Accounting & Investement Dictionary
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An alphabetical listing of General terms and items.
Fifth letter of a Nasdaq stock symbol specifying that the issue is the company's fourth class of preferred shares.
See: Money supply
A tactic used by a corporation that is the target of a hostile takeover bid involving the issue of a large number of bonds that must be redeemed at a higher value if the company is taken over.
The weighted-average term to maturity of the cash flows from a bond, where the weights are the present value of the cash flow divided by the price.
Analysis of a country's economy as a whole.
MACRS (modified accelerated cost recovery system): IRS regulations that allocate the cost of an asset according to predefined recovery periods and percentages.
modified accelerated cost recovery system (MACRS): IRS regulations that allocate the cost of an asset according to predefined recovery periods and percentages.
The largest of Spain's four stock exchanges.
The effective reduction of risk (variance) of a portfolio, achieved without reduction to expected returns through the combination of assets with low or negative correlations (covariances). Related: Markowitz diversification.
Time period that checks for payment spend in the postal system.
A call for additional money or securities when a margin account falls below its exchange-mandated required level.
A yearly charge to maintain brokerage accounts, such as asset management accounts or IRAs.
A sum, usually smaller than but part of the original margin, that must be maintained on deposit at all times. If a customer's equity in any futures position drops to or below, the maintenance margin level, the broker must issue a margin call for the amount at money required to restore the customer's equity in the account to the original margin level. Related: Margin, margin call.
A shareholder who is part of a group that controls more than half the outstanding shares of a corporation.
Voting system under which corporate shareholders vote for each director separately. Related: Cumulative voting.
Dealers are said to make a market when they quote bid and offered prices at which they stand ready to buy and sell.
Related to the lump-sum payments made when a loan or bond is called, equal to the NPV of future loan or coupon payments not paid because of the call. The payment can be significant and negate the attractiveness of a call.
A person (entity) who signs a note to borrow money and who assumes responsibility to pay the note at maturity.
Refers to the seller's actually turning over to the buyer the assets agreed upon in a forward contract.
A subsidiary of the KLSE that trades interest rate futures on the three-month Kuala Lumpur Interbank offered rate.
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1938 legislation amending the Securities Exchange Act that regulates the OTC market.
An investment portfolio one or more clients entrusted to a manager who decides how to invest it.
Also known as "dirty" float, this is a system of floating exchange rates with central bank intervention to reduce currency fluctuations.
The people who administer a company, create policies, and provide the support necessary to implement the owners' business objectives.
The area of accounting concerned with providing internal financial reports to assist management in making decisions.
The acquisition of a controlling interest in a promising business by an outside investment group that retains existing management and places representatives on the board of directors.
Leveraged buyout whereby the acquiring group is led by the firm's management.
A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial statements in the annual report.
An investment advisory fee charged by the financial adviser to a fund typically on the basis of the fund's average assets, but sometimes determined on a sliding scale that declines as the dollar amount of the fund increases.
Percentage of shares held by persons closely related to a company, as defined by the Securities and Exchange Commission. Part of these percentages often are included in "institutional holdings"--making the combined total of these percentages over 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.
Decisions concerning the operation of the firm, such as the choice of firm size, firm growth rates, and employee compensation.
The leading firm in an underwriting group, which originates the deal and acts as an agent for the group.
A debt instrument that is exchangeable at some point for equity in the form of common stock or a new issue.
Schedule according to which bond sinking fund payments must be made.
Dealing in a security to create a false appearance of active trading, in order to bring in more traders. Illegal.
Loans on manufactured homes-that is, factory-built or prefabricated housing, including mobile homes.
A gold, silver, or platinum coin minted in Canada that usually trades at slightly more than its current bullion value.
Allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes. Related: Security deposit (initial).
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.
The agreement governing customers' margin accounts.
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A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance.
The department in a brokerage firm that monitors customers' margin accounts, ensuring that all short sales, stock purchases, and other positions are covered by the margin account balance.
Gross profit divided by net sales. Used to measure a firm's operating efficiency and pricing policies in order to determine how competitive the firm is within the industry.
With respect to working capital management, the difference between (1) the amount of long-term financing and (2) the sum of fixed assets and the permanent component of current assets.
The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intraday price changes.
A security that may be bought or sold in a margin account as defined in Regulation T.
