B
A Nasdaq stock symbol specifying that the stock is Class B shares of the company

B-Share
A class in a family of multi-class mutual funds. This class is characterized by a rear-end load structure that is paid only when selling the fund.

Baby Bells
A common nickname given to the U.S. regional telephone companies that were formed from the breakup of AT&T in 1984, which was done to create more competition within the industry

Baby Bills
A nickname given to the hypothetical companies that would have formed if the Justice Department had broken up Microsoft Corporation.

Baby Bond
Any bond issued with a par value less than $1,000.

Baccalaureate Bond
A zero-coupon bond issued by certain states to assist families save for college tuition by means of added tax benefits.

Back Door Listing
A strategy of going public used by a company that fails to meet the criteria for listing on a stock exchange. To get onto the exchange, the company desiring to go public acquires an already listed company.

Back Fee
The premium charged upon the second term or portion of a compound option.

Back Months
The available futures contracts for a particular commodity that possess expirations or delivery dates furthest into the future. Also referred to as deferred futures or forward months.
Back Office
Administration and support personnel in a financial services company. They carry out functions like settlements, clearances, record maintenance, regulatory compliance, and accounting. When order processing is slow due to high volume, it is commonly referred to as "back office crunch."

Back Stop
The act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares. A company will try and raise capital through an issuance and to guarantee the amount received through the issue, the company will get a back stop from an underwriter or major shareholder to buy any of the unsubscribed shares

Back Up the Truck
The act of a large buyer scooping up huge quantities of a stock

Back-End Load
A fee an investor pays when selling a mutual fund within a certain number of years, usually seven.

Back-End Ratio
A ratio that indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), credit-card payments, child support and other loan payments. Lenders use this ratio in conjunction with the front-end ratio to approve mortgages.
Back-End Ratio = (Total Monthly Debt Expense / Gross Monthly Income) x 100

Back-to-Back Loan
A loan in which two companies in different countries borrow offsetting amounts from one another in each other's currency. The purpose of this transaction is to hedge against currency fluctuations. With the advent of currency swaps this type of transaction is no longer used very often

Backdating
Dating any document by a date earlier than the one on which the document was originally drawn up.

Backing Away
The act of a market maker failing to honor a posted bid or ask even though the price and quantity are valid.
Backlog
The total value of sales orders waiting to be fulfilled.

Backpricing
A pricing method used in specific futures contracts whereby the price of the commodity to be delivered is priced by the purchaser at some future date after entering into the position.

Backspread
A type of options spread in which a trader holds more long positions than short positions. The premium collected from the sale of the short option is used to help finance the purchase of the long options. This type of spread enables the trader to have significant exposure to expected moves in the underlying asset while limiting the amount of loss in the event prices do not move in the direction the trader had hoped for. This spread can be created using either all call options or all put options.

Backtesting
The process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge the its effectiveness.
Most technical-analysis strategies are tested with this approach

Backup Withholding
Tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. This tax may be imposed for a variety of reasons. In the U.S., for example, backup withholding may be applied when an investor has not met rules regarding taxpayer identification numbers (TIN). At the time the investor withdraws his or her investment income, the amount mandated by the backup withholding tax is remitted to the government, providing the tax-collecting body with the required funds immediately, but leaving the investor with less short-term cash flow.

Backward Integration
A form of vertical integration that involves the purchase of suppliers in order to reduce dependency.

Backwardation
The theory that says futures prices will tend to rise over the life of a contract. Therefore the near-term contracts trade at a higher price than the longer-term contracts.

Bad Debt
A debt that is not collectable and therefore worthless to the creditor

Bag Man
Any person in charge of organizing and collecting contributions to political parties or funds gathered for political reasons.

Bahrain Stock Exchange - BSE
The stock exchange headquartered in Manama, Bahrain

Balance Of Payments - BOP
A record of all transactions made between one particular country and all other countries during a specified period of time. BOP compares the dollar difference of the amount of exports and imports, including all financial exports and imports. A negative balance of payments means that more money is flowing out of the country than coming in, and vice versa.

Balance Of Trade - BOT
The largest component of a country's balance of payments. It is the difference between exports and imports. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it imports more than it exports the opposite scenario is a trade surplus.

Balance Sheet
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.
The balance sheet must follow the following formula:
Assets = Liabilities + Shareholders' Equity
Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt. The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses.

Balanced Fund
A mutual fund that invests its assets into the money market, bonds, preferred stock, and common stock with the intention to provide both growth and income. Also known as an "asset allocation fund".

Balanced Investment Strategy
A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.

Balanced Scorecard
A performance metric used in strategic management to identify and improve various internal functions and their resulting external outcomes. The balanced scorecard attempts to measure and provide feedback to organizations in order to assist in implementing strategies and objectives.

Balloon Maturity
1. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date).

2. A final loan payment that is considerably higher than prior payments.
This is also known as a "balloon payment

Balloon Option
An option whose notional payments increase significantly after a set threshold is broken.

Bancassurance
A French term referring to the selling of insurance through a bank's established distribution channels.

Bandwidth
The data transfer capacity of a network. It is measured in bits per second.

Bank
A commercial institution licensed as a receiver of deposits. Banks are mainly concerned with making and receiving payments as well as supplying short-term loans to individuals.

Bank For International Settlements - BIS
An international organization fostering the cooperation of central banks and international monetary policy makers. Established in 1930, it is the oldest international financial organization, and was created to administer the transaction of monies according to the Treaty of Versailles. Among others, its main goals are to promote information sharing and to be a key center for economic research

Bank Guarantee
A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.

Bank Insurance
A guarantee on a specified amount of deposits in a bank.

Bank Investment Contract - BIC
A security with an interest rate guaranteed by a bank. It provides a specific yield on a portfolio over a specified period.

Bank Of Canada - BOC
The central bank of Canada, that came into existence after the passing of the Bank of Canada Act in 1935, influences the country's economy and money supply

Bank of England - BoE
The Bank of England is the central bank for the United Kingdom. It has a wide range of responsibilities, similar to those of most central banks around the world. For example, it acts as the government's bank and the lender of last resort, it issues currency and, most importantly, it oversees monetary policy.

Bank Of Japan - BoJ
Headquartered in the business district of Nihonbashi in Tokyo, the Bank of Japan is the Japanese central bank. The bank is responsible for issuing and handling currency and treasury securities, implementing monetary policy, maintaining the stability of the Japanese financial system, and providing settling and clearing services.
Like most central banks, the Bank of Japan also compiles and aggregates economic data and produces economic research and analysis

Bank Rate
The rate at which central banks lend funds to national banks.

Bank Reconciliation Statement
A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.

Bank Restriction Act of 1797
An act passed by the British government in 1797 to free the central Bank of England from converting bank notes and other financial claims into gold. The act was created in response to the flood of paper money issued by the British government that resulted in an economic catastrophe

Bank Run
A situation in which numerous bank customers try to withdraw their bank deposits simultaneously and the bank's reserves are not sufficient to cover the withdrawals

Banker's Acceptance
A short-term credit investment created by a non-financial firm and guaranteed by a bank.

Bankmail
An agreement made between a company planning a takeover and a bank, which prevents the bank from financing any other potential acquirer's bid.

Bankruptcy
The state of a person or firm unable to repay debts.

Bankruptcy Financing
Financing arranged by a company while under the chapter 11 bankruptcy process. Clearly, such financing is extremely high risk and is done at a relatively high interest rate.

Bankruptcy Risk
The risk that a company will be unable to meet its debt obligations. Often referred to as "default" or "insolvency risk".

Banner Advertising
A common form of advertising on the internet. The banner is an advertisement of 460x68 pixels, usually placed at the top of the page

Baptism of Fire
A difficult situation that a company or individual experiences that will result in either success or failure. Examples include Initial Public Offerings (IPOs), a new CEO hired to manage a struggling company, and hostile takeover attempts.

Bar
A graphical representation of a stock's movement that usually contains the open, high, low and closing prices for a set period of time.

Bar Chart
A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates the highest price a security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading.

Barbell
A bond investment strategy that concentrates holdings in both very short-term and extremely long-term maturities. This is also known as the "dumbbell" or "barbelling."

Barefoot Pilgrim
Slang for an unsophisticated investor who loses all of his or her wealth from trading equities in the stock market.

Barings Bank
A British merchant bank that was started in 1762, and for centuries was considered the largest and most stable bank in the world. In 1995, Barings - then the oldest bank in Britain - collapsed after it was unable to meet its cash requirements following unauthorized speculative trading in derivatives at its Singapore office by then-trader Nick Leeson.

Barometer
An investment instrument whose movements forecast trends

Barometer Stock
A security whose price pattern is regarded as an indicator of the state of the overall market

Barratry
The act of a vessel's captain or crew knowingly endangering the vessel's cargo and/or the vessel itself.

Barrels Per Day - B/D
A measure of oil output, represented by the number of barrels of oil produced in a single day. For example, you might hear "country ABC has the potential to produce five million barrels per day". The abbreviation "bbl/d" can also be used to represent this production measure.

Barrier Option
A type of option whose payoff depends on whether or not the underlying asset has reached or exceeded a predetermined price

Barriers To Entry
The existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing companies already operating in an industry because they protect an established company's revenues and profits from being whittled away by new competitors

Barron's Confidence Index
A confidence indicator calculated by dividing the average yield on high-grade bonds by the average yield on intermediate-grade bonds. The discrepancy between the yields is indicative of investor confidence.
A rising ratio indicates investors are demanding a lower premium in yield for increased risk and so are showing confidence in the economy.

Barter
The act of trading goods and services between two or more parties without the use of money. Bartering benefits companies and countries that see a mutual benefit in exchanging goods and services rather than cash, and it also enables those who are lacking "hard currency" to obtain goods and services.

Base (and base patterns, base-building, price consolidation area, price pattern)
A term used by technical analysts to refer to an area of consolidation in a stock's chart pattern. It typically can be an indicator for future price advances. This price consolidation pattern generally lasts around seven weeks but can last as long as 12 months. (Also, see Cup with handle, Double bottom, and Flat base.)

Base Currency
The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.
It is sometimes referred to as the "primary currency

Base Period
A particular time period whose data is used for comparative purposes when measuring economic data of other periods.

Basel Committee On Bank Supervision
A committee established by the central bank governors of the Group of Ten countries in 1974 that seeks to improve the supervisory guidelines that central banks or similar authorities impose on both wholesale and retail banks. The committee makes banking policy guidelines for both member and non-member countries and helps authorities to implement its suggestions.

Baseline
A benchmark used as a basis for comparison.

Basing
A period in which a stock price has very little or no trend. The resulting price pattern is a flat line.

Basis
1. The variation between the spot price of a deliverable commodity and the relative price of the futures contract for the same actual that has the shortest duration until maturity.
2. A security's basis is the purchase price after commissions or other expenses. Also known as "cost basis" or "tax basis".
3. In the context of IRAs, basis is the after-tax balance in the IRA, which originates from nondeductible IRA contributions and rollover of after-tax amounts. Earnings on these amounts are tax-deferred, similar to earnings on deductible contributions and rollover of pretax amounts.

Basis Grade
The minimum accepted standard that a deliverable commodity must meet to be used as the actual of a futures contract. Also known as "par grade" or "contract grade."

Basis Point - BPS
A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

Basis Price
Price quotation for a security expressed in terms of yield to maturity. This will usually only be quoted on fixed-income securities such as bonds.


Basis Quote
A method for simplifying and shortening the quoted price of a futures contract. Used in the futures markets, a basis quote gives the variation above or below the price of a futures contract.

Basis Rate Swap
A type of swap in which two parties swap variable interest rates based on different money markets. This is usually done to limit interest-rate risk that a company faces as a result of having differing lending and borrowing rates.

Basis Risk
The risk that offsetting investments in a hedging strategy will not experience price changes in entirely opposite directions from each other. This imperfect correlation between the two investments creates the potential for excess gains or losses in a hedging strategy, thus adding risk to the position

Basket Option
A type of option whose underlying asset is a basket of commodities, securities, or currencies.

Basket Trade
A single order to buy or sell a set of 15 or more securities.

Batch Trading
A method of transacting different security orders that involves the accumulation of orders and their simultaneous execution.

Bay Street
1.The street in Toronto where the Toronto Stock Exchange (TSE) is located.
2. The collective name for the financial institutions in Toronto including stock exchanges, banks, commodity markets, money markets, etc

BBD
In currencies, this is the abbreviation for the Barbados Dollar

BCG Growth Share Matrix
A graphical approach to resource allocation within a multi-segmented corporation.

BDT
In currencies, this is the abbreviation for the Bangladesh Taka.

Bear
An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

Bear Call Spread
A type of options strategy used when a decline in the price of the underlying asset is expected. It is achieved by selling call options at a specific strike price while also buying the same number of calls, but at a higher strike price. The maximum profit to be gained using this strategy is equal to the difference between the price paid for the long option and the amount collected on the short option

Bear CD
A certificate of deposit whose interest rate fluctuates in inverse correlation to the value of an underlying market index. In other words, the interest rate paid on the CD increases as the underlying market index decreases in value.

Bear Flattener
A yield-rate environment in which short-term interest rates are increasing at a faster rate than long-term interest rates. This causes the yield curve to flatten as short-term and long-term rates start to converge.

Bear Hug
An offer made by one company to buy the shares of another for a much higher per-share price than what that company is worth. A bear hug offer is usually made when there is doubt that the target company's management will be willing to sell. By offering a price far in excess of the target company's current value, the offering party can usually obtain an agreement. The target company's management is essentially forced to accept such a generous offer because it is legally obligated to look out for the best interests of its shareholders.

Bear Market
A period when market indices (i.e., Dow Jones Industrial Average, S&P 500, Nasdaq Composite) declines 15% to 25% and in some cases as much as 50%.

Bear Put Spread
A type of options strategy used when an option trader expects a decline in the price of the underlying asset. It is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower strike price. The maximum profit to be gained using this strategy is equal to the difference between the two strike prices, minus the net cost of the options
Bear Raid
The illegal practice of attempting to push the price of a stock lower by taking large short positions and spreading unfavorable rumors about the target firm

Bear Spread
1. An option strategy seeking maximum profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of options puts or calls can be used. A higher strike price is purchased and a lower strike price is sold. The options should have the same expiration date.
2. A trading strategy used by futures traders who intend to profit from the decline in commodity prices while limiting potentially damaging losses

Bear Steepener
A widening of the yield curve caused by long-term rates increasing at a faster rate then short-term rates. This causes a larger spread between the two rates as the long-term rate moves further away from the short-term rate.

Bear Trap
A false signal that the rising trend of a stock or index has reversed when it has not.

Bearer Form
A security not registered in the books of issuing corporation but that is payable to its bearer (the person possessing it). Securities can be issued in two forms: registered or bearer. Registered form means the issuing firm keeps records of a security's owner and mails out payments to him/her. Bearer form means the security is traded without any record of ownership, so physical possession of the security is the sole evidence of ownership. Most securities issued today are in registered form.

Bearish Belt Hold
A candlestick pattern that forms during an upward trend. This is what happens in the pattern: following a stretch of bullish trades, a bearish or black candlestick occurs the opening price, which becomes the high for the day, is higher than the close of the previous day the stock price declines throughout the day, resulting in a long black candlestick with a short lower shadow and no upper shadow.

Bearish Engulfing Pattern
A chart pattern that consists of a small white candlestick with short shadows or tails followed by a large black candlestick that eclipses or "engulfs" the small white one.

Bearish Harami
A trend indicated by a large candlestick followed by a much smaller candlestick whose body is located within the vertical range of the larger candle's body. Such a pattern is an indication that the previous upward trend is coming to an end.

Beginning Inventory - BI
The book value of goods, inputs, or materials available for use or sale at the beginning of an inventory accounting period

Behavioral Economics
A field of economics that studies how the actual decision-making process influences the decisions that are reached.

Behavioral Finance
A field of finance that proposes psychology-based theories to explain stock market anomalies. Within behavioral finance, it is assumed that the information structure and the characteristics of market participants systematically influence individuals' investment decisions as well as market outcomes

Behaviorist
1. One who accepts or assumes the theory of behaviorism (behavioral finance in investing.)
2. A psychologist who subscribes to behaviorism.

Beige Book
A commonly used name for the Fed report entitled "Summary of Commentary on Current Economic Conditions by Federal Reserve District." It is published just before the FOMC meeting on interest rates and is used to inform the members on changes in the economy since the last meeting.

Beirut Stock Exchange - BSE
The stock exchange headquartered in Beirut, Lebanon.

Bell
The ring that marks the open and close of each trading day on many organized financial exchanges, most notably the NYSE.

Bellwether
A leading indicator of trends.

Below the Market
An order to buy or sell a security at a price lower than the current market price.

Ben Bernanke
The Chairman of the Board of Governors of the U.S. Federal Reserve who took over the helm from Alan Greenspan on February 1, 2006, ending 18 years of Greenspan's leadership at the Fed. A former Fed governor, Bernanke was Chairman of the U.S. President's Council of Economic Advisers prior to being nominated as Greenspan's successor in late 2005

Benchmark
A standard against which the performance of a security, index or investor can be measured.

Benchmark Bond
A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".

Beneficial Owner
A person who enjoys the benefits of ownership even though title is in another name.

Beneficiary
A person or entity named in a will or a financial contract as the inheritor of property when the property owner dies.

Benefit Cost Ratio - BCR
A ratio attempting to identify the relationship between the cost and benefits of a proposed project.

Benefit Offset
A reduction in the amount of benefit payments received by a member of a retirement plan which may result when the member owes money to the plan.

Benjamin Graham
A scholar and financial analyst who is widely recognized as the father of value investing. His famous book, "The Intelligent Investor", has gained recognition as one of the best and most important investment pieces written illustrating the fundamentals of a value-investing strategy.

Bequest
The process of giving stocks, bonds, or any other assets to beneficiaries through the provisions of a will.

Bermuda Option
A type of option that can only be exercised on predetermined dates, usually every month.

Bermuda Stock Exchange - BSX
The stock exchange headquartered in Hamilton, Bermuda

Bermuda Swaption
A swaption with predefined limitations on exercise.

Berry Ratio
The ratio of a company's gross profits to operating expenses. This ratio is used as an indicator of a company's profits in a given period of time. A ratio coefficient of 1 or more indicates that the company is making profit above all variable expenses, whereas a coefficient below 1 indicates that the firm is losing money.

Best Ask
The lowest quoted ask price for a particular stock among those offered from competing market makers.

Best Bid
The highest quoted bid for a particular stock among all those offered by competing market makers.

Best Efforts
An agreement an underwriter makes to act as an agent between an issuing company and investors

Best Execution
The responsibility of brokers to provide the most advantageous, or best price, order execution for customers.

Best Return On Equity Tab
An indicator of a company's financial performance. It measures how efficient a company is with its money. Presented as a percentage figure, it is derived by dividing annual income (before extraordinary items, discontinued operations, cumulative accounting adjustments and non-recurring items) by an average of the latest fiscal year and the prior year's stockholders' equity.

Best-Price Rule - Rule 14D-10
An SEC regulation that stipulates that a tender offer is open to all security holders of that class of security and the amount paid to the security holder is the highest paid to any other holder of the same security.

Beta
Measures a stock’s price volatility relative to price performance of the S&P 500 Index, over a 12-month period.

BGN
In currencies, this is the abbreviation for the Bulgarian Lev.

BHD
In currencies, this is the abbreviation for the Bahraini Dinar.

Bid
1. An offer made by an investor, a trader or a dealer to buy a security. The bid will stipulate both the price at which the buyer is willing to purchase the security and the quantity to be purchased.
2. The price at which a market maker is willing to buy a security. The market maker will also display an ask price, or the amount and price at which it is willing to sell.

Bid Price
The price a buyer is willing to pay for a security. This is one part of the bid with the other being the bid size, which details the amount of shares the investor is willing to purchase at the bid price. The opposite of the bid is the ask price, which is the price a seller is looking to get for his or her shares.

Bid Size
The number of shares a buyer is willing to purchase at the quoted bid price.

Bid Tick
An indication of whether the latest bid price is higher, lower, or the same as the previous bid.

Bid-Ask Spread
The amount by which the ask price exceeds the bid. This is essentially the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price for which a seller is willing to sell it.

Bid-to-Cover Ratio
A ratio that compares the number of bids received in a Treasury security auction to the number of bids accepted.

BIF
In currencies, this is the abbreviation for the Burundi Franc.

Bifurcation
A term used in finance that refers to a splitting of something into two separate pieces

A    B    C    D    E    F    G    H    I    J    K    L    M    N    O    P
                   Q    R    S    T    U    V    W    X   Y    Z

Bolsa Boliviana de Valores - BBV
The stock exchange headquartered in La Paz, Bolivia .

Bond
A debt investment with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate.

Bond Anticipation Note - BAN
A short-term interest-bearing security issued in the anticipation of larger future bond issues.

Bond Attorney
A lawyer who represents the bondholders' interests during a bond offering and who prepares the legal opinion attesting that the issue is legal, valid and binding.

Bond Equivalent Yield - BEY
A calculation for restating semi-annual, quarterly, or monthly discount-bond or note yields into an annual yield. For a fixed income security with a par value of $1000, the calculation is as follows:

Bond Fund
A mutual fund whose investment objective is to provide stable income while taking on minimal risk.

Bond Ladder
A strategy for managing fixed-income investments by which the investor builds a ladder by dividing his or her investment dollars evenly among bonds or CDs that mature at regular intervals simultaneously (for example, every six months, once a year or every two years).

Bond Market
The environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities, and facilitates the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and ongoing operations.

Bond Option
An option contract in which the underlying asset is a bond. Other than the different characteristics of the underlying assets, there is no significant difference between stock and bond options. Just as with other options, a bond option allows investors the ability to hedge the risk of their bond portfolios or speculate on the direction of bond prices with limited risk
Bond Quote
The statement of a bond's price

Bond Rating
A specification of a bond issuer's probability of defaulting based on an analysis of the issuer's financial condition and profit potential.

Bond Swap
A strategy in which an investor sells a bond and at the same time purchases a different bond with the proceeds from the sale.

Bonus Issue
An offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout. Also known as a "scrip issue" or "capitalization issue".

Book Building
The process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors.

Book Closure
A company's announcement of a dividend or bonus to investors.

Book Runner
The managing or lead underwriter who maintains the books of securities sold for a new issue.

Book Value
1. The value at which an asset is carried on a balance sheet. In other words, the cost of an asset minus accumulated depreciation.
2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.
3. The initial outlay for an investment. This number may be net or gross of expenses such as trading costs, sales taxes, service charges and so on.
In the U.K., book value is known as "net asset value".

Book Value Per Common Share
A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly

Book-Entry Securities
Securities that are recorded in electronic records called book entries rather than as paper certificates.
Also referred to as "book-entry receipt."

Book-to-Bill Ratio
The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled

Book-To-Market Ratio
A ratio used to find the value of a company by comparing the book value of a firm to its market value. Book value is calculated by looking at the firm's historical cost, or accounting value. Market value is determined in the stock market through its market capitalization
Booking the Basis
An arrangement made between a buyer and seller giving either party the ability at some future date to determine the cash price of the forward sales agreement. Also known as "deferred pricing."

Bookout
The process of closing out a position in a swap contract or another OTC derivative agreement prior to maturity.

Boom
A period of time during which sales or business activity increases rapidly.

Boomerang
An American slang term that refers to an adult who has moved back in with his or her parents (who are part of the baby boomer generation) instead of living independently. The phrase, when applied to an individual, makes reference to the fact that the person lived independently for a period, but subsequently returned home due to the financial costs associated with maintaining a separate household.
Boomernomics
An investing strategy that involves buying equities directly related to the spending behavior of baby boomers (people born between 1946 and 1964).
Boon
A general term that refers to a benefit or improvement for investors. This can include such things as increased dividends, a stock market rally and stock buybacks

Booster Shot
The name given to the first formal recommendation report issued by an underwriter for an IPO. It is presented in the process of the public offering.

Boot
Cash or other property added to an exchange or a transaction in order to make the value of traded goods equal

Bootstrap
A situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.

Bootstrapping
1. A procedure used to calculate the zero coupon yield curve from market figures.
2. A situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.

Boston Snow Indicator
A market theory stating that a white Christmas in Boston will result in rising stock prices for the following year.

Bottleneck
A point of congestion in a system that occurs when workloads arrive at a given point more quickly than that point can handle them. The inefficiencies brought about by the bottleneck often create a queue and a longer overall cycle time.

Bottom
The lowest point or price reached by a financial security, commodity, index or economic cycle in a given time period, which is followed by a steady increase.

Bottom Fisher
An investor who looks for bargains among stocks whose prices have recently dropped dramatically. The investor believes that the recent price drop is temporary and a recovery is soon to follow.

Bottom Line
Slang for net income or profit.

Bottom-Up Investing
An investment approach that de-emphasizes the significance of economic and market cycles. This approach focuses on the analysis of individual stocks. In bottom-up investing, therefore, the investor focuses his or her attention on a specific company rather than on the industry in which that company operates or on the economy as a whole.
Bought Deal
A new share issue that is bought entirely by one underwriter to resell to investors
Bounced Check
A check that cannot be processed because the writer has insufficient funds. Also known as a "rubber check".
Bourse
Any European stock exchange.

Boutique
A small investment firm specializing in offering specific, but limited services to a select number of individuals

Box Size
In the context of Point & Figure Charts, the box size is the minimum price change that must occur for a given period before a mark (an X or an O) is added to the chart.

Box Spread
A dual option position involving a bull and bear spread with identical expiry dates. This investment strategy provides for minimal risk. Additionally, it can lead to an arbitrage position as an investor attempts to lock in a small return at expiry.

Box-Top Order
A buy or sell order made at the best market price. If the order cannot be completely filled, a limit order is placed for the remaining shares at the price at which the filled portion was executed.

Bracket Creep
A situation where inflation pushes income into higher tax brackets. The result is an increase in income taxes but no increase in real purchasing power

Bracketed Buy Order
A buy order that is accompanied (or "bracketed") by a sell limit order above the buy order's price and a sell stop order below the buy order's price. These three component orders will all be set at a price determined by the investor entering the order. The bracketed buy order allows investors to lock in profits with an upside movement and prevent a downside loss, and does not require investors to constantly follow the position.
Bracketed Sell Order
A sell order on a short sale that is accompanied (or "bracketed") by a buy stop order above the entry price of the sell order and a buy limit order below the entry price of the sell order. As the three component orders are based on set prices, this type of order protects the investor from the downside but also potentially locks in a gain without the investor constantly monitoring price.

Brady Bonds
Bonds that are issued by the governments of developing countries. Brady Bonds are some of the most liquid emerging market securities. They are named after former U.S. Treasury Secretary Nicholas Brady, who sponsored the effort to restructure emerging market debt instruments.

Brand
A distinguishing symbol, mark, logo, name, word, sentence or a combination of these items that companies use to distinguish their product from others in the market.

Brand Awareness
The likelihood that consumers recognize the existence and availability of a company's product or service. Creating brand awareness is one of the key steps in promoting a product.

Brand Equity
An intangible value-added aspect of particular goods that are otherwise not considered unique

Brazil, Russia, India and China - BRIC
An acronym for the economies of Brazil, Russia, India and China combined. The general consensus is that the term was first prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most of the current major economic powers.

Bre-X Minerals Ltd.
A company involved in one of the largest stock swindles in history. Its Indonesian gold property, which reportedly contained over 200 million ounces, was proven fraudulent in May of 1997.

Breadth Indicator
A specific type of indicator that uses advancing and declining issues to determine the amount of participation in the movement of the stock market.

Breadth of Market Theory
A technical analysis theory that predicts the strength of the market according to the number of stocks that advance or decline in a particular trading day

Break
A term used in futures markets to describe a rapid and sharp price decline.

