depository trust company what is
Depository Trust Company (Dtc), Depository Transfer Check (Dtc), Dividend Reinvestment Plan (Drp.

Financial definitions for business owners D

  • Definition Dead cat bounce Explain A small upmove in a bear market
  • Definition Divestiture Explain A complete asset or investment disposal such as outright sale or liquidation
  • Definition Discharge of lien Explain An order terminating a lien on property
  • Definition Dual syndicate equity offering Explain splits the offering is split into two tranches - domestic and foreign - and each tranche is handled by a separate lead manager
  • Definition Dual trading Explain The custom of a trader on the commodities market to deal for its own account and the investor's account at the same time
  • Definition Due bill Explain An instrument evidencing the obligation of a seller to deliver securities sold to the buyer. Occasionally used in the bill market
  • Definition Due date Explain Date on which a debt must be paid
  • Definition Due dilengence Explain An internal audit of a target frim by an acquiring firm. Offers are often made contingent upon resolution of the due diligence process
  • Definition Due diligence meeting Explain Meeting legally required to be held by an underwriter to enable brokers to question a new issuer about an upcoming issue
  • Definition Due-on-sale clause Explain that the borrower to pay off the full remaining principal on a mortgage if the mortgaged property is sold before the mortgage is paid off
  • Definition Dumping Explain In the context of general equities, offering large amounts of stock with little or no concern for price or market effect
  • Definition Duplicative portfolio Explain Applies mainly to derivative products. Basket of stocks that imitates the price movement of another set of securities (e.g., S;P 500 index
  • Definition Dupont system of financial control Explain Expressing return on assets (ROA) in terms of the profit margin and asset turnover
  • Definition Duration Explain A common gauge of the price sensitivity of a fixed income asset or portfolio to a change in interest rates
  • Definition Dutch auction Explain necessary to sell the entire offering becomes the price at which all securities offered are sold. This technique has been used in Treasury
  • Definition Down-and-in option Explain Barrier option that comes into existence if asset price hits a predetermined price level
  • Definition Demand-pull inflation Explain A theory of inflation or price increases resulting from so-called excess demand. Related: Cost-push inflation
  • Definition Dutch auction preferred stock Explain stock in which the dividend is ascertained in a Dutch auction process by corporate bidders every seven weeks
  • Definition Duty Explain A tax on imports, exports, or consumption goods
  • Definition Dwarfs Explain Fannie Mae-issued mortgage-backed securities pool that has an original maturity of 15 years
  • Definition Dynamic asset allocation Explain the asset mix is shifted in response to changing market conditions, as in a portfolio insurance strategy, for example
  • Definition Double-declining-balance depreciation method (DDB) Explain An accounting methodology in which depreciation is accelerated to twice the rate of annual depreciation by the straight-line method
  • Definition Double-declining-balance depreciation Explain Method of accelerated depreciation
  • Definition Double dip Explain Used for listed equity securities. Dividend roll in which the dividend capturer already owns the stock cum dividend
  • Definition Double-dip lease Explain different rules of the lessor's and lessee's countries let both parties be treated as the owner of the leased equipment for tax
  • Definition Double-tax agreement Explain Agreement between two countries that taxes paid abroad can be offset against domestic taxes levied on foreign dividends
  • Definition Double taxation Explain twice; specifically, taxation of earnings at the corporate level and dividends at the stockholder level
  • Definition Double top Explain refer to the rise of a stock's price, a drop, and then a rise back to the same level as the original rise
  • Definition Double up Explain the risk when the price moves in the opposite direction from the direcetion the investor hoped for. For example, an investor with
  • Definition Double witching day Explain classes of options and futures expire, resulting in a variety of arbitrage strategies to close out positions
  • Definition Doubling option Explain A sinking fund provision that may allow repurchase of twice the required number of bonds at the sinking fund call price
  • Definition Dow Jones Industrial Average Explain price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including, stocks that trade on the New York Stock
  • Definition Dow Theory Explain Technical theory that a major trend in the stock market must be confirmed by simultaneous movement of the Dow Jones Industrial Average
  • Definition Down round Explain Refers to a round of venture capital financing that is raised at a lower firm valuation than the previous round
  • Definition Down-and-out option Explain Barrier option that expires if asset price hits a predetermined price level
  • Definition Downgrade Explain A negative change in ratings for a stock, or other rated security
  • Definition Downside risk Explain The risk that a security will decline in value in includng the implications of risk
  • Definition Demand shock Explain An event that affects the demand for goods and services in an economy
