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A-Share
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In a family of multi-class mutual funds, this is the class that is characterized by a front load structure.
Not all fund companies follow this class structure; however it is the prominent method of distinction. Class A Mutual Fund units Will commonly have...
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AAA
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The highest rating given on bonds by Bond rating agencies.
AAA bonds are supposed to have virtually no Risk of Default. Moody's and Standard & Poor's are the most widely used rating agencies. A Credit Rating assesses the credit worthiness of an individual,...
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Abandonment
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It can be the act of surrendering a claim to, or Interest in, a particular asset or the permitted withdrawal from a Forward contract that is made for the purchase of deliverable securities ort he act of allowing an Option to expire unexercised.
Corporations...
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Abandonment Option
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A clause written in a contract, granting parties the Option of withdrawing from the contract before the fulfillment or completion of all the contractual duties.
This clause adds value by giving the parties the ability to end the obligation if it is unprofitable.
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Abandonment Value
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The value of a project or asset if it were immediately liquidated.
Also known as the liquidation value.
The Abandonment value is generally a Cash value, or equivalent, associated with an asset. This value is important for companies when analyzing the...
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Abatement
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In general, a decrease in the amount of taxation faced by an individual or company.
A Tax decrease, a reduction in penalties, or a rebate are examples of an abatement. Abatement of debts and legacies is a common law doctrine of wills that holds that when...
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Abatement Cost
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A cost paid by many businesses for the removal and/or reduction of an undesirable item that they have created.
Abatement costs are generally incurred when corporations are required to reduce possible nuisances or negative byproducts created during production....
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ABC Agreement
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An agreement made between a purchasing member of a seat on the NYSE and the firm in which he/she works. With the approval of the NYSE, this agreement stipulates that the employee of the firm may:
a) transfer the seat to another employee of the firm,
b)...
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Absolute Advantage
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The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.
Entities with absolute advantages can produce something using a smaller...
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Academic Consultants
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An advisory group initiated by the Board in the 1960s to provide a forum for the Exchange of views between the Board and members of the academic community in Economics and banking.
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Accelerated Death Benefit
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It is a life insurance policy with an optional provision which allows a specified percentage of the death benefit to be paid prior to the insured's death, if a doctor certifies that the insured's life expectancy is limited (usually 12 months or less).
...
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Accountable Plan
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A plan for reimbursing employees for business expenses.
Under this plan, the reimbursement that the employee receives for the expenses is not included in his/her income. Employees are required to account adequately for expenses with records and return...
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Accredited Investor
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A term used by the SEC under Regulation D to define investors that are financially sophisticated and have no need for the protection provided by certain government filings. Also known as a qualified purchaser.
Accredited investor is defined as various...
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Accumulated Earnings Tax
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A Tax imposed by the federal government upon companies with retained Earnings deemed to be unreasonable and in excess of what is considered ordinary.
It is a Tax imposed by the federal government upon companies with retained Earnings deemed to be unreasonable...
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Acquirer
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In electronic money system, the entity or entities (typically banks) that hold Deposit accounts for merchants and to which transaction data are transmitted.
The firm which is purchasing a company in an Acquisition. The acquirer is also known as a bidder.
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Acquisition
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The process of buying or acquiring some asset.
The term can refer to the purchase of a block of stock or more often, to the acquisition of an entire company.
A corporate action in which a company buys most, if not all, of the target company's ownership...
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Act of God Bond
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A Bond issued by an insurance company, linking principal and Interest to the company's losses due to natural disasters.
Such bonds create flexibility for insurance companies if an unforeseen natural disaster occurs. Because principal and Interest depend...
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Active Bond
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A term used to describe fixed-income securities that trade frequently on the floor of the NYSE.
Generally, most-active stocks are those with the most shares traded over one day. Usually, stocks experience higher-than-normal trading Volume due to significantly...
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Active Management
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The use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund's Portfolio.
Active managers rely on analytical research, forecasts, and their own judgment and experience in making investment decisions...
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Ad Valorem Tax
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A Tax based on the assessed value of Real Estate or personal property.
In other words ad valorem taxes can be property Tax or even duty on imported items. Property ad valorem taxes are the major source of revenues for state and municipal governments.
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Adjustable Rate Mortgage (ARM)
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A loan in which the Interest rate is periodically adjusted, moving higher or lower in the same ratio as a pre-selected index such as Treasury Bill rates.
An adjustable rate mortgage (ARM) is a mortgage loan where the Interest rate on the note is periodically...
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Adjusted Cost Base - ACB
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An income Tax term that refers to the change in an asset's Book Value resulting from improvements, new purchases, sales, payouts, or other factors.
An adjusted cost base can be calculated on a single or a per unit Basis.
The Book Value can be adjusted...
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Adjusted gross income
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An interim calculation in the computation of income Tax liability. It is .computed by subtracting certain allowable adjustments from gross income.
In the US, a person's income on which federal income Tax is calculated.This is gross income less adjustments...
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Adoption Credit
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A per-child Tax credit for adopting a child under 18.
The Limit is higher if it's determined that the adopted child has special needs. The credit is nonrefundable, thus, it can only decrease a taxpayers Tax liability to zero. However, if the credit amount...
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ADRs (American Depositary Receipts)
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ADRs (American Depositary Receipts) are tradable certificates in registered form, issued in the U.S. by a U.S. bank, which certifies that a specific number of foreign shares have been deposited with an overseas branch of the bank - or another financial Institution...
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Affluenza
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A social condition arising from the desire to be more wealthy or successful.
Affluenza is a term used by critics of consumerism. Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements. People said to be...
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Agent
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An authorized representative of an insurance company who solicits and services insurance contracts. Also known as an Associate.
An individual or firm authorized to act on behalf of another (called the principal), such as by executing a transaction or selling...
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Aging
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A method used by accountants and investors to evaluate and identify any irregularities within a company's account receivables.
Aging is achieved by sorting and inspecting the accounts according to their length outstanding. By aging a company's accounts...
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Agricultural Prices
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An index prices that the farmers get in the market.
The statistics is expressed as a percentage change from the previous month. It is a useful predictor of price changes on the grocery shelf, which are reflected in the consumer price index.
A consumer...
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Alan Greenspan
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The former chairman of the Board of Governors of the Federal Reserve System as well as the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body.
His tenure at the helm of the Fed lasted 18 years from 1987 until early 2006,...
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Algorithmic trading
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In electronic financial markets, algorithmic trading, also known as algo, automated, black-Box, or robo trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on certain aspects of the order such as the timing,...
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Alimony
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Money paid to a divorced or separated spouse pursuant to a divorce order.
For the receiver, payments are considered taxable income; for the payer, they are a deductible Expense.
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Allonge
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A sheet of paper attached to a bill of Exchange for the purpose of documenting endorsements.
Allonge is a slip of paper affixed to a negotiable instrument, as a bill of Exchange, for the purpose of receiving additional endorsements for which there may...
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Alpha
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Extra return on an asset compared with its required rate of return.
Investment managers often explain what they do with the help of two Greek letters, Alpha and Beta. These are used to describe the two main risks inherent in investing in stocks.
Alpha...
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Alternate account
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Account which multiple individuals can draw against without permission from each other.
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Alternative Investments
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Refers to investment in Hedge funds and other non-traditional investment types such as private Equity and Venture capital.
An alternative investment is regarded as an investment product other than traditional investments such as stocks, bonds, money markets...
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Alternative Minimum Tax
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Alternative Minimum Tax (AMT) is part of the Federal income Tax system of the United States. There is an AMT for those who owe personal income Tax, and another for corporations owing corporate income Tax.
A method of calculating income Tax that disallows...
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Amalgamation
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A combination under a single entity of all or part of the assets and liabilities of two or more business units by either merger (where one company absorbs another) or consolidation (where the original companies form a new one) is called amalgamation.
Amalgamation...
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American National Standards Institute (ANSI)
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A non-profit organization that sponsors industry standards for information management and financial communication.
The American Bankers Association has responsibility for the ANSI financial industry standards committee (ANSI X9). The American National...
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Amortization
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The gradual and systematic reduction of Debt by equal periodic payments.
Amortization is an accounting practice that companies use to write off intangible rights or assets - such as Goodwill or copyrights. Where the assets being written off are fixed assets,...
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Analyst
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A financial analyst (or securities analyst, research analyst, Equity analyst, investment analyst) is a person who works with financial analysis.
An analyst Will write reports on the companies they are supposed to cover, trying to describe the businesses...
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Announcement Date
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The date at which a company Will announce the details regarding an issue of Debt or Equity or the day that coincides with the release of new financial news, such as Interest rate changes or Earnings reports.
The announcement date is the first day the public...
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Annual Percentage Rate (APR)
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The cost of your credit as a yearly rate.
It takes into account Interest, points, loan Origination Fee, etc. It is a good Basis for comparing the cost of various loan programs, since all lenders are required to use the same guidelines in determining APR....
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Annual Report
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Yearly record of a public limited company's financial condition.
It describes the firm's operations, its Balance Sheet, and its income Statement. According to he Securities & Exchange Commission (SEC) rules, the annual report is distributed to all shareholders....
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Appraisal
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A professional opinion of the Market value of a property.
A property's value assessment is based on information from recent sales of similar properties.
An estimate of the value of property, made by a qualified licensed professional called an "appraiser."
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Approved List
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A list of pre-selected securities that are deemed fit for purchase by a Mutual Fund or the clients of a brokerage firm.
The intention is to Limit the account managers' or brokers' array of choices to investments available on the brokerage's approved list....
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Arbitrage
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Arbitrage means dealing simultaneously in the same product in two markets to take advantage of temporary price distortions at minimal Risk. For example, a share with a Bid-Offer price of 100 - 101 in New York, and a Bid-Offer price of 102 - 103 in London,...
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Associate
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An associate is a company over which a parent company has a significant influence.
An associate company is also called associated undertaking or Equity affiliate.
Associate company is a company in which another company owns a significant portion of...
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Attribute Bias
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The tendency of stocks selected by a quantitative technique or model to have similar fundamental characteristics, such as High yields and Low Earnings valuations.
Most investing models that provide investment choices as an output Will have to establish...
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Auction
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A system where potential buyers place competitive bids on assets and services.
An auction is a process of buying and selling goods or services by offering them up for Bid, taking bids, and then selling the item to the winning bidder. In economic theory,...
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Audit
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The examination of the accounting and financial documents of a firm by an objective professional.
The audit is done to determine the records' accuracy, consistency, and conformity to legal and accounting principles.
Traditionally audits were mainly...
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Authorized Signer
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A person appointed by the owner of an account to draw, sign and deliver checks, drafts, bills of Exchange or other orders for the payment of money, including checks payable to the authorized signers order and to endorse checks, drafts or other instrument.
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Automated teller machine (ATM)
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A device for conducting business at your credit union or other financial Institution without a teller's help even when it's closed.
With an ATM card, you can typically withdraw Cash, transfer money between two accounts, or check your account balances.
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Automatic Funds Transfer
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Transactions which occur through computer networks and which do not require direct management.
A depositors Savings Account from which funds may be transferred automatically to the same depositors checking account to cover a check written or to maintain...
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B-Share
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A class in a family of multi-class mutual funds that is characterized by a Back-End Load structure that is paid only when the fund is sold.
Class B funds Will generally have higher management Expense ratios compared to front load funds within the same...
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Baby bond
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A Bond that has a Par value less than $1,000.
Bond is a Debt instrument or IOU issued by corporations or units of government. IOU means a note and acknowledgment of personal Debt (from the phrase "I owe you" or "I owe unto").
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Baccalaureate Bond
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A zero-Coupon Bond issued by certain states to assist families save for college tuition by means of added Tax benefits.
These bonds are typically issued in small denominations and are offered in several maturities, making them more convenient for investing...
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Back door financing
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When a government agency borrows from the U.S. Treasury instead of relying on congressional appropriations.
Back door means the U.S treasury. The United States Constitution vests all legislative power in the Congress. The Congress meets in the U.S. Capitol...
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Back Testing
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The process of designing a trading strategy according to historical data and then testing the strategy by applying it to fresh data.
Instead of applying a strategy for the time period Forward, which could take years, a trader can do a simulation of his...
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Back-End Load
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A fee (sales charge or load) that investors pay when selling Mutual Fund shares within a specified number of years, which usually ranges between five to ten years.
The fee amounts to a percentage of the value of the share being sold. The fee percentage...
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Backing Away
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The act of a market maker failing to honor a posted Bid or ask even though the price and quantity are valid.
The NASD does not condone the act of backing away from transactions and Will take disciplinary action if certain regulations are broken. For example,...
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Backup withholding
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Tax withheld from investment income, such as Interest and dividends, to ensure that Tax is collected on the income.
Banks and other organizations are required to report to the IRS all Interest and Dividend payments you received, along with your Social...
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Bad will
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The negative effect felt by a company when shareholders and the investment community find out that is has done something that is not in accordance with good business practices.
Although typically not expressed in a dollar amount, bad Will can play out...
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Bag Man
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Any person in charge of organizing and collecting contributions to political parties or raising funds for political reasons.
These contributions may be legitimate or illegitimate.
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Bailout Provision
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A provision in some annuity contracts whereby, if the Interest rate being credited to the annuity fund ever falls below a specified rate, the policyholder may withdraw the initial Premium amount paid without a surrender charge.
Bailing out is also selling...
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Balance Sheet
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A financial Statement that summarizes a company's assets, liabilities and shareholders' Equity at a specific point in time.
These three balance sheet segments give investors an idea as to what the company's assets and debts are and investment by share...
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Balanced Scorecard
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A strategic-management method of identifying and improving various internal functions and their resulting external outcomes.
The balanced scorecard tries to measure and provide feedback to organizations in order to help in enforcing strategies and objectives....
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Balloon Payment
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A large extra payment that may be charged at the end of a loan or lease.
With a balloon loan, a balloon payment is paid back when the loan comes to its contractual maturity, e.g. reaches the deadline set to repayment at the time the loan was granted, representing...
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Baltic Dry Index - BDI
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It is a shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea.
The Baltic Exchange directly contacts shipping brokers to assess price...
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Banc assurance
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The sale of insurance and other similar products through a bank.
The usage of the word picked up as banks and insurance companies merged and banks sought to provide insurance, especially in markets that have been liberalized recently. It is a controversial...
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Bank Examiner
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Individual who reviews a bank's operations, such as lending policies, guidelines, and practices.
Bank examiners are employed by a Federal Reserve Bank, and typically have had extensive education in finance or accounting. A Bank Examiner's work involves...
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Bank Run
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A situation in which numerous bank customers try to withdraw their bank deposits simultaneously and the bank's reserves are not sufficient to cover the withdrawals
A bank run (also known as a run on the bank) is a type of financial crisis. It is a panic...
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Bank Secrecy Act
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The Bank Secrecy Act was designed to help identify the source, Volume and movement of Currency and other monetary instruments transported into or out of the U.S. or deposited in financial institutions.
Government legislation was created in 1970 to prevent...
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Bank Trust Department
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The part of a bank which settles estates, performs agency services, and administers trusts and guardianships.
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Banker's year
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A 360-day year, used so the year can be divided into 12 equal months of 30 days each. This makes Interest calculations simpler and more consistent.
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Bankruptcy
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A legal ruling that cancels some of a person's debts in Exchange for giving up some assets.
Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Creditors may file a bankruptcy petition...
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Banner Advertising
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A common form of advertising on the internet.
The banner is an advertisement of 460x68 pixels, usually placed at the top of the page .For an example, just look at the top of a page on almost any popular web site. Online advertising is a form of advertising...
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Baptism of Fire
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A difficult situation that a company or individual experiences that Will result in either success or failure.
Examples include Initial Public Offerings (IPOs), a new CEO to a struggling company or a company that has survived hostile takeover attempts....
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Barometer
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An instrument used to forecast trends.
For example, a Barometer Stock is a stock that has a price trend indicative of the market. And, the stock market as a whole is said to be a barometer because it can be used to forecast the growth or slowdown in the...
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Barometer Stock
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A Security whose price pattern is regarded as an indicator of the state of the overall market.
A stock or Bond that is widely believed to be an indicator of the overall market's condition. Also called bellwether. A Barometer stock is simply any stock...
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Bear Hug
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An Offer made by one company to buy the shares of another for a much higher per-share price than what that company is worth.
A bear hug Offer is usually made when there is doubt that the target company's management Will be willing to sell. By offering...
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Bear market
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A market in which traders and investors are feeling negative and prices are falling or static.
Market trends are described as periods when bulls (buyers) consistently outnumber bears (sellers), or vice versa. The terms "Bull market" and "bear market" describe...
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Benchmark
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The performance of a financial instrument used as a reference to compare the performances of similar instruments. To measure performance in this way you need a benchmark relative to an index.
A benchmark is something that the performance of something else...
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Beneficial ownership
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The state of having the benefits of owning a property or Security, without actually being the one who has his or her name on the title.
Beneficial ownership is enjoyed by anyone who has the benefits of ownership of a Security or property, and yet does...
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Beneficiaries
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The Beneficiaries are the persons or companies who may benefit from the assets held in a Trust. Or the person to whom an inheritance passes after being named in a Will.
A beneficiary in the broadest sense is a natural person or other legal entity who receives...
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Bermuda Option
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A type of Option that can only be exercised on predetermined dates, usually every month.
Like the mixed culture of Bermuda, Bermuda options are a combination of American and European style options. An American Option is that can be exercised anytime during...
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Berry Ratio
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The ratio of a company's gross profits to operating expenses.
Dr. Charles Berry an American economist is well known for his derivation of the Berry Ratio, an analytical tool used extensively by Tax and transfer pricing analysts the world over. Berry consulted...
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Big Bath
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A business strategy with which a company manipulates its income Statement to make poor results look even worse.
The big bath is often implemented in a bad year to enhance next year's Earnings artificially. The big rise in Earnings might result in a larger...
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Big Five Banks
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A reference used in Canada to describe Royal Bank, The Bank of Montreal, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia and TD Canada Trust, which are the five largest banks in the country.
All five banks are headquartered in Toronto or in...
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Bimetallism
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A government's Commission to Exchange its Currency on demand for stated amounts of either of two metals, usually gold or silver. Also bimetallic standard.
Bimetallic Standard is a monetary system in which a government recognizes coins composed of gold...
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Black Thursday
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The name given to Thursday, October 24th, 1929, when the New York Stock Exchange plummeted, leading to the Great Depression of the 1930's.
As a result of this day, the Securities Act of 1933 and the Securities Exchange Act of 1934 were formed in order...
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Blank check
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A check that is signed by the payer but with no specific amount indicated, leaving this determination up to the drawer.
More generally, a term used for any situation in which a usually High level of Trust is afforded by one party to another. Blank cheek...
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Blank endorsement
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An endorsement consisting of nothing but a signature and allowing any party in possession of the endorsed item to execute a claim.
Blank endorsement of a financial instrument such as a check is only a signature, not indicating the payee. The effect of...
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Blend Fund
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A category of Equity mutual funds with portfolios that are made up of a mix of value and growth stocks.
Also known as a "hybrid fund".
A blend Mutual Fund has its origins in the graphical representation of a fund's essential characteristics in an Equity...
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Block House
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A brokerage whose major concern is finding potential buyers and sellers of block trades.
These guys deal with the big boys, not individual investors. Transactions are typically well into the millions of dollars.
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Blue Chip Stock
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A blue chip stock is the stock of a well-established company having stable Earnings and no extensive liabilities.
The term derives from casino, where blue CHIPS stand for counters of the highest value. Most blue chip stocks pay regular dividends, even...
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Blue Sheets
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Requests for information sent out by the Securities and Exchange Commission to market makers.
Blue sheets provide the SEC with detailed information about trades performed by a firm and its clients. The information includes the Security's name, the date...
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Bogey
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A buzzword that refers to a Benchmark used to evaluate a fund's performance.
The Benchmark is an index that reflects the investment scope of the funds investment. Comparing a fund's performance to a Benchmark index gives investors an idea of how well the...
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Bond
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Bonds are Debt and are issued for a period of more than one year.
National governments, Local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of...
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Boom
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A period of time during which sales or business activity increases rapidly.
In the stock market, booms are associated with bull markets. Conversely, busts are associated with bear markets. The cyclical nature of the market and the economy in general suggests...
