling a convertible and buying the underlying common, usua
Reverse A Swap: Reswap of bonds to gain the advantage of a yield spread or tax loss and restore a bond portfolio to
Reverse Conversion: A technique in which brokerage firms earn interest on the stocks they hold for their customers by se
Reverse Leverage: Occurs when the interest on borrowings exceeds the return on investment of the funds that were borro
Reverse Leveraged Buyout: Bringing back into publicly traded status a company that had been privatized by way of a leveraged b
Reverse Mortgage: A mortgage agreement allowing a homeowner to borrow against home equity and receive tax-free payment
Reverse Price Risk: A type of mortgage pipeline risk that occurs when a lender commits to sell loans to an investor at r
Reverse Repo: In essence, refers to a repurchase agreement. From the customer's perspective, the customer provides
Reverse Stock Split: A proportionate decrease in the number of shares, but not the total value of shares of stock held by
Reverse-Annuity Mortgages (RAM): Bank loan for an amount equal to a percentage of the appraisal value of the home. The loan is then p
Reversing Trade: Entering the opposite side of a currently held futures position to close out the position.
Revisionary Trust: An irrevocable trust that becomes a revocable trust after a certain amount of time.
Revocable Trust: A trust that may altered as many times as desired in which income-producing property passes directly
Revolving Credit Agreement: A legal commitment in which a bank promises to lend a customer up to a specified maximum amount duri
Revolving Line Of Credit: A bank line of credit on which the customer pays a commitment fee and can take and repay funds at wi
Reward-To-Volatility Ratio: Ratio of excess return to portfolio standard deviation.
Rich: Term for a security whose price seems too high in light of its price history.
RICO: Stands for Racketeer Influenced and Corrupt Organization Act. Legislation under/which inside traders
Rider: A form accompanying an insurance policy that alters the policy's terms or coverage.
Riding The Yield Curve: Buying long-term bonds in anticipation of capital gains as yields fall with the declining maturity o
Riegle-Neal Interstate Banking And Branching Efficiency Act Of 1994: Law permitting interstate banking in the U.S.
Rigged Market: Manipulation of prices in a market to attract buyers and sellers.
Right: Privilege granted shareholders of a corporation to subscribe to shares of a new issue of common stoc
Right Here: Used in the context of general equities. In-line, emphasizing that this is a customer inquiry that i
Right Of First Refusal: The right of a person or company to purchase some thing before the offering is made to others.
Right Of Redemption: The right to recover property that has been attached by paying off the debt .
Right Of Rescission: The right to void a contract without any penalty within three days as provided in the Consumer Credi
Rights Offering: Issuance to shareholders that allows them to purchase additional shares, usually at a discount to ma
Rights-On: Shares trading with rights attached to them.
Ring The Cash Register: Used in the context of general equities. 'Take a profit.' See: Profit taking.
Rings: Trading arenas located on the floor of an exchange in which traders execute orders. Sometimes called
Rising Bottoms: Chart pattern showing an increasing trend in the daily low prices of a security or commodity.
Risk: Often defined as the standard deviation of the return on total investment. Degree of uncertainty of
Risk Arbitrage: Traditionally, the simultaneous purchase of stock in a company being acquired and the sale of stock
Risk Classes: Groups of projects that have approximately the same amount of risk.
Risk Controlled Arbitrage: A self-funding, self-hedged series of transactions that generally use mortgage securities (MBS) as t
Risk Factor: In arbitrage pricing theory or the multibeta capital asset pricing model, the set of common factors
Risk Indexes: Categories of risk used to calculate fundamental beta, including (1) market variability, (2) earning
Risk Lover: A person willing to accept lower expected returns on prospects with higher amounts of risk.
Risk Management: The process of identifying and evaluating risks and selecting and managing techniques to adapt to ri
Risk Premium: The reward for holding the risky equity market portfolio rather than the risk-free asset. The spread
Risk Premium Approach: A common approach for tactical asset allocation to determine the relative valuation of asset classes
Risk Transfer: The shifting of risk through insurance or securitization of debt because of risk aversion.
Risk-Adjusted Discount Rate: The rate established by adding an expected risk premium to the risk-free rate in order to determine
Risk-Adjusted Profitability: A probability used to determine a 'sure' expected value (sometimes called a certainty equivalent) th
Risk-Adjusted Return: Often we subtract from the rate of return on an asset a rate of return from another asset that has s
Risk-Averse: Describes an investor who, when faced with two investments with the same expected return but differe
Risk-Based Capital Ratio: Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted
Risk-Free Asset: An asset whose future normal return is known today with certainty.
