The category of the money supply that includes all physical money like coins and currency. It also includes demand deposits, which are checking accounts and NOW accounts.
A category within the money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds.
The category of the money supply that includes M2 as well as all large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets.
An approach taken by a company that does not want to be taken over. The company issues a large number of bonds with the condition they must be redeemed at a high price if the company is taken over.
The weighted-average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present value of the cash flow by the price.
A type of political risk in which political actions in a host country can adversely affect all foreign operations. Macro risk can come about from events that may or may not be in the reigning government's control.
An investment technique used to eliminate the risk of a portfolio of assets. In most cases, this would mean taking a position that offsets the whole portfolio. But this technique is difficult in practice because there is rarely one asset that will offset the risk of a broader portfolio, so applying a macro-hedge most likely requires taking an offsetting position in each individual asset.
The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels
In currencies, this is the abbreviation for the Moroccan Dirham.
A CEO or managerial team whose ability to lead a company is highly suspect.
A person's regular or permanent place of residence.
Shorthand for "the investing public"--in the same way that "Wall Street" is used to refer to investment professionals and brokers.
The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and NASD, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account. Keep in mind that this level is a minimum, and many brokerages have higher maintenance requirements of 30-40%.
Also referred to as "minimum maintenance" or "maintenance requirement".
A person or conglomerate who owns more than 50% of the outstanding shares of a corporation.
Make A Market
An action whereby a dealer stands by ready, willing and able to buy or sell a particular security at the quoted bid and ask price.
Make Whole Call (Provision)
A type of call provision on a bond allowing the borrower to pay off remaining debt early. The borrower has to make a lump sum payment derived from a formula based on the net present value (NPV) of future coupon payments will not be paid because of the call.
An investment account that is owned by an individual investor and looked after by a hired professional money manager. In contrast to mutual funds (which are professionally managed on behalf of many mutual-fund holders), managed accounts are personalized investment portfolios tailored to the specific needs of the account holder.
Managed Futures Account
An account that is like a mutual fund, except that positions in government securities, futures contracts and options on futures contracts are used to manage the portfolio.
A means of investment where the investor, rather than buying and selling their own securities, places their investment funds in the hands of a qualified investment professional for a predetermined annual fee
Management Buyin - MBI
When a group of investors outside of a company purchase a controlling block of shares and keep the existing management
Management Discussion and Analysis - MD&A
A section of a company's annual report in which management discusses numerous aspects of the company, both past and present.
A fixed fee that a mutual fund manager charges investors for his services and work with the fund.
Percent of common stock which is owned by the company's management; a higher percentage generally assumes an increased level of commitment.
The risks associated with ineffective, destructive or underperforming management, which hurts shareholders and the company or fund being managed. This term refers to the risk of the situation in which the company and shareholders would have been better off without the choices made by management.
Manager Universe (Benchmark)
The comparison of an account's performance to that of a representative peer group of money managers.
The process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals
A type of convertible bond that has a required conversion or redemption feature. Either on or before a contractual conversion date, the holder must convert the mandatory convertible into the underlying common stock.
These securities provide investors with higher yields to compensate holders for the mandatory conversion structure.
The act of artificially inflating or deflating the price of a security. In most cases, manipulation is illegal. It is much easier to manipulate the share price of smaller companies, such as penny stocks, because they are not as closely watched by analysts as the medium- and large-sized firms.
Also known as "price manipulation".
A tax concept whereby the lender of a stock receives the equivalent dividend payment from the borrower of the stock.
1. Borrowed money that is used to purchase securities. This practice is referred to as "buying on margin".
2. The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account.
3. In a general business context, the difference between a product's (or service's) selling price and the cost of production.
4. The portion of the interest rate on an adjustable-rate mortgage that is over and above the adjustment-index rate. This portion is retained as profit by the lender.
A brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock drops sufficiently, the account holder will be required to deposit more cash or sell a portion of the stock.
A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. This is sometimes called a "fed call" or "maintenance call".
Margin Of Safety
A principle of investing in which an investor only purchases securities when the market price is significantly below its intrinsic value. In other words, when market price is significantly below your estimation of the intrinsic value, the difference is the margin of safety. This difference allows an investment to be made with minimal downside risk.
The term was popularized by Benjamin Graham (known as "the father of value investing") and his followers, most notably Warren Buffett. Margin of safety doesn't guarantee a successful investment, but it does provide room for error in an analyst's judgment. Determining a company's "true" worth (its intrinsic value) is highly subjective. Each investor has a different way of calculating intrinsic value which may or may not be correct. Plus, it's notoriously difficult to predict a company's earnings. Margin of safety provides a cushion against errors in calculation.
Marginal Propensity To Consume - MPC
A component of Keynesian theory, MPC represents the proportion of an aggregate raise in pay that is spent on the consumption of goods and services, as opposed to being saved.
Marginal Tax Rate
The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate.
The additional satisfaction a consumer gains from consuming one more unit of a good or service.
A tax reduction that is mainly used for the purposes of estate and gifts. It allows an individual to transfer some assets to his or her spouse tax free, creating a deduction in taxable income.
