A Nasdaq stock symbol specifying that the stock is a new issue.
In the forex market, a particular point in time specified by a forex dealer to stand as the end of the current trading day and the beginning of a new trading day. This is done for primarily administrative and logistical reasons, because although the forex market trades 24 hours a day, the market and its intermediaries require a specified beginning and end to each trading day in order to record trade dates and define settlement periods.
Daily Graphs (and Daily Graphs Online)
Print and online (www.dailygraphs.com) charting services that provide extensive fundamental and technical indicators on thousands of stocks for the individual investor.
A group of unscrupulous investors who, practicing a kind of fictitious trading or wash selling, artificially inflate the price of a security so that they sell it at a profit.
A term that refers to the Bombay Stock Exchange, the major stock exchange in India. The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions.
Dark Cloud Cover
In candlestick charting, a pattern where a black candlestick follows a long white candlestick. It can be an indication of a future bearish trend.
A type of database application that looks for hidden patterns in large groups of data.
A term identifying the date on/by which the specified actions of a contract can be reasonably completed. This date is important, as it is generally considered legally binding.
Date of Chart
Date on chart reflects the most recent market activiity. It is displayed in the lower right corner of the chart.
Calendar information used to indicate the date of price and volume data on a chart. The vertical line to the immediate left of the month or day indicates its precise reference point on the chart grid.
To determine an exact date on a chart, utilize the Track Price tool by clicking the right-hand mouse button while the cursor is over the point of interest
The action of a firm or investor buying a substantial amount of shares in a company (making it a target firm) first thing in the morning when the stock markets open. This is done by a stock broker acting on behalf of a company. Because the bidding company builds a substantial stake in its target at the prevailing stock market price, the takeover costs are likely to be significantly lower than they would be had the acquiring company first made a formal takeover bid.
An index of 30 top German Stocks.
Any order to buy or sell a security that automatically expires if not executed on the day the order is placed.
A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. Most trades are entered and closed out within the same day.
A system used to determine the number of days between two coupon dates, which is important in calculating accrued interest and present value when the next coupon payment is less than a full coupon period away. Each bond market has its own day-count convention.
Days Payable Outstanding - DPO
A company's average payable period. Calculated as:
Notice that the formula may also be written as: accounts payable / (cost of sales/number of days).
Days Sales Of Inventory - DSI
A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its raw materials into sales. The lower (shorter) the DSI the better, but it is important to note that the typical DSI will vary from one industry to another.
Here is how the DSI is calculated:
Days To Cover
A measurement of a company's issued shares that are currently shorted, expressed as the number of days required to close out all of the short positions. For example, if a company has 10 million shares outstanding and 2 million shares are currently short sold, the shares have a days to cover rate of 2 (2M/10M).
Also referred to as the "short-interest ratio".
A corporate strategy to sell off subsidiaries or divisions of a company.
Dead Cat Bounce
A temporary recovery from a prolonged decline or bear market, after which the market continues to fall.
Dead Hand Provision
A stipulation on a defense mechanism or poison pill used by companies in order to protect against a merger or takeover by another company. The dead hand provision prevents the removal of the poison pill even if shareholders of the target company favor the takeover.
The costs to society created by an inefficiency in the market.
The rate at which new proposals are flowing to the underwriters of an investment bank.
1. An individual or firm willing to buy or sell securities for their own account.
2. One who purchases goods or services for resale to consumers.
A market where dealers are assigned for specific securities. The dealers create liquid markets by purchasing and selling against personal inventory.
An option created upon physical commodities, outside of regular exchange regulations.
A situation in which money or loans are very difficult to obtain in a given country. If you do have the opportunity to secure a loan, then interest rates are usually extremely high. Also known as "tight money".
The amount on a life insurance policy or pension that is payable to the beneficiary when the annuitant passes away.
Also known as "survivor benefit".
A crossover resulting from a security's long-term moving average breaking above its short-term moving average or support level.
An optional redemption feature on a debt instrument allowing the beneficiary of the estate of the deceased to put (sell) the bond (back to the issuer) in the event of the beneficiary's death or legal incapacitation. Also known as a "survivor's option".
A type of loan investors lend to a company in exchange for convertible debt, which, like a convertible bond, typically has provisions that allow the investors to convert the bonds into stock at below-market prices. This can lead to the original shareholders losing control of the company.
1. To lower the value, quality or status of something or someone.
2. To lower the value (of a coin) by adding metal of inferior value.
A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other types of bonds, debentures are documented in an indenture.
An accounting entry which results in either an increase in assets or a decrease in liabilities on a company's balance sheet or in your bank account.
In a margin account, money owed by the customer to the broker for funds advanced to purchase securities. The debit balance is the amount of funds the customer must put into his or her margin account, following the successful execution of a security purchase order, in order to properly settle the transaction.
An electronic card issued by a bank which allows bank clients access to their account to withdraw cash or pay for goods and services. This removes the need for bank clients to go to the bank to remove cash from their account as they can now just go to an ATM or pay electronically at merchant locations. This type of card, as a form of payment, also removes the need for checks as the debit card immediately transfers money from the client's account to the business account.
Expressed in percentage, this figure is based on fiscal year-end values of total debt to shareholder's equity.
A transfer of debt from a creditor to a third party.
This occurs when a major financial institution, such as a multinational bank, defaults on its obligations that causes disruption not only in the financial system of the institution's home country, but also in the global financial system as a whole.
The action of combining several loans or liabilities into one loan. Put another way, debt consolidation is the process of taking out a new loan to pay off a number of other debts. Most people who consolidate their debt are usually doing it to attain a lower interest rate, or the simplicity of a single loan. Also known as a "consolidation loan".
A situation in which the collateral used to secure a loan, or another form of debt, decreases in value. This can be detrimental to the borrower, as it may lead to a restructuring of the loan agreement or even a loan recall.
