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Similar financial terms

Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA) is based on a portfolio consisting of 30 blue-chipi stocks in the United States. The weights given to the stocks are proportional to their prices.

In-the-money
An option that has a positive value if exercised immediately. For example, a call when the exercise price is below the current price of the underlying asset, or a put when the exercise price is above the current price of the underlying asset.

Out-of-the-money
An option that has a negative value if exercised immediately. For example, a call when the exercise price is above the current price of the underlying asset, or a put when the exercise price is below the current price of the underlying asset.

Out-of-the-money options are usually not exercised.

At-the-money
An option that has zero value if exercised immediately. For example, a call or put when the exercise price is equal to the current price of the underlying asset.

One Cancels the Other Order (OCO)
A combination of two orders in which the execution of either one automatically cancels the other.

Zero-one integer programming
An analytical method that can be used to determine the solution to a capital rationing problem.

All or none
Requirement that none of an order be executed unless all of it can be executed at the specified price.

All-or-none underwriting
An arrangement whereby a security issue is canceled if the underwriter is unable to re-sell the entire issue.

Near money
A domestic dollar deposit is money within the context of the US economy while tue euro-dollar deposit is near money held y a bank branch in an offshore money market, such as Luxembourg. So the eurodollar market is a place where banks outside the US accept (borrow from customers) and place (lend) dollar deposits.

Unseasoned issue
Issue of a security for which there is no existing market.

Transaction demand (for money)
The need to accommodate a firm's expected cash transactions.

Tombstone
Advertisement listing the underwriters to a security issue.

Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received.

Target zone arrangement
A monetary system under which countries pledge to maintain their exchange rates within a specific margin around agreed-upon, fixed central exchange rates.

Stand-alone principle
Investment principle that states a firm should accept or reject a project by comparing it with securities in the same risk class.

Speculative demand (for money)
The need for cash to take advantage of investment opportunities that may arise.

Seasoned new issue
A new issue of stock after the company's securities have previously been issued. A seasoned new issue of common stock can be made by using a cash offer or a rights offer.

Seasoned issue
Issue of a security for which there is an existing market.

Seasoned datings
Extended credit for customers who order goods in periods other than peak seasons.

Risk prone
Willing to pay money to transfer risk from others.

Precautionary demand (for money)
The need to meet unexpected or extraordinary contingencies with a buffer stock of cash.

Postponement option
The option of postponing a project without eliminating the possibility of undertaking it.

Phone switching
In mutual funds, the ability to transfer shares between funds in the same family by telephone request. There may be a charge associated with these transfers. Phone switching is also possible among different fund families if the funds are held in street name by a participating broker/dealer.

Out-of-the-money option
A call option is out-of-the-money if the strike price is greater than the market price of the underlying security. A put option is out-of-the-money if the strike price is less than the market price of the underlying security.

One-way market
(a) A market in which only one side, the bid or asked, is quoted or firm. (b) A market that is moving strongly in one direction.

One-factor APT
A special case of the arbitrage pricing theory that is derived from the one-factor model by using diversification and arbitrage. It shows the expected return on any risky asset is a linear function of a single factor.

New money
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of those maturing.

Money supply
M1-A: Currency plus demand deposits
M1-B: M1-A plus other checkable deposits
M2: M1-B plus overnight repos, money market funds, savings, and small (less than $100M) time deposits.
M3: M-2 plus large time deposits and term repos.
L: M-3 plus other liquid assets.

Money rate of return
Annual money return as a percentage of asset value.

Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and the firm contributes at the same or a different rate. Also called and individual account plan.

Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.

Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the home currency value of a foreign currency transaction.

Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances, commercial paper, repurchase agreements and government bills. The net asset value per share is maintained at $1. 00. Such funds are not federally insured, although the portfolio may consist of guaranteed securities and/or the fund may have private insurance protection.

Money market demand account
An account that pays interest based on short-term interest rates.

