| A | Fifth letter of a Nasdaq stock symbol specifying Class A shares. |
| AAA+ Bank | Refers to banks that are rated AAA by IBCA, Moodys Investor Service and Standard & Poors. |
| AAII | See: American Association of Individual Investors |
| Abandonment | Controlling party giving up rights to property voluntarily. |
| Abandonment option | The option of terminating an investment earlier than originally planned. |
| ABC agreement | A contract between an employee and a brokerage firm outlining the rights of the firm purchasing an NYSE membership for that employee. |
| Ability to pay | Refers to the borrower's ability to make interest and principal payments on debts. See: Fixed charge coverage ratio. In context of municipal bonds, refers to the issuer's present and future ability to create sufficient tax revenue to fulfill its contractual obligations, accounting for municipal income and property values. |
| Abnormal returns | The component of the return that is not due to systematic influences (market-wide influences). In other words, the abnormal returns is the difference between the actual return and that is expected to result from market movements (normal return). Related: excess returns. |
| ABO | See: Accumulated Benefit Obligation |
| Above par | See: Par. |
| ABS | See: Automated Bond System |
| Absolute advantage | A person, company or country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another person, company or country. |
| Absolute form of purchasing power parity | A theory that prices of products of two different countries should be equal when measured by a common currency. Also called the "law of one price." |
| Absolute Physical Life | The period of use after which an asset has deteriorated to such an extent that it can no longer be used. |
| Absolute priority | Rule in bankruptcy proceedings requiring senior creditors to be paid in full before junior creditors receive any payment. |
| Absorbed | Used in context of general equities. Securities are "absorbed" as long as there are correspondingorders to buy and sell. The market has reached the absorption point when further assimilation is impossible without an adjustment in price. See: Sell the book. |
| Abstract of title | An abbreviated summary of the documents to prove ownership of land. Contrast with epitome which consists of copies of the title deeds. |
| Abusive tax shelter | A limited partnership that the IRS judges to be claiming tax deductions illegally. |
| ACAT | See: Automated Customer Account Transfer |
| Accelerated cost recovery system (ACRS) | Schedule of depreciation rates allowed for tax purposes. |
| Accelerated depreciation | Any depreciation method that produces larger deductions for depreciation in the early years of an asset's life. Accelerated cost recovery system (ACRS), which is a depreciation schedule allowed for tax purposes, is one such example. |
| Acceleration clause | A clause included in a term loan or security document permitting a lender to require repayment of the sums loaned earlier than the agreed repayment date. The clause may also permit a lender to convert a term loan to a demand facility, while not actually making demand for payment. |
| Acceleration clause | A contract stating that the unpaid balance becomes due and payable if specific actions transpire, such as failure to make interests payments on time. |
| Acceptance | Contractual agreement instigated when the drawee of a time draft "accepts" the draft by writing the word "accepted" thereon. The drawee assumes responsibility as the acceptor and for payment at maturity. See: Letter of credit and banker's acceptance. |
| Accommodative monetary policy | Federal Reserve System policy to increase the amount of money available to banks for lending. See: Monetary policy. |
| Account | In the context of bookkeeping, refers to the ledger pages upon which various assets, liabilities, income, and expenses are represented. In the context of investment banking, refers to the status of securities sold and owned or the relationship between parties to an underwriting syndicate. In the context of securities, the relationship between a client and a broker/dealerfirm allowing the firm's employee to be the client's buying and selling agent. See: Account executive; account statement. |
| Account Ad Valorem Duty | An imported merchandise tax expressed as a percentage. |
| Account balance | Creditsminus debits at the end of a reporting period. |
| Account executive | The brokerage firm employee who handles stockorders for clients. See: Broker. |
| Account Party | Party who applies to open a bank for the issuance of a letter of credit. |
| Account reconciliation | The reviewing and adjusting of the balance in a personal checkbook to match your bank statement. |
| Account statement | In the context of banking, refers to a summary of all balances. In the context of securities, a summary of all transactions and positions (long and short) between a broker/dealer and a client. See also: Option agreement. |
