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Accounting & Investement Dictionary

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An alphabetical listing of General terms and items.

B   Dico Tools
Fifth letter of a Nasdaq stock descriptor specifying that issue is the Class B shares of the company.

B2B   Dico Tools
An Internet strategy of dealing directly with businesses, rather than consumers, i.e. business to (2) business.

Baby Bond   Dico Tools
A bond with a par value of less than $1000.

Back Away   Dico Tools
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.

Back Fee   Dico Tools
The fee paid on the extension date if the buyer wishes to continue the option.

Back Months   Dico Tools
In the context of futures and options trading, refers to the months of contracts with expiration dates farthest away. See farthest month.

Back Office   Dico Tools
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.

Back On The Shelf   Dico Tools
In the context of general equities, permanently cancelled order/interest in a stock by a customer. See: Take a powder.

Back Taxes   Dico Tools
Due taxes that have not been paid on time.

Back Up   Dico Tools
(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.

Back Up The Truck   Dico Tools
In the context of general equities, "Prepare for a very large buyer."

Back-end Load Fund   Dico Tools
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.

Back-testing   Dico Tools
Creating a hypothetical portfolio performance history by applying current asset selection criteria to prior time periods.

Back-to-back Financing   Dico Tools
An intercompany loan channeled through a bank.

Back-to-back Loan   Dico Tools
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.

Backdating   Dico Tools
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.

Backed In   Dico Tools
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.

Backup Line   Dico Tools
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.

Backwardation   Dico Tools
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.

Bad Debt   Dico Tools
An uncollectible account receivable.

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Bad Delivery   Dico Tools
Antithesis of good delivery.

Bad Title   Dico Tools
Title to property that does not distinctly confer ownership, usually in the context of real estate.

Bai-kai   Dico Tools
Two-sided market picture, in Japanese terminology applies mainly to international equities.

Bailing Out   Dico Tools
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.

Bailout Bond   Dico Tools
A bond issued by the Resolution Funding Corporation (Refcorp) to save the failing savings and loan associations in the late 1980s and early 1990s.

Baker Plan   Dico Tools
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.

Balance Of Payments   Dico Tools
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.

Balance Of Trade   Dico Tools
Net flow of goods (exports minus imports) between two countries.

Balance Sheet   Dico Tools
The financial statement that shows the assets, liabilities, and owners' equity of an entity at a particular date.  

Balance Sheet Exposure   Dico Tools
See: Accounting exposure.

Balance Sheet Identity   Dico Tools
Total assets = Total liabilities + Total stockholders' equity

Balanced Budget   Dico Tools
A budget in which the income equals expenditure. See: budget.

Balanced Fund   Dico Tools
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.

Balanced Mutual Fund   Dico Tools
This is a fund that buys common stock, preferred stock, and bonds. The same as a balanced fund.

Balloon Interest   Dico Tools
In the context of serial bond issues, the elevated coupon rate on bonds with late maturities.

Balloon Maturity   Dico Tools
Any large principal payment due at maturity for a bond or loan with or without a sinking fund requirement.

BAN   Dico Tools
Bank anticipation notes

Bank Anticipation Notes   Dico Tools
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.

Bank Collection Float   Dico Tools
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.

Bank Discount Basis   Dico Tools
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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Bank Draft   Dico Tools
A draft addressed to a bank.

Bank For International Settlements   Dico Tools
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.

Bank Holding Company   Dico Tools
A company that owns or has controlling interest in two or more banks and/or other bank holding companies.

Bank Insurance Fund (BIF)   Dico Tools
A unit of the Federal Deposit Insurance Corporation (FDIC) that provides deposit insurance for banks excluding thrifts.

Bank Investment Contract   Dico Tools
Interest guaranteed by the bank in a portfolio over a specific time frame with a specific yield.

Bank Line   Dico Tools
Line of credit that by a bank grants to a customer.

Bank Reconciliation   Dico Tools
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.