A U.S. state-level legal distinction of a married individual's assets. Property acquired by either spouse during the course of a marriage is considered marital property. For example, an IRA in the name of an individual with a spouse, which is accumulated during the course of the marriage, would be considered marital property.
Mark To Market - MTM
1. The act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.
2. In terms of mutual funds, a MTM is when the net asset value (NAV) of the fund is valued upon the most current market values.
The difference between the highest current bid price among broker-dealers in the market and the lower price that a dealer charges a customer.
1. Typically refers to the equity market where stocks are traded, but can also refer to the bond, options, or commodity market.
2. People with the desire and ability to buy a specific product.
Purchasing and selling the same security at the same time in different markets to take advantage of a price difference between the two separate markets.
A measure of the overall price level of a given market, as defined by a specified group of stocks or other securities. A market average equals the sum of all current values of stocks in the group divided by the total number of shares in the group.
Term that refers to the overall general market making a low point and then turning around for a period of improvement.
The negative impact of a company's new product on the sales performance of its existing related products.
Total market value of company. Calculated by multiplying shares outstanding by the stock price.
A situation where markets cease to function in a regular manner, typically characterized by rapid and large market declines. Market disruptions can result from both physical threats to the stock exchange or a unusual trading (as in a crash). In either case, the disruption creates widespread panic and results in disorderly market conditions.
An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning. This is the opposite of a centrally planned economy, in which government decisions drive most aspects of a country's economic activity.
The degree to which stock prices reflect all available, relevant information.
The amount of funds invested in a particular type of security and/or market sector or industry and usually expressed as a percentage of total portfolio holdings. Thus, it is the amount an investor has at risk or the amount he/she can lose. Also known as "exposure".
Market If Touched - MIT
An order to purchase or sell a security as soon as a specific price is reached.
An aggregate value produced by combining several stocks or other investment vehicles together and expressing their total value against a base value from a specific date. Market indexes are intended to represent an entire stock market and thus track the market's changes over time.
Market Is Off
A common phrase meaning that the market (or a major market index) is trading below the previous closing price.
Market Is Up
A common phrase meaning the market (or a major market index) is trading higher than the previous closing price
Feelings of nervousness created by uncertainty or fear about the current investment environment
A broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the market maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds.
Market Maker Spread
The difference between the price at which a Market Maker is willing to buy a security and the price at which the firm is willing to sell it (the difference between the bid and ask for a given security). Since each market maker can either buy or sell a stock at any given time, the spread represents the market maker's profit on each trade.
Slang used to describe a good investor who is "in-the-know." It also implies opinion leadership.
A measure of overall market sentiment, calculated as the change in the value of a market index multiplied by the aggregate trading volume occurring within the index components.
A strategy undertaken by an investor or an investment manager that seeks to profit from both increasing and decreasing prices in a single and numerous markets. Market-neutral strategies are often attained by taking matching long and short positions in different stocks to increase the return from making good stock selections and decreasing the return from broad market movements. Market neutral strategists may also use other tools such as merger arbitrage, shorting sectors, and so on. There is no single accepted method of employing a market-neutral strategy.
Market On Close - MOC
A market order to be executed as near to the end of the exchange day as possible. Also known as an "at-the-close order."
An order to buy or sell a stock immediately at the best available current price.
Market Out Clause
A clause in an underwriting agreement allowing the underwriter to cancel the agreement for certain specified reasons without penalty.
The day-to-day potential for an investor to experience losses from fluctuations in securities prices. This risk cannot be diversified away. Also referred to as "systematic risk".
Market Risk Premium
The difference between the expected return on a market portfolio and the risk-free rate.
Market Sector Indexes
Small daily industry sector charts in Investor's Business Daily located on the 'General Market & Sectors' and 'Industry Groups' pages. Includes such major sectors as Dow Jones Utilities, High Tech and Defensive. Listed in order of sector relative strength performance. Useful in determining leading sectors in the current market.
A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action.
The feeling or tone of a market (i.e. crowd psychology). It is shown by the activity and price movement of securities.
The percentage of total industry sales that is made up by a particular company's individual sales.
A department responsible for investigating and preventing abusive, manipulative, or illegal trading practices on the NASDAQ.
Market Technicians Association - MTA
A not-for-profit organization located in the US that promotes ethical trading practices among technical analysts.
1. The act of attempting to predict the future direction of the market, typically through the use of technical indicators or economic data.
2. The practice of switching among mutual fund asset classes in an attempt to profit from the changes in their market outlook.
1. The current quoted price at which investors buy or sell a share of common stock or a bond at a given time.
2. The market capitalization plus the market value of debt. Sometimes referred to as "total market value".
Market versus Quote - MVQ
A comparison between the last price at which a security traded and the current bid/ask prices
A type of market order that is canceled and re-submitted as a limit order if the price of the asset moves dramatically after the investor places the order. The limit on the limit order is placed at around the current market price as determined by a broker. This type of order adds a protective measure, helping the investor ensure his or her market order will not be completed at a price that is far off from the market price at the time of the order.
Very liquid securities that can be converted into cash quickly at a reasonable price.
Marketable securities are very liquid as they tend to have maturities of less than one year. Furthermore, the rate at which these securities can be bought or sold has little effect on their prices.
The activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. People who work in marketing departments of companies try to get the attention of target audiences by using slogans, packaging design, celebrity endorsements and general media exposure. The four 'Ps' of marketing are product, place, price and promotion.
The difference between an investment's lowest current offering price among dealers and the higher price a dealer charges a customer. Markups occur when dealers act as principals (buying and selling securities from their own accounts, at their own risk), as opposed to brokers (receiving a fee for facilitating a transaction).
A reference to Friday, Apr 2, 1993, when Philip Morris, the maker of Marlboro cigarettes, announced that it would be cutting the price of Marlboros to compete with generic cigarette makers. The company's stock tanked 26% following the announcement, losing about $10 billion off its market cap in a single day.
The day is remembered as a landmark moment in the 1990s consumer movement away from name brand products in favor of cheaper generic products with prices 50% lower than their branded competitors. In its wake, money managers moved cash from name brand consumer goods makers like Coca-Cola and Tambrands (the former maker of Tampax tampons) to technology stocks and generic consumer goods producers.
A company's most appealing asset. Also referred to as a trophy asset.
Married Filing Jointly
A filing status for married couples that have wed before the end of the tax year. They can record their respective incomes, exemptions and deductions on the same tax return. Married filing jointly is best if only one spouse has a significant income. However, if both spouses work and the income and itemized deductions are large and very unequal, it may be more advantageous to file separately.
Married Filing Separately
A filing status for married couples who choose to record their respective incomes, exemptions and deductions on separate tax returns. In most cases, "married filing jointly" offers the most tax savings, especially when the spouses have different income levels. However, there is a potential tax advantage to filing separately when one spouse has significant medical expenses or miscellaneous itemized deductions.
An option strategy whereby an investor, holding a long position in stock, purchases a put on the same stock to protect against a depreciation in the stock's price.
A money management system of investing in which the dollar values of investments continually increase after losses, or the position size increases with lowering portfolio size.
A type of candlestick charting formation that appears when a security's price does not trade outside the range of the opening and closing prices.
The process of delivering wide-market goods and services that are customized to satisfy a specific customer need.
In general, an investment vehicle that enables individual investors to invest money into one or more underlying investments that are operated by professional managers.
Master Limited Partnership - MLP
A limited partnership that is publicly traded.
High-quality debt instruments offered by the Federal Farm Credit Bank (FFCB) with a minimum face value of $25 million.
Master of Business Administration - MBA
A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates gain a better understanding of general business management functions. The MBA degree can have a specific focus such as accounting, finance or marketing.
A collection of funds from individual investors that are pooled together in order to obtain wholesale prices and rates unavailable for regular investors.
A foreign bond denominated in pesetas and issued in Spain by a non-Spanish company.
When the interest rate on a loan matches (or is extremely close to) the interest rate on the source of the funds loaned out. An example of this would be if a bank accepted a $100,000 deposit and agreed to pay 5% interest on it for five years, then loaned the $100,000 out at 5.25%.
A securitization lender would be a typical user of match-rate funds.
A bank is running a matched book when the maturities of its assets and liabilities are equally distributed. Also known as "asset/liability management".
A type of contribution an employer chooses to make to his or her employee's employer-sponsored retirement plan. The contribution is based on elective deferral contributions made by the employee.
Entering identical buy and sell orders at the same time to create the appearance of active trading in that security.
A strategy of creating investment portfolios that meet the individual needs of investors through tiered investment durations.
Material Insider Information
Material information, about certain aspects of a company, that has not yet been made public but that will have at least a small impact on the company's share price once released. It is illegal for holders of material insider information to use the information - however it was received - to their advantage in trading stock, or to provide the information to family members or friends so they can use it to make trades.
When one or more of a company's internal controls, put in place to prevent significant financial statement irregularities, is considered to be ineffective. If a deficiency in an internal control is thought to be of material weakness, this means that it could lead to a material misstatement in a company's financial statements.
An bond denominated in the Australian dollar and issued on the Australian market by a foreign entity.
An industry which has passed both the emerging and the growth phases of industry growth. Earnings and sales grow slower in mature industries than in growth and emerging industries.
As can be seen above, the third phase is the mature industry phase.
A Canadian retirement savings vehicle that is registered with the Canadian government and is being used to produce retirement income for the beneficiary
1. The length of time until the principal amount of a bond must be repaid.
2. The end of the life of a security.
Maturity by Maturity Bidding - MBM
A bond auction that allows bidders (who are underwriters) to submit bids for selected maturities in its issue, rather than requiring buyers to bid for the entire issue on an all-or-none (AON) basis.
The date on which the principal amount of a note, draft, acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop. It is also the termination or due date on which an installment loan must be paid in full.
The dollar amount of a contract (such as a life insurance policy or segregated fund contract) that is guaranteed after a certain amount of time has elapsed
Max Pain (TM)
The point at which options expire worthless.
A brand of customer relationship management software popularly used by brokers and investment advisors for tracking clients and leads.
Refers to May 1st, 1975, when brokerages changed from a fixed commission for securities transactions to a negotiated one.
A market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. It is primarily used for short and intermediate term trading.
To calculate subtract a 39 day EMA (of advancing issues - declining issues) from a 19 day EMA (of advancing issues - declining issues).
