Accounting & Investement Dictionary

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An alphabetical listing of General terms and items.

T   Dico Tools
Fifth letter of a Nasdaq stock symbol indicating that the stock has warrants or rights.

T-period Holding-period Return   Dico Tools
The percentage return over the T-year period an investment is held.

T-Rex Fund   Dico Tools
A large venture capital fund (over one billion dollars). Such funds are known for imposing strong discipline on the firms they fund.

TAA   Dico Tools
See: Tactical asset allocation

TABs   Dico Tools
See: Tax anticipation bill

TAC Bonds   Dico Tools
See: Targeted amortization class bond.

Tactical Asset Allocation   Dico Tools
Portfolio strategy that allows active departures from the normal asset mix according to specified objective measures of value. Often called active management. It involves forecasting asset returns, volatilities, and correlations. The forecasted variables may be functions of fundamental variables, economic variables, or even technical variables.

Tail   Dico Tools
(1) The difference between the average price in Treasury auctions and the stopout price. (2) A future money market instrument (one available some period hence) created by buying an existing instrument and financing the initial portion of its life with a term repo. (3) The extreme ends under a probability curve. (4) The odd amount in an MBS pool.

Tailgating   Dico Tools
Purchase of a security by a broker after the broker places an order for the same security for a customer. The broker hopes to profit either because of information which the customer has or because the customer's purchase is of sufficient size to affect security prices. This is an unethical practice.

Taiwan Stock Exchange   Dico Tools
Exchange of the Republic of China in Taipei.

Take   Dico Tools
(1) To agree to buy. A dealer or customer who agrees to buy at another dealer's offered price is said to take the offer. (2) Euro bankers speak of taking deposits rather than buying money.

Take A Bath   Dico Tools
To sustain a loss on either a speculation or an investment.

Take A Flier   Dico Tools
To speculate on highly risky securities.

Take A Position   Dico Tools
To buy or sell short; that is to own or to owe some amount on an asset or derivative security.

Take A Powder   Dico Tools
Temporarily cancel an order or indication in a stock, while unrepresented interest still exists. See: Back on the shelf, sidelines.

Take A Swing   Dico Tools
Execute a trade at a price that the trader feels is higher or more risky than would normally be acceptable, in order to gain market share in the institutional arena.

Take Home Pay   Dico Tools
Total wage or salary (plus bonuses) minus payroll deductions.

Take Off   Dico Tools
A sharp increase in the price of a stock, or a positive movement of the market as a whole.

Take The Offer   Dico Tools
Buy stock by accepting a floor broker's (listed) or dealer's (OTC) offer at an agreed-upon volume. Antithesis of hit the bid.

Take-or-pay Contract   Dico Tools
An agreement that obligates the purchaser to take any product that is offered (and pay the cash purchase price) or pay a specified amount if the product is not taken.

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Take-out   Dico Tools
A cash surplus generated by the sale of one block of securities and the purchase of another, e.g., selling a block of bonds at 99 and buying another block at 95. Also, a bid made to a seller of a security that is designed (and generally agreed) to take the seller out of the market.

Take-up Fee   Dico Tools
A fee paid to an underwriter in connection with an underwritten rights offering or an underwritten forced conversion. Represents compensation for each share of common stock the underwriter obtains and must resell upon the exercise of rights or conversion of bonds.

Takedown   Dico Tools
The share of securities of each participating investment banker in a new or a secondary offering, or the price at which the securities are distributed to the different members of an underwriting group.

Takeover   Dico Tools
General term referring to transfer of control of a firm from one group of shareholders to another group of shareholders. Change in the controlling interest of a corporation, either through a friendly acquisition or an unfriendly, hostile, bid. A hostile takeover (with the aim of replacing current existing management) is usually attempted through a public tender offer.

Takeover Target   Dico Tools
A company that is the object of a takeover attempt, friendly or hostile.

Takes A Call   Dico Tools
Requires a phone call to an account in order for a trade to be completed. See: Show me.

Takes Price   Dico Tools
Requiring some price movement or concession on behalf of the initiating party before a trade can be consummated. See: Price give.

Taking A View   Dico Tools
A London expression; means forming an opinion as to where market prices are headed and acting on it.

Taking Delivery   Dico Tools
When the buyer actually assumes possession from a seller of assets agreed upon in a forward contract or a futures contract.

Tandem Programs   Dico Tools
Ginnie Mae mortgage funds provided at below-market rates to residential MBS buyers with FHA Section 203 and 235 loans and to developers of multifamily projects with Section 236 loans initially and later with Section 221(d)(4) loans.

Tangible Asset   Dico Tools
An asset whose value depends on particular physical properties. These include reproducible assets such as buildings or machinery and non-reproducible assets such as land, a mine, or a work of art. Also called real assets. Converse of: Intangible asset

Tangible Net Worth   Dico Tools
Total assets minus intangible assets, which include patents and copyrights, and total liabilities.

TANs   Dico Tools
See: Tax anticipation notes

Tape   Dico Tools
(1) Service that reports prices and sizes of transactions on major exchanges-ticker tape. (2) Dow Jones and other news wires. See: Consolidated tape.

Tape Is Late   Dico Tools
When the trading volume is so heavy that trades appear on the tape more than a minute behind the timer they actually take place.

Target Cash Balance   Dico Tools
Optimal amount of cash for a firm to hold, considering the trade-off between the opportunity costs of holding too much cash and the trading costs of holding too little cash.

Target Company   Dico Tools
Often used in risk arbitrage. Firm chosen as an attractive takeover candidate by a potential acquirer. The acquirer may buy up to 5% of the target's stock without public disclosure, but it must report all transactions and supply other information to the SEC, the exchange the target company is listed on, and the target company itself once the 5% threshold is hit. See: Raider.

Target Firm   Dico Tools
A firm that is the object of a takeover by another firm.