Bank Statement   Dico Tools
Monthly record of all activity within an account, provided by the bank.

Bank Trust Department   Dico Tools
Bank department that deals with estates, administers trusts, and provides services such as estate planning advice to its clients.

Bank Wire   Dico Tools
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.

Banker's Acceptance   Dico Tools
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.

Bankmail   Dico Tools
An agreement between a company engaged in a takeover bid and a bank that the bank will not finance the bid of another acquirer.

Bankruptcy   Dico Tools
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.

Bankruptcy Cost View   Dico Tools
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.

Bankruptcy Risk   Dico Tools
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.

Bankruptcy View   Dico Tools
The argument that expected bankruptcy costs preclude firms from financing entirely with debt.

Banks   Dico Tools
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.

Barbell Strategy   Dico Tools
A fixed income strategy in which the maturities of the securities included in the portfolio are concentrated at two extremes.

Barefoot Pilgrim   Dico Tools
A slang term for an unsophisticated investor who has lost everything on the stock market.

Bargain Hunter   Dico Tools
In the context of general equities, purchaser who is extremely selective in the price sought on a transaction.

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Bargain-purchase-price Option   Dico Tools
Gives the lessee the option to purchase the asset at a price below fair market value when the lease expires.

BARRA's Performance Analysis   Dico Tools
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.

Barrier Options   Dico Tools
Option contracts with trigger points that, when crossed, automatically generate buying or selling of other options. These are exotic options.

Barron's Confidence Index   Dico Tools
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.

Base Currency   Dico Tools
Applies mainly to international equities. Currency in which gains or losses from operating an international portfolio are measured.

Base Interest Rate   Dico Tools
Related: Benchmark interest rate.

Base Market Value   Dico Tools
A group of securities, average market price at a specific time. Used for the purpose of indexing.

Base Period   Dico Tools
A particular period of time used for comparative purposes when measuring economic data.

Base Probability Of Loss   Dico Tools
The probability of not achieving a portfolio expected return. Related: Value at risk.

Base Rate   Dico Tools
British equivalent of the U.S. prime rate.

Basic Balance   Dico Tools
In a balance of payments, the basic balance is the net balance of the combination of the current account and the capital account.

Basic Business Strategies   Dico Tools
Key strategies a firm intends to pursue in carrying out its business plan.

Basic IRR Rule   Dico Tools
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.

Basis Point   Dico Tools
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%.

Basis Price   Dico Tools
Price expressed in terms of yield to maturity or annual rate of return.

Basis Risk   Dico Tools
Uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for price risk.

Basket Options   Dico Tools
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.

Basket Purchase   Dico Tools
The purchase of two or more assets acquired together at a single price.  

Basket Trades   Dico Tools
Related: Program trades.

BCS   Dico Tools
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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BCS   Dico Tools
  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...)..........  

BD Form   Dico Tools
An SEC required document of brokerage houses that outlines the firm's finances and officers.

Bear CD   Dico Tools
A bear CD pays the holder a fraction of any fall in a given market index.

Bear Hug   Dico Tools
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.

Bear Market   Dico Tools
Any market in which prices exhibit a declining trend. For a prolonged period, usually falling by 20% or more.

Bear Raid   Dico Tools
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.

Bear Spread   Dico Tools
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.

Bear Trap   Dico Tools
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

Bearer Bond   Dico Tools
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.

Bearer Form   Dico Tools
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.

Bearer Share   Dico Tools
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.

BEARS   Dico Tools
See: Bonds Enabling Annual Retirement Savings (BEARS)

Beating The Gun   Dico Tools
In the context of general equities, gaining an advantageous price in a trade through a quick response to market developments.

Before-tax Profit Margin   Dico Tools
The ratio of net income before taxes to net sales.

Beggar-thy-neighbor   Dico Tools
An international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners.

Beggar-thy-neighbor Devaluation   Dico Tools
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.