| Accountant's opinion | A signed statement from an independent public accountant after examination of a firm's records and accounts. The opinion may be unqualified or qualified. See: Qualified opinion. |
| Accounting earnings | Earnings of a firm as reported on its income statement. |
| Accounting exposure | The change in the value of a firm's foreign currency-denominated accounts due to a change in exchange rates. |
| Accounting insolvency | Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books. |
| Accounting liquidity | The ease and quickness with which assets can be converted to cash. |
| Accounting Standards Board | The board responsible for issuing Financial Reporting Standards (FRS) set up to establish and improve standards of financial accounting and reporting. See www.asb.org.uk. |
| Accounts payable | Money owed to suppliers. |
| Accounts receivable | Money owed by customers. |
| Accounts receivable financing | A short-termfinancing method in which accounts receivable are collateral for cash advances. See: Factoring. |
| Accounts receivable turnover | The ratio of netcreditsales to averageaccounts receivable, which is a measure of how quickly customers pay their bills. |
| Accredited investor | Refers to an individual whose net worth, or joint net worth with a spouse, exceeds $1,000,000; or whose individual income exceeded $200,000 or whose joint income with a spouse exceeded $300,000 in each of the 2 most recent years and can be expected to meet that income in the current year. More details of the definitions for investors other that individuals are found in Regulation D of the Securities and Exchange Commission. |
| Accreting Swap) | An interest rate swap in which the notional principal amount increases over time, for example as with a construction loan provided in tranches as each stage of the project is completed. |
| Accretion (of a discount) | In portfolio accounting, a straight-line accumulation of capital gains on a discount bond in anticipation of receipt of par at maturity. |
| Accrual Accounting Convention | An accounting system that tries to match the recognition of revenues earned with the expenses incurred in generating those revenues. It ignores the timing of the cash flows associated with revenues and expenses. |
| Accrual basis | In the context of accounting, practice in which expenses and income are accounted for as they are earned or incurred, whether or not they have been received or paid. Antithesis of cash basis accounting. |
| Accrual bond | A bond on which interest accrues but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of the bond and is paid at maturity. |
| Accrue | To accumulate. For example, interest accrued is that interest which has fallen due but which is unpaid. |
| Accrued benefits | The pension benefits earned by an employee according to the years of the employee's service. |
| Accrued discount | Interest that accumulates on savings bonds from the date of purchase until the date of redemption or final maturity, whichever comes first. Series A, B, C, D, E, EE, F, I, and J are discount or accrual bonds, meaning principal and interest are paid when the bonds are redeemed. Series G, H, HH, and K are income bonds, and the semiannual interest paid to their holders is not included in accrued discount. |
| Accrued interest | Applies mainly to convertible securities. Interest that has accumulated between the most recent payment and the sale of a bond or other fixed-income security. At the time of sale, the buyer pays the seller the bond's price plus "accrued interest," calculated by multiplying the coupon rate by the fraction of the coupon period that has elapsed since the last payment. (If a bondholder receives $40 in coupon payments per bond semiannually and sells the bond one-quarter of the way into the coupon period, the buyer pays the seller $10 as the latter's proportion of interest earned.) |
| Accrued market discount | The rise in the market value of a discount bond as it approaches maturity (when it is redeemable at par) and not because of falling marketinterest rates. |
| Accumulate | Broker/analyst recommendation that could mean slightly different things depending on the broker/analyst. In general, it means to increase the number of shares of a particular security over the near term, but not to liquidate other parts of the portfolio to buy a security that might skyrocket. A buy recommendation, but not an urgent buy. |
| Accumulated Benefit Obligation (ABO) | An approximate measure of the liability of a pension plan in the event of a termination at the date the calculation is performed. Related: Projected benefit obligation. |
| Accumulated dividend | A dividend that has reached its due date, but is not paid out. See: Cumulative preferred stock. |
| Accumulated profits tax | A tax on earnings retained in a firm as a way for the principals to defer personal income taxes. |
| Accumulation | In the context of corporate finance, refers to profits that are added to the capital base of the company rather than paid out as dividends. See: Accumulated profits tax. In the context of investments, refers to the purchase by an institutional broker of a large number of shares over a period of time in order to avoid pushing the price of that share up. In the context of mutual funds, refers to the regular investing of a fixed amount while reinvesting dividends and capital gains. |
