Accounting & Investement Dictionary
Enter a word below: Search also in: IT Dico. | Accounting Dico. | Medical Dico. | Plants Dico. | Business Dico. | Engineering Dico. | Water Purification & Filtration Dico. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
An alphabetical listing of General terms and items. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DAC, in accounting, is an acronym for Deferred Acquisition Costs.
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.
Manipulation of the market by traders to create the illusion of active volume to attract investors.
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 dividend checks are mailed.
The date selected by a corporation's board of directors on which the shareholders of record are identified as those who will receive dividends.
The date one uses to calculate accrued interest on various debt instruments, specifically bonds.
Treating cash flows as being received on exact dates-date 0, date 1, and so forth-as opposed to the end-of-year convention.
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
A day order that supersedes (cancels and replaces) the previous order by altering its size or price limit.
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.
A bank account that pays interest according to the number of days that the money is actually on deposit.
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.
Establishing and liquidating the same position or positions within one day's trading.
Average collection period.
The average number of days' worth of sales that is held in inventory.
Average collection period.
Discounted cash flows
Discounted dividend model
Existing in actual fact although not by official recognition.
Back to top
A small upmove in a bear market.
In investment banking, the rate at which new deals are referred to a brokerage firm.
Stock subject to merger or acquisition, either publicly announced or rumored.
Overnight, collateralized loan from a money market bank made to a dealer financing his position by borrowing.
Where traderss specializing in particular commodities buy and sell assets for their own accounts.
Over-the-counter options, such as those offered by government and mortgage-backed securities dealers.
Markdown; underwriting spread.
British term for tight money.
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.
In venture capital, refers to the period before a new company starts generating revenues, when it is difficult for the company to raise money.
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.
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.
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.
Bonds for which no collateral has been pledged.
An entry on the left side of an account.
The amount that is owed to a broker by a margin customer for loans the customer uses to buy securities.
Bank cards that allow the payment of goods and services to be subtracted directly from a bank account.
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.
A default on debt and obligations by a major financial institution that disrupts the stability of the economic system.
Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.
Back to top
Debt limit
The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity.
Acquiring funds by borrowing money from creditors in the form of long-term notes, mortgages, leases, or bonds.
An asset requiring fixed dollar payments, such as a government or corporate bond.
Amplification of the return earned on equity when an investment or firm is financed partially with borrowed money.
The maximum amount that a municipality can borrow.
A bond covenant that restricts the firm's ability to incur additional indebtedness in some way.
The market for trading debt instruments.
Total debt divided by total assets.
Reducing the principal and/or interest payments on Less developed country loans.
The complete repayment of debt. Sinking fund.
Financial instruments issued by a company that carry with them a promise of interest payments and the repayment of principal.
Interest payment plus repayments of principal to creditors (retirement of debt).
The ratio of cash flow available to the borrower to the annual interest and principal payments on a loan or other debt.
Payment alternatives that provide the firm with the exact same schedule of after-tax debt payments (including both interest and principal).
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.
A measurement of the relative utilization of debt and equity; computed by dividing average total assets by average stockholders' equity.
Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate.
Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.
Bondholder
Back to top
A firm that continues to operate under the Chapter 11 bankruptcy process.
New debt obtained by a firm during the Chapter 11 bankruptcy process.
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%.
The quotation and trading of stock prices in decimals, as opposed to the quotation of stock prices in fractions of a dollar.
Schematic way of representing alternative sequential decisions and the possible outcomes from these decisions.
The date on which a corporation's board of directors formally decides to pay a dividend to shareholders.
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.)
Total par value (number of shares issued, multiplied by the par value of each share). Also called dedicated value.
Related: Cash flow matching
Refers to multiperiod cash-flow matching.
Business expenses or losses that are subtracted from gross income in computing taxable income.
Using known fact to draw a conclusion about a specific situation.
Indenture
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).
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.
A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default.
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).
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.
Low-risk stocks or bonds that will provide a predictable and safe return on an investor's money.
A type of account that delays taxes on that account until some later date.
Back to top
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.
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.
An expenditure treated as an asset that carries forward until it becomes pertinent to the business at hand, e.g., advance rent payment.
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.
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.
The most distant months of a futures contract.
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.
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.
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.
An annuity that stipulates payments be made to the annuitant at a later date, such as when the annuitant reaches a certain age.
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.
Notification from the SEC to a prospective issuer of securities that revisions or additions need to be made to the preliminary prospectus.
When government spending overwhelms government revenue resulting in government borrowing. Deficit financing.
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.
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
A pension plan whoae sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan
A broad, overall drop in the price of goods and services; the opposite of the more common inflation.
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.
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.
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.
Back to top
Removal of a company's security from listing on an exchange because the firm has not abided by specific regulations.
The Treasury bills that fulfill a set of guidelines set forth by the exchange on which the bills are traded.
The asset in a forward contract that will be delivered in the future at an agreed-upon price.
Date by which a seller must fulfill the obligations of a forward or futures contract.
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.
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.
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.
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.
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.
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.
Describes value of a portfolio not affected by changes in the value of the asset on which the options are written.
