Accounting & Investement Dictionary
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An alphabetical listing of General terms and items. |
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Fifth letter of a Nasdaq stock descriptor specifying that issue is the Class B shares of the company.
An Internet strategy of dealing directly with businesses, rather than consumers, i.e. business to (2) business.
A bond with a par value of less than $1000.
In the context of general equities, to withdraw from a previously declared interest, indication, or transaction; broker-dealer's failure, as a market maker in a given security, to make good on a bid/offer for the minimum quantity.
The fee paid on the extension date if the buyer wishes to continue the option.
In the context of futures and options trading, refers to the months of contracts with expiration dates farthest away. See farthest month.
Brokerage house clerical operations that support, but do not include, the trading of stocks and other securities. All written confirmation and settlement of trades, record keeping, and regulatory compliance happen in the back office.
In the context of general equities, permanently cancelled order/interest in a stock by a customer. See: Take a powder.
Due taxes that have not been paid on time.
(1) When bond yields rise and prices fall, the market is said to backup. (2) An investor who swaps out of one security into another of shorter current maturity is said to back up.
In the context of general equities, "Prepare for a very large buyer."
A mutual fund that charges investors a fee to sell (redeem) shares, often ranging from 4% to 6%. Some back-end load funds impose a full commission if the shares are redeemed within a designated length ofg time, such as one year. The commission decreases, the longer the investor holds the shares. The formal name for the back-end load is the contingent deferred sales charge, or C.D.S.C.
Creating a hypothetical portfolio performance history by applying current asset selection criteria to prior time periods.
An intercompany loan channeled through a bank.
A loan in which two companies in separate countries borrow each other's currency for a specific time period and repay the other's currency at an agreed-upon maturity.
In the context of mutual funds, a feature allowing fundholders to use an earlier date on a letter of intent to invest in a mutual fund in exchange for a reduced sales charge, e.g. Giving retroactive value to purchases from the earlier date.
In the context of general equities, to describe result of unanticipated events that allow for a purchase at a discount or a sale at a premium.
A commercial paper issuer's bank line of credit covering maturing notes if, for some reason, selling new notes to cover the maturing notes is not possible.
A market condition in which futures prices are lower in the distant delivery months than in the nearest delivery month. This may occur when the costs of storing the product until eventual delivery are effectively subtracted from the price today. The opposite of contango.
An uncollectible account receivable.
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Antithesis of good delivery.
Title to property that does not distinctly confer ownership, usually in the context of real estate.
Two-sided market picture, in Japanese terminology applies mainly to international equities.
In the context of securities, refers to selling a security or commodity quickly, regardless of the price. May occur when an investor no longer wants to sustain further losses on a stock.
A bond issued by the Resolution Funding Corporation (Refcorp) to save the failing savings and loan associations in the late 1980s and early 1990s.
A plan by former U.S. Treasury Secretary James Baker under which 15 principal middle-income debtor countries (the Baker 15) would undertake growth-oriented structural reforms, to be supported by increased financing from the World Bank and continued lending from commercial banks.
A statistical compilation formulated by a sovereign nation of all economic transactions between residents of that nation and residents of all other nations during a stipulated period of time, usually a calendar year.
Net flow of goods (exports minus imports) between two countries.
The financial statement that shows the assets, liabilities, and owners' equity of an entity at a particular date.
See: Accounting exposure.
Total assets = Total liabilities + Total stockholders' equity
A budget in which the income equals expenditure. See: budget.
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
This is a fund that buys common stock, preferred stock, and bonds. The same as a balanced fund.
In the context of serial bond issues, the elevated coupon rate on bonds with late maturities.
Any large principal payment due at maturity for a bond or loan with or without a sinking fund requirement.
Bank anticipation notes
Notes issued by states and municipalities to obtain interim financing for projects that will eventually be funded long term through the sale of a bond issue.
The time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank.
A convention used for quoting bids and offers for Treasury bills in terms of annualized yield, based on a 360-day year.
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A draft addressed to a bank.
An international bank headquartered in Basel, Switzerland, which serves as a forum for monetary cooperation among several European central banks, the Bank of Japan, and the U.S. Federal Reserve System. Founded in 1930 to handle the German payment of World War I reparations, it now monitors and collects data on international banking activity and promulgates rules concerning international bank regulation.
A company that owns or has controlling interest in two or more banks and/or other bank holding companies.