  • Definition Downsizing Explain number of employees, number of bureaucratic levels, and overall size in an attempt to increase efficiency and profitability
  • Definition Downstream Explain The transfer of corporate activity from the larger parent to the smaller subsidiary
  • Definition Downtick Explain Move down in a particular stock. On U.S. stock exchanges, you cannot sell a stock short on a downtick
  • Definition Downturn Explain The transition point between a rising, expanding economy to a falling, contracting one
  • Definition Draining reserves Explain action to tighten the money supply by (1) raising a bank's minimum reserve requirements, (2) selling bonds in the open market, (3
  • Definition Draft Explain signed by a person, usually the exporter, and addressed to the importer-ordering the importer or the importer's agent to pay, on
  • Definition Draw a call Explain In the context of general equities, provoking a customer indication/inquiry/order by up or doing large amount of the volume in a stock
  • Definition Drawback Explain A tax or duty rebate on imported goods that are exported at a later date
  • Definition Debtholder Explain See: Bondholder
  • Definition Drip feed Explain a small and growing company as the company needs it, rather than investing a lump sum at the company's inception
  • Definition Drive-by VC Explain usual model, the venture capitalist (VC) is involved in management and mentoring of the startup. A drive-by VC invests in a portfolio of
  • Definition Drop Explain Refers to over-the-counter trading. Remove from O.T.C. trading list; hence, no longer making a market in a security
  • Definition Drop, The Explain difference between the sale price of a mortgage-backed pass-through, and its repurchase price on a future date at a predetermined price
  • Definition Drop-dead day Explain The date on which a deadline is final, with no exceptions
  • Definition Drop-dead fee Explain A term of British origin referring to fee that must be paid if a deal falls through because of financing issues
  • Definition Drop lock Explain The fixing of the interest rate on a floating-rate note or preferred stock if it falls to a specified level
  • Definition Dual banking Explain Describes United States custom in which a bank is chartered by the state or federal government
  • Definition Dual-currency issues Explain Eurobonds that pay coupon interest in one currency but pay the principal in a different currency
  • Definition Dual-purpose fund Explain classes of shares. The two classes are preferred shares, on which shareholders receive all the dividends and interest from the portfolio
  • Definition Dividend record Explain S;P publication stating companies' payment histories and corporate policies
  • Definition Dividend requirement Explain The annual earnings minimum required for payment of dividends on a preferred stock
  • Definition Dividend rights Explain A shareholder's rights to receive per-share dividends identical to those other shareholders receive
  • Definition Dividend yield (Funds) Explain share of a mutual fund held over the past 12 months. Assumes fund was purchased a year ago. Reflects effect of sales charges (at current
  • Definition Dividend yield (Stocks) Explain Indicated yield represents annual dividends divided by current stock price
  • Definition Dividends payable Explain The declared dividend dollar amount that a company is obligated to pay
  • Definition Dividends per share Explain divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted
  • Definition Dividends-received deduction Explain allowed by company A that is in ownership of shares of company B and receives dividends on the shares of company B
  • Definition DM Explain Deutsche (German) marks
  • Definition Deutsche Terminbörse (DTB) Explain and options market. Merged with the Swiss Options and Financial Futures Exchange (SOFFEX) in 1998 to form EUREX, the European derivatives
  • Definition Divisor Explain Suppose you have 10 stocks in an index, each worth $10 and the index is at 100. Now suppose you want to replace one of the stocks with
  • Definition Do Not Increase (DNI) Explain on a good til' cancelled order to prevent an order increase in the case of a stock dividend or stock split
  • Definition Doctrine of sovereign immunity Explain Principle that a nation may not be tried in another country without its consent
  • Definition Documented discount notes Explain lines of credit plus a letter of credit from a bank stating that it will pay off the paper at maturity if the borrower defaults. Such paper
  • Definition Dollar bears Explain Traders who capitalize on a falling dollar by buying other foreign currencies directly
  • Definition Dollar bonds Explain quotes are given in dollar prices. Not to be confused with U.S. Dollar bonds, a common term of reference in the Eurobond market
  • Definition Dollar drain Explain countries more than exporting to them. The money required to finance the import purchases removes dollars from the importing nation
  • Definition Dollar duration Explain The product of modified duration and the initial price
  • Definition Dollar price of a bond Explain Percentage of face value at which a bond is quoted
  • Definition Dollar return Explain any evaluation period, including (1) the change in market value of the portfolio and (2) any distributions made from the portfolio during
  • Definition Dollar roll Explain agreement-a simultaneous agreement to sell a security held in a portfolio with purchase of a similar security at a future date at an agreed
