Fifth letter of a Nasdaq stock symbol specifying that the issue is a class of stock such as third preferred class of warrants, foreign preferred, sixth class of preferred stock, or preferred when issued stock.
Payment of a financial obligation later than is expected or required, as in lead and lag. Also, the number of periods that an independent variable in a regression model is "held back" in order to predict the dependent variable.
A delay of typically about three months between the time the weighted-average coupon of an MBS pool crosses the threshold for refinancing and observation of an acceleration in prepayment speed is observed.
Economic indicators that follow rather than precede the country's overall pace of economic activity. See also: Leading indicators and coincident indicators.
The ratio of a change in the option price to a small change in the option volatility. It is the partial derivative of the option price with respect to the option volatility.
A method of real estate financing; a mortgage-holding seller finances a buyer by taking a down payment and subsequent payments in installments, but holds the title until the mortgage is fully repaid.
Economic indicators that follow rather than precede the country's overall pace of economic activity. See also: Leading indicators and coincident indicators.
A delay in the display of price changes on the tape of an exchange because of heavy trading. In severe instances the first digit of each price is intentionally deleted.
An economic rule stating that a given security must have the same price no matter how the security is created. If the payoff of a security can be synthetically created by a package of other securities, the implication is that the price of the package and the price of the security whose payoff it replicates must be equal. If it is unequal, an arbitrage opportunity would present itself.
The commercial or investment bank with the primary responsibility for organizing syndicated bank credit or bondissued. The lead manager recruits additional lending or underwriting banks, negotiates terms of the issue with the issuer, and assesses market conditions.
Used in the context of general equities. Remains to buy or sell of a previously entered order after a report of partial execution has been given. If the floor broker to buy 20M IBM at $115, and he then buys 6M at this price, his report would be, "You bought 6M IBM at $115; leaves 14."
A computerized database maintained by the NYSE to keep track of enforcement actions, audits, and complaints against member firms. This term is not an acronym but is referred to in capitals.
The deposit of cash and permitted securities, as specified in the bond indenture, into an irrevocable trust sufficient to enable the issuer to fully discharge its obligations under the bond indenture.
A benchmarkindex that includes investment-grade, tax-exempt, and fixed-rate bonds issued in California. All securities have long-termmaturities (greater than two years) and are selected from issues larger than $50 million.
A benchmarkindex made up of the Treasury Bond Index and the Agency Bond Index as well as the 1-3 Year Government Index and the 20+ Year Treasury Index.
A benchmarkindex that includes investment-grade, tax-exempt, and fixed-rate bonds with long-termmaturities (greater than two years) selected from issues larger than $50 million.
A benchmarkindex that includes investment-grade, tax-exempt, and fixed-rate bonds issued in the state of New York. All securities have long-termmaturities (greater than two years) and are selected from issues larger than $50 million.
Traditionally the Federal Reserve
Bank in the US, which assists banks that face large withdrawals of funds
and in so doing stabilizes the banking system.
A form of guarantee of payment issued by a bank on behalf of a borrower that assures the payment of interest and repayment of principal on bond issues.
An assurance by a mutual fundshareholder that a certain amount of money will be invested monthly, in exchange for lower sales charges. In mergers, a preliminary merger agreement between companies after significant negotiations.
Scheduling principal and interest
payments (P&I) due under a mortgage
so that total monthly payment of P&I is the same. Different from the typical
mortgage for which the principal payment
component of the monthly payment becomes gradually greater while the monthly
interest component shrinks.
The use of debt financing, or property of rising or falling at a proportionally greater amount than comparable investments. For example, an option is said to have high leverage compared to the underlyingstock because a given price change in the stock may result in a greater increase or decrease in the value of the option.
A group of shareholders who, because of their personal leverage, seek to invest in corporations that maintain a compatible degree of corporate leverage.
Measures of the relative value of stockholders, capitalization, and creditors obligations, and of the firm's ability to pay financing charges. Value of firm's debt to the total value of the firm (debt plus stockholder capitalization).
A transaction used to take a public corporation private that is financed
through debt such as bank loans
and bonds. Because of the large amount of debt
relative to equity in the new corporation,
the bonds are typically rated below investment-grade,
properly referred to as high-yield bonds
or junk bonds. Investors
can participate in an LBO through either the purchase of the debt (i.e., purchase
of the bonds or participation in the bank loan) or the purchase of equity
through an LBO fund that specializes in such investments.