Also known as "worst deflation" and "collateral deflation".
Debt Exchangeable for Common Stock - DECS
A debt instrument that provides the holder with coupon payments in addition to an embedded short put option and a long call on the issuing company's stock.
When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid.
A paper or electronic obligation that enables the issuing party to raise funds by promising to repay a lender in accordance with terms of a contract. Types of debt instruments include notes, bonds, certificates, mortgages, leases or other agreements between a lender and a borrower.
A situation where the debt stock of a country exceeds the country's future capacity to repay it.
A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage.
A security representing a loan given by an investor to an issuer. In return for the loan, the issuer promises to pay interest and to repay the debt on a specified date.
Cash required over a given period for the repayment of interest and principal on a debt.
Debt-Service Coverage Ratio - DSCR
1. In corporate finance, it is the amount of cash flow available to meet annual interest and principal payments on debt, including sinking fund payments.
2. In government finance, it is the amount of export earnings needed to meet annual interest and principal payments on a country's external debts.
3. In personal finance, it is a ratio used by bank loan officers in determining income property loans. This ratio should ideally be over 1. That would mean the property is generating enough income to pay its debt obligations.
In general, it is calculated by:
A measurement of a company's financial leverage, calculated as long-term debt divided by long-term capital. Total debt includes all short-term and long-term obligations. Total capital includes all common stock, preferred stock and long-term debt.
Debt-To-Income Ratio - DTI
A personal-finance measure that compares an individual's debt payments to the income he or she generates. This measure is important in the lending industry as it gives lenders an idea of how likely they will receive payments from the borrower.
A measure of a company's financial leverage calculated by dividing long-term debt by stockholder equity. It indicates what proportion of equity and debt the company is using to finance its assets.
Note: Sometimes only interest-bearing long-term debt is used instead of total liabilities in the calculation.
A measure of a country's federal debt in relation to its gross domestic product (GDP). By comparing what a country owes and what it produces, the debt-to-GDP ratio indicates the country's ability to pay back its debt. The ratio is a coverage ratio on a national level.
A refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the debt.
Debtor in Possession - DIP
A company that continues to operate while under the Chapter 11 bankruptcy process.
Debtor-in-Possession Financing - DIP Financing
Financing arranged by a company while under the Chapter 11 bankruptcy process. DIP financing is unique from other financing methods in that it usually has priority over existing debt, equity and other claims.
A notification on a person's credit report that alerts credit agencies that the person is deceased and should not be issued credit in the future. Upon a person's death, a family member or friend must request the credit reporting agencies to send out the deceased alert. The purpose of the deceased alert is to prevent identity thieves from stealing and abusing the name of the deceased person.
The process of changing the prices that securities trade at from fractions to decimals.
A term used to refer to the open orders held by floor brokers on futures exchanges.
1. The date on which the next dividend payment is announced by the directors of a company. This statement includes the dividend's size, ex-dividend date and payment date. It is also referred to as the "announcement date".
2. The last day on which the holder of an option must indicate whether they will exercise the option. Also known as the "expiration date".
Declining Balance Method
A common depreciation-calculation system that involves applying the depreciation rate against the non-depreciated balance. Instead of spreading the cost of the asset evenly over its life, this system expenses the asset at a constant rate, which results in declining depreciation charges each successive period.
An industry where growth is either negative or is not growing at the broader rate of economic growth. There are many reasons for a declining industry: consumer demand may be steadily evaporating, the depletion of a natural resource may be occurring, or there may be the emergent substitutes because of technological innovation.
The occurrence of returns on asset classes diverging from their normal pattern of correlation.
A passive form of portfolio management that involves the matching of future cash flows with future liabilities.
Dedicated Short Bias
A hedge fund strategy with which the fund manager takes more short positions than long positions.
1. The amount you have to pay out-of-pocket for expenses before the insurance company will cover the remaining costs.
2. An amount subtracted from an individual's adjusted gross income to reduce the amount of taxable income.
Also known as "tax deductible".
Any item or expenditure subtracted from gross income to reduce the amount of income subject to tax.
Also referred to as "allowable deduction".
A legal document that grants the bearer a right or privilege, provided that he or she meets a number of conditions. In order to receive the privilege - usually ownership, the bearer must be able to do so without causing others undue hardship. A person who poses a risk to society as a result of holding a deed may be restricted in his or her ability to use the property.
Deeds are most known for being used to transfer the ownership of automobiles or land between two parties.
Deep In The Money
An option with an exercise price, or strike price, significantly below (for a call option) or above (for a put option) the market price of the underlying asset. Significantly, below/above is considered one strike price below/above the market price of the underlying asset. For example, if the current price of the underlying stock was $10, a call option with a strike price of $5 would be considered deep in the money.
1. A bond that sells at a significant discount from par value.
2. A bond that is selling at a discount from par value and has a coupon rate significantly less than the prevailing rates of fixed-income securities with a similar risk profile.
A flat market. Neither a bull or bear market, a deer market is characterized by low activity, with timid investors waiting for a sign of which way the market is going to end up moving.
1. The failure to promptly pay interest or principal when due.
2. The failure to perform on a futures contract as required by an exchange.
The additional amount a borrower must pay to compensate the lender for assuming default risk.
The risk that companies or individuals will be unable to pay the contractual interest or principal on their debt obligations.
A provision that voids a bond or loan when the borrower sets aside cash or bonds sufficient enough to service the borrower's debt.
Also referred to as "defease."
A company or individual who owes money. If the debt is in the form of a loan from a financial institution, the debtor is referred to as a borrower. If the debt is in the form of securities, such as bonds, the debtor is referred to as an issuer.
An investment that is an attractive buy because it is low risk, not because of its return potential.
A company whose sales and earnings remain relatively stable during both economic upturns and downturns.
