Banca Extranjera is a consulting International Bank Account opening. Banca Extranjera can assist its customer to open a Swiss Bank account in either of two Swiss Banks. Also to open a US Bank account.   Our procedure of working is simple and quick. You do not need to visit the bank, nor is there any complicated paper work. You will be able to control the account by online banking.   You can open your Swiss bank account for as low as U$D149 and If for any reason your application will be rejected we will give you your money back!   Option I   Excellent Internet Banking Systems. No Minimum Deposit Required Receiving money trough SWIFT is FREE SWIFT transfers available for as low a $15 per transaction  Multicurrency - USD EUR CHF online securities trading on SWX, Virt-x, Xetra, Euronext, Nasdaq, NYSE, Amex, Scandinavian markets, Euwax,Vontobel (off-exchange)  over-the-phone securities trading on 60 exchanges in 40 countries  online sale of more than 4,000 investment funds, partnerships with various issuers  online forex trading on CHF, EUR, USD, SEK, DKK, and NOK accounts  Lombard loans in CHF, EUR and USD  term and fiduciary deposit investments  banking system for independent asset managers and Eurex trading for asset managers  banking platform in four languages services of a customer care centre in six languages, during trading hours  "Level 3" access identification  24x7 Excellent online real-time banking system, highly secure login.  24x7 World-wide Access to your funds.  VISA and Mastercard Gold available can be used anywhere in the world. Transfer money into your bank account anytime, anywhere. Protected by Swiss banking secrecy Swiss government insurance : your funds will be literally in the safest place in the world. Currently only persons domiciled in the above list can register online.  Argentina, Australia, Bahrain, Belgium, Brazil, Brunei Darussalam, Bulgaria, Canada, Canary Islands, Chile, China, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, El Salvador, Finland, France, French Antilles, French Guyana, Germany, Gibraltar, Granada, Greece, Greenland, Guadaloupe, Guernsey, Honduras, Hong Kong, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Korea (South), Kuwait, Lebanon, Liechtenstein, Luxembourg, Malta, Martinique, Mauritius, Mexico, Monaco, Morocco, Netherlands, New Zeland, Norway, Oman, Panama, Peru, Poland, Portugal, Puerto Rico, Qatar, Romania, Russian Fed, San Marino, Saudi Arabia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela, Vietnam.   Option II   You can open your account in all major currencies, usually clients open account in CHF (Switzerland Francs), USD (United States Dollar) or EURO. Minimum opening balance is CHF 1,000 or equivalent in other currency. Your account will only be fully activated AFTER you fund your account with this amount. The maintenance charge/service fee of the account is FREE. The bank has a SWIFT code to easily received money from all over the world. The bank can also used IBAN for money transfer.  Online banking is available in English, German, French and Italian. You can deposit foreign checks by mailing them directly to the bank. The fee is CHF 5 per check. Maestro ATM/Debit card is available. Each withdrawal fee is CHF 5. In order to received the card, you will need to place a secured deposit with the bank. The amount of the secured deposit is double your preferred monthly withdrawal limit. For example, if you want to withdraw maximum CHF 1,000 in a month, you will need to place a secured deposit of CHF 1,000. This rule is common among Swiss banks towards foreign customers (customers not from Switzerland). You can also shop offline with your Maestro card and the fee is CHF 1.50 per transaction. The card can not be used online. Card is applied after account is opened. Visa and MasterCard credit cards are also available. They are REAL credit cards like in the US or other countries and can be used online and offline. The secured deposit for a credit card is CHF 10,000. If you withdraw money with your credit card, the fee is 2.5% (minimum CHF 10). Card is applied after account is opened. Bank will not accept applicants from Argentina, Afghanistan, Balkans, Brazil, Bosnia Herzegovina, Colombia, Cook Islands, Dominica, Egypt, Grenada, Gautemala, Indonesia, Iran, Iraq, Kenya, Lebanon, Malaysia, Marshall Islands, Myanmar, Moldova, Morocco, Nauru, Nigeria, Niue, Pakistan, Poland, Russia, St.Vincent, Phillipines, Thailand, Ukraine, Lybia, Vietnam, Yugoslavia. Apostille required.  Order our Service Nothing is hidden : our website explains in detail our services, what you will receive and the procedures. Our F.A.Q. page is extremely detailed.  Our support is second to none : we reply to most emails within 24 hours (even in minutes if we will receive them during business hours). Money back guarantee : if for any reason the bank will reject your application we will give your money back.   Swiss Banking Secrecy/Protection Do you know that bank accounts in almost any part of the world are unsafe and that your privacy is not fully protected? For example in the USA the Federal Government requires that if a search is requested for any reason by authorities (even foreign authorities, with a valid reason)  the banks must release informations about your financial assets and bank accounts Swiss Banks are obligated by Swiss law to keep any and all information about their clients strictly confidential. Secrecy rules are vigorously enforced throughout the Swiss Banking Industry. This is especially true when it comes to civil matters. Obviously. The Swiss Constitution clearly defines and protects these Secrecy rules. Any Swiss banker revealing information about their clients will be prosecuted under Swiss Law. In today’s sue happy societies, asset protection and estate planning are the main reasons why people seek Switzerland as a safe and sound banking center.      Copyright © 2003-2008 Banca Extranjera su Consultora Offshore

The information contained in this Website is not meