Accounting & Investement Dictionary

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An alphabetical listing of General terms and items.

DAC   Dico Tools
DAC, in accounting, is an acronym for Deferred Acquisition Costs.

Daily Price Limit   Dico Tools
The level at which many commodity, futures, and options markets are allowed to rise or fall in a day. Exchanges usually impose a daily price limit on each contract.

Daisy Chain   Dico Tools
Manipulation of the market by traders to create the illusion of active volume to attract investors.

Date Of Issue   Dico Tools
Used in the context of bonds to refer to the date on which a bond is issued and when interest accrues to the bondholder. Used in the context of stocks to refer to the date trading begins on a new stock issued to the public.

Date Of Payment   Dico Tools
Date dividend checks are mailed.

Date Of Record   Dico Tools
The date selected by a corporation's board of directors on which the shareholders of record are identified as those who will receive dividends.

Dated Date   Dico Tools
The date one uses to calculate accrued interest on various debt instruments, specifically bonds.

Dates Convention   Dico Tools
Treating cash flows as being received on exact dates-date 0, date 1, and so forth-as opposed to the end-of-year convention.

Dawn Raid   Dico Tools
A term of British origin used to describe the purchase of all available shares of a target company at the market's open by a raider. A dawn raid is a surprise technique that allows the raider to gain a substantial share of the target company before the target company knows what is happening

Day Around Order   Dico Tools
A day order that supersedes (cancels and replaces) the previous order by altering its size or price limit.

Day Loan   Dico Tools
A loan from a bank to a broker prior to the delivery of securities. Upon the delivery of the securities, a day loan becomes a regular broker call loan for which securities serve as collateral.

Day Of Deposit To Day Of Withdrawal Account   Dico Tools
A bank account that pays interest according to the number of days that the money is actually on deposit.

Day Order   Dico Tools
In the context of general equities, request from a customer to either buy or sell stock, that, if not cancelled or executed the day it is placed, expires automatically. All orders are day orders unless otherwise specified. Traders often make calls before the opening to check for renewals.

Day Trading   Dico Tools
Establishing and liquidating the same position or positions within one day's trading.

Days In Receivables   Dico Tools
Average collection period.

Days' Sales In Inventory Ratio   Dico Tools
The average number of days' worth of sales that is held in inventory.

Days' Sales Outstanding   Dico Tools
Average collection period.

DCF   Dico Tools
Discounted cash flows

DDM   Dico Tools
Discounted dividend model

De Facto   Dico Tools
Existing in actual fact although not by official recognition.

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Dead Cat Bounce   Dico Tools
A small upmove in a bear market.

Deal Flow   Dico Tools
In investment banking, the rate at which new deals are referred to a brokerage firm.

Deal Stock   Dico Tools
Stock subject to merger or acquisition, either publicly announced or rumored.

Dealer Loan   Dico Tools
Overnight, collateralized loan from a money market bank made to a dealer financing his position by borrowing.

Dealer Market   Dico Tools
Where traderss specializing in particular commodities buy and sell assets for their own accounts.

Dealer Options   Dico Tools
Over-the-counter options, such as those offered by government and mortgage-backed securities dealers.

Dealer's Spread   Dico Tools
Markdown; underwriting spread.

Dear Money   Dico Tools
British term for tight money.

Death Play   Dico Tools
A stock strategy that buys stock on the belief that a key executive will die, the company will be dissolved, and shares will command a higher price at their private market value.

Death Valley Curve   Dico Tools
In venture capital, refers to the period before a new company starts generating revenues, when it is difficult for the company to raise money.

Death-backed Bonds   Dico Tools
Bonds backed by loans of a policyholder against a life insurance policy. The policyholder will repay the loans while alive or with the benefits from the insurance policy upon death.

Debenture Bond   Dico Tools
An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond and collateral trust bonds.

Debenture Stock   Dico Tools
A type of stock that makes fixed payments at scheduled intervals of time. Debenture stock differs from a debenture in that it has the status of equity, not debt, in liquidation.

Debentures   Dico Tools
Bonds for which no collateral has been pledged.

Debit   Dico Tools
An entry on the left side of an account.

Debit Balance   Dico Tools
The amount that is owed to a broker by a margin customer for loans the customer uses to buy securities.

Debit Card   Dico Tools
Bank cards that allow the payment of goods and services to be subtracted directly from a bank account.

Debit Spread   Dico Tools
Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a "debit spread." Antithesis of a credit spread.

Debt Bomb   Dico Tools
A default on debt and obligations by a major financial institution that disrupts the stability of the economic system.

Debt Capacity   Dico Tools
Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.

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Debt Ceiling   Dico Tools
Debt limit

Debt Displacement   Dico Tools
The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity.

Debt Financing   Dico Tools
Acquiring funds by borrowing money from creditors in the form of long-term notes, mortgages, leases, or bonds.

Debt Instrument   Dico Tools
An asset requiring fixed dollar payments, such as a government or corporate bond.

Debt Leverage   Dico Tools
Amplification of the return earned on equity when an investment or firm is financed partially with borrowed money.

Debt Limit   Dico Tools
The maximum amount that a municipality can borrow.

Debt Limitation   Dico Tools
A bond covenant that restricts the firm's ability to incur additional indebtedness in some way.

Debt Market   Dico Tools
The market for trading debt instruments.

Debt Ratio   Dico Tools
Total debt divided by total assets.

Debt Relief   Dico Tools
Reducing the principal and/or interest payments on Less developed country loans.

Debt Retirement   Dico Tools
The complete repayment of debt. Sinking fund.

Debt Securities   Dico Tools
Financial instruments issued by a company that carry with them a promise of interest payments and the repayment of principal.

Debt Service   Dico Tools
Interest payment plus repayments of principal to creditors (retirement of debt).

Debt Service Coverage   Dico Tools
The ratio of cash flow available to the borrower to the annual interest and principal payments on a loan or other debt.

Debt Service Parity Approach   Dico Tools
Payment alternatives that provide the firm with the exact same schedule of after-tax debt payments (including both interest and principal).

Debt Swap   Dico Tools
A set of transactions in which a firm buys a country's dollar bank debt at a discount and swaps this debt with the central bank for local currency that it can use to acquire local equity. Also called a debt-equity swap.

Debt-equity Management Ratio   Dico Tools
A measurement of the relative utilization of debt and equity; computed by dividing average total assets by average stockholders' equity.

Debt-service Coverage Ratio   Dico Tools
Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate.

Debt/equity Ratio   Dico Tools
Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.

Debtholder   Dico Tools

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Debtor In Possession   Dico Tools
A firm that continues to operate under the Chapter 11 bankruptcy process.

Debtor-in-possession Financing   Dico Tools
New debt obtained by a firm during the Chapter 11 bankruptcy process.

Decile Rank   Dico Tools
Performance over time, rated on a scale of 1-10. 1 indicates that a mutual fund's return is in the top 10% of funds being compared; while 3 means the return is in the top 30%.

Decimal Trading   Dico Tools
The quotation and trading of stock prices in decimals, as opposed to the quotation of stock prices in fractions of a dollar.

Decision Tree   Dico Tools
Schematic way of representing alternative sequential decisions and the possible outcomes from these decisions.

Declaration Date   Dico Tools
The date on which a corporation's board of directors formally decides to pay a dividend to shareholders.

Declining-balance Depreciation Method   Dico Tools
An accelerated depreciation method in which an asset's book value is multiplied by a constant depreciation rate (such as double the straight-line percentage, in the case of double-declining-balance.)

Dedicated Capital   Dico Tools
Total par value (number of shares issued, multiplied by the par value of each share). Also called dedicated value.

Dedicating A Portfolio   Dico Tools
Related: Cash flow matching

Dedication Strategy   Dico Tools
Refers to multiperiod cash-flow matching.

Deduction   Dico Tools
Business expenses or losses that are subtracted from gross income in computing taxable income.

Deductive Reasoning   Dico Tools
Using known fact to draw a conclusion about a specific situation.

Deed Of Trust   Dico Tools

Deep In/out Of The Money   Dico Tools
A call option with an exercise price substantially below the underlying stock's market price (deep in the money) or substantially above the market price (deep out of the money). Also put option with an exercise price substantially above the underlying stock's market price (deep in the money) or substantially below the underlying stock's market price (deep out of the money).

Deep-discount Bond   Dico Tools
A bond issued with a very low coupon or no coupon that sell at a price far below par value. A bond that has no coupon is called a zero-coupon bond.

Default Premium   Dico Tools
A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default.

Default Risk   Dico Tools
The risk that an issuer of a bond may be unable to make timely principal and interest payments. Also referred to as credit risk (as gauged by commercial rating companies).

Defeasance   Dico Tools
The setting aside by a borrower of cash or bonds sufficient to service the borrower's debt. Both the borrower's debt and the offsetting cash or bonds are removed from the balance sheet.

Defensive Securities   Dico Tools
Low-risk stocks or bonds that will provide a predictable and safe return on an investor's money.

Deferred Account   Dico Tools
A type of account that delays taxes on that account until some later date.

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Deferred Annuities   Dico Tools
Tax-advantaged life insurance products. Deferred annuities offer deferral of taxes with the option of withdrawing one's funds in the form of life annuity.

Deferred Call   Dico Tools
A provision that prohibits the company from calling the bond before a certain date. During this period the bond is said to be call protected.

Deferred Charge   Dico Tools
An expenditure treated as an asset that carries forward until it becomes pertinent to the business at hand, e.g., advance rent payment.

Deferred Compensation   Dico Tools
An amount that has been earned but is not actually paid until a later date, typically through a payment plan, pension, or stock option plan.

Deferred Equity   Dico Tools
A common term for convertible bonds, which recognizes their equity component and the expectation that the bond will ultimately be converted into shares of common stock.

Deferred Futures   Dico Tools
The most distant months of a futures contract.

Deferred Income Taxes   Dico Tools
An account used to record the difference between income tax expense on the income statement and income taxes payable for the year to federal and state governments.

Deferred Interest Bond   Dico Tools
A bond that pays interest at a later date, usually in one lump sum, effectively reinvesting interest earned over the life of the bond. Zero coupon bond.

Deferred Nominal Life Annuity   Dico Tools
A monthly fixed-dollar payment beginning at retirement age. It is nominal because the payment is fixed in a dollar amount at any particular time, up to and including retirement.

Deferred Payment Annuity   Dico Tools
An annuity that stipulates payments be made to the annuitant at a later date, such as when the annuitant reaches a certain age.

Deferred Taxes   Dico Tools
A non-cash expense that provides a source of free cash flow. Amount allocated during the period to cover tax liabilities that have not yet been paid.

Deficiency Letter   Dico Tools
Notification from the SEC to a prospective issuer of securities that revisions or additions need to be made to the preliminary prospectus.

Deficit Spending   Dico Tools
When government spending overwhelms government revenue resulting in government borrowing. Deficit financing.

Defined Asset Fund   Dico Tools
A unit investment trust consisting of a fixed portfolio of securities, including blue chips, REITs, or high-yielding stocks on a major exchange such as the NYSE or FTSE.

Defined Benefit Plan   Dico Tools
A pension plan obliging the sponsor to make specified dollar payments to qualifying employees. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan

Defined Contribution Plan   Dico Tools
A pension plan whoae sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan

Deflation   Dico Tools
A broad, overall drop in the price of goods and services; the opposite of the more common inflation.

Delayed Issuance Pool   Dico Tools
Refers to mortgage backed securities (MBS) that at the time of issuance were collateralized by seasoned loans originated prior to the MBS pool issue date.

Delayed Opening   Dico Tools
Postponement of the start of trading in a stock until correction of a gross imbalance in buy and sell orders. Such an imbalance is likely to follow on the heels of a significant event such as a takeover offer. Suspended trading.

Delayed Settlement/delivery   Dico Tools
In the context of general equities, transaction in which a contract is settled in excess of five full business days. Seller's option. Dividend play, settlement.

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Delisting   Dico Tools
Removal of a company's security from listing on an exchange because the firm has not abided by specific regulations.

Deliverable Bills   Dico Tools
The Treasury bills that fulfill a set of guidelines set forth by the exchange on which the bills are traded.

Deliverable Instrument   Dico Tools
The asset in a forward contract that will be delivered in the future at an agreed-upon price.

Delivery Date   Dico Tools
Date by which a seller must fulfill the obligations of a forward or futures contract.

Delivery Notice   Dico Tools
The written notice given by the seller of its intention to make delivery against an open, short futures position on a particular date. Related: Notice day.

Delivery Options   Dico Tools
The options available to the seller of an interest rate futures contract, including the quality option, the timing option, and the wild card option. Delivery options mean that the buyer is uncertain of which Treasury bond will be delivered or when it will be delivered.

Delivery Points   Dico Tools
Locaations designated by futures exchanges at which the financial instrument or commodity covered by a futures contract may be delivered in fulfillment of such a contract.

Delivery Price   Dico Tools
The price fixed by the clearinghouse at which deliveries on futures are invoiced; also the price at which the futures contract is settled when deliveries are made.

Delivery Versus Payment   Dico Tools
A transaction in which the buyer's payment for securities is due at the time of delivery (usually to a bank acting as agent for the buyer) upon receipt of the securities. The payment may be made by bank wire, check, or direct credit to an account.

Delta Hedge   Dico Tools
A dynamic hedging strategy using options that calls for constant adjustment of the number of options used, as a function of the delta of the option.

Delta Neutral   Dico Tools
Describes value of a portfolio not affected by changes in the value of the asset on which the options are written.

Demand Deposits   Dico Tools
Checking accounts that pay no interest and from which funds can be withdrawn upon demand.

Demand Line Of Credit   Dico Tools
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.

Demand Loan   Dico Tools
A loan which can be called by the lender at any time and carries no set maturity date.

Demand Master Notes   Dico Tools
Short-term securities that are repayable immediately upon the holder's demand.

Demand Shock   Dico Tools
An event that affects the demand for goods and services in an economy.

Demand-pull Inflation   Dico Tools
A theory of inflation or price increases resulting from so-called excess demand. Related: Cost-push inflation.

Depletion   Dico Tools
The process of cost allocation that assigns the original cost of a natural resource to the periods benefited.

Deposit Insurance   Dico Tools
FDIC: Federal Deposit Insurance Corporation

Depository Institutions Deregulation And Monetary   Dico Tools
The 1980 federal legislation that ended the regulation of the banking industry.

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Depository Institutions Deregulation And Monetary   Dico Tools
The 1980 federal legislation that ended the regulation of the banking industry.

Depository Institutions Deregulation And Monetary   Dico Tools
The 1980 federal legislation that ended the regulation of the banking industry.

Depository Preferred   Dico Tools
Device enabling an issuer to circumvent an arbitrary corporate limit on the number of preferred shares issuable. Applies mainly to convertible securities.

Depository Receipt   Dico Tools
ADR American Depository Receipt

Depository Transfer Check (DTC)   Dico Tools
Check made out directly by a local bank to a particular firm or person.

Depository Trust Company (DTC)   Dico Tools
DTC is a user-owned securities depository that accepts deposits of eligible securities for custody, executes book-entry deliveries and records book-entry pledges of securities in its custody, and provides for withdrawals of securities from its custody. Central securities repository where stock and bond certificates are exchanged. Most of these exchanges now take place electronically, and few paper certificates actually change hands. The DTC is a member of the Federal Reserve System and is owned by most of the brokerage houses on Wall Street and the NYSE

Depreciated Cost   Dico Tools
In terms of economics: The measure of cost of capital consumption during production, e.g., machine and equipment wear.In terms of finance: The process of amortization of fixed assets (equipment) to spread the cost over the depreciable life of the assets.

Depreciation   Dico Tools
The process of cost allocation that assigns the original cost of plant and equipment to the periods benefited.

Depreciation Tax Shield   Dico Tools
The value of the tax write-off on depreciation of plant and equipment.

Depressed Market   Dico Tools
Market in which supply overwhelms demand, leading to weak and lower prices.

Depressed Price   Dico Tools
In the context of stocks, stock whose market price is low in comparison to stocks in its sector.

Derivative Instruments   Dico Tools
Contracts such as options and futures whose price is derived from the price of an underlying financial asset.

Derivative Markets   Dico Tools
Markets for derivative instruments.

Derivative Security   Dico Tools
A financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying asset.

Descending Tops   Dico Tools
A chart pattern which in which each successive peak in a security's price is lower than the preceding peak over a period of time. Antithesis of ascending tops.

Designated Order Turnaround System   Dico Tools
Computerized order entry system that allows orders to buy or sell large baskets of stock to be transmitted immediately to the specialist on the exchange, where execution will occur quickly, depending on the basket size. Also used for odd-lot transactions to occur at the prices and quantities available. AOS.

Detachable Warrant   Dico Tools
A warrant entitles the holder to buy a given number of shares of stock at a stipulated price. A detachable warrant is one that may be sold separately from the package it may have originally been issued with (usually a bond).

Deterministic Models   Dico Tools
Liability-matching models that assume that the liability payments and the asset cash flows are known with certainty. Related: Stochastic models.

Detrend   Dico Tools
To remove the general drift, tendency, or bent of a set of statistical data as related to time. Often accomplished by regressing a variable or a time index and perhaps time-squared and capturing the residuals.

Deutsche B?rse AG   Dico Tools
Deutsche B?rse AG (DBAG) is the operating company for the German cash and derivatives markets. It has four subsidiaries: Deutsche B?rse Clearing AG, Deutsche B?rse Systems AG, Frankfurter Wertpapierb?rse (FWB), and the derivatives market, EUREX Deutschland (formerly the Deutsche Terminb?rse ).

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Diagonal Spread   Dico Tools
An options strategy requiring a long and a short position in the same class of option at different strike prices and different expiration dates. For example, two puts or two calls in the same stock. Calendar spread; vertical spread.

Dialing And Smiling   Dico Tools
Cold calling

Dialing For Dollars   Dico Tools
A term used to describe the practice of cold calling, but which has negative implications as it is frequently applied to salespeople selling speculative or fraudulent investments.

Diamonds   Dico Tools
Units of interest in the diamonds trust, a unit investment trust that serves as an index to the Dow Jones Industrial Average in that its holdings consist of the 30 component stocks of the Dow.

Diff   Dico Tools
Short version of Euro rate differential, which is a Chicago Mercantile Exchange Futures contract that is founded on the interest rate spread between the U.S. dollar and the British pound, the German mark, or the Japanese yen.

Difference From S&P   Dico Tools
A mutual fund's return minus the change in the Standard & Poor's 500 index for the same time period. A notation of -5.00 means the fund return is 5 percentage points less than the gain in the S&P, while 0.00 means that the fund and the S&P have the same return.

Differential Disclosure   Dico Tools
The practice of reporting conflicting or markedly different information in official corporate statements including annual and quarterly reports and 10-Ks and 10-Qs.

Differential Swap   Dico Tools
Swap between two LIBOR rates of interest, e.g., yen LIBOR for dollar LIBOR Payments are in one currency.

Diffusion Process   Dico Tools
A conception of the way a stock's price changes that assumes that the price takes on all intermediate values.

Digits Deleted   Dico Tools
Designation on securities exchange tape meaning that because the tape has been delayed, some digits have been dropped (e.g., 26 1/2 becomes 6 1/2).

Dilution Protection   Dico Tools
Standard provision that changes the conversion ratio in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder's potential equity position. Adjustment usually requires a split or stock dividend in excess of 5% or issuance of stock below book value.

Dilutive Effect   Dico Tools
Result of a transaction that decreases earnings per common share (EPS).

Direct Deposit   Dico Tools
Prearranged payments from a third party directly into a bank account (e.g.,paychecks, Social Security).

Direct Estimate Method   Dico Tools
A method of cash budgeting based on detailed estimates of cash receipts and cash disbursements category by category.

Direct Investment   Dico Tools
The purchase of a controlling interest in a company or at least enough interest to have enough influence to direct the course of the company.

Direct Lease   Dico Tools
Contract in which a lessor purchases new equipment from the manufacturer and leases it to the lessee.

Direct Method   Dico Tools
A method of reporting net cash flow from operations that shows the major classes of cash receipts and payments for a period of time.

Direct Overhead   Dico Tools
A fraction of overhead costs devoted to the manufacturing sector of a firm to cover expenses such as rent and utilities.

Direct Paper   Dico Tools
Commercial paper sold directly by the issuer to investors.

Direct Participation Program   Dico Tools
An investment program enabling investors to directly participate in the cash_flow and tax benefits of the partnership invested in by the investor, typically a form of passive investment.

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Direct Placement   Dico Tools
Selling a new issue not by offering it for sale publicly, but by placing it with one of several institutional investors.

Direct Quote   Dico Tools
For foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency.

Direct Search Market   Dico Tools
Buyers and sellers seek each other directly and transact directly.

Direct Stock-purchase Programs   Dico Tools
Investors purchase securities directly from the issuer.

Direct Write-off Method   Dico Tools
The recording of actual losses from uncollectible accounts as expenses during the period in which accounts receivable are determined to be uncollectible.

Dirty Float   Dico Tools
A system of floating exchange rates in which a government may intervene to change the direction of the value of the country's currency.

Dirty Price   Dico Tools
Bond price including accrued interest, i.e., the price paid by the bond buyer.

Dirty Stock   Dico Tools
A stock that fails to fulfill prerequisites to attain good delivery status.

Disability Income Insurance   Dico Tools
An insurance policy that insures a worker in the event of an occupational mishap resulting in disability. Insurance benefits compensate the injured worker for lost pay.

Disbursement Float   Dico Tools
A decrease in book cash but no immediate change in bank cash, generated by checks written by the firm.

Discharge Of Bankruptcy   Dico Tools
The termination of bankruptcy proceedings, resulting in cancellation of the debtor's obligations.

Discharge Of Lien   Dico Tools
An order terminating a lien on property.

Disclaimer Of Opinion   Dico Tools
A disclaimer indicating the auditor was unable to satisfy himself or herself that the overall financial statements were fairly present in accordance with GAAP.

Discontinued Operations   Dico Tools
Divisions of a business that have been sold or written off and that no longer are maintained by the business.

Discount   Dico Tools
The amount charged by a financial institution when a note receivable is discounted; calculated as maturity value times discount rate times discount period.

Discount Bond   Dico Tools
Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond.

Discount Broker   Dico Tools
A brokerage house featuring relatively low commission rates in comparison to a full-service broker.

Discount Factor   Dico Tools
Present value of $1 received at a stated future date.

Discount Period   Dico Tools
The time between the date a note is sold to a financial institution and its maturity date.

Discount Rate   Dico Tools
The interest rate charged by a financial institution for buying a note receivable.

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Discount Securities   Dico Tools
Non-interest-bearing money market instruments that are issued at a discount and redeemed at maturity for full face value, e.g., U.S. Treasury bills.

Discount Window   Dico Tools
Facility provided by the Fed enabling member banks to borrow reserves against collateral in the form of governments or other acceptable paper.

Discount Yield   Dico Tools
The yield or annual interest rate on a security sold to an investor at a discount. A bond that is sold at $4875 that matures to $5000 has a discount of $125. To calculate the discount yield: (discount divided by the face value of the security) multiplied by the (number of days in the year divided by the number of days to maturity).

Discounted Basis   Dico Tools
To sell below maturity value, so that the difference makes up all or part of the interest.

Discounted Cash Flow (DCF)   Dico Tools
Future cash flows multiplied by discount factors to obtain present values.

Discounted Dividend Model (DDM)   Dico Tools
A formula to estimate the intrinsic value of a firm by figuring the present value of all expected future dividends.

Discounted In/by Market   Dico Tools
Unannounced information that is widely accepted or anticipated, and hence is already taken into account in the pricing of the security/ market (e.g., poor earnings).

Discounted Payback Period Rule   Dico Tools
An investment decision rule in which cash flows are discounted at an interest rate and one determines how long it takes for the sum of the discounted cash flows to equal the initial investment.

Discounting   Dico Tools
Calculating the present value of a future amount. Discounting is opposite to compounding.

Discounting A Note Receivable   Dico Tools
The process of the payee's selling notes to financial institution for less than the maturity value.

Discounting The News   Dico Tools
An adjustment of a stock's price as speculators bid the price up or down in anticipation of news about the company, whether good or bad.

Discrete Compounding   Dico Tools
Compounding the time value of money for separate time intervals.

Discrete Random Variable   Dico Tools
A random variable that can take only a certain specified set of individual possible values-for example, the positive integers 1, 2, 3, . . .

Discrete Variable   Dico Tools
Variable like 1, 2, 3. Bond ratings are examples of discrete classifications.

Discretionary Account   Dico Tools
Accounts over which an individual or organization, other than the person in whose name the account is carried, exercises trading authority or control.

Discretionary Cash Flow   Dico Tools
Cash flow that is available after the funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on.

Discretionary Income   Dico Tools
The amount of income a consumer has available after purchasing essentials such as food and shelter.

Discretionary Order   Dico Tools
A type of buy order that gives the broker the freedom and power to make the execution at any time and price that is seen fit and reasonable, given the investor's goals.

Discretionary Trust   Dico Tools
In the context of mutual funds, refers to a mutual fund or unit trust whose management decides on the best way to use the assets without restriction to a specific type of security.

Discriminant Analysis   Dico Tools
A statistical process that links the probability of default to a specified set of financial ratios.

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Disintermediation   Dico Tools
Withdrawal of funds from a financial institution in order to invest them directly.

Disposable Income   Dico Tools
Income remaining after income and payroll taxes are deducted from gross pay; income available to spend or save.

Distress Sale   Dico Tools
The selling of assets under adverse conditions, e.g., an investor may have to sell securities to cover a margin call.

Distributing Syndicate   Dico Tools
A syndicate consisting of a number of brokerage firms or investment bankers that work together to sell and disperse a large lot of securities.