Bellwether Issues   Dico Tools
Related: Benchmark issues.

Below Par   Dico Tools
Less than the nominal or face value of a security.

Benchmark Error   Dico Tools
Use of an inappropriate proxy for the true market portfolio.

Benchmark Interest Rate   Dico Tools
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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Benchmark Issue   Dico Tools
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.

Beneficial Ownership   Dico Tools
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.)

Best's Rating   Dico Tools
A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders.

Best-efforts Sale   Dico Tools
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).

Best-interests-of-creditors Test   Dico Tools
The requirement that a claim holder voting against a plan of reorganization must receive at least as much as if the debtor were liquidated.

Beta Equation   Dico Tools
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

Bi-weekly Mortgage Loan   Dico Tools
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.

Biased Expectations Theories   Dico Tools
Related: Pure expectations theory.

BIC   Dico Tools
See: Bank Investment Contract

Bid Away   Dico Tools
Refers to over-the-counter trading. Bid from another dealer exists at the same (listed) or higher (O.T.C.) price.

Bid Price   Dico Tools
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.

Bid Wanted   Dico Tools
Used in the context of general equities. Announcement that a holder of securities wants to sell and will entertain bids.

Bid-asked Spread   Dico Tools
The difference between the bid and the asked prices.

Bid-to-cover Ratio   Dico Tools
The ratio of the number of bids received in a Treasury security auction compared to the number of accepted bids.

Bidding Buyer   Dico Tools
In the context of general equities, a nonaggressive buyer who prefers to await a natural seller in the hope of paying a lower price.

Bidding Through The Market   Dico Tools
In the context of general equities, aggressive willingness to purchase a security at a premium to the inside market. Contrast with bidding buyer.

Bidding Up   Dico Tools
Moving the bid price higher.

BIF   Dico Tools
See: Bank Insurance Fund

Big Bang   Dico Tools
The term applied to the liberalization in 1986 of the London Stock Exchange (L.S.E.) when trading was automated.

Big Board   Dico Tools
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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Big Picture   Dico Tools
To highlight trading interest due to the size of the trade.

Big Producer   Dico Tools
A successful broker who generates a large volume of commission. See Rainmaker.

Big Uglies   Dico Tools
Unpopular stocks.

Bill Of Exchange   Dico Tools
General term for a document demanding payment.

Bill Of Lading   Dico Tools
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.

Billing Cycle   Dico Tools
The time elapsed between billing periods for goods sold or services rendered.

Binomial Option Pricing Model   Dico Tools
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.

BIS   Dico Tools
See: Bank for International Settlements

Black Friday   Dico Tools
A precipitous drop in a financial market . The original Black Friday occurred on September 24, 1869, when prospectors attempted to corner the gold market.

Black Market   Dico Tools
An illegal market.

Black Monday   Dico Tools
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.

Black-Scholes Option-pricing Model   Dico Tools
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.

Blank Check   Dico Tools
A check that is duly signed, but the amount of the check is left blank to be supplied by the drawee.

Blank Check Offering   Dico Tools
An initial public offering by a company whose business activities are undefined and therefore speculative.

Blanket Fidelity Bond   Dico Tools
SEC-required insurance coverage that brokerage firms are required to have in order to cover fraudulent trading by employees.

Blanket Inventory Lien   Dico Tools
A secured loan that gives the lender a lien against all the borrower's inventories.

Blanket Recommendation   Dico Tools
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.

Blind Pool   Dico Tools
A limited partnership that does not announce its intentions as to what properties will be acquired.

Blind Trust   Dico Tools
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.

Blitzkrieg Tender Offer   Dico Tools
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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Block Call   Dico Tools
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.

Block House   Dico Tools
Brokerage firms that help to find potential buyers or sellers of large block trades.

Block List   Dico Tools
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.

Block Trade   Dico Tools
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.