Target Payout Ratio   Dico Tools
A firm's long-run dividend-to-earnings ratio. The firm's policy is to attempt to pay out a certain percentage of earnings, but it pays a stated dollar dividend and adjusts it to the target as base line increases in earnings occur.

Target Price   Dico Tools
In the context of takeovers, the price at which an acquirer aims to buy a target firm.In the context of options, the price of the underlying security at which an option will become in the money.In the context of stocks, the price that an investor hopes a stock will reach in a certain time period.

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Target Zone Arrangement   Dico Tools
A monetary system under which countries pledge to maintain their exchange rates within a specific margin around agreed-upon, fixed central exchange rates.

Targeted Amortization Class (TAC) Bonds   Dico Tools
Bonds offered as a tranche class of some CMOs, according to a sinking fund schedule. They differ from PAC bonds whose amortization is guaranteed as long as prepayments on the underlying mortgages do not exceed certain limits. A TAC's schedule is met at only one prepayment rate.

Targeted Repurchase   Dico Tools
Buying back of a firm's stock from a potential acquirer, usually at a substantial premium, to forestall a takeover attempt. Related: Greenmail.

Tariff   Dico Tools
A tax on imports or exports.

Tax   Dico Tools
A government fee on business and individual income, activities, or products.

Tax And Loan Account   Dico Tools
An account at a private bank, held in the name of the district Federal Reserve Bank, which holds operating cash for the business of the U.S. Treasury.

Tax Anticipation Bills (TABs)   Dico Tools
Special bills that the Treasury occasionally issues that mature on corporate quarterly income tax dates and can be used at face value by corporations to pay their tax liabilities.

Tax Anticipation Notes (TANs)   Dico Tools
Notes issued by states or municipalities to finance current operations in anticipation of future tax receipts.

Tax Audit   Dico Tools
Audit by the IRS or other tax-collecting agency to determine whether a taxpayer has paid the correct amount of tax.

Tax Avoidance   Dico Tools
Minimizing tax burden through legal means such as tax-free municipal bonds, tax shelters, IRA accounts, and trusts. Compare with tax evasion.

Tax Base   Dico Tools
The assessed value of the taxable property, assets, and income within a specific geographic area.

Tax Basis   Dico Tools
In the context of finance, the original cost of an asset less depreciation that is used to determine gains or losses for tax purposes. In the context of investments, the price of a stock or bond plus the broker's commission.

Tax Books   Dico Tools
Records kept by a firm's management that follow IRS rules. The books follow Financial Accounting Standards Board rules.

Tax Bracket   Dico Tools
The percentage of tax obligation for a particular taxable income.

Tax Clawback Agreement   Dico Tools
An agreement to contribute as equity to a project the value of all previously realized project-related tax benefits not already clawed back. Exercised to the extent required to cover any cash deficiency of the project.

Tax Credit   Dico Tools
An amount that a taxpayer who meets certain criteria can subtract from tax owed. Examples include a credit for earned income below a certain limit and for qualified post-secondary school expenses. (See Tax Deduction, Tax Exemption.)

Tax Deduction   Dico Tools
An expense that a taxpayer can subtract from taxable income. Examples include deductions for home mortgage interest and for charitable gifts. (See Tax Credit, Tax Exemption.) Tax Deferred Investments where taxes due on the amount invested and/or its earnings are postponed until funds are withdrawn, usually at retirement.

Tax Deferral Option   Dico Tools
Allowing the capital gains tax on an asset to be payable only when the gain is realized by selling the asset.

Tax Differential View   Dico Tools
The view that shareholders prefer capital gains over dividends, and hence low payout ratios, because capital gains are effectively taxed at lower rates than dividends.

Tax Equity And Fiscal Responsibility Act Of 1982   Dico Tools
Legislation to increase tax revenue by eliminating various taxation loopholes and instituting tougher enforcement procedures in collecting taxes.

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Tax Evasion   Dico Tools
Illegal by reducing tax burden by underreporting income, overstating deductions, or using illegal tax shelters.

Tax Exemption   Dico Tools
An amount that a taxpayer who meets certain criteria can subtract from taxable income. Examples include exemptions for each dependent or for life insurance proceeds.

Tax Free   Dico Tools
Investments (e.g., municipal bonds) whose earnings are free from tax liability.

Tax Free Acquisition   Dico Tools
A merger or consolidation in which (1) the acquirer's tax basis on each asset whose ownership is transferred in the transaction is generally the same as the acquiree's, and (2) each seller who receives only stock does not have to pay any tax on the gain realized until the shares are sold.

Tax Haven   Dico Tools
A nation with a moderate level of taxation and/or liberal tax incentives for undertaking specific activities such as exporting or investing.

Tax Liability   Dico Tools
The amount in taxes a taxpayer to the government.

Tax Lien   Dico Tools
The right of the government to enforce a claim against the property of a person owing taxes.

Tax Loss Carryback, Carryforward   Dico Tools
A tax benefit that allows business losses to be used to reduce tax liability in previous and or following years.

Tax Planning   Dico Tools
Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer.

Tax Preference Item   Dico Tools
Items that must be included when calculating the alternative minimum tax.

Tax Preparation Services   Dico Tools
Firms that prepare tax returns for a fee.

Tax Rate   Dico Tools
The percentage of tax paid for different levels of income.

Tax Reform Act Of 1976   Dico Tools
Legislation aimed at tightening provisions relating to taxation, including changes in the capital gains tax laws.

Tax Reform Act Of 1984   Dico Tools
Legislation enacted as part of the Deficit Reduction Act of 1984 to reduce the federal budget deficit. Among its provisions are a decrease in the minimum holding period for assets to qualify for long-term capital gains treatment from one year to six months.

Tax Reform Act Of 1986   Dico Tools
A 1986 law involving a major overhaul of the U.S. tax code.

Tax Reform Act Of 1993   Dico Tools
See: Revenue Reconciliation Act of 1993

Tax Refund   Dico Tools
Money back from the government when too much tax has been paid or withheld from a salary.

