An identifier for a computer or networking device on a TCP/IP network to determine its location. Networks using the TCP/IP protocol route messages based on the IP address of the destination. The format of an IP address is a 32-bit numeric address written as four numbers separated by periods. Each number can be zero to 255. For example, 192.168.2.1 could be an IP address. Within an isolated network, you can assign IP addresses at random as long as each one is unique. However, connecting a private network to the Internet requires using registered IP addresses (called Internet addresses) to avoid duplicates.
Similar financial termsPrincipal value
The amount that the issuer of a bond agrees to repay the bondholder at the maturity date. The principal is also referred to redemption value, maturity value, par value or face value.
Initial Public Offering. The first sale of stock by a private company to the public. IPOs are often smaller, younger companies seeking capital to expand their business. Also known as going public
Principal orders refers to hte activity by a broker or dealer who buys or sells for his or her own account and risk.
Triple Witching Hour
A term given to the time when stock index futures, stock index options, and options on stock index futures all expire together.
A long position in one call option and two put options with the same exercise price.
The par or face value of a debt instrument
Gibraltar Pound from Gibraltar.
Maximum Investment Plan
Bon de souscription.
The French term for a stock purchase warrant.
Initial public offering (IPO)
IPO: Initial Public Offering (IPO) is a company's offering of newly issued shares from treasury to the general public. It is generally the first time that a company does so - making the transition from being a closed-door privately operated company to being a publicly traded, highly visible, entity. When doing an IPO, an underwriter, i.e. a stockbroker firm, handles the distribution of shares to the public. Effectively, the brokerage firm subscribes (underwrites) for the shares and then sells th ...
American Depositary Receipts (ADRs)
Certificates issued by a U.S. depositary bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADR's are "sponsored," the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADRs. "Unsponsored" ADRs do not receive such assistance. ADRs carry the same ...
Value additivity principal
Prevails when the value of a whole group of assets exactly equals the sum of the values of the individual assets that make up the group of assets. Stated differently, the principle that the net present value of a set of independent projects is just the sum of the net present values of the individual projects.
Receipt for goods that are to be held in trust for the lender.
Variables that are used to describe the market on a technical basis.
Systematic risk principle
Only the systematic portion of risk matters in large, well-diversified portfolios. The expected returns must be related only to systematic risks.
Price that the existing shareholders are allowed to pay for a share of stock in a rights issue.
Stripped mortgage-backed securities (SMBSs)
Securities that redistribute the cash flows from the underlying generic MBS collateral into the principal and interest components of the MBS to enhance their use in meeting special needs of investors.
Bond that can be subdivided into a series of zero-coupon bonds.
Strip mortgage participation certificate (strip PC) is an ownership interests in specified mortgages purchased by Freddie Mac from a single seller in exchange for strip PCs representing interests in the same mortgages.
Investment principle that states a firm should accept or reject a project by comparing it with securities in the same risk class.
A business owned by a single individual. The sole proprietor pays no corporate income tax but has unlimited liability for business debts and obligations.
The difference between estimated transaction costs and actual transaction costs. The difference is usually composed of revisions to price difference or spread and commission costs.
The trade is settled one business day beyond what is normal.
Round-trip transactions costs
Costs of completing a transaction, including commissions, market impact costs, and taxes.
Remaining principal balance
The amount of principal dollars remaining to be paid under the mortgage as of a given point in time.
Rate anticipation swaps
An exchange of bonds in a portfolio for new bonds that will achieve the target portfolio duration, based on the investor's assumptions about future changes in interest rates.
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same underlying security with the same expiration date, which prevents arbitrage opportunities. Holding the stock and buying a put will deliver the exact payoff as buying one call and investing the present value (PV) of the exercise price. The call value equals C=S+P-PV(k).
Principal only (PO)
A mortgage-backed security (MBS) in which the holder receives only principal cash flows on the underlying mortgage pool. The principal-only portion of a stripped MBS. For PO securities, all of the principal distribution due from the underlying collateral pool is paid to the registered holder of the stripped MBS based on the current face value of the underlying collateral pool.
A situation that can be modeled as one person, an agent, who acts on the behalf of another person, the principal.
Principal of diversification
Highly diversified portfolios will have negligible unsystematic risk. In other words, unsystematic risks disappear in portfolios, and only systematic risks survive.
A relationship espoused by some technical analysts that signals continuing rises and falls in security prices based on accompanying changes in volume traded.
Shared ownership among two or more individuals, some of whom may, but do not necessarily, have limited liability.
The portion of total fees in a syndicated credit that go to the participating banks.