Block Trader   Dico Tools
A dealer who will take a position in the block trades to accommodate customer buyers and sellers of blocks. See: Dealer, market maker, principal.

Block Voting   Dico Tools
Descirbes a group of shareholders banding together to vote their shares in a single block.

Blocked Currency   Dico Tools
A currency that is not freely convertible to other currencies due to exchange controls.

Blow-off Top   Dico Tools
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.

Blue List   Dico Tools
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.

Blue-chip Company   Dico Tools
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.

Blue-sky Laws   Dico Tools
State laws covering the issue and trading of securities.

Bo Derek Stock   Dico Tools
High quality stock.

Board Broker   Dico Tools
Employee of the Chicago Board Options Exchange who manages away from the market orders, which cannot be executed immediately.

Board Of Directors   Dico Tools
Individuals elected by the stockholders to govern a corporation.

Board Of Governors Of The Federal Reserve System   Dico Tools
The managing body of the Federal Reserve System, set which policies on bank practices and the money supply.

Board Room   Dico Tools
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.

Boiler Room   Dico Tools
Used to describe place or operation in which unscrupulous salespeople call and try to sell people speculative, even fraudulent, securities.

Bolsa   Dico Tools
Spanish for stock exchange.

Bolsa De Commercio De Santiago   Dico Tools
Chile's preeminent stock exchange.

Bolsa De Valores De Rio De Janeiro   Dico Tools
Brazil's second-largest stock exchange.

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Bolsa De Valores De Sao Paulo   Dico Tools
The largest stock exchange in Brazil.

Bombay Stock Exchange   Dico Tools
See: National Stock Exchange; Mumbai stock exchange.

Bon Voyage Bonus   Dico Tools
See: Greenmail.

Bond   Dico Tools
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.

Bond Agreement   Dico Tools
A contract for privately placed debt.

Bond Anticipation Note   Dico Tools
A short-term debt instrument issued by a state or municipality to borrow against the proceeds of an upcoming bond issue.

Bond Broker   Dico Tools
A broker on the floor of an exchange who trades bonds.

Bond Buyer   Dico Tools
A daily publication featuring many essential statistics and index figures relevant to the fixed income markets.

Bond Buyer's Municipal Bond Index   Dico Tools
A municipal bond price tracking index published daily by the Bond Buyer.

Bond Carrying Value   Dico Tools
The face value of bonds minus the unamortized discount or plus the unamortized premium.

Bond Counsel   Dico Tools
An attorney who prepares the legal opinion concerning a municipal bond issue.

Bond Covenant   Dico Tools
A contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions.

Bond Crowd   Dico Tools
Members of the stock exchange who transact bond orders on the floor of the exchange.

Bond Discount   Dico Tools
The difference between the face value and the sales price when bonds are sold below their face value.

Bond Equivalent Yield   Dico Tools
Bond yield calculated on an annual percentage rate method. Differs from annual effective yield.

Bond Indenture   Dico Tools
A contract between a bond issuer and a bond purchaser that specifies the terms of a bond.

Bond Indexing   Dico Tools
Designing a bond portfolio so that its performance will match the performance of some bond index.

Bond Market Association   Dico Tools
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.

Bond Mutual Fund   Dico Tools
A mutual fund holding bonds.

Bond Points   Dico Tools
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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Bond Power   Dico Tools
A form used in the transfer of registered bonds from one owner to a different owner.

Bond Premium   Dico Tools
The difference between the face value and the sales price when bonds are sold above their face value.

Bond Rating   Dico Tools
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.

Bond Ratio   Dico Tools
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.

Bond Swap   Dico Tools
The sale of one bond issue and purchase of another bond issue simultaneously. See: Swap; swap order.

Bond Value   Dico Tools
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.

Bond-equivalent Basis   Dico Tools
The method used for computing the bond-equivalent yield.

BONDPAR   Dico Tools
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.

Bonds   Dico Tools
Corporate bonds arranged so that specified principal amounts become due on specified dates. Related: Term bonds.