Tax Schedules   Dico Tools
Tax forms used to report itemized deductions, dividend and interest income, profit or loss from a business, capital gains and losses, supplemental income and loss, and self-employment tax.

Tax Selling   Dico Tools
Selling of securities to realize losses that will offset capital gains and reduce tax liability. See: Wash sale.

Tax Shelter   Dico Tools
Legal methods taxpayers can use to reduce tax liabilities. An example is the use of depreciation of assets.

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Tax Shield   Dico Tools
The reduction in income taxes that results from taking an allowable deduction from taxable income.

Tax Software   Dico Tools
Computer software designed to assist taxpayers in filling out tax returns and minimizing tax liability.

Tax Status Election   Dico Tools
The decision of the status under which to file a tax return. For example, a corporation may file as a C corporation or an S corporation.

Tax Straddle   Dico Tools
Technique used in futures and options trading to create tax benefits. For example, an investor with a capital gain takes a position creating an artificial offsetting loss in the current tax year and postponing a gain from the position until the next tax year.

Tax Swap   Dico Tools
Swapping two similar bonds to receive a tax benefit.

Tax Umbrella   Dico Tools
Tax loss carryforwards from previous business losses that form a tax shelter for profits earned in current and future years.

Tax-deductible   Dico Tools
The effect of creating a tax deduction, such as charitable contributions and mortgage interest.

Tax-deferred Retirement Plans   Dico Tools
Employer-sponsored and other plans that allow contributions and earnings to be made and accumulate tax-free until they are paid out as benefits.

Tax-equivalent Yield   Dico Tools
The pre-tax yield required from a taxable bond in order to equal the tax-free yield of a municipal bond.

Tax-exempt Money Market Fund   Dico Tools
A money market fund that invests in short-term tax-exempt municipal securities.

Tax-exempt Sector   Dico Tools
The municipal bond market where state and local governments raise funds. Bonds issued in this sector are exempt from federal income taxes.

Tax-exempt Security   Dico Tools
An obligation whose interest is tax-exempt, often called a municipal bond, offered by a country, state, town, or any political district.

Tax-timing Option   Dico Tools
The option to sell an asset and claim a loss for tax purposes or not sell the asset and defer the capital gains tax.

Taxable Acquisition   Dico Tools
A merger or consolidation that is not a tax-fee acquisition. The selling shareholders are treated as having sold their shares.

Taxable Estate   Dico Tools
That portion of a deceased person's estate that is subject to transfer tax.

Taxable Event   Dico Tools
An event or transaction that has a tax consequence, such as the sale of stock holding that is subject to capital gains taxes.

Taxable Income   Dico Tools
Income subject to tax; total income adjusted for deductions, exemptions, and credits.

Taxable Municipal Bond   Dico Tools
Taxed private-purpose bonds issued by the state or local government to finance prohibited projects such as sports stadiums.

Taxable Transaction   Dico Tools
Any transaction that is not tax-free to the parties involved, such as a taxable acquisition.

Taxpayer Relief Act Of 1997   Dico Tools
Legislation forming part of a larger act designed to balance the federal budget. Some of the legislation's provisions included tax credits for taxpayers supporting children, an increase in the amount that could be excluded from estate taxes, and a lower capital gains tax rate.

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TBA   Dico Tools
See: To be announced

Tear Sheet   Dico Tools
A page from an S&P stock that provides information on thousands of stocks, often sent to prospective purchasers.

Teaser Rate   Dico Tools
A low initial interest rate on an adjustable-rate mortgage to entice borrowers, that is later eliminated and replaced by a market-level rate.

Technical Analysis   Dico Tools
Security analysis that seeks to detect and interpret patterns in past security prices.

Technical Analysts   Dico Tools
Also called chartists or technicians, analysts who use mechanical rules to detect changes in the supply of and demand for a stock, and to capitalize on the expected change.

Technical Condition Of A Market   Dico Tools
Demand and supply factors affecting price, in particular, the net position, either long or short, of the dealer community.

Technical Descriptors   Dico Tools
Variables that are used to describe the market in terms of patterns in historical data.

Technical Insolvency   Dico Tools
Default on a legal obligation of the firm. Technical insolvency occurs when a firm doesn't pay a bill on time.

Technical Rally   Dico Tools
Short rise in securities or commodities futures prices in the face of a general declining trend. Such a rally may result because investors are bargain hunting or because analysts have noticed a particular support level at which securities usually bounce up. Antithesis of correction.

Technical Sign   Dico Tools
A short-term trend in the price movement of a security that analysts recognize as significant.

Technician   Dico Tools
Related: Technical analysts

TED Spread   Dico Tools
Difference between U.S. Treasury bill rate and Eurodollar rate; used by some traders as a measure of investor/trader anxiety o credit quality.

Teenyo   Dico Tools
1/16 or 0.0625 of one full point in price. Steenth.

TEI   Dico Tools
total economic impact (TEI): Total economic impact of a potential project in terms of other projects that may spring from it.

Tel Aviv Stock Exchange   Dico Tools
Israel's only stock exchange.

Telephone Switching   Dico Tools
Moving one's assets from one mutual fund or variable annuity to another by telephone.

Temporal Method   Dico Tools
A currency translation method under which the choice of exchange rate depends on the underlying method of valuation. Assets and liabilities valued at historical cost (market cost) are translated at the historical (current market) rate.

Temporary Investment   Dico Tools
A short-term investment, such as a money market fund, Treasury bills, or short-term CD, which is usually held a year or less.

Tenant   Dico Tools
A partial owner of a security, or the holder of some property. See: Lessee.

Tenbagger   Dico Tools
A stock that grows in value ten-fold.

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Tender   Dico Tools
To offer for delivery against futures.

Tender Offer   Dico Tools
General offer made publicly and directly to a firm's shareholders to buy their stock at a price well above the current market price.

Tender Offer Premium   Dico Tools
The premium offered above the current market price in a tender offer.