Risk-Free Rate: The rate earned on a riskless asset.
Risk-Neutral: Insensitive to risk.
Risk-Prone: Willing to pay money to assume risk from others.
Risk-Return Trade-Off: The basic concept that higher expected returns accompany greater risk, and vice versa.
Risk-Reward Ratio: Relationship of substantial reward corresponding to the amount of risk taken; mathematically represe
Riskless Arbitrage: The simultaneous purchase and sale of the same asset to yield a profit.
Riskless Or Risk-Free Asset: An asset whose future return is known today with certainty. The risk-free asset is commonly defined
Riskless Rate: The rate earned on a riskless investment, typically the rate earned on the 90-day U.S. Treasury Bill
Riskless Rate Of Return: The rate earned on a riskless asset.
Riskless Transaction: A transaction that is guaranteed a profit, such as the arbitrage of a temporary differential between
Risky Asset: An asset whose future return is uncertain.
Road Show: A promotional presentation by an issuer of securities to potential buyers about the desirable qualit
Rocket Scientist: An employee of an investment firm (often having a Ph.D. in physics or mathematics) that works on hig
Roll Down: To move to an option position with a lower exercise price.
Roll Forward: To move to an option position with a later expiration date.
Roll Order: (1) Dividend roll; (2) Replacement of a maturing position with an identical one in the new maturity;
Roll Over: To reinvest funds received from a maturing security in a new issue of the same or a similar security
Roll Up: To move to an option position with a higher exercise price. In venture capital, refers to the ventur
Roll, Richard: Author of path-breaking work on asset pricing including the famous Roll critique. Finance professor
Rollover: Means that a loan is periodically repriced at an agreed spread over the appropriate, currently preva
Ross, Stephen: Developer of the Arbitrage Pricing Theory. Finance professor at MIT.
Rotation: An active asset management strategy that tactically overweighted and underweighted certain sectors,
Roth IRA: Individual Retirement Account that allows contributors to invest up to $2,000 per year, and to withd
Round Lot: A trading order typically of 100 shares of a stock or some multiple of 100. Related: odd lot.
Round-Trip Trade: The purchase and sale of a security within a short period of time.
Round-Trip Transactions Costs: Costs of completing a transaction, including commissions, market impact costs, and taxes.
Round-Turn: Procedure by which the long or short position of an individual is offset by an opposite transaction
Royalty: Payment for the right to use intellectual property or natural resources.
Rubber Check: A check that bounces for lack of funds.
Rule 13-D: Often used in risk arbitrage. Requirement under Section 13-d of the Securities Act of 1934 that a fo
Rule 14-D: Often used in risk arbitrage. Regulations and restrictions covering public tender offers and related
Rule 144: Restricts solicitation of buyers to complete the sell order of an insider (unless the firm is alread
Rule 144a: SEC rule allowing qualified institutional buyers to buy and trade unregistered securities.
Rule 405: NYSE codification of 'know your customer' rules, which require that a customer's situation is suitab
Rule 415: Permits corporations to file a registration for securities they intend to issue in the future when m
Rule Of 72: A formula used to determine the amount of time it will take for invested money to double at a given
Rules Of Fair Practice: Rules established by the NASD that lay down guidelines for just and equitable principles of trade an
Rumortrage: A term combining the words 'rumor' and arbitrage, used to describe trading that occurs on the basis
Rump: Usually used in the context of a merger or acquisition. A group of shareholders who refuse to tender
Run: A run consists of a series of bid and offer quotes for different securities or maturities. Dealers g
Rundown: A summary of the amount and prices of a serial bond issue that is still available for purchase.
Running Ahead: The illegal practice of trading in a security for a broker's personal account before placing an orde
Runoff: Used for listed equity securities. Series of trades printed on the ticker tape that occur on the NYS
Russell Indexes: U.S. equity index widely used by pension and mutual fund investors that are weighted by market capit
Russian Trading System (RTS): An electronic system in Russia, like the Nasdaq system on which the majority of Russian equities tra
S: Fifth letter of a Nasdaq stock symbol specifying a beneficial interest.
S and P: Standard & Poor's Corporation.
S and P 500 Composite Index: Index of 500 widely held common stocks that measures the general performance of the market.
S and P Phenomenon: Tendency of stocks newly added to the S&P composite index to rise in price due to a large number of
S and P Rating: Rating service provided by S&P that indicates the amount of risk involved with different securities.