  • Definition Dollar safety margin Explain The dollar equivalent of the safety cushion for a portfolio in a contingent immunization strategy
  • Definition Dollar shortage Explain Results when a nation importing U.S. goods cannot pay for them without the aid of the United States
  • Definition Dollar-weighted rate of return Explain the interest rate that makes the present value of the cash flows from all the subperiods in an evaluation period plus the terminal market
  • Definition Domestic corporation Explain A corporation that is conducting business and is based in the country in which it is established, as opposed to a foreign corporation
  • Definition Domestic market Explain representing the mechanisms for issuing and trading securities of entities domiciled within that nation. Compare external market and
  • Definition Donor Explain One who gives property or assets to someone else through the vehicle of a trust
  • Definition Don't fight the tape Explain Phrase advising not to trade against the market trend. If stock prices are rising, do not sell
  • Definition Don't know (DK, DKed) Explain expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party
  • Definition Double auction market Explain bought and sold through brokers on the securities exchanges, as distinguished from the OTC market, where trades are negotiated. Unlike the
  • Definition Double auction system Explain A market consisting of many sellers and many buyers, as opposed to a conventional auction with one market maker and many buyers
  • Definition Double-barreled Explain Describes backing of the principal and interest of a smaller municipal revenue bond the large municipal entity
  • Definition Double bottom Explain refer to the drop of a stock's price, a rebound, and then a drop back to the same level as the original drop
  • Definition Discrete compounding Explain Compounding the time value of money for separate time intervals
  • Definition Discrete random variable Explain A random variable that can take only a certain specified set of individual possible values-for example, the positive integers 1, 2, 3
  • Definition Discrete variable Explain Variable like 1, 2, 3. Bond ratings are examples of discrete classifications
  • Definition Discretionary account Explain organization, other than the person in whose name the account is carried, exercises trading authority or control
  • Definition Discretionary cash flow Explain funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common
  • Definition Discretionary income Explain The amount of income a consumer has available after purchasing essentials such as food and shelter
  • Definition Discretionary order Explain broker the freedom and power to make the execution at any time and price that is seen fit and reasonable, given the investor's goals
  • Definition Discretionary trust Explain to a mutual fund or unit trust whose management decides on the best way to use the assets without restriction to a specific type of
  • Definition Discriminant analysis Explain A statistical process that links the probability of default to a specified set of financial ratios
  • Definition Dishonor Explain A refusal to pay
  • Definition Disinflation Explain A decrease in the rate of inflation
  • Definition Disinvestment Explain reflected by a decrease in capital goods and a company's decision not to replace depleted capital goods
  • Definition Disposable income Explain individual has after taxes and government fees, which can be spent on necessities, or non-essentials, or be saved
  • Definition Distress sale Explain The selling of assets under adverse conditions, e.g., an investor may have to sell securities to cover a margin call
  • Definition Distributed Explain As new Treasury issues in dealers' hands are said to be distributed
  • Definition Distributing syndicate Explain brokerage firms or investment bankers that work together to sell and disperse a large lot of securities
  • Definition Distribution Explain Selling a large lot of a security in such a way that the security price is not heavily influenced
  • Definition Distribution period Explain directors' declaration of a stock dividend (declaration date) and the date of record, or the date an individual must own shares to be
  • Definition Distribution plan Explain A mutual fund's plan to charge distribution costs such as advertising to the investors of the fund
  • Definition Distribution stock Explain forms part of a larger block of stock that is sold small amount by small amount so as not to disrupt the stock's market price
  • Definition Distributions Explain flow. May include dividends from earnings, capital gains from sale of portfolio holdings and return of capital. Fund distributions can be
  • Definition Divergence Explain When two or more averages or indexes fail to show confirming trends
  • Definition Diversification Explain variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk
  • Definition Diversified investment company Explain An investment vehicle such as a mutual fund that invests in an assortment of securities
  • Definition Dividend Explain paid to common and preferred shareholders. A stock selling for $20 a share with an annual dividend of $1 a share yields the investor 5
  • Definition Dividend in arrears Explain Accumulated dividends on cumulative preferred stock that are deemed payable to the current holder
  • Definition Dividend rollover plan Explain purchase and selling of a stock right before its ex-dividend date in order to collect the dividends paid out by the stock and capture a