Simplified, it looks as follows: (19 Day EMA of Advances - Declines) - (39 Day EMA of Advances - Declines)
McClellan Summation Index
The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends.
The simple mathematical average of a set of two or more numbers. The mean for a given set of numbers can be computed in more than one way, including the arithmetic mean method, which uses the sum of the numbers in the series, and the geometric mean method. However, all of the primary methods for computing a simple average of a normal number series produce the same approximate result most of the time.
1. In securities analysis, it is the expected value, or mean, of all the likely returns of investments comprising a portfolio. It is also known as "expected return".
A theory suggesting that prices and returns eventually move back towards the mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry.
Buying and selling stocks according to a screen based on predetermined criteria, usually ranking stocks using relative strength or momentum as the central indicator, but other indicators can also be used.
Medallion Signature Guarantee
A guarantee seal applied to securities, in the process of transfer, by member institutions of the Medallion program.
The midpoint of the range numbers that are arranged in order of value.
A joint federal and state program that helps low-income individuals or families pay for the costs associated with long-term medical and custodial care, provided they qualify. Although largely funded by the federal government, Medicaid is run by the state where coverage may vary.
A U.S. federal health program that subsidizes people who meet one of the following criteria:
1. An individual over the age of 65 who has been a U.S. citizen or permanent legal resident for five years.
2. An individual who is disabled and has collected Social Security for a minimum of two years.
3. An individual who is undergoing dialysis for kidney failure or who is in need of a kidney transplant.
4. An individual who has Amyotrophic Lateral Sclerosis (ALS-Lou Gehrig's disease).
Medicare helps out people at a time in their lives when they may have serious health problems but lack the funding for treatment.
Medicare Part D
A prescription drug benefit program that was created through the U.S. Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The "D" stands for "drugs". The program gives Medicare recipients these basic choices: stay in traditional Medicare without signing up for the prescription drug benefit outlined in the Act, stay in traditional Medicare and enroll in a Medicare drug plan, enroll in other Medicare plans, or enroll in a comprehensive private health plan (which may or may not cover prescription costs). The program began providing coverage for users on Jan 1, 2006.
The portion of a person's earnings that are subject to "Medicare tax."
Medium Of Exchange
An intermediary instrument used to facilitate the sale, purchase or trade of goods between parties. In modern economies the medium of exchange is currency.
An intermediate period of time to hold an asset.
Medium Term Note - MTN
1. A note that usually matures in five to 10 years.
2. A corporate note continuously offered by a company to investors through a dealer. Investors can choose from differing maturities, ranging from nine months to 30 years.
Companies having a market capitalization greater than $200 billion
In the U.S., a form of financing that can be used by cities, counties and special districts (such as school districts) to finance major improvements and services within the particular district. Special taxes and bonds used for Mello-Roos financing can only be issued by counties or districts in which two-thirds of the voters in the area have voted in favor of becoming a Mello-Roos district.
1. In the most general context, a brokerage firm (or broker) holding membership on an organized stock or commodities exchange. Membership is generally required in order to fill trades for clients on the exchange.
2. For the New York Stock Exchange, one of over 1300 individuals or firms owning a seat on the exchange.
3. For the National Association of Securities Dealers (NASD), any broker-dealer admitted to membership in the association.
A broker-dealer in which at least one of the principal officers is a member of either the NYSE, another major stock exchange, a self-regulatory organization or a clearing house corporation.
Also referred to as "clearing member".
Member Of Household
A person who is claimed as a dependent when filing year-end tax forms. Such a dependent allows a taxpayer to qualify for the dependency exemption. A member of household can be a relative or a non-relative, but in order for a non-relative to be claimed as a member of household, he or she must meet the relationship requirements outlined by the IRS.
Member Short-Sales Ratio
A ratio comparing the number of short sales transacted on behalf of NYSE members to the entire number of short sells transacted on the exchange.
Memorandum of Understanding - MOU
A legal document outlining the terms and details of an agreement between parties, including each parties requirements and responsibilities.
An economic concept established by economist Richard Thaler, which contends that individuals divide their current and future assets into separate, non-transferable portions. The theory purports individuals assign different levels of utility to each asset group, which affects their consumption decisions and other behaviors.
A bank that deals mostly in (but is not limited to) international finance, long-term loans for companies and underwriting. Merchant banks do not provide regular banking services to the general public.
The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
A hedge fund strategy with which the stocks of two merging companies are simultaneously bought and sold to create a risk less profit.
Mergers And Acquisitions - M&A
A general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another with no new company being formed.
Merrill Lynch & Co.
One of the better known management and advisory companies. Merrill Lynch provides a wide range of services to both individual and institutional investors.
A hybrid of debt and equity financing that is is typically used to finance the expansion of existing companies. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.
Since mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower, this type of financing is aggressively priced with the lender seeking a return in the 20-30% range.
Represents the amount of the total outstanding stock (capitalization) that is held by management. Figure is expressed as a percentage.
As an executive at investment bank Drexel Burnham Lambert Inc during the 1980s, Milken used high-yield junk bonds for corporate financing and mergers and acquisitions. He amassed an enormous personal fortune, but in 1989 he was indicted by a federal grand jury and eventually spent nearly two years in prison after pleading guilty to charges of securities fraud. While he is credited with founding the high-yield debt market, he was banned for life from the securities industry.
