A municipal bond with a face value greater than the value of the underlying
property. The difference is designed to compensate the lender for costs exceeding the mortgage value.
The error between the true value in a system and its observed value due to imprecision in measurement. Also called Measurement Noise. See: Dynamical Noise.
The theory that profits can be made by making trades contrary to odd-lot trading patterns, since odd-lot investors have poor timing. This theory is no longer popular.
Used for listed equity securities. Transacted away from a national securities exchange even though the stock itself is listed, such as on the NYSE, and instead of on the OTC market, a regional exchange, or in the third or fourth markets (between customers directly). After 9:30 a.m., if the stock has not opened due to the exchange's discretion, trading can occur elsewhere, but the trader must assume the role of a quasi-specialist in the process.
Federally owned and controlled entities whose transactions are excluded from the budget totals under provisions of law. Their receipts, outlays, and surplus or deficit are not included in budget receipts, outlays or deficits. Their budget authority is not included in totals of the budget.
Used for listed equity securities. (1) Order to buy or sell a security that originates off the floor of an exchange; customer orders originating with brokers,
as distinguished from orders placed by floor members trading for their own accounts. Exchange rules require that an off-floor order be executed
before orders initiated on the floor. Upstairs order. Antithesis of on-floor order; (2) order not handled on the floor but instead upstairs.
Used in the context of general equities. Notice by a potential buyer of a security that he or she is looking for supply from a potential seller of the security, often requiring a capital commitment. Antithesis of bid wanted.
Include a variety of subsidies, military aid, voluntary cancellation of
debt, contributions to international organizations, indemnities imposed under peace treaties, technical assistance, taxes, or fines.
A wholly owned affiliate incorporated overseas, usually in a tax haven country, whose function is to issuesecurities abroad for use in either the parent's domestic or foreign business.
Used for listed equity securities. "Legal to cross the buy and sell orders on the exchange floor because transactor is not a principal in the transaction."
A dividend that was scheduled to be declared, but that is not voted by the board of directors probably because the company is experiencing financial difficulties.
An account carried by one futures commission merchant with another futures commission merchant in which the transactions of two or more persons are combined and carried in the name of the originating broker, rather than designated separately. Related: Commission house.
Used in the context of general equities. Conjunction that denotes tradeexecution /indication, usually during a pre-opening look. "Looks 6 on 6000 shares at opening." See: for/at.
Used in the context of general equities. Willingness to participate in part of a trade if all of the stock
available is spoken for except for the "clean up amount."
Used in the context of general equities. To participate in a block trade that has already transpired, as if that customer had been part of the trade originally; often used by a new party looking to participate in
a trade that has just happened. See: Open on the print.
Used in the context of general equities. Price moving upward, because more buyers are taking offerings, causing offerings to vanish and be replaced by higher ones. Antithesis of come in, get hit.
A graph which shows all possible states of a system. In phase space we plot the value of a variable against possible values of the other variables at the same time. If a system has three descriptive variables, we plot the phase space in three dimensions, with each variable taking one dimension.
Tape symbol showing either the first transaction
of the day in a security after a delayed opening or the opening transaction in a security whose price has experienced a large rise or fall from the previous day's closing price.
Used in the context of general equities. Having either buy or sell interest at the indicated price level and side of a preceding trade. "Open on the buy/sell side" means looking for buyers/sellers (for someone who is a seller/buyer). Antithesis of clean.
Contracts that have been bought or sold without completion of the transaction by subsequent sale or purchase, or by making or taking actual delivery of the financial instrument or physical commodity.
Used for listed equity securities. Having room for a customer buyer or seller contingent on the results of a trade being executed on the floor (i.e., satisfying the specialist book and the orders the traderopened up). See: Open on the print, subject.
The total number of derivatives contracts traded that have not yet been liquidated either by an offsetting derivative transaction or by delivery. Related: Liquidation.
The method of trading used at futuresexchanges, typically involving calling out the specific details of a buy or sell order, so that the information is available to all traders.
Used in the context of general equities. Block trader's term for a block trade that has been completed with an institutional client and printed on the consolidated tape, but
leaves the block trader with stock available (because the trader has taken a long or short position to complete the
trade) for new customers who are on the opposite side of the market to the initiating customer.
A repurchase agreement with no definite term. The agreement is made on a day-to-day basis, and either the borrower or the lender may choose to terminate. The rate paid is higher than on overnight repo and is subject to adjustment if rates move.
Used in the context of general equities. Disclose more information (e.g., the exact price and quantity of one's potential interest). See: Put pants on it.
The period at the beginning of the trading session officially designated by an exchange, during which all transactions are considered made "at the opening." Related: Close.
Short-term, cancelablelease. A type of lease in which the contact period is shorter than the life of the equipment, and the lessor pays all maintenance and servicing costs.
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage.
Also called business risk.
Market in which investors can obtain transactions services that reflect the true costs associated with furnishing those services. Also called an internally efficient market.
Attempts by a corporation to attain reporting objectives by following questionable accounting principles, with the help of an auditor willing to sanction the practices. Prohibited by the SEC.
Portugal's derivatives exchange (Bolsa de Derivados do Oporto) trading futures
on the ten-year government bond, Portuguese stock index, and three-month interbank deposit rate LISBOR (Lisbon Interbank Offered Rate).