A lease arrangement under which the lessor borrows a large proportion of the funds needed to purchase the asset. The lender has a lien on the assets and a pledge of the lease payments to secure the borrowing.
Often used in risk arbitrage. A public company takes on significant additional debt with the purpose of either paying an extraordinary dividend or repurchasing shares, leaving the public shareholders with a continuing interest in a more financially leveraged company. Popular form of shark repellent See: Stub.
A contract by which a domestic company (the licensor) allows a foreign company (the licensee) to market its products in a foreign country in return for royalties, fees, or other forms of compensation.
Arrangement in which a local firm in the host country produces goods in accordance with another firm's (the licensing firm's) specifications; as the goods are sold, the local firm can retain part of the earnings.
A type of mortgage in which a homeowner borrows against the value a home, while retaining title, and making no payments while residing in the home. When the owner ceases living in the house, the property is sold, and the loan repaid.
An attractor for non-linear dynamic systems which has periodic
cycles or orbits in phase space. An example
is an undamped pendulum which will have a closed circle orbit equal to the amplitude of
the pendulum's swing. See: Attractor, Phase Space.
An order to buy a stock at or below a specified price, or to sell a stock at or above a specified price. For instance, you could tell a broker "buy me 100 shares of XYZ Corp at $8 or less" or "sell 100 shares of XYZ at $10 or better" The customer specifies a price, and the order can be executed only if the market reaches or betters that price. A conditional trading order designed to avoid the danger of adverse unexpected price changes.
Applies mainly to convertible securities. Possible delay in convertibility. More frequently, the right to convert may be terminable prior to a redemption date, preventing the holder from receiving a final coupon or dividend. See: Accrued interest.
A bond covenant that restricts in some way a firm's ability to enter into sale-and-leaseback transactions, financing techniques that could affect creditor thinness..
Sale or realization of a debtor firm's assets voluntarily agreed to by its creditors who estimate that the firm's liquidation value exceeds its going-concern value.
A high level of trading activity, allowing buying and selling with minimum price disturbance. Also, a market characterized by the ability to buy and sell with relative ease. Antithesis of illiquidity.
The risk that arises from the difficulty of selling an asset in a timely manner. It can be thought of as the difference between the "true value" of the asset and the likely price, less commissions.
Stock or bond that has been accepted for trading by one of the organized and registered securitiesexchanges in the United States. Generally, the advantages of being listed are that exchanges provide: (1) an orderly marketplace; (2) liquidity; (3) fair price determination; (4) accurate and continuous reporting on sales and quotations; (5) information on listed companies; and (6) strict regulation for the protection of securityholders. Antithesis of OTC Security.
In the context of real estate, written agreement between a property owner and a real estate broker that gives the broker permission to find a buyer or tenant for some property. See: Listing broker.
Listing broker In the context of equity, when a stock is traded in exchange it is said to be listed.
A licensed real estate broker who completes a listing of a property for sale.
A trust that an individual establishes during the individual's lifetime, enabling the person to control the assets contributed to the trust. Also known as an inter vivos trust.
A mutual fund that sells shares with a sales charge-typically 4% to 8% of the net amount indicated. Some no-load funds also levy distribution fees permitted by Article 12b-1 of the Investment Company Act; these are typically 0. 25%. A true no-load fund has neither a sales charge nor
Historical term. In the 1920's and 1930's, it refers to the group of member firms that lend or borrowsecurities needed to cover the positions of customers who have sold shortsecurities. The crowd could be found around the loan post.
Used in the context of general equities. Make a market both ways (bid and offer) either on the bid, offering, or an in-between price only. Locking on the offering occurs to attract a seller, since the trader is willing to pay (and ask) the offering side when others only ask it. Locking on the bid side attracts buyers for similar reasons. Typically, the sell side requires a plus tick to comply with short sale rules.
To ensure that an individual transacts all his or her business with a sole broker by providing superior services, such as accommodating block buy and sell needs or preparing excellent research (soft-dollar lock). This usually guarantees a certain volume of business.
CDs that are issued with the tacit understanding that the buyer will not trade the certificate. Quite often, the issuing bank will insist that it hold the certificate for safekeeping by it to ensure that the buyer holds the understanding.