| Accumulation area | A range within which a buyer accumulatesshares of a stock. See: On-balance volume and distribution area. |
| ACES | See: Advance Computerized Execution System |
| ACH | See: Automated Clearing House |
| Acid test ratio | Also called the quick ratio, the ratio of current assetsminusinventories, accruals, and prepaid items to current liabilities. |
| Acquired surplus | The surplus acquired when a company is purchased in a pooling of interests combination, i.e. the net worth not considered to be capital stock. |
| Acquiree | A firm that is being acquired. |
| Acquirer | A firm or individual that is purchasing another firm or asset. |
| Acquisition | When a firm buys another firm. |
| Acquisition cost | Refers to the price (including the closing costs) to purchase another company or property. In the context of investments, refers to price plus brokerage commissions, of a security, or the sales charge applied to load funds. See: Tax basis. |
| Acquisition of assets | A merger or consolidation in which an acquirerpurchases the selling firm's assets. |
| Acquisition of stock | A merger or consolidation in which an acquirerpurchases the acquiree'sstock. |
| Across the board | Movement or trend in the stock market that causes all stocks in all sectors to move in the same direction. |
| ACRS | See: Accelerated cost recovery system |
| Act of state doctrine | This doctrine says that a nation is sovereign within its own borders, and its domestic actions may not be questioned in the courts of another nation. |
| Acting in concert | Investors working together and performing identical actions to attain the same investment goal. |
| Active | A market in which there is frequent trading. |
| Active account | Refers to a brokerage account in which many transactions occur. Brokerage firms may levy a fee if an account generates an inadequate level of activity. |
| Active bond crowd | Refers to members of the bond department of the NYSE who trade the most bonds. Antithesis of cabinet crowd. |
| Active box | Securities that are held in safekeeping and are available as collateral for securing brokers'loans or customers' marginpositions. |
| Active fund management | An investment approach that purposely shifts funds either between asset classes (asset allocation) or between individual securities (security selection). |
| Active income | Income from an active business as opposed to passiveinvestment income according to the U.S. tax code. |
| Active Management | The pursuit of investmentreturns in excess of a specified benchmark. |
| Active portfolio strategy | A strategy that uses available information and forecasting techniques to seek better performance than a buy and holdportfolio. Related: Passive portfolio strategy. |
| Active Return | Return relative to a benchmark. If a portfolio'sreturn is 5%, and the benchmark's return is 3%, then the portfolio's active return is 2%. |
| Active Risk | The risk (annualizedstandard deviation) of the activereturn. Also called the tracking error. |
| Actual market | Used in context of general equities. Firm market. Antithesis of Subject market. |
| Actuals | The physical commoditiesunderlying a futures contract. Cash commodity, physical asset. |
| ACU | See: Asian currency units |
| AD | The two-character ISO 3166 country code for ANDORRA. |
| A-D | Advance-Decline, or measurement of the number of issuestrading above their previous closing prices less the number trading below their previous closing prices over a particular period. As a technical measure of marketbreadth, the steepness of the AD line indicates whether a strong bull or bear market is under way. |
| Ad valorem | In proportion to the value. Most often encountered in connection with stamp duty where the rate of duty varies according to the value of the interest transferred. |
| Ad valorem tax | A type of tax calculated based on percentage of gross or stated value. For example, VAT. |
| ADB | See: Adjusted Debit Balance |
| ADB | See: Asian Development Bank |
| Additional bonds test | A test for ensuring that bondissuers can meet the debt service requirements of issuing any new additional bonds. |
| Additional hedge | A protection against fallout risk in the mortgage pipeline. |
| Adequacy of coverage | A test that measures the extent to which the value of an asset is protected from potential loss either through insurance or hedging. |
| Adjustable rate | Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. Typically, such issues have a set floor or ceiling, called caps and collars that limits the adjustment. |
| Adjustable-rate mortgage (ARM) | A mortgage that features predetermined adjustments of the loaninterest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or margin, over the index, usually subject to per-interval and to life-of-loaninterest rate and/or payment rate caps. |