Checking accounts that pay no interest and from which funds can be withdrawn upon demand.
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.
A loan which can be called by the lender at any time and carries no set maturity date.
Short-term securities that are repayable immediately upon the holder's demand.
An event that affects the demand for goods and services in an economy.
A theory of inflation or price increases resulting from so-called excess demand. Related: Cost-push inflation.
The process of cost allocation that assigns the original cost of a natural resource to the periods benefited.
FDIC: Federal Deposit Insurance Corporation
The 1980 federal legislation that ended the regulation of the banking industry.
Back to top
The 1980 federal legislation that ended the regulation of the banking industry.
The 1980 federal legislation that ended the regulation of the banking industry.
Device enabling an issuer to circumvent an arbitrary corporate limit on the number of preferred shares issuable. Applies mainly to convertible securities.
ADR American Depository Receipt
Check made out directly by a local bank to a particular firm or person.
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
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.
The process of cost allocation that assigns the original cost of plant and equipment to the periods benefited.
The value of the tax write-off on depreciation of plant and equipment.
Market in which supply overwhelms demand, leading to weak and lower prices.
In the context of stocks, stock whose market price is low in comparison to stocks in its sector.
Contracts such as options and futures whose price is derived from the price of an underlying financial asset.
Markets for derivative instruments.
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.
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.
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.
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).
Liability-matching models that assume that the liability payments and the asset cash flows are known with certainty. Related: Stochastic models.
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 (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 ).
Back to top
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.
Cold calling
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.
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.
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.
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.
The practice of reporting conflicting or markedly different information in official corporate statements including annual and quarterly reports and 10-Ks and 10-Qs.
Swap between two LIBOR rates of interest, e.g., yen LIBOR for dollar LIBOR Payments are in one currency.
A conception of the way a stock's price changes that assumes that the price takes on all intermediate values.
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).
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.
Result of a transaction that decreases earnings per common share (EPS).
Prearranged payments from a third party directly into a bank account (e.g.,paychecks, Social Security).
A method of cash budgeting based on detailed estimates of cash receipts and cash disbursements category by category.
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.
Contract in which a lessor purchases new equipment from the manufacturer and leases it to the lessee.
A method of reporting net cash flow from operations that shows the major classes of cash receipts and payments for a period of time.
A fraction of overhead costs devoted to the manufacturing sector of a firm to cover expenses such as rent and utilities.
Commercial paper sold directly by the issuer to investors.
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.
Back to top
Selling a new issue not by offering it for sale publicly, but by placing it with one of several institutional investors.
For foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency.
Buyers and sellers seek each other directly and transact directly.
Investors purchase securities directly from the issuer.
The recording of actual losses from uncollectible accounts as expenses during the period in which accounts receivable are determined to be uncollectible.
A system of floating exchange rates in which a government may intervene to change the direction of the value of the country's currency.
Bond price including accrued interest, i.e., the price paid by the bond buyer.
A stock that fails to fulfill prerequisites to attain good delivery status.
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.
A decrease in book cash but no immediate change in bank cash, generated by checks written by the firm.
The termination of bankruptcy proceedings, resulting in cancellation of the debtor's obligations.
An order terminating a lien on property.
A disclaimer indicating the auditor was unable to satisfy himself or herself that the overall financial statements were fairly present in accordance with GAAP.
Divisions of a business that have been sold or written off and that no longer are maintained by the business.
The amount charged by a financial institution when a note receivable is discounted; calculated as maturity value times discount rate times discount period.
Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond.
A brokerage house featuring relatively low commission rates in comparison to a full-service broker.
Present value of $1 received at a stated future date.
The time between the date a note is sold to a financial institution and its maturity date.
The interest rate charged by a financial institution for buying a note receivable.
Back to top
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.
Facility provided by the Fed enabling member banks to borrow reserves against collateral in the form of governments or other acceptable paper.
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).
To sell below maturity value, so that the difference makes up all or part of the interest.
Future cash flows multiplied by discount factors to obtain present values.
A formula to estimate the intrinsic value of a firm by figuring the present value of all expected future dividends.
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).
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.
Calculating the present value of a future amount. Discounting is opposite to compounding.
The process of the payee's selling notes to financial institution for less than the maturity value.
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.
Compounding the time value of money for separate time intervals.
A random variable that can take only a certain specified set of individual possible values-for example, the positive integers 1, 2, 3, . . .
Variable like 1, 2, 3. Bond ratings are examples of discrete classifications.
Accounts over which an individual or organization, other than the person in whose name the account is carried, exercises trading authority or control.
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.
The amount of income a consumer has available after purchasing essentials such as food and shelter.
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.
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.
A statistical process that links the probability of default to a specified set of financial ratios.
Back to top
Withdrawal of funds from a financial institution in order to invest them directly.
Income remaining after income and payroll taxes are deducted from gross pay; income available to spend or save.
The selling of assets under adverse conditions, e.g., an investor may have to sell securities to cover a margin call.
A syndicate consisting of a number of brokerage firms or investment bankers that work together to sell and disperse a large lot of securities.