Defensive Investment Strategy
A method of portfolio allocation and management aimed at minimizing the risk of losing principal. Defensive investors place a high percentage of their investable assets in bonds, cash equivalents, and stocks that are less volatile than average.
A stock that provides a constant dividend and stable earnings regardless of the state of the overall stock market.
This is not to be confused with a "defense stock", which refers to stock in companies which manufacture things like weapons, ammunition and fighter jets.
Defensive Stocks/Industry Groups/Sectors
Usually considered more stable and relatively safer by most investors. They include utilities, tobacco, food, soap, soft drinks, supermarkets, etc. They represent industries of staple goods and repeat purchase items.
The period after the issue of callable security during which it cannot be called by the issuer.
The act of firms acquiring other firms and assets as a defense against market downturns or possible takeovers. A defensive acquisition contrasts with the normal impetus for an acquisition, which is usually increased market share or revenue.
An account that postpones tax liabilities until a later date. Deferred accounts are usually retirement accounts
Deferred Acquisition Costs - DAC
Typically used in the insurance industry, this is when a company defers the sales costs that are associated with acquiring a new customer over the term of the insurance contract.
A type of annuity contract that delays payments of income, installments or a lump sum until the investor elects to receive them. This type of annuity has two main phases, the savings phase in which you invest money into the account, and the income phase in which the plan is converted into an annuity and payments are received.
A deferred annuity can be either variable or fixed.
A prepaid expense that is recognized on the balance sheet as an asset until it is used.
Deferred Income Tax
A liability that results from income already earned, is recognized for accounting but not tax purposes and is recorded on the balance sheet.
Deferred Interest Bond
A debt instrument that pays no interest until a date specified in the future.
Deferred Payment Option
An option with all the characteristics of an American vanilla option, with one exception: payment is deferred until the original expiration date.
Deferred Profit Sharing Plan - DPSP
An employer-sponsored Canadian profit sharing plan that is registered with the Canadian Revenue Agency. On a periodic basis, the employer shares the profits made from the business with all employees or a designated group of employees. Employees receiving a share of the profits paid out by the employer do not have to pay federal taxes on the money received from the DPSP until it is withdrawn.
A liability account used to collect deposits and other cash receipts prior to the completion of the sale.
1. A share that does not have any rights to the assets of a company undergoing bankruptcy until all common and preferred shareholders are paid.
2. A method of stock payment to directors and executives of a company through the deposit of shares into a locked account. The value of these shares fluctuate with the market and cannot be accessed by the beneficiary for the purpose of liquidation until they are no longer employees of the company.
3. A share generally issued to company founders that restricts their receipt of dividends until dividends have been distributed to all other classes of shareholders
A situation in which liabilities exceed assets, expenditures exceed income, imports exceed exports, or losses exceed profits.
An employer-sponsored retirement plan for which retirement benefits are based on a formula indicating the exact benefit that one can expect upon retiring. Investment risk and portfolio management are entirely under the control of the company. There are restrictions on when and how you can withdraw these funds without penalties.
A retirement plan wherein a certain amount or percentage of money is set aside each year for the benefit of the employee. There are restrictions as to when and how you can withdraw these funds without penalties.
A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.
The condition of a company, whether publicly traded or private, that has gone bankrupt and ceased to exist. If the company was publicly traded, it will be delisted from the exchange where it was listed, and its stock will be worth nothing.
This term also applies to currencies that are no longer in circulation
The action of a company altering its capital structure by replacing long-term debt with equity, thereby easing the burden of interest payments and also increasing management's flexibility
A security that is no longer included on a specified market. Sometimes referred to as "delisted
The reduction of financial instruments or borrowed capital previously used to increase the potential return of an investment. It is the opposite of leverage.
A fixed-income investment with a floating rate tied to a specific index with less than a one for one payback ratio.
A term describing the failure to meet required obligations according to schedule.
The removal of a listed security from the exchange on which it trades. Stock is removed from an exchange because the company for which the stock is issued, whether voluntarily or involuntarily, is not in compliance with the listing requirements of the exchange.
Delivered Ex Ship - DES
A trade term requiring the seller to deliver goods to a buyer at an agreed port of arrival. The seller remains responsible for the goods until they are delivered.
The action by which an underlying commodity, security, cash value, or delivery instrument covering a contract is tendered and received by the contract holder.
1. The final date by which the underlying commodity for a futures contract must be delivered in order for the terms of the contract to be fulfilled.
2. The maturity date of a currency forward contract.
A document that, during the delivery of the futures contract, stands in lieu of the physical asset underlying the contract.
The month in which a contract expires and delivery of the underlying asset or cash is required.
A notice written by the holder of the short position in a futures contract informing the clearing house of the intent and details of delivering a commodity for settlement.
A feature added to some futures contracts permitting the short position to determine the combination of timing, location, quantity, and quality of the underlying commodity stated in the delivery notice.
The price for the delivery of underlying commodities occurring upon the expiration of a futures contract.
Delivery Versus Payment - DVP
A securities industry procedure in which the buyer's payment for securities is due at the time of delivery. Security delivery and payment are simultaneous.
The ratio comparing the change in the price of the underlying asset to the corresponding change in the price of a derivative. Sometimes referred to as the "hedge ratio".
An options strategy that aims to reduce (hedge) the risk associated with price movements in the underlying asset by offsetting long and short positions. For example, a long call position may be delta hedged by shorting the underlying stock. This strategy is based on the change in premium (price of option) caused by a change in the price of the underlying security. The change in premium for each basis-point change in price of the underlying is the delta and the relationship between the two movements is the hedge ratio.
A portfolio consisting of positions with offsetting positive and negative deltas. The deltas balance out to bring the net change of the position to zero.
A consumer's desire and willingness to pay for a good or service.
An account from which deposited funds can be withdrawn at any time without any notice to the depository institution.
A loan with no fixed term or set duration of repayment. It can be recalled upon the lenders request, assuming the notice required by the provisions of the loan are met.