Tenor   Dico Tools
Maturity of a loan.

Term   Dico Tools
The period of time during which a contract is in force.

Term Bonds   Dico Tools
Bonds that mature in one lump sum at a specified future date.

Term Certificate   Dico Tools
A certificate of deposit with a longer time to maturity.

Term Fed Funds   Dico Tools
Fed funds sold for a period of time longer than overnight.

Term Insurance   Dico Tools
Provides a death benefit only, no build up of cash value.

Term Life Insurance   Dico Tools
A contract that provides a death benefit but no cash build up or investment component. The premium remains constant only for a specified term of years, and the policy is usually renewable at the end of each term.

Term Loan   Dico Tools
A bank loan, typically with a floating interest rate, for a specified amount that matures in between one and ten years, and requires a specified repayment schedule.

Term Premiums   Dico Tools
Excess of the yields to maturity on long-term bonds over those of short-term bonds.

Term Repo   Dico Tools
A repurchase agreement with a term of more than one day.

Term Structure Of Interest Rates   Dico Tools
Relationship between interest rates on bonds of different maturities, usually depicted in the form of a graph often called a yield curve. Harvey shows that inverted term structures (long rates below short rates) have preceded every recession over the past 30 years.

Term To Maturity   Dico Tools
The time remaining on a bond's life, or the date on which the debt will cease to exist and the borrower will have completely paid off the amount borrowed. See: Maturity.

Term Trust   Dico Tools
A closed-end fund that has a fixed termination or maturity date.

Terminal Value   Dico Tools
The value of a bond at maturity, typically its par value, or the value of an asset (or an entire firm) on some specified future valuation date. Usually, a perpetuity formula is used. For example, suppose we forecast cash flows through year 10. We make an assumption that year 11 and beyond will be no growth (except for inflation). If the cash flow forecast for year 11 is 100, the firm's discount rate is 12%, and inflation is expected to be 2%, we use the formula V10 = CF11/(disc rate-inflation). Hence, the value is 100/(0.12 - 0.02) that is 1,000. This cash flow needs to be brought back to present value using the formula 1000/(1.12)10, which is 321.97. Note the importance of the inflation assumption.

Terms Of Sale   Dico Tools
Conditions under which a firm proposes to sell its goods or services for cash or credit.

Terms Of Trade   Dico Tools
The weighted average of a nation's export prices relative to its import prices.

Test   Dico Tools
The event of a price movement that approaches a support level or a resistance level established earlier by the market. A test is passed if prices do not go below the support or resistance level, and the test is failed if prices go on to new lows or highs.

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Testamentary Trust   Dico Tools
A trust created by a will, that is scheduled to occur after the maker's death.

The Curb   Dico Tools
Used for listed equity securities. American Stock Exchange (AMEX).

The Merc   Dico Tools
Shorthand for Chicago Mercantile Exchange.

The Public   Dico Tools
Individual investors who trade single securities independently or invest in intermediaries such as mutual funds, as opposed to professional investors.

Theoretical Futures Price   Dico Tools
The equilibrium futures price. Also called the fair price.

Theoretical Spot Rate Curve   Dico Tools
A curve derived from theoretical considerations as applied to the yields of actually traded Treasury debt securities, because there are no zero-coupon Treasury debt issues with a maturity greater than one year. Like the yield curve, this is a graphic depiction of the term structure of interest rates.

Theoretical Value   Dico Tools
Applies to derivative products. Mathematically determined value of a derivative instrument as dictated by a pricing model such as the Black-Scholes model.

Theta   Dico Tools
The ratio of the change in an option price to the decrease in time to expiration. Also called time decay.

Thin Market   Dico Tools
A market in which trading volume is low, and consequently bid and asked quotes are wide and the instrument traded is not very liquid. Very little stock to buy or sell. Illiquid.

Thinly Traded   Dico Tools
Infrequently traded.

Third Market   Dico Tools
Exchange-listed securities trading in the OTC market.

Thirty-day Visible Supply   Dico Tools
The total volume in dollars of municipal bonds with maturities of 13 months or more that should reach the market within 30 days.

Thirty-day Wash Rule   Dico Tools
IRS rule stating that losses on a sale of stock may not be used as tax shelter if equivalent stock is purchased 30 days or less before or after the sale of the stock.

Three Steps And A Stumble Rule   Dico Tools
A rule predicting that stock and bond prices will fall following three increases in the discount rate by the Federal Reserve. This is a result of increased costs of borrowing for companies and the increased attractiveness of money market funds and CDs over stocks and bonds as a result of the higher interest rates.

Three-phase DDM   Dico Tools
A version of the dividend discount model that applies a different expected dividend rate depending on a company's life-cycle phase: growth phase, transition phase, or maturity phase.

Threshold For Refinancing   Dico Tools
The point when the weighted-average coupon of an MBS is at a level to induce homeowners to prepay the mortgage in order to refinance to a lower-rate mortgage, generally reached when the weighted-average coupon of the MBS is 2 percentage points or more above currently available mortgage rates.

Thrift Institution   Dico Tools
An organization formed as a depository for primarily consumer savings. Savings and loan associations and savings banks are thrift institutions.

Throughput Agreement   Dico Tools
An agreement to put a specified amount of product per period through a particular facility. An example is an agreement to ship a specified amount of crude oil per period through a particular pipeline.

Tick   Dico Tools
Refers to the minimum change in price a security can have, either up or down. Related: Point.

Tick Indicator   Dico Tools
A market indicator based on the number of stocks whose last trade was an uptick or a downtick. Used as an indicator of market sentiment or psychology to try to predict the market's trend.

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Tick-test Rules   Dico Tools
SEC-imposed restrictions on when a short sale may be executed, intended to prevent investors from destabilizing the price of a stock when the market price is falling. A short sale can be made only when either (1) the sale price of the particular stock is higher than the last trade price (referred to as an uptick trade) or (2) if there is no change in the last trade price of the particular stock, the previous trade price must be higher than the trade price that preceded it (referred to as a zero uptick).