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Boomerang
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An American slang term that refers to an adult who has moved back in with his or her parents (who are part of the baby boomer generation) instead of living independently.
Boomerang refers to an individual, who lived independently for a period, but later...
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Bottom Fisher
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An investor who looks for bargains among stocks whose prices have recently dropped dramatically.
Bottom fisher believes that the recent price drop is temporary and a recovery is soon to follow. He attempts to find stocks that the market has undervalued....
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Bounced check
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A check which a bank returns because it is not payable due to insufficient funds. It is also Rubber check.
A demand for payment (a check) cannot be honored because insufficient funds are available in the account on which the instrument was drawn. In simplified...
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BPM - Bull shit per Minute
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The industry norm measuring a banker's ability to awe clients.
The more bullshit a banker utters in the course of a limited time period 9a minute) the more (s) he is able to amaze the client. This effect is achieved by ensuring the BPM is above the cutoff...
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Bracket Creep
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A situation where Inflation pushes income into higher Tax brackets.
Bracket creep is the process by which Inflation takes wages and salaries into higher Tax brackets resulting in an increase in income taxes but no increase in real purchasing power. This...
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Brain Drain
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A slang term for a significant emigration of educated or talented individuals.
A brain drain can result from turmoil within a nation, from there being better professional opportunities in other countries or from people seeking a better standard of living....
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Brand
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A printed symbol of ownership that a company hopes consumers Will Associate with quality.
Brand is a distinguishing symbol, mark, logo, name, word, sentence or a combination of these items that distinguish a company's product from others in the market.
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Brazil, Russia, India And China - BRIC
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An acronym for the economies of Brazil, Russia, India and China combined.
The general belief is that the term was first prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most...
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Bridge loan
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A kind of Short-term financing that allows a company to continue running until it can arrange longer-term financing.
A Short-term loan that is used until a person or company can secure permanent financing. Companies sometimes seek this because they run...
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British Bankers Association - BBA
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The leading trade association that represents the views of those involved in the banking and financial services industry within the U.K.
Among other things, the BBA is responsible for continually improving the Banking Code, Small Business Code, accounting...
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Broker
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An Agent who handles the public's orders to buy and sell securities, commodities, or other property.
Broker can be an individual or firm that charges a fee or Commission for executing buy and sell orders submitted by an investor. A Broker firm acts as...
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Buba
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Nickname given to Bundesbank, the Central Bank of Germany.
Both the Deutsche Bundesbank and the European Central Bank (ECB) are located in Frankfurt am Main. It is sometimes referred to as "Buba" for Bundesbank.
The Deutsche Bundesbank (German for...
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Bubble
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A speculative venture that has little chance of making a profit.
When this fact becomes evident, the bubble burst and prices fall. The cause of bubbles remains a mystery to economic theory. It has been recently shown that bubbles appear even without uncertainty,...
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Bull market
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A market in which traders and investors are feeling positive and prices are rising.
A bull market is usually associated with increasing investor confidence, motivating investors to buy in anticipation of further capital gains.
The longest and most...
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Bulldog Bond
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A sterling denominated Bond that is issued in London by a company that is not British.
These sterling bonds are referred to as bulldog bonds as the bulldog is a national symbol of England .A bulldog Bond would usually be issued because the issuer has (or...
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Bullion
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Gold and silver that is officially recognized as High quality (at least 99.5% pure), and is in the form of bars rather than coins.
Precious metals in bulk form are known as bullion, and are traded on commodity markets. These metals may be cast into ingots,...
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Burn rate
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The rate at which a start-up uses its Venture capital funding before it begins earning any revenue.
The rate at which a new company uses up its Venture capital to finance overhead before generating positive Cash flow from operations is called burn rate...
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Business Cycle
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The recurring and fluctuating levels of economic activity that an economy experiences over a Long period of time.
The five stages of the business cycle are growth (expansion), peak, Recession (contraction), trough and recovery. At one time, business cycles...
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C-Share
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In a family of multi-class mutual funds, the class that has a constant load structure throughout the life span of the fund.
The class C fund usually has a higher management Expense ratio because of its lower load fee when compared to other mutual funds...
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Cabinet Crowd
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Members of the NYSE that typically trade in inactive bonds. Also known as the inactive Bond crowd or book crowd.
Members of the New York Stock Exchange who trade in infrequently traded bonds. The name cabinet crowd arises from the fact that these members...
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Cafeteria Plan
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An employee benefit plan that allows employees to choose from a variety of benefits to formulate a plan that best suits their needs.
Also known as 'cafeteria employee benefit plan' or 'flexible benefit plan'. Similar to a cafeteria where individuals can...
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Cage
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A term describing the department of a brokerage firm that receives and distributes physical securities.
A reference mainly used by industry workers, the cage is like a vault where all certificates and bonds are held in physical form. It is also the section...
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Calculation Agent
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A person who calculates the value of a Derivative or the amount owing from each party in a Swap agreement.
In most cases, a calculation Agent Will be a professional market maker. If more than one calculation Agent has been chosen, they are referred to...
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Call Center
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Centralized customer service and sales facility through which a majority (and sometimes all) of customer calls are routed.
A call centre or call center (see spelling differences) is a centralized office used for the purpose of receiving and transmitting...
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Callable bond
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A Bond that can be redeemed by the issuer prior to its maturity.
Usually a Premium is paid to the Bond owner when the Bond is called. Also known as a redeemable Bond.
The main cause of a call is a decline in Interest rates. If Interest rates have declined...
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CAMELS Rating
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A rating system that measures of the relative soundness of a bank.
The components of the CAMELS rating- stand for Capital, Assets, Management, Earnings, Liquidity and Sensitivity to Market risk. They are calculated on a 1-5 scale, and are used by bank...
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Canary Call
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A step-up Bond that cannot be called after completing its first-step period.
The issuer of the Bond reserves the Option to call back the Bond until the first step is reached. A canary call may only be exercised on predetermined dates.
The canary call...
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Cancel Former Order - CFO
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An order given by an investor instructing his/her Broker to cancel a previously placed order.
CFO's are typically followed by new orders placed on the same securities. For example, if you placed a Limit order to sell Cory's Tequila Corporation (CTC) at...
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Cancellation
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A notice informing a customer of the cancellation of an erroneous trade that has been credited to his or her account by the Broker.
Even stock brokers are subject to human error. When an error is made, set guidelines must be followed to rectify the situation.
...
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Candlestick
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A price chart that displays the High, Low, Open, and close for a Security each day over a specified period of time.
There are many trading strategies based upon patterns in candlestick Charting. A candlestick chart is a style of bar-chart used primarily...
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Capital Gain
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The increase in the value of an asset or investment above the original purchase cost.
It is an increase in the value of shares or assets in a fund. An investor looking for capital growth means that all dividends and Interest are automatically reinvested...
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Capital Market
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The market in which Long-term Debt instruments are traded.
The capital market is the market for securities, where companies and governments can raise Long-term funds.
The capital market includes the stock market and the Bond market. Financial regulators,...
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Capital requirement
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The amount of money a business needs for its normal operations.
It is also the amount of Cash and easily liquidated assets that a Broker/dealer or bank needs to meet SEC regulations, usually expressed as a proportion of total liabilities. In general, the...
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CAPM-Capital Asset Pricing Model
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An investment theory according to which investors require higher returns for higher risks.
More specifically, CAPM argues that the expected return on a Security is equal to the Risk-free rate of return plus a Risk Premium. It also suggests that all unsystematic...
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Captive Fund
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A fund that provides investment services solely to the one firm holding ownership.
A captive fund is funded entirely by one Institution or the clients of an Institution holding ownership. Institutions that hold captive funds include investment banks, insurance...
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Carbon Trade
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An idea presented in response to the Kyoto Protocol that involves the trading of greenhouse gas (GHG) emission rights between nations.
For example, if Country A exceeds its capacity of GHG and Country B has a surplus of capacity, a monetary agreement could...
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Card Board index
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An index used by some investors to gauge industrial production by using the output of cardboard boxes to predict the purchases of non-durable consumer goods.
This is considered to be a relatively good measure. It is estimated that nearly 75 to 80 percent...
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Carrot Equity
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Equity which allows for the opportunity to purchase more Equity if the company reaches certain financial goals.
This term is British slang. It likely originated from the practice of urging an animal onwards by attaching a carrot on a stick to its head.
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Cartel
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A small group of producers of a good or services who agree to regulate supply in an effort to control or manipulate prices.
The best known example of a cartel is probably the Organization of Petroleum Exporting Countries (OPEC).
Cartel members may...
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Cash
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Legal Tender or coins that can be used in Exchange goods, Debt, or services or money in the form of Notes and coins.
Cash also include the value of assets that can be converted into cash immediately, as reported by a company. This usually includes bank...
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Cash reserves
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Cash deposits, Short-term bank deposits, Money Market instruments, and Treasury Bills.
It is a bank regulation that sets the minimum reserves each bank must hold to customer deposits and Notes. These reserves are designed to satisfy withdrawal demands,...
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Cashier's check
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A check which cannot bounce because its face amount is paid to the bank when it is issued, and the bank then assumes the obligation.
A cashier's check (also known as a cashier's cheque (check), bank check, official check, teller's check, bank draft or...
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Cease-and-Desist Order
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An order issued after notice and opportunity for hearing, requiring a depository Institution, a holding company, or a depository Institution official to terminate unlawful, unsafe, or unsound banking practices.
Cease-and-desist orders are issued by the...
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Central assets account
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A single account at a brokerage or bank which includes both banking and brokerage services.
Most asset management accounts allow checking, a debit or credit card, automatic transfer of excess funds into a money management account, and Margin loans. It...
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Central Bank
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The generic name given to a country's primary monetary authority, such as the Federal Reserve System in the U.S.
Usually has responsibility for issuing Currency, administering monetary policy, holding member banks' deposits, and facilitating the nation's...
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Certificate of deposit (CD)
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A Debt instrument from a financial Institution.
When you purchase a CD from your credit union (usually some multiple of $500 or $1,000), you're lending it that amount for a specific period, for which you'll earn a specific amount of Interest. If you want...
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Channel Check
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A method of independent stock analysis whereby company information is supplied by third parties.
Many times, when stock analysts provide ratings upon specific companies the information used is supplied by the company being analyzed. When doing a channel...
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Charitable Donation
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A Gift made by an individual or an organization to a nonprofit organization, charity or private Foundation.
Charitable donations are commonly in the form of Cash, but can also take the form of Real Estate, motor vehicles, appreciated securities, clothing...
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Charter
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Government authorization to do business.
A credit union or other financial Institution must have a charter with a state or the federal government
A charter is the Grant of authority or rights, stating that the granter formally recognizes the prerogative...
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Chartered Financial Consultant (ChFC)
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A professional financial planning designation granted by The American College to individuals who complete a comprehensive curriculum in financial planning.
Prerequisites include passing a series of written examinations, meeting specified experience requirements...
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Check Cashing Outlet (CCO)
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Businesses that Cash government, payroll, and unsecured personal checks for consumers.
Additional services may include payday loans, money orders, and wire transfers. CCO growth has taken place in primarily lower-income neighborhoods where traditional...
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Check clearing
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In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. Clearing is necessary because the speed of trades is much faster than the cycle time for completing the Underlying transaction.
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Checkbook register
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An informal record of all deposits to and withdrawals from a given checking account.
A checkbook register is used to perform bank Reconciliation.
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China Investment Corporation (CIC)
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A government-sponsored entity of the People's Republic of China that seeks to invest in securities and commodities abroad.
The CIC was initially funded with around $200 billion, which originated from the issuance of Long-term treasury bonds by the People's...
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Chinese wall
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The ethical (not physical) barrier between different divisions of a financial (or other) Institution to avoid conflict of Interest.
A Chinese Wall is said to exist, for example, between the corporate-advisory area and the brokering department to separate...
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CHIPS
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Clearing House Interbank Payments System
The Clearing House Interbank Payments System (CHIPS) is the main privately held clearing house for large-value transactions in the United States, settling well over US$1 trillion a day in around 250,000 interbank...
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Churning
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Churning is often used as a generic term for buying and selling stocks rapidly.
Churning also refers to unconscious or conscious over-trading by an advisory stockbroker in a customer's account in order to generate Commission from the account.The consideration...
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Classified Shares
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The separation of company Equity into more than one class of common shares, usually called "Class A" and "Class B."
Also known as "classified stock".
The specific features of each class are set out in the corporate Charter and bylaws. Voting privileges...
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Clearinghouse funds
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Funds represented by a personal or business check that pass between Federal Reserve System banks prior to approval of credit.
Clearinghouse funds are in the process of being transmitted and reconciled through a central processing mechanism. Since these...
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Clearstream
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An electronic Clearinghouse that allows financial institutions to settle securities transactions. Along with Euro Clear, it is the principal Clearinghouse for Euro market transactions.
It is based in Luxembourg, of Deutsche Börse.
It was created in...
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Cleave
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The breaking of a gem stone into two or more pieces during the cutting or polishing process. Naturally occurring impurities in the stones increase the likelihood that a stone Will break apart.
Large gem stones are very rare. When large gemstones are found,...
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Closing Cost
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Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Also called "settlement cost."
The point in time at which the contract is actually executed and the title to the property is conveyed...
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Closing Price
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The final price at which a Security is traded on a given trading day.
The Closing Price represents the most up-to-date Valuation of a Security until trading commences again on the next trading day.
Most financial instruments are traded after hours...
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Co-Housing
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A hybrid form of housing that combines private and communal forms of living.
Residents occupy individual, complete housing units and share additional kitchen, dining, and recreational facilities with other residents. Ownership and design may take a variety...
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Cockroach Theory
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A market theory that suggests that when a company reveals bad news to the public, there may be many more related negative events that have yet to be revealed.
The term comes from the common belief that seeing one cockroach is usually evidence that there...
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COFI-Cost of Funds Index
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A Yield index based upon the cost of funds to savings & loan institutions in the San Francisco Federal Home Loan Bank District. It is one of the indexes commonly used to set the rate of adjustable rate mortgages.
Cost of Funds Index or COFI is a regional...
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Collateral
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An asset such as an automobile or a piece of property that a person uses to take out a loan, promising to give the asset to the lender if loan payments cannot be met.
Collateral also refers to the collection of receivables, such as mortgages, which are...
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Commercial bank
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An Institution which accepts deposits, makes business loans, and offers related services.
Commercial banks also allow for a variety of Deposit accounts, such as checking, savings, and time Deposit. These institutions are run to make a profit and owned...
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Common Stock
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A unit of ownership in a Corporation.
A Security representing partial ownership, also called Equity, in a Corporation, and which entitles shareholders to participate in stockholder meetings and to vote for the board of directors is called a common stock....
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Community Reinvestment Act (CRA)
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A law that requires banks and other financial institutions to meet the credit needs of their communities including Low and moderate income sections of the community. The act also requires banks to submit reports.
Community Reinvestment Act is a United...
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Compound Annual Growth Rate - CAGR
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The year-over-year growth rate of an investment over a specified period of time.
The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.
...
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Compounding
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The ability of an asset to generate Earnings, which are then reinvested in order to generate their own Earnings. In other words, compounding refers to generating Earnings from previous Earnings.
Also known as "compound Interest".
Suppose you invest...
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Conditional Prepayment Rate - CPR
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Conditional Prepayment Rate or CPR is a measure of the rate of payments from a Bond that pays principal payments in excess of scheduled payments (so-called prepayments).
CPR is defined as the annualized rate of principal payments beyond the regularly scheduled...
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Condominium
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A large property complex that is divided into individual units and sold.
Ownership usually includes a non-exclusive Interest in certain "common properties" controlled by the condominium management. The management is usually made up of a board of unit owners...
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Condotel
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A Condominium project that is operated as a hotel with a registration desk, cleaning service and more.
The units are individually owned. Unit owners also have the Option to place their unit in the hotels rental program where it is rented out like any other...
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Conglomerate
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A Corporation that is made up of a number of different, seemingly unrelated businesses.
In a conglomerate, one company owns a controlling Stake in a number of smaller companies, which conduct business separately. Each of a conglomerate's Subsidiary businesses...
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Consumer bank
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An Institution which accepts deposits, makes personal loans, and offers related services
Consumer bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal...
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Consumer Credit
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The general term for loans given to persons usually on an unsecured Basis and providing for monthly repayment.
Installment loans and personal loans are also referred to as consumer credit (unless the loan is used for business purposes or to purchase commercial...
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Contrarian
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An Investment Style that invests against prevailing market trends and does not follow the prevailing consensus view.
A Contrarian buys assets that are performing poorly and then selling when they perform well.
A contrarian investor believes that the...
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Controller
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In most organizations the controller is the top managerial and financial accountant.
The controller supervises the accounting department and assists management in interpreting and utilizing managerial accounting information. Also known as the comptroller....
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Cook The Books
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A buzzword describing fraudulent activities performed by corporations in order to falsify their financial statements.
Usually, cooking the books involves augmenting financial data to Yield previously non-existent Earnings.
Examples of techniques used...
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Cooling Degree Day - CDD
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The number of degrees that a day's average temperature is above 65o Fahrenheit, the temperature at which people Will start to use air conditioning to cool their buildings.
Heating degree day (HDD) and cooling degree day (CDD) are quantitative indices designed...
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Corporate Cannibalism
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An act of self-infringement upon market share by corporations through the issuance of new products.
Also known as "market cannibalization".
Corporate cannibalism occurs when companies introduce new products into a market where these products are already...
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Corporate Governance
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The relationship between all the stakeholders in a company.
This includes the shareholders, directors, and management of a company, as defined by the corporate Charter, bylaws, formal policy, and rule of law. Ethical companies are said to have excellent...
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Corporation
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A legal business entity created under federal or provincial statutes.
Being a legal entity that is separate and distinct from its owners, shareholders have no legal liability for its debts. Corporations enjoy most of the rights and responsibilities that...
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Correlation
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Statistical measure of the degree to which the movements of two variables are related.
A Correlation coefficient is a number between -1 and 1, which measures the degree to which two variables are linearly related. If there is perfect linear relationship...
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Correspondent
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The name given to a bank, Broker, dealer, or financial Institution that acts on behalf of another financial Institution with limited or restricted access to the financial markets where a transaction must occur.
Commonly done by smaller financial corporations...
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Coskewness
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A statistical measure that calculates the symmetry of a variable's probability Distribution in relation to another variable's probability Distribution symmetry.
All else being equal, a positive coskewness means that the first variable's probability Distribution...
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Cost of Deposit Index (CODI)
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The Cost of Deposit Index (CODI) is one of several indexes commonly used to set the adjustment amount of an adjustable rate mortgage (ARM).
CODI is typically calculated as a 12-month moving average of three-month certificate of Deposit, or CD, yields as...
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Cost of Goods Sold - COGS
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A figure reflecting the cost of the product or good that a company sells to generate revenue, appearing on the income Statement as an Expense unto itself. Also referred to as "cost of sales."
COGS is the costs that go into creating the products that a...
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Cost Per Click - CPC
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Cost Per click (CPC) is the amount that you pay search engines and other internet publishers for one click on your ad that brings one visitor to your website.
A web site which uses CPCs would bill by the number of times a visitor clicks on a banner, instead...
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Cost-of-Living Adjustment (COLA)
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Adjustment of wages designed to Offset changes in the cost of living, usually as measured by the Consumer Price Index.
COLAs are key bargaining issues in labor contracts and are politically sensitive elements of social Security payments and federal pension...
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Cost-Push Inflation
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When Inflation increases because of a rise in the costs of production.
This is a phenomenon in which the general price levels rise (Inflation) due to increases in the cost of wages and raw materials.
Cost-push Inflation develops because the higher...
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Counterfeit
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Fake, usually referring to phony Currency.
The Secret Service is in charge of investigating counterfeit money in the US and can tell you a lot about its history and what it looks like. A counterfeit is an imitation (often of Currency, documents, or manufactured...
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Coupon
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The Interest rate on a Security that the issuer promises to pay to the Holder until maturity which is expressed as an annual percentage of face value.
It is the Interest rate on a Bond. It's expressed as an annual percentage of the face value. A Bond that...
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Coupon Bond
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A Debt obligation with coupons attached that represent semiannual Interest payments. Also known as a "bearer Bond".
No record of the purchaser is kept by the issuer, and the purchaser's name is not printed on the certificate. The Coupon or Coupon rate...