Distribution Area   Dico Tools
An established price range in which a stock has been trading in for a significant amount of time. Accumulation area.

Distribution Period   Dico Tools
The few days between the board of directors' declaration of a stock dividend (declaration date) and the date of record, or the date an individual must own shares to be entitled to a dividend.

Distribution Plan   Dico Tools
A mutual fund's plan to charge distribution costs such as advertising to the investors of the fund.

Distribution Stock   Dico Tools
A small amount of a specific stock that forms part of a larger block of stock that is sold small amount by small amount so as not to disrupt the stock's market price.

Distributions   Dico Tools
Payments from fund or corporate cash flow. May include dividends from earnings, capital gains from sale of portfolio holdings and return of capital. Fund distributions can be made by check or by investing in additional shares. Funds are required to distribute capital gains (if any) to shareholders at least once per year. Some corporations offer Dividend Reinvestment Plans (DRP).

Diversifiable Risk   Dico Tools
Related: Unsystematic risk

Diversification   Dico Tools
The process of spreading assets among different investments to reduce the risk of a decline in value of an investor’s total portfolio from a decline in any one investment.

Diversified Companies   Dico Tools
Companies operating in more than one line of business.

Diversified Investment Company   Dico Tools
An investment vehicle such as a mutual fund that invests in an assortment of securities.

Dividend   Dico Tools
A payment to shareholders that a company’s board of directors approves from earnings.

Dividend Capture   Dico Tools
Dividend rollover plan

Dividend Clawback   Dico Tools
An arrangement under which sponsors of a project agree to contribute as equity any prior dividends received from the project to the extent necessary to cover any cash deficiencies.

Dividend Clientele   Dico Tools
A group of shareholders who prefer that the firm follow a particular dividend policy. Such a preference may be based on comparable tax situations.

Dividend Discount Model   Dico Tools
A method to value the common stock of a company that is based on the present value of the expected future dividends.

Dividend Growth Model   Dico Tools
An approach that assumes dividends grow at a constant rate in perpetuity. The value of the stock equals next year's dividends divided by the difference between the required rate of return and the assumed constant growth rate in dividends.

Dividend In Arrears   Dico Tools
Accumulated dividends on cumulative preferred stock that are deemed payable to the current holder.

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Dividend Limitation   Dico Tools
A bond covenant that restricts in some way the firm's ability to pay cash dividends.

Dividend Payment Date   Dico Tools
The date on which a corporation pays dividends to its shareholders.

Dividend Payout Ratio   Dico Tools
A measure of the percentage of earnings paid out in dividends; computed by dividing cash dividends by the net income available to each class of stock.

Dividend Policy   Dico Tools
Standards by which a firm determines the amount of money it will pay as dividends.

Dividend Rate   Dico Tools
The fixed or floating rate paid on preferred stock based on par value.

Dividend Record   Dico Tools
S&P publication stating companies' payment histories and corporate policies.

Dividend Reinvestment Plan   Dico Tools
Automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to market price. Dividend reinvestment plans allow shareholders to accumulate stock over the long term using dollar cost averaging. The DRP is usually administered by the company without charges to the holder.

Dividend Requirement   Dico Tools
The annual earnings minimum required for payment of dividends on a preferred stock.

Dividend Rights   Dico Tools
A shareholder's rights to receive per-share dividends identical to those other shareholders receive.

Dividend Rollover Plan   Dico Tools
An investment strategy that entails the purchase and selling of a stock right before its ex-dividend date in order to collect the dividends paid out by the stock and capture a trade profit.

Dividend Trade Roll/play   Dico Tools
Used for listed equity securities. Method of buying and selling stocks around their ex-dividend dates so as to collect the dividend (which is 80% tax-exempt) offset by a fully-taxable capital loss. Predicated on the 80% current exemption that some corporations receive on dividend income.

Dividend Yield (Funds)   Dico Tools
Indicated yield represents return on a share of a mutual fund held over the past 12 months. Assumes fund was purchased a year ago. Reflects effect of sales charges (at current rates), but not redemption charges.

Dividend Yield (Stocks)   Dico Tools
Indicated yield represents annual dividends divided by current stock price.

Dividends   Dico Tools
Distributions to owners (stockholders) of a corporation.

Dividends Account   Dico Tools
The account used to reflect periodic distributions of earnings to the owners (stockholders) of a corporation.

Dividends In Arrears   Dico Tools
Missed dividends for past years that preferred stockholders have a right to receive under the cumulative-dividend preference if and when dividends are declared.

Dividends Payable   Dico Tools
The declared dividend dollar amount that a company is obligated to pay.

Dividends Per Share   Dico Tools
Dividend paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term.

Dividends-received Deduction   Dico Tools
A corporate tax deduction on income allowed by company A that is in ownership of shares of company B and receives dividends on the shares of company B.

DNR Order   Dico Tools
Do Not Reduce Order

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Do Not Increase   Dico Tools
A restriction that an investor places on a good til' cancelled order to prevent an order increase in the case of a stock dividend or stock split.

Do Not Reduce Order   Dico Tools
Limit order to buy or to sell, or a stop limit order to sell that is not to be reduced by the amount of an ordinary cash dividend on the ex-dividend date. A "do not reduce order" applies only to ordinary cash dividends, and not stock dividends or rights.