Safe Harbor: Often used in risk arbitrage as a form of shark repellent. A target company acquires a business so o
Safe Harbor Lease: A lease to transfer tax benefits of ownership (depreciation and debt tax shield) from the lessee, if
Safekeep: Holding by a bank of bonds and money market instruments. For a fee, the bank clips coupons and prese
Safety Cushion: In a contingent immunization strategy, the difference between the initially available immunization l
Safety-Net Return: The minimum available return that will trigger an immunization strategy in a contingent immunization
Salaries: Compensation provided by a business to employees, excluding benefits. On an income statement, Salari
Salary: Regular wages and benefits an employee receives from an employer.
Salary Freeze: A temporary halt to increases in salary due to financial difficulties experienced by a company.
Salary Reduction Plan: A plan allowing employees to contribute pre-tax income to a tax-deferred retirement plan.
Sale: An agreement between a buyer and a seller on the price to be paid for a security, followed by delive
Sale And Lease-Back: Sale of an existing asset to a financial institution that then leases it back to the user. Related:
Sales: Another term for revenue.
Sales Charge: The fee charged by a mutual fund at purchase of shares, usually payable as a commission to a marketi
Sales Forecast: A key input to a firm's financial planning process. External sales forecasts are based on historical
Sales Literature: Material written by an institution selling a product, which informs potential buyers of the product
Sales Or Revenues: Total sales or revenues (fiscal year basis).
Sales Tax: A percentage tax on the selling price of goods and services.
Sales-Type Lease: The leasing out of a firm's own equipment, such as a printing company leasing its own presses, there
Salomon Brothers World Equity Index (SBWEI): A top-down, float capitalization-weighted index used to measure the performance of fixed-income and
Salvage Value: The scrap value of an asset. Acquisition cost minus salvage value yields the total amount that an as
Salvage Value: Scrap value of plant and equipment.
Same-Day Funds Settlement (SDFS): A method of settlement used in trading between well-collateralized parties in good-the-same-day fede
Same-Day Substitution: Offsetting changes in a margin account during the day that result in no overall change in the balanc
Samurai Bond: A yen-denominated bond issued in Tokyo by a non-Japanese borrower. Related: Bulldog bond and Yankee
Samurai Market: The foreign market in Japan.
Santa Claus Rally: Seasonal rise in stock prices in the last week of the calendar year, between Christmas and New Year'
Saturday Night Special: Often used in risk arbitrage. Sudden attempt by one company to take over another by making a public
Saucer: Technical chart pattern depicting a security whose price has reached bottom and is moving up.
Savings And Loan Association: National- or state-chartered institution that accepts savings deposits and invests the bulk of the f
Savings Association Insurance Fund (SAIF): A government organization that replaced the Federal Savings and Loan Insurance Corporation as the pr
Savings Bank: An institution that primarily accepts consumer savings deposits and to make home mortgage loans.
Savings Bond: A government bond issued in face value denominations from $50 to $10,000, with local and state tax-f
Savings Deposits: Accounts that pay interest, typically at below-market interest rates, that do not have a specific ma
Savings Element: Used in the context of life insurance, the cash value built up in a policy, which equals the amount
Savings Rate: Personal savings as a percentage of disposable personal income.
Scale: Payment of different rates of interest on CDs of varying maturities. A bank is said to 'post a scale
Scale In: Gradually taking a position in a security or market over time.
Scale Order: Order to buy (sell) a security that specifies the total amount to be bought (sold) and the amount to
Scale-Enhancing: Describes a project that is in the same risk class as the whole firm. That is, the project allows th
Scalp: To trade for small gains. Scalping normally involves establishing and liquidating a position quickly
Scattered: Used for listed equity securities. Unconcentrated buy or sell interest.
Scenario Analysis: The use of horizon analysis to project total returns under different reinvestment rates and future m
Schedule 13d: Disclosure form required when more than 5% of any class of equity securities in a publicly held corp
Schedule C: Describes membership requirements and procedures of NASD, in its bylaws.