| Adjustable-rate preferred stock (ARPS) | Publicly tradedissues that may be collateralized by mortgages and MBS |
| Adjusted balance method | Method of calculating finance charges that uses the account balance remaining after adjusting for all transactions posted during the given billing period as its basis. Related: Average daily balance method, previous balance method, past due balance method. |
| Adjusted basis | Price from which to calculate and derive capital gains or losses upon sale of an asset. Account actions such as any stock splits that have occurred since the initial purchase must be accounted for. |
| Adjusted debit balance (ADB) | The account balance for a margin account that is calculated by combining the balance owed to a broker with any outstanding balance in the special miscellaneous account, and any paper profits on short accounts. |
| Adjusted exercise price | Term used in options on Ginnie Mae (Government National Mortgage Association) contracts. The final exercise price of the option accounts for the coupon rates carried on Ginnie Maemortgages. For example, if the standard GNMA mortgage has an 9% yield, the price of GNMA pools with 13% mortgages in them is altered so that the investor receives the same yield. |
| Adjusted gross income (AGI) | Gross income less allowable adjustments, which is the income on which an individual is taxed by the federal government. |
| Adjusted present value (APV) | The net present value analysis of an asset if financed solely by equity (present value of unlevered cash flows), plus the present value of any financing decisions (levered cash flows). In other words, the various tax shields provided by the deductibility of interest and the benefits of other investment tax credits are calculated separately. This analysis is often used for highly leveraged transactions such as a leveraged buyout. |
| Adjustment bond | A bondissued in exchange for outstanding bonds when a corporation facing bankruptcy is recapitalized. |
| Administration | A corporate insolvency procedure under the Insolvency Act 1986 involving the appointment of an administrator over a company. The procedure is designed to enable the company to survive, to facilitate an arrangement of creditors or to secure a more advantageous realisation of its assets than would arise if the company were put into liquidation. An administration order prohibits the company’s creditors taking legal proceedings. The exercise of a right to forfeit by a landlord is not currently prohibited. |
| Administrative pricing rules | IRS rules used to allocate income on export sales to a foreign sales corporation. |
| Adoption | The procedure by which a local highways authority takes over the maintenance of a road as a public highway. This is to be distinguished from dedication which creates rights of way over the road. Title to the subsoil remains with the owner. |
| ADR | See: American Depositary Receipt |
| ADS | See: American Depositary Share |
| Advance | Increase in the market price of stocks, bonds, commodities, or other assets. |
| Advance commitment | A promise to sell an asset before the seller has lined up purchase of the asset. This seller can offsetrisk by purchasing a futures contract to fix the sales price approximately. |
| Advance Computerized Execution System (ACES) | Refers to the Advance Computerized Execution System, run by Nasdaq. ACES automates trades between order entry and market makerfirms that have established trading relationships with each other. Securities are designated as specified for automatic execution. |
| Advance funded pension plan | A pension plan in which funds are set aside in advance of the date of retirement. |
| Advance refunding | In the context of municipal bonds, refers to the sale of new bonds (the refundingissue) before the first call date of old bonds (the issue to be refunded). The refunding issue usually specifies a rate lower than the issue to be refunded, and the proceeds are invested, usually in governmentsecurities, until the higher-rate bonds become callable. See: Refunding escrow deposits. |
| Advancement | Money or property given to a person by the deceased before death and intended as an advance against the beneficiary's share in the will. |
| Adverse opinion | An independent auditor's opinion expressing that a firm'sfinancial statements do not reflect the company'sposition accurately. See also: Qualified opinion. |
| Adverse possession | A means by which a trespasser may acquire title to land by virtue of long (12 years) occupation. The possession must be other than by consent and must be inconsistent with the true owner’s title. |
| Adverse selection | Refers to a situation in which sellers have relevant information that buyers lack (or vice versa) about some aspect of product quality. |
| Advising bank | Corresponding bank in the beneficiary's country to which an issuing bank sends a letter of credit. |
| Advisory letter | A newsletter offering financial advice to its readers. |
| AE | The two-character ISO 3166 country code for UNITED ARAB EMIRATES. |
| AED > | The ISO 4217 currency code for United Arab Emirates Dirham. |