Michigan Consumer Sentiment Index - MCSI
A survey of consumer confidence conducted by the University of Michigan. The preliminary report is released on the tenth (except on weekends) of each month. A final report for the prior month is released on the first of the month.
Companies having a market capitalization between $50 million and $300 million.
A type of political risk that refers to political actions in a host country that can adversely affect selected foreign operations. Micro risk can come about from events that may or may not be in the reigning government's control
An investment technique used to eliminate the risk of a single asset. In most cases, this means taking an offsetting position in that single asset.
If this asset is part of a larger portfolio, the hedge will eliminate the risk of the one asset but will have less of an effect on the risk associated with the portfolio.
An extremely small loan given to impoverished people to help them become self employed. Also known as "micro lending."
The branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, microeconomics focuses on patterns of supply and demand and the determination of price and output in individual markets (e.g. coffee industry).
A type of banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services. Ultimately, the goal of microfinance is to give low income people an opportunity to become self-sufficient by providing a means of saving money, borrowing money and insurance.
An option that can be exercised at different times during the life of the option. The various times set for exercise are written within the option and allow for flexibility for both the writer and holder of the option.
The group of employees in a financial services company that manages risk, calculates profits and losses, and (generally) is in charge of information technology. The middle office draws on the resources of both the front and the back offices.
A deduction of automobile expenses for people using their vehicles for business, charity, moving, medical or any other purpose that qualifies for a deduction.
The amount of tax paid per dollar of the assessed property value.
Mine and Yours
Terms used by floor traders to signify buying and selling. Mainly used in forex transactions.
Short-term financing used to pay off income-producing construction or commercial properties, usually payable in three to five years.
Mini-Sized Dow Options
A type of option for which the underlying assets are Dow Jones Industrial Average futures contracts. The option has a 5 times multiplier, which means that each option contract on the index controls 5 times the value of the index. This gives the option holder more leverage on his/her investment compared to cash index options at a lower cost. The option is traded on the Chicago Board of Trade.
The initial amount required to be deposited in a margin account before trading on margin or selling short. For example, the NYSE and the NASD require investors to deposit a minimum of $2,000 in cash or securities to open a margin account. Keep in mind that this amount is only a minimum - some brokerages may require you to deposit more than $2,000.
Minimum Price Contract
A forward contract with a provision guaranteeing a minimum price at delivery of the underlying agricultural commodity.
A significant but non-controlling ownership of less than 50% of a company's voting shares by either an investor or another company.
Designates a trade that occurs at a lower price than the immediately preceding trade. Also referred to as "downtick" or "zero minus tick".
A type of mutual fund, typically run by a life insurance company, that enables an investor to access another company's mutual fund through his or her life insurance policies.
A measure of economic well-being for a specified economy, computed by taking the sum of the unemployment rate and the inflation rate for a given period. An increasing index means a worsening economic climate for the economy in question, and vice versa.
1) A category of risk that refers to the possibility that a swap dealer will be unable to find a suitable counterparty for a swap transaction for which it is acting as an intermediary.
2) The risk that an investor has chosen investments that are not suitable for his or her circumstances.
An acronym representing the months March, June, September, and December.
In currencies, this is the abbreviation for the Myanmar Kyat.
In currencies, this is the abbreviation for the Mongolian Tughrik.
MOB (Municipals-over-Bonds) Spread
The difference in yields between a municipal bond and a Treasury bond with the same time to maturity. The MOB is sometimes used for determining tax strategies.
A statistical term referring to the most frequently occurring term in a set of numbers.
Modern Portfolio Theory - MPT
A theory on how risk-averse investors can construct portfolios in order to optimize market risk for expected returns, emphasizing that risk is an inherent part of higher reward. Also called portfolio theory or portfolio management theory.
Modified Accelerated Cost Recovery System - MACRS
The new accelerated cost recovery system, created after the release of the Tax Reform Act of 1986, which allows for greater accelerated depreciation over longer time periods.
Modified Adjusted Gross Income - MAGI
The amount of income that determines how much of an individual's IRA contribution is deductible. The modified adjusted gross income is found by taking the individual's adjusted gross income and adding back certain items such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
Modified Dietz Method
A method of evaluating a portfolio's return based upon a time weighted analysis.
A formula that expresses the measurable change in the value of a security in response to a change in interest rates. Calculated as the following:
n = number of coupon periods per year
YTM = the bond's yield to maturity
Modified Internal Rate Of Return - MIRR
While the internal rate of return (IRR) assumes the cash flows from a project are reinvested at the IRR, the modified IRR assumes that all cash flows are reinvested at the firm's cost of capital. Therefore, MIRR more accurately reflects the profitability of a project
Modigliani-Miller Theorem - M&M
A financial theory stating that the market value of a firm is determined by its earning power and the risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends. Remember, a firm can choose between three methods of financing: issuing shares, borrowing or spending profits (as opposed to dispersing them to shareholders in dividends). The theorem gets much more complicated, but the basic idea is that, under certain assumptions, it makes no difference whether a firm finances itself with debt or equity.