Scheduled Cash Flows: The mortgage principal and interest payments due to be paid under the terms of the mortgage, not inc
Scorched-Earth Policy: Often used in risk arbitrage. Any technique a company that has become the target of a takeover attem
SCORE: Stands for Special Claim on Residual Equity, a certificate that entitles the owner to the capital ap
Screen Stocks: To analyze various stocks in search of stocks that meet predetermined criteria. For example, a simpl
Scrip: A temporary document that represents a portion of a share of stock, often issued after a stock split
Scripophily: Collecting stock and bond certificates for their scarcity, rather than for their value as securities
Search Costs: Costs associated with locating a counterparty to a trade, including explicit costs (such as advertis
Seasonally Adjusted: Mathematically adjusted by moderating a macroeconomic indicator (e.g., oil prices/imports) so that r
Seasoned: In the case of equity, having gained a reputation for quality with the investing public and enjoying
Seasoned Datings: Extended credit for customers who order goods in periods other than peak seasons.
Seasoned Issue: Issue of a security for which there is an existing market. Related: Unseasoned issue.
Seasoned New Issue: A new issue of stock after the company's securities have previously been issued. A seasoned new issu
Seat: Position of membership on a securities or commodity exchange, bought and sold at market prices.
SEC Fee: Small fee the SEC charges to sellers of equity securities on an exchange.
Second Mortgage Lending: Loans secured by real estate previously pledged in a first mortgage.
Second Pass Regression: A cross-sectional regression of portfolio returns on betas. The estimated slope is the measurement o
Second Round: Stage of venture capital financing following the start-up and first round stages and before the mezz
Second-Preferred Stock: Preferred stock issue that has less priority in claiming dividends and assets in liquidation than an
Second-To-Die Insurance: Insurance policy that, on the death of the spouse dying last, pays a death benefit to the heirs that
Secondary Distribution-Offering: Public sale of previously issued securities held by large investors, usually corporations or institu
Secondary Issue: (1) Procedure for selling blocks of seasoned issues of stocks. (2) More generally, sale of already i
Secondary Market: The market in which securities are traded after they are initially offered in the primary market. Mo
Secondary Mortgage Market: Buying and selling existing mortgage loans, which are often pooled and traded as mortgage-backed sec
Secondary Stocks: Stocks with smaller market capitalization, less quality and more risk than blue chip issues that beh
Section 482: U.S. Department of Treasury regulations governing transfer prices.
Sector: Used to characterize a group of securities that are similar with respect to maturity, type, rating,
Sector Rotation: An active asset management strategy certain sectors, that tactically overweights and underweights de
Secular: Long-term time frame (10-50 years or more).
Secured Bond: A bond backed by the pledge of collateral, a mortgage, or other lien, as opposed to an unsecured bon
Secured Debt: Debt that has first claim on specified assets in the event of default.
Securities Act Of 1933: First law designed to regulate securities markets, requiring registration of securities and disclosu
Securities Acts Amendments Of 1975: Legislation to encourage the establishment of a national market system together with a system for na
Securities Analysts: Related: Financial analysts
Securities And Commodities Exchanges: Exchanges on which securities, options, and futures contracts are traded by members for their own ac
Securities and Exchange Commission (SEC): A federal agency that regulates the U.S. financial markets. The SEC also oversees the securities ind
Securities And Exchange Commission Rules: Rules enacted by the SEC to assist in the regulation of U.S. financial markets.
Securities Exchange Act Of 1934: Legislation that created the SEC, outlawing dishonest practices in the trading of securities.
Securities Exchange Of Thailand (SET): The only stock market in Thailand, based in Bangkok.
Securities Industry Association (SIA): An association of broker-dealers who sell taxable securities, which lobbies the government, records
Securities Industry Committee On Arbitration (SICA): A private group that provides mediation services in case of customer complaints against securities f
Securities Investor Protection Corporation (SIPC): A nonprofit corporation that insures customers' securities and cash held by member brokerage firms a
Securities Loan: The loan of securities between brokers, often to cover a client's short sale; or a loan secured by m
Securities Markets: Organized exchanges plus over-the-counter markets in which securities are traded.
Securitization: Creating a more or less standard investment instrument such as the mortgage pass-through security, b
Security: Piece of paper that proves ownership of stocks, bonds, and other investments.
Security Characteristic Line: A plot on a graph of the excess return on a security over the risk-free rate as a function of the ex
Security Deposit (Initial): Synonymous with the term margin. A cash amount that must be deposited with the broker for each contr
Security Deposit (Maintenance): Related: Maintenance margin
Security Industry Automated Corporation (SIAC): Entity that executes automated DOT orders.
Security Market Line: Line representing the relationship between expected return and market risk or beta. The slope of thi
Security Market Plane: A plane that shows the relationship between expected return and the beta coefficient of more than on
Security Ratings: Commercial rating agencies' assessment of the credit and investment risk of securities.