A unit of the Federal Deposit Insurance Corporation (FDIC) that provides deposit insurance for banks excluding thrifts.
Interest guaranteed by the bank in a portfolio over a specific time frame with a specific yield.
Line of credit that by a bank grants to a customer.
The process of systematically comparing the cash balance as reported by the bank with the cash balance on the company's books and explaining any differences.
Monthly record of all activity within an account, provided by the bank.
Bank department that deals with estates, administers trusts, and provides services such as estate planning advice to its clients.
A computer message system linking major banks. It is used not for effecting payments, but as a mechanism to advise the receiving bank of some action that has occurred, e.g., the payment by a customer of funds into that bank's account.
A short-term credit investment created by a nonfinancial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts to face value in the secondary market. These instruments have been a popular investment for money market funds. They are commonly used in international transactions.
An agreement between a company engaged in a takeover bid and a bank that the bank will not finance the bid of another acquirer.
Situation where a person files with the court to be released from debts. May entail sale of the debtor’s property and/or a court-approved plan for repayment of debts.
The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt financing.
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
The argument that expected bankruptcy costs preclude firms from financing entirely with debt.
Corporations chartered by state or federal government to offer numerous financial services such as checking and savings accounts, loans, and safe deposit boxes. The Federal Deposit Insurance Corporation (FDIC) insures accounts in federally chartered banks.
A fixed income strategy in which the maturities of the securities included in the portfolio are concentrated at two extremes.
A slang term for an unsophisticated investor who has lost everything on the stock market.
In the context of general equities, purchaser who is extremely selective in the price sought on a transaction.
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Gives the lessee the option to purchase the asset at a price below fair market value when the lease expires.
A method developed by BARRA, a consulting firm in Berkeley, Calif. It is commonly used by institutional investors applying performance attribution analysis to evaluate their money managers' performance.
Option contracts with trigger points that, when crossed, automatically generate buying or selling of other options. These are exotic options.
Index measuring the ratio of the average yield on 10 top-grade bonds to the average yield on 10 intermediate-grade bonds. The discrepancy between high-rated top-grade bonds and low-rated bond yields establishes a measure that is indicative of investor confidence.
Applies mainly to international equities. Currency in which gains or losses from operating an international portfolio are measured.
Related: Benchmark interest rate.
A group of securities, average market price at a specific time. Used for the purpose of indexing.
A particular period of time used for comparative purposes when measuring economic data.
The probability of not achieving a portfolio expected return. Related: Value at risk.
British equivalent of the U.S. prime rate.
In a balance of payments, the basic balance is the net balance of the combination of the current account and the capital account.
Key strategies a firm intends to pursue in carrying out its business plan.
Accept the project if IRR is higher than the discount rate; reject the project if it is lower than the discount rate. It is wise to also consider net present value for project evaluation.
In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 5% is 50 basis points higher than an interest rate of 4.5%.
Price expressed in terms of yield to maturity or annual rate of return.
Uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for price risk.
Packages that involve the exchange of more than two currencies against a base currency at expiration. The basket option buyer purchases the right, but not the obligation, to receive designated currencies in exchange for a base currency, either at the prevailing foreign exchange market rate or at a prearranged rate of exchange. Multinational corporations with multicurrency cash flows frequently use basket options because it is generally cheaper to buy an option on a basket of currencies than to buy individual options on each of the currencies that make up the basket.
The purchase of two or more assets acquired together at a single price.
Related: Program trades.
Business Controlling System: It is an Enterprise Resources Planning System (ERP System), it is created and developed by NSD Company. This system is intended for a small and Medium Enterprises, it was developed based on a best business practice.
It is a windows platform system using MS SQL Server as Data Base.
The applications included on the standard package of NSD BCS are:
1- Human Resources
2- Financial
3- Sales and Distribution including a point of sale system (POS)
4- Project Management
5- Logistics (Procurement, Warehouses Management, Inventory...)..........
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Business Controlling System: It is an Enterprise Resources Planning System (ERP System), it is created and developed by NSD Company. This system is intended for a small and Medium Enterprises, it was developed based on a best business practice.
It is a windows platform system using MS SQL Server as Data Base.
The applications included on the standard package of NSD BCS are:
1- Human Resources
2- Financial
3- Sales and Distribution including a point of sale system (POS)
4- Project Management
5- Logistics (Procurement, Warehouses Management, Inventory...)..........
An SEC required document of brokerage houses that outlines the firm's finances and officers.