The increase or decrease in a firm's total cost of production as a result of changing production by one unit.
The percentage yield earned on an additional unit of capital.
The change in total revenue as a result of producing one additional unit of output.
The tax rate that would have to be paid on any additional dollars of taxable income earned.
The change in total satisfaction as a result of consuming one additional unit of a specific good or service.
A tax deduction that allow spouses to transfer unlimited amounts of property to one another.
Adjustment of the book value or collateral value of a security to reflect current market value.
The amount subtracted from the selling price of securities when they are sold to a dealer in the OTC market. Also, the discounted price of municipal bonds after the market has shown little interest in the issue at the original price.
An arrangement whereby the profits or losses on a futures contract are settled each day.
Usually refers to the equity market. "The market went down today" means that the value of the stock market dropped that day.
An account used to track the difference between the historical cost and the market value of a company's portfolio of trading securities.
An analysis of technical corporate and market data used to predict movements in the market.
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The total dollar value of all outstanding shares. Computed as shares times current market price. Capitalization is a measure of corporate size.
Expected return on a security. The market-consensus estimate of the appropriate discount rate for a firm's cash flow.
Total demand for loans by borrowers equals total supply of loans from lenders. The market, any market, clears at the equilibrium rate of interest or price.
Also called conversion parity price, the price that an investor effectively pays for common stock by purchasing a convertible security and then exercising the conversion option. This price is equal to the market price of the convertible security divided by the conversion ratio.
The period between the two latest highs or lows of the S&P 500, showing net performance of a fund through both an up and a down market. A market cycle is complete when the S&P is 15% below the highest point or 15% above the lowest point (ending a down market).
A financial information service based in the U.K. sponsored by the ISE (International Stock Exchange of the U.K. and the Republic of Ireland) that provides current market and statistical information.
The result of a bid/ask spread and a dealer's price concession. Also called price impact costs.
Market measure that consists of weighted values of the components that make up certain list of companies. A stock market tracks the performance of certain stocks by weighting them according to their prices and the number of outstanding shares by a particular formula.
Anxiety among many investors, causing them to sell stocks and bonds, pushing prices down.
A newsletter analyzing the market that is written by an SEC-registered investment adviser who sells the letter to subscribers. See: Hulbert Rating.
Used in the context of general equities. One who maintains firm bid and offer prices in a given security by standing ready to buy or sell round lots at publicly quoted prices. See: Agent, dealer, and specialist.
The market model says that the return on a security depends on the return on the market portfolio and the extent of the security's responsiveness as measured by beta. The return also depends on conditions that are unique to the firm. The market model can be graphed as a line fitted to a plot of asset returns against returns on the market portfolio. This relationship is sometimes called the single-index model.
The start of formal trading on an exchange.
Used in the context of general equities. Order to buy or sell a stated amount of a security at the most advantageous price obtainable after the order is represented in the trading crowd. You cannot specify special restrictions such as all or none (AON) or good 'til cancelled order (GTC) on market orders. See: Limit order.
Used for listed equity securities. See: Percentage order.
A clause that may appear in an underwriting firm commitment that releases it from its purchase requirement if there are negative securities market developments.
The theory that, in certain situations, institutions wish to sell their shares but postpone the sale because large orders under current market conditions would drive down the share price and that the consequent threat of securities sales will tend to retard the rate of share price appreciation. Support for this theory is largely anecdotal.
Used in the context of general equities. Percent of trading volume in a stock that a particular market maker trades.
A group of NYSE market oversight specialists who monitor specialists' efficiency in maintaining fair prices and orderly markets.
A portfolio consisting of all assets available to investors, with each asset held in proportion to its market value relative to the total market value of all assets.
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The last reported price at which a security was traded on an exchange.
A measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-risk ratio of the market portfolio.
The amount of money that a willing buyer pays to acquire something from a willing seller, when a buyer and seller are independent and when such an exchange is motivated by only commercial consideration.
A technical analysis of factors such as volume, price trends, and market breadth that are used to predict price movement.
The return on the market portfolio.
Risk that cannot be diversified away. Related: Systematic risk
The classifications of bonds by issuer characteristics, such as state government, corporate, or utility.
A biased expectations theory that asserts that the shape of the yield curve is determined by the supply of and demand for securities within each maturity sector.