Security Selection Decision: Choosing the particular stocks or bonds or other investment instruments to include in a portfolio.
Seed Money: The first contribution by a venture capitalist toward the financing of a new business, often using a
Seek A Market: Search for a securities buyer or seller.
Segregation Of Securities: SEC rules to dictate how customers' securities may be used by broker-dealers in broker loans.
Select Ten Portfolio: A unit investment trust that buys and holds for one year the ten stocks in the Dow Jones Industrial
Selected Dealer Agreement: The set of rules governing the selling group in an underwriting.
Self-Amortizing Mortgage: Mortgage whose entire principal is paid off in a specified period of time with regular interest and
Self-Directed IRA: An IRA that the account holder can after appointing a custodian manager to carry out investment inst
Self-Employed Income: Taxable income of a person involved in a sole proprietorship or other sort of free-lance work.
Self-Employment Tax: A tax self-employed people must pay to qualify them to receive Social Security benefits at retiremen
Self-Liquidating Loan: Loan to finance current assets. The sale of the current assets provides the cash to repay the loan.
Self-Regulatory Organization (SRO): Organizations that enforce fair, ethical, and efficient practices in the securities and commodity fu
Self-Selection: Consequence of a contract that induces only one group to participate.
Self-Supporting Debt: Bonds sold to finance a project that will produce enough revenue through tolls or other charges to r
Sell Hedge: Related: short hedge.
Sell Limit Order: Conditional trading order that indicates that a security may be sold at the designated price or high
Sell Off: Sale of securities under pressure. See: Dumping.
Sell Order: An order that may take many different forms by an investor to a broker to sell a particular stock, b
Sell Out: Liquidation of a margin account after a customer has failed to bring an account to a required level
Sell Plus Order: Market or limit order to sell a stated amount of stock provided that the price to be obtained is not
Sell The Book: Used for listed equity securities. Order to a broker by the holder of a large quantity of shares of
Sell-Side Analyst: A financial analyst who works for a brokerage firm and whose recommendations are passed on to the br
Seller Financing: Funding a purchase by a seller's loan to the buyer, the buyer takes full title to the property when
Sellers Market: Market in which demand exceeds supply. As a result, the seller can dictate the price and the terms o
Sellers Option: Delayed settlement/delivery in a transaction.
Selling Climax: A sudden drop in security prices as sellers dump their holdings.
Selling Concession: The discount underwriters offer the selling group on securities in a new issue.
Selling Dividends: Inducing a prospective customer to buy shares in order to profit from a dividend scheduled in the ne
Selling Group: All banks involved in selling or marketing a new issue of stock or bonds.
Selling On The Good News: A strategy of selling stock shortly after a company announces good news and the stock price rises. I
Selling Short: Selling a stock not actually owned. If an investor thinks the price of a stock is going down, the in
Selling Short Against The Box: Selling short stock that is actually owned by the seller but held in the box, meaning it is held in
Selling The Spread: A spread whose option to be sold is trading at a higher premium than the option to be bought.
Selling, General, And Administrative (SG and A) Expenses: Expenses such as salespersons' salaries and commissions, advertising and promotion, travel and enter
Semistrong-Form Efficiency: A form of pricing efficiency that profits the price of a security fully reflects all public informat
Send It In: Market language: 'I bought your stock - 'send it in' (and possibly more).'
Senior Debt: Debt whose terms in the event of bankruptcy, require it to be repaid before subordinated debt receiv
Senior Mortgage Bond: A bond that, in the event of bankruptcy, will be redeemed before any other bonds are repaid.
Senior Refunding: Replacement by the issuer of securities with 5-to 12-year maturities with securities of 15-year or l
Senior Security: A security that, in the event of bankruptcy, will be redeemed before any other securities.
Seniority: The order of repayment. In the event of bankruptcy, senior debt must be repaid before subordinated d
Sensitive Market: A market that reacts to a great extent to good or bad news.
Sensitivity Analysis: Analysis of the effect on a project's profitability of changes in sales, cost, and so on.
Sentiment Indicators: The general feeling of investors about the state of the market, such as whether they are bullish or
Separate Customer: Method of allocating insurance by the Securities Investor Protection Corporation. Each account that
Separate Tax Returns: Tax returns of married persons who choose to file their returns individually, usually because this a
Separation Property: The property that portfolio choice can be divided into two independent tasks: (1) Determination of t
Separation Theorem: Theory that the value of an investment to an individual is not dependent on consumption preferences.