  • Definition Dividend clawback Explain a project agree to contribute as equity any prior dividends received from the project to the extent necessary to cover any cash
  • Definition Dividend clientele Explain the firm follow a particular dividend policy. Such a preference may be based on comparable tax situations
  • Definition Dividend Discount Model (DDM) Explain A method to value the common stock of a company that is based on the present value of the expected future dividends
  • Definition Dividend growth model Explain at a constant rate in perpetuity. The value of the stock equals next year's dividends divided by the difference between the required
  • Definition Dividend limitation Explain A bond covenant that restricts in some way the firm's ability to pay cash dividends
  • Definition Dividend payout ratio Explain Percentage of earnings paid out as dividends
  • Definition Dividend policy Explain Standards by which a firm determines the amount of money it will pay as dividends
  • Definition Dividend rate Explain The fixed or floating rate paid on preferred stock based on par value
  • Definition Dilutive effect Explain Result of a transaction that decreases earnings per common share (EPS
  • Definition Direct estimate method Explain A method of cash budgeting based on detailed estimates of cash receipts and cash disbursements category by category
  • Definition Direct investment Explain The purchase of a controlling interest in a company or at least enough interest to have enough influence to direct the course of the company
  • Definition Direct lease Explain Contract in which a lessor purchases new equipment from the manufacturer and leases it to the lessee
  • Definition Direct overhead Explain A fraction of overhead costs devoted to the manufacturing sector of a firm to cover expenses such as rent and utilities
  • Definition Direct paper Explain Commercial paper sold directly by the issuer to investors
  • Definition Direct participation program Explain investors to directly participate in the cash_flow and tax benefits of the partnership invested in by the investor, typically a form of
  • Definition Direct placement Explain Selling a new issue not by offering it for sale publicly, but by placing it with one of several institutional investors
  • Definition Direct quote Explain For foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency
  • Definition Direct search market Explain Buyers and sellers seek each other directly and transact directly
  • Definition Direct stock-purchase programs Explain Investors purchase securities directly from the issuer
  • Definition Dirty price Explain Bond price including accrued interest, i.e., the price paid by the bond buyer
  • Definition Directorship Explain Stock status whereby a trader may not maintain positions in the security, due to an investment bank employee serving as a director on the
  • Definition Dirty float Explain A system of floating exchange rates in which a government may intervene to change the direction of the value of the country's currency
  • Definition Dirty stock Explain A stock that fails to fulfill prerequisites to attain good delivery status
  • Definition Disability income insurance Explain worker in the event of an occupational mishap resulting in disability. Insurance benefits compensate the injured worker for lost pay
  • Definition Disbursement float Explain A decrease in book cash but no immediate change in bank cash, generated by checks written by the firm
  • Definition Discharge of bankruptcy Explain The termination of bankruptcy proceedings, resulting in cancellation of the debtor's obligations
  • Definition Disclaimer of opinion Explain An auditor's statement that does not express any opinion regarding the company's financial condition
  • Definition Disclosure Explain information pertaining to the company's business activity, regardless of how that information may influence investors
  • Definition Discontinued operations Explain Divisions of a business that have been sold or written off and that no longer are maintained by the business
  • Definition Discount Explain parity and a given convertible price. Most often invoked when a redemption is expected before the next coupon payment, making it liable for
  • Definition Discount bond Explain Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond
  • Definition Discount broker Explain A brokerage house featuring relatively low commission rates in comparison to a full-service broker
  • Definition Discount factor Explain Present value of $1 received at a stated future date
  • Definition Discount period Explain The period during which a customer can deduct the discount from the net amount of the bill when making payment
  • Definition Discount rate Explain Reserve charges a bank to borrow funds when a bank is temporarily short of funds. Collateral is necessary to borrow, and such borrowing is
  • Definition Discount securities Explain instruments that are issued at a discount and redeemed at maturity for full face value, e.g., U.S. Treasury bills
  • Definition Discount window Explain member banks to borrow reserves against collateral in the form of governments or other acceptable paper
  • Definition Discount yield Explain security sold to an investor at a discount. A bond that is sold at $4875 that matures to $5000 has a discount of $125. To calculate the
  • Definition Discounted basis Explain To sell below maturity value, so that the difference makes up all or part of the interest
  • Definition Discounted payback period rule Explain cash flows are discounted at an interest rate and one determines how long it takes for the sum of the discounted cash flows to equal the