The percentage of total industry sales that a particular company controls.
A second offering following a tender offer, allowing institutional investors to obtain a controlling interest at a price higher than the original offer.
A money manager who assumes he or she can forecast when the stock market will go up and down.
Asset allocation in which investment in the equity market is increased if one forecasts that the equity market will outperform T-bills and is decreased when the market is anticipated to underperform.
Costs that arise from price movement of a stock during a transaction period but attributable to other activity in the stock.
The general state of well-being of a securities market, based mostly on trading activity.
(1) The price at which a security is trading and could presumably be purchased or sold. (2) What investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares.
Ratios that relate the market price of the firm's common stock to selected financial statement items.
An index of a group of securities computed by calculating a weighted average of the returns on each security in the index, where the weights are proportional to outstanding market value.
Market price of a share divided by book value per share.
A price order, below market if a buy or above market if a sell, that automatically becomes a market order if the specified price is reached.
An order to trade stocks, options, or futures as close as possible to the market close.
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A negotiable security is said to have good marketability if there is an active secondary market in which it can easily be resold.
Securities that are easily convertible to cash because there is high demand allowing them to be sold quickly.
A clear, reasonably incontestable title to a piece of real estate that is good for transaction purposes.
Claims that can be bought and sold in financial markets, such as those of stockholders and bondholders.
The degree to which the prices of assets reflect the available marketplace information. Marketplace price efficiency is sometimes estimated as the difficulty faced by active management of earning a greater return than passive management would, after adjusting for the risk associated with a strategy and the transactions costs associated with implementing a strategy.
The amount by which a securities dealer raises or lowers the price of a stock or bond due to changes in demand and supply.
A strategy that seeks to combine in a portfolio assets with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return. Related: Naive diversification.
The graphical depiction of the Markowitz efficient set of portfolios representing the boundary of the set of feasible portfolios that have the maximum return for a given level of risk. Any portfolios above the frontier cannot be achieved. Any below the frontier are dominated by Markowitz efficient portfolios.
Also called a mean-variance efficient portfolio, a portfolio that has the highest expected return at a given level of risk.
The collection of all efficient portfolios, which can be graphed as the Markowitz efficient frontier.
Nobel laureate in economics. Father of modern portfolio theory.
A tax that has the effect of penalizing a married couple because they pay more tax on a joint tax return than they would if they file tax returns individually.
A put option bought at the same time as its underlying securities in order to hedge the price paid for the securities.
A publicly traded limited partnership.
The foreign market in Spain.
A bank is said to match-fund a loan or other asset when it does so by buying (taking) a deposit of the same maturity. The term is commonly used in the Euromarket.
The outcome of the flip of a coin used to determine which of two brokers who are locked in competition for equal trades may actually execute the trades.
A bank runs a matched book when the of maturities of its assets and liabilities is distribution equal.
The coordination by a financial institution of the maturities of its assets (loans) and liabilities (deposits) in order to enable it to meet its obligations at the required times.
Used for listed equity securities. Participate in equal amounts of a trade at a certain price, particularly when two parties have the same level of priority on the exchange floor (this requires standing in the trading crowd).
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Applies mainly to convertible securities. Procedure whereby the Federal Reserve Bank of New York sells government securities to a nonbank dealer against payment in federal funds. The agreement requires the dealer to sell the securities back by a specified date, which ranges from 1 to 15 days. The Fed pays the dealer a rate of interest equal to the discount rate. These transactions, also called reverse repurchase agreements, decrease the money supply for temporary periods by reducing dealers' bank balances and thus excess reserves.
The accounting principle that requires the recognition of all costs that are associated with the generation of the revenue reported in the income statement.
The concept that all costs and expenses incurred in generating revenues must be recognized in the same reporting period as the related revenues.
The importance of an event or information in influencing a company's stock price.
Computer-based systems that plan backward from the production schedule to make purchases in order to manage inventory levels.
An operations research technique that solves problems in which an optimal value is sought subject to specified constraints. Mathematical programming models include linear programming, quadratic programming, and dynamic programming.
The futures exchange of France.
Swapping bonds in order to take advantage of temporary differences in the yield spread between bonds with different ratings or different classes.
To cease to exist; to expire.
The economy of a nation with a stable population and slowing economic growth.
For a bond, the date on which the principal is required to be repaid. In an interest rate swap, the date that the swap stops accruing interest.