A sudden surprise event that temporarily increases or decreases demand for goods or services. A positive demand shock increases demand, while a negative demand shock decreases demand. Both positive and negative demand shock have an effect on the prices of goods and services.
A situation in which inflation increases because of a continual increase in consumer demand.
An indicator used in technical analysis that compares the most recent price action to the previous period's price in an attempt to measure the demand of the underlying asset. This indicator is generally used to identify price exhaustion and can also be used to identify market tops and bottoms. This oscillator is bounded between -100 and +100 and, unlike many other oscillators, it does not use smoothed data.
Dematerialization - DEMAT
The move from physical certificates to electronic book keeping. Actual stock certificates are slowly being removed and retired from circulation in exchange for electronic recording.
The process of changing corporate structure from a mutual fund company to some other form, such as a limited liability or corporation.
The stated value found on financial instruments.
Department of Labor - DOL
A U.S Government cabinet body responsible for standards in occupational safety, wages and number of hours worked, unemployment insurance benefits, re-employment services and a portion of the country's economic statistics.
A measure showing the number of dependents (aged 0-14 and over the age of 65) to the total population (aged 15-64). Also referred to as the "total dependency ratio".
A person who relies on someone else for financial support. The taxpayer supporting the dependent is allowed to claim dependency exemptions.
An accounting term describing the amortization of assets that can be physically reduced.
1. A transaction involving a transfer of funds to another party for safekeeping.
2. A portion of funds that is used as security or collateral for the delivery of a good.
Deposit/Withdrawal at Custodian - DWAC
The automated system for deposits and withdrawals of securities from the Depository Trust Company (DTC).
A negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange
Depository Trust & Clearing Corporation - DTCC
Established in 1999, the DTCC is a holding company consisting of 5 clearing corporations and 1 depository, making it the world's largest financial services corporation dealing in post trade transactions.
Depository Trust Company - DTC
One of the world's largest securities depositories, it holds in excess of US$10 trillion worth of securities in custody. The DTC acts like a clearinghouse to settle trades in corporate and municipal securities
Depository Trust Company Tracking - DTCT
A service, used by underwriting firms, that provides a method of tracking the exact path of purchases and sales of newly issued securities.
Calculated by subtracting the amount of depreciation claimed from the original cost of an asset.
1. In accounting, an expense recorded to allocate a tangible asset's cost over its useful life. Since it is a non-cash expense, it increases free cash flow while decreasing reported earnings.
2. A decrease in the value of a particular currency relative to other currencies.
A description of a market, security, or product that is experiencing weak demand and lowering prices.
A severe and prolonged recession characterized by inefficient economic productivity, high unemployment, and falling price levels.
The ability of a security to absorb buy and sell orders without the stock price dramatically moving in either direction.
The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.
In finance, a security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
A downward moving channel formed by two parallel, downward sloping trendlines. The upper trendline connects a stock's highs over a period of time, with each subsequent high price lower than the previous. Conversely, the lower trendline connects the stock's lows, with each subsequent low price lower than the previous.
A pattern in charts where each peak in price is lower then the previous peak in price. The pattern signals a bearish trend in the security.
The above is an example of descending tops.
A bearish chart pattern used in technical analysis that is created by drawing one trendline that connects a series of lower highs and a second trendline that has historically proven to be a strong level of support. Traders watch for a move below support, as it suggests that downward momentum is building. Once the breakdown occurs, traders enter into short positions and aggressively push the price of the asset lower. The chart below is an example of a descending triangle:
Designated Order Turnaround - DOT (SuperDOT)
An electronic system that increases order efficiency by routing orders for listed securities directly to a specialist on the trading floor, instead of through a broker.
A trader who is restricted to instituting trades for a firm's clients and who is unable to trade with his/her firm's own accounts.
In forecasting models, the process of removing the effects of accumulating data sets from a trend to show only the absolute changes in values and to allow potential cyclical patterns to be identified. This is done using regression and other statistical techniques.
A deliberate downward adjustment to a country's official exchange rate relative to other currencies. In a fixed exchange rate regime, only a decision by a country's government (i.e central bank) can alter the official value of the currency. Contrast to "revaluation".
A company that is focusing a majority of its attention on research & development.
Dhaka Stock Exchange - DSE
The stock exchange headquartered in Dhaka, Bangladesh.
An options strategy established by simultaneously entering into a long and short position in two options of the same type (two call options or two put options) but with different strike prices and expiration dates.
Diamond Top Formation
A technical analysis reversal pattern that is used to signal the end of an uptrend. This relatively uncommon pattern is found by identifying a period in which the price trend of an asset starts to widen and then starts to narrow. This pattern is called a diamond because of the shape it creates on a chart.
Dialing and Smiling
A slang term for the practice of cold calling.
1. An extremely hard gemstone used mainly for jewelry and tools.
2. An exchange traded security, issued by the American Stock Exchange, that replicates the movements in the Dow Jones Industrial Average
The amount of adjustment of the delivery location and grade of deliverables that a futures contract permits. Also known as "allowance. "
1. A measure of the percentage of stocks that have advanced in price or are showing a positive momentum over a defined period. It is used in the technical analysis of stocks.
2. A measure of the breadth of a move in any of the Conference Boards Business Cycle Indicators (BCI), showing how many of an indicators components are moving together with the overall indicator index.
An option whose payout is fixed after the underlying stock exceeds the predetermined threshold or strike price.
Also referred to as "binary" or "all-or-nothing option."
Diluted Earnings Per Share - Diluted EPS
A performance metric used to gauge the quality of a company's earnings per share (EPS) if all convertible securities were exercised. Convertible securities refers to all outstanding convertible preferred shares, convertible debentures, stock options (primarily employee based) and warrants. Unless the company has no additional potential shares outstanding (a relatively rare circumstance) the diluted EPS will always be lower than the simple EPS.