Bonds Enabling Annual Retirement Savings   Dico Tools
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.

Boning   Dico Tools
Charging a lot more for an asset than its worth.

Book Cash   Dico Tools
A firm's cash balance as reported in its financial statements. Also calledledger cash.

Book Profit   Dico Tools
The cumulative book income plus any gain or loss on disposition of assets.

Book Runner   Dico Tools
The managing underwriter for a new issue. The book runner maintains the book of securities sold.

Book To Bill   Dico Tools
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 (

Book Value   Dico Tools
The net amount shown in the accounts for an asset, liability, or owners' equity item.

Book Value Per Share   Dico Tools
A measure of net worth; computed by dividing stockholders' equity for each class of stock by the number of shares outstanding for that class.

Book-entry Securities   Dico Tools
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.

Bootstrapping   Dico Tools
Creating a theoretical spot rate curve using one yield projection as the basis for the yield of the next maturity.

Borrowed Reserves   Dico Tools
Funds borrowed from a Federal Reserve Bank by member banks to maintain the required reserve ratios.

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Borrower Fallout   Dico Tools
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be closed will elect to withdraw from the contract.

Boston Exchange Automated Communication Order-Rout   Dico Tools
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.

Bottom Fisher   Dico Tools
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.

Bottom-up Equity Management Style   Dico Tools
A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks.

Bought Deal   Dico Tools
Security issue in which one or two underwriters buy the entire issue.

BPM   Dico Tools
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.

Bracket Creep   Dico Tools
The gradual movement into higher tax brackets when incomes increase as a result of inflation.

Brady Bonds   Dico Tools
Bonds issued by emerging countries under a debt reduction plan.

Breadth Of The Market   Dico Tools
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.

Break Price   Dico Tools
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).

Break-even Analysis   Dico Tools
An analysis of the level of sales at which a project would make zero profit.

Break-even Lease Payment   Dico Tools
The lease payment at which a party to a prospective lease is indifferent between entering and not entering into a lease arrangement.

Break-even Payment Rate   Dico Tools
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.

Break-even Point   Dico Tools
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.

Break-even Tax Rate   Dico Tools
The tax rate at which a party to a prospective transaction is indifferent between entering into and not entering into the transaction.

Break-even Time   Dico Tools
Related: Premium payback period.

Breaking The Syndicate   Dico Tools
Terminating an agreement among underwriters, specifically the investment banking group assembled to underwrite the issue of a security.

Breakpoint Sale   Dico Tools
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.

Breakup Value   Dico Tools
See: Private market value.

Breeden, Douglas T.   Dico Tools
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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Bretton Woods Agreement   Dico Tools
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.

Bridge Financing   Dico Tools
Interim financing of one sort or another used to solidify a position until more permanent financing is arranged.

Bring It Out   Dico Tools
In the context of general equities, "make stock available for sale to indicated buyers."

British Clearers   Dico Tools
The large clearing banks that dominate deposit taking and short-term lending in the domestic sterling market.

Broad Tape   Dico Tools
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.

Broken Up   Dico Tools
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).

Broker Loan Rate   Dico Tools
Related: Call money rate.

Brokered CD   Dico Tools
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.

Brokered Market   Dico Tools
A market in which an intermediary offers search services to buyers and sellers.

Brought Over The Wall   Dico Tools
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".

Brussels Stock Exchange (BSE)   Dico Tools
Stock exchange that handles the majority of securities transactions in Belgium.

Bubble Theory   Dico Tools
Security prices sometimes move wildly above their true values, or the price falls sharply until the "bubble bursts.".

Bucket Shop   Dico Tools
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.

Budget   Dico Tools
A financial plan that summarizes future income and expenditures over a period of time.

Budget Deficit   Dico Tools
The amount by which government spending exceeds government revenues.

Budget Surplus   Dico Tools
The amount by which government revenues exceed government spending.