Break Fee
1. A fee paid by a target company to bidders (during an acquisition) if the pending deal is terminated.
2. A fee paid by one party of a contract to another in order to terminate or cancel legal obligations.

Break-Even Point - BEP
1. In general, the point at which gains equal losses.
2. In options, the market price that a stock must reach for option buyers to avoid a loss if they exercise. For a call, it is the strike price plus the premium paid. For a put, it is the strike price minus the premium paid.

Breakaway Gap
A term used in technical analysis. A breakaway gap represents a gap in the movement of a stock price supported by levels of high volume.
The image shows a gap at the beginning of a large upward movement.

Breakdown
A price movement through an identified level of support, which is usually followed by heavy volume and sharp declines. Technical traders will short sell the underlying asset when the price of the security breaks below a support level because it is a clear indication that the bears are in control and that additional selling pressure is likely to follow.

Breakout
The action by a stock when it surpasses its resistance level: usually a price ceiling at which the stock has previously encountered selling. In many cases, but not always, that resistance level is the highest point in a "handle" portion of a base pattern.

Breakout Trader
A type of trader who uses technical analysis to find potential trading opportunities, identifying situations where the price of an asset is likely to experience a substantial movement over a short period of time. Breakout traders generally look for key levels of support and resistance and will place transactions when the asset's price passes through these levels. Long positions are taken when the price of an asset breaks through a level of resistance, and short positions are taken when the price breaks below a level of support.

Breakpoint
A predetermined contribution amount in a mutual fund making the investor eligible for a reduction in sales charges. Mutual Funds are required to give a description of these breakpoints and the eligibility requirements in their fund prospectus. It is prudent for investors to be aware of these.


Breakpoint Sale
The sale of a mutual fund at a set dollar amount that allows for the fundholder to move into a lower sales charge bracket. If an investor is unable at the time of investment to come up with the funds necessary to qualify for the lower fee they can sign a letter of intent stating they will reach the total amount, or breakpoint, in a set time period.
Any sales that occur just below a breakpoint are considered unethical and in violation of NASD rules.

Brent Blend
A type of sweet crude oil that is used as a benchmark for the prices of other crude oils.

Bretton Woods Agreement
A 1944 agreement made in Bretton Woods, New Hampshire, which helped to establish a fixed exchange rate in terms of gold for major currencies. The International Monetary Fund was also established at this time.

Brick And Mortar
A traditional "street-side" business that deals with its customers face to face in an office or store that the business owns or rents. Web-based businesses usually have lower costs and greater flexibility than brick-and-mortar operations.

Bridge Financing
A method of financing, used by companies before their IPO, to obtain necessary cash for the maintenance of operations.

Bridge Loan
A short-term loan that is used until a person or company secures permanent financing or removes an existing obligation. This type of financing allows the user to meet current obligations by providing immediate cash flow. The loans are short-term (up to one year) with relatively high interest rates and are backed by some form of collateral such as real estate or inventory.
Also known as "interim financing", "gap financing or a "swing loan".

British Bankers Association - BBA
The leading trade association that represents the views of those involved in the banking and financial services industry within the U.K.

BRL
In currencies, this is the abbreviation for the Brazilian Real

Broad Liquidity
A category of the money supply which includes: all funds in M3, individual holdings in accounts, savings bonds, T-bills with maturity of less than one year, commercial papers, and banker's acceptances.


Broad-Based Index
An index designed to reflect the movement of the entire market. The smallest broad-based index is the Dow Jones Industrial Average with 30 industrial stocks and the largest is the Wilshire 5000 Total Market Index. Other examples include the S&P 500, Russell 3000 Index, AMEX Major Market Index and the Value Line Composite Index.

Broad-Based Weighted Average
An anti-dilution provision used for the benefit of existing preferred shareholders when additional offerings are made by the corporation. The broad-based weighted average accounts for all equity previously issued and currently undergoing issue.

Broadband
A high-speed, high-capacity transmission medium that can carry signals from multiple independent network carriers. This is done on a single coaxial or fiber-optic cable by establishing different bandwidth channels. Broadband technology can support a wide range of frequencies. It is used to transmit data, voice and video over long distances simultaneously

Broadening Formation
A pattern used in technical analysis to predict the likelihood of a reversal in the direction of the current trend. It is identified by finding diverging trendlines that connect a series of widening peaks and troughs. The most common type of broadening formation is found at the end of a prolonged uptrend and is used to predict a move lower

Brochure Rule
Under the Investment Advisor's Act of 1940, the Brochure Rule requires federally registered investment advisors provide a written disclosure statement to their clients at specified times during the advisory process.

Broker
1. An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.
2. The role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.
3. A licensed real estate professional who typically represents the seller of a property. A broker's duties may include: determining market values, advertising properties for sale, showing properties to prospective buyers, and advising clients with regard to offers and related matters.

Broker Association
A permitted association between exchange members who have shared responsibility for the execution of orders placed by their customers. These members thereby gain access to a collective pool of un-transacted orders, and they share the profits and losses associated with trading activities.

Broker's Call
The interest rate relative to which margin loans are quoted. Also known as the call loan rate.

Broker-Dealer
A person or firm in the business of buying and selling securities operating as both a broker and a dealer depending on the transaction.

Broker-Reseller
A type of broker that acts as an intermediary between large brokerages and their clients. Broker-resellers typically take stock orders from clients and then use major brokerages to execute the trades

Brokerage Account
An arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage, which then carries out the transactions on the investor's behalf. The investor owns the assets contained in the brokerage account and must usually claim as income any capital gains he or she incurs from the account

Brokered Deposit
A large-denomination deposit similar to a certificate of deposit.

Brought Over The Wall
The situation of an employee in the research department of an investment bank - usually a research analyst - who has been brought over to work for the underwriting department with a focus on a particular company. The purpose of this transfer is to add a knowledgeable opinion to the underwriting process, thereby adding value to it. Also known as "brought over the Chinese Wall

Brown Field Investment
When a company or government entity purchases or leases existing production facilities to launch a new production activity. This is one strategy used in foreign-direct investment.

BSD
In currencies, this is the abbreviation for the Bahamanian Dollar

BTN
In currencies, this is the abbreviation for the Bhutan Ngultrum

Bubble
1. An economic cycle characterized by rapid expansion followed by a contraction.
2. A surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive selloff occurs.
3. A theory that security prices rise above their true value and will continue to do so until prices go into freefall and the bubble bursts

Buck
1. Trader's slang for a million dollars.
2. Informal reference to one dollar.

Buck the Trend
When a security goes against the prevailing trend of the overall market.

Bucket Shop
1. A fraudulent brokerage firm that uses aggressive telephone sales tactics to sell securities that the brokerage owns and wants to get rid of. The securities they sell are typically poor investment opportunities, and almost always penny stocks.
2. A brokerage that makes trades on a client's behalf and promises a certain price. The brokerage, however, waits until a different price arises and then makes the trade, keeping the difference as profit.