A slang term often used by venture capitalists to describe the process by which the founders of a startup gradually lose ownership of the company they founded. As a startup that is using venture capital for funding progresses through multiple rounds of financing, the venture capitalists providing the financing will often want more and more ownership of the company.
In other words, the founders dilute their ownership in the company in exchange for capital to grow their business.
A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities
An acquisition that will decrease the acquiring company's EPS.
Direct Access Trading - DAT
A system that allows a client to trade directly with another client, a market maker on Nasdaq, or a specialist on the floor of an exchange without broker interference
A cost that can be directly traced to producing specific goods or services.
1. When the tax authorities deposit your tax refund directly into your bank account rather than mailing you a check.
2. When your employer deposits your paycheck directly into your bank account rather than issuing you a physical check.
Direct Participation Program - DPP
A business venture designed to let investors participate directly in the cash flow and tax benefits of the underlying investment. DPPs are generally passive investments that invest in real estate or energy-related ventures.
Also known as a "direct participation plan".
Direct Public Offering - DPO
Where a company raises capital by marketing its shares directly to its own customers, employees, suppliers, distributors and friends in the community. DPOs are an alternative to underwritten public offerings by securities broker-dealer firms where a company's shares are sold to the broker's customers and prospects
A foreign exchange rate quoted as the domestic currency per unit of the foreign currency. In other words, it involves quoting in fixed units of foreign currency against variable amounts of the domestic currency.
A company's plan to buy back its own shares from the marketplace, thereby reducing the number of outstanding shares.
A distribution of eligible rollover assets from a qualified plan, 403(b) plan, or a governmental 457 plan to a Traditional IRA, qualified plan, 403(b) plan, or a governmental 457 plan or a distribution from an IRA to a qualified plan, 403(b) plan or a governmental 457 plan
Direct Stock Purchase Plan
A plan in which shares are sold directly to investors, instead of through a broker.
A tax that cannot be shifted onto others.
A stockbroker that concentrates on speed and order execution - unlike a full-service broker that focuses on research and advice. Direct-access brokers usually use complicated computer software that allows clients to trade directly with an exchange or with other individuals via electronic communication networks (ECN).
A customer order where the customer gives specific instructions to the broker concerning the orders routing destination
Directional Movement Index - DMI
An indicator developed by J. Welles Wilder for identifying when a definable trend is present in an instrument. That is, the DMI tells whether an instrument is trending or not.
A general term referring to the strategy used by investors that open positions, either long or short, on the belief that they are able to correctly predict the movement of price in a security.
A system of floating exchange rates in which the government or the country's central bank occasionally intervenes to change the direction of the value of the country's currency. In most instances, the intervention aspect of a dirty float system is meant to act as a buffer against an external economic shock before its effects become truly disruptive to the domestic economy.
A bond price that includes accrued interest
Disability-Income (DI) Insurance
An insurance product that provides supplementary income in the event of an illness or accident resulting in a disability that prevents the insured from working at their regular employment. Benefits are usually provided on a monthly basis so that the individual can maintain their standard of living and continue to pay their regular expenses.
Discharge in Bankruptcy
When a bankrupt person or company is legally free and clear of any obligation to repay certain debts.
To renounce an interest or obligation by way of a legal instrument - usually a written disclaimer, or a disclaiming trust. Property may be disclaimed for several reasons: because it is unwanted, because it carries heavy liabilities, because of tax reasons, or because the intended beneficiary wants to pass the property to another beneficiary. Liabilities, obligations, beneficial ownership, or rights may also be disclaimed.
A trust that has embedded provisions (usually contained in a will) which allow a surviving spouse to put specific assets under the trust by disclaiming ownership of a portion of the estate. Disclaimed property interests are transferred to the trust, without being taxed.
Provisions can be written into the trust that provide for regular payouts from the trust to support survivors. Surviving minor children can also be provided for, as long as the surviving spouse elects to disclaim inherited assets, passing them on to the trust.
The act of releasing all relevant information pertaining to a company that may influence an investment decision. In order to be listed on major U.S. stock exchanges, companies must follow all of the Securities and Exchange Commission's disclosure requirements and regulations.
1. A document explaining the rules of an IRA in plain, nontechnical language. This must be provided to the IRA owner at least seven days before the IRA is established, or it can be provided to the IRA owner at the time the IRA is being established providing the IRA owner is given seven days within which he/she may revoke the IRA.
2. A document outlining the specific terms and conditions of a loan, including the interest rate of the loan, any loan fees, the amount borrowed, insurance, prepayment rights and the responsibilities of the borrower.
The condition of the price of a bond that is lower than par. The discount equals the difference between the price paid for a security and the security's par value.
A bond that is valued at less than its face amount
A stockbroker who carries out buy and sell orders at a reduced commission, compared to a full-service broker, but provides no investment advice.
Discount Margin - DM
The return earned in addition to the index underlying the floating rate security.
An unsecured corporate debt that is issued at a discount and matures at par. It is similar to a zero coupon bond or T-bill. Discount notes give institutional and retail investors convenient choices with respect to the investment size and maturity date for a short-term investment.
1. The interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank.
2. The interest rate used in determining the present value of future cash flows.
The location at the Federal Reserve where financial institutions go to borrow money at the discount rate.
Discounted Cash Flow - DCF
A valuation method used to estimate the attractiveness of an investment opportunity. Discounted cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one.
An account that allows a broker to buy and sell securities without the client's consent. Sometimes referred to as a managed account. The client must sign a discretionary disclosure with the broker as documentation of the clients consent.
The amount of an individual's income that is left for spending after the essentials have been taken care of.
An order giving a broker the ability to decide when to buy/sell securities at the best possible price for the customer. Some discretionary orders place restrictive terms to limit the amount of discretion the broker has.