The date on which a note or other obligation becomes due.
An arrangement that provides collection and insurance of accounts receivable.
A stage of company development in which earnings to grow at the rate of the general economy. Related: Three-phase DDM.
The difference in returns between bonds of different time lengths.
The amount of an obligation to be collected or paid at maturity; equal to principal plus any interest.
A mutual fund whose objective is to produce capital gains by investing in small or risky rapid-growth companies.
The greatest amount by which the contract price can change, up or down, during one trading session, as fixed by exchange rules in the contract specification. Related: Limit price.
The date of May 1, 1975, after which brokers were allowed to charge any brokerage commission, rather than a mandatory rate.
Used in the context of general equities. Warning that the size of the order/total may be increased. See: "more behind it."
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See: Management buyout
A book-entry depository for GNMA securities. The depository was initially operated by MBSCC and is now a separately incorporated, participant-owned, limited-purpose trust company organized under the State of New York Banking Law.
The requirement that the mortgage servicer maintain payment of the full amount of contractually due principal and interest payments whether or not actually collected.
See: Mortgage-Backed Securities Clearing Corporation
See: Multiple discriminant analysis
A tax deduction allowed for meals and entertainment expenses incurred in the course of business.
The expected value of a random variable. Arithmetic average of a sample.
The arithmetic average; that is, the sum of the observations divided by the number of observations.
See: Expected return
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
The selection of portfolios based on the means and variances of their returns. The choice of the higher expected return portfolio for a given level of variance or the lower variance portfolio for a given expected return.
Related: Markowitz efficient portfolio
Errors in measuring an explanatory variable in a regression, which leads to biases in estimated parameters.
A federal government program of transfer payments for certain health care expenses for citizens 65 or older. The Social Security Administration manages the program.
A bond maturing in two to ten years.
A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from maturity bands of: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc., up to 30 years.
The derivatives exchange in Barcelona, Spain, listing futures and options on fixed interest securities and on interest rates, including the MIBOR (Madrid Interbank Offered Rate).
Spain's screen-based trading of stock index and equity derivatives market in Spain trading futures and options on the Iberian Exchange (IBEX)-35 index and on individual stocks.
A national- or state-chartered bank that is a member of the Federal Reserve System.
Used for listed equity securities. Brokerage firm that has at least one membership on a major stock exchange even though, by exchange rules, the membership is in the name of an employee and not the firm itself.
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The total shares sold short by NYSE members divided by total short sales, which is used to analyze market expectations and bullish or bearish trends.
A limited number of exchange positions that enable the holder to trade for the holder's own accounts and charge clients for the execution of trades for their accounts. Related: Member firm.
Used in the context of general equities. Hierarchy of choices concerning price and volume of bids or offers proposed to a customer (e.g., menu of offerings to a customer buyer: (1) 10m @ 24 1/4; (2) 25m @ 24 1/2; or (3) 50m @ 24 3/4).
An organization that supplies credit ratings and reports on firms that are prospective customers.
The Italian futures market trading Italian Treasury bond (BTF) futures.
All movable goods such as cars, textiles, or appliances.
A British term for a bank that specializes not in lending its own funds, but in providing various financial services such as accepting bills arising out of trade, underwriting new issues, and providing advice on acquisitions, mergers, foreign exchange, or `portfolio management.
The acquisition of one company by another company whereby the companies combine as one legal entity, with the acquired company going out of existence.
The only stock exchange in Mexico. The Indice de Precios y Cotizaciones, or IPC index, consists of the 35 most representative stocks chosen every two months.
The members of an underwriting group with involvement large enough to be just below the top tier.
The stage of financing that follows venture capital financing.
The period in a company's development just before it goes public.
See: Manufactured housing securities
Analysis of the behavior of individual economic units such as companies, industries, or households.
A stock with a capitalization of usually between $1 billion and $5 billion.
This is the same as a SPDR, except that the index it tracks is Standard & Poor's Midcap 400. This SPDR also trades on the AMEX, under the symbol MDY.
The largest regional stock exchange in Italy, facilitating more than 90% of the country's trading volume.
Nobel Laureate and co-author of the famous Miller-Modigliani theorems. Finance professor at the University of Chicago.
An imitation that sends a false signal.