A collection and processing service provided to firms by banks, which collect payments from a dedicated postal box to which the firm directs its customers to send payment to. The banks make several collections per day, process the payments immediately, and deposit the funds into the firm's bank account.
When an investor is unable to take advantage of preferential tax treatment because of time remaining on a required holding period. Also, a commoditiesposition in which the market has a limit up or limit down day and investors are unable to move in to or out of the market.
A market is locked if the bid price equals the ask price. This can occur, for example, if the market is brokered and one side pays brokerage only, in over-the-counter trading the initiator of the transaction. Highly competitive market environment with inside bid and offering at the same price. Often occurs when an OTC dealer has not updated the market.
A statistical technique for fitting a curve to a set of data points. One of the variables is transformed by taking its logarithm, and then a straight line is fitted to the transformed set of data points.
Pattern of frequency of occurrence in which the logarithm of the variable follows a normal distribution. Lognormal distributions are used to describe returns calculated over periods of a year or more.
Applies mainly to international equities. Interest rate the German Bundesbank uses as an upper limit to the day-to-day money rate, since no bank will pay higher rates in the money market than it has to pay for very short-term recourse to Lombard credit.
The rate of interest that major international
banks in London charge each other for borrowings. Many variable
interest rates in the US are based on spreads off LIBOR. By contrast with
the bid rate LIBID quoted by banks seeking such
deposits.
The U.K.'s six regional exchanges joined together in 1973 to form the stock exchange of Great Britain and Ireland, later named the LSE. The FTSE 100 index (known as the footsie) is its dominant index.
One who has bought a contract to establish a marketposition and who has not yet closed out this position through an offsetting sale; the opposite of short.
(1) Bonds or notes with a long current maturity. (2) A bond on which one of the coupon periods, usually the first, is longer than the other periods or the standard period.
Contracts that state exchange rate at which a specified amount of a particular currency can be exchanged at a future date (more than one year from today).
The purchase of a futures contract in anticipation of actual purchases in the cash market. Used by processors or exporters as protection against an advance in the cash price. Related: hedge, short hedge
Owning or holding options (i.e., the number of contracts bought exceeds the number of contracts sold). For equities, a long position occurs when an individual owns securities. An owner of 1,000 shares of stock is said to be "Long the stock." Related: Short position.
Value of property, equipment, and other capital assets minus the depreciation. This is an entry in the bookkeeping records of a company. It is usually established on a "cost" basis, and thus does not necessarily reflect the market value of the assets.
Indicator of financial leverage. Shows long-term debt as a proportion of the capital available. Determined by dividing long-term debt by the sum of long-term debt, preferred stock and common stockholder's equity.
An option that allows the buyer to choose as the option strike price any price of the underlying asset that has occurred during the life of the option. For a call option, the buyer will choose the minimum price; for a put option, the buyer will choose the maximum price. This option will always be in the money.
In the context of general equities, this describing a buy interest in which a dealer is asked to offerstock, often involving a capital commitment. Antithesis of in touch with.
A technicality in some legislation or regulation that makes it possible to avoid certain consequences or circumvent a rule without breaking the law, such as in the use of a tax shelter.
A tax provision that allows operating losses to be used as a tax shield to reduce taxable income in prior and future years. Losses can be carried backward for up to three years and forward for up to 15 years under current tax codes.
In the context of general equities, this blocks or portions of trades. Can express a specific transaction in a stock at a certain time, often implying execution at the same price (e.g., "I traded 40m in two lots of 10 and four lots of 5.").
In the context of general equities, this is a specific minimum limit required by a seller in execution an order ("I'll sell 50 with an eighth low."); implies a not-held limit order. Antithesis of top.
A single payment that represents an employee's interest in a qualified retirement plan. The payment must be prompted by retirement (or other separation from service), death, disability, or attainment of age 59-1/2, and must be made within a single tax year to avoid the federal
government's 10% penalty tax.
A measure of the dynamics of an attractor. Each dimension has a Lyapunov
exponent. A positive exponent measures sensitive dependence on
initial conditions, or how much our forecasts can diverge based upon different estimates
of starting conditions. Another way to view Lyapunov exponents is the loss of predictive
ability as we look forward into time. Strange
Attractors are characterized by at least one positive exponent. A negative exponent
measures how points converge towards one another. Point Attractors are characterized by all
negative variables. See: Attractor, Limit Cycle, Point Attractor, Strange Attractor.