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CPI
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Short for consumer price index.
A measure of the cost of living determined by the Bureau of Labor Statistics. A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care....
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Credit Life and Disability Insurance
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A contract binding an insurance company to pay the principal plus Interest on a loan in the event of the insured's death or insurance to make payments in the event of disability.
This insurance is offered to applicants on most loans but is not a requirement...
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Credit Rating
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A formal evaluation of an individual's or company's credit history and capability of repaying obligations.
Formal evaluation of a company's ability to pay Interest and repay principal on borrowed money, as published by a credit rating agency or service.
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Cross Calling
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A method of redeeming bonds using surplus funds provided from an unrelated Bond issue.
Cross calling occurs when a lender, which repackages its loans into new securities, uses prepayments from Low Interest rate loans to repay principal on the High-Yield...
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Crossed Check
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Any check that is crossed with two parallel lines, either across the whole check or through the top left hand corner of the check.
This symbol means that the check can only be deposited directly into a bank account and cannot be immediately cashed by a...
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Crown Corporation
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Any Corporation that is established and regulated by a country's government.
In the Commonwealth realms, a Crown Corporation is a state-controlled company or enterprise. Equivalent names in other jurisdictions include government trading enterprises, government-owned...
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Currency
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A currency is a unit of Exchange, facilitating the transfer of goods and/or services.
It is one form of money, where money is anything that serves as a medium of Exchange, a store of value, and a standard of value. A currency is the dominant medium of...
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Currency trading
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The act of buying and selling world currencies.
Currency trading is most often engaged in by banks and other institutions, for the purposes of international trade. Individual investors may engage in Currency trading as well, attempting to benefit from...
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Custodial account
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An account which is created for the benefit of a minor, usually at a bank, Mutual Fund, or brokerage, with an adult as the Custodian.
Custodial account is a financial account set up for a minor, but administered by a responsible adult, known as a Custodian,...
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Custodian
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An Agent, bank, Trust company, or other organization which holds and safeguards an individual's, Mutual Fund's, or investment company's assets for them.
Custodian bank, is an organization responsible for safeguarding a firm's or individual's financial assets.
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Custodian Services
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This is a service whereby a person or entity agrees to hold and manage assets on behalf of another person or entity.
It can be a financial Institution that has the legal responsibility for a customer's securities. This implies management as well as safekeeping.
...
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Cyberspace
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A term used to describe the Range of information resources available through computer networks such as the Internet.
The term was coined by science fiction author William Gibson. Cyberspace is a domain characterized by the use of electronics and the electromagnetic...
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Cyclical Unemployment
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A factor of overall unemployment that relates to the cyclical trends in growth and production that occur within the Business Cycle.
When business cycles are in their High, cyclical unemployment Will be Low because total economic output is being maximized....
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Daisy Chain
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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.
It is an illegal practice by brokers of creating artificial transactions to give...
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Date draft
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A draft that matures a specified number of days after its issue date, regardless of the date of acceptance.
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DBA
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Doing Business As.
A formal notice that an individual, company or organization is conducting business under a different name. Often used in contracts.
DBA is a legal term, meaning that the name of the business or operation does not include the legal...
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De Novo
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In Financial terminology, numbers reported by newly founded companies (especially the financial services industry) are qualified as "de novo," to distinguish them from older companies.
For example, "growth de novo" means growth of newly started companies
...
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De-merger
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A corporate strategy to sell off subsidiaries or divisions of a company.
For example, in 2001 British Telecom did a de-merger of its mobile phone arm, BT Wireless, in an attempt to boost the performance of its stock. British Telecom took this action because...
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Dead Cat Bounce
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A 'dead cat bounce' is a rather unpleasant term used to describe a small, Short-term recovery in a falling stock's price.
If a cat was dropped from the top of a tall building, it would bounce when hitting the ground. Yet it wouldn't bounce much and still...
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Death Cross
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A crossover resulting from a Security's Long-term moving average breaking above its Short-term moving average or support level.
As Long-term indicators carry more weight, this trend indicates a Bear market on the horizon and is reinforced by High trading...
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Debt
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Money, goods, or services that one party is obligated to pay to another in accordance with an expressed or implied agreement.
Debt may or may not be secured; General name for bonds, Notes, mortgages, and other forms of paper evidencing amounts owed and...
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Debt Consolidation
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Using the proceeds of a new loan to pay off one or more existing loans.
Usually done when the client has trouble meeting their existing obligations and is able to lower their monthly payment with another more favorable loan. Debt consolidation can simply...
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Deduction
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Any item or expenditure subtracted from gross income to reduce the amount of income subject to Tax.
Also referred to as "allowable deduction". A Tax deduction or a Tax-deductible Expense affects a taxpayer's income Tax. A Tax deduction represents an Expense...
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Defined Benefit Plan
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A qualified retirement plan under which a retiring employee Will receive a guaranteed retirement fund, usually payable in installments.
Annual contributions may be made to the plan by the employer at the level needed to fund the benefit. The annual contributions...
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Delinquency
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A loan in which a payment is overdue but not yet in Default.
A delinquent is a person who fails to pay a Debt or other financial obligation, like a mortgage. Failure to cure a delinquent payment can result in repossession or foreclosure.
A mortgage...
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Demand Deposit
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An account from which deposited funds can be withdrawn at any time without any notice to the depository Institution.
A Deposit that can be withdrawn at any time without advance notice. The most common type is the checking account. This account allows you...
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Demand-Pull Inflation
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A term used in Keynesian Economics to describe the scenario that occurs when price levels rise because of an imbalance in the aggregate supply and demand.
When the aggregate demand in an economy strongly outweighs the aggregate supply, prices increase....
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Department of Veterans Affairs
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A federal agency that provides, among other services, guaranteed home loans for veterans.
The terms and rates of such loans are usually more favorable that those of conventional home loans. The Department of Veterans Affairs does not directly originate...
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Deposit
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Money given in advance to show intention to complete the purchase of a property or money transferred into a customer's account at a financial Institution.
Deposit is the money given by a buyer when making a formal Offer to bind the sale. It is also called...
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Deposit Ceiling Rates of Interest
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Maximum Interest rates that can be paid on savings and time deposits at federally insured commercial banks, mutual savings banks, savings and loan associations, and credit unions.
Ceilings on credit union deposits are established by the National Credit...
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Deposit insurance
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A system that guarantees that people who Deposit their money in a financial Institution are protected if the Institution fails.
Depending on the type of account and ownership, this protection totals $100,000 or more. Two government agencies provide this...
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Deposit multiplier
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A value representing the ratio of bank reserves to bank deposits.
If bank reserves increase, bank deposits may increase by the amount of the increase times the Deposit multiplier.
It is a function that describes the amount of money created in a bank's...
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Deposit Protection Scheme
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A scheme set up to give limited financial protection to people with deposits in authorized banks which fail.
Banks are authorized and supervised by the Financial Services Authority (FSA) and they are obliged to provide details of their Deposit protection...
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Digital money
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A form of electronic money that can be used to pay for goods and services, most often on the internet or another electronic medium.
Upon receiving the buyer's authorization of the payment, the vendor contacts the issuing bank and receives a transfer of...
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Digital wallet
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Encryption software that conducts secure transactions online in a fashion that resembles using a physical wallet.
A digital wallet (also known as an e-wallet) allows users to make electronic commerce transactions quickly and securely .A digital wallet,...
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DINKS
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Dual Income, No Kids - DINKS
A household in which both couples earn and no children (either both partners are working or one has two incomes).
DINKS are often the targeted by marketing efforts for luxury items such as expensive cars and vacations.
...
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Discrete compounding
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The process of calculating Interest and adding it to existing principal and Interest at finite time intervals, such as daily, monthly or yearly.
Compounding is the ability of an asset to generate Earnings, which are then reinvested in order to generate...
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Dividend
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A portion of Earnings paid to the owners of a credit union or Corporation. (A credit union's owners are called members; a Corporation's owners are called shareholders. Credit unions and banks both pay savers a percentage of the money in their savings accounts....
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Dollar Cost Averaging
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Investment of a fixed amount of money at regular intervals, usually each month.
This process results in the purchase of extra shares during market downturns and fewer shares during market upturns. Dollar-cost averaging is based on the belief that the market...
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Domicile
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The country or place of a person's permanent home, which may differ from that person's nationality or place of residence.
Domicile, which is important for taxation purposes and the application of certain financial regulations, is determined both by the...
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Donation
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Legal transaction by which a giver, while still living, transfers irrevocably, freely and without delay, the property of a good to a done who accepts it.
In France, a donation is generally certified by an act drawn up by a notary. A donation may take various...
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Dotcom
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A company that embraces the internet as the chief component in its business.
A Dot-com company, or simply a dot-com, is a company which does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com"...
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Down payment
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An initial amount you pay at the time of purchase, in Cash, to reduce the total amount you have to finance.
Down payment is a term used in the context of the purchase of expensive items such as a car and a house, whereby the payment is the initial upfront...
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Downgrade
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A negative change in the rating of a Security.
This situation occurs when analysts feel that the Future prospects for the Security have weakened from the original recommendation, usually due to a material and fundamental change in the company's operations,...
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Drawdown
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A measure of a losing period during an investment record.
It is calculated as the percent change from a price peak to trough. This used as a measure of Risk. It is any losing period during an investment record. It is defined as the percent retrenchment...
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Dutch Auction
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A public offering Auction structure in which the price of the offering is set after taking in all bids and determining the highest price at which the total offering can be sold. In this type of Auction, investors place a Bid for the amount they are willing...
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Earmarking
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It is a policy or fund, part of a larger unit/group is considered to belong to one designated person. Normally in relation to certain pension contracts.
Funds (or capital) that are set aside to pay for a specific project or event. In some cases, the term...
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Earnest Money
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A Deposit made by the potential home buyer to show that he or she is serious about buying the house.
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Earnings
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The Net Income of a company during a specific period. Generally, but not necessarily, referring to after-Tax income.
It is the compensation from participation in a business, including wages, salary, tips, commissions and bonuses.
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Easy-To-Borrow List
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A list of securities deemed to be available for borrowing in Short selling transactions because their Delivery is assured.
Availability is usually due to their accessible nature and/or High number of outstanding shares.Also called as a blanket or standing...
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Economics
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A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.
Economics often referred to as "the dismal science", can generally be broken down into: Macroeconomics,...
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Efficiency of Capital Structure
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The acceptable Debt/Equity ratio varies according to the segment a company is active in.
Depending on the nature of a company's business, greater or lower Debt levels can be tolerated. In order to finance its operations, a company hardly ever uses the...
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Electronic Banking
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Many banking institutions provide computerized network services that provide account holders access to their accounts by personal computer.
Also known as Online banking (or Internet banking),electronic banking allows customers to conduct financial transactions...
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Electronic Order Matching
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In Electronic Order matching systems price makers enters prices into a computer system.
The prices are then displayed on a screen. The takers can select the displayed prices via their keyboard.
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Elephants
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Slang for large institutions that have the monetary base to make High volumes trades.
Due to the large volumes of stock that elephants deal in, any investment decisions that they make Will have a major influence on the price of the Underlying financial...
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Elliott Wave Theory
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Theory named after Ralph Nelson Elliott, who concluded that the movement of the stock market could be predicted by observing and identifying a repetitive pattern of waves.
Based on rhythms found in nature, the theory suggests that the market moves up in...
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Emoluments
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Things that comprise your employment package(s).
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EMTN (Euro medium term note)
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Medium term Bond whose issue is uninterrupted, in accordance with the principal characteristics defined within the framework of a program of issuing : Currency, ceiling of the issuing, duration& maturity.
Medium Term Note - MTN is a note that usually matures...
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Encryption
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A method for ensuring the privacy and Security of a consumer's personal finance information at a bank or financial Institution Web site.
Encryption is the process of scrambling data so that only the intended receiver can use it. To be effective, encryption...
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Enterprise Multiple
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A ratio used to determine the value of a company.
The enterprise multiple looks at a firm as a potential Acquirer would, because it takes Debt into account - an item which other Multiples like the P/E ratio do not include.
A Low ratio indicates that...
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Entitlement Community
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A city or urban community with a population of 50,000 or more which, because of its size, receives Community Development Block Grant funds directly from the federal government.
Non-entitlement communities receive CDBG funds through the state office of economic...
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Entrepreneur
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Someone who starts his or her own business.
A person who, rather than working as an employee, runs a small business and assumes all the Risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly...
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Escheat
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When property and/or an estate is transferred to the government because a person has died without a Will or an Heir to his or her estate.
Escheat is a common law that censures that property is not left in limbo and ownerless. It is the transfer of the...
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Escrow
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Funds paid by one party to another (the escrow Agent) to hold until the occurrence of a specific event, after which the funds are released to a designated individual.
The money is held in a Trust fund, provided by the lender for the buyer. Documents, real...
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Estate Tax
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A Tax levied on an individual's estate or valuables if they amount to over $600,000.
This Tax does not apply between spouses, who can leave any amount to one another upon death--a right known as the unlimited marital Deduction. Therefore, the estate Tax...
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ETF (Exchange-traded Fund)
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An Exchange-traded fund, or ETF, is a basket of stocks traded on a stock Exchange. Each ETF typically represents a particular sector of the economy or of a country at large.
For instance, the iUnits traded on the TSE are a bundle of 60 large Canadian stocks...
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Ethical investment
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An investment philosophy that avoids nasty companies.
Nasty is in the eye of the beholder, but normally includes arms companies, alcohol companies and companies considered to be environmentally harmful. When looking at these funds ensure that their definition...
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Ethical mutual fund
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Mutual Fund whose objective of management is to reconcile profitability and morals concerns.
The principal categories of ethical funds relate to:
- funds with humane or ecological vocation, resting on the concept of the sharing of the performance and...
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Eurobond
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An international Bond denominated in a Currency not native to the country in which it is issued.
The Eurobond market is an important source of capital for multinational companies and foreign governments, including third world governm2ents.
Contrary...
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European Central Bank (ECB)
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On 1 January 1999, The ECB became the independent Central Bank of the Euro area on 1 January 1999.
ECB is responsible for creating and carrying out EU monetary policy, including the setting of Short-term Interest rates. The ECB also has the sole right...
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European Savings Directive
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Introduced to ensure that individuals pay the correct amount of Tax to the correct country, reducing any advantage gained by investing elsewhere in the European Union.
In the European Union, member states have concluded a multilateral agreement on information...
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Event-Driven
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Strategies that focus on the actual or anticipated occurrence of an event such as a merger, corporate restructuring or Bankruptcy.
The key to the profitability of such investments is the ability to understand the likelihood of an event being completed...
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Ex-Legal
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Municipal bonds that are delivered without a legal opinion from a Bond law firm.
Most bonds have the legal opinion of a Bond law firm printed directly on them. An investor should approach ex-legal bonds with a greater level of caution because of their...
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Exchange
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An Exchange is a market place in which financial contracts are bought and sold; traditionally in a central, physical location called trading floor.
More and more often, though, exchanges take place online between sellers and buyers of traded instruments.
...
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Exchange-Traded Fund - ETF
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A Security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an Exchange, thus experiencing price changes throughout the day as it is traded.
Because it trades like a stock whose price fluctuates daily,...
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Exhaustion Gap
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A drop that occurs after the rapid rise in a stock's price begins to tail off.
An exhaustion gap usually reflects falling demand for a particular stock. An exhaustion gap usually reflects falling demand for a particular stock. Many technical analysts...
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Expense
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The economic costs that a business incurs through its operations to earn revenue.
In order to maximize profits, businesses must attempt to minimize expenses without also cutting into revenues. Because expenses are such an important indicator of a business's...
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Expiry Date
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Options expire on a specified point in time called the "expiry date".
It means that they have a limited lifespan. The day on which an options or Futures Contract is no longer valid and, therefore, ceases to exist. Exchange-traded options have a number...
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Explicit Cost
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A cost that is represented by lost opportunity in actual Cash payments.
A business Expense that is easily identified and accounted for. Explicit costs represent Clear, obvious Cash outflows from a business that reduces its bottom-line profitability. This...
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Fair Credit Billing Act
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Passed by Congress in 1975 to help customers resolve billing disputes with card issuers.
The act requires issuers to credit payments to a customer's account the day they are received. To be protected under the law, the consumer must write to the issuer...
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Fair Weather Fund
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A type of Mutual Fund which tend to perform well during a Bull market.
In other words, it is a Mutual Fund that generally surpasses the market when the market is doing well, and underperforms the market when the market is doing poorly.
Fair weather...
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Fairness Opinion
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A report given by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or Acquisition.
It serves as a document used for Guidance in a merger, takeover, or Acquisition. Basically, it's a professional...
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Fallen Angel
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A Bond that was once investment grade but has since been reduced to junk Bond status or a stock that has fallen substantially from its all time highs.
There is a fine line between fallen angels that are value stocks and those that are headed straight towards...
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Fast Tape
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Rather than quoting a specific price, a fast tape Will give a Range of prices marked by the word "fast" to indicate that the market is moving rapidly.
It is a type of futures market that happens when a single traded price is unavailable because of the...
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Featherbedding
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Term used to describe the practice of a labor union requiring an employer to hire more workers than necessary for a particular task.
Featherbedding has developed over time as unions respond to workers being laid off because of technological change. These...
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Fed Model
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A model thought to be used by the Federal Reserve that hypothesizes a relationship between Long-term treasury Notes and the market return of equities.
The Fed doesn't endorse this tool. In fact, it was named the "Fed model" by Prudential Securities strategist...
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Federal Covered Advisor
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An investment advisor that manages over $25 million in assets for other investors.
These investors must meet regulations of individual states and file with the SEC yearly in order to ensure that all information is recent and accurate.
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Federal Reserve Board
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The 7-member Board of Governors that oversees Federal Reserve Banks, establishes monetary policy (Interest rates, credit, etc.), and monitors the economic health of the country.
Its members are appointed by the President subject to Senate confirmation,...
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FHA-Federal Housing Administration
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The Federal Housing Administration (FHA) is a United States government agency created as part of the National Housing Act of 1934. The goals of this organization are: to improve housing standards and conditions; to provide an adequate home financing system...
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Fiduciary Certification
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It is the certification process to ensure that fiduciaries uphold the prudent investment guidelines and practices set forth by state regulations.
Certified fiduciary needs to fulfill all legal requirements set forth by the designation and adhere to the...
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Fiduciary Risk
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A type of Risk that accounts for the possibility of a trustee/Agent who is not optimally performing in the beneficiary's best interests.
This does not mean that the trustee is using the beneficiary's resources for his/her own benefit; this could be the...
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Finance company
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A company which provides loans to customers, usually at higher Interest rates than banks, building societies and credit unions is a finance company.
An Institution that uses its funds chiefly to purchase financial assets (deposits, loans, securities) as...
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Financial Planner
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A qualified investment professional who helps individuals and corporations meet their Long-term financial objectives by analyzing the client's status and setting a program to achieve that client's goals.
He helps people to deal with various personal financial...
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Firewall
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A Security procedure that places a specially programmed computer system between an organization's Local area network (LAN) and the Internet.
It's a legal barrier that prevents both the transference of inside information and the performance of financial...
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Fiscal Year - FY
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Any 12-month period that a company uses for accounting purposes.
The fiscal year may or may not be the same as a calendar year. A fiscal year (or financial year, or sometimes budget year) is a period used for calculating annual ("yearly") financial statements...
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Five-Year Rule
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If a retirement account owner dies before the required beginning date for receiving distributions, the beneficiary may distribute the inherited assets over his/her (the beneficiary's) life expectancy or distribute the assets under the five-year rule.
Under...
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Fixed Rate
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A traditional approach to determining the finance charge payable on an extension of credit.
A predetermined and certain rate of Interest is applied to the principal.
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Flower Bond
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Fixed income products that were originally purchased by investors at a Discount for the purpose of paying federal estate taxes upon their maturity.
Investors would purchase these bonds before their death in anticipation of federal estate taxes. If the...
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Fool's Gold
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A gold-colored mineral that is often mistaken for real gold. Also known as Iron Pyrite.
During historical periods of gold rushes, many less-than-knowledgeable miners would frequently believe that they hit the mother load upon finding a huge cache of fool's...
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Forecasting
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The process of analyzing current and historical data to determine Future trends.
Economic forecasting is the process of making predictions about the economy as a whole or in part.