Bucketing
A situation where, in an attempt to make a short-term profit, a broker confirms an order to a client without actually executing it. A brokerage which engages in unscrupulous activities, such as bucketing, is often referred to as a bucket shop

Budget
An estimation of the revenue and expenses over a specified future period of time. A budget can be made for a person, a family or a group of people, a business, government, country or multinational organization or just about anything else that makes and spends money. Budgets are a microeconomic concept that show the tradeoff made when one good is exchanged for another.

BUGS Index - HUI
An acronmy for "basket of un-hedged gold stocks," the BUGS index is the AMEX's index measuring gold companies that do not hedge their gold production beyond a year and a half.

Bulge
A slang term used to describe a rapid advance in prices within the commodities market

Bulge Bracket
The group of firms in an underwriting syndicate who sold the largest amount of the issue

Bulk Sales Escrow
A type of escrow agreement placed on the sale of inventory, business assets or an entire company. The escrow serves to protect the interests of unsecured creditors: it eliminates the risk that the seller of the assets will use the proceeds from the sale for purposes other than paying debts or taxes owed.

Bull
An investor who thinks the market, a specific security or an industry will rise.

Bull Call Spread
A type of options strategy used when a moderate rise in the price of the underlying asset is expected. It is achieved by purchasing call options at a specific strike price while also selling the same number of calls of the same asset and expiration date but at a higher strike. The maximum profit in this strategy is the difference between the strike prices of the long and short options, less the net cost of options. Most often, bull call spreads are vertical spreads.

Bull CD
A certificate of deposit whose interest rate fluctuates in direct correlation to the value of an underlying market index. In other words, the interest rate paid on the CD increases as the value of the market index increases during the life of the CD.

Bull Flattener
A yield-rate environment in which long-term rates are decreasing at a rate faster than short-term rates. This causes the yield curve to flatten as the short-term and long-term rates start to converge.

Bull Market
A financial market of a certain group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used in respect to the stock market, but really can be applied to anything that is traded, such as bonds, currencies, commodities, etc.
Bull markets are characterized by optimism, investor confidence and expectations that strong results will continue. Of course, no bull market can last forever, and sooner or later a bear market (in which prices fall) will come. It's tough if not impossible to predict consistently when the trends in the market will change. Part of the difficulty is that psychological effects and speculation can sometimes play a large (if not dominant) role in the markets. The extreme on the high end is a stock-market bubble, and on the low end a crash.

Bull Put Spread
A type of options strategy that is used when the investor expects a moderate rise in the price of the underlying asset. This strategy is constructed by purchasing one put option while simultaneously selling another put option with a higher strike price. The goal of this strategy is realized when the price of the underlying stays above the higher strike price, which causes the short option to expire worthless, resulting in the trader keeping the premium.

Bull Spread
An option strategy in which maximum profit is attained if the underlying security rises in price. Either calls or puts can be used. The lower strike price is purchased and the higher strike price is sold. The options have the same expiration date.

Bull Steepener
A change in the yield curve caused by short-term rates falling faster than long-term rates, resulting in a higher spread between the two rates.

Bull Trap
A false signal indicating that a declining trend in a stock or index has reversed and heading upwards when, in fact, the security will continue to decline

Bull Vertical Spread
An bullish strategy used by investors who feel that the market price of a commodity will appreciate but wish to limit the downside potential associated with an incorrect prediction.

Bulldog Bond
A sterling denominated bond that is issued in London by a company that is not British.

Bullet Bond
A noncallable regular coupon paying debt instrument with a single repayment of principal on the maturity date.

Bullet GIC
A guaranteed investment contract (GIC) is purchased with a single premium and only one payout that is made at maturity.

Bullet Loan
Any loan that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the balloon payment obligation.

Bullet Repayment
A single payment for an entire loan amount that is paid at maturity.

Bullet Trade
The act of purchasing an "in the money" put option so that the buyer can capitalize on a bear market by effectively shorting a stock without waiting for an uptick

Bullion
Gold and silver that is officially recognized as high quality (at least 99.5% pure), and is in the form of bars rather than coins.

Bullish Belt Hold
A trend in candlestick charting that occurs during a downward movement. After a stretch of bearish candlesticks, a bullish or white candlestick forms. The opening price, which becomes the low for the day, is significantly lower then the closing price. This results in a long white candlestick with a short upper shadow and no lower shadow.

Bullish Engulfing Pattern
A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses or "engulfs" the previous day's candlestick. The shadows or tails of the small candlestick are short, which enables the body of the large candlestick to cover the entire candlestick from the previous day.

Bullish Harami
A candlestick chart pattern in which a large candlestick is followed by a smaller candlestick whose body is located within the vertical range of the larger body. In terms of candlestick colors, the bullish harami is a downtrend of negative-colored (black) candlesticks engulfing a small positive (white) candlestick, giving a sign of a reversal of the downward trend.

Bullish Homing Pigeon
A trend indicated by a large candlestick followed by a much smaller candlestick whose body is located within the vertical range of the larger candle's body. In both candlesticks, the stock price has to have closed down from the opening price. This pattern may indicate that there is a weakening of the current downward trend.

Bullpen
A slang term referring to the traditional seating arrangement of younger investment advisors or brokers in a brokerage house

Bunching
The combining of odd-lot or round-lot orders for the same security so that they may be executed at the same time.

Bund
The German government's federal bond. The bund is issued to the public as a way for the German government to finance its spending.

Bundesbank
Refers to the central bank of Germany. This is the U.S. equivalent of the Federal Reserve

Bungalow
A one-story house, cottage or cabin. Bungalows are generally small in terms of square footage, but it is not uncommon to see very large bungalows. Bungalows were originally designed to provide affordable, modern housing for the working class.

Bunny Bond
A type of bond that offers investors the option to reinvest coupon payments into additional bonds with the same coupon and maturity. Also known as a "multiplier bond" or a "guaranteed coupon reinvestment bond

Buoyant
The term used to describe a commodities market where the prices generally rise with ease when there are considerable signals of strength.


Bureau of Census
A division of the federal government of the United States Bureau of Commerce that is responsible for conducting the national census at least once every 10 years, in which the population of the United States is counted. The Bureau of Census is also responsible for collecting data on the people, economy and country of the United States. Also known as the "United States Census Bureau

Bureau of Economic Analysis - BEA
A division of the U.S. federal government's Department of Commerce that is responsible for the analysis and reporting of economic data used to confirm and predict economic trends and business cycles. Reports from the Bureau of Economic Analysis are the foundation upon which many economic policy decisions are made by government, and many investment decisions are made in the private sector by companies and individual investors.

Bureau Of Labor Statistics - BLS
A government agency that produces economic data reflecting the state of the U.S. economy, the most well-known being the Consumer Price Index, Unemployment Rate, and the Producer Price Index.

Business
1. An organization or enterprising entity engaged in commercial, industrial or professional activities. A business can be a for-profit entity, such as a publicly-traded corporation, or a non-profit organization engaged in business activities, such as an agricultural cooperative.
2. Any commercial, industrial or professional activity undertaken by an individual or a group.
3. A reference to a specific area or type of economic activity.

