FINANCIAL DICTIONARY-H

H
A Nasdaq stock symbol specifying that it is the second preferred bond of the company

H-Shares
A share of a Chinese company listed on the Hong Kong Stock Exchange.

Haircut
1. The difference between prices at which a market maker can buy and sell a security.
2. The percentage by which an asset's market value is reduced for the purpose of calculating capital requirement, margin and collateral levels.

Half Stock
A stock with a par value of $50.

Hammer
A price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or close to its opening price. This pattern forms a hammer-shaped candlestick.

Hammering
The rapid and concentrated sale of a stock thought to be overvalued by the market. It performed by investors and speculators who beleive that prices are inflated and that a period of liquidation is imminent.

Handle
Component of William J. O'Neil's 'cup with handle' chart pattern.

Hands-Off Investor
An investor who accepts a passive management role in a company, even while holding a large portion of the company's stock.

Hands-On Investor
An investor who holds a large portion of a company's shares and takes an active management role.

Hang Seng
An index of the leading stocks on the Hong Kong stock market.

Hang Seng Index
A market-cap weighted index of the stock prices of the 33 largest companies in Hong Kong.

Hanging Man
A bearish candlestick pattern that forms at the end of an uptrend. It is created when there is a significant sell-off near the market open, but buyers are able to push this stock back up so that it closes at or near the opening price. Generally the large sell-off is seen as an early indication that the bulls (buyers) are losing control and demand for the asset is waning.

Harami Cross
A trend indicated by a large candlestick followed by a doji that is located within the top and bottom of the candlestick's body. This indicates that the previous trend is about to reverse.

Harami Cross
A trend indicated by a large candlestick followed by a doji that is located within the top and bottom of the candlestick's body. This indicates that the previous trend is about to reverse.

Hard Currency
A currency, usually from a highly industrialized country, that is widely accepted around the world as a form of payment for goods and services. A hard currency is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex market.

Hard Dollars
Fees or payments paid to brokerage firms in return for their services.

Hard Landing
A term used to describe an economy going into recession as the government attempts to slow down inflation.

Hard Loan
A foreign loan that must be paid in the currency of a nation that has stability and a reputation abroad for economic strength (a hard currency).

Hard Money
1. Funding by a government or organization that is repetitive, rather than a one-time grant. Examples include ongoing government daycare subsidies or firms that pay annual scholarships to post-secondary students.
2. Describes gold/silver/platinum (bullion) coins. A government that uses a hard money policy backs the value of the currency it uses with a hard, tangible and lasting material that will retain its relative value over time.

Hard-To-Borrow List
A list used by brokerages to indicate securities considered difficult or unavailable to borrow for short selling transactions.

Hardening
1. A term used to describe a price of commodity or futures contracts that is gradually stabilizing.
2. A futures market that is slowly advancing in prices.

Harmonic Average
The mean of a set of positive variables. Calculated by dividing the number of observations by the reciprocal of each number in the series.
Also known as 'harmonic mean'.

Harmonized Index of Consumer Prices - HICP
An inflation indicator used by the European Central Bank.

Harry Markowitz
A Nobel prize winning economist who devised the modern portfolio theory in 1952. Markowitz's theories emphasized the importance of portfolios, risk, the correlations between securities and diversification. His work changed the way that people invested.

Haurlan Index
A technical analysis indicator, developed by P.N. Haurlan, that is used to detect market breadth. There are three components of the Haurlan index:

Short Term: a 3-day exponential moving average is taken of the net NYSE advances over declines.

Intermediate Term: same, using a 20-day exponential moving average.

Long Term:same, using a 200-day exponential moving average.

Hawk
An economic policy advisor who has a negative view toward inflation and its effects on society.
Also known as "inflation hawk".

Hazard Insurance
Insurance protecting a property owner against damages caused by fires or severe storms. If the owner lives in an area that is prone to natural disasters, like earthquakes and floods, he or she may need a separate policy.

Head and Shoulders Pattern
A technical analysis term used to describe a chart formation in which a stock's price:
1. Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines.
3. And finally, rises again, but not to the second peak, and declines once more.
The first and third peaks are shoulders, and the second peak forms the head.

Head Of Household
Someone who is unmarried and resides with a dependent.

Headline Earnings
A basis for measuring earnings per share implemented by the Institute of Investment Management and Research. This method accounts for all the profits and losses from operational, trading, and interest activities, that have been discontinued or acquired at any point during the year. Excluded from this figure are profits or losses associated with the sale or termination of discontinued operations, fixed assets or related businesses, or from any permanent devaluation or write off of their values

Headline Effect
The effect that negative news in the popular press has on a corporation or an economy. Whether it is justified or not, the investing public's reaction to various headlines can be very dramatic. Many economists believe that negative news headlines make consumers more reluctant to spend money.

Headquarters
The location of a company's main offices, presented as “city, state” when based in the United States. International listings will also display relevant headquarter information.

Heads of Agreement
A non-binding document outlining the main issues relevant to a tentative partnership agreement.

Health Savings Account - HSA
An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual's employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs.

Heath-Jarrow-Morton Model - HJM Model
A model that applies forward rates to an existing term structure of interest rates to determine appropriate prices for securities that are sensitive to changes in interest rates.

Heating Degree Day - HDD
The number of degrees that a day's average temperature is below 65

Heavy
A term used to describe a futures market showing difficulty in advancing or a tendency to decline.

Hedge
Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.

Hedge Fund
An aggressively managed portfolio of investments that uses advanced investment strategies such as leverage, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).
Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for a minimum period of at least one year.

Hedge Ratio
1. A ratio comparing the value of a position protected via a hedge with the size of the entire position itself.
2. A ratio comparing the value of futures contracts purchased or sold to the value of the cash commodity being hedged.

Hedged Tender
A strategy in a tender offer where an investor short sells a portion of the shares they own. This is to protect against the risk of loss in the event that the tender offer does not go through.

Hedgelet
A simplified derivative instrument that allows investors to hedge or speculate on economic events such as housing prices, commodity prices, interest rates, currencies and economic indicators.
The price for a hedgelet contract is based on the prevailing market price determined by participants in the market. Every contract has the same defined payout scheme: $10 for a correct contract and $0 for an incorrect one. Each hedgelet contract is set so that investors must make a decision on whether an economic event will occur or not occur.

Hedonic Pricing
A model identifying price factors according to the premise that price is determined both by internal characteristics of the good and external factors affecting it.

Heikin-Ashi Technique
A type of candlestick chart that shares many characteristics with standard candlestick charts, but differs because of the values used to create each bar. Instead of using the open-high-low-close (OHLC) bars like standard candlestick charts, the Heikin-Ashi technique uses a modified formula:
Close = (Open+High+Low+Close)/4
Open = [Open (previous bar) + Close (previous bar)]/2
High = Max (High,Open,Close)
Low = Min (Low,Open, Close)

Heir
A person who inherits some or all of the estate of a recently deceased person. The legal successor is usually selected because they are related to the deceased by a direct bloodline or have been designated in a will or by a legal authority.