Ticker Tape   Dico Tools
Computerized device that relays to investors around the world the stock symbol and the latest price and volume on securities as they are traded.

Ticket   Dico Tools
An abbreviation of order ticket.

Tier 1 And Tier 2   Dico Tools
Descriptions of the capital adequacy of banks. Tier 1 refers to core capital while Tier 2 refers to items such as undisclosed resources.

TIGER   Dico Tools
Acronym for Treasury Investors Growth Receipt. U.S. government-backed bonds without coupons, meaning that the bondholders do not receive the periodic interest payments. The principal of the bond and the individual coupons are sold separately.

Tight   Dico Tools
In line with or extremely close to the inside market or last sale in a stock (+/- 1/8). On the money.

Tight Market   Dico Tools
A market in which volume is high, trading is active and highly competitive, and consequently spreads between bid and ask prices are narrow.

Tight Money   Dico Tools
When a restricted money supply makes credit difficult to secure. The antithesis of tight money is easy money.

Tiki   Dico Tools
Tick of Dow Jones Industrial Average component issues.

Tilted Portfolio   Dico Tools
An indexing strategy that is linked to active management through the emphasis of a particular industry sector, selected performance factors such as earnings momentum, dividend yield, price-earnings ratio, or selected economic factors such as interest rates and inflation.

Time Decay   Dico Tools
Related: Theta

Time Deposit   Dico Tools
Interest-bearing deposit at a savings institution that has a specific maturity. Related: Certificate of deposit.

Time Draft   Dico Tools
Demand for payment at a stated future date.

Time Order   Dico Tools
Order that becomes a market or limited price order or is cancelled at a specific time.

Time Period   Dico Tools
time period (or periodicity) concept: The idea that the life of a business is divided into distinct and relatively short time periods so that accounting information can be timely.

Time Premium   Dico Tools
Also called time value, the amount by which an option price exceeds its intrinsic value. The value of an option beyond its current exercise value representing the optionholder's control until expiration, the risk of the underlying asset, and the riskless return.

Time Spread Strategy   Dico Tools
Buying and selling puts and calls with the same exercise price but different expiration dates, and trying to profit from the different premiums of the options.

Time To Maturity   Dico Tools
The time remaining until a financial contract expires. Also called time until expiration.

Time Until Expiration   Dico Tools
The time remaining until a financial contract expires. Also called time to maturity.

Time Value   Dico Tools
Applies to derivative products. Portion of an option price that is in excess of the intrinsic value, due to the amount of volatility in the stock; sometime referred to as premium. Time value is positively related to the length of time remaining until expiration.

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Time Value Of An Option   Dico Tools
The portion of an option's premium that is based on the amount of time remaining until the expiration date of the option contract, and the idea that the underlying components that determine the value of the option may change during that time. Time value is generally equal to the difference between the premium and the intrinsic value. Related: In the money.

Time Value Of Money   Dico Tools
Comparison of a lump sum of money, or a series of equal payments, between two different time periods (e.g., present and future), assuming a specified interest rate and time period. (Reference: The Time Value of Money by Clayton and Spivey.)

Time-weighted Rate Of Return   Dico Tools
Related: Geometric mean return

Times Interest Earned Ratio   Dico Tools
Ratio that indicates the company's margin above the fixed interest charged to be paid to creditors; calculated by dividing income before interest and income taxes by interest expense.

Times-interest-earned Ratio   Dico Tools
Earnings before interest and tax, divided by interest payments.

Timing   Dico Tools
See: Market timing

Timing Option   Dico Tools
The seller's choice of when in the delivery month to deliver. A Treasury Bond or note futures contract.

Tip   Dico Tools
An amount paid beyond what’s required, usually to express satisfaction with service quality; also known as a gratuity.

Tired   Dico Tools
Has been strong for a while and will probably fall due to increased supply at current price level (due to e.g. profit taking, technical analysis). Heavy.

Title Insurance   Dico Tools
Insurance policy that protects a policyholder from future challenges to the title claim a property that may result in loss of the property.

To Be Announced (TBA)   Dico Tools
A contract for the purchase or sale of an MBS to be delivered at an agreed-upon future date but does not include a specified pool number and number of pools or precise amount to be delivered.

Tobin's Q   Dico Tools
Market value of assets divided by replacement value of assets. A Tobin's Q ratio greater than 1 indicates the firm has done well with its investment decisions. Named after James Tobin, Yale University economist.

Toehold Purchase   Dico Tools
Often used in risk arbitrage. Accumulation by an acquirer of less than 5% of the shares of a target company. Once 5% is acquired, the acquirer must file with the SEC and other agencies to explain its intentions and notify the acquiree. See: Rule 13d.

Tokyo Commodity Exchange   Dico Tools
Tokyo exchange for trading futures on gold, silver, platinum, palladium, rubber, cotton yarn, and woolen yarn.

Tokyo International Financial Futures Exchange   Dico Tools
Exchange that trades Euroyen futures and options, and futures on the one-year Euroyen, three-month eurodollar, and U.S. dollar/Japanese yen currency.

Tokyo Stock Exchange   Dico Tools
The largest stock exchange in Japan with the some of the most active trading in the world.

Toll Revenue Bond   Dico Tools
A municipal bond that is repaid with revenues from tolls that are paid by users of the public project built with the bond revenue.

Tolling Agreement   Dico Tools
An agreement to put a specified amount of raw material per period through a particular processing facility. For example, an agreement to process a specified amount of alumina into aluminum at a particular aluminum plant.

Tom Next   Dico Tools
Means to "tomorrow next.". In the interbank market in Eurodollar deposits and the foreign exchange market, the value (delivery) date on a tom next transaction is the next business day.

Tombstone   Dico Tools
Advertisement listing the underwriters of a security issue.

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Ton   Dico Tools
$100 million in bond trader's terms.