| AEX | See: Amsterdam Exchange |
| AF | The two-character ISO 3166 country code for AFGHANISTAN. |
| AFA | The ISO 4217 currency code for Afghan Afghani. |
| Affidavit of Loss | A sworn statement describing the particulars and circumstances of the loss of securities. This affidavit is required before a Bond of Indemnity can be issued and the securities replaced. |
| Affiliate | Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. |
| Affiliated corporation | A corporation that is an affiliate to the parent company. |
| Affiliated person | An individual who possesses enough influence and control in a corporation as to be able to alter the actions of the corporation. |
| Affirmative covenant | A bond covenant that specifies certain actions the firm must take. |
| Affirmative obligation | A New York Stock Exchange rule that governs the behavior of specialists. Affirmative obligation is the mandate of the specialists to step in and act as either the buyer or the seller when public investor orders exist do not match up naturally. Also known as positive_obligation. Related: negative_obligation. |
| Affordability index | An index that measures the financial ability of consumers to purchase a home. |
| AFM | See: Amman Financial Market |
| After acquired clause | A contractual clause in a mortgage agreement stating that any additional mortgageable property attained by the borrower after the mortgage is signed will be regarded as additional security for the obligation addressed in the mortgage. |
| After-hours dealing or trading | Securitiestrading after regular trading hours on organized exchanges. |
| Aftermarket | See: Secondary market. |
| After-tax basis | The comparisonbasis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. |
| After-tax profit margin | The ratio of net income to net sales. |
| After-tax real rate of return | The after-tax rate of return minus the inflation rate. |
| AG | The two-character ISO 3166 country code for ANTIGUA AND BARBUDAAG. |
| AGA | Pronounced ‘arga’. See authorised guarantee agreement. |
| Against the box | See: Selling short against the box. |
| Aged fail | An account between two broker/dealers that remains intact 30 days after the settlement date. The receiving firm must adjust its capital as it can no longer treat this account as an asset. |
| Agencies | See: Federal agency securities. |
| Agency | In context of general equities, buying or selling for the account and risk of a customer. Generally, an agent, or broker, acts as intermediary between buyer and seller, taking no financial risk personally or as a firm, and charging a commission for the service. The broker represents a customer buyer/seller to a customer seller/buyer and does not act as principal for the firm's own trading account. Antithesis of principal. See: Dealer. |
| Agency bank | A form of organization commonly used by foreign banks to enter the US market. An agency bank cannot accept deposits or extend loans in its own name; it acts as agent for the parent bank. It is also the financial_institution that issuesADRs to the general market. |
| Agency basis | A means of compensating the broker of a program trade solely on the basis of commission established through bids submitted by various brokerage firms. |
| Agency cost view | The argument that specifies that the various agency costs create a complex environment in which total agency costs are at a minimum with some, but less than 100%, debtfinancing. |
| Agency costs | The incremental costs of having an agent make decisions for a principal. |
| Agency incentive arrangement | A means of compensating the broker of a program trade using benchmarkprices for issues to be traded in determining commissions or fees. |
| Agency pass-throughs | Mortgage pass-through securities whose principal and interest payments are guaranteed by government agencies, such as the Government National Mortgage Association (Ginnie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), and Federal National Mortgage Association (Fannie Mae). |
| Agency problem | Conflicts of interest among stockholders, bondholders, and managers. |
| Agency securities | Securitiesissued by federally related institutions and U.S. government-sponsored entities. Such agencies were created to reduce borrowingcosts for certain sectors of the economy, such as agriculture. |
| Agency theory | The analysis of principal-agent relationships, in which one person, an agent, acts on behalf of another person, a principal. |
| Agent | In a syndicated loan one of the participating banks will act as agent for the others in order to facilitate the day-to-day running of the loan. The agent will monitor the performance of the loan on behalf of the other banks and will be the point of contact for the borrower. The loan will be drawn down by the borrower via the agent who will also collect interest and receive repayments of principal for distribution to syndicate banks. The agent’s function will be purely administrative and any waiver of the terms of the loan will usually be taken on the basis of the consent of the majority of syndicate banks. |