  • Definition Discounted in/by market Explain accepted or anticipated, and hence is already taken into account in the pricing of the security/ market (e.g., poor earnings
  • Definition Discounting Explain Calculating the present value of a future amount. Discounting is opposite to compounding
  • Definition Discounting the news Explain An adjustment of a stock's price as speculators bid the price up or down in anticipation of news about the company, whether good or bad
  • Definition Dependent Explain Acceptance of a capital budgeting project contingent on the acceptance of another project
  • Definition DOT Explain See: Designated order turnaround system
  • Definition Depository Institutions Deregulation and Monetary Control Act Explain The 1980 federal legislation that ended the regulation of the banking industry
  • Definition Depository preferred Explain an arbitrary corporate limit on the number of preferred shares issuable. Applies mainly to convertible securities
  • Definition Dilution Explain Diminution in the proportion of income to which each share is entitled
  • Definition Depreciate Explain To allocate the purchase cost of an asset over its life
  • Definition Depreciated cost Explain cost of capital consumption during production, e.g., machine and equipment wear.In terms of finance: The process of amortization of fixed
  • Definition Depreciation Explain source of free cash flow. Amount allocated during the period to amortize the cost of acquiring long-term assets over the useful life of the
  • Definition Depreciation tax shield Explain The value of the tax write-off on depreciation of plant and equipment
  • Definition Depressed market Explain Market in which supply overwhelms demand, leading to weak and lower prices
  • Definition Depressed price Explain In the context of stocks, stock whose market price is low in comparison to stocks in its sector
  • Definition Depression Explain overwhelms aggregate demand, resulting in falling prices, unemployment problems, and economic contraction
  • Definition Deregulation Explain The reduction of government's role in controlling markets, which lead to freer markets, and presumably a more efficient marketplace
  • Definition Derivative instruments Explain Contracts such as options and futures whose price is derived from the price of an underlying financial asset
  • Definition Derivative markets Explain Markets for derivative instruments
  • Definition Derivative security Explain or future whose value is derived in part from the value and characteristics of another security, the underlying asset
  • Definition Descending tops Explain successive peak in a security's price is lower than the preceding peak over a period of time. Antithesis of ascending tops
  • Definition Desk Explain s trading desk (or securities department) where all transactions of the Federal Reserve System are executed in the money market or the
  • Definition Deliver Explain The sale of a futures or forward contract may require the seller to deliver the commodity
  • Definition Detachable warrant Explain given number of shares of stock at a stipulated price. A detachable warrant is one that may be sold separately from the package it may have
  • Definition Deterministic models Explain that the liability payments and the asset cash flows are known with certainty. Related: Stochastic models
  • Definition Detrend Explain or bent of a set of statistical data as related to time. Often accomplished by regressing a variable or a time index and perhaps time
  • Definition Deutsche Börse AG (DBAG) Explain operating company for the German cash and derivatives markets. It has four subsidiaries: Deutsche Börse Clearing AG, Deutsche Börse Systems
  • Definition Devaluation Explain A decrease in the spot price of a currency. Often initiated by a government announcement
  • Definition Dogs of the Dow Explain Industrial Average with the most depressed prices and consequently the highest yields. The investor buying these stocks speculates that
  • Definition Dialing for dollars Explain cold calling, but which has negative implications as it is frequently applied to salespeople selling speculative or fraudulent investments
  • Definition Diamonds Explain a unit investment trust that serves as an index to the Dow Jones Industrial Average in that its holdings consist of the 30 component
  • Definition Diff Explain which is a Chicago Mercantile Exchange Futures contract that is founded on the interest rate spread between the U.S. dollar and the
  • Definition Difference from S;P Explain change in the Standard ; Poor's 500 index for the same time period. A notation of -5.00 means the fund return is 5 percentage points
  • Definition Differential Explain A small charge, typically 1/8 point, added to the purchase price and subtracted from the selling price by the dealer for odd-lot quantities
  • Definition Denomination Explain Corresponds to the face value of currency units, coins, and securities
  • Definition Differential disclosure Explain or markedly different information in official corporate statements including annual and quarterly reports and 10-Ks and 10-Qs
  • Definition Differential swap Explain Swap between two LIBOR rates of interest, e.g., yen LIBOR for dollar LIBOR Payments are in one currency
  • Definition Diffusion process Explain A conception of the way a stock's price changes that assumes that the price takes on all intermediate values
  • Definition Digits deleted Explain meaning that because the tape has been delayed, some digits have been dropped (e.g., 26 1/2 becomes 6 1/2