Money market
Money markets are for borrowing and lending money for three years or less. The securities in a money market can be U.S.government bonds, treasury bills and commercial paper from banks and companies.

Money center banks
Banks that raise most of their funds from the domestic and international money markets , relying less on depositors for funds.

Money base
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.

Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts payable and receivable, and long-term debt) are translated at the current rate while non-monetary items (e.g. inventory, fixed assets, and long-term investments) are translated at historical rates.

Monetary policy
Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply or interest rates.

Monetary gold
Gold held by governmental authorities as a financial asset.

Law of one price
An economic rule stating that a given security must have the same price regardless of the means by which one goes about creating that security. This implies that if the payoff of a security can be synthetically created by a package of other securities, the price of the package and the price of the security whose payoff it replicates must be equal.

Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance margin loans to investors. The broker charges the investor the call money rate plus a service charge.

Hush money
Bribe; payment to keep someone quiet

Keep up with the Jones
Strive, especially beyond one's income to socialize and spend like others in the same neighborhood.

Prisoner's dilemma
A game frequently displayed in cop dramas on the telly. Two partners in crime are separated into separate rooms at the police station and given a similar deal. If one implicates the other, he may go free while the other receives a life in prison. If neither implicates the other, both are given moderate sentences, and if both implicate the other, the sentences for both are severe. Each player has a dominant strategy to implicate the other, and thus in equilibrium each receives a harsh punishment, ...

Tight money
When a restricted money supply makes credit difficult to secure. The antithesis of tight money is easy money.

Dear money
UK term for tight money.

Deep in the money
A call option with an exercise price substantially below the underlying stock's market price. Also put option with an exercise price substantially above the underlying stock's market price. Often substantially below is defined as more than one strike price below (for calls)/above (for puts) the current value of the underlying security.

Deep out of the money
A call option with an exercise pricesubstantially above the market price. Also put option with an exercise price substantially below the underlying stock's market price. Often substantially below is defined as more than one strike price below (for calls)/above (for puts) the current value of the underlying security.

Monetary neutrality
A proposition that in the long run, a percentage rise in the money supply is matched by the same percentage rise in the price level, leaving unchanged the real money supply and all other economic variables such as interest rates.

This theory, a core belief of classical economics, was first put forward in the 18th century by David Hume. He set out the classical dichotomy that economic variables come in two varieties, nominal and real, and that the things that influence nominal variables ...

Earnest money deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.

Lead manager
The bank or financial institution in charge of setting up a syndicated bank credit or a bond issue.

Performance Related Pay
Performance Related pay is a remuneration system whereby the employee's pay is based on his or her performance. It is basically a payments by results system that is designed to give incentive to the employee to work harder or more productively. In its simplest form, this may be an annual bonus based on subjective assessment of performance. In many larger organisations this can be more structured, based on a set of pre-agreed objectives or targets. Performance related pay is becoming increasingly ...

Ombudsman
The ombudsman (comes from Norwegian "ombudsmann" for a person who looks after the government's assets) is an independent official who investigates the complaints of individuals against companies or public authorities. Ombudsmen do not have any formal power to reverse decisions but they have substantial moral authority over companies or national or local government agencies.

Within financial services, there are different Ombudsmen for banking, building societies, insurance, pensions, and ...

Working capital management
The management of current assets and current liabilities to maximize short-term liquidity.

Eurodollar demand deposit
Eurodollar demand deposit accounts are not often used or available, as the balances of such accounts would be volatile and the transaction costs incurred in such a service would reduce the overall efficiency and competitiveness of the eurodollar market. It is the latter factor that stimulates interest-rate-conscious corporate treasures and investment agencies to make eurodollar time deposits with banks in offshore centres.

Variable rated demand bond
Variable rated demand bond (VRDB) is a floating rate bond that can be sold back periodically to the issuer.