Top   Dico Tools
Indicates the higher price one is willing to pay for a stock in an order; implies a not held order.

Top-down Equity Management Style   Dico Tools
Investment style that begins with an assessment of the overall economic environment and makes a general asset allocation decision regarding various sectors of the financial markets and various industries. The bottom-up manager, in contrast, selects specific securities within the particular sectors.

Top-heavy   Dico Tools
At a price level where supply is exceeding demand. See: Resistance level.

Topping Out   Dico Tools
Denoting a market or a security that is at the end of a period of rising prices and can now be expected to stay on a plateau or even to decline.

Toronto Stock Exchange   Dico Tools
Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options.

Total   Dico Tools
Complete amount of buy or sell interest, as opposed to having more behind it. See: Partial.

Total Asset Turnover   Dico Tools
The ratio of net sales to total assets.

Total Capitalization   Dico Tools
The total long-term debt and all types of equity of a company that constitutes its capital structure.

Total Cost   Dico Tools
The price paid for a security plus the broker's commission and any accrued interest that is owed to the seller (in the case of a bond).

Total Debt-to-equity Ratio   Dico Tools
A capitalization ratio comparing current liabilities plus long-term debt to shareholders' equity.

Total Dollar Return   Dico Tools
The dollar return on a nondollar investment, which includes the sum of any dividend/interest income, capital gains or losses, and currency gains or losses on the investment. See also: Total return.

Total Return   Dico Tools
In performance measurement, the actual rate of return realized over some evaluation period. In fixed income analysis, the potential return that considers all three sources of return (coupon interest, interest on coupon interest, and any capital gain/loss) over some investment horizon.

Total Revenue   Dico Tools
Total sales and other revenue for the period shown. Known as "turnover" in the U.K.

Total Volume   Dico Tools
The total number of shares or contracts traded on national and regional exchanges in a stock, bond, commodity, future, or option on a certain day.

Touch, The   Dico Tools
Mainly applies to international equities. Inside market in London terminology.

Tough On Price   Dico Tools
Firm price mentality at which one wishes to transact stock, often at a discount/premium that is not available at the time.

Tout   Dico Tools
To promote a security in order to attract buyers.

Tracking Error   Dico Tools
In an indexing strategy, the standard deviation of the difference between the performance of the benchmark and the replicating portfolio.

Tracking Stock   Dico Tools
Best defined with an example. Suppose Company A purchases a business from Company B and pays B with 1 million shares of A's stock. The agreement provides that B cannot sell the 1 million shares for 60 days, and also prohibits B from hedging by purchasing put options on A's shares or short-selling A's shares. B is worried that the market may fall in the next 60 days. B could hedge by purchasing put options or selling the futures on the S&P 500. However, it is possible that A's business is much more cyclical than the S&P 500. One solution to this problem is to find a tracking stock. This is a stock that has high correlation with A. Let us call it Company C. The solution is to sell short or buy protective put options on this tracking stock C. This protects B from fluctuations in the price of A's stock over the next 60 days. Because the degree of the protection is related to the correlation of A and C's stock, it is extremely unlikely that the protection is perfect. Tracking stock is also used for internal evaluation. A firm with four divisions, for example, might set up four tracking stocks. The value-weighted sum of the four stocks exactly equals the firm's stock price observed in the market. This is a way to reward managers for good divisional performance with an equity that is tied to their division-rather than potentially penalizing them compensation for bad performance in a division they have no control over.

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Trade   Dico Tools
An oral (or electronic) transaction involving one party buying a security from another party. Once a trade is consummated, it is considered "done" or final. Settlement occurs 1-5 business days later.

Trade Acceptance   Dico Tools
Written demand that has been accepted by an industrial company to pay a given sum at a future date. Related: Banker's acceptance.

Trade Away   Dico Tools
Trade execution by another broker/dealer.

Trade Credit   Dico Tools
Credit one firm grants to another firm for the purchase of goods or services.

Trade Date   Dico Tools
The date that the counterparties in an interest rate swap commit to the swap. Also, the day on which a security or a commodity future trade actually takes place. Trades generally settle (are paid for) 1-5 business days after a trade date. With stocks, settlement is generally 3 business days after the trade. The settlement date usually follows the trade date by five business days, but varies depending on the transaction and method of delivery used.

Trade Debt   Dico Tools
Accounts payable.

Trade Deficit Or Surplus   Dico Tools
The difference in the value of a nation's imports over exports (deficit) or exports over imports (surplus).

Trade Draft   Dico Tools
A draft addressed to a commercial enterprise. See: Draft.

Trade Flat   Dico Tools
For convertibles, trade without accrued interest. Preferred stock always "trades flat," as do bonds on which interest is in default or is in doubt. In general, trade in and out of a position at the same price, neither making a profit nor taking a loss.

Trade House   Dico Tools
A firm that deals in actual commodities.

Trade On The Wire   Dico Tools
Immediately give a bid or offer to a salesperson without checking the floor conditions (listed), dealer depth (OTC) or customer interest. An aggressive trading posture.

Trade On Top Of   Dico Tools
Trade at a narrow speed or no spread in basis points relative to some other bond yield, usually Treasury bonds.

Trademark   Dico Tools
A distinctive name or symbol used to identify a product or company and build recognition. Trademarks may be registered with the U.S. Patent and Trademark Office.

Traders   Dico Tools
Individuals who take positions in securities and their derivatives with the objective of making profits. Traders can make markets by trading the flow. When they do this, their objective is to earn the bid/ask spread. Traders can also take proprietary positions in which they seek to profit from the directional movement of prices or spread positions.

Trades By Appointment   Dico Tools
A stock that is very difficult to trade to because of illiquidity.

Trading   Dico Tools
Buying and selling securities.

Trading Authorization   Dico Tools
A document (power of attorney) a customer gives to a broker in order that the broker may buy and sell securities on behalf of the customer.