Build A Book   Dico Tools
In the context of general equities, develop customer orders to gather demand/supply in order to make a bid or an offer.

Builder Buydown Loan   Dico Tools
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).

Bulge Bracket   Dico Tools
A tier of firms in an underwriting syndicate that have the highest participation level. See: Mezzanine bracket.

Bull CD   Dico Tools
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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Bull Market   Dico Tools
Any market in which prices are in an upward trend.

Bull Spread   Dico Tools
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.

Bull-bear Bond   Dico Tools
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.

Bulldog Bond   Dico Tools
Foreign bond issue made in London.

Bulldog Market   Dico Tools
The foreign market in the United Kingdom.

Bullet Contract   Dico Tools
A guaranteed investment contract purchased with a single (one-shot) premium. Related: Window contract.

Bullet Loan   Dico Tools
A bank term loan that calls for no amortization.

Bullet Strategy   Dico Tools
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.

Bullion Coins   Dico Tools
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.

Bump-up CD   Dico Tools
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.

Bunching   Dico Tools
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.

Bundling, Unbundling   Dico Tools
Creation of securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes.

Burn Rate   Dico Tools
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.

Burnout   Dico Tools
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.

Business   Dico Tools
An organization operated with the objective of making a profit from the sale of goods or services.

Business Combination   Dico Tools
See: Merger

Business Cycle   Dico Tools
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.

Business Day   Dico Tools
A day in which financial markets are open for trading.

Business Documents   Dico Tools
Records of transactions used as the basis for recording accounting entries; includes invoices, check stubs, receipts, and similar business papers.

Business Expenses   Dico Tools
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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Business Failure   Dico Tools
A business that has terminated operations with a loss to creditors.

Business Risk   Dico Tools
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.

Business Segment Reporting   Dico Tools
Reporting the results of the separate divisions or subsidiaries of a business.

Bust-up Takeover   Dico Tools
A leveraged buyout in which the buyer sells off the assets of the target_company to repay the debt that financed the takeover.

Busted Convertible   Dico Tools
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.

Butterfly Shift   Dico Tools
A nonparallel shift in the yield curve involving the height of the curve.

Butterfly Spread   Dico Tools
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.

Buy Hedge   Dico Tools
See: Long hedge

Buy In   Dico Tools
To cover, offset, or close out a short position. Related: Evening up, liquidation.

Buy Limit Order   Dico Tools
A conditional trading order that indicates a security may be purchased only at the designated price or lower. Related: Sell limit order.

Buy Minus Order   Dico Tools
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.)

Buy On Close   Dico Tools
Buying at the end of the trading session at a price within the closing range.

Buy On Margin   Dico Tools
Borrowing to buy additional shares, using the shares themselves as collateral.

Buy On Opening   Dico Tools
Buying at the beginning of a trading session at a price within the opening range.

Buy On The Bad News   Dico Tools
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.

Buy Order   Dico Tools
An order to a broker to purchase a specific quantity of a security.

Buy Stop Order   Dico Tools
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.

Buy The Book   Dico Tools
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.

Buy Them Back   Dico Tools
Used for listed equity securities. "Cover my short position.

Buy-and-hold Strategy   Dico Tools
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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Buy-and-write Strategy   Dico Tools
An options strategy that calls for the purchase of stocks and the writing of covered call options on them.

Buy-side Analyst   Dico Tools
A financial analyst employed by a nonbrokerage firm, typically one of the larger money management firms that purchases securities on its own account.

Buydowns   Dico Tools
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.

Buyer's Market   Dico Tools
Market in which the supply exceeds the demand, creating lower prices. Antithesis of seller's_market.

Buyers/sellers On Balance   Dico Tools
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.

Buying Climax   Dico Tools
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.

Buying Power   Dico Tools
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.

Buying The Index   Dico Tools
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the same return.

Bylaws   Dico Tools
Rules and practices that govern management of an organization.

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