A bear CD pays the holder a fraction of any fall in a given market index.
Often used in risk arbitrage. Hostile takeover attempt in which the acquirer offers an exceptionally large premium over the market value of the acquiree's share so as to as to squeeze (hug) the target into acceptance.
Any market in which prices exhibit a declining trend. For a prolonged period, usually falling by 20% or more.
In the context of general equities, attempt by investors to move the price of a stock opportunistically by selling large numbers of shares short. The investors pocket the difference between the initial price and the new, lower price after this maneuver. This technique is illegal under S.E.C. rules, which stipulate that every short sale must be on an uptick.
Applies to derivative products. Strategy in the options market designed to take advantage of a fall in the price of a security or commodity, usually executed by buying a combination of calls and puts on the same security at different strike prices in order to profit as the security's price falls.
The predicament facing short sellers when a bear market reverses its trend and becomes bullish. The assets continue to sell in anticipation of further declines in price, and short sellers then are forced to cover at higher prices
Bonds that are not registered on the books of the issuer. Such bonds are held in physical form by the owner, who receives interest payments by physically detaching coupons from the bond certificate and delivering them to the paying agent.
Describes issue form of security not registered on the issuing corporation's books, and therefore payable to its bearer. See also: Bearer bond; coupon bond.
Security not registered on the books of the issuing corporation and thus payable to possessor of the shares. Negotiable without endorsement and transferred by delivery, thus avoiding some of the control associated with ordinary shares. Dividends are payable upon presentation of dividend coupons, which are dated or numbered. Applies mainly to international equities.
See: Bonds Enabling Annual Retirement Savings (BEARS)
In the context of general equities, gaining an advantageous price in a trade through a quick response to market developments.
The ratio of net income before taxes to net sales.
An international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners.
A devaluation that is designed to cheapen a nation's currency and thereby increase its exports at the expense of other countries. Devaluation can also reduce a nation's imports. Such devaluations often lead to trade wars.
Related: Benchmark issues.
Less than the nominal or face value of a security.
Use of an inappropriate proxy for the true market portfolio.
Also called the base interest rate, it is the minimum interest rate investors will demand for investing in a non-Treasury security. It is also tied to the yield to maturity offered on the comparable-maturity Treasury security that was most recently issued (on-the-run).
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Also called on-the-run or current-coupon issue or bellwether issues. In the secondary market, the benchmark issue is the most recently auctioned Treasury issues for each maturity.
Often used in risk arbitrage. Person who enjoys the benefits of ownership even though title is in another name. (Abused through the illegal use of a parking violation.)
A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders.
A method of securities distribution/underwriting in which the securities firm agrees to sell as much of the offering as possible and return any unsold shares to the issuer. As opposed to a guaranteed or fixed-price sale, in which the underwriter agrees to sell a specific number of shares (and holds any unsold shares in its own account if necessary).
The requirement that a claim holder voting against a plan of reorganization must receive at least as much as if the debtor were liquidated.
The market beta of a security is determined as follows: Regress excess returns of stock y on excess returns of the market. The slope coefficient is beta. Define n as number of observation numbers. Beta =[(n) (sum of [xy]) ]-[ (sum of x) (sum of y)]/ [(n) (sum of [xx]) ]-[ (sum of x) (sum of x)] where: n = # of observations (usually 36 to 60 months) x = rate of return for the S&P 500 index y = rate of return for the security Related: Alpha
A mortgage loan on which interest and principal payments are made every half-month (total of 26 payments) as opposed to monthly payments. This results in earlier loan retirement.
Related: Pure expectations theory.
See: Bank Investment Contract
Refers to over-the-counter trading. Bid from another dealer exists at the same (listed) or higher (O.T.C.) price.
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically speaking, this is the available price at which an investor can sell shares of stock. Related: Ask, offer.
Used in the context of general equities. Announcement that a holder of securities wants to sell and will entertain bids.
The difference between the bid and the asked prices.
The ratio of the number of bids received in a Treasury security auction compared to the number of accepted bids.
In the context of general equities, a nonaggressive buyer who prefers to await a natural seller in the hope of paying a lower price.
In the context of general equities, aggressive willingness to purchase a security at a premium to the inside market. Contrast with bidding buyer.
Moving the bid price higher.
See: Bank Insurance Fund
The term applied to the liberalization in 1986 of the London Stock Exchange (L.S.E.) when trading was automated.