Mom and Pop
An adjective denoting a small-scale and family-like atmosphere, often used to describe these types of businesses and investors.
The rate of acceleration of a security's price or volume.
Investment funds that invest in companies based on current trends in such things as earnings or price movement. The portfolio manager will look for companies that have been trending in a certain direction (e.g. a series of extremely positive earnings releases or upward price momentum in the short term). The manager will then take positions in the same direction as the trend and attempt to ride the wave and sell once it has peaked.
These funds are also known as "momo funds".
A slang term used to describe an investment purely as a momentum play, not worrying about the company's fundamentals.
A theory that returns on the stock market on Mondays will follow the prevailing trend from the previous Friday. Therefore, if the market was up on Friday, it should continue through the weekend and, come Monday, resume its rise.
A set of views based on the belief that inflation depends on how much money the government prints. It is closely associated with Milton Friedman, who argued, based on the Quantity Theory of Money, that the government should keep the money supply fairly steady, expanding it slightly each year mainly to allow for the natural growth of the economy.
An economist who holds the strong belief that the economy's performance is determined almost entirely by changes in the money supply.
An economic concept which contends that changes in the money supply are the most significant determinants of the rate of economic growth and the behavior of the business cycle.
The total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank's reserves. This measure of the money supply typically only includes the most liquid currencies.
Also known as the "money base".
Monetary Conditions Index - MCI
A measure of monetary conditions in the Canadian economy, giving an idea of the relative ease or tightness of monetary policy. MCI gauges the effect that Canada's monetary policy has on the Canadian economy through changes in the exchange rate and interest rates.
The actions of a central bank, currency board or other regulatory committee, that determine the size and rate of growth of the money supply, which in turn affects interest rates.
Monetary Union Index of Consumer Prices - MUICP
An average measure of inflation for all countries located in the Euro-zone. It is a statistical indicator whose objective is to facilitate making comparisons of inflation between the European Union and other economies such as the U.S.
1. To convert into money.
2. To convert from securities into currency that can be used to purchase goods and services.
1. A commodity or asset, such as gold, an officially issued currency, coin or paper note, that can be legally exchanged for something equivalent, such as goods or services.
2. As defined by common law: a medium of exchange that is authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.
Calculated by averaging the high, low, and closing prices, and multiplying by the daily volume. Comparing that result with the number for the previous day tells you whether money flow was positive or negative for the current day.
Money Flow Index - MFI
A momentum indicator that measures the strength of money in and out of a security. A divergence between the MFI and price trend can be interpreted as a possible trend reversal.
The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.
The process of budgeting, saving, investing, spending or otherwise in overseeing the cash usage of an individual or group. The predominant use of the phrase in financial markets is that of an investment professional making investment decisions for large pools of funds, such as mutual funds or pension plans.
Also referred to as "investment management" and/or "portfolio management".
A business or bank responsible for managing the securities portfolio of an individual or institutional investor. Typically, a money manager employs people with various expertise ranging from research and selection of investment options to monitoring the assets and deciding when to sell them. In return for a fee, the money manager has the fiduciary duty to choose and manage investments prudently for his or her clients, including developing an appropriate investment strategy, buying and selling securities to meet those goals. Also known as "portfolio manager" or "investment manager".
The securities market dealing in short-term debt and monetary instruments. Money market instruments are forms of debt that mature in less than one year and are very liquid.
Money Market Account
A savings account that offers the competitive rate of interest (real rate) in exchange for larger-than-normal deposits.
Also known by the acronym "MMDA", which stands for "money market demand account" or "money market deposit account".
Money Market Fund
A mutual fund that invests in short-term debt instruments. The fund's objective is to earn interest for shareholders while maintaining a net asset value of $1 per share.
The entire quantity of bills, coins, loans, credit, and other liquid instruments in a country's economy.
Money Zero Maturity - MZM
A measure of the liquid money supply within an economy. MZM represents all money in M2 less the time deposits, plus all money market funds.
Money-Purchase Pension Plan
A defined-contribution plan to which employer contributions are fixed
The terms of a registered pension plan that detail the specific amounts that an employer and employee contribute to the plan. The amounts may be stated in dollars or percentages. The provisions of the pension plan states the maximum amount of the employee's contribution that can be matched by the employer. Money-purchase provisions for registered plans must fall under the governing requirements outlined by the Government of Canada
A person, group or organization with a monopoly. In other words, an individual or company that controls all of the market for a particular good or service.
A type of competition within an industry where:
1. All firms produce similar yet not perfectly substitutable products.
2. All firms are able to enter the industry if the profits are attractive.
3. All firms are profit maximizers.
4. All firms have some market power, which means none are price takers.
A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition - which often results in high prices and inferior products.
For a strict academic definition, a monopoly is a market containing a single firm.
A market similar to a monopoly except that a large buyer not seller controls a large proportion of the market and drives the prices down. Sometimes referred to as the buyer's monopoly.
Monte Carlo Simulation
A problem solving technique used to approximate the probability of certain outcomes by running multiple trial runs, called simulations, using random variables.