Business Cycle
The recurring and fluctuating levels of economic activity that an economy experiences over a long period of time. The five stages of the business cycle are growth (expansion), peak, recession (contraction), trough and recovery. At one time, business cycles were thought to be extremely regular, with predictable durations. But today business cycles are widely known to be irregular - varying in frequency, magnitude and duration.

Business Cycle Indicators - BCI
Composite of leading, lagging and coincident indexes created by the Conference Board and used to forecast changes in the direction of the overall economy of a country. They can be used to confirm or predict the peaks and troughs of the business cycle and are published for the U.S., Mexico, France, the U.K., South Korea, Japan, Germany, Australia and Spain.

Business Development Bank of Canada - BDC
A financial institution that is wholly owned by the government of Canada providing financial and consulting services to small Canadian businesses.

Business Logic
The specific details and information flow of a particular industry.

Business Model
The plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.

Business Risk
The risk that a company will not have adequate cash flow to meet its operating expenses.

Business To Business - B To B
Business conducted between companies, rather than between a company and individual consumers.

Business To Consumer - B To C
Business conducted between companies and individual consumers, rather than between two companies

Busted Convertible Security
A convertible security that is trading well below its conversion value. The result is that the security is valued as regular debt because there is very little chance that it will ever reach the convertible price before maturity.

Busted Takeover
A highly leveraged takeover that, to go through, requires a selling off of some of the acquired company's assets.

Butterfly Spread
An option strategy combining a bull and bear spread. It uses three strike prices. The lower two strike prices are used in the bull spread, and the higher strike price in the bear spread. Both puts and calls can be used.

Buttonwood Agreement
The agreement between 24 of United States' first and most prominent brokers. Rumored to have occurred under a "Buttonwood" tree, this marked the beginnings of the investment community of Wall Street.

Buy
1. A recommendation to purchase a specific security.
2. To acquire an asset in exchange for currency.

Buy And Hold
A passive investment strategy in which an investor buys stocks and holds them for a long period of time, regardless of fluctuations in the market. An investor who employs a buy-and-hold strategy actively selects stocks, but once in a position, is not concerned with short-term price movements and technical indicators.

Buy Minus
A type of order where a client instructs the broker to purchase a stock at a price below the current market price.

Buy Point
Optimal buy point of a stock as it emerges from a sound and proper basing area or chart pattern (the most common of which include the 'cup with handle,' 'flat base' and 'double bottom') and breaks out into a new high in price. This is the point of least resistance and has shown, through William J. O'Neil's research, to have the greatest chance of moving substantially higher based on its current and historical price and volume activity.

Buy Side
The side of Wall Street comprising the investing institutions such as mutual funds, pension funds and insurance firms that tend to buy large portions of securities for money-management purposes. The buy side is the opposite of the sell-side entities, which provide recommendations for upgrades, downgrades, target prices and opinions to the public market. Together, the buy side and sell side make up both sides of Wall Street.

Buy Stop Order
An order to buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.

Buy To Close
A term used by many brokerages to represent the closing of a short position in option transactions.

Buy To Cover
An order placed to close out a short position in a particular stock.

Buy To Open
A term used by many brokerages to represent the opening of a long position in option transactions

Buy Weakness
A proactive trading strategy in which a trader takes profits by closing out of a short position or buying into a long position. This strategy is used when the price of the asset being traded is still falling but is expected to reverse and move against the trader. This is the opposite of "selling into strength


Buy-In
When an investor is forced to repurchase shares because the seller did not deliver the securities in a timely fashion, or did not deliver them at all.


Buyback
The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may be looking for a controlling stake.


Buydown
A mortgage-financing technique with which the buyer attempts to obtain a lower interest rate for at least the first few years of the mortgage, but possibly its entire life. The builder or seller or the property usually provides payments to the mortgage-lending institution, which, in turn, lowers the buyer's monthly interest rate and therefore monthly payment. The home seller, however, increases the purchase price of the home to compensate for the costs of the buydown agreement.


Buyer's Call
An agreement between a buyer and seller whereby a commodity purchase occurs at a specific price above a futures contract for an identical grade and quantity.
Also known as a call sale, this agreement gives the buyer the option to fix the price of the commodity by either purchasing a future from the seller or indicating to the seller a time in which the price of the transaction will be set. A buyer's call is used instead of buying the commodity on the spot market because of the possibility that its price will depreciate

Buyer's Market
A market condition characterized by an abundance of goods available for sale.

Buying Hedge
A transaction that commodities investors undertake to hedge against possible increases in the prices of the actuals underlying the futures contracts.

Buying Power
The money an investor has available to buy securities. In a margin account, the buying power is the total cash held in the brokerage account plus maximum margin available.
Also referred to as "Excess Equity."

Buyout
The purchase of a company or a controlling interest of a corporation's shares

BWP
In currencies, this is the abbreviation for the Botswana Pula.

BZD
In currencies, this is the abbreviation for the Belize Dollar.

Big Bath
The strategy of manipulating a company's income statement to make poor results look even worse. The big bath is often implemented in a bad year to enhance artificially next year's earnings. The big rise in earnings might result in a larger bonus for executives. New CEOs sometimes use the big bath so they can blame the company's poor performance on the previous CEO and take credit for the next year's improvements.

Big Board
A nickname for the New York Stock Exchange

Big Figure
The stem, or whole dollar price, of a quote, often used in reference to foreign currencies or money markets.

Big Four (or Big Five, Big Six, Big Eight)
The largest accounting firms in the United States as measured by revenue

Big Mac PPP
A survey done by The Economist that determines what a country's exchange rate would have to be for a Big Mac in that country to cost the same as it does in the United States. Purchase power parity (PPP) is the theory that currencies adjust according to changes in their purchasing power. With the Big Mac PPP, purchasing power is reflected by the price of a McDonald's Big Mac in a particular country. The measure gives an impression of how overvalued or undervalued a currency is.

Big Three
A reference to the three largest automobile manufacturers in North America:
1. General Motors
2. DaimlerChrysler
3. Ford Motor Co.

Big Uglies
Old industrial companies in gritty industries (such as mining, steel and oil) and as a result, they tend to be unpopular stocks with investors.

Big-Cap. Growth Funds vs. Small-Cap. Growth Funds chart
Found on Investor's Business Daily's Industry Groups page. This chart illustrates the degree to which institutions are buying and selling big vs. small-capitalization stocks. This feature helps identify shifts in emphasis by institutions.

Bill of Exchange
A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.


Bill Of Lading
A legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver.

Binomial Option Pricing Model
An options valuation method developed by Cox, et al, in 1979. The binomial option pricing model uses an iterative procedure, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option's expiration date.
The model reduces possibilities of price changes, removes the possibility for arbitrage, assumes a perfectly efficient market, and shortens the duration of the option. Under these simplifications, it is able to provide a mathematical valuation of the option at each point in time specified.

Black
A description of a positive balance on a company's financial statements.

Black Box Model
A computer program into which users enter information and the system utilizes pre-programmed logic to return output to the user.