A nickname for the New York Stock Exchange (NYSE). Also known as The Exchange. More than 2,000 common and preferred stocks are traded. Founded in 1792, the N.Y.S.E. is the oldest exchange in the United States, and the largest. It is located on Wall Street in New York City.
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To highlight trading interest due to the size of the trade.
A successful broker who generates a large volume of commission. See Rainmaker.
Unpopular stocks.
General term for a document demanding payment.
A contract between an exporter and a transportation company in which the latter agrees to transport the goods under specified conditions that limit its liability. It is the exporter's receipt for the goods as well as proof that goods have been or will be received.
The time elapsed between billing periods for goods sold or services rendered.
An option pricing model in which the underlying asset can assume one of only two possible, discrete values in the next time period for each value that it can take on in the preceding time period.
See: Bank for International Settlements
A precipitous drop in a financial market . The original Black Friday occurred on September 24, 1869, when prospectors attempted to corner the gold market.
An illegal market.
Refers to October 19, 1987, when the Dow Jones Industrial Average fell 508 points on the heels of sharp drops the previous week. On Monday, October 27, 1997, the Dow dropped 554 points. While the point drop set a new record, the percentage decline was substantially less than in 1987.
A model for pricing call options based on arbitrage arguments. Uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the expected standard deviation of the stock return. Developed by Fischer Black and Myron Scholes in 1973.
A check that is duly signed, but the amount of the check is left blank to be supplied by the drawee.
An initial public offering by a company whose business activities are undefined and therefore speculative.
SEC-required insurance coverage that brokerage firms are required to have in order to cover fraudulent trading by employees.
A secured loan that gives the lender a lien against all the borrower's inventories.
A recommendation by a brokerage firm sent to all its customers advising that they buy or sell a particular stock regardless of investment objectives or portfolio size.
A limited partnership that does not announce its intentions as to what properties will be acquired.
A trust in which a fiduciary third party has total discretion to make investments on behalf of a beneficiary while the beneficiary is uninformed about the holdings of the trust.
In the context of a takeover, refers to a tender offer that is priced so attractively that the tender is completed quickly.
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In the context of general equities, conference meeting during which customer indications and orders, along with the traders' own buy/sell preferences, are conveyed to the entire organization. See block list.
Brokerage firms that help to find potential buyers or sellers of large block trades.
In the context of general equities, listing of stock the investment bank is looking for (wants to buy) or (wants to sell) at the beginning of the day, whether on an agency or principal basis.
A large trading order, defined on the New York Stock Exchange as an order that consists of 10,000 shares of a given stock or at a total market value of $200,000 or more.
A dealer who will take a position in the block trades to accommodate customer buyers and sellers of blocks. See: Dealer, market maker, principal.
Descirbes a group of shareholders banding together to vote their shares in a single block.
A currency that is not freely convertible to other currencies due to exchange controls.
A steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen in charts and used in technical analysis of stock price and market trends.
Daily financial publication featuring bonds offered for sale by dealers and banks that represent billions of dollars in par value. Also available on-line at www.bluelist.com.
Used in the context of general equities. Large and creditworthy company. Company renowned for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends. Gilt-edged security.
State laws covering the issue and trading of securities.
High quality stock.
Employee of the Chicago Board Options Exchange who manages away from the market orders, which cannot be executed immediately.
Individuals elected by the stockholders to govern a corporation.
The managing body of the Federal Reserve System, set which policies on bank practices and the money supply.
A room at a brokerage firm where its clients can watch an electronic board displaying stock prices and transactions. Also refers to the room where Board of Directors meetings take place.
Used to describe place or operation in which unscrupulous salespeople call and try to sell people speculative, even fraudulent, securities.
Spanish for stock exchange.
Chile's preeminent stock exchange.
Brazil's second-largest stock exchange.
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The largest stock exchange in Brazil.
See: National Stock Exchange; Mumbai stock exchange.
See: Greenmail.
A contract between a borrower and a lender in which the borrower promises to pay a specified rate of interest for each period the bond is outstanding and repay the principal at the maturity date.
A contract for privately placed debt.
A short-term debt instrument issued by a state or municipality to borrow against the proceeds of an upcoming bond issue.
A broker on the floor of an exchange who trades bonds.
A daily publication featuring many essential statistics and index figures relevant to the fixed income markets.
A municipal bond price tracking index published daily by the Bond Buyer.
The face value of bonds minus the unamortized discount or plus the unamortized premium.