Monthly Income Preferred Securities - MIPS
Shares that are an interest in a limited partnership existing solely for the purpose of issuing preferred securities and lending the proceeds of the sales to its parent company. MIPS usually have a $25 par value, NYSE listing and cumulative monthly distributions.
A Canadian derivatives exchange that facilitates the trading of stock options, interest rate futures and options, as well as index options and futures. Located in Montreal, Quebec, it is the country's main financial derivative market, while the Winnipeg Commodities Exchange in Manitoba is the home to Canadian commodity derivative trading.
Moody's Bond Survey
A weekly publication that reports changes in corporate bond quality ratings for publicly traded companies, lists new debt registrations and provides market commentary. Also known as "Moody's Credit Survey".
An observation, In 1965, by Intel co-founder Gordon Moore. He noticed the number of transistors per square inch on integrated circuits had doubled every year since their invention. Moore predicted the trend would continue for the foreseeable future.
Although the pace has slowed, the number of transistors per square inch has since doubled approximately every 18 months. This is used as the current definition of Moore's Law.
In currencies, this is the abbreviation for the Macau Pataca.
The risk that a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles.
Moral Obligation Bond
A type of revenue bond issued by a municipality or similar government body. A moral obligation bond not only gives investors the tax exemption benefits inherent in a municipal bond, but also provides an additional moral pledge of commitment against default. The issuing body's commitment is supported by a reserve fund established to meet any debt service costs the government may be unable to make.
A persuasion tactic used by an authority (i.e. Federal Reserve Board) to influence and pressure, but not force, banks into adhering to policy. Tactics used are closed-door meetings with bank directors, increased severity of inspections, appeals to community spirit, or vague threats. A good example of moral suasion is when Fed Chairman Alan Greenspan speaks on the markets - his opinion on the overall economy can send financial markets falling or flying.
1) A period of time in which there is a suspension of a specific activity until future events warrant a removal of the suspension or issues regarding the activity have been resolved.
2) In bankruptcy law, a legally binding halt of the right to collect debt.
Morgan Stanley Capital International - MSCI
A series of indexes constructed by Morgan Stanley to help institutional investors benchmark their returns. These indexes are also used for investment purposes - in the form of exchanged-traded funds - by all types of investors. There are a wide range of indexes created by Morgan Stanely covering a wide range of developed and emerging economies and a wide range of economic sectors.
A bullish candlestick pattern that consists of three candles that have demonstrated the following characteristics:
1. The first bar is a large red candlestick located within a defined downtrend.
2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.
3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar's body.
As shown by the chart, this pattern is used by traders as an early indication that the downtrend is about to reverse.
Morningstar Risk Rating
A rating system that measures how often a fund loses money compared to the risk-free rate of return (T-bill return
Mortality And Expense Risk Charge
A variable annuity fee included in certain annuity or insurance products which serves to compensate the insurance company for various risks it assumes under the annuity contract
A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front.
Mortgages are also known as liens against property, or claims on property.
A company, individual or institution that originates, sells and services mortgage loans.
The matchmaker between a homebuyer and a lender whose goal is to originate a mortgage loan. The broker draws from a pool of various lenders to find the right match.
Mortgage-Backed Securities - MBS
An investment instrument that represents ownership of an undivided interest in a group of mortgages. Principal and interest from the individual mortgages are used to pay investors' principal and interest on the MBS. Also known as "mortgage pass-through".
An entity that lends money to a borrower for the purpose of purchasing a piece of real property. By accepting a mortgage on the real property, the lender creates security in the full repayment of the loan in the future.
An individual or company who borrows money to purchase a piece of real property. By granting the lender an interest in the property, which allows it to lend the funds with an accurate assessment of risk, the mortgagor provides the lender with a guarantee for the full repayment of the loan. Also known as a "chargor".
The stocks on an exchange that had the highest volume over a given period. The most common time period used is a single trading day.
Most Recent Quarter - MRQ
The previous quarter
The preservation of a production facility without using it to produce. Machinery in a mothballed facility is kept in working order so that production may be restored quickly if needed.
Moving Average - MA
An indicator frequently used in technical analysis showing the average value of a security's price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance.
Moving Average Chart
A tool used by technical analysts to track the price movements of a security or commodity. It plots average daily settlement prices over a defined period of time, anywhere from a few days to a couple years.
Moving Average Convergence Divergence - MACD
A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.
Moving Average Ribbon
A technique used in technical analysis to identify changing trends. It is created by placing a large number of moving averages onto the same chart. When all the averages are moving in the same direction, the trend is said to be strong. Reversals are confirmed when the averages crossover and head in the opposite direction.
The moving averages used in the diagram start with the 50-day moving average and increase by 10-day periods up to the final average of 200. (50, 60, 70, 80 ... 190, 200)
Deductible expenses that are related to moving an individual and/or his or her family and possessions for employment reasons
Otherwise known as Yasuo Hamanaka, Mr. Copper was a trader in the copper market who lost over $2.5 Billion for his employer, Sumitomo Corp. (in Japan). The losses amassed from unauthorized trading in secret accounts between 1985 and 1996.
In currencies, this is the abbreviation for the Mauritanian Ouguiya.
MSCI Emerging Markets Index
An index created by Morgan Stanley Capital International (MSCI) that is designed to measure equity market performance in global emerging markets.