Trading in the underwriting security of an option contract in order to manipulate its price so that the options will become in the money.
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The lowest required equity level that must be held with a broker in a margin account. See: Margin call.
Smallest increment of price movement possible in trading a given contract. Also called point or tick.
For mutual funds, the amount required to open a new account (minimum initial purchase) or to deposit into an existing account (minimum additional purchase). These minimums may be reduced for buyers participating in an automatic purchase plan
Graph of the lowest possible portfolio variance that is attainable for a given portfolio expected return.
The portfolio of risky assets with lowest variance.
The interest owned in a subsidiary by stockholders other than those of the parent company; occurs when the acquiring company has less than a 100 percent ownership interest.
The symbol (-) that precedes the change figure in a stock table to indicate a closing sale lower than that of the previous day.
See: Monthly income preferred security
An index that sums the unemployment and inflation rates, used as a political rating or measure of consumer confidence.
Floating-rate note whose interest rate is reset at more frequent intervals than the rollover period (e.g., a note whose payments are set quarterly on the basis of the one-year interest rate).
Used for listed equity securities. (1) Have an order in hand but fail to execute a transaction on terms favorable to a customer and, thus, be negligent as a broker; (2) receive an order just after a print has transpired.
A brokerage account holding both long and short positioned securities.
Used in the context of general equities. Group of stocks including some that are up, some down, and some neutral.
See: Master limited partnership
See: Money market demand account
See: Multinational corporation
The yield spread between a tax-free municipal bond and a Treasury bond with the same maturity.
The simulated trading of securities used as a learning device in training investors and brokers.
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The process of creating a depiction of reality, such as a graph, picture, or mathematical representation.
Principles underlying the analysis and evaluation of rational portfolio choices based on risk-return trade-offs and efficient diversification.
A 1986 act that set out rules for the depreciation of qualifying assets, allowing for greater acceleration over longer periods of time.
The ratio of Macaulay duration to (1 + y), where y = the bond yield. Modified duration is inversely related to the approximate percentage change in price for a given change in yield.
Agency pass-throughs that guarantee (1) timely interest payments and (2) principal payments as collected, but no later than a specified time after they are due. Related: Fully modified pass-throughs.
A proposition by Franco Modigliani and Merton Miller that states that a firm cannot change the total value of its outstanding securities by changing its capital structure proportions. Also called the irrelevance proposition.
A proposition by Franco Modigliani and Merton Miller that states that the cost of equity is a linear function of the firm's debt/equity-ratio.
The amount of acceleration of an economic, price, or volume movement. A trader who follows a movement strategy will purchase stocks that have recently risen in price.
Indicators used in market analysis to quantify the momentum of upward and downward price movements.
A subsidiary of the Paris Bourse that trades stock and index options.
An economist who believes that changes in the money supply are the most important determinants of economic activity and economic cycles.
Gold held by government authorities as a financial asset.
Economic indicators of the effects of monetary policy, such as the condition of the credit market.
The idea that money, as the common medium of exchange, is the accounting unit of measurement, and that only economic activities measurable in monetary terms are included in the accounting model.
Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply or interest rates.
Under this translation method, monetary items (e.g. cash, accounts payable and receivable, and long-term debt) are represented at the current rate, while nonmonetary items (e.g., inventory, fixed assets, and long-term investments) are represented at historical rates.
Financing the national debt by printing new money, which causes inflation as a result of a larger money supply.
Currency and coin that are guaranteed as legal tender by the government.
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
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Related: Investment management
Related: Investment manager
Money markets are for borrowing and lending money for three years or less. The securities in a money market can be U.S. government bonds, Treasury bills and commercial paper from banks and companies.
A type of savings account that may or may not be protected by the FDIC, with minimum balance requirements and usually higher interest rates than other types of savings accounts.
An account that pays interest based on short-term interest rates.
A mutual fund that invests only in short-term securities, such as banker's acceptances, commercial paper, repurchase agreements, and government bills. The net asset value per share is maintained at $1.00. Such funds are not federally insured, although the portfolio may consist of guaranteed securities or the fund may have private insurance protection.
The use of borrowing and lending transactions in foreign currencies to lock in the home currency value of a foreign currency transaction.
Publicly traded issues that may be collateralized by mortgages and mortgage backed securities (MBS).