An attorney who prepares the legal opinion concerning a municipal bond issue.
A contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions.
Members of the stock exchange who transact bond orders on the floor of the exchange.
The difference between the face value and the sales price when bonds are sold below their face value.
Bond yield calculated on an annual percentage rate method. Differs from annual effective yield.
A contract between a bond issuer and a bond purchaser that specifies the terms of a bond.
Designing a bond portfolio so that its performance will match the performance of some bond index.
An international trade association of broker/dealers and banks in U.S. government and federal agency securities, municipal securities, mortgage-backed securities, and money market securities.
A mutual fund holding bonds.
A conventional unit of measure for bond prices set at $1 and equivalent to 1% of the $100 face value of the bond. A price of 80 means that the bond is selling at 80% of its face or par value.
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A form used in the transfer of registered bonds from one owner to a different owner.
The difference between the face value and the sales price when bonds are sold above their face value.
A rating based on the possibility of default by a bond issuer. The ratings range from AAA (highly unlikely to default) to D (in default). See: Rating, investment grade.
The percentage of a company's capitalization represented by bonds. The ratio is calculated by dividing the total bonds due after one year by that same figure plus all other equity. See: Debt-to-equity-ratio.
The sale of one bond issue and purchase of another bond issue simultaneously. See: Swap; swap order.
With respect to convertible bonds, the value the security would have if it were not convertible. That is the market value of the bond minus the value of the conversion option.
The method used for computing the bond-equivalent yield.
A system that monitors and evaluates the performance of a fixed income portfolio, as well as the individual securities held in the portfolio. BONDPAR decomposes the return into the elements beyond the manager's control--such as the interest rate environment and client-imposed duration policy constraints--and those that the management process contributes to, such as interest rate management, sector/quality allocations, and individual bond selection.
Corporate bonds arranged so that specified principal amounts become due on specified dates. Related: Term bonds.
Holders of BEARS receive the face value of bonds underlying call option, which are exercised by CUBS (an acronym for Calls Underwritten by Swanbrook). If the calls are exercised by CUBS, BEARS holders receive the total of the exercise price.
Charging a lot more for an asset than its worth.
A firm's cash balance as reported in its financial statements. Also calledledger cash.
The cumulative book income plus any gain or loss on disposition of assets.
The managing underwriter for a new issue. The book runner maintains the book of securities sold.
In the context of general equities, high-technology industry's demand to supply ratio of orders on a firm's book to number of orders filled. Measures who the company has more orders than it can deliver (>1), equal amounts (=1), or less (
The net amount shown in the accounts for an asset, liability, or owners' equity item.
A measure of net worth; computed by dividing stockholders' equity for each class of stock by the number of shares outstanding for that class.
System in which securities are not represented by paper certificates but are maintained in computerized records at the Fed in the names of member banks, which in turn keep computer records of the securities they own as well as those they are holding for customers. In the case of other securities where a book-entry has developed, certificates reside in a central clearinghouse or by another agent. These securities do not move from holder to holder.
Creating a theoretical spot rate curve using one yield projection as the basis for the yield of the next maturity.
Funds borrowed from a Federal Reserve Bank by member banks to maintain the required reserve ratios.
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In the mortgage pipeline, the risk that prospective borrowers of loans committed to be closed will elect to withdraw from the contract.
This system permits the automatic execution of trades based on the current stock prices on the consolidated markets at any of the U.S. securities exchanges.
An investor seeking stocks that have fallen to prices at or near their bottom, which he or she believes will trend up in the future.
A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks.
Security issue in which one or two underwriters buy the entire issue.
BPM = Business Process Management
The phrase Business Process Management (BPM) refers to a set of activities an organization implements to optimize its processes. Business process management also encompasses software tools designed to assist firms in achieving process optimization.
The gradual movement into higher tax brackets when incomes increase as a result of inflation.
Bonds issued by emerging countries under a debt reduction plan.
In the context of general equities, percentage of stocks participating in a particular market move. Technical analysts say there was significant breadth if two-thirds of the stocks listed on an exchange move in the same direction during a trading session. See: A/D line.
Used in the context of general equities. Change one's offering or bid prices to move to a more realistic, tight level where execution is more feasible. Often done to trim one's position, thus "breaking price" from where the trades occurred (if long, "break price" downward 1/8 a point or more).
An analysis of the level of sales at which a project would make zero profit.