Diseconomies of Scale
An economic concept referring to a situation in which economies of scale no longer function for a firm. Rather than experiencing continued decreasing costs per increase in output, firms see an increase in marginal cost when output is increased.
A repayment of ill-gotten gains that is imposed on wrongdoers by the courts. Funds that were received through illegal or unethical business transactions are disgorged, or paid back, with interest to those affected by the action. Disgorgement is a remedial civil action, rather than a punitive civil action.
A slowing of the rate at which prices increase. Typically, this occurs during a recession as sales drop and retailers are not able to pass on higher prices to customers.
1. In finance, withdrawal of funds from intermediary financial institutions, such as banks and savings and loan associations, in order to invest them directly.
2. Generally, removing the middleman or intermediary.
1. The action of an organization or government selling or liquidating an asset or subsidiary. Also known as "divestiture".
2. A reduction in capital expenditure, or the decision of a company not to replenish depleted capital goods.
A slang term used to describe the discipline of economics. It was given this description by Thomas Carlyle, who was inspired to coin the phrase by T. R. Malthus's gloomy prediction that population would always grow faster than food, dooming mankind to unending poverty and hardship.
A technical indicator that measures the relative position of the most recent closing price to a selected moving average and reports the value as a percentage. A value greater than zero suggests that the asset is gaining upward momentum, while a value less than zero can be interpreted as a sign that selling pressure is increasing.
A term used in statistics that refers to the location of a set of values relative to a mean or average level.
Displaced Moving Average
A moving average that has been adjusted forward or back in time in order to forecast trends. Displaced moving averages are constructed by taking the moving average and shifting it by a number of intervals, either positive or negative. If the number is negative, the displaced moving average will lag the original moving average, and if the number is positive the displaced moving average will lead the original moving average.
The amount of after-tax income that is available to divide between spending and personal savings.
Getting rid of an asset or security through a direct sale or some other method.
An urgent sale of assets because of negative conditions.
A financial instrument in a company that is near or is currently going through bankruptcy. This usually results from a company's inability to meet its financial obligations. As a result, these financial instruments have suffered a substantial reduction in value. Distressed securities can include common and preferred shares, bank debt, trade claims (goods owed) and corporate bonds.
Distributable Net Income - DNI
An amount that is transferable to unitholders, in the case of an income trust, or the amount to be distributed to a beneficiary, in the case of an estate trust. Distributable net income is the maximum amount a unitholder or beneficiary will receive that is taxable any amount above this figure will be tax free.
1. An occurrence where trading volume is, without any price appreciation, higher than that of the previous day.
2. A removal of assets from a retirement account that is paid to the retirement account owner or beneficiary.
3. A company's payment of cash, stock or physical products to their shareholders.
Distribution In Kind
A distribution made in the form of stock rather than cash.
Also referred to as a "distribution in specie
A situation in which the price of an asset and an indicator, index or other related asset move in opposite directions. In technical analysis traders make transaction decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators, such as the MACD, are moving in opposite directions.
A risk-management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.
Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.
Diversified Common Stock Fund
A mutual fund that invests its assets in a wide range of common stocks. The fund's objectives can be growth, income, or a combination of both.
A type of investment fund that contains a wide array of securities and is adequately diversified. A mutual fund classified as a "diversified fund" will actively maintain a high level of diversification in its holdings, thus reducing the amount of risk in the fund, since events that affect one sector won't have the same effect on other sectors. For example, the fund may restrict its purchases so it is not dominated by companies from one industry or representing one market capitalization size.
A measure, created by Moody's Investors Service, to estimate the diversification in a portfolio, specifically in the context of a collateralized debt obligation (CDO). The calculation methodology for a diversification score takes into account the extent to which a portfolio is diversified by industry.
The partial or full disposal of an investment or asset through sale, exchange, closure or bankruptcy. Divestiture can be done slowly and systematically over a long period of time, or in large lots over a short time period.
The process of selling an asset. Also known as divestiture, it is made for either financial or social goals. Divestment is the opposite of investment
Distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (i.e. dividends per share or DPS). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.
An arrangement under which those financing a project agree to contribute, as equity, any prior dividends received from the project to cover any cash shortages.
Dividend Discount Model - DDM
A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued.
Dividend Enhanced Convertible Stock - DECS
Preferred stock that provides the holder with premium dividends in addition to an embedded short put option and a long call on the issuing company's stock.
An arrangement in Australia that eliminates the double taxation of dividends.
Dividend Irrelevance Theory
A theory that investors are not concerned with a company's dividend policy since they can sell a portion of their portfolio of equities if they want cash
An abbreviation will appear on a chart when the company announces a change (increase or decrease) or omission in a quarterly dividend pay-out:
·Div Incr = Dividend increase
·Div Decr = Dividend decrease
·Div Initl = Dividend initialized
·Div Rsum = Dividend resume
·Div Omit = Omission of payment
·Div Spec = Special dividend
·Div Extra = Extra dividend
Dividend Payout Ratio
The percentage of earnings paid to shareholders in dividends.
The policy a company uses to decide how much it will pay out to shareholders in dividends.
Dividend Reinvestment Plan - DRIP
A plan offered by a corporation allowing investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.
Dividend Tax Credit
The amount a Canadian resident applies against their tax owing on the grossed up portion of dividends received from Canadian corporations.
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated as follows:
Dividend, Quarterly Distribution
Amount distributed for each share of company stock.
Dividends Received Deduction - DRD
A tax deduction received by a corporation on the dividends paid to it by companies in which it has an ownership stake. The purpose of this deduction is to soften the consequences of triple taxation. Triple taxation occurs because the company paying the dividend does so with after-tax money and the receiving company is subject to income tax on the dividends. Therefore, if the company that receives the dividends decides to pay out its shareholders, the money will have been taxed three times.
The process of adding to one's portfolio in such a way that the risk/return tradeoff is worsened.