A financial instrument backed by a deposit at a certain firm such as a bank that can be easily converted into cash.
A defined benefit contribution plan in which the participant contributes some part and the firm contributes at the same or a different rate. Also called an individual account plan.
Annual money return as a percentage of asset value.
M1-A: Currency plus demand deposits. M1-B: M1-A plus other checkable deposits. M2: M1-B plus overnight repos, money market funds, savings, and small (less than $100M) time deposits. M3: M-2 plus large time deposits and term repos. L: M-3 plus other liquid assets.
money wire (transfer): The process of moving money from one bank to another, sometimes between countries.
To seek information about an agent's behavior; a mechanism that provides such information.
Market characterized by absolute control of all sales and distribution in the market by one firm, due to some barrier to entry of other firms, allowing the firm to sell at a higher price than the societally optimal price.
Market characterized by the existence of only one buyer in a market, forcing sellers to accept a lower price than the societally optimal price.
An analytical technique for solving a problem by performing a large number of trail runs, called simulations, and deducing a solution from the collective results of the trial runs. Method for calculating the probability distribution of possible outcomes.
Preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to the parent.
A plan in which a certain amount is invested each month in order to benefit from dollar cost averaging.
The oldest stock exchange in Canada trading stocks, bonds, futures, and options. The Canadian Market Portfolio Index (XXM) tracks the market performance of the 25 highest-capitalization stocks traded on at least two Canadian exchanges.
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A rating of one through four assigned by Moody's Investor Service to municipal short-term bonds.
A security and bond rating agency publishing bond manuals and a common stock handbook annually.
The risk that the existence of a contract will change the behavior of one or both parties to the contract, e.g., an insured firm will take fewer fire precautions.
A tax-exempt bond issued by a municipality or a state financial intermediary that is backed by the moral, but not legal, obligation of a state government to appropriate funds in case of default.
Used in the context of general equities. More stock exists to be bought or sold by the same buyer or seller, respectively. Often, the buyer or seller does not disclose the full size of its buy or sell interest as not to affect the market adversely. See: May expand.
Publisher of a number of well-known benchmarks, such as the MSCI World Index.
A proprietary ranking of mutual funds and annuities issued by Morningstar Inc. of Chicago.
Tables of probability that individuals of various ages will die within one year.
A loan secured by the collateral of some specified real estate property that obliges the borrower to make a predetermined series of payments.
A schedule that shows the breakdown between interest and principal for each payment over the life of a mortgage.
A company or individual that originates mortgage loans and sells them to investors, while taking care of borrowers' loan payments, records, taxes, and insurance.
A bond whose issuer has granted bondholders a lien against pledged assets. See: Collateral trust bonds.
A company or individual that places mortgage loans with lenders, but does not originate or service loans like a mortgage banker.
A modification of standard duration to account for the impact on duration of MBS of changes in prepayment speed resulting from changes in interest rates.
A federal tax deduction for interest paid on a mortgage used to acquire, construct, or improve a residence.
A life insurance policy that pays off the remaining balance of the insured person's mortgage at death.
Also called a pass-through, a security created when one or more mortgage holders form a collection (pool) of mortgages and sells shares or participation certificates in the pool. The cash flow from the collateral pool is "passed through" to the securityholder as monthly payments of principal, interest, and prepayments. This is the predominant type of MBS traded in the secondary market.
A written promise to pay a stated amount of money at one or more specified future dates; a mortgage is secured by the pledging of certain assets, usually real estate, as collateral.
The period from the taking of applications from prospective mortgage borrowers to the marketing of the loans.
The risk associated with taking applications from prospective mortgage borrowers who may opt to decline to accept a quoted mortgage rate within a certain grace period.
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A group of mortgages with similar class, interest rate, and maturity characteristics.
The interest rate on a mortgage loan.
An REIT that invests in loans secured by real estate that derives income from mortgage interest and fees.
The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default, involved with a mortgage loan.
Investment instruments backed by a pool of mortgage loans.
A wholly owned subsidiary of the Midwest Stock Exchange that operates a clearing service for the comparison, netting, and margining of agency-guaranteed MBS transacted for forward delivery.
The lender of a loan secured by property.
The borrower of a loan secured by property.
Established in 1992, the most liquid and best organized financial exchange in Russia.
The stocks with the highest volume of trading on a certain day.