| Agent | A party appointed to act on behalf of a principal entity or person. In context of project financing, refers to the bank in charge of administering the project financing. |
| Aggregate exercise price | The exercise price multiplied by the number of shares in a put or callcontract. The option premium is excluded in the aggregate exercise price. In the case of options traded on debt instruments, the aggregate exercise price is the exercise price of the underlying security multiplied by its face value. |
| Aggregation | Process in corporate financial planning whereby the smaller investment proposals of each of the firm's operational units are aggregated and effectively treated as a whole. |
| Aggressive Growth Hedge Fund | In the context of hedge funds, a style of management that focuses primarily on equities that are expected to have strong earnings growth. |
| Aggressive growth mutual fund | A mutual fund designed for maximum capital appreciation that places its money in companies with high growth rates. |
| Aggressively | Used in context of general equities. For a customer it means working to buy or sell one's stock, with an emphasis on execution over price. For a trader it means acting in a way that puts the firm'scapital at higher risk through paying a higher price, selling cheaper, or making a larger short sale or purchase than the trader would under normal circumstances. |
| Aging schedule | A table of accounts receivable broken down into age categories (such as 0-30 days, 30-60 days, and 60-90 days), which is used to determine if customer payments are keeping close to schedule. |
| Agreement among underwriters | A contract among participating members of a syndicate that defines the members' proportionate liability, which is usually limited to and based on the participants' level of involvement. The contract outlines the payment schedule on the settlement date. Compare: Underwriting agreement. |
| Agreement corporation | Corporationchartered by a state to engage in international banking: so named because the corporation enters into an "agreement" with the Fed's Board of Governors that it will limit its activities to those permitted by an Edge Act Corporation. |
| Agricultural Credits Act Charge | A specific type of floating charge granted by an individual or group of individuals over agricultural assets, for example livestock. |
| Ahead of itself | In context of general equities, refers to equities that are overbought or oversold on a fundamental basis. |
| Ahead of you | Used for listed equity securities. At the same price but entered ahead of your order/interest, usually referring to the specialist's book. See: Behind,matched orders,priority,stock ahead. |
| AI | The two-character ISO 3166 country code for ANGUILLAAI. |
| AIBD | Association of International Bond Dealers |
| AIMR Performance Presentation Standards Implementation Committee | The Association for Investment Management and Research (AIMR) Performance Presentation Standards Implementation Committee is charged with the responsibility to interpret, revise, and update the AIMR Performance Presentation Standards (AIMR-PPS(TM) for portfolio performance presentations. |
| Air Freight Consolidator | An air freight carrier that does not own or operate its own aircraft but ships its cargo with actual equipment operating carriers. Consolidators issue house air waybills to their customers and receive master air waybills from the actual carriers. |
| Air pocket stock | A stock whose price drops precipitously, often on the unexpected news of poor results. |
| AL | The two-character ISO 3166 country code for ALBANIA. |
| Alien corporation | A company incorporated under the laws of a foreign country regardless of where the company conducts its operations. |
| Alienation clause | The provisions of a lease which regulate the right of the tenant to assign, underlet or charge the leasehold title. |
| ALL | The ISO 4217 currency code for Albanian Lek. |
| All equity rate | The discount rate that reflects only the business risks of a project, distinct from the effects of financing. |
| All in | Refers to an issuer'sinterest rate after accounting for commissions and various related expenses. |
| All or none order (AON) | Used in context of general equities. A limited price order that is to be executed in its entirety or not at all (no partial transaction), and thus is testing the strength/conviction of the counterparty. Unlike an FOK order, an AON order is not to be treated as cancelled if not executed as soon as it is represented in the trading crowd, but instead remains alive until executed or cancelled. The making of "all or none" bids or offers in stocks is prohibited, and the making of "all or none" bids or offers in bonds is subject to the restrictions of Rule 61. AON orders are not shown on the specialist's book because they cannot be traded in pieces. Antithesis of any-part-of order. See: FOK order. |