  • Definition Dilution protection Explain conversion ratio in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder's
  • Definition Deferred futures Explain The most distant months of a futures contract
  • Definition Deferred nominal life Annuity Explain beginning at retirement age. It is nominal because the payment is fixed in a dollar amount at any particular time, up to and including
  • Definition Deferred payment annuity Explain An annuity that stipulates payments be made to the annuitant at a later date, such as when the annuitant reaches a certain age
  • Definition Deferred taxes Explain source of free cash flow. Amount allocated during the period to cover tax liabilities that have not yet been paid
  • Definition Deficiency letter Explain Notification from the SEC to a prospective issuer of securities that revisions or additions need to be made to the preliminary prospectus
  • Definition Deficit Explain An excess of liabilities over assets, of losses over profits, or of expenditure over income
  • Definition Deficit spending Explain When government spending overwhelms government revenue resulting in government borrowing. See: Deficit financing
  • Definition Defined asset fund Explain fixed portfolio of securities, including blue chips, REITs, or high-yielding stocks on a major exchange such as the NYSE or FTSE
  • Definition Defined benefit plan Explain make specified dollar payments to qualifying employees. The pension obligations are effectively the debt obligation of the plan sponsor
  • Definition Defined contribution plan Explain responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan
  • Definition Deflation Explain Decline in the prices of goods and services. Antithesis of inflation
  • Definition Deflator Explain current dollar purchasing power into inflation-adjusted purchasing power. Enabling the comparison of prices while accounting for inflation
  • Definition Delayed issuance pool Explain MBS) that at the time of issuance were collateralized by seasoned loans originated prior to the MBS pool issue date
  • Definition Dividend trade roll/play Explain Method of buying and selling stocks around their ex-dividend dates so as to collect the dividend (which is 80% tax-exempt) offset by a
  • Definition Delinquency Explain Failure to make a payment on a debt or obligation by the specified due date
  • Definition Delisting Explain Removal of a company's security from listing on an exchange because the firm has not abided by specific regulations
  • Definition Deliverable bills Explain The Treasury bills that fulfill a set of guidelines set forth by the exchange on which the bills are traded
  • Definition Deliverable instrument Explain The asset in a forward contract that will be delivered in the future at an agreed-upon price
  • Definition Delivery Explain The tender and receipt of an actual commodity or financial instrument in settlement of a futures contract
  • Definition Delivery date Explain Date by which a seller must fulfill the obligations of a forward or futures contract
  • Definition Delivery notice Explain of its intention to make delivery against an open, short futures position on a particular date. Related: Notice day
  • Definition Delivery options Explain an interest rate futures contract, including the quality option, the timing option, and the wild card option. Delivery options mean that
  • Definition Delivery points Explain exchanges at which the financial instrument or commodity covered by a futures contract may be delivered in fulfillment of such a contract
  • Definition Delivery price Explain which deliveries on futures are invoiced; also the price at which the futures contract is settled when deliveries are made
  • Definition Delivery versus payment Explain payment for securities is due at the time of delivery (usually to a bank acting as agent for the buyer) upon receipt of the securities
  • Definition Dealer Explain to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). Individual or firm acting as a
  • Definition Delta hedge Explain options that calls for constant adjustment of the number of options used, as a function of the delta of the option
  • Definition Delta neutral Explain Describes value of a portfolio not affected by changes in the value of the asset on which the options are written
  • Definition Demand deposits Explain Checking accounts that pay no interest and from which funds can be withdrawn upon demand
  • Definition Demand line of credit Explain A bank line of credit that enables a customer to borrow on a daily or on-demand basis
  • Definition Demand loan Explain A loan which can be called by the lender at any time and carries no set maturity date
  • Definition Demand master notes Explain Short-term securities that are repayable immediately upon the holder's demand
  • Definition Debt/equity ratio Explain Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder
  • Definition Debt leverage Explain Amplification of the return earned on equity when an investment or firm is financed partially with borrowed money
  • Definition Debt limitation Explain A bond covenant that restricts the firm's ability to incur additional indebtedness in some way
  • Definition Debt market Explain The market for trading debt instruments
  • Definition Debt ratio Explain Total debt divided by total assets
  • Definition Debt relief Explain Reducing the principal and/or interest payments on Less developed country loans
  • Definition Diversifiable risk Explain Related: Unsystematic risk