Stock analysts use various forecasting methods to determine Future stock...
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Foreclosure - FCL
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Usually refers to the repossession of Real Estate.
The legal process required to gain possession of a house when a specified number of mortgage payments have been missed and the client has not sold the house on his own.
FCL is a situation in which...
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Foreign Branch Bank
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A type of foreign bank that is obligated to follow the regulations of both the home and host countries.
Because the foreign branch banks' loan limits are based on the parent bank's capital, foreign banks can provide more loans than Subsidiary banks.
...
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Foreign Exchange Dealers' Association of India -FEDAI.
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A group of banks and financial institutions that deal in foreign Exchange transactions in India.
FEDAI sets transaction commissions and trading rules and guidelines. It is a self regulatory body& It's major activities include framing of rules governing...
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Foreign Invested Enterprise - FIE
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Any one of a number of legal structures under which a company can participate in the foreign economy.
FIEs tend to have tight government regulation at nearly every important business juncture, which limits the efficiency at which any foreign company can...
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Forensic Accounting
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Forensic Accounting utilizes accounting, auditing, and investigative skills to conduct an examination into a company's financial statements. Thus, providing an accounting analysis that is suitable for court.
Forensic accountants are trained to look beyond...
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Foundation
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A private, non-profit, Tax-free organization that collects and distributes money for charitable purposes.
A foundation is a legal categorization of nonprofit organizations. Foundations may also and often have charitable purposes. This type of nonprofit...
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Fractional reserve banking
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A banking system in which only a fraction of the total deposits managed by a bank must be kept in reserve.
The amount of the deposits equals the amount of the reserves times the Deposit multiplier. In the U.S., this system is maintained by the Federal...
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Free Credit Balance
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The Cash held by a Broker in a customer's Margin account that can be withdrawn by the customer at any time without restriction.
This balance is calculated as the total remaining money in a Margin account after Margin requirements, Short sale proceeds and...
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Front-End Load
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A Commission or sales charge that has to be paid at the time of the initial purchase for an investment, usually mutual funds and insurance policies.
It is cut from the investment amount resulting in lowering the size of the investment.
Front-end...
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Fulcrum Fee
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An additional, performance-based fee an advisor charges a client.
The advisor charges the fee when he or she achieves a return above a specified Benchmark.
This is one of the only performance-based fees that advisors are allowed to charge clients....
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Full-Service Broker
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A Broker that provides a large variety of services to its clients, including research and advice, retirement planning, Tax tips, and much more.
This all comes at a price, as commissions at full-service brokerages are much higher than those at Discount...
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G-10 (Group of Ten) Countries
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The Group of Ten or G10 refers to the group of countries that have agreed to participate in the General Arrangements to Borrow (GAB)
Member banks coordinate banking industry supervision through the Bank for International Settlements and monetary policy...
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Garbatrage
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An increase in price and trading Volume in a particular sector of the economy that results from a recent takeover creating a change in sentiment towards the sector. Also known as Rumortrage.
The term is usually used in reference to firms not directly related...
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Gatekeeper
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Specialist advisers who assist institutional investors in their private Equity allocation decisions.
Institutional investors with little experience of the asset class or those with limited resources often use them to help manage their private Equity allocation....
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GDP
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A country's Gross Domestic Product (GDP) is a measure of the total flow of goods and services produced over a specified time period, usually a year.
The word "gross" means that no Deduction for the value of expenditure on capital goods for replacement...
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Gemology
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The combined art and science of studying, cutting, valuing, buying and selling precious stones. Some of the most precious stones that gemologists deal in include diamonds, rubies, sapphires and emeralds.
The science, art and profession of identifying and...
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General partner
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A partner in a business who has unlimited liability.
This can refer to the top-ranking partners at a private Equity firm as well as the firm managing the private Equity fund.
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General partner contribution/commitment
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The amount of capital that the fund manager contributes to its own fund.
This is an important way for limited partners to ensure that their interests are aligned with those of the General partner. The US Department of Treasury recently removed the legal...
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General Partnership
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An arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership's obligations.
In the commercial and legal parlance of most countries, a general partnership or simply...
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Generally Accepted Accounting Principles GAAP
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Conventions, rules, and procedures that define accepted accounting practice, including broad guidelines as well as detailed procedures.
The basic doctrine was set forth by the Accounting Principles Board of the American Institute of Certified Public Accountants,...
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Gift
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A transfer of an asset such as property or money etc from one person to another where no payment of any kind is given by the receiving person to the donor.
Transfers of this kind may be subject to inheritance Tax if the value is above a certain amount...
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Gilts
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Risk-free bonds issued by the British government.
They are the equivalent of U.S. Treasury Securities. The name "gilt" comes from the original British government certifications that had gilded edges. Refers to the Debt securities issued by the Bank of...
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Global Investment Performance Standards - GIPS
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Ethical standards to be used by investment managers for creating performance presentations that ensure fair representation and full disclosure of investment performance results.
The GIPS is put out by the Chartered Financial Analyst Institute (CFA Institute),...
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Globalization
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The tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnectedness of different markets.
Globalization has had the effect of markedly increasing not...
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Gold Bug
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A person who is bullish on gold.
The term gold bug is a (sometimes pejorative) term used to describe investors who are very bullish on buying the commodity gold .Gold bugs believe that gold is still a stable source of wealth like it was during the years...
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Gold card
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A plastic payment card which normally allows the Holder higher spending limits over the standard card.
Also loan facilities are sometimes available. People holding such a card is often required to be earning a minimum salary level. Gold cards are usually...
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Golden Cross
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In Technical Analysis, a Golden Cross is formed when a Short moving average breaks above a longer one when both rise.
The signal is considered much stronger if the cross is formed after the moving averages have stayed close to each other for some time....
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Good Faith Estimate
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A breakdown of cost to originate a mortgage loan.
In the u.s,a good faith estimate must be provided by a mortgage lender or Broker to a customer, as required by the Real Estate Settlement Procedures Act (RESPA). The estimate must include an itemized...
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Goodwill
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An account that can be found in the assets portion of a company's Balance Sheet.
Goodwill can often arise when one company is purchased by another company. In an Acquisition, the amount paid for the company over Book Value usually accounts for the target...
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Government bond
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A government Bond is a Bond issued by a national government denominated in the country's own Currency. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds.
One of the world's largest and most liquid Bond...
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Graduated Payment
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Repayment terms calling for gradual increases in the payments on a closed-end obligation.
A graduated payment loan usually involves negative Amortization. Amortization is an accounting practice that companies use to write off intangible rights or assets...
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Grant
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Grants are funds dispersed by one party (Grant Makers), often a Government Department, Corporation, Foundation or Trust, often (but not always) to a non profit entity, educational Institution or business
A financial aid award that does not require repayment....
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Gray List
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A list of stocks that is ineligible for trade by an investment bank's Risk Arbitrage division. The gray list is composed of firms working with the investment bank, often in matters of mergers and acquisitions.
While the Risk Arbitrage division is barred...
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Green shoe Option
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A provision contained in an Underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer.
If the demand for a Security issue proves higher than expected green shoe Option is executed. Legally...
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Greenback
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A slang term for U.S. paper dollars.
Greenbacks got their name from their color, however, in the mid-1800s, "greenback" was a negative term. During this time, the Continental Congress did not have taxing authority. As a result, the greenbacks did not have...
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Greenmail
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A situation in which a large block of stock is held by an unfriendly company.
This forces the target company to repurchase the stock at a substantial Premium to prevent a takeover. It is also known as a "Bon Voyage Bonus" or a "Goodbye Kiss". Like blackmail,...
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Greensheet
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An information circular that is passed around an Underwriting firm that indicates the features of a new issue.
A green sheet contains both advantages and disadvantages of a new issue so salespeople can attempt to solicit the issue to the public. A green...
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Gridlock
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A government, business or Institution's inability to establish change due to either complex or conflicting procedures within the administrative framework.
In business as in traffic, little to nothing gets done when gridlock happens. This can be highly...
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Guaranteed Investment Certificates
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A Deposit instrument paying a predetermined rate of Interest for a specified term, available from banks, Trust companies and other financial institutions.
A Guaranteed Investment Certificate is a Canadian investment that offers a guaranteed rate of return...
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Guaranty
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A term used to refer contract in which one person becomes liable to perform a specific act or duty for another upon that person's failure to perform.
A guarantor promises either that another person Will perform his or her duty or that, if the other person...
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Guidance
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Information that a company provides as an indication or estimate of their Future Earnings. Also known as "Earnings guidance."
Guidance reports estimating a company's Future Earnings have some influence over Analyst stock ratings and investor decisions...
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Gunslinger
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A High-strung Portfolio manager who invests in very High Risk stock looking for High returns.
Better to stay away from these guys, or they could end up shooting you in the foot. Gunslinger is a aggressive Portfolio manager who buys speculative stocks,...
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Hands-Off Investor
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An investor who accepts a Passive Management role in a company, even while holding a large portion of the company's stock.
Hands off investors usually take a passive Position because they are satisfied with the company's current management or they do not...
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Hands-On Investor
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An investor who holds a large portion of a company's shares and takes an Active Management role.
Investor who takes an active role in the management of the company whose stock he or she has bought.
The majority shareholders are usually hands-on investors...
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Hard Landing
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A term used to describe an economy going into Recession as the government attempts to slow down Inflation.
The Fed Will try to avoid a hard landing by raising Interest rates only enough to slow the economy down without putting it into Recession (a soft...
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Hard Money Loan
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A loan of "last resort" or a Short-term Bridge loan.
Hard money loans are backed by the value of the property, not by the credit worthiness of the borrower. Since the property itself is used as the only protection against Default by the borrower, hard...
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Harmonic Average
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The mean of a set of positive variables.
It is calculated by dividing the number of observations by the reciprocal of each number in the series.
Also known as "harmonic mean". Alternately, the harmonic average could be thought of as the reciprocal...
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Hazard Insurance
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Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.
Insurance protecting a property owner against damages caused by fires or severe storms.
If the owner lives in an area that is prone...
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Heating Degree Day - HDD
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The number of degrees that a day's average temperature is below 65o Fahrenheit (18o Celsius), the temperature below which buildings need to be heated.
Heating degree day (HDD) and cooling degree day (CDD) are quantitative indices designed to reflect the...
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Heavy
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A term used to describe a futures market showing difficulty in advancing or a tendency to decline.
Heavy market Will usually show slight declines and very few rises in price. This type of market is generally unfavorable for speculators attempting to capitalize...
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Hedge
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A Hedge is typically accomplished by making approximately offsetting transactions that Will largely eliminate one or more types of Risk.
In finance, a Hedge is an investment that is taken out specifically to reduce or cancel out the Risk in another investment....
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Hedge Fund
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An investment fund that employs a multitude of skill-based investment strategies with a broad Range of Risk and return objectives.
A private pooled investment fund, usually only Open to a limited number of investors. Subject to less restrictions and regulations,...
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Heir
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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. Originating...
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Herd Instinct
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A mentality characterized by a lack of individuality, causing people to think and act like the general population.
This term is used in the investing world to refer to the forces that cause unsubstantiated rallies or sell-offs. Herd behavior describes...
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High Close
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A tactic used by stock manipulators. They make small trades at High prices during the final minutes of trading to give the impression that the stock did very good.
Since the closing prices are widely quoted, stock manipulators hope to create a buzz on...
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High Flier
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A stock that has seen its share price - and subsequently its Valuation - rise to High Multiples on metrics such as current Earnings and current sales.
Usually, the rise Will happen quickly, with the stock well outpacing the gains in the overall market...
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High Price
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The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.
The intraday High trading price is the highest price at which a stock traded during the course of the day.
More often than not this is higher than the closing...
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High Watermark
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The highest peak in value that an investment fund/account has reached. This term is often used in the context of fund manager compensation, which is performance based.
The High watermark ensures that the manager does not get paid large sums for poor performance....
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Hire purchase
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A transaction in which the purchaser of goods pays an initial Deposit and takes possession.
Subsequent installments are made over a specified time after which ownership passes to the purchaser. Hire purchase (frequently abbreviated to HP) is the legal...
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Hockey Stick Bidding
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An anti-competitive bidding practice of a market participant (or trader) offering an extremely High price for a small portion of a good.
The name derives from the price curve of this practice, which resembles a hockey stick. This is considered to be a...
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Holder of Record
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The name of the person who is the registered owner of a Security.
The name of an individual or entity that an issuer carries in its records as the registered Holder (not necessarily the beneficial owner) of the issuer's securities. Dividends and other...
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Home Bias
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The tendency for investors to invest in a large amount of domestic equities, despite the purported benefits of diversifying into foreign equities.
This bias is believed to have arisen as a result of the extra difficulties associated with investing in foreign...
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Home Equity Loan
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A type of Real Estate credit in which the homeowner borrows against the value of his or her residence.
A home Equity lien could be a 1st lien if the home is paid for, a 2nd lien if there is already a 1st mortgage, or, more uncommonly, could be a 3rd lien...
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Homemade Dividends
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A form of investment income that comes from the sale of a portion of shares held by a shareholder.
This differs from dividends that shareholders receive from a company according to the number of shares the shareholder has.
The existence of homemade...
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Honorarium
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Payment that is given to a professional for services which fees are not legally or traditionally required.
An honorarium is an ex gratia payment made to a person for their services in a volunteer capacity or for services for which fees are not traditionally...
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Hot Issue
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An issue that sells at a Premium over the public offering price on the first day of trading.
A "hot issue" is an IPO that is in Heavy demand. In such a case the indications of Interest from prospective purchasers received by the Broker-dealers Underwriting...
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House Call
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A brokerage house notification that the customer's Equity in a Margin account has fallen below the maintenance requirement level.
If the client fails to immediately deliver the required Margin by depositing more funds or securities into the account, his...
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Housing Unit
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A house, apartment, mobile home, trailer, group of rooms, or single room occupied or intended for occupancy as separate living quarters.
Separate living quarters are classified as a place where the occupants do not live and eat with any other person in...
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HTML (Hypertext Markup Language)
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The most popular coding language for documents and e-mail on the World Wide Web, HTML permits the web page author to specify approximately where text, graphics, and links should appear, and what they should do (if anything).
It provides a means to describe...
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Human Resources - HR
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The company department that is in charge of finding, screening, recruiting and training job applicants, as well as administering employee-benefit programs.
When a company is re organizing, the human resources plays a key role in helping companies deal...
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Hyperinflation
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A period in which the rate of Inflation is so High that money is practically worthless.
Inflation is a rise in general level of prices of goods and services over time. Although "Inflation" is sometimes used to refer to a rise in the prices of a specific...
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IAS - International Accounting Standards
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It details as well as generalizes the conventions, rules and guidelines of accounting practices.
Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS was issued between 1973 and 2001 by...
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IBAN
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IBAN stands for International Bank Account Number
A standard numbering system developed to identify bank accounts from around the world.
It was originally developed by banks in Europe to simplify transactions involving bank accounts from other countries.
...
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Ichimoku Chart
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A chart that provides a glance at equilibrium prices for specified securities.
"Ichimoku" is a Japanese word that means "one look." This Charting technique was created by a Japanese newspaper Writer. It does look very complicated when a trader sees the...
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Idiosyncratic Risk
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Risk that affects a very small number of assets, and can be almost eliminated with diversification.
Similar to unsystematic Risk. This is news that is specific to a small number of stocks. One example is a sudden strike by employees.
Unsystematic Risk...
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IMF-International Monetary Fund
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The International Monetary Fund (IMF) is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on Exchange rates and the balance of payments.
...
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Immediate or Cancel Order - IOC
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An order requiring that all or part of the order be executed immediately after it has been brought to the market.
Any portions not executed immediately are automatically cancelled. This is used for large orders where filling quickly can be difficult. Such...
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Immunization
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A strategy that matches the durations of assets and liabilities, thereby minimizing the impact of Interest rates on the Net worth
It is protection against Interest rate Risk by holding assets and liabilities of equal durations. A Bond management strategy...
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Implicit Cost
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A cost that is represented by lost opportunity in the use of a company's own resources, excluding Cash.
These are intangible costs that are not easily accounted for. For example, the time and effort that an owner puts into the maintenance of the company...
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Import
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In reference to international trade, these are goods brought into one country from another.
In Economics, an import is any good or commodity, brought into one country from another country in a legitimate fashion, typically for use in trade. Import goods...
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Inconvertible currency
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A banking system in which only a fraction of bank deposits are backed by actual Cash-on-hand and are available for withdrawal.
This is done to expand the economy by freeing up capital that can be loaned out to other parties. Most countries operate under...
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Incubator
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An entity designed to nurture business ideas or new technologies to the point that they become attractive to venture capitalists.
An incubator typically provides physical space and some or all of the services - legal, managerial, technical - needed for...
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Independent Financial Advisor (IFA)
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Professionals who Offer independent advice on financial matters to their clients and recommend suitable financial products from the whole of the market.
The term "Independent Financial Adviser" was coined to describe the advisers working independently for...
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Individual retirement account (IRA)
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An Individual Retirement Arrangement (or IRA) is a retirement plan account that provides some Tax advantages for retirement savings in the United States.
A special federal program that allows you to delay the payment of income Tax on some money you save,...
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Inflation
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A rise in the general price level of goods and services; inflation is the opposite of deflation. The Consumer Price Index and the Producer Price Index are the most common measures of inflation.
Mainstream economists believe that High rates of inflation...
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Initial Public Offering - IPO
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The first sale of stock by a private company to the public. IPO's are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
In an IPO, the issuer...
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Institution
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An organization which is in the business of holding assets.
Examples of institutions include banks, insurance companies, and investment companies. Investment companies invest the pooled funds of retail investors for a fee. By aggregating the funds of a...
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Institutional Investor
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A non-bank person or organization that trades securities in huge share quantities or dollar amounts that they qualify for preferential treatment and lower commissions.
Institutional investors face fewer protective regulations because it is thought that...
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Institutionalization
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The gradual domination of financial markets by institutional investors, as opposed to retail investors.
An individual who purchases small amounts of securities for him/herself, as opposed to an Institutional Investor. also called individual investor or...
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Interest
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The fee charged for borrowing money.
The cost of borrowed money is known as interest. An amount paid for the use of someone else's money. You pay the credit union to use the money you borrow from it. The credit union pays you to use the money you save...
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International Fund
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A Mutual Fund that invests in securities of a number of countries.
A Mutual Fund that can invest in companies located anywhere outside of its investors' country of residence. Also known as a "foreign fund".
Never confuse an international fund with...
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Investment management
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The process of managing money, including investments, budgeting, banking, and taxes. also called money management.
Investment management is the professional management of various securities (shares, bonds etc) assets (e.g. Real Estate), to meet specified...
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Investment Real Estate
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Real Estate that generates income or is otherwise intended for investment purposes not as a primary residence.
It is common for investors to own multiple pieces of Real Estate, one of which serves as a primary residence, while the others are used to generate...
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Investment Style
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Investment style refers to different style characteristics of equities or Bonds within a given investment philosophy.
The style is often determined by the temper and the beliefs of the investor. Theory would favor a combination of big capitalization, passive...
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Investor Relations - IR
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A department, present in most medium to large public companies, that provides investors with an accurate account of the company's affairs. This helps investors to make informed buy or sell decisions.
A company's investor relations department serves as...
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IRA:Individual Retirement Account
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A retirement account with Tax advantages. Individuals may contribute money annually to an IRA based on how much they've earned (such as wages) or up to IRS-established limits, some of which are age- and income related. Contribution and withdrawal rules also...
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Irrevocable Trust
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A Trust that can't be modified or terminated without the permission of the beneficiary.
The Grantor, having transferred assets into the Trust, effectively removes all of his or her rights of ownership to the assets and the Trust. This is the opposite of...
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Islamic Banking
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A banking system that is based on the principles of Islamic law (also known Shariah) and guided by Islamic Economics.
Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and...
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Jekyll and Hyde
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This term has many meanings like:
1. A slang term referring to the strengths and weaknesses of a company's financial statements.
2. An asset that suddenly increases or decreases in value.
3. A senior manager's good and bad qualities, or the polarized...
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Jensen's Measure
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A Risk-adjusted performance measure that represents the average return on a Portfolio over and above that predicted by the CAPM, given the Portfolio's Beta and the average market return. This is the Portfolio's Alpha. In fact, the concept is sometimes referred...