A guaranteed investment contract where the policyholder is not guaranteed a crediting rate, but instead receives a return based on the actual experience of the portfolio managed by the life company.
In a rights issue, arrangement by which shareholders are given the right to apply for any shares that are not taken up.
Options contract multiple
A constant, set at $100, which when multiplied by the cash index value gives the dollar value of the stock index underlying an option. That is, dollar value of the underlying stock index = cash index value x $100 (the options contract multiple).
Notional principal amount
In an interest rate swap, the predetermined dollar principal on which the exchanged interest payments are based.
Short-term notes issued by municipalities in anticipation of tax receipts, proceeds from a bond issue, or other revenues.
State or local governments offer muni bonds or municipals, as they are called, to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes.
Under the GNMA-II program, pools formed through the aggregation of individual issuers' loan packages.
Multiple-discriminant analysis (MDA)
Statistical technique for distinguishing between two groups on the basis of their observed characteristics.
Another name for price/earnings ratios.
The estimated relationship between a dependent variable and more than one explanatory variable.
Multiple rates of return
More than one rate of return from the same project that make the net present value of the project equal to zero. This situation arises when the IRR method is used for a project in which negative cash flows follow positive cash flows. For each sign change in the cash flows, there is a rate of return.
A portfolio strategy in which a portfolio is created that will be capable of satisfying more than one predetermined future liability regardless if interest rates change.
The risk associated with taking applications from prospective mortgage borrowers who may opt to decline to accept a quoted mortgage rate within a certain grace period.
The period from the taking of applications from prospective mortgage borrowers to the marketing of the loans.
Monthly income preferred security (MIP)
Preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to the parent.
Membership or a seat on the exchange
A limited number of exchange positions that enable the holder to trade for the holder's own accounts and charge clients for the execution of trades for their accounts.
Master limited partnership (MLP)
A publicly traded limited partnership.
A partnership that includes one or more partners who have limited liability.
When a company is sick (financially speaking) and cannot meet its payment obligations to its creditors, it can be placed into "receivership" by the courts. This means that a court-appointed receiver (often this will be a well-known accounting firm) will manage the affairs of the company for an interim period of time during which the receiver will consider proposals from various stakeholders to rescue the company. During this period, the company is allowed to continue doing business, albeit with ...
An oversubscription of shares on an IPO means that there was much more demand than supply of shares on an initial offering.
Bank anticipation notes (BAN)
Notes issued by states and municipalities to obtain interim financing for projects that will eventually be funded long term through the sale of a bond issue.
Large and creditworthy company.
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value payments operated by a group of major banks.
A modern update of the Peter Principle in which ineffective workers are promoted to management.
The idea that in any situation only a small part of the problem initially will be visible.
Officially agreeing with, even though you may have reservations about the issue.
The continual investment of capital in a small and growing company as the company needs it, rather than investing a lump sum at the company's inception.
Separate Trading of Registered Interest (STRIPS)
Separate Trading of Registered Interest and Principal Securities (STRIPS) are securities that have their periodic interest payments separated from the final maturity payment and the two cash flows are sold to different investors.
A trust in which a principal amount is placed in a trust on the death of person A and is transferred to A's grandchildren when A's children die. However, the income generated from the trust while the children of person A are alive goes to the children of person A.
Original principal balance
The total amount of principal owed on a mortgage before any payments are made.
International Fiscal Police (INTERFIPOL)
The tax crime counterpart to INTERPOL.
Limited liability partnership (LLP)
A form of the LLC favored and used for professional associations, such as accountants and attorneys.
Limited liability limited partnership (LLLP)
Intended to protect the general partners from liability. Previously, the general partner was a corporation to protect the principals from personal liability. Under the LLLP, an individual could be a general partner and have limited personal liability.
A type of risk often associated with mortgages. It occurs from the time an application is accepted to the sale of the asset. Some analysts partition this process into two parts: production and inventory. Production starts at the time of the application and continues until the closing of the mortgage. Inventory risk starts at the closing and continues until the product is hedged or sold. Different hedging techniques are suggested for the two partitions.
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 negotiable instrument used by several futures exchanges as the futures delivery instrument for several commodities (e.g., soybean meal, plywood, and white wheat). The shipping certificate is issued by exchange-approved facilities and represents a commitment by the facility to deliver the commodity to the holder of the certificate under the terms specified therein. Unlike an issuer of a warehouse receipt who has physical product in store, the issuer of a shipping certificate may honor its oblig ...
A document indicating ownership of a commodity stored in a bank or other depository and frequently used as a delivery instrument in precious metal futures contracts.