Black Friday
1. A day of stock market catastrophe. Originally, Sept 24, 1869 was deemed Black Friday. The crash was sparked by gold speculators, including Jay Gould and James Fist, who attempted to corner the gold market. The attempt failed and the gold market collapsed, causing the stock market to plummet.
2. The day after Thanksgiving in the United States. Retailers generally see an upward spike in sales and consider this to be the start of the holiday shopping season. It's common for retailers to offer special promotions and to open early to draw in customers.

Black Knight
A company that makes a hostile takeover offer on a target company


Black Market
A type of economic activity that takes place outside of government-sanctioned channels. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table'. The black market is also the means by which illegal substances or products - such as illicit drugs, firearms or stolen goods - are bought and sold.

Black Monday
The most notorious day in financial history (Oct 19, 1987). The DJIA fell 508 points, almost 22%.

Black Scholes Model
A model of price variation over time of financial instruments such as stocks that can, among other things, be used to determine the price of a European call option. The model assumes that the price of heavily traded assets follow a geometric Brownian motion with constant drift and volatility. When applied to a stock option, the model incorporates the constant price variation of the stock, the time value of money, the option's strike price and the time to the option's expiry.

Black Thursday
The name given to Thursday, October 24th, 1929, when the New York Stock Exchange plummeted, leading to the Great Depression of the 1930's.

Black Tuesday
October 29th, 1929 when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million shares were traded in a panic selloff.

Black's Model
A variation of the Black-Scholes model that allows for the valuation of options on futures contracts.

Blackboard Trading
The trading of commodities and futures contracts off a blackboard found on the wall of a commodity exchange.

Blackout Period
1. A term that refers to a temporary period in which access is limited or denied.
2. A period of around 60 days during which employees of a company with a retirement or investment plan cannot modify their plans. Notice must be given to employees in advance of a pending blackout

Blank Check Preferred Stock
A method companies use to simplify the process of creating new classes of preferred stock to raise additional funds from sophisticated investors without obtaining separate shareholder approval.

Blank-Check Company
A company in a developmental stage that either doesn't have an established business plan or has a business plan that revolves around a merger or acquisition with another firm.

Blanket Bond
Insurance coverage carried by brokerages, investment bankers, and other financial institutions to protect them against losses due to employee dishonesty.

Blanket Lien
A lien covering nearly all types of assets and collateral owned by a debtor.

Blanket Recommendation
A situation in which a financial professional or institution sends a recommendation to all clients to buy or sell a particular security or product, regardless of whether or not the particular asset is compatible with the client's investment goals, objectives, and risk tolerance.

Blend Fund
A mutual fund composed of various asset classes (such as stocks, bonds and money market securities), allowing investors to diversify their holdings by owning just a single fund. Also called "hybrid funds".

Blind Trust
A trust in which the executors have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust

Blitzkrieg Tender Offer
A takeover offer that is intended to be so attractive that very few objections will arise and the takeover will occur swiftly. In German, "blitz" means lightning and "krieg" means war. Thus, a blitzkrieg (lightning war) refers to a surprise offensive that is both powerful and swift and was used to describe World War II bombing raids.

Block
A large amount of the same security bought or sold by institutional or other large investors. There is no official size designation constituting a block of securities, but a commonly used threshold is more than 10,000 equity shares or more than $200,000 of debt securities

Block House
A brokerage whose major concern is finding potential buyers and sellers of block trades

Block Trade
An order/trade submitted for sale or purchase of a large quantity of securities. Also known as "Block Order".

Blocked Currency
Any currency that is mainly used for domestic transactions and does not freely trade on a forex market (usually due to government restrictions). Also referred to as a "nonconvertible currency".

Blockholder
The owner of a large amount of a company's shares and/or bonds, or block. In terms of shares, these owners are often able to influence the company with the voting rights awarded with their holding.

Bloodletting
A period of severe investing losses

Bloomberg
A major global provider of 24-hour financial news and information including real-time and historic price data, financials data, trading news and analyst coverage, as well as general news and sports. Its services, which span their own platform, television, radio and magazines, offer professionals analytic tools.

Blotter
A record of trades and the details of the trades made over a period of time (usually one trading day). The details of a trade will include such things as the time, price, order size and a specification of whether it was a buy or sell order. The blotter is usually created through a trading software program that records the trades made through a data feed.

Blow-Off Top
A steep and rapid increase in price followed by a steep and rapid drop in price.
Here is an example of a blow-off top, a steep rise followed by a steep fall.

Blowoff
A term in technical analysis that refers to a sharp price increase that comes after a long period of price appreciation, and is followed by a fall in the price. A blowoff is seen as a rally's last breath and is a highly bearish sign.

Blue Chip
A nationally recognized, well-established and financially sound company. Blue chips generally sell high-quality, widely accepted products and services. Blue-chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth.

Blue List
A daily digest of municipal and corporate bond offerings, market commentaries, fixed-income statistics and other bond information. The blue list is used by bond investors to identify investment opportunities in the bond market.

Blue Sheets
Requests for information sent out by the Securities and Exchange Commission to market makers.

Blue Sky Laws
State regulations designed to protect investors against securities fraud by requiring sellers of new issues to register their offerings and provide financial details. This allows investors to base their judgments on trustworthy data.

Blue-Chip Stock
Stock of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times.

BMD
In currencies, this is the abbreviation for the Bermudian Dollar

BND
In currencies, this is the abbreviation for the Brunei Dollar.

Bo Derek
A slang term used to describe a perfect stock or investment. In the 1979 hit movie "10", actress Bo Derek portrayed the "perfect woman", or "the perfect 10".

Board Broker
A member or member nominee of a commodity exchange who is entrusted with the responsibility of executing and matching orders, providing price quotations, and maintaining orderliness of trading accounts for the designated commodity

Board Broker System
The system used by many commodity exchanges in which members are assigned specific commodities to manage.

Board Certified In Estate Planning - BCE
A certification offered by the Institute of Business & Finance (IBF) aimed at brokers, advisors and financial planners whose clients are interested in estate accumulation, preservation and distribution (estate planning).

Board Lot
A standardized number of shares defined by a stock exchange as a trading unit. In most cases, this means 100 shares. The purpose of a board lot is to avoid "odd lots" and to facilitate easier trading. It's more difficult for a broker to find a buyer for, say, 17 shares, than if everybody agrees to trade in 100 share lots.

Board Of Directors - B Of D
A group of individuals who are elected by stockholders to establish corporate management policies and make decisions on major company issues, such as dividend policies.

BOB
In currencies, this is the abbreviation for the Bolivian Boliviano

Bogey
This is the benchmark return to which the performance of a portfolio manager or mutual fund manager is compared.

Boiler Room
A place where high-pressure salespeople use banks of telephones to call lists of potential investors (known as a "sucker lists") in order to peddle speculative, even fraudulent, securities. A boiler room is called as such because of the high-pressure selling.

Boilerplate
The standardization of a legal document's structure and language. This leads to quicker and more efficient practices in terms of the filling out and processing of documents.
Most often used in contracts, prospectuses and indentures.

Bollinger Band
A band plotted two standard deviations away from a simple moving average.
In this example of Bollinger bands, the price of the stock is banded by an upper and lower band along with a 21-day simple moving average.