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Joint Float
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An arrangement by which a group of currencies maintain a fixed relationship relative to each other, but move jointly relative to another Currency in response to supply and demand conditions in the Exchange market.
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Jumbo CD
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A CD with a very large denomination, usually $1 million or more.
These are usually bought by institutional investors who are interested in Low-Risk investments. Jumbo CDs are usually in bearer form, and have secondary markets that are highly liquid. also...
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Kangaroos
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Slang term for Australian stocks, it refers mostly to the stocks on the All Ordinaries index, which is composed of 280 of the most active Australian companies.
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KEOGH ACCOUNTS (IRA)
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Special accounts where you can save and invest, and the taxes are deferred until money is withdrawn.
These plans are subject to frequent changes in law with respect to the deductibility of contributions. Withdrawals of Tax deferred contributions are taxed...
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Keogh Plan
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A retirement plan for self-employed people and their employees, to yearly Tax deductible contributions up to a specified Limit can be made if the plan meets certain requirements of the Internal Revenue Code.
A Tax-deferred qualified retirement account...
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Key logger
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Key loggers are hardware devices or software programs which record all information entered into a machine via a keyboard.
Criminals deploy both types of key loggers to capture personal information such as passwords and credit card numbers. Key loggers...
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Keynesian
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A term used to describe the economic theories of John Maynard Keynes.
A key feature of those theories is the assumption that fiscal policies are important determinants of Short- run economic activity.
Keynes maintained that governments should use the...
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Kiddie Tax
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A Tax on children under 14 who earn income over $1,200. The extra income is taxed at the guardian's rate.
The kiddie Tax rule exists in the United States of America which taxes certain unearned income of a child at the parent's marginal rate, no matter...
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KIPPERS
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Kids In Parents' Pockets Eroding Retirement Savings.
A slang term referring to adult children who are out of school and in their working years, but are still living at home with their parents. These parents face the challenge of managing their own finances...
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Kiting
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Illegally benefiting from float, for example by depositing and drawing checks between accounts at two or more banks.
The act of misrepresenting the value of a financial instrument for the purpose of extending credit obligations or increasing financial...
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Labor Force
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The number of people employed plus the number of unemployed .
In Economics the people in the labor force are the suppliers of labor. In 2005, the worldwide labor force was over 3 billion people.
Normally, the labor force of a country (or other geographic...
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Labor Market
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The input/factor market in which households supply work for wages to firms that demand labor.
Labor markets function through the interaction of workers and employers. Labor Economics looks at the suppliers of labor services (workers), the demanders of...
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Labor Productivity
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Output per worker; the amount of output produced by an average worker in one hour.
Measured labor productivity Will vary as a function of both other input factors and the efficiency with which the factors of production are used (total factor productivity)....
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Lagging Indicator
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An economic data series that consistently moves with overall activity but turns up or down later that general economy.
It can be a measurable economic factor that changes after the economy has already begun to follow a particular pattern or trend or ...
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Large-dollar Funds Transfer System
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A funds transfer system through which large-dollar and High-priority funds transfers are made between participants in the system for their own account or on behalf of their customers.
Sometimes known as wholesale funds transfers systems.
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Late fee
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A fee charged when a payment is not received on time.
Some common bills which almost always have a late fee policy are credit card payments, mortgage and Student loan payments, and car loan payments.
A late fee, also known as a late fine or a past...
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Later stage finance
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Capital that private Equity firms generally provide to established, medium-sized companies that are breaking even or trading profitably.
The company uses the capital to finance strategic moves, such as expansion, growth, acquisitions and management buy-outs.
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Lead investor
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The firm or individual that organises a round of financing, and usually contributes the largest amount of capital to the deal.
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Lead Underwriter
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A investment bank or other financial outfit that has the primary directive for organizing an initial public stock offering, or a secondary offering for companies that are already publicly traded.
The lead underwriter Will usually work with other investment...
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Leading Indicators
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Components of an index released monthly by the U.S. Commerce Department's Bureau of Economic Analysis.
A measure used to predict the financial condition and stability of a particular industry or the economy in general, represented by such indicators as...
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Legal list
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List of legal investments for savings banks and Trust funds; determined by each state. also called Approved List. opposite of nonlegal.
A selection of eligible companies and investments, determined by Local state governments, for institutions such as insurance...
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Lehman Formula
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A compensation formula developed by Lehman Brothers for investment banking services.
The Lehman Formula is a formula to define the compensation a Broker should receive when handling a large transaction for a client. The formula usually applies to the entire...
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Lender of Last Resort
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An Institution, usually a country's Central Bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky or near collapse.
In the U.S. the Federal Reserve acts as the lender of...
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Letter of Wishes
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A letter of wishes is a document that purportedly has no legal status.
In fact the document is used to transmit the wishes of the creator or the alleged owner of the Trust to the trustee. A letter of wishes is a separate document and not a part of the...
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Lifeline Account
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A streamlined checking or Savings Account designed for Low-income customers.
These accounts Will usually have Low balance requirements and no monthly fees, and are offered by large banking institutions as a way to Offer basic banking services to the broad...
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Line of credit
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A line of credit is a Short-term loan for a specific amount which allows you to receive money to pay for routine or regular expenses, such as rent or equipment leases.
This type of loan allows you to borrow repeatedly - so that you repay and re borrow...
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Liquid asset
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A liquid asset has some or more of the following features. It can be sold (1) rapidly, (2) with minimal loss of value, (3) anytime within market hours.
The essential characteristic of a liquid market is that there are ready and willing buyers and sellers...
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Liquidity
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The ability to convert an investment into Cash with minimum capital loss.
A stock, Bond or commodity that has a great many units outstanding has liquidity and investors are therefore more inclined to seek out liquid investments so that their trading activity...
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Load Fund
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A Mutual Fund that comes with a sales charge or Commission.
The fund investor pays the load, which goes to compensate a sales intermediary (Broker, Financial Planner, investment advisor, etc.) for his or her time and expertise in selecting an appropriate...
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Loan-deposit ratio
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The amount of a bank's loans divided by the amount of its deposits at any given time.
The higher the ratio, the more the bank is relying on borrowed funds, which are generally more costly than most types of deposits.
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Local taxes
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In the USA, taxes paid by an individual to a Local state or county. These are deductible on the person's federal Tax return.
In the UK the nearest equivalent is the Tax paid by house owners to their Local council (council Tax). There is no Tax relief on...
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Lockbox
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A service offered by banks to companies in which the company receives payments by mail to a post office Box and the bank picks up the payments several times a day, deposits them into the company's account, and notifies the company of the Deposit.
Lock...
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Long-term liabilities
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Expenses, loans, and accounts payables due after one year or more.
It is recorded on the Balance Sheet, a company's liabilities for leases, Bond repayments and other items due in more than one year. A company's Long-term liabilities are accounted for...
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Look-Ahead Bias
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Bias created by the use of information or data in a study or simulation that would not have been known or available during the period being analyzed.
This Will usually lead to inaccurate results in the study or simulation.
If an investor is Back Testing...
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M1
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The sum of Currency held by the public, plus travelers' checks, plus demand deposits, plus other checkable deposits (i.e., negotiable order of withdrawal [NOW] accounts, and automatic transfer service [ATS] accounts, and credit union share drafts.)
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M2
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M1 plus savings accounts and small-denomination time deposits, plus shares in Money Market mutual funds (other than those restricted to institutional investors), plus overnight Eurodollars and repurchase agreements.
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M3
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M2 plus large-denomination time deposits at all depository institutions, large-denomination term repurchase agreements, and shares in Money Market mutual funds restricted to institutional investors.
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Macroeconomics
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The branch of Economics that deals with the economy as a whole.
Macroeconomics focuses on determinants of total national income, deals with aggregates such as aggregates consumption and investment, and looks at the overall level of prices rather than individual...
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Magnetic Stripe Card
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A plastic or paper card with a magnetic stripe containing information about the card owner, the financial value of the card, or other related information.
A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny...
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Managed Account
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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...
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Managed Futures
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Managed futures are a form of investment account - managed by professional investment managers called Commodity Trading Advisors (CTSs) - that utilizes futures contracts and options on futures contracts.
Managed Futures is an account that is like a mutual...
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Management And Employee Buyout - MEBO
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A restructuring initiative that involves both managerial and non-managerial employees buying out a firm in order to concentrate ownership into a small group from a widely dispersed group of shareholders.
MEBOs are generally used to privatize a publicly...
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Management buy-in (MBI)
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When a team of managers buys into a company from outside, taking a majority Stake, it is likely to need private Equity financing.
A MBI happens when a group of investors outside of a company purchase a controlling block of shares and keep the existing...
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Management Buyout - MBO
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When the managers and/or executive of a company purchase controlling Interest in a company.
A private Equity firm Will often provide finance to enable current operating management to acquire or to buy at least 50 per cent of the business they manage. In...
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Management fee
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This is the annual fee paid to the General partner.
It is a fixed fee that a Mutual Fund manager charges investors for his services and work with the fund. It is typically a percentage of limited partner commitments to the fund and is meant to cover the...
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Mandate
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A mandate is the Portfolio given to investment managers by clients to be managed within their Risk control requirements.
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Maple Bond
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A Canadian dollar denominated Bond that is sold in Canada by foreign financial institutions and companies.
Similar to other foreign bonds (such as the bulldog Bond, samurai Bond and the matilda Bond), the maple Bond gives domestic investors (in this case,...
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Market Neutral
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A strategy undertaken by a person or fund attempting to profit from the current direction of the market.
A person using the strategy Will take both Long and Short positions at the same time. An investment strategy or Portfolio is considered market neutral...
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Master Card
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An international payment services and card scheme.
MasterCard Worldwide (NYSE: MA) is a multinational Corporation based in Purchase, New York, USA. Throughout the world, its principal business is to process payments between the banks of merchants and the...
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Matador Bond
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A foreign Bond denominated in pesetas and issued in Spain by a non-Spanish company.
It is a Bond issued on the Spanish market by an Obligor who is not domiciled in Spain.
Matadors are the bullfighters in Spain.
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MATIF
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Regulated market of financial instruments in the Long term on which are negotiated purchases and sales of contracts or options on financial instruments and goods.
MATIF SA (Marché à Terme International de France) is France's futures Exchange, absorbed...
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Matilda Bond
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An Bond denominated in the Australian dollar and issued on the Australian market by a foreign entity.
Also known as a "kangaroo Bond."
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Maturity Date
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For life insurance policies, the maturity date is the end of the contract term.
Maturity date refers to the date when a principal amount of a note, draft, acceptance Bond, or other Debt instrument becomes due or payable. It is also a termination or due...
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Mean Income
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Mean income is calculated by dividing the total income of area residents by the number of residents in the area.
Mean household income is obtained by dividing the total household income by the number of people living in the household. Income is the sum...
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Median Income
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Median income divides the income Distribution into two equal parts, one with residents having incomes above the median and the other with residents having incomes below the median.
Median family and household incomes are based on the Distribution of the...
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Mercantilism
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The main economic system used during the sixteenth to eighteenth centuries.
The main goal was to increase a nation's wealth by imposing government regulation concerning all of the nation's commercial interests. It was believed that national strength could...
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Merger - absorption
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Operation by which a company transfers the whole of its property to an absorbing company, against the attribution of shares of the latter to the shareholders of the former company, with possibly a balance in Cash.
It is the combining of two or more companies,...
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Metropolitan Statistical Area
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A federally designated geographically unit consisting of an urbanized area a central city of least 50,000 residents and a regional population of 100,000.
Federal banking regulations permit financial institutions doing business within an MSA to use a single...
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Mezzanine financing
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This is the term associated with the middle layer of financing in leveraged buy-outs.
1. A type of Equity financing used in takeovers. It uses preferred shares and convertible securities to make a target firm larger.
2. Financing that combines Debt...
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Micro pal Rating
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To evaluate the performance of a fund and the consistency of that performance relative to other funds in the sector, Standard and Poor's Micro pal has developed the Standard and Poor's Micro pal Star Ranking (TM) based on a fund's relative performance in the...
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Micro-Cap
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Micro Cap refers to a company with a market capitalization of between $50 million to $300 million.
Micro Cap stands for micro capitalization. These are the smallest companies by market capitalization in a given market.
Capitalization of income means...
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Mileage Allowance
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A Deduction of automobile expenses for people using their vehicles for business, charity, moving, medical, or any other allowable reason.
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Modified Endowment Contract (MEC)
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A modified endowment contract or MEC is a life insurance contract
For federal income Tax purposes, it is funded in a way that violates the "7-pay" test under Section 7702A(b) of the Internal Revenue Code. In that case, lifetime distributions from the policy...
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Money Flow Index
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A Volume indicator that tracks the flow of money into or out of a market.
A divergence between the Money Flow Index and price trend can warn of a possible trend Reversal.
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Money Manager
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A professional responsible for managing the securities Portfolio of an individual or Institutional Investor.
In return for a fee, the money manager has the fiduciary responsibility to choose and manage investments prudently for his or her clients. Money...
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Money Market
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A sector of the Capital Market where Short term obligations such as Treasury bills, commercial paper and bankers' acceptances are bought and sold.
The money market is the global financial market for Short-term borrowing and lending. It provides Short-term...
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Money order
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Financial instrument, issued by a bank or other Institution, allowing the individual named on the order to receive a specified amount of Cash on demand.
It is often used by people who do not have checking accounts. A money order is a payment order for...
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Money Supply
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The entire quantity of bills, coins, loans, credit and other liquid instruments in a country's economy.
Money supply is divided into multiple categories - M0, M1, M2 and M3 - according to the type and size of account in which the instrument is kept. The...
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Multinational Corporation - MNC
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A Corporation that has its facilities and other assets in at least one country other than its home country.
MNC's have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management....
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Multiple Compression
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The effect that arises when a stock trades at a certain multiple and, while Earnings may be good, the stock price doesn't move or sometimes goes down.
The result is that the given multiple is reduced even though nothing is fundamentally wrong with the...
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Multiples
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A typical Valuation technique in corporate finance.
A term that measures some aspect of a company's financial well-being, determined by dividing one metric by another metric. The metric in the numerator is typically larger than the one in the denominator,...
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Musharakah
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A joint enterprise or partnership structure with profit/loss sharing implications that is used in Islamic finance instead of Interest-bearing loans.
Musharakah allows each party involved in a business to share in the profits and risks. Instead of charging...
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Mutual Fund
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An investment company that enables investors to Pool their funds with other investors in order to invest in a professionally managed diversified Portfolio of securities.
The three major types of mutual funds are Money Market, Bond, and stock.A mutual...
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NASDAQ
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Acronym of National Association of Securities Dealers Automated Quotation System.
A computerized system that provides price quotations for securities traded over the counter as well as for many New York Stock Exchange listed securities.
It is market...
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National Credit Union Administration
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Independent federal agency which supervises the credit union system and insures member accounts.
National Credit Union Association was created in 1970 to Charter and supervise federal credit unions. The National Credit Union Administration (NCUA) is the...
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National Savings
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A variety of savings schemes, backed by the government, in which the public can participate.
National Savings publishes a booklet entitled 'Investor's Guide' which describes in detail how it operates and the products it offers. The savings schemes currently...
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Near money
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Highly liquid assets which are not Cash but can easily be converted into Cash, such as bank deposits and Treasury Bills. similar to Cash equivalents.
Near money (synonym: quasi-money) is a term used in Economics to describe highly liquid assets that can...
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Nest Egg
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A special amount of money saved or invested for one specific Future purpose.
The purposes for which nest eggs are usually intended include retirement, education, and even entertainment (vacations and cruises). The main idea is that the money in the nest...
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Net Advantage To Leasing - NAL
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The total monetary savings that would result from a person or a business choosing to lease an asset, as opposed to purchase it outright.
The benefit of leasing is determined by comparing the Net present value of purchasing the asset outright to the net...
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Net Income
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Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Subtracting total costs, expenses, and taxes from total revenue results is the net income.
Net income is profit after non recurrent items and...
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Net worth
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The owner's Equity in a given business represented by the excess of total assets over the total amounts owed to outside creditors (total liabilities) at a given time.
Also, the net worth of an individual as determined by deducting the amount of all his...
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Netting
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The settlement of obligations between two parties that processes the combined value of transactions.
It is designed to lower the number of transactions required. For example, if Bank A owed Bank B $100,000, and Bank B owed Bank A $25,000, the value after...
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Neural Network
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A series of algorithms that attempt to identify Underlying relationships in a set of data by using a process that mimics the way the human brain operates.
Neural networks have the ability to adapt to changing input so that the network produces the best...
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Niche banks
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Smaller banks that cater to particular communities or certain industries. These banks have been thriving in the fallout from mega-bank mergers.
Banks that cater to and serve the needs of a certain demographic segment of the population. Niche banks typically...
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No-load Fund
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A Mutual Fund that does not charge a fee for buying or selling its shares.
A Mutual Fund in which shares are sold without a Commission or sales charge. The reason for this is that the shares are distributed directly by the investment company, instead...
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Non-resident
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An individual who mainly lives in one region or jurisdiction but has interests in another region.
In the region where he or she does not mainly live, he or she Will be classified by government authorities as a non-resident. The classification itself Will...
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Non-Resident Alien
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A non-U.S. citizen who doesn't pass the green card test or the substantial presence test.
If a non-citizen currently has a green card or has had a green card in the past calendar year, he or she would pass the green card test and would be classified as...
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Nostro account
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A banking term to describe an account one bank holds with a bank in a foreign country, usually in the Currency of that foreign country.
This allows for easy Cash management because Currency doesn't need to be converted.
A bank counts a Nostro account...
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Notary Public
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An officer of the public that can authenticate signatories on documents, and take depositions or oaths.
A state or jurisdiction may authorize an applicant to certify specific documents usually for a term of years. Banks, insurance agencies, legal offices,...
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Notes
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A note is a negotiable record of an unsecured loan with a maturity of more than one year - in other words, a Bond.
There's little difference between bonds and notes, although generally, when an instrument is referred to as a note, it Will have a maturity...
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NOW
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Negotiable Order of Withdrawal.
An Interest-bearing checking account at a bank or savings and loan. NOW is a liquid account, providing FDIC insurance to $100,000 per person ($250,000 on retirement accounts), that permits unlimited check-writing and typically...
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Null Hypothesis
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A type of hypothesis used in statistics that proposes that no statistical significance exists in a set of given observations.
The null hypothesis attempts to show that no variation exists between variables, or that a single variable is no different than...
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Obligor
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An individual or Institution bound by a legal obligation.
In credit situations, usually the borrower. An entity that has an obligation to pay all principal and Interest payments on a Debt is a Obligor . Bond issuers are examples of obligors. Also referred...
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Obsolescence Risk
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The Risk that a process, product or technology used or produced by a company for profit Will become obsolete, and is no longer competitive in the marketplace.
Obsolescence Risk is most significant for technology-based companies or companies with offerings...
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OCC
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Office of Comptroller of the Currency
OCC Charters, regulates and supervises all national banks. It also supervises all federal branches and agencies of foreign banks.
The Office of the Comptroller of the Currency (or OCC) was established by the National...
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Old Lady
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An eighteenth century nickname for the Bank of England.
The full name is the Old Lady of Thread needle Street, which refers to the bank's location. The Bank of England is located in the middle of the city of London on Thread needle Street.
James Gillray...
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One-Stop Shop
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A company or a location that offers a multitude of services to a client or a customer.
The idea is to provide convenient and efficient service and also to create the opportunity for the company to sell more products to clients and customers. This is a...
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Online banking
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Online banking is where a bank offers its customers the opportunity to interact with their banking system electronically over the internet.
The exact makeup of services varies between banks but generally includes a facility to check balances and transfer...
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OPALS
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Optimized Portfolio as Listed Securities
A Portfolio of securities used to closely track an index without the exposure of purchasing all securities within that index.
OPALS are similar to ETFs and are generally used by large institutional investors...
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Operational Efficiency
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A market condition that exists when participants can execute transactions and receive services at a price that equates fairly to the actual costs required to provide them.
An operationally-efficient market permits investors to make transactions that move...
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Option
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A financial Derivative that represents a contract sold by one party (Option Writer) to another party (Option Holder).
Options are financial instruments that convey the right, but not the obligation, to engage in a Future transaction, i.e., to buy (call)...