Value manager
A manager who seeks to buy stocks that are at a discount to their "fair value" and sell them at or in excess of that value. Often a value stock is one with a low price to book value ratio.

Top-down equity management style
A management style that begins with an assessment of the overall economic environment and makes a general asset allocation decision regarding various sectors of the financial markets and various industries. The bottom-up manager, in contrast, selects the specific securities within the favored sectors.

Risk management
The process of identifying and evaluating risks and selecting and managing techniques to adapt to risk exposures.

Remainderman
One who receives the principal of a trust when it is dissolved.

Performance shares
Shares of stock given to managers on the basis of performance as measured by earnings per share and similar criteria. A control device used by shareholders to tie management to the self-interest of shareholders.

Performance measurement
The calculation of the return realized by a money manager over some time interval.

Performance evaluation
The evaluation of a manager's performance which involves, first, determining whether the money manager added value by outperforming the established benchmark (performance measurement) and, second, determining how the money manager achieved the calculated return (performance attribution analysis).

Performance attribution analysis
The decomposition of a money manager's performance results to explain the reasons why those results were achieved. This analysis seeks to answer the following questions: (a) What were the major sources of added value? (b) Was short-term factor timing statistically significant? (c) Was market timing statistically significant? And (d), Was security selection statistically significant?

Passive investment management
Buying a well-diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities.

Pac-Man strategy
Takeover defense strategy in which the prospective acquiree retaliates against the acquirer's tender offer by launching its own tender offer for the other firm.

Nondiversifiability of human capital
The difficulty of diversifying one's human capital (the unique capabilities and expertise of individuals) and employment effort.

Manufactured housing securities (MHSs)
Loans on manufactured homes - that is, factory-built or prefabricated housing, including mobile homes.

Mandatory redemption schedule
Schedule according to which sinking fund payments must be made.

Managerial decisions
Decisions concerning the operation of the firm, such as the choice of firm size, firm growth rates, and employee compensation.

Mangement's discussion
A report from management to the shareholders that accompanies the firm's financial statements in the annual report. This report explains the period's financial results and enables management to discuss other ideas that may not be apparent in the financial statements in the annual report.

Management fee
An investment advisory fee charged by the financial advisor to a fund based on the fund's average assets, but sometimes determined on a sliding scale that declines as the dollar amount of the fund increases.

Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.

Management/closely held shares
Percentage of shares held by persons closely related to a company, as defined by the Securities and exchange commission. Part of these percentages often is included in Institutional Holdings -- making the combined total of these percentages over 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.

Managed float
Also known as "dirty" float, this is a system of floating exchange rates with central bank intervention to reduce currency fluctuations.

Computer-Intergrated Manufacturing (CIM)
The intergration of computer control and monitoring into a manufacturing process.

Keyman Insurance
Companies often take out insurance policies on essential (i.e. key) managers or employees to protect them against the loss (accidents, death) of such talent. This is referred to as keyman insurance.

BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in Berkeley, California. It is commonly used by institutional investors applying performance attribution analysis to evaluate their money managers' performances.

Bottom-up equity management style
A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks.

Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days.

Claimant
A party to an explicit or implicit contract.

Co-manager
A bank that ranks just below a lead manager in a syndicated Eurocredit or international bond issue. Comanagers may assist the lead manger bank in the pricing and issue of the instrument.

Corporate financial management
The application of financial principals within a corporation to create and maintain value through decision making and proper resource management.

Hatchet man
Junior executive who is given the task of firing employees.

Demand, law of
Ceteris paribus, the lower the price of a good (or service), the greater the quantity of it that will be demanded by purchasers at any given time.

Demand curve
The deman curve is a graphic illustration depicting the relationship between quantity demanded and price when all other economic variables are held constant.

Management BuyIn (MBI)
This is when a small group of shareholders organise a take-over of a company and form a new management team. The opposite of a Management Buyout.

Picture
The bid and asked prices quoted by a broker for a given security.