| All Ordinaries Index | The major stock price index in Australia. The capitalization weighted index is made up of the largest 500 companies as measured by market capitalization that are listed on the Australian Stock Exchange. The index was developed with a base value of 500 as of 1979. |
| All Risk Insurance | Marine cargo insurance which covers most perils except strikes, riots, civil unrest, capture, war, seizure, civil war, piracy, loss of market, and inherent vice. |
| Allied member | A partner or stockholder of a firm that is a member of the NYSE, the partner or stockholder is not personally a member of the NYSE. |
| Alligator spread | The term used to describe a spread in the optionsmarket that generates such a large commission that the client is unlikely to make a profit even if the markets move as the investoranticipated. |
| All-in cost | Total costs, explicit and implicit. |
| All-in-rate | Rate used in charging customers for accepting banker's acceptances, consisting of the discount interest rate plus the commission. |
| Allocational efficiency | The effectiveness with which a market channels capital toward its most productive uses. |
| Allocation-of-income rules | US tax provisions that define how income and deductions are to be allocated between domestic source and foreign source income. |
| All-or-none underwriting | An arrangement whereby a securityissue is cancelled if the underwriter is unable to resell the entire issue. |
| Allotment | The number of securities assigned to each of the participants in an underwriting syndicate. |
| Alpha | Measure of risk-adjusted performance. An alpha is usually generated by regressing the security or mutual fund'sexcess return on the S&P 500 excess return. The beta adjusts for the risk (the slope coefficient). The alpha is the intercept. Example: Suppose the mutual fund has a return of 25%, and the short-terminterest rate is 5% (excess return is 20%). During the same time the market excess return is 9%. Suppose the beta of the mutual fund is 2.0 (twice as risky as the S&P 500). The expected excess return given the risk is 2 x 9%=18%. The actual excess return is 20%. Hence, the alpha is 2% or 200 basis points. Alpha is also known as the Jensen Index. Related: Risk-adjusted return. |
| Alpha equation | Regression usually run over 36-60 months of data: Return-Treasury bill= alpha + beta (S&P 500 - Treasury bill) + error. The alpha is the intercept. Note that the benchmark does not necessarily have to be the S&P 500. A mutual fund specializing in international investment might be benchmarked to a broader world market index, such as the MSCI World Index. |
| Alphabet stock | Categories of common stock of a corporation associated with a particular subsidiary resulting from acquisitions and restructuring. The various alphabetical categories have different voting rights and pay dividends tied to the operating performance of the particular divisions. See also: Tracking stocks. |
| ALT | Alternative Trading System. This term is defined under section 301 of the U.S. Securities Act. |
| Alternative investments | Usually refers to investments in hedge funds. Many hedge funds pursue strategies that are uncommon relative to mutual funds. Examples of alternative investment strategies are: long--short equity, event driven, statistical arbitrage, fixed income arbitrage, convertible arbritage, short bias, global macro, and equity market neutral. May also refer to the high frequency style of commodity trading advisors who often employ technical and quantitative tools for intraday investments |
| Alternative Minimum Tax (AMT) | A federal tax aimed at ensuring that wealthy individuals, estates, trusts, and corporations pay a minimal level income tax. For individuals, the AMT is calculated by adding adjusted gross income to tax preference items. |
| Alternative mortgage instruments | Variations of mortgageinstruments such as adjustable-rate and variable-rate mortgages, graduated-payment mortgages, reverse-annuity mortgages, and several seldom-used variations. |
| Alternative order | Used in context of general equities. Order giving a broker a choice between two courses of action, either to buy or sell, never both. Execution of one course automatically eliminates the other. An example is a combination buy limit/ buy stop order, where the buy limit is below the current market and the buy stop is above. If the order is for one unit of trading, when one part of the order is executed on the occurrence of one alternative, the order on the other alternative is to be treated as cancelled. If the order is for an amount of more than one unit of trading, the number of units executed determines the amount of the alternative order to be treated as cancelled. Sometimes known as One Cancels the Other. Also see: Either-or order. |
| AM | The two-character ISO 3166 country code for ARMENIA. |
| AMD | The ISO 4217 currency code for Armenian Dram. |
| American Association of Individual Investors (AAII) | A not-for-profit organization to educate individual investors about stocks, bonds, mutual funds, and other financial instruments. |