Serial Covariance: The covariance between a variable and the lagged value of the variable; the same as autocorrelation.
Serial Entrepreneur: Business person that successfully starts (does not kill) a number of different businesses.
Serial Redemption: The redemption of a serial bond.
Series: Options: All option contracts of the same class that also have the same unit of trade, expiration da
Series Bond: Bond that may be issued in several series under the same indenture document.
Series E Bond: A local and state tax-free bond issued by the U.S. government from 1941 to 1979, which was then repl
Set Of Contracts Perspective: View of corporation as a set of contracting relationships among individuals who have conflicting obj
Set Up: Applies mainly to convertible securities. Arbitrage involving going long the convertible and short a
Set-Aside: A percentage of a municipal or corporate bond underwriting that is allocated for handling by a minor
Settlement: When payment is made for a trade.
Settlement Date: The date on which payment is made to settle a trade. For stocks traded on U.S. exchanges, settlement
Settlement Options: The various possibilities open to a beneficiary under a life insurance policy as to how the benefit
Settlement Price: A figure determined by the closing range that is used to calculate gains and losses in futures marke
Settlement Rate: The rate suggested in Financial Accounting Standards Board (FASB) 87 for discounting the obligations
Settlement Risk: The risk that one party will deliver and the counterparty will not be able to pay and vice versa.
Severally But Not Jointly: An agreement between members of an underwriting group buy a new issue (severally), but not to assume
Shadow Calendar: A backlog of securities issues registered with the SEC, awaiting the determination of an offer date.
Shadow Stock: First, a public company may create a stock that strips out the market wide movements for the purpose
Shakeout: A dramatic change in market conditions that forces speculators to sell their positions, often at a l
Sham: A business transaction, such as a limited partnership, that is entered into for the sake of avoiding
Share Broker: A discount broker who charges per share traded, and reduces the per unit charge as the number of sha
Share Repurchase: Program by which a corporation buys back its own shares in the open market. It is usually done when
Share Type: Represents the security whose prices and dividends are shown with the fundamental data.
Shared Appreciation Mortgage (SAM): A mortgage with a low rate of interest, offset by giving the lender some portion of the appreciation
Shareholder: Person or entity that owns shares or equity in a corporation.
Shareholder Equity: Another term for equity.
Shareholders Equity: This is a company's total assets minus total liabilities. A company's net worth is the same thing.
Shareholders Letter: A section of an annual report where one can find general overall discussion by management of success
Shares: Certificates or book entries representing ownership in a corporation or similar entity.
Shares Authorized: The maximum number of shares of stock of a company allowed in the articles of incorporation, which m
Shark Repellant: Often used in risk arbitrage. Examples are golden parachutes, poison pills, safe harbor, and scorche
Shark Watcher: Often used in risk arbitrage. Firm specializing in the early detection of takeover activity. Such a
Sharpe Benchmark: A statistically created benchmark that adjusts for a manager's index-like tendencies. Named after Wi
Sharpe Ratio: A measure of a portfolio's excess return relative to the total variability of the portfolio. Related
Shelf Offering: Offering of registered securities covered by a prospectus whose distribution is not underwritten on
Shelf Registration: A procedure that allows firms to file one registration statement covering several issues of the same
Shell Corporation: An incorporated company with no significant assets or operations, often formed to obtain financing b
Shirking: The tendency to do less work when the return is smaller. Owners may have more incentive to shirk if
Shogun Bond: Dollar bond issued in Japan by a nonresident.
Shootout: Venture capital jargon. Refers to two or more venture capital firms fighting for the startup.
Shop: Wall Street slang for a firm.
Shopped Stock: Sell inquiry that has been seen by or shown to other dealers before coming to an investment bank.
Shopping: Seeking to obtain the best bid or offer available by calling a number of dealers and/or brokers.
Short: One who has sold a contract to establish a market position and who has not yet closed out this posit
Short Bonds: Bonds with short (not much time to maturity) current maturities.
Short Coupon: 0
Short Covering: A bond payment covering less than six-months' interest, because the original issue date is less than
Short Exempt: Used in the context of general equities. Actual purchase of securities by a short seller to replace
Short Hedge: Used for listed equity securities. A special trading situation where a short sale is allowed on a mi
Short Interest: The sale of futures contracts to eliminate or lessen the possible decline in value of an approximate
Short Interest Theory: Total number of shares of a security that investors have sold short and that have not been repurchas
Short Position:<