Trading Costs   Dico Tools
Costs of buying and selling marketable securities and borrowing. Trading costs include commissions, slippage, and the bid/ask spread. See: Transactions costs.

Trading Dividends   Dico Tools
Maximizing a firm's revenues by purchasing stock in other firms in order to collect the maximum amount of dividends of which 70% is tax-free.

Trading Halt   Dico Tools
When trading of a stock, bond, option or futures contract is stopped by an exchange while news is being broadcast about the security. See: Suspended trading.

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Trading Paper   Dico Tools
CDs purchased by accounts that are likely to resell them. The term is commonly used in the Euromarket.

Trading Pattern   Dico Tools
Long-range direction of a security or commodity futures price, charted by drawing one line connecting the highest prices the security has reached and another line connecting the lowest prices at which the security has traded over the same period. See: Technical analysis.

Trading Posts   Dico Tools
The positions on the floor of a stock exchange where the specialists stand and securities are traded.

Trading Profit   Dico Tools
The profit earned on short-term trades of securities held for less than one year, subject to tax at normal income tax rates.

Trading Range   Dico Tools
The difference between the high and low prices traded during a period of time; for commodities, the high/low price limit an exchange establishes for a specific commodity for any one day's trading.

Trading Securities   Dico Tools
Debt and equity securities purchased with the intent of selling them should the need for cash arise or to realize short-term gains.

Trading Unit   Dico Tools
The number of shares of a particular security that is used as the acceptable quantity for trading on the exchanges.

Trading Variation   Dico Tools
The increments to which securities prices are rounded up or rounded down.

Trading Volume   Dico Tools
The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares.

Traditional View   Dico Tools
An argument that, "within reason," investors prefer higher dividends to lower dividends because the dividend is sure but future capital gains are uncertain.

Tranche   Dico Tools
One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics.

Transaction   Dico Tools
The delivery of a security by a seller and its acceptance by the buyer.

Transaction Demand   Dico Tools
The money needed to accommodate a firm's expected cash transactions.

Transaction Exposure   Dico Tools
Risk to a firm with known future cash flows in a foreign currency, that arises from possible changes in the exchange rate. Related: Translation exposure.

Transaction Loan   Dico Tools
A loan extended by a bank for a specific purpose. Lines of credit and revolving credit agreements involve by contrast loans that can be used for various purposes.

Transaction Tax   Dico Tools
Applies mainly to international equities. Levies on a deal that foreign governments sometimes charge.

Transactions   Dico Tools
Exchange of goods or services between entities (whether individuals, businesses, or other organizations), as well as other events having an economic impact on a business.

Transactions Costs   Dico Tools
The time, effort, and money necessary, including such things as commission fees and the cost of physically moving the asset from seller to buyer. Related: Round-trip transactions costs, information costs, search costs.

Transactions Motive   Dico Tools
A desire to hold cash in order to conduct cash-based transactions.

Transfer   Dico Tools
A change of ownership from one person or party to another.

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Transfer Agent   Dico Tools
Individual or institution a company appoints to look after the transfer of securities.

Transfer Payments   Dico Tools
Payments from a government to its citizens, such as welfare and other government benefits.

Transfer Price   Dico Tools
The price at which one unit of a firm sells goods or services to another unit of the same firm.

Transfer Tax   Dico Tools
A small federal tax on the movement of ownership of all bonds (except obligations of the U.S., foreign governments, states, and municipalities) and all stocks.

Transferable Put Right   Dico Tools
An option issued by a firm to its shareholders to sell the firm one share of its common stock at a fixed price (the strike price) within a stated period (the time to maturity). The put right is "transferable" because it can be traded in the capital markets.

Transition Phase   Dico Tools
A stage of development when a company begins to mature and its earnings decelerate to the rate of growth of the economy as a whole. Related: Three-phase DDM.

Translation Exposure   Dico Tools
Risk of adverse effects on a firm's financial statements that may arise from changes in exchange rates. Related: Transaction exposure.

Transmittal Letter   Dico Tools
A letter describing the contents and purpose of a transaction delivered with a security that is changing ownership.

Transportation Costs   Dico Tools
Costs of transferring merchandise into or out of a firm.

Travel And Entertainment Expense   Dico Tools
Funds spent on business travel and entertainment that qualify for a tax deduction of 50% of the amount claimed.

Treasurer   Dico Tools
The corporate officer responsible for designing and implementing a firm's financing and investing activities.

Treasurer's Check   Dico Tools
A check issued by a bank to make a payment. Treasurer's checks outstanding are counted as part of a bank's reservable deposits and as part of the money supply.

Treasuries   Dico Tools
Related: Treasury securities

Treasury   Dico Tools
U.S. Department of the Treasury, which issues all Treasury bonds, notes, and bills as well as overseeing agencies. Also, the department within a corporation that oversees its financial operations including the issuance of new shares.

Treasury Bills   Dico Tools
Debt obligations of the U.S. Treasury that have maturities of one year or less. Maturities for T-bills are usually 91 days, 182 days, or 52 weeks.

Treasury Bonds   Dico Tools
Debt obligations of the U.S. Treasury that have maturities of 10 years or more.

Treasury Direct   Dico Tools
A system allowing an individual investor to make a noncompetitive bid on U.S. Treasury securities and thus avoid broker-dealer fees.

Treasury Notes   Dico Tools
Debt obligations of the U.S. Treasury that have maturities of more than 2 years but less than 10 years.

Treasury Securities   Dico Tools
Securities issued by the U.S. Department of the Treasury.

Treasury Stock   Dico Tools
Issued stock that has subsequently been reacquired by the corporation.

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Treat Me Subject   Dico Tools
In the equities market, a conditional bid or offer. "My bid or offer is not firm, but is subject to confirmation between other parties and to market changes."

Trend   Dico Tools
The general direction of the market.

Trendline   Dico Tools
A technical chart line that depicts the past movement of a security and that is used in an attempt to help predict future price movements.