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Option on shares
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Optional contract being the subject of a negotiation on the MONEP and bearing on some shares.
Securities known as negotiable supports of options are the only one concerned. There are around fifty of them, selected among the most active securities of the...
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Ordinary Income
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Income received that is taxed at the highest rates, or ordinary income rates.
Ordinary income is composed mainly of wages, salaries, commissions and Interest income (as from bonds). Ordinary Income can only be Offset with standard Tax deductions, while...
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Ordinary interest
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Interest as calculated on a 360-day-a-year Basis.
Interest can be the charge for the privilege of borrowing money, typically expressed as an annual percentage rate, the amount of ownership a stockholder has in a company, usually expressed as a percentage....
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Origination Fee
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The fee paid to a lender for processing a loan application; it is stated as a percentage of the mortgage amount.
An origination fee is a payment associated with the establishment of a new loan. This fee is paid to the bank (or perhaps the Broker) that...
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OTS
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Short for Office of Thrift Supervision.
A bureau of the U.S. Treasury Department established in August 1989. OTS has the authority to Charter federal Thrift Institutions and serves as the primary regulator of approximately 2,000 federal and state chartered...
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Over-The-Counter - OTC
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The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized Exchange.
It also refers to Debt securities and other financial instruments such as derivatives, which are traded through a dealer...
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Over-The-Counter Bulletin Board - OTCBB
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A regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real-time quotes, last-sale prices and Volume information for over-the-counter (OTC) Equity securities.
Companies listed on this Exchange...
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Overhang
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Overhang is a problem caused by fear that the arrival of a large number of shares on the market Will depress the share price.
Overhang may refer to:
* Debt overhang, a fiscal situation of a government
* Market overhang, a concept in marketing
* Monetary...
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Painting The Tape
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An illegal action by a group of market manipulators buying and/or selling a Security among themselves to create artificial trading activity, which, when reported on the ticker tape, lures in unsuspecting investors as they perceive an unusual Volume.
After...
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Paired Shares
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Stock of two companies under the same management that is sold as one unit and usually appears on one certificate.
These are also known as Siamese Shares or stapled shares.
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Paper Millionaire
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An individual who has achieved a High Net worth as a result of the large total Market value of the assets he or she owns.
This phenomenon usually occurs when investors buy marketable securities that are later Bid up to much higher prices on the Open market....
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Paper Profit (Paper Loss)
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Unrealized Capital Gain (or capital loss) in an investment. It is calculated by comparing market price of the Security to the original purchase price. Gains or losses only become realized when the Security is sold.
Investors commonly justify bad investment...
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Par Value
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Par value (also known as nominal value) is the face value of a Security.
The Par value of a Security - whether a stock or a Debt instrument - needs to be distinguished from both its issue price and its market price. Par value is a nominal value of a Security...
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Paris Club
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A monthly meeting, taking place in Paris, between the creditors of 19 countries for the purpose of discussing Debt issues.
Among other things, the Paris Club addresses the issue of coordinated Debt relief for developing countries that cannot service their...
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Parity
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Has different meanings in different markets:
1. For options, parity is the condition on which an Option's value in the market is the same as its Intrinsic value.
2. In the Warrant market, parity can be positive or negative.
3. In regards to convertible...
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Passive Management
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A style of management associated with mutual and Exchange-traded funds (ETF) where a fund's Portfolio mirrors a market index.
Passive management is the opposite of Active Management in which a fund's manager(s) attempt to beat the market with various investing...
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Payday Loan
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A transaction in which a Short-term Cash advance is made to a consumer in Exchange for a customer's post-dated check in the amount of the advance plus a fee, or in Exchange for a consumer's authorization to debit a transaction account in the amount of the...
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PC banking
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A service that allows a bank customer to obtain account information and perform certain bank transactions through a personal computer .
A personal computer banking system and method in which a personal computer is connected by a network service provider...
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PDA (Personal Digital Assistant)
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A small, handheld computer, capable of accepting input that the user writes on-screen with a stylus, that's designed to provide all the tools an individual would need for day to day organization, such as a Palm Pilot or Handspring Visor.
A personal digital...
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Penalty
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A fee imposed for a violation of a rule.
A clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty Will be assessed. This is known as Prepaid penalty. The penalty is usually based on percentage of the...
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Penny Stock
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A stock that trades at a relatively Low price and market capitalization, usually outside of the major market exchanges.
These types of stocks are generally considered to be highly speculative and High Risk because of their lack of Liquidity, large Bid-ask...
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Performance Audit
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An Audit done on an asset manager by an outside accounting firm to verify that the performance figures shown to the public on marketing materials represent the true aggregate results of the firm's clientele.
The CFA Institute has established performance...
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Phantom Stock Plan
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An employee benefit plan that gives selected employees (senior management) many of the benefits of stock ownership without actually giving them any company stock.
Sometimes referred to as "shadow stock. It is an incentive plan that awards executives a...
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Phillips Curve
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A graph showing the relationship between the Inflation rate and the unemployment.
An economic concept developed by A. W. Phillips stating that Inflation and unemployment have a stable and inverse relationship. The theory states that with economic growth...
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Pigovian Tax
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A special Tax that is often levied on companies that pollute the environment or create excess social costs, called negative externalities, through business practices.
In a true market economy, a Pigovian Tax is the most efficient and effective way to correct...
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Pines
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Public Income Notes
An unsecured unsubordinated debenture issued by a public company. PINES trade on a stock Exchange, but also bear Interest. These types of securities are in that gray area between bonds and preferred stock.
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Pink Sheets
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A daily publication compiled by the National Quotation Bureau with Bid and ask prices of over-the-counter (OTC) stocks, including the market makers who trade them.
Unlike companies on a stock Exchange, companies quoted on the pink sheets system do not...
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PITI
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Stands for principal, Interest, taxes and insurance-the components of a monthly mortgage payment.
In relation to a mortgage, PITI (pronounced like the word "pity") is an acronym for a mortgage payment that is the sum of monthly principal, Interest, taxes,...
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Point of Sale. POS
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An electronic payment system for retail goods and services, through the use of credit cards or debit cards that directly access and deduct funds from a customer's checking account.
The point of sale often refers to the hardware and software used for checkouts...
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Poison Pill
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A strategy used by corporations to discourage a hostile takeover by another company.
The target company attempts to make its stock less attractive to the Acquirer. There are two types of poison pills are:
1. A "flip-in" allows existing shareholders...
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Political Risk
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The Risk that an investment's returns could suffer as a result of political changes or instability in a country.
Instability affecting investment returns could arise from a change in government, legislative bodies, other foreign policy makers, or military...
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Portfolio
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A grouping of financial assets such as stocks, bonds and Cash equivalents, as well as their mutual, Exchange-traded and closed-fund counterparts.
Portfolios are held directly by investors and/or managed by financial professionals. Holding a portfolio is...
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Portfolio Management
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The art and science of making decisions about investment mix and policy, matching investments to objectives, Asset allocation for individuals and institutions, and balancing Risk against performance.
Portfolio management is all about strengths, weaknesses,...
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Preferred return
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This is the minimum amount of return that is distributed to the limited partners until the time when the General partner is eligible to deduct carried Interest.
The preferred return ensures that the General partner shares in the profits of the partnership...
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Prepaid Expense
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A type of asset that arises on a Balance Sheet as a result of business making payments for goods and services to be received in the near Future.
While prepaid expenses are initially recorded as assets, their value is expensed over time as the benefit is...
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Present Situation Index
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A sub index that measures overall consumer sentiments toward the present economic situation and is used to derive (about 40% of) the Consumer Confidence Index, a widely used economic indicator.
The sub-index is compiled from data gathered from a Survey...
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Press Release
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News that is sent out or released by the company making the news.
If it's an Earnings press release, the release Will discuss the company's financial results for the recently completed quarter and may provide comments from management. Press releases often...
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Price Earnings Ratio (PE)
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The market price of a share divided by the company's Earnings(profits) per share in its latest 12 month trading period.
The P/E ratio of a stock (also called its "Earnings multiple", or simply "multiple", "P/E", or "PE") is a measure of the price paid...
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Private banking
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The providing of banking services to very wealthy individuals and families. Many financial services firms require a person or family to have a certain minimum Net worth to qualify for private banking services.
Private banking is a term for banking, investment...
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Pro Forma
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A projection or estimate of what may result in the Future from actions in the present.
A pro forma financial Statement shows how theactual operations of a business Will turn out if certain assumptions are realized. The term pro forma (occasionally written...
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Producer Price Index - PPI
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A group of indexes that measures the average change in selling prices received by domestic producers of goods and services over time.
Its measure price change from the perspective of the seller .A Producer Price Index (PPI) measures average changes in...
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Production Efficiency
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An economic level at which the economy can no longer produce additional amounts of a good without lowering the production level of another product. This Will happen when an economy is operating along its production possibility frontier.
It is the ability...
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Production Possibility Frontier - PPF
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A curve showing all maximum output possibilities of two or more goods given a set of inputs (resources, labor, etc.).
The PPF assumes that all inputs are used efficiently. Among others, factors such as labor, capital and technology Will affect where the...
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Profit and Loss Statement - P&L
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The portion of a company's financial statements that summarizes revenues and expenses during a specific period of time.
A financial Statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal...
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Profit Center
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The branch or division of a company that creates profits individually and separately from the main organization.
The profit center's revenues and expenses are held separate from the main company's in order to determine their profitability. Profit Centers...
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PROFIT MARGIN
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Indicator of profitability that is calculated by dividing the Net Income by the revenue for the same twelve month period, and the profit Margin is represented as a percentage.
A ratio of profitability calculated as Net Income divided by revenues, or net...
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Program Trading
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Computerized trading used primarily by institutional investors typically for large-Volume trades.
Orders from the trader's computer are entered directly into the market's computer system and executed automatically. In recent times, there has been a subset...
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Progressive Tax
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A Tax that takes a more percentage from the income of High-income people than it does from Low-income people.
Most income taxes are considered progressive. progressive Tax is a Tax that imposes a greater percentual burden on the rich than on the poor....
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Project Finance
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International Project Finance Association (IPFA)
We can define Project Finance as follows: The financing of Long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure where project...
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Promissory note
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A signed Statement promising to pay to a specified person or the bearer a particular sum of money on a fixed date or on demand.
A promissory note, also referred to as a note payable in accounting, is a contract detailing the terms of a promise by one party...
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Proportional Tax
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An income Tax that takes the same percentage of income from everyone regardless of how much (or little) an individual earns.
The US and Canada do not use this system. It is quite controversial and certainly debatable whether or not this is a fair system....
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Proprietary Trading
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When a firm trades for direct gain instead of Commission dollars. Essentially, the firm has decided to profit from the market rather than commissions from processing trades.
Proprietary trading is a term used in investment banking to describe when the...
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Proration
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When the available Cash/shares during a corporate action are not sufficient to satisfy the tendered offers by shareholders. Therefore, a proportion of both are granted to each Offer tendered.
When you Tender an Offer for a corporate action, the company...
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Prospectus
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A required legal document that offers securities or Mutual Fund shares for sale.
The Securities Act of 1933 requires that a prospectus explain the terms, issuer, objectives (if a Mutual Fund) or planned use of the money (if securities) and historical financial...
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Protectionism
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Actions taken by a government to prevent imports from destroying domestic producers.
Typical methods of protectionism are Import tariffs, quotas, subsidies or Tax cuts to Local businesses and direct state intervention.
Any time a government undertakes...
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Provisional Call Feature
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A feature of a convertible issue that allows the issuer to call the issue during the non-call period if the stock reaches a certain price.
For example, a convertible Bond may allow a provisional call if the Underlying Common Stock trades at 150% of the...
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Prudent Person Rule
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A legal maxim that restricts the discretion in a client's account to investments only in those securities that a prudent person seeking reasonable income and preservation of capital might buy for his or her own investment.
Also called the Prudent Man Rule.
...
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Public Offering Price - POP
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The price at which new issues are offered to the public by an underwriter.
When underwriters determine the public offering price, they look at a number of factors. Some of these include the company's financial statements (how profitable it is), public...
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Puke
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Slang for selling off a losing Position even if the loss is substantial.
The point at which an investor decides to sell regardless of price has been dubbed "the puke point." This follows the theory that successful trading means always cutting your losses...
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Pump and Dump
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A highly illegal practice occurring mainly on the Internet.
A scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. The perpetrators of this scheme, who already have an...
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Punter
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An investor who hopes to make quick profits.
Its another term for Speculator. A British and Australian term for one who gambles, a bettor.
A punter's approach is to speculate rather than invest. Thus, punters aren't concerned with the fundamentals...
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Purchasing Managers' Index (PMI)
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An indicator of the economic health of the manufacturing sector.
The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.
A PMI of more than 50 represents expansion...
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Put Bond
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A Bond that allows the Holder to force the issuer to repurchase the Security at specified dates before maturity.
The repurchase price is set at the time of issue, and is usually Par value. Bondholders have the Option of putting bonds back to the issuer...
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Pyramid debt
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The borrowing of funds in rapid succession without firs repaying previous Debt, usually to meet obligation on earlier loans.
Such a practice Will rapidly erode a borrower's financial Position.
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Pyramid Scheme
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An illegal investment Scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, or so-called returns, given to the earlier investors/recruits above them.
A pyramid scheme is initiated by an individual or...
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Quick ratio
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Cash plus other assets that can be used immediately (converted to Cash) should approach or exceed current liabilities.
It is an indicator of a company's Short-term Liquidity. The quick ratio measures a company's ability to meet its Short-term obligations...
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Quotation
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The highest Bid and lowest Offer (asked) price currently available for a Security.
For example, an investor requesting a price on ABC Company might be quoted "50to 51" This means that the best Bid price (the highest price any buyer Will pay) is currently...
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Rain Check
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A promise or commitment by a seller to a buyer that an item currently out of stock can be purchased at a later date for today's sale price.
The term originated from baseball; spectators at games that were postponed because of rain would receive a check...
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Ratchets
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This is a structure that determines the eventual Equity allocation between groups of shareholders.
A ratchet enables a management team to increase its share of Equity in a company if the company is performing well. The Equity allocation in a company varies,...
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Rates (Variable)
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Variable loan rates Will generally change monthly or quarterly and are based on some index, such as the bank's prime rate.
Variable rates can rise or fall during the life of a loan depending on what happens to the index rate the loan is based on. A typical...
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Razor
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A business tactic involving the sale of dependant goods for different prices.
One good is sold at a Discount, while the second dependant good is sold at a considerably higher price.
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Real Estate
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The right, title, or Interest that a person has in real property, as distinguished from the property itself.
Land plus anything permanently fixed to it, including buildings, sheds, and other items attached to the structure comes under real estate.
...
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Recapitalization
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Restructuring a company's Debt and Equity mixture often with the aim of making a company's capital structure more stable.
This refers to a change in the way a company is financed. It is the result of an injection of capital, either through raising Debt...
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Recession
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A significant decline in general economic activity extending over a period of time.
It is visible in industrial production, employment, real income, and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative...
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Reconciliation
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Adjusting one's checkbook balance to match a bank Statement.
It is the act of confirming that the balance in your check register matches the corresponding balance on the Statement you get from your credit union. An accounting process used to compare two...
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Redemption Date
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In Debt markets, the maturity of an instrument is the duration of the loan, i.e. the amount of time before the principal amount lent is repaid.
The actual date on which the principal is repaid is known as the redemption date (which may be wholly or partly...
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Redlining
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A practice in which certain areas of a community are eliminated from eligibility for mortgages or other loans, either intentionally or unintentionally, allegedly because the area is considered a poor investment Risk.
The unethical practice whereby financial...
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Refinancing
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The process of paying off one loan with proceeds from a new loan using the same property as Security.
Refinancing refers to the replacement of an existing Debt obligation with a Debt obligation bearing different terms. The most common consumer refinancing...
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Reflation
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An economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output.
It refers to an economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output. It can be done...
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Regional bank
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A bank with a primary market in a regional or metropolitan area but takes deposits from throughout the state in which it is located.
A bank that operates in one region of a country, as opposed to a money center bank, which operates nationally and globally....
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REPO
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A repurchase agreement.
An investment vehicle in which the seller agrees to buy back the securities for an agreed-upon price, usually at a stated time. A form of Short-term borrowing for dealers in government securities. The dealer sells the government...
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Repudiation
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When one party refuses to honor their terms in a loan contract.
It is a term in the law of contracts that describes a declaration by one party (the promising party) to a contract that they do not intend to live up to their obligations under the contract....
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Research Note
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A Statement from a brokerage firm or other investment advisory service discussing a specific Security, industry, market or news item.
Research Notes are usually meant to contain time-sensitive information that applies to the current day's trading session...
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Reserve Currency
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A reserve Currency is a Currency which governments and international institutions are willing to hold in their gold and foreign-Exchange reserves and which finances a significant proportion of international trade.
It is a foreign Currency held by central...
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Resident Alien
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A foreigner who is a permanent resident of the country he or she resides, but does not have citizenship.
To fall under this classification in the U.S., you need to either currently have a green card or have had one in the last calendar year. You also fall...
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Residual Risk
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The component of an asset's Risk that cannot be explained by exposure to pervasive factors (the market), common factors (Interest rates, industrial production), or by industry affiliation. Residual Risk is analogous to unsystematic or diversifiable Risk.
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Resistance
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In Technical Analysis, a barrier - the opposite of support.
A resistance is marked by a previous price High that provides enough of a barrier above the market to halt a price advance. Often support and resistance areas occur at round numbers.
Resistance...
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Retail banking
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Banking services for individual customers.
Retail banking is typical mass-market banking where individual customers use Local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit...
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Return on Equity (ROE)
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This is the most popular indicator of financial performance.
It basically measures the company's efficiency in earning profits on behalf of its shareholders. Basically, the return on Equity is found by dividing pre-Tax profit by shareholders' funds. Also...
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Revocable Trust
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A Trust in which the creator reserves the right to modify or terminate the Trust.
A Trust whereby provisions can be altered or cancelled dependent on the Grantor.
During the life of the Trust, income earned is distributed to the Grantor, and only after...
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RevPOR
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Revenue Per Occupied room.
An industry metric used to evaluate companies in the hotel and lodging industries. RevPOR is used in conjunction with, or in place of, the more standard revenue per available room (RevPAR) statistic. RevPAR is calculated by taking...
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Riba
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A concept in Islamic Banking that refers to charged Interest. It is forbidden under Sharia, Islamic religious law, because it is thought to be exploitive.
Depending on the interpretation, riba may only refer to excessive Interest; however to others, the...
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Ring Fence
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A strategy with which an investor isolates a certain amount of money from any outside Risk.
A protection-based transfer of assets from one place to another, usually through the use of offshore accounting. A ring fence is meant to protect the assets from...
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Rings
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Trading arenas, located on the floor of an Exchange, in which traders execute orders.
Rings are also referred to as pits. We can see traders wildly thrashing their arms and yelling orders in the trading rings. Although it may look poorly coordinated, there...
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Rio Trade
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In the securities market, a transaction made in a desperate attempt to recover previous losses.
In the securities market, a transaction made in a desperate attempt to recover previous losses. The term was coined with the idea that if a trader fails in...
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Ripple
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A metaphor for a Short-term market trend.
The ripple is one of the ocean metaphors coined by Robert Rhea, one of the original technical analysts. In general, technical analysts encourage traders to ignore market ripples.
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Risk
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The chance that an investor Will lose all or part of an investment.
Risk is the possibility an investment's actual Future return Will be below its expected return. Risk is the degree of uncertainty of return on an asset. Risks are events or conditions...
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ROTA
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Return On Total Assets - ROTA
A ratio that measures a company's Earnings before Interest and taxes (EBIT) against its total net assets. The ratio is considered an indicator of how successfully a company is using its assets to generate Earnings before contractual...
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Royalty
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A payment to an owner for the use of property, especially patents, copyrighted works, franchises, or natural resources.
Royalties can be determined as a percentage of gross or net sales derived from use of the asset or a fixed price per unit sold. There...
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Rumortrage
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A term often used by traders to refer to increased trading caused by a takeover rumor.
If firms A and C are both in the auto industry and rumors say that firm A Will takeover firm C, an increase in trading in firms A and C's stock illustrates rumortrage.
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Rump
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The name given to the group of investors refusing to Tender their shares into a corporate action, such as a merger or Acquisition.