  • Definition Debt securities Explain IOUs created through loan-type transactions-commercial paper, bank CDs, bills, bonds, and other instruments
  • Definition Debt service Explain Interest payment plus repayments of principal to creditors (retirement of debt
  • Definition Debt service coverage Explain The ratio of cash flow available to the borrower to the annual interest and principal payments on a loan or other debt
  • Definition Debt-service coverage ratio Explain taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate
  • Definition Debt service parity approach Explain Payment alternatives that provide the firm with the exact same schedule of after-tax debt payments (including both interest and principal
  • Definition Debt swap Explain buys a country's dollar bank debt at a discount and swaps this debt with the central bank for local currency that it can use to
  • Definition Disintermediation Explain Withdrawal of funds from a financial institution in order to invest them directly
  • Definition Debtor Explain Borrower of money
  • Definition Debtor in possession Explain A firm that continues to operate under the Chapter 11 bankruptcy process
  • Definition Debtor-in-possession financing Explain New debt obtained by a firm during the Chapter 11 bankruptcy process
  • Definition Decile rank Explain of 1-10. 1 indicates that a mutual fund's return is in the top 10% of funds being compared; while 3 means the return is in the top 30
  • Definition Decimal trading Explain The quotation and trading of stock prices in decimals, as opposed to the quotation of stock prices in fractions of a dollar
  • Definition Decision tree Explain Schematic way of representing alternative sequential decisions and the possible outcomes from these decisions
  • Definition Declaration date Explain The date on which a firm's directors meet and announce the date and amount of the next dividend
  • Definition Declare Explain The Board of Directors motion to authorize dividend payments
  • Definition Dedicated capital Explain Total par value (number of shares issued, multiplied by the par value of each share). Also called dedicated value
  • Definition Dedicating a portfolio Explain Related: Cash flow matching
  • Definition Dedication strategy Explain Refers to multiperiod cash-flow matching
  • Definition Deduction Explain An expense that is allowable as a reduction of gross taxable income by the IRS e.g., charity donations
  • Definition Deductive reasoning Explain Using known fact to draw a conclusion about a specific situation
  • Definition Deep-discount bond Explain no coupon that sell at a price far below par value. A bond that has no coupon is called a zero-coupon bond
  • Definition Deep in/out of the money Explain substantially below the underlying stock's market price (deep in the money) or substantially above the market price (deep out of the
  • Definition Default Explain Failure to make timely payment of interest or principal on a debt security or to otherwise comply with the provisions of a bond indenture
  • Definition Default premium Explain compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default
  • Definition Default risk Explain be unable to make timely principal and interest payments. Also referred to as credit risk (as gauged by commercial rating companies
  • Definition Defeasance Explain or bonds sufficient to service the borrower's debt. Both the borrower's debt and the offsetting cash or bonds are removed from
  • Definition Defensive securities Explain Low-risk stocks or bonds that will provide a predictable and safe return on an investor's money
  • Definition Deferred account Explain A type of account that delays taxes on that account until some later date
  • Definition Deferred annuities Explain Deferred annuities offer deferral of taxes with the option of withdrawing one's funds in the form of life annuity
  • Definition Deferred call Explain A provision that prohibits the company from calling the bond before a certain date. During this period the bond is said to be call protected
  • Definition Deferred charge Explain An expenditure treated as an asset that carries forward until it becomes pertinent to the business at hand, e.g., advance rent payment
  • Definition Deferred compensation Explain An amount that has been earned but is not actually paid until a later date, typically through a payment plan, pension, or stock option plan
  • Definition Deferred equity Explain which recognizes their equity component and the expectation that the bond will ultimately be converted into shares of common stock
  • Definition Daily price limit Explain futures, and options markets are allowed to rise or fall in a day. Exchanges usually impose a daily price limit on each contract
  • Definition Daisy chain Explain Manipulation of the market by traders to create the illusion of active volume to attract investors
  • Definition Date of issue Explain to the date on which a bond is issued and when interest accrues to the bondholder. Used in the context of stocks to refer to the date
  • Definition Date of payment Explain Date dividend checks are mailed
  • Definition Date of record Explain Date on which holders of record in a firm's stock ledger are designated as the recipients of either dividends or stock rights
  • Definition Dated date Explain The date one uses to calculate accrued interest on various debt instruments, specifically bonds
  • Definition Dates convention Explain Treating cash flows as being received on exact dates-date 0, date 1, and so forth-as opposed to the end-of-year convention