Treynor Index   Dico Tools
A measure of the excess return per unit of risk, where excess return is defined as the difference between the portfolio's return and the risk-free rate of return over the same evaluation period and where the unit of risk is the portfolio's beta. Named after Jack Treynor.

Trial Balance   Dico Tools
A listing of all account balances; provides a means of testing whether total debits equal total credits for all accounts.

Triangular Arbitrage   Dico Tools
Striking offsetting deals among three markets simultaneously to obtain an arbitrage profit.

Trickle Down   Dico Tools
An economic theory that the support of businesses that allows them to flourish will eventually benefit middle- and lower-income people, in the form of increased economic activity and reduced unemployment.

Trin   Dico Tools
Used in the context of general equities. Short-term trading index that shows a minute-by-minute correlation of the ratio of advances to declines to the ratio of advancing volume to declining volume. Depicts whether changes in the relationship of advances and declines are taking place more quickly or more slowly than changes in the general volume movement of the market, 1 bear market. See: A/D and arms index.

Triple Net Lease   Dico Tools
A lease providing that the tenant pay for all maintenance expenses, plus utilities, taxes, and insurance. This results in lower risk for investors, who usually form a limited partnership.

Triple Tax-exempt   Dico Tools
Municipal bonds featuring federal, state, and local tax-free interest payments.

Triple Witching Hour   Dico Tools
The four times a year that the S&P futures contract expires at the same time as the S&P 100 index option contract and option contracts on individual stocks. It is the last trading hour on the third Friday of March, June, September, and December, when stock options, futures on stock indexes, and options on these futures expire concurrently. Massive trades in index futures, options, and underlying stock by hedge strategists and arbitrageurs cause abnormal activity (noise) and volatility.

Trough   Dico Tools
The transition point between economic recession and recovery.

True Interest Cost   Dico Tools
For a security such as commercial paper that is sold on a discount basis, true interest cost is the coupon rate required to provide an identical return assuming a coupon-bearing instrument of like maturity that pays interest in arrears.

True Lease   Dico Tools
A contract that qualifies as a valid lease agreement under the Internal Revenue Code.

Trust   Dico Tools
A fiduciary relationship calling for a trustee to hold the title to assets for the benefit of the beneficiary. The person creating the trust, who may or may not also be the beneficiary, is called the grantor.

Trust Company   Dico Tools
An organization that acts as a fiduciary and administers trusts.

Trust Deed   Dico Tools
Agreement between trustee and borrower setting out terms of a bond.

Trust Indenture Act Of 1939   Dico Tools
A law that requires all corporate bonds and other debt securities to be issued subject to indenture agreements and comply with certain indenture provisions approved by the SEC.

Trust Receipt   Dico Tools
Receipt for goods that are to be held in trust for the lender.

Trustee In Bankruptcy   Dico Tools
An appointed trustee who supervises and administers the affairs of a bankrupt company or individual.

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Truth In Lending Law   Dico Tools
Legislation governing the granting of credit, that requires lenders to disclose the true cost of loans and the actual interest rates and terms of the loans in a manner that is easily understood.

TSE 300   Dico Tools
Canadian form of a S&P 500.

TT&L Account   Dico Tools
Treasury tax and loan account at a bank.

Turkey   Dico Tools
A losing investment.

Turn   Dico Tools
In the equities market, a reversal; unwind.

Turnaround   Dico Tools
Securities bought and sold for settlement on the same day. Also describes a firm that has been performing poorly, but changes its financial course and improves its performance.

Turnaround Time   Dico Tools
Time available or needed to effect a turnaround.

Turnkey Construction Contract   Dico Tools
A type of construction contract under which the construction firm is obligated to complete a project according to prespecified criteria for a price that is fixed at the time the contract is signed.

Turnover   Dico Tools
For mutual funds, a measure of trading activity during the previous year, expressed as a percentage of the average total assets of the fund. A turnover rate of 25% means that the value of trades represented one-fourth of the assets of the fund. For finance, the number of times a given asset, such as inventory, is replaced during the accounting period, usually a year. For corporate finance, the ratio of annual sales to net worth, representing the extent to which a company can grow without outside capital. For markets, the volume of shares traded as a percent of total shares listed during a specified period, usually a day or a year. For Great Britain, total revenue. Percentage of the total number of shares outstanding of an issue that trades during any given period.

Twenty Bond Index   Dico Tools
A benchmark indicator of the level of municipal bond yields. It consists of the yields on 20 general obligation municipal bonds with 20-year maturities with an average rating equivalent to a1l.

Twenty-day Period   Dico Tools
The period during which the SEC inspects registration statement and preliminary prospectus prior to a new issue or secondary distribution.

Twisting   Dico Tools
Convincing a customer that trades are necessary in order to generate a commission. This is an unethical practice.

Two Dollar Broker   Dico Tools
Floor broker of the NYSE, who executes orders for other brokers having more business at that time than they can handle with their own private floor brokers or who do not have their exchange member on the floor.

Two-factor Model   Dico Tools
Black's zero-beta version of the capital asset pricing model.

Two-fund Separation Theorem   Dico Tools
The theoretical result that all investors will hold a combination of the risk-free asset and the market portfolio.

Two-sided Market   Dico Tools
A market in which both bid and asked prices, good for the standard unit of trading, are quoted. When customers or market makers are lined up on both sides (buy and sell) of a stock.

Two-state Option Pricing Model   Dico Tools
A pricing equation allowing an underlying asset to assume only two possible (discrete) values in the next time period for each value it can take on in the preceding time period. Also called the binomial option pricing model.

Two-tier Bid   Dico Tools
Takeover bid in which the acquirer offers to pay more for the shares needed to gain control than for the remaining shares, or to pay the same price but at different times in the merger period; contrasts with any-or-all bid.

Two-tier Tax System   Dico Tools
Taxation system that results in taxing the income going to shareholders twice.

Type   Dico Tools
The classification of an option contract as either a put or a call.

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