In currencies, this is the abbreviation for the Djibourti Franc.
In currencies, this is the abbreviation for the Danish Krone.
Do Not Increase - DNI
Instructions on a good-till-cancelled buy-limit or stop order that tell a broker not to increase the number of shares bought or sold in the event of a stock dividend or stock split.
Do Not Reduce - DNR
A trade type used on an buy or sell order. It tells the broker not to decrease the limit price on buy-limit and sell-stop orders on the record date of a cash dividend.
One of the four categories (quadrants) of the BCG growth-share matrix that represents the division within a company that has a small market share in a mature industry.
Dog And Pony Show
A slang term referring to a financial seminar that presents new products or issues of securities to potential buyers.
Dog Eat Dog
When the market for a good or service is ruthlessly competitive.
Dogs Of The Dow
An investing strategy that consists of buying the 10 DJIA stocks with the highest dividend yield at the beginning of the year. The portfolio should be adjusted at the beginning of each year to include the 10 highest yielding stocks
Doing the Reverse Desk
A slang phrase referring to a tactic a hedge fund would use to try to mislead other funds that attempt to mimic its trades.
A name for candlesticks that provide information on their own and also feature in a number of important patterns. Dojis form when a security's open and close are virtually equal.
A situation that occurs when a country imports more goods and services from another country than it exports back to the same country. The net effect of spending more money importing than is received from exporting causes a net reduction in the importing country's reserves of the exporting country's currency.
Percentage of par, or face value, that a bond is quoted at. The other way bonds are often quoted is in terms of their yield.
A special type of repurchase agreement in which the security, transferred to the investor as collateral, is a mortgage-backed security. The investor who sells the security gives up the cash flows during the roll period, but has use of the proceeds.
Dollar-Cost Averaging - DCA
The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.
Also referred to as "constant dollar plan".
The location where an individual, partnership, or corporation establishes permanent residence as per legal obligations.
Don't Know - DK
A slang expression for an out trade that is used when there is a discrepancy in the details of a trade.
Also known as a "DK'd trade."
A moving average indicator developed by Richard Donchian. It plots the highest high and lowest low over the last period time intervals.
Donor Advised Fund
A private fund administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual.
A call provision added to fixed income securities that allows for early redemption by the issuer if certain conditions are favorable.
In currencies, this is the abbreviation for the Dominican Republic Peso.
A company that embraces the internet as the key component in its business.
Bonds secured by the pledge of two or more sources of repayment.
Double Barrier Option
An option with two distinct triggers that define the allowable range for the price fluctuation of the underlying asset. In order for the investor to receive a payout, one of two situations must occur the price must reach the range limits (for a knock-in) or the price must avoid touching either limit (for a knock-out).
A William J. O'Neil chart pattern resembling a 'W.' One of the three positive chart patterns to look for when doing technical analysis of a stock.
Double Dip Recession
When the gross domestic product (GDP) growth slides back to negative after a quarter or two of brief positive growth. In other words, a recession followed by a short-lived recovery, followed by another recession.
For brokerage firms, when a broker puts commissioned products into a fee-based account. The broker makes money from both the client and the commission.
Used to describe situations where multiple companies are using shared capital to buffer against risk occurring in separate entities without the proper documentation of exposure.
Double No-Touch Option
A type of exotic option that gives an investor an agreed upon payout if the price of the underlying asset does
A term used in technical analysis to describe the rise of a stock, a drop, another rise to the same level as the original rise, and finally another drop.
Similar to triple witching, but instead of three classes of options or futures expiring on the same day, double witching is when only two classes (any two) are expiring. The three classes are stock options, index options, and index futures.
An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that inflation and its negative effects will have minimal impact on society. This term is derived from the docile and placid nature of the bird of the same name.
A number used in the calculation of the Dow Jones Industrial Average that accounts for stock splits and stock dividends
Dow Jones AIG Commodity Index - DJ-AIGCI
A rolling commodities index composed of futures contracts on 19 physical commodities traded on U.S. exchanges. The index serves as a liquid and diversified benchmark for the commodities' asset class.
Dow Jones CDX Indexes
A series of indices that track North American and emerging market credit derivative indexes. The purpose of the combined indexes is to track the performance of the various segments of credit derivatives so that the overall return can be benchmarked against funds that invest in similar products.
Dow Jones Industrial Average - DJIA
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
Dow Jones Transportation Average - DJTA
The Dow Jones Transportation Average is a price-weighted average of 20 transportation stocks traded in the United States. The average was started back in 1884.
Dow Jones Utility Average - DJUA
The Dow Jones Utility Average is a price-weighted average of 15 utility stocks traded in the United States. The DJUA was started back in 1929.
A theory which says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high, it is accompanied or followed by a similar advance in the other.
A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the company by earlier investors.
A stock volume that closes at a price lower than the previous day's close.
A form of a knock-in option whose payoff is determined by the price of the underlying asset sinking to the barrier price level.
A type of knock-out barrier option that ceases to exist when the price of the underlying security hits a specific barrier price level. If the price of the underlying does not reach the barrier level, the investor has the right to exercise their European call or put option at the exercise price specified in the contract.
A negative change in the rating of a security.
The dollar amount by which the market or a stock has the potential to fall.
An estimation of a security's potential to suffer a decline in price if the market conditions turn bad.
Reducing the size of a company by eliminating workers and/or divisions within the company.
The oil and gas operations that take place after the production phase through to the point of sale.
A transaction on an exchange that occurs at a price below the previous transaction.
In order for a downtick to occur, a transaction price must be followed by a decreased transaction price. This is commonly used in reference to stocks, but it can also be extended to commodities and other forms of securities.
The share volume of a security that trades at a price lower than its previous price.
A right that enables a majority shareholder to force a minority shareholder to join in the sale of a company. The majority owner doing the dragging must give the minority shareholder the same price, terms, and conditions as any other
A bond that is issued in Asia but denominated in U.S. dollars.