The difference in the actual performance of a particular investment and some other desired investment adjusted for fixed costs and execution costs. It often refers to the most valuable alternative that is given up.
Slope of a graph representing portfolios achieved by combining different levels of borrowing
and lending with a single risky portfolio. Sometimes called investment opportunity set.
Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date. Investors, not companies, issue options. Buyers of call options bet that a stock will be worth more than the price set by the option (the strike price), plus the price they pay for the option itself. Buyers of put options bet that the stock's price will drop below the price set by the option. An option is part of a class of securities called derivatives, which means
these securities derive their value from the worth of an underlying investment.
(1) The spread over an issuer'sspot rate curve, developed as a measure of the yieldspread that can be used to convert dollar differences between theoretical value and market prices. (2) The cost of the implied call embedded in an MBS,
defined as additional basis-yield spread. When added to the base yield spread of an MBS without an operative call produces the option-adjusted spread.
A form that an optionsinvestor opening an option account fills out guarantees the investor will follow trading regulations and has the financial resources to settle possible losses.
The cycle of option expiration months. The most common cycles are: January, April, July, and October (JAJO); February, May, August, and November (FMAN); and March, June, September, and December (MJSD).
A constant, set at $100, that when multiplied by the cash index value gives the dollar value of the stock indexunderlying an option. That is the dollar value of the underlying stock index = Cash index value x $100 (the options contract multiple).
Used in the context of general equities. Indication on the order ticket of a limit order to buy or sell securities at a price better than the specified limit price if a better price can be obtained. Does not imply a not-held order, but rather puts more emphasis on executing at the limit if available.
In a nonlinear dynamic system, a variable-acting link a macrovariable,
or combination of variables-that summarizes the individual variables that can affect a system. In a controlled experiment, involving thermal convection, for example, temperature can be a control parameter; in a large complex system, temperature can be an order parameter, because it summarizes the effect of the sun, air pressure, and other atmospheric variables. See: Control parameter.
Apples mainly to international equities. Shares of non-U.S. companies traded in their individual home markets. Usually cannot be delivered in the US See: ADR.
A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a pool. Also, an investment bank that has worked with the issuer of a new securities offering from the beginning and is usually appointed manager of the underwriting syndicate.
An electronic quotation listing of the bid and asked prices of OTCstocks that do not meet the requirements to be listed on the NASDAQ stock-listing system.
In the balance of payments, other capital is a residual category that groups all
the capital transactions that have not been included in direct investment, portfolio investment, and reserves categories. It is divided into long-term capital and short-term capital and, because of its residual status, can differ from country to country. Generally speaking, other long-term capital includes most nonnegotiable instruments of a year or more, like bank loans and mortgages. Other short-term capital includes financial assets that can be liquidated in less than a year such as currency, deposits, and bills.
Value of leases, future employee benefits, deferred taxes, and other obligations not requiring interest payments that must be paid over a period of more than one year.
Used in the context of general equities. Indication gained from their trading and inquiry activity that buyers and/or (more often) sellers are in the market and should be found to get their order. "Feels like IBM is 'out there'."
Used for listed equity securities. Another order bidding for or offeringstock at the same price that the trader has put on the floor himself, represented by another broker in the trading crowd. These orders may have different price limits (possible top or low on floor mentioned to floor broker but not announced in the crowd). See: Matching orders.
A decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked by telephones and computer screens. The market is for securities not listed on a stock or bondexchange. The NASDAQ market is an OTC market
for US stocks. Antithesis of listed.
Apples mainly to convertible securities. Difference between how much common stock one party must sell and the other wishes to buy for the same amount of convertible in a swap.
Used in the context of general equities. Technically too high in price, and hence a technical correction is expected.
See: Heavy. Antithesis of oversold.
Used in the context of general equities. Create a crossed market by expressing a willingness to sell on the bid side of the market and buy on the offer side.
A risk brought about because differences in time zones between settlement centers require that payment or delivery on one side of a transaction be made without knowing until the next day whether the funds have been received in an account on the other side. Particularly apparent when delivery takes place in Europe for payment in dollars in New York.
Used in the context of general equities. Creating artificial volume in astock through activity not generated by normal/natural buyers and sellers in the market.
The tendency of a pool of MBS to reflect an especially high rate of prepayments the first time it crosses the threshold for refinancing, specially if two or more years have passed since the date of issue without the weighted average coupon of the pool crossing the refinancing threshold.
Investors are not able to buy all the shares or bonds they want, so underwriters must allocate the shares or bonds among investors. This occurs when a new issue is underpriced or in great demand because of growth prospects.
Excessive broker trading in a discretionary account. Underwriters persuade brokerage
clients to purchase some part of a new issue in return for the purchase by the underwriter of other securities
from the clients at a premium. This premium is offset by the underwritingspread.
A speculative options trategy that involves selling call or putoptions on stocks that are believed to be overpriced or underpriced; the options are expected not to be exercised.
Property rights or intangible assets, including patents, trademarks, organizational and marketing expertise, production technology, and management and general organizational abilities, that form the basis for a company's advantage over other firms.