Variant of linear programming in which the objective function is quadratic rather than linear. In portfolio selection, we often minimize the variance of the portfolio (which is a quadratic function) subject to constraints on the mean return of the portfolio.
A period of time during the first few months or weeks of a new policy when an insurance company will not reimburse a policyholder for a claim in order to allow the insurance company time to find any fraudulent information in the application.
A judgment, decree, or order that gives a pension plan participant access to retirement assets that must be used to pay an ex-spouse or dependent children.
A signature on the back of a negotiable instrument transferring the amount to some other party but that includes wording that limits the endorser's liability.
A tax-deferred plan allowing employer and employee contributions that build up savings, which are paid out at retirement or on termination of employment. Tax is paid only when amounts are drawn from the trust.
A retirement plan established by employers for their employees that meets the requirements of Internal Revenue Code Section 401(a) or 403(a) and is eligible for special tax considerations. The plan may provide for employer contributions, as in a pension or profit-sharing plan, as well as employee contributions. Employers can deduct plan contributions made on behalf of eligible employees on the business's tax return as business expenses. Plan earnings are not taxed to the employee until withdrawn.
A trust that allows a surviving spouse to receive income generated from the trust, while the actual distribution of the trust's assets is made to other beneficiaries such as the grantor's children.
A payment representing 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. Payment can be in installments as long as the complete distribution is made within a single tax year.
Traditional analysis of firm-specific prospects for future earnings. It may be based on data collected by the analysts, there is no formal quantitative framework used to generate projections.
An assessment of specific measurable securities or investment factors, such as cost of capital, value of assets; and projections of sales, costs, earnings, and profits. Combined with more subjective or qualitative considerations (such as management effectiveness), quantitative analysis can enhance investment decisions and portfolios.
Difference between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating. For instance, the difference between yields on Treasuries and those on single A-rated industrial bonds. Also called credit spread.
Use of advanced econometric and mathematical valuation models to identify the firms with the best possible prospectives. Antithesis of qualitative research.
Currency options with a guaranteed exchange rate that enable buyers who like an asset, German bonds for example, but not the asset's pricing currency, to arrange payment in a different currency for a fee.
February 15, May 15, August 15 and November 15, or next working day offerings of several "coupon" securityissues. Quarterly issues currently consist of a 3-year note, a 10-year note, and a 30-year bond. The Treasury sometimes offers additional amounts of outstandinglong-term notes or bonds, rather than selling new security issues. See: Reopening.
An arrangement allowing a firm to use research from another firm at no cost in exchange for executing all of its trades with the firm that provides the research.
Rule requiring market makers to publish quotations for any listed security when a quotation represents more than 1% of the aggregate trading volume for that security.