When several futures contracts are considered, the contract settling last. Related: Nearby futures contract.
A perpetual inventory cost flow alternative whereby the cost of goods sold and the cost of ending inventory are determined by using a weighted-average cost of all merchandise on hand after each purchase.
See: Morgan Stanley Capital International
Medium-term notes issued by corporations, much like shorter-term commercial paper.
A municipal utility district, which is a political subdivision that administers utility-related services, sometimes requiring the issue of special assessment bonds.
An agreement in the case of a Euro loan that permits the borrower to switch from one currency to another currency on a rollover date.
Give the borrower the flexibility of drawing a loan in different currencies.
A version of the capital asset pricing model derived by Robert Merton that includes extra-market sources of risk referred to as factors. Related: Arbitrage pricing theory.
Loans usually represented by conventional mortgages on multifamily rental apartments.
A firm that operates in more than one country.
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A syndicated confirmed credit line with attached options.
Creating a portfolio that will be capable of satisfying more than one predetermined future liability regardless of interest rate changes.
An agreement used by a broker who is a member of a multiple-listing organization, providing the exclusive right to sell, with the additional authority and obligation to distribute the listing to the other brokers in a multiple listing organization.
Insurance policy that covers a wide variety of property damage.
More than one rate of return from the same project that makes the net present value of the project equal to zero. This situation arises when the IRR method is used for a project in which negative cash flows follow positive cash flows. For each sign change in the cash flows, there is a different rate of return.
The estimated relationship between a dependent variable and more than one explanatory variable.
Statistical technique for distinguishing between two groups on the basis of their observed characteristics.
Under the GNMA-II program, pools formed through the aggregation of individual issuers' loan packages.
Another name for price-earnings ratios.
In the case of an investment a factor that quantifies the overall effects of investment spending on total income. In the case of deposit, a factor that shows the effects of a change in bank deposits on the total amount of outstanding credit and the money supply.
A technical trading strategy that combines mechanical rules, such as the CRISMA (cumulative volume, relative strength, moving average) with other trading systems.
Represents borrowing by state or local governments to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes.
An insurance policy that guarantees payment on municipal bonds in the event the issuer defaults.
A certificate used to finance local government projects and services that are financed by a special tax assessment. Its interest is tax-free.
A unit investment trust that buys municipal bonds and usually holds them until maturity, passing the bond income on to shareholders, usually tax-free.
Short-term notes issued by municipalities in anticipation of tax receipts, proceeds from a bond issue, or other revenues.
A bond issued to finance a public project that is funded by receipts from the project's operation.
A certificate on which the name of the issue, the issuer, or some other identifying detail cannot be read.
The right of all partners in a partnership to act as agents for the normal business operations of the partnership, with the authority to bind it to a business agreements.
A savings and loan association organized as a cooperative. Members purchase shares, vote on association affairs, and receive income in the form of dividends.
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A corporation that is owned by a group of members and that distributes income in proportion to the amount of business that members do with the company.
The tenet that rules municipal bond interest is federal tax-free. In return for this federal tax exemption, states and localities cannot tax interest generated by federal government securities.
Mutual funds are pools of money that are managed by an investment company and regulated by the Investment Company Act of 1940. They offer investors a variety of goals, depending on the fund and its investment charter. Some funds seek to generate income on a regular basis. Others seek to preserve an investor's money. Still others seek to invest in companies that are growing at a rapid pace. Funds can impose a sales charge, or load, on investors when they buy or sell shares. No-load funds impose no sales charge. Related: Open-end fund, closed-end fund.
The cash instruments portion of a mutual fund as a proportion of its total assets.
A commercial bank or trust company that holds securities owned by a mutual fund and sometimes acts as transfer agent for the mutual fund.
A result associated with the CAPM, asserting that investors will choose to invest their entire risky portfolio in a market index or mutual fund.
Investment companies that pool money from shareholders and invest in a variety of securities, including stocks, bonds, and short-term money market assets.
A system, such as the arrangement between the Chicago Mercantile Exchange (CME) and Singapore International Monetary Exchange (SIMEX), that allows trading positions established on one exchange to be offset or transferred on another exchange.
A state-chartered savings bank that is owned by its depositors and managed by a fiduciary board of trustees.
Investment decisions in which the acceptance of a project precludes the acceptance of one or more alternative projects.
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