Doctrine Of Sovereign Immunity   Dico Tools
Principle that a nation may not be tried in another country without its consent.

Documented Discount Notes   Dico Tools
Commercial paper backed by normal bank lines of credit plus a letter of credit from a bank stating that it will pay off the paper at maturity if the borrower defaults. Such paper is also referred to as L.O.C. paper.

Dogs Of The Dow   Dico Tools
T 10 stocks of the 30 on the Dow Jones Industrial Average with the most depressed prices and consequently the highest yields. The investor buying these stocks speculates that they will bounce back over a one-year period.

Dollar Bears   Dico Tools
Traders who capitalize on a falling dollar by buying other foreign currencies directly.

Dollar Bonds   Dico Tools
Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with "U.S. Dollar" bonds, a common term of reference in the Eurobond market.

Dollar Cost Averaging   Dico Tools
Investing regular sums of money (e.g., $50) at regular time intervals (e.g., quarterly) regardless of whether security prices are moving up or down.

Dollar Drain   Dico Tools
The impact of importing from foreign countries more than exporting to them. The money required to finance the import purchases removes dollars from the importing nation.

Dollar Duration   Dico Tools
The product of modified duration and the initial price.

Dollar Price Of A Bond   Dico Tools
Percentage of face value at which a bond is quoted.

Dollar Return   Dico Tools
The return realized on a portfolio for any evaluation period, including (1) the change in market value of the portfolio and (2) any distributions made from the portfolio during that period.

Dollar Roll   Dico Tools
Similar to the reverse repurchase agreement-a simultaneous agreement to sell a security held in a portfolio with purchase of a similar security at a future date at an agreed-upon price.

Dollar Safety Margin   Dico Tools
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization strategy.

Dollar Shortage   Dico Tools
Results when a nation importing U.S. goods cannot pay for them without the aid of the United States.

Dollar-weighted Rate Of Return   Dico Tools
Also called the internal rate of return; the interest rate that makes the present value of the cash flows from all the subperiods in an evaluation period plus the terminal market value of the portfolio equal to the initial market value of the portfolio.

Domestic Corporation   Dico Tools
A corporation that is conducting business and is based in the country in which it is established, as opposed to a foreign corporation.

Domestic International Sales Corporation   Dico Tools
A US corporation that receives a tax incentive for export activities.

Domestic Market   Dico Tools
A nation's internal market representing the mechanisms for issuing and trading securities of entities domiciled within that nation. Compare external market and foreign market.

Don't Fight The Tape   Dico Tools
Phrase advising not to trade against the market trend. If stock prices are rising, do not sell.

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Don't Know   Dico Tools
"Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party.

Double Auction Market   Dico Tools
Systems by which listed securities are bought and sold through brokers on the securities exchanges, as distinguished from the OTC market, where trades are negotiated. Unlike the conventional auction with one auctioneer and many buyers, double auction markets consist of many sellers and many buyers.

Double Auction System   Dico Tools
A market consisting of many sellers and many buyers, as opposed to a conventional auction with one market maker and many buyers.

Double Bottom   Dico Tools
A term used in technical analysis to refer to the drop of a stock's price, a rebound, and then a drop back to the same level as the original drop.

Double Dip   Dico Tools
Used for listed equity securities. Dividend roll in which the "dividend capturer" already owns the stock cum dividend .

Double Taxation   Dico Tools
Government taxation of the same money twice; specifically, taxation of earnings at the corporate level and dividends at the stockholder level.

Double Top   Dico Tools
A term used in technical analysis to refer to the rise of a stock's price, a drop, and then a rise back to the same level as the original rise.

Double Up   Dico Tools
A stock buying strategy that doubles the risk when the price moves in the opposite direction from the direcetion the investor hoped for. For example, an investor with confidence in ABC buys 1000 shares at $100 and another 1000 shares when the price declines to $90.

Double Witching Day   Dico Tools
A trading day when of two related classes of options and futures expire, resulting in a variety of arbitrage strategies to close out positions.

Double-declining-balance Depreciation   Dico Tools
Method of accelerated depreciation.

Double-declining-balance Depreciation Method   Dico Tools
An accounting methodology in which depreciation is accelerated to twice the rate of annual depreciation by the straight-line method.

Double-dip Lease   Dico Tools
A cross-border lease in which the different rules of the lessor's and lessee's countries let both parties be treated as the owner of the leased equipment for tax purposes.

Double-entry Accounting   Dico Tools
A system of recording transactions in a way that maintains the equality of the accounting equation.

Double-tax Agreement   Dico Tools
Agreement between two countries that taxes paid abroad can be offset against domestic taxes levied on foreign dividends.

Doubling Option   Dico Tools
A sinking fund provision that may allow repurchase of twice the required number of bonds at the sinking fund call price.

Dow Dividend Theory   Dico Tools
Dogs of the Dow.

Dow Jones Industrial Average   Dico Tools
The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including, stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing. There are hundreds of investment indexes around the world for stocks, bonds, currencies, and commodities.

Dow Theory   Dico Tools
Used in the context of general equities. Technical theory that a major trend in the stock market must be confirmed by simultaneous movement of the Dow Jones Industrial Average and the Dow Jones Transportation Average to new highs or lows.

Down Round   Dico Tools
Refers to a round of venture capital financing that is raised at a lower firm valuation than the previous round.