Should the quantity of rump shares be large enough, a corporate action may be stalled or halted.
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Run Rate
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The average annual dilution from company Stock option grants over the most recent three year period recorded in the Annual Report.
In the context of extrapolating Future performance of a company, the run rate helps to put the company's latest results...
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S&L
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Savings and Loan.
A federally or state chartered financial Institution that takes deposits from individuals, funds mortgages, and pays dividends. S&L is a state or federally-chartered depository financial Institution that was primarily a provider of...
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SAIF
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Savings Association Insurance Fund.
Savings Association Insurance Fund was created in 1989 as part of the savings and loan bailout. It provides Deposit insurance to thrifts.
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Salary Freeze
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The action of a company suspending salary increases for a period of time.
A salary freeze typically occurs when a company is experiencing financial difficulties. It may choose to freeze salaries for a while in order to minimize layoffs. Once the company...
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Sales fee
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A fee charged by a Broker or Agent for his/her service in facilitating a transaction, such as the buying or selling of securities or Real Estate.
In the case of securities trading, brokers can be split into two broad categories depending on the sales fees...
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Sallie Mae - Student Loan Marketing Association
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A publicly traded company that is the largest provider of educational loans in the U.S.
Along with providing student loans, Sallie Mae purchases student loans from the original lenders and provides financing to state student-loan agencies. Sallie Mae...
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Salvage Value
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The estimated value that an asset Will realize upon its sale at the end of its useful life.
The value is used in accounting to determine Depreciation amounts and in the Tax system to determine deductions. The value can be a best guess of the end value...
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Samurai Bond
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A Yen-denominated Bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Other types of Yen-denominated bonds are Euro yens issued in countries other than Japan.
Samurai bonds give issuers the ability to access investment...
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Saving Bank
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An Institution that primarily accepts consumer savings deposits and to make home mortgage loans.
Accounts that pay Interest, typically at below-market Interest rates, that do not have a specific maturity, and that usually can be withdrawn upon demand is...
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Savings Account
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An account with a bank or savings and loan company that pays Interest on money deposited.
A Deposit account intended for funds that are expected to stay in for the Short term. A savings account offers lower returns than the market rates. Writing checks...
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Scam
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Scam is a slang term for a fraud or confidence trick.
Phishing is one of the largest Internet related scams. Other scams include advanced fee frauds such as fake lotteries and 419 scams - where individuals are sent notification that they have either won...
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Scarcity
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The basic economic problem that arises because people have unlimited wants but resources are limited.
Due to scarcity, various economic decisions must be made to allocate resources efficiently.
When we talk of scarcity within an economic context, it...
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Scholarship
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A scholarship is an award of access to an Institution, or a financial aid award for an individual student scholar, for the purpose of furthering their education.
A kind of financial aid for students who meet special athletic, academic, or artistic qualifications,...
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Scrip Issue
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A scrip issue is the process of creating new shares which are given free of charge to existing shareholders.
Shares given without charge to existing shareholders in proportion to the shares they already hold. A script issue is a pure bookkeeping transaction....
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Scripophily
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The hobby of collecting antique bonds, stocks, and other financial instruments based upon their esthetics and prominence in the financial world.
It is the study and collection of stocks ,bonds etc. A specialized field of numismatics, scripophily is an...
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Seasoned Issue
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An issue of securities from an established company whose existing shares have exhibited stable price movements and substantial trading Volume over time, thereby earning a good reputation.
This is also known as a "seasoned Equity offering" (SEO). A Seasoned...
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Second-to-Die Insurance
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Life insurance on two people (usually married) that pays out once the last surviving spouse dies.
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Secondary Market
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Market where shares are bought and sold on the Stock Exchange after their initial flotation on the primary market.
It is the market for secondary buy-outs. A market in which an investor purchases an asset from another investor, rather than an issuing Corporation...
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Security
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Evidence of an investment, either in direct ownership (as with stocks), creditor ship (as with bonds), or indirect ownership (as with options).
Security Deposit is a type of payment usually required of an individual wishing to secure a personal loan, a...
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Seed capital
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The provision of very early stage finance to a company with a business venture or idea that has not yet been established.
Capital is often provided before venture capitalists become involved. However, a small number of venture capitalists do provide seed...
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Separate Account
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A privately managed investment account opened through a brokerage or financial advisor that uses pooled money to buy individual assets.
In the context of variable annuities, these are payments made to an insurance company for the purpose of investing in...
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Sharpe Ratio
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The Sharpe ratio or Sharpe index or Sharpe measure or reward-to-variability ratio is a measure of the excess return (or Risk Premium) per unit of Risk in an investment asset or a trading strategy. Since its revision made by the original author in 1994, it...
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Shogun Bond
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A type of foreign-Currency denominated Bond that is issued in Japan by foreign entities. Organizations such as the World Bank have issued such Debt instruments in the past .
Also known as a "geisha Bond"ie issued in Japan by nonresident companies using...
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SICAV (Mutual fund)
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Société d'Investissement À Capital Variable - SICAV
Company having a legal status and which purpose is the management of a Portfolio of bonds for the account of its share holders .
A type of Open-ended investment fund in which the amount of capital...
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SICOVAM
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Sicovam, an acronym for Société Interprofessionelle pour la Compensation des Valeurs Mobilières.
French organization in charge of facilitating, by operations of transfer from account to account, the circulation of the securities between its partners.
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Sight draft
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A draft which is payable on demand.
It is a bill of Exchange payable on the day it is presented to the named entity (the drawee). Also called sight bill or at sight .
Bank Draft is a type of check where the payment is guaranteed to be available by...
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Signature guarantee
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An authentication of a signature in the form of a stamp or seal by a bank, a stock Exchange member or another acceptable guarantor. Often required when securities are transferred from one party to another.
A form of authentication issued by a bank or other...
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Sin Tax
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A state-sponsored Tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling.
These type of taxes are levied by governments to discourage individuals from committing such activities without making the use of...
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Sinful Stock
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Stock from companies that are associated with (or are directly involved in) activities that are widely considered to be unethical or immoral.
Also known as "sin stock".
Examples of activities some people may consider sinful include the Distribution...
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Situs
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The location or Position of a property.
For intangible property, such as Debt, the situs is probably the jurisdiction in which the Debt obligation was issued. The situs of Real Estate (land) is where the land is located ,the situs of debts is where the...
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Sleeping Beauty
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A company that is ready for takeover but has not been approached by an acquiring company.
A company may be considered a sleeping beauty because it has large Cash reserves, undervalued Real Estate, or huge potential.
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SMA
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Special Memorandum Account.
A special account where excess Margin generated from a client's Margin account is deposited. Also known as "special miscellaneous account".
The purpose of an SMA is to lock in any increase in a client's Margin account. Consider...
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Small Business Administration (SBA)
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Operated by U.S. Government, this federal agency Will guarantee loans to qualified borrowers.
It acts as co-signer, ensuring banks that it Will pay off the loan if the business owner is unable to do so. Business banks often use the SBA to guarantee for...
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Smurf
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Slang for somebody who frequently launders money.
Not the same as those cute blue creatures we all remember so fondly. Instead, it describes someone much more like their nemesis Gargamel. The process of creating the appearance that large amounts of money...
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Sotheby's
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One of the world's most venerable Auction houses.
The company is largely known for holding auctions of very valuable and rare collectors' items such as jewelry, antiques and fine art.
Sotheby's acts as a market for the Exchange of rare and valuable...
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Speculator
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A person who gambles on High-Risk investments, hoping to make a large profit quickly.
Financial speculation, involves the buying, holding, selling, and Short-selling of stocks, bonds, commodities, currencies, collectibles, Real Estate, derivatives, or...
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Spin-out firms
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These are captive or semi-captive firms that gain independence from their parent organizations.
Creation of a new, independent company created through selling or distributing new shares for an existing part of another company. Spin out happens when a...
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Spot price
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The current value of an asset.
The current price at which a particular commodity can be bought or sold at a specified time and place is the Spot price. It is also the price that is quoted if you want to buy any commodity today.
The Spot price or Spot...
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Spot Trade
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The purchase or sale of a foreign Currency or commodity for immediate Delivery.
Spot trades are settled "on the Spot", as opposed to at a set date in the Future. It is also called "Cash trades".
Futures transactions that expire in the current month...
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Squawk box
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A speaker and intercom system that is used on trading desks.
A squawk Box allows direct communication between a trader and a Broker. This allows the users to be in contact with a Broker on a continuous Basis, and keep up with current market quotes.
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Stagflation
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A condition of slow economic growth and relatively High unemployment - a time of stagnation - accompanied by a rise in prices, or Inflation.
Stagflation is a period of Inflation combined with stagnation (that is, slow economic growth and rising unemployment),...
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Stake
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Part of the capital of a firm held by an individual or a body corporate, conferring a right to the Distribution of the profit and more generally to management.
It can be a sum of money gambled on a risky game or venture or a share or Interest in a business...
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State bank
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Bank organized under a state, rather than a federal, Charter.
A state bank is generally a bank that is chartered by a state. It differs from a reserve bank in that it does not necessarily control monetary policy (indeed, the state in question may have...
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Statement
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The monthly bill from a credit card issuer that describes and summarizes the activity on an account.
A statement includes the outstanding balance, purchases, payments, credits, finance charges and other transactions for the month .It is a record of activity...
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Steering
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An illegal procedure in which a prospective buyer is shown properties in specific neighborhoods where the residents share the buyer's ethnicity.
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Story Stock
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A stock whose value is a reflection of expected Future potential (or favorable press coverage) rather than its assets and income.
A stock whose price is currently moving, or expected to move, due to some important company news An example of a story stock...
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STP
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Straight Through Processing
An initiative by many financial companies to streamline transactions by maintaining contact throughout processing.
Companies in the financial world use this to optimize the speed at which transactions are processed. This...
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Strangle
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An options strategy where the investor holds a Position in both a call and put with different strike prices.
This Option strategy is profitable only if there are large movements in the price of the Underlying asset. This is a good strategy If you think...
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Strategic investment
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An investment that a Corporation makes in a young company that can bring something of value to the Corporation itself.
The aim may be to gain access to a particular product or technology that the start-up company is developing, or to support young companies...
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Strip Bonds
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The capital portion of a Bond from which the coupons have been stripped.
The Holder of the Strip Bond is entitled to its Par value at maturity, but not the annual Interest payments. A Bond where both the principal and regular Coupon payments--which have...
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Strong Form Efficiency
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The strongest version of market efficiency.
It states all information in a market, whether public or private, is accounted for in a stock price. Not even insider information could give an investor the advantage. Not even insider information could give...
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Structural Unemploment
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Unemployment resulting from changes in the basic composition of the economy.
These changes simultaneously Open new positions for trained workers. Here, the unemployed workers lack the specific skills required for the jobs, or are located in a different...
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Student loan
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A means of borrowing money for education after High school at Low Interest rates and generous repayment terms from federal government programs.
Student loans are loans offered to students to assist in payment of the costs of professional education. These...
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Sub prime loan
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A loan offered to an individual who does not qualify for a loan at the prime rate due to their credit history.
Sub prime lending is lending at a higher rate than the prime rate. It is also known as B-paper, near-prime, or second chance lending. If a...
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Subchapter S (S Corporation)
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A Corporation that meets the requirements for, and has made a proper election to be taxed under, Subchapter S of the Internal Revenue Code.
This gives the Corporation the Option of being taxed as if it were a partnership (income is taxed to the shareholders,...
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Subsidiary
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A company owned by another company(parent company) that controls more than 50% of its voting stock.
AS Long as the parent company has more than 50% of the voting stock in the subsidiary, it has control. In the case of a foreign subsidiary, the company...
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Suicide Provision
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A life insurance policy provision whereby if the insured commits suicide within a specified period, usually one or two years after date of issue, the company is not liable to pay the face amount of coverage; instead, liability is limited to a return of premiums...
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Sundry Income
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External income that results from factors outside of a firm's control.
Examples of sundry income include gains from foreign Exchange, Royalty income, or even income from the sale of various investments.
This is called as miscellaneous income too.
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Sunrise Industry
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Slang for a new, emerging growth industry that is expected to be the strongest sector in the Future.
It is a figurative term for the emerging growth sectors that some believe Will be the mainstays of the Future economy, taking the place of declining sunset...
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Sunshine Laws
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Federal and state regulations that require meetings on public policy to be publicized
U.S. federal and state laws which require regulatory authorities' meetings, decisions and records to be made available to the public.
Sunshine laws were first created...
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Sunshine Trade
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A High-Volume transaction prematurely revealed to the market before the order is even entered.
Sunshine trades are meant to reduce confusion and speculation by investors by making the large transactions more transparent.
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Super Bowl Indicator
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An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in the stock market for the coming year, and that a win from a team from the old NFL (NFC division) means the stock market Will be up for...
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Supply Management
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A broad term describing the various acts of identifying, acquiring and managing the products and/or resources needed to run a business or other organization.
These include physical goods as well as information, services and any other resources needed....
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Survey
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A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Surveying is the technique and science of accurately determining the terrestrial or...
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Swap
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A Swap is a contract where two parties agree to Exchange their Interest payment liabilities on an agreed amount of each others Debt, for a fixed time period.
There are two basic kinds of Swap transaction; the single-Currency Swap and the cross-Currency...
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Sweeper account
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A bank account which offsets the Cash held in a depositor's account against credit card, loan and mortgage debts to reduce the debit Interest payable on them.
Often it Will automatically transfer surplus funds held in a depositor's current account to his...
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Sweetheart Deal
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A merger, a sale or an agreement in which one party in the deal presents the other party with very attractive terms and conditions.
The terms of a sweetheart deal are usually so lucrative that it is difficult to justify turning the Offer down.
This...
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Swissie
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A slang term for the Swiss franc.
The Swiss franc, or Swissie, has often been considered a safe-haven Currency during times of geopolitical unrest. This is mainly due to the country's neutral stance in global conflicts.
For example, one may hear in...
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Symmetallism
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A monetary standard in which a nation Will redeem its Currency in specified proportions of both gold and silver.
It can be compared with Bimetallism, in which Currency is redeemable in either gold or silver.
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Syndication
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The sharing of deals between two or more investors, normally with one firm serving as the Lead investor.
Investing together allows venture capitalists to Pool resources and share the Risk of an investment. Syndicated loan happens when a group of banks...
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Synergy
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The effect of a combination of separate actions or operations that make the whole greater than the sum of its parts.
Synergy is the idea that the value and performance of two companies combined Will be greater than the sum of the separate individual parts....
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Synthetic Dividend
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A type of incoming Cash flow that an investor creates with certain financial securities to produce a Dividend-like payment stream that resembles the periodic Cash receipts from a Dividend-paying stock.
For example, suppose an investor owns shares in a...
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Tag along Rights
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A contractual obligation used to protect a minority shareholder (usually in a Venture capital deal).
Basically, if a majority shareholder sells their Stake, then the minority shareholder has the right to join the transaction and sell their minority Stake...
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Tangible asset
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Assets having a physical existence, such as Cash, equipment, and Real Estate; accounts receivable are also usually considered tangible assets for accounting purposes. opposite of intangible asset.
An asset is defined as a probable Future economic benefit...
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Taper relief
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Aims to reduce the amount of capital gains Tax that you have to pay when you sell shares, to account for the effect of Inflation.
Taper relief works by reducing the gain by a 5% a year for every year it was held regardless of the base cost. This is to...
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Target price
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Price at which a Holder of a stock is hoping to sell the stock.
This is calculated by market research and calculating the cost to market of the product. In turn, the target price may be used to calculate the target cost for a product.
The easiest measure...
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Tariff
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A taxation levied on goods and services imported into a country. Also known as a duty Tax.
A tariff is a Tax on goods upon importation. Governments generally impose tariffs to raise revenue and protect domestic industries from foreign competition caused...
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Tax
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A pecuniary burden laid upon individuals or property to support the government
A fee charged ("levied") by a government on a product, income, or activity.
If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is...
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Tax allowances
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Tax allowances are concessions by the Inland Revenue which can be used to reduce a person's Taxable Income.
The main allowance for UK taxpayers is the 'personal allowance'; which is an amount of income that is Tax free.
The personal allowances for elderly...
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Tax Anticipation Notes - TAN
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Securities issued in anticipation of Future Tax collections.
TANs are generally issued by state and municipal governments to provide immediate funding for a capital expenditure, such as highway construction. Investing in these bonds may Offer a Tax-free...
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Tax Bracket
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The rate at which an individual is taxed due to a particular income level.
Tax brackets are set based on income levels; individuals with lower income levels are taxed at a lower rate than individuals with higher income levels. Tax brackets serve as cutoff...
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Tax Court
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A court of law whose sole jurisdiction is to decide litigation involving federal income, death, and other taxes.
A specialized federal or state court that decides cases involving Tax-related controversies . All state governments and the federal government...
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Tax Deferral
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Tax deferral refers to instances where a taxpayer can delay paying taxes to some Future period. In theory, the net taxes paid should be the same. In practice, due to the Time value of money, paying taxes in Future is usually preferable to paying them NOW....
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Tax Evasion
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An illegal practice whereby an individual intentionally avoids paying their true Tax liability.
Illegal practice of intentionally evading taxes. Tax minimization/avoidance and Tax evasion are different. All citizens have the right to reduce the amount...
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Tax Haven
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A Tax haven is a country, which provides a no-Tax or Low-Tax environment.
Individuals and firms find it attractive to move themselves to areas with lower Tax rates. Among governments, this creates a situation of Tax competition. Different jurisdictions...
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Tax Home
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An individual's primary place of work or residence.
This is used when determining Tax for travel or transportation expenses. Many travel deductions require that you travel a minimum mileage away from your Tax home to qualify.
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Tax Lien
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A claim imposed by the federal government to Liquidate a person's property until the Tax and Debt owed is fully paid.
Tax liens can be purchased from the government in the form of an investment. A Tax lien is a lien imposed on property by law to secure...
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Tax Shelter
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A legal method of minimizing or decreasing an investor's taxable income and, therefore, his or her Tax liability.
Tax shelters can Range from investments or investment accounts that provide favorable Tax treatment, to activities or transactions that lower...
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Tax Shield
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The reduction in income taxes that result from taking an allowable Deduction from taxable income.
A reduction in taxable income for an individual or Corporation achieved through claiming allowable deductions such as mortgage Interest, medical expenses,...
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Tax-Exempt Interest
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Interest income that is exempt from federal income Tax.
Although it is not directly taxed, this income may still be required to determine other Tax calculations such as social Security benefits.
For example, municipal bonds are exempt from federal and...
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Technical Analysis
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Technical Analysis is a form of analysis that seeks to make judgments about the performance of a share based solely on its historic and current price behavior and without reference to the Underlying business, the sector the company is in, or the economy as...
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Technical Rally
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An upward movement in a Security's price following a declining trend.
The movement is caused by technical as opposed to fundamental factors affecting sentiment.
For instance, technical analysts may identify a particular support price, and as a result,...
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Ted Spread
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The price difference between three-month futures contracts for U.S. Treasuries and three-month contracts for Eurodollars having identical expiration months.
The Ted spread can be used as an indicator of Credit risk. This is because U.S. T-bills are considered...
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Tenants by Entirety - TBE
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When a property is owned by two or more tenants.
In a TBE if an owner dies, the survivor takes the whole estate. This agreement can only be changed if each person is still living.
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Tenants In Common - TIC
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When a property is owned by two or more tenants.
If one owner dies, the other does not automatically take the entire estate.When the person dies, the property portion is transferred to the descendant's beneficiary.
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The overnight rate
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It is generally the rate that large banks use to borrow and lend from one another on the interbank market. In some countries (for example, Canada), the overnight rate may be the rate targeted by the Central Bank to influence monetary policy. In most countries,...
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Thrift
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An organization formed for the purpose of holding deposits for individuals; examples include savings banks and savings and loans.
It's a generic term for Savings and loan association in the United States. A bank whose main purpose is to take deposits from...
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Tied Selling
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The illegal practice of a company providing a product or service on condition the customer purchases a product from the same or related company.
It is mainly used in reference to banks and referred to as coercive tied selling. The basic idea is that consumers...
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Timber Investment Management Organization - TIMO
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A management group that aids institutional investors in managing their timberland investments.
A TIMO acts as a Broker for institutional clients. The primary responsibility of TIMOs are to find, analyze and acquire investment properties that would best...