The peak-to-trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak and the trough.
Dread Disease Rider
A special addition to a life insurance policy that gives a percentage of the death benefit to the policy holder if he or she is diagnosed with a serious disease (such as cancer or heart disease).
A term used to describe shares that trade for prices less than one dollar. The fractional prices are comparable to the diameter measures of drill-bits found in a hardware store.
1) The process of investing on an ongoing basis in a small but growing firm over a period of time. Essentially, a drip feed results in a startup company receiving capital contributions as the need for capital arises, rather than getting a lump sum capital contribution at the company's inception.
2) The process of retail investors contributing small amounts of their savings to their investment pool on a periodic basis, such as $200/month, for example.
Slang referring to a deal in which a venture capitalist invests in a startup with the goal of a quick exit strategy. The VC takes little to no role in the management and monitoring of the startup.
An arrangement whereby the interest rate on a floating rate note or preferred stock becomes fixed if it falls to a specified level.
When a farmer is forced to sell more animals than in a typical year because of poor weather conditions. The profits from the livestock sales can be deferred to the following year, even if the proceeds exceed the losses.
A slang term for cash reserves kept on hand to cover future obligations.
Du Pont Analysis
A method of performance measurement that was started by the DuPont Corporation in the 1920s, and has been used by them ever since. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher ROI.
Du Pont Identity
An expression breaking down return on equity (ROE) into three parts: profit margin, total asset turnover and financial leverage.
The Du Pont identity tells us that ROE is affected by three things:
-Operating efficiency (as measured by profit margin)
-Asset use efficiency (as measured by total asset turnover)
-Financial leverage (as measured by the equity multiplier)
Dual Class Stock
Dual stock issued for a single company with varying classes indicating the different voting rights and dividend payments
Dual Currency Deposit
A fixed deposit with variable terms for the currency of payment. Deposits are made in one currency, but withdrawals at maturity occur either in the currency of the initial deposit or in another agreed upon currency.
Dual Currency Issue
A bond that pays interest in one currency but pays the principal in a different currency. The amount of the principal repayment is set at initiation and paid at maturity. This principal amount usually allows for some appreciation in the exchange rate of the stronger currency. These issues are common in the Eurobond market and are a useful source of capital for multinational companies.
Dual Exchange Rate
A situation in which there is a fixed official exchange rate and an illegal market-determined parallel exchange rate. The different exchange rates are used in different situations, either in exchanges or evaluations, as mandated by the government.
Dual Income, No Kids - DINKS
A household in which there are two incomes and no children (either both partners are working or one has two incomes). DINKS are often the target of marketing efforts for luxury items such as expensive cars and vacations.
A company's securities are listed on more than one exchange for the purpose of adding liquidity to the shares and allow investors greater choice in where they can trade their shares.
Dual Purpose Fund
A fund created by a closed-ended investment company that offers two classes of stock. Each class offers entitlements to either income or capital appreciation.
When a broker simultaneously executes customer orders and places trades in his or her own account, or one in which he or she has a beneficial interest, on the same trading day. This is also known as acting as both an agent and a dealer at the same time. Dual trading is prevalent in the futures market.
Dually Employed With Kids - DEWKS
A household in which there are children and both partners earn an income.
A financial instrument used to document and identify the seller's obligation to deliver securities sold to the buyer.
Due Bill Period
In the context of corporate actions (such as dividends, issuance of rights and warrants, splits, etc.), the period during which remittances to investors are due - once stockholders of record are checked on the record date. In the case of a common stock dividend, for example, the due bill period is the time between the record date for a security and a date four days after the ex-date.
Due Diligence - DD
1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.
2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party.
An investment strategy, used mainly for bonds, where holdings are heavily concentrated in both very short and long term maturities.
Due Diligence Meeting
The process of careful investigation by an underwriter to ensure that all material information pertinent to a security issue has been disclosed to prospective investors
A person on a company's board of directors who votes and acts on the wishes of a non board member.
A person who holds shares in his or her name, but the shares are really owned by someone else.
1. In international trade, this occurs when one country exports a significant amount of goods to another country at prices much lower than in the domestic market.
2. A slang term for selling a stock with little regard for price.
The process of communicating with customers to ensure the collection of accounts receivable.
A situation in which two companies own all or nearly all of the market for a given type of product or service.
A category of consumer goods, durables are products that do not have to be purchased frequently. Some examples of durables are appliances, home and office furnishings, lawn and garden equipment, consumer electronics, toy makers, small tool manufacturers, sporting goods, photographic equipment, and jewelry.
The measure of the price sensitivity of a fixed-income security to an interest rate change of 100 basis points. Calculation is based on the weighted average of the present values for all cash flows.
An auction where the price on an item is lowered until it gets its first bid, and then the item is sold at that price.
An economic condition that, in its broadest sense, refers to negative consequences arising from large increases to a country's income. Dutch disease is primarily associated with a natural resource discovery, but it can result from any large increase in foreign currency, including foreign direct investment, foreign aid or a substantial increase in natural resource prices.
This condition arises when foreign currency inflows cause an increase in the affected country's currency. This has two main effects for the country with Dutch disease:
1. A decrease in the price competitiveness, and thus the exports, of its manufactured goods
2. An increase in imports
In the long run, both these factors can contribute to manufacturing jobs being moved to lower-cost countries. The end result is that non-resource industries are hurt by the increase in wealth generated by the resource-based industries.
A name given to a pool of mortgage-backed securities, issued by Fannie Mae, with a maturity of 15 years
Dynamic Momentum Index
An indicator used in technical analysis that determines overbought and oversold conditions of a particular asset. This indicator is very similar to the relative strength index (RSI). The main difference between the two is that the RSI uses a fixed number of time periods (usually 14), while the dynamic momentum index uses different time periods as volatility changes.
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