Security selection decision

Similar financial terms

Variable price security
A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.

Underlying security
For options it is the security subject to being purchased or sold upon exercise of an option contract. For example, Deutsche Bank stock is the underlying security to Deutsche Bank options.

For depository receipts it is the class, series and number of the foreign shares represented by the depository receipt.

Security market plane
A plane that shows the equilibrium between expected return and the beta coefficient of more than one factor.

Security market line
Line representing the relationship between expected return and market risk.

Security deposit (initial)
Synonymous with the term margin. A cash amount of funds that must be deposited with the broker for each contract as a guarantee of fulfillment of the futures contract. It is not considered as part payment or purchase.

Security characteristic line
A plot of the excess return on a security over the risk-free rate as a function of the excess return on the market.

Security
Piece of paper that proves ownership of stocks, bonds and other investments.

Primitive security
An instrument such as a stock or bond for which payments depend only on the financial status of the issuer.

Mortgage pass-through security
Also called a passthrough, a security created when one or more mortgage holders form a collection (pool) of mortgages sells shares or participation certificates in the pool. The cash flow from the collateral pool is "passed through" to the security holder as monthly payments of principal, interest, and prepayments. This is the predominant type of MBS traded in the secondary market.

Monthly income preferred security (MIP)
Preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to the parent.

Convertible security
A security that can be converted into common stock at the option of the security holder, including convertible bonds and convertible preferred stock.

Cabinet security
A stock or bond listed on a major exchange with low daily traded volume.

Adverse selection
A situation in which market participation is a negative signal.

Stock selection
An active portfolio management technique that focuses on advantageous selection of particular stocks rather than on broad asset-allocation choices.

Self-selection
Consequence of a contract that induces only one group (e.g. low risk individuals) to participate.

Country selection
A type of active international management that measures the contribution to performance attributable to investing in the better-performing stock markets of the world.

Currency selection
Asset allocation in which the investor chooses among investments denominated in different currencies.

Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project precludes the acceptance of one or more alternative projects.

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

Capital allocation decision
Allocation of invested funds between risk-free assets versus the risky portfolio.