| American Depositary Receipt (ADR) | Certificates issued by a US depository bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADR's are "sponsored," the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADR. "Unsponsored" ADRs do not receive such assistance. ADRs are subject to the same currency, political, and economic risks as the underlying foreign share. Arbitrage keeps the prices of ADRs and underlying foreign shares, adjusted for the SDR/ordinary ratio essentially equal. American depository shares (ADS) are a similar form of certification. |
| American Depositary Receipt Fees | Fees associated with the creating or releasing of ADRs from ordinary shares, charged by the commercial banks with correspondent banks in the international sites. |
| American Depositary Receipt Ratio | The number of ordinary shares into which an ADR can be converted. |
| American Depositary Share (ADS) | Foreign stock issued in the US and registered in the ADR system. |
| American option | An option that is capable of being exercised at any time during the life of the option, ie exercise is not conditional on other events. |
| American option | An option that may be exercised at any time up to and including the expiration date. Related: European option |
| American shares | Securitiescertificatesissued in the US by a transfer agent acting on behalf of the foreign issuer. The certificates represent claims to foreign equities. |
| American Stock Exchange (AMEX) | Stock exchange with the third highest volume of trading in the US. Located at 86 Trinity Place in downtown Manhattan. The bulk of trading on AMEX consists of index options (computer technology index, institutional index, major market index) and shares of small to medium-sized companies are predominant. Recently merged with Nasdaq See: Curb. |
| American-style option | An optioncontract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded equity options are American style. |
| AMEX | See: American Stock Exchange |
| Amman Financial Market (AFM) | Established in 1976, the AFM is the only stock exchange in Jordan. |
| Amman Stock Exchange | The only agency authorized as a formal market for tradingsecurities in Jordan. |
| Amortisation | The repayment of a loan over time. Note where the rate of amortisation is such that the full loan will not be repaid over the term of the loan, a single payment of the outstanding balance will be required at the end of the term. |
| Amortising loan | A loan under which the principal amount outstanding is reduced by agreed payments over the period of the loan. |
| Amortization | The repayment of a loan by installments. |
| Amortization factor | The pool factor implied by the scheduled amortization assuming no prepayments. |
| Amortizing interest rate swap | Swap in which the principal or notional amount declines over time. |
| Amount outstanding and in circulation | All currency issued by the Bureau of the Mint and intended as a medium of exchange. Coins sold by the Bureau of the Mint at premium prices are not included; uncirculated coin sets sold at face value plus handling charge are included. |
| AMPS | See: Auction Market Preferred Stock |
| Amsterdam Exchange (AEX) | Exchange that comprises the AEX-Effectenbeurs, the AEX-Optiebeurs (formerly the European Options Exchange or EOE) and the AEX-Agrarische Termijnmarkt. AEX-Data Services is the operating company responsible for the dissemination of data from the Amsterdam Exchange via its integrated Mercury 2000 system. |
| AMTEL | Used in context of general equities. In-house message system entered and displayed through Quotron A page. |
| AN | The two-character ISO 3166 country code for NETHERLANDS ANTILLES. |
| Analyst | Employee of a brokerage or fund management house who studies companies and makes buy-and-sell recommendations on stocks of these companies. Most specialize in a specific industry. |
| Anchor tenant | The tenant who has the strongest covenant within a development. Also, a tenant that attracts customers to a retail development, for example a supermarket or large high street store. |
| And interest | An indication that the buyer will receive accrued interest in addition to the price quoted for a bond. |
| Andean Pact | A regional trade pact that includes Venezuela, Colombia, Ecuador, Peru, and Bolivia. |
| ANG | The ISO 4217 currency code for Netherlands Antilles Guilder. |
| Angel | An investment-grade bond. Antithesis to fallen angel. In the context of venture capital, the first investor. |
| Angels | Individuals providing venture capital. |
| Ankle biter | Stock issued with a market capitalization of less than $500 million. |
| Announcement date | Date on which particular news concerning a given company is announced to the public. Used in event studies, which researchers use to evaluate the economic impact of events of interest. |
| Annual basis | The technique in statistics of taking a figure covering a period of less than one year and extrapolating it to cover a full one year period. The process is known as annualizing. |
| Annual effective yield | See: Annual percentage yield. |
| Annual exclusion | A tax rule allowing the deduction of certain income from taxation. |