The Emerging Markets Index is a float-adjusted market capitalization index. As of May 2005, it consisted of indices in 26 emerging economies: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela
In currencies, this is the abbreviation for the Maltese Lira.
An investment fund that is managed by more than one investment manager, each with a particular specialty. The goal of the multi-advisor fund is to make investment decisions based on multiple professional opinions, rather than relying on a single person to have comprehensive knowledge of investment options.
A type of investment account that allows access by several specialized investment managers within one main account. The account is split into several sub-accounts that are separately run by managers with relevant expertise. The multi-discipline account provides investors with an efficient way to get professional investment management and asset diversification. It is also referred to as a "multi-style" and "multi-strategy account".
Multinational Corporation - MNC
A corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries.
Sometimes referred to as a "transnational corporation".
The effect that arises when a stock trades at a certain multiple and, while earnings may be strong, the stock price doesn't move up (or even goes down). The result is that the given multiple (P/E ratio) is reduced even though nothing is fundamentally wrong with the company. Compression of a company's multiple can be interpreted as the valuation being called into question.
A valuation theory based on the idea that similar assets sell at similar prices. This assumes that a ratio comparing value to some firm-specific variable (operating margins, cash flow, etc.) is the same across similar firms.
In Keynesian economic theory, a factor that quantifies the change in total income as compared to the injection of capital deposits or investments which originally fueled the growth. It is usually used as a measurement of the effects of government spending on income, and it can be calculated as one divided by the marginal propensity to save.
The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold on reserves. In other words, it is money used to create more money and calculated by dividing total bank deposits by the reserve requirement.
A debt security issued by a state, municipality, or county, in order to finance its capital expenditures. Municipal bonds are exempt from federal taxes and from most state and local taxes, especially if you live in the state the bond is issued.
Municipal Bond Fund
A mutual fund that invests in municipal bonds, operating either as an investment trust or as an open-end fund.
A zero-coupon municipal bond that can be converted into an interest-bearing bond under certain circumstances.
Municipal Inflation-Linked Securities
Investment vehicles issued by various levels of governments containing variable coupon payments that increase and decrease with changes in the consumer price index (CPI).
Municipal Securities Rulemaking Board - MSRB
A regulating body that creates rules and policies for investment firms and banks in the issuing and sale of municipal bonds, notes and other municipal securities by states, cities and counties. Activities regulated by the MSRB include the underwriting, trading and selling of municipal securities financing public projects.
A newswire service for municipal bonds that provides information on new municipal bond issues in the primary market and secondary market.
In currencies, this is the abbreviation for the Mauritius Rupee.
A private company whose ownership base is made of customers. Also referred to as a "co-operative".
Mutual Fund Custodian
A trust company, bank or similar financial institution responsible for holding and safeguarding the securities owned within a mutual fund. A mutual fund's custodian may also act as the mutual fund's transfer agent, maintaining records of shareholder transactions and balances.
Also referred to as a "mutual fund corporation".
Mutual Fund Index, IBD
Proprietary index of domestic growth stock funds located every day on Investor's Business Daily's 'General Market & Sectors' page. Can be used along with other key indices as a general market indicator.
Mutual Fund Liquidity Ratio
A ratio published monthly by the Investment Company Institute that compares the amount of cash relative to total assets held by a mutual fund.
Mutual Fund Timing
A legal but frowned-upon practice whereby traders attempt to profit from the short-term differences between the daily closing prices of a mutual fund.
Timing occurs when investors attempt to gain short-term profits from buying and selling mutual funds. This has a negative effect on the fund's long-term holders, as they will be subjugated to higher fees due to the short-term trading. In order to prevent this, many mutual funds will impose a short term trading penalty upon the sale of funds that are not held for a minimum period of time. This transfers the short-term costs of buying and selling new shares within the fund's portfolio to those investors not planning to stay with the fund for the long-term. Don't confuse market timing with mutual fund timing. Market timing is a practice of trying to predict the best time to buy and sell stocks for the purpose of a short-term gain. Mutual fund timing is an practice publicly frowned upon by many mutual fund companies in their prospectuses.
Mutual-Fund Advisory Program
A portfolio of mutual funds that are selected to match a pre-set asset allocation model based on the investor's objectives and offered in a single investment account together with the services of a professional investment advisor. Typically, investors won't be charged separate transaction fees, but periodic (i.e. monthly/quarterly/yearly) asset-management fees based on the average value of assets held within the account. Also known as a "mutual fund wrap".
In currencies, this is the abbreviation for the Maldive Rufiyaa.
In currencies, this is the abbreviation for the Malawi Kwacha.
In the currency market, this is the abbreviation for the Mexican peso
My Stock Lists
My Stock Lists tracks those stocks you want to keep a close eye on. Besides providing price and price change, My Stock Lists also tracks Volume % Change and IBDâ€™s unique Earnings Per Share and Relative Strength Ratings for up to 80 stocks (2 lists of up to 40 each). Links are also provided for easy access to the IBD Investing Tools.
In currencies, this is the abbreviation for the Malaysian Ringgit
In currencies, this is the abbreviation for the Mozambique Metical
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