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Time Horizon
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The length of time over which an investment is made or held before it is liquidated.
Time horizons can Range from seconds, in the case of a Day Trader, all the way up to decades for a buy-and-hold investor. There is no "right" time frame - it depends on...
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Title Search
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A check of the title records to ensure that the seller is the legal owner of the property and to determine what liens or other claims are outstanding.
An examination of public records to determine and confirm a property's legal ownership, and find out...
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Torpedo Stock
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A classification for a stock that has fallen substantially in value and that it appears it Will continue to fall in value in the near Future. It is a declining stock that Will most likely continue to decline.
The name for this classification was derived...
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Total Disability
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A total disability usually means a worker cannot complete most job requirements based on a physical or mental disability.
In some cases, total disability is immediate subsequent to the loss of sight or limbs. In other situations, an "elimination" period...
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Track share
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Specific nature of share of a company assigned to a specific category of assets, to a Subsidiary, or even to an activity in the company.
The track share Holder's rights (dividends, etc.) are indexed on the performances of the considered assets, as well...
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Tracker
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Investment fund which aim is to duplicate an index of Security prices and which is listed on a stock Exchange like a stock.
An index fund that tracks a broad market index or a segment thereof. Such a fund invests in all, or a representative number, of...
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Trademark
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A symbol, word, phrase, logo, or combination of these that legally distinguishes one company's product from any others.
Any infringement on a trademark is illegal and therefore grounds for the company owning the trademark to sue the infringing party.
...
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Trading Authorization
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The level of power entrusted to a Broker or Agent granting specific levels of access to a client's account.
Trading authorization dictates what actions an Agent may perform, such as buying or selling. This is similar to the concept of power of attorney,...
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Traveler's check
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A traveler's cheque (also traveler's cheque, travelers cheque, traveler's check, or travelers check) is a preprinted, fixed-amount cheque designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the...
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Treasuries
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The United States Government regularly offers negotiated Debt obligations at public Auction through the Federal Reserve Bank.
Treasuries have varying maturities and yields. Treasury bills have maturities of less than one year; Notes less than 10 years;...
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Treasury Index
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An index based on the auctions of U.S. Treasury bills, or on the U.S. Treasury's daily Yield curve.
It is commonly used in determining mortgage rates for mortgages with an unfixed component and as a performance Benchmark for investors in the capital markets...
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Treasury Securities
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Interest-bearing obligations of the US government issued by the Treasury as a means of borrowing; money to meet government expenditures not covered by Tax revenues.
Marketable Treasury securities fall into three categories- bills, Notes, and bonds. Marketable...
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Treynor Ratio
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The Treynor ratio is a measurement of the returns earned in excess of that which could have been earned on a riskless investment (i.e. Treasury Bill) (per each unit of Market risk assumed).
The Treynor ratio (sometimes called reward-to-Volatility ratio)...
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Trickle Down Theory
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An economic theory, according to which investing money in companies and giving them Tax breaks is the best way to stimulate the economy.
Proponents of this theory believe that when government helps companies, they Will produce more and thereby hire more...
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Trust
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A fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.
The two types of trusts are Living Trust &Testamentary...
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Turkey
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Slang for an investment that yields disappointing results or turns out worse than expected.
Failed business deals, securities that realize significant losses and unsuccessful initial public offerings (IPOs) could all be called "turkeys".
For an individual...
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Umbrella Fund
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An umbrella fund - sometimes known as a 'fund of funds' - is an investment fund that invests in other funds rather than in direct investments.
An umbrella fund is an investment term used to describe a collective investment scheme which is a single legal...
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Uncollected funds
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Bank Deposit which has not yet been acknowledged by the bank on which the check was drawn. Most banks don't allow drawing on uncollected funds.
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Underwriting
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The process of evaluating a loan application to determine the Risk involved for the lender.
The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both Equity...
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Unemployment insurance
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Compensation plans by which federal and state governments provide money to workers who've lost their jobs through no fault of their own.
The federal Social Security Act of 1935 set up this system. Employers pay federal and state taxes to support unemployment...
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Unit Trust -UT
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An unincorporated fund whose organizational structure permits the conduit treatment of income realized by the fund.
An unincorporated Mutual Fund structure that allows funds to hold assets and pass profits through to the individual owners, rather than reinvesting...
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Universal banking
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A system of banking where banks are allowed to provide a variety of services to their customers.
Banking that includes investment services in addition to services related to savings and loans is universal banking.
In universal banking, banks are not...
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Valuation
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The textbook definition of valuation is determining the fair value of a company.
Valuation is the process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others...
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Value at Risk (VaR)
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Procedure for estimating the probability of Portfolio losses exceeding some specified proportion based on a statistical analysis of historical market price trends, correlations, and volatilities.
A technique used to estimate the probability of Portfolio...
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Value Chain
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A High-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers.
Value-chain analysis looks at every step a business goes through, from raw materials...
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Value Date
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A Future date used in determining the value of a product that varies in price.
Usually, you Will see the use of value dates in determining the payment of products and accounts where there is a possibility for discrepancies due to differences in the timing...
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Value Trap
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A stock that has experienced a large price Depreciation and is mistaken to be a value stock.
When a company's stock seems undervalued, investors are sometimes drawn into buying it in hopes of a stock price appreciation. If stock price is the only factor...
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VAR
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Value At Risk.
A technique which uses the statistical analysis of historical market trends and volatilities to estimate the likelihood that a given Portfolio's losses Will exceed a certain amount.
Value at Risk (VaR) is the maximum loss not exceeded...
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Variable Rate
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A variable rate agreement, as distinguished from a Fixed Rate agreement, calls for an Interest rate that may fluctuate over the life of the loan.
The rate is often tied to an index that reflects changes in market rates of Interest. A fluctuation in the...
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VAT
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Value Added Tax
A consumption Tax which is levied at each stage of production based on the value added to the product at that stage.Value added Tax (VAT), or goods and services Tax (GST), is Tax on exchanges. It is levied on the added value that results...
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Vault Receipt
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A document frequently used as a Delivery instrument to indicate ownership of precious metals stored in a bank, warehouse, or depository.
Also known as Warrant or Warehouse Receipt for metals.
Vault receipts indicate ownership of precious metal commodities...
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Velocity (of Money)
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A term used to describe the rate at which money is exchanged from one transaction to another.
Velocity is important for measuring the rate at which money in circulation is used for purchasing goods and services. This helps investors gauge how robust the...
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Vendor Financing
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The lending of money by a company to one of its customers so that the customer can buy products from them.
Vendor finance is usually in the form of deferred loans from, or shares subscribed by, the vendor. The vendor usually takes shares alongside the...
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Venture capital
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Venture capital is a type of private Equity capital typically provided by professional, outside investors to new, High-potential-growth companies in the Interest of taking the company to an IPO.
Venture capital investments are generally made as Cash in...
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Vesting
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A process by which employees accrue non-forfeitable rights to employer contributions that are made to the employee's qualified retirement plan account.
Generally, non-forfeitable rights accrue based on the number of years of service performed by the employee....
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Viager
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A (French) Real Estate agreement where property is sold on a reverse annuity Basis. Also known as a Reverse Annuity Mortgage or Charitable Remainder Trust.
It is also known as a Reverse Annuity Mortgage or Charitable Remainder Trust.
For example a person...
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Viatical Settlement
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An arrangement in which someone with a terminal disease sells his or her life insurance policy at a Discount from its face value for ready Cash.
Also referred to as a Life Settlement, it is very risky. The rate of return is unknown because it's impossible...
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Visibility
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The extent to which Future projections are probable.
For example, you'll often hear CEOs in a conference call tell analysts that they have "Low visibility" for the upcoming quarter. This means they have little to no idea what Future Earnings Will be and...
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Volatility
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The relative rate at which the price of a Security moves up and down.
Volatility is found by calculating the annualized standard deviation of daily change in price. If the price of a stock moves up and down rapidly over Short time periods, it has High...
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Vulture Fund
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A fund that buys securities in distressed investments, such as High-Yield bonds in or near Default, or equities that are in or near Bankruptcy.
It is a type of Limited Partnership that invests in depressed property, usually Real Estate, aiming to profit...
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Waiver of Specified Premium
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An optional life insurance policy rider that waives a specified Premium on a traditional product for the length of a qualified disability as outlined in the policy contract.
An insurance policy rider that allows a policyholder to stop making Premium payments...
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Wall of Worry
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A phrase used to describe a bullish market trend in the face of expected negative uncertainties
A phrase used to describe a bullish market trend occurring in the face of negative uncertainties.
When stock prices are rising regardless of market uncertainties,...
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Wall Street
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The street in New York City where the NYSE is located.
Wall Street is a street in lower Manhattan island, New York City, USA. It runs east from Broadway downhill to South Street on the East River, through the historical center of the Financial District....
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Wallflower
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A stock that has fallen out of favor with investors and, consequently, tends to trade at a Low P/E.
Also called orphan stock. In general condition, a wallflower is somebody who remains on the sidelines of a social activity. The financial sense of the word...
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Walrasian Market
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An economic model of a market process in which orders are collected into batches of buys and sells and then analyzed to determine a clearing price that Will decide the market price. Also called "call market".
The NYSE uses a similar process before the...
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War Babies
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Securities in companies that are defense contractors are called War Babies .
Also known as defense stocks. A good example of this are firms that build aircrafts and ammunition. When a war is imminent, these stocks tend to outperform the market because...
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War Bond
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Debt securities issued by a government for the purpose of financing military operations during times of war.
It is an sentimental appeal to patriotic citizens to lend the government their money because these bonds Offer a rate of return below the market...
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War Chest
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Slang term for the reserve of Cash a Corporation keeps aside to attempt a takeover or to defend against a hostile takeover.
For example, we may hear, "Look for ABC Company to make an Acquisition soon; they've been selling off assets in order to build up...
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Warrant Coverage
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An agreement between a company and its shareholders whereby the company issues warrants equal to some percentage of the dollar amount of the shareholder's investment.
For example, if an investor purchases 1,000,000 shares of stock at a price of $5 per...
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Warrant Golden Cross
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In Technical Analysis, a Golden Cross is formed when a Short moving average breaks above a longer one when both rise.
The signal is considered much stronger if the cross is formed after the moving averages have stayed close to each other for some time.Financial...
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Warren Buffet
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Warren Buffet is known as the most successful stock market investor in the world. Having started in 1954 with $100, he is NOW worth around $20 billion. He learned about the markets working for Ben Graham but started to make his own mark with his holding company,...
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Wash
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A situation where two events or actions have the effect of nullifying each other.
In terms of investment, this could be when gains in a Portfolio equal the losses. This is another way of saying that you've broken even.
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Wash Sale
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An illegal transaction an investor makes by simultaneously buying and selling a Security through two different brokers, thereby creating the illusion of activity.
Investors do this to try and recognize a Tax loss without actually changing their Position....
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Wash Trading
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An illegal stock trading practice where an investor simultaneously buys and sells shares in a company through two different brokers.
A transaction designed to make it appear that a purchase and sale has occurred even though no change in ownership occurred....
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Wash-Sale Rule
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An Internal Revenue Service (IRS) rule prohibiting a taxpayer from claiming a loss on the sale of an investment when the same investment was purchased within 30 days before or after the sale date.
Also known as the "30-day Wash-sale rule". This rule...
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Watch List
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A list of securities being monitored closely by a brokerage or Exchange in order to Spot irregularities.
Firms on the watch list might be suspected of regulatory violations, about to issue new securities, attracting unusually Heavy Volume, etc.
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Wave
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A metaphor for daily market activity that goes against the weekly market tide.
An investor trading daily would measure the market waves, or the daily market trends, with various oscillators from the triple screen trading system. The ocean metaphors for...
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Wealth Added Index - WAI
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A metric designed by the Steward Stern &; Co. consulting firm that attempts to measure wealth created (or destroyed) for shareholders.
The WAI takes into account more variables than just the profits or share growth of a company. According to this theory,...
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Well's Notice
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Notifications issued by regulators to inform individuals and companies of completed investigations where infractions have been discovered.
A Wells Notice is a letter that the U.S. Securities and Exchange Commission sends to people or firms when it is planning...
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Whipsaw
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A condition where an investor's Security transaction is quickly followed by an opposite reaction. Sometimes referred to as "being whipped".
The origins of term is derived from the push and pull action used by lumberjacks to cut wood with a type of saw...
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Whisper Number
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Unofficial and unpublished Earnings per share forecasts that circulate among the professionals and wealthy investors on Wall Street.
It can be a company's forecasted Future Earnings or revenues according to the collective expectations of individual investors....
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Whisper Stock
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Shares in a company that is rumored to be the target of a takeover Offer.
The source of whisper stocks could be anybody from an investment banker involved in a deal, to the spouse of an executive privy to the information. It is only a rumour. There is...
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White knight
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A potential Acquirer who is sought out by a target company's management to take over the company to avoid a hostile takeover by an undesirable black knight.
A company which makes a hostile takeover Bid on a target company is a black knight.
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Whitemail
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A strategy that a takeover target uses to try and thwart an undesired takeover attempt.
The target firm issues a large amount of shares at below-market prices, which the acquiring company Will then have to purchase if it wishes to complete the takeover....
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Whole life insurance
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A permanent life insurance policy that remains in full force and effect throughout the life of the insured, with fixed Premium payments being made for the same period.
Life insurance that provides coverage for an individual's entire life (as opposed to...
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Wholesale Banking
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Banking services between merchant banks and other financial institutions. In other words, business to business banking.
Sometimes wholesale banking is the provision of services by banks to other financial institutions. Usually, however, wholesale banking...
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Widget
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A hypothetical product used to illustrate a business concept.
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Wildcat strike
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An unauthorized work stoppage while a labor contract is still in effect.
Wildcat strike is an illegal strike action taken by labor not authorized by their union. Unions have the power to collectively bargain for its members and to call for strikes demanding...
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Will
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A legally enforceable declaration of how a person wishes his or her property to be disposed of after death. Also known as a will and testament.
Will is a legal document expressing the desires of the author with regard to the disposition of property after...
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Wilshire 5000
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This is the most comprehensive index of the entire US Equity market: this index measures the performance of shares in all US-based companies with readily-available price data.
Although it is called the Wilshire 5000 index, it is actually calculated using...
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Windfall
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Money received which was not expected and not a direct result of something the recipient did.
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Windfall Tax
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A Tax levied by governments against certain industries when economic conditions allow those industries to experience above-average profits.
Windfall taxes are primarily levied on the companies in the targeted industry that have benefited the most from...
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Window
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The Discount window of a Federal Reserve Bank.
Discount means anything selling below its normal price, opposite of Premium. The Federal reserve Bank is one of 12 regional banks established to maintain reserves, issue bank Notes, and lend money to member...
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Wire Fraud
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A situation where a person concocts a scheme to defraud or obtain money based on false representation or promises.
This criminal act is done over using electronic communications or an interstate communications facility. It is a legal concept in the United...
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Wire Transfer
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A wire transfer is an electronic transfer of funds across a network administered by hundreds of banks around the world.
Wire transfers can be done by a simple bank account transfer, or by a transfer of Cash at a Cash office. Bank wire transfers are often...
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Withholding tax
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A Tax levied by a country of source on income paid, usually on dividends remitted to the home country of the firm operating in a foreign country.
Withholding Tax is an amount withheld by the party making payment to another (payee) and paid to the taxation...
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Work permit
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Work permit is a generic term for a legal authorization which allows a person to take employment.
It is most often used in reference to instances where a person is given permission to work in a country where one does not hold citizenship, but is also used...
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Working capital
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A measure of both a company's efficiency and its Short-term financial health.
It is the difference between current assets and current liabilities. Also known as "net working capital".
Contrasted with capital, a permanent use of funds, working capital...
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World Fund
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A Mutual Fund that invests in securities from several different countries, including the United States.
World funds typically have a major portion of their investment in U.S.-listed securities, but also spread their investment capital among securities...
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World Trade Organization - WTO
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An international organization dealing with the global rules of trade between nations.
The WTO's headquarters are in Geneva, Switzerland.
Its main function is to ensure that trade flows as smoothly, predictably, and freely as possible. The World Trade...
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Xenocurrency
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A Currency that trades outside of its domestic borders.
Xeno" is a prefix meaning foreign or strange. An example of a xenocurrency is the Chinese yuan when it is traded in the United States. When Currency is deposited by national governments or corporations...
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Year-over-year (YOY)
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A method of evaluating two or more measured events that compares the results of measurement at one time period with those from another time period (or series of time periods), on an annualized Basis.
Year-over-year comparisons are a popular way to evaluate...
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Yellow Sheets
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A U.S. bulletin that gives updated Bid and ask prices as well as other information on OTC bonds.
Similar to the Pink Sheets that track non-Exchange traded OTC micro-Cap stocks, the yellow sheets are a primary source of information for investors who track...
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Yen
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The Japanese Yen is one of the world's five major currencies, along with the US dollar (USD), the euro (EUR), the British pound (GBP) and the Swiss franc (CHF).
The yen is the third most traded Currency of the majors behind the USD and the EUR.
Japan's...
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Yield
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The rate of income generated from a stock in the form of dividends, or the effective rate of Interest paid on a Bond, calculated by the Coupon rate divided by the Bond's market price.
Furthermore, for any investment, Yield is the annual rate of return...
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Yield Curve
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Graph plotting the Interest rate of a given issuer for a Range of different maturities.
A graphic line chart that shows Interest rates at a specific point for all securities having equal Risk, but different maturity dates. For bonds, it typically compares...
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Yield Spread
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Yield spread is the difference in yields on different types of Debt securities.
Yield - in whatever way it is measured - is the return offered on an investment. The Yield spread is the difference between the Yield on one Security and that on another.
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Yield to Worst
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The Yield to maturity if the worst possible Bond repayment takes place.
If market yields are higher than the Coupon, the Yield to worst would assume no prepayment. If market yields are below the Coupon, the Yield to worst would assume prepayment. In other...
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Young and Wealthy But Normal - YAWN
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A class of self-made millionaires that live comparatively modest lives.
Rather than spending wealth on getting luxurious items and living expensive lifestyles, these individuals like to contribute to charitable causes and spend time with their families.
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Yupcap
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A slang term for a young urban professional who cannot afford to buy property.
Yupcaps are individuals in their late twenties or early thirties with a post secondary educations and a well-paying jobs who are unable to buy a property due to factors such...
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Zakat
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A term used in Islamic finance to refer to the obligation that an individual has to donate a certain proportion of wealth each year to charitable causes.
Zakat is a mandatory process for Muslims in order to physically and spiritually purify their yearly...
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Zero Balance Account - ZBA
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A checking account in which a balance of zero is maintained by automatically transferring funds from a master account in an amount only large enough to cover checks presented.
ZBA is a checking account which always maintains a balance of zero. Whenever...
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Zero Based Budgeting - ZBB
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A method of budgeting in which all expenditures must be justified each new period, as opposed to only explaining the amounts requested in excess of the previous period's funding.
Zero-based budgeting starts from a "zero base" and every function within...
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Zero Cost Collar
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A type of positive-carry Collar that secures a return through the purchase of a Cap and sale of a floor. Also called "zero cost options" or "Equity Risk Reversal.
This investment strategy is sometimes used in relation to Interest rates, commodities, options,...
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Zero-Sum Game
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A situation in which one participant's gains result only from another participant's equivalent losses.
The net change in total wealth among participants is zero; the wealth is just shifted from one to another.
Options and Future contracts are examples...
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Zig Zag
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A Technical Analysis indicator that filters out changes in an Underlying plot that are less than a specified amount.
In other words, it helps to show only significant changes.
A zig zag indicator is a trend following indicator that is used to predict...
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Zombies
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Companies that continue to operate even though they are insolvent. Also known as living dead.
Zombies are companies that continue to operate even though they are insolvent or near Bankruptcy. Zombies often become casualties to the High costs associated...
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Zoning
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Government (usually municipal) laws that control the use of land within a jurisdiction.
Zoning areas may be classified as residential, commercial, farming, and so forth.
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ZZZZ Best
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A company owned by Barry Minkow in the 1980s.
Through such means as forgery and theft, Minkow appeared to be building a multimillion dollar Corporation. ZZZZ Best went public in December of 1986, eventually reaching a market capitalization of over $200...
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