  • Definition Dating Explain Credit extension beyond normal terms of a credit supplier
  • Definition Dawn raid Explain describe the purchase of all available shares of a target company at the market's open by a raider. A dawn raid is a surprise
  • Definition Day around order Explain A day order that supersedes (cancels and replaces) the previous order by altering its size or price limit
  • Definition Day of deposit to day of withdrawal account Explain A bank account that pays interest according to the number of days that the money is actually on deposit
  • Definition Day loan Explain the delivery of securities. Upon the delivery of the securities, a day loan becomes a regular broker call loan for which securities serve
  • Definition Day order Explain request from a customer to either buy or sell stock, that, if not cancelled or executed the day it is placed, expires automatically. All
  • Definition Day trading Explain Establishing and liquidating the same position or positions within one day's trading
  • Definition Days in receivables Explain Average collection period
  • Definition Days' sales in inventory ratio Explain The average number of days' worth of sales that is held in inventory
  • Definition Days' sales outstanding Explain Average collection period
  • Definition De facto Explain Existing in actual fact although not by official recognition
  • Definition Deal flow Explain In investment banking, the rate at which new deals are referred to a brokerage firm
  • Definition Deal stock Explain Stock subject to merger or acquisition, either publicly announced or rumored
  • Definition Deposit insurance Explain See: FDIC: Federal Deposit Insurance Corporation
  • Definition Dealer loan Explain Overnight, collateralized loan from a money market bank made to a dealer financing his position by borrowing
  • Definition Dealer market Explain Where traderss specializing in particular commodities buy and sell assets for their own accounts
  • Definition Dealer options Explain Over-the-counter options, such as those offered by government and mortgage-backed securities dealers
  • Definition Debt instrument Explain An asset requiring fixed dollar payments, such as a government or corporate bond
  • Definition Dear money Explain British term for tight money
  • Definition Death-backed bonds Explain against a life insurance policy. The policyholder will repay the loans while alive or with the benefits from the insurance policy upon
  • Definition Death play Explain belief that a key executive will die, the company will be dissolved, and shares will command a higher price at their private market value
  • Definition Death Valley Curve Explain period before a new company starts generating revenues, when it is difficult for the company to raise money
  • Definition Debenture Explain Any debt obligation backed strictly by the borrower's integrity, e.g. an unsecured bond. A debenture is documented in an indenture
  • Definition Debenture bond Explain claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond
  • Definition Debenture stock Explain payments at scheduled intervals of time. Debenture stock differs from a debenture in that it has the status of equity, not debt, in
  • Definition Debit balance Explain The amount that is owed to a broker by a margin customer for loans the customer uses to buy securities
  • Definition Debit spread Explain Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a debit spread
  • Definition Debt Explain Money borrowed
  • Definition Debt bomb Explain A default on debt and obligations by a major financial institution that disrupts the stability of the economic system
  • Definition Debt capacity Explain Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases
  • Definition Debt limit Explain The maximum amount that a municipality can borrow
  • Definition Debt displacement Explain The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity
  • Definition D Explain Fifth letter of a Nasdaq stock symbol specifying that it is a new issue, such as the result of a reverse split
  • Definition Discounted cash flow (DCF) Explain Future cash flows multiplied by discount factors to obtain present values
  • Definition Discounted dividend model (DDM) Explain A formula to estimate the intrinsic value of a firm by figuring the present value of all expected future dividends
  • Definition Domestic International Sales Corporation (DISC) Explain A US corporation that receives a tax incentive for export activities
  • Definition Do Not Reduce Order (DNR Order) Explain stop limit order to sell that is not to be reduced by the amount of an ordinary cash dividend on the ex-dividend date. A do not reduce
  • Definition Designated order turnaround system (DOT) Explain allows orders to buy or sell large baskets of stock to be transmitted immediately to the specialist on the exchange, where execution will
  • Definition Dividend Reinvestment Plan (DRP) Explain dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at
  • Definition Depository transfer check (DTC) Explain Check made out directly by a local bank to a particular firm or person
  • Definition Depository Trust Company (DTC) Explain depository that accepts deposits of eligible securities for custody, executes book-entry deliveries and records book-entry pledges of

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Depository Trust Company (Dtc), Depository Transfer Check (Dtc), Dividend Reinvestment Plan (Drp), Designated Order Turnaround System (Dot), Do Not Reduce

Depository Trust Company (Dtc), Depository Transfer Check