An established price range in which a stock has been trading in for a significant amount of time. Accumulation area.
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.
A mutual fund's plan to charge distribution costs such as advertising to the investors of the fund.
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.
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).
Related: Unsystematic risk
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.
Companies operating in more than one line of business.
An investment vehicle such as a mutual fund that invests in an assortment of securities.
A payment to shareholders that a company’s board of directors approves from earnings.
Dividend rollover plan
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.
A group of shareholders who prefer that the firm follow a particular dividend policy. Such a preference may be based on comparable tax situations.
A method to value the common stock of a company that is based on the present value of the expected future dividends.
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.
Accumulated dividends on cumulative preferred stock that are deemed payable to the current holder.
Back to top
A bond covenant that restricts in some way the firm's ability to pay cash dividends.
The date on which a corporation pays dividends to its shareholders.
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.
Standards by which a firm determines the amount of money it will pay as dividends.
The fixed or floating rate paid on preferred stock based on par value.
S&P publication stating companies' payment histories and corporate policies.
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.
The annual earnings minimum required for payment of dividends on a preferred stock.
A shareholder's rights to receive per-share dividends identical to those other shareholders receive.
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.
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.
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.
Indicated yield represents annual dividends divided by current stock price.
Distributions to owners (stockholders) of a corporation.
The account used to reflect periodic distributions of earnings to the owners (stockholders) of a corporation.
Missed dividends for past years that preferred stockholders have a right to receive under the cumulative-dividend preference if and when dividends are declared.
The declared dividend dollar amount that a company is obligated to pay.
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.
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.
Do Not Reduce Order
Back to top
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.
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.
Principle that a nation may not be tried in another country without its consent.
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.
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.
Traders who capitalize on a falling dollar by buying other foreign currencies directly.
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.
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.
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.
The product of modified duration and the initial price.
Percentage of face value at which a bond is quoted.
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.
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.
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization strategy.
Results when a nation importing U.S. goods cannot pay for them without the aid of the United States.
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.
A corporation that is conducting business and is based in the country in which it is established, as opposed to a foreign corporation.
A US corporation that receives a tax incentive for export activities.
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.
Phrase advising not to trade against the market trend. If stock prices are rising, do not sell.
Back to top
"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.
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.
A market consisting of many sellers and many buyers, as opposed to a conventional auction with one market maker and many buyers.
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.
Used for listed equity securities. Dividend roll in which the "dividend capturer" already owns the stock cum dividend .
Government taxation of the same money twice; specifically, taxation of earnings at the corporate level and dividends at the stockholder level.
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.
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.
A trading day when of two related classes of options and futures expire, resulting in a variety of arbitrage strategies to close out positions.
Method of accelerated depreciation.
An accounting methodology in which depreciation is accelerated to twice the rate of annual depreciation by the straight-line method.
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.
A system of recording transactions in a way that maintains the equality of the accounting equation.
Agreement between two countries that taxes paid abroad can be offset against domestic taxes levied on foreign dividends.
A sinking fund provision that may allow repurchase of twice the required number of bonds at the sinking fund call price.
Dogs of the Dow.
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.
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.
Refers to a round of venture capital financing that is raised at a lower firm valuation than the previous round.
Barrier option that comes into existence if asset price hits a predetermined price level.
Back to top
Barrier option that expires if asset price hits a predetermined price level.
The risk that a security will decline in value in includng the implications of risk.
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.
In the context of general equities, provoking a customer indication/inquiry/order by up or doing large amount of the volume in a stock.
Distribution to the owner(s) of a proprietorship or partnership; similar to dividends for a corporation.
The account used to reflect periodic withdrawals of earnings by the owner (proprietor) or owners (partners) of a proprietorship or partnership.
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
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.
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.
The fixing of the interest rate on a floating-rate note or preferred stock if it falls to a specified level.
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.
The date on which a deadline is final, with no exceptions.
A term of British origin referring to fee that must be paid if a deal falls through because of financing issues.
Dividend reinvestment plan
Depository transfer check
Describes United States custom in which a bank is chartered by the state or federal government.
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.
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.
The custom of a trader on the commodities market to deal for its own account and the investor's account at the same time.
Eurobonds that pay coupon interest in one currency but pay the principal in a different currency.
Back to top
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.
An instrument evidencing the obligation of a seller to deliver securities sold to the buyer. Occasionally used in the bill market.
Date on which a debt must be paid.
An internal audit of a target frim by an acquiring firm. Offers are often made contingent upon resolution of the due diligence process.
Meeting legally required to be held by an underwriter to enable brokers to question a new issuer about an upcoming issue.
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.
Applies mainly to derivative products. Basket of stocks that imitates the price movement of another set of securities (e.g., S&P 500 index).
Expressing return on assets (ROA) in terms of the profit margin and asset turnover.
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.
A form of adjustable-rate preferred stock in which the dividend is ascertained in a Dutch auction process by corporate bidders every seven weeks.
Fannie Mae-issued mortgage-backed securities pool that has an original maturity of 15 years.
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.
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. Back to top |