The lease payment at which a party to a prospective lease is indifferent between entering and not entering into a lease arrangement.
The prepayment rate of an MBS coupon that will produce the same cash flow yield (CFY) as that of a predetermined benchmark MBS coupon. Used to identify for coupons higher than the benchmark coupon the prepayment rate that will produce the same cash flow yield (CFY) as that of the benchmark coupon; and for coupons lower than the benchmark coupon the lowest prepayment rate that will do so.
Refers to the price at which a transaction produces neither a gain nor a loss. In the context of options, the term has the additonal definitions: 1. Long calls and short uncovered calls: strike price plus premium. 2. Long puts and short uncovered puts: strike price minus premium. 3. Short covered call: purchase price minus premium. 4. Short put covered by short stock: short sale price of underlying stock plus premium.
The tax rate at which a party to a prospective transaction is indifferent between entering into and not entering into the transaction.
Related: Premium payback period.
Terminating an agreement among underwriters, specifically the investment banking group assembled to underwrite the issue of a security.
For mutual funds, refers to the investment amount necessary to make the fundholder eligible for a reduced sales charge. See: Letter of intent; right of accumulation.
See: Private market value.
Inventor of one of the foundational asset pricing models in finance, the consumption based capital asset pricing model. Chairman of Smith Breeden Associates.
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An agreement signed by the original United Nations members in 1944 that established the International Monetary Fund (I.M.F.) and the post-World War II international monetary system of fixed exchange rates.
Interim financing of one sort or another used to solidify a position until more permanent financing is arranged.
In the context of general equities, "make stock available for sale to indicated buyers."
The large clearing banks that dominate deposit taking and short-term lending in the domestic sterling market.
An expanded version of the ticker tape, which is displayed on a screen in the board room of a brokerage firm and shows constantley updated financial information and news.
Used for listed equity securities. Prevented from executing a trade (committed to upstairs) due to exchange priority rules excluding one's order (e.g., higher bid/lower offer on floor, market order to satisfy).
Related: Call money rate.
A certificate of deposit issued by a bank or thrift institution bought by a brokerage firm in bulk for the purpose of reselling to brokerage customers. A broker CD features a higher interest rate, usually 1% higher, and is FDIC insured and do not usually have commissions.
A market in which an intermediary offers search services to buyers and sellers.
Compelling a research analyst of an investment bank to work in the underwriting department for a corporate client, therefore allowing for the transmission of insider information. Also called "Over the Chinese wall".
Stock exchange that handles the majority of securities transactions in Belgium.
Security prices sometimes move wildly above their true values, or the price falls sharply until the "bubble bursts.".
An illegal brokerage firm that accepts customer orders but does not attain immediate executions. A bucket shop broker promises the customer a certain price, but waits until a price discrepancy is present and the trade is advantageous to the firm and then keeps the difference as profit. Alternatively, the broker may never fill the customer's order but keep the money.
A financial plan that summarizes future income and expenditures over a period of time.
The amount by which government spending exceeds government revenues.
The amount by which government revenues exceed government spending.
In the context of general equities, develop customer orders to gather demand/supply in order to make a bid or an offer.
A mortgage loan on newly developed property that the builder subsidizes during the early years of the development. The builder uses cash to buy down the mortgage rate to a lower level than the prevailing market loan rate for some period of time. The typical buydown is 3% of the interest rate amount for the first year, 2% for the second year, and 1% for the third year (also referred to as a 3-2-1 buydown).
A tier of firms in an underwriting syndicate that have the highest participation level. See: Mezzanine bracket.
A bull CD pays its holder a specified percentage of the increase in return on a specified market index while guaranteeing a minimum rate of return.
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Any market in which prices are in an upward trend.
A spread strategy in which an investor buys an out-of-the-money put option, financing it by selling an out-of-the money call option on the same underlying security.
Bond whose principal repayment is linked to the price of another security. The bonds are issued in two tranches: In the first tranche repayment increases with the price of the other security, and in the second tranche repayment decreases with the price of the other security.
Foreign bond issue made in London.
The foreign market in the United Kingdom.
A guaranteed investment contract purchased with a single (one-shot) premium. Related: Window contract.
A bank term loan that calls for no amortization.
A fixed income strategy in which a portfolio is constructed so that the maturities of its securities are highly concentrated at one point on the yield curve.
Metal coins consisting of gold, silver, platinum, or palladium that are actively traded. Some examples include the American eagle and the Canadian maple leaf. Their price is directly connected to the underlying price of their metal.