Down-and-in Option   Dico Tools
Barrier option that comes into existence if asset price hits a predetermined price level.

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Down-and-out Option   Dico Tools
Barrier option that expires if asset price hits a predetermined price level.

Downside Risk   Dico Tools
The risk that a security will decline in value in includng the implications of risk.

Draining Reserves   Dico Tools
Federal Reserve System's course of action to tighten the money supply by (1) raising a bank's minimum reserve requirements, (2) selling bonds in the open market, (3) raising the rate at which banks borrow from the Fed.

Draw A Call   Dico Tools
In the context of general equities, provoking a customer indication/inquiry/order by up or doing large amount of the volume in a stock.

Drawings   Dico Tools
Distribution to the owner(s) of a proprietorship or partnership; similar to dividends for a corporation.

Drawings Account   Dico Tools
The account used to reflect periodic withdrawals of earnings by the owner (proprietor) or owners (partners) of a proprietorship or partnership.

Dressing Up A Portfolio   Dico Tools
Money managers' strategy to make transactions for the sole purpose of making a portfolio look good to the investor near the end of a reporting period. Window dressing

Drip Feed   Dico Tools
The continual investment of capital in a small and growing company as the company needs it, rather than investing a lump sum at the company's inception.

Drive-by VC   Dico Tools
A type of venture capitalist. In the usual model, the venture capitalist (VC) is involved in management and mentoring of the startup. A drive-by VC invests in a portfolio of startups and is often quick to exit.

Drop Lock   Dico Tools
The fixing of the interest rate on a floating-rate note or preferred stock if it falls to a specified level.

Drop, The   Dico Tools
In a dollar roll transaction, the difference between the sale price of a mortgage-backed pass-through, and its repurchase price on a future date at a predetermined price.

Drop-dead Day   Dico Tools
The date on which a deadline is final, with no exceptions.

Drop-dead Fee   Dico Tools
A term of British origin referring to fee that must be paid if a deal falls through because of financing issues.

DRP   Dico Tools
Dividend reinvestment plan

DTC   Dico Tools
Depository transfer check

Dual Banking   Dico Tools
Describes United States custom in which a bank is chartered by the state or federal government.

Dual Listing   Dico Tools
Listing of a security on more than one exchange, thus increasing the competition for bid and offer prices, the liquidity of the securities, and the length time the stock can be traded daily (if listed on both the east and west coasts.) Listed security.

Dual Syndicate Equity Offering   Dico Tools
An international equity placement that splits the offering is split into two tranches - domestic and foreign - and each tranche is handled by a separate lead manager.

Dual Trading   Dico Tools
The custom of a trader on the commodities market to deal for its own account and the investor's account at the same time.

Dual-currency Issues   Dico Tools
Eurobonds that pay coupon interest in one currency but pay the principal in a different currency.

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Dual-purpose Fund   Dico Tools
A closed-end fund consisting of two classes of shares. The two classes are preferred shares, on which shareholders receive all the dividends and interest from the portfolio, and common shares, on which shareholders receive all the capital gains.

Due Bill   Dico Tools
An instrument evidencing the obligation of a seller to deliver securities sold to the buyer. Occasionally used in the bill market.

Due Date   Dico Tools
Date on which a debt must be paid.

Due Dilengence   Dico Tools
An internal audit of a target frim by an acquiring firm. Offers are often made contingent upon resolution of the due diligence process.

Due Diligence Meeting   Dico Tools
Meeting legally required to be held by an underwriter to enable brokers to question a new issuer about an upcoming issue.

Due-on-sale Clause   Dico Tools
A mortgage contract clause stipulating that the borrower to pay off the full remaining principal on a mortgage if the mortgaged property is sold before the mortgage is paid off.

Duplicative Portfolio   Dico Tools
Applies mainly to derivative products. Basket of stocks that imitates the price movement of another set of securities (e.g., S&P 500 index).

Dupont System Of Financial Control   Dico Tools
Expressing return on assets (ROA) in terms of the profit margin and asset turnover.

Dutch Auction   Dico Tools
Auction in which the lowest price necessary to sell the entire offering becomes the price at which all securities offered are sold. This technique has been used in Treasury auctions. Often used in risk arbitrage. The price of an item (stock) is gradually lowered until it elicits a responsive bid (government T-bills) or offer (corporate repurchase) and is sold. In a corporate repurchase, the company sets a range of prices within which shareholders are invited to tender their shares. The tender offer is open for a specific period of time (i.e., 20 days), and the quantity of stock to be purchased is stated as well, subject to prorating if more shares are tendered than can be legally purchased under the stated terms (often an additional amount equal to 20% of outstanding shares can be purchased). Compare to double auction system.

Dutch Auction Preferred Stock   Dico Tools
A form of adjustable-rate preferred stock in which the dividend is ascertained in a Dutch auction process by corporate bidders every seven weeks.

Dwarfs   Dico Tools
Fannie Mae-issued mortgage-backed securities pool that has an original maturity of 15 years.

Dynamic Asset Allocation   Dico Tools
An asset allocation strategy in which the asset mix is shifted in response to changing market conditions, as in a portfolio insurance strategy, for example.

Dynamic Hedging   Dico Tools
A strategy that involves rebalancing hedge positions as market conditions change; a strategy that seeks to insure the value of a portfolio using a synthetic put option.

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