A certificate of deposit granting the owner the right to increase its yield one time for the remaining term of the CD. The power is exercised by the owner in the event of an interest rate hike.
Describes the act of traders combining round-lot orders for execution at the same time. Bunching can also be used to combine odd-lot orders to save the odd-lot differential for customers. Also used to refer to the pattern on the ticker tape when a series of trades for a security appear consecutively.
Creation of securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes.
Used in venture capital financing to refer to the rate at which a start-up company expends capital to finance overhead costs prior to the generation of positive cash flow.
Depletion of a tax shelter's benefits. In the context of mortgage backed securities it refers to the percentage of the pool that has prepaid their mortgage.
An organization operated with the objective of making a profit from the sale of goods or services.
See: Merger
Repetitive cycles of economic expansion and recession. The official peaks and troughs of the U.S. cycle are determined by the National Bureau of Economic Research in Cambridge, MA.
A day in which financial markets are open for trading.
Records of transactions used as the basis for recording accounting entries; includes invoices, check stubs, receipts, and similar business papers.
Expenses that have been paid or incurred in the course of business and that are ordinary, necessary, and reasonable in amount.
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A business that has terminated operations with a loss to creditors.
The risk that the cash flow of an issuer will be impaired because of adverse economic conditions, making it difficult for the issuer to meet its operating expenses.
Reporting the results of the separate divisions or subsidiaries of a business.
A leveraged buyout in which the buyer sells off the assets of the target_company to repay the debt that financed the takeover.
Related: Fixed income equivalent. Mainly applies to convertible securities. Convertible bond selling essentially as a straight bond. Assuming the issuer is "money good," or will continue to meet credit obligations, such issues can be highly attractive since the price makes virtually no allowance for the bond's call on the common stock, although such issues usually carry high premiums.
A nonparallel shift in the yield curve involving the height of the curve.
Applies to derivative products. Complex option strategy that involves selling two calls and buying two calls on the same or different markets, with several maturity dates. One of the options has a higher exercise price and the other has a lower exercise price than the other two options. The payoff diagram resembles the shape of a butterfly.
See: Long hedge
To cover, offset, or close out a short position. Related: Evening up, liquidation.
A conditional trading order that indicates a security may be purchased only at the designated price or lower. Related: Sell limit order.
In the context of general equities, rare market or limit order to buy a stated amount of a stock, provided that the price to be obtained is not higher than the last sale if the last sale is a minus or zero-minus tick, and is not higher than the last sale minus the minimum fractional change in the stock if the last sale is a plus or zero-plus tick. (If limit, then the buy cannot occur above the limit, regardless of tick.)
Buying at the end of the trading session at a price within the closing range.
Borrowing to buy additional shares, using the shares themselves as collateral.
Buying at the beginning of a trading session at a price within the opening range.
Buying stock shortly after a price drop resulting from bad news from the company. Investors believe that the price has hit bottom and will trend upward. See: Bottom fisher.
An order to a broker to purchase a specific quantity of a security.
A buy order not to be executed until the market price rises to the stop price. Once the security has broken through that price, the order is then treated as a market order. Also known as a suspended market order.
An order, typically from a large institutional investor to a broker to purchase all the shares available at the market from the specialist and other brokers and dealers at the current offer price. The book refers to the record a specialist kept before the advent of computers.
Used for listed equity securities. "Cover my short position.
A passive investment strategy with no active buying and selling of stocks from the time the portfolio is created until the end of the investment horizon.
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An options strategy that calls for the purchase of stocks and the writing of covered call options on them.
A financial analyst employed by a nonbrokerage firm, typically one of the larger money management firms that purchases securities on its own account.
Mortgages in which monthly payments consist of principal and interest. During the early part of the loan, portions of these payments are provided by a third party to reduce the borrower's monthly payments.
Market in which the supply exceeds the demand, creating lower prices. Antithesis of seller's_market.
Used for listed equity securities. Indicates that at a given time (usually before the opening of a stock/market or at expiration time), there are more buyers/sellers in the marketplace, usually with market orders. See: Imbalance of orders.
A rapid rise in the price of a stock resulting from heavy buying, which usually creates the market condition for a rapid fall in the price.
The amount of money available to buy securities, determined by adding the total cash held in brokerage accounts and the amount that could be spent if securities were margined to the limit.
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the same return.
Rules and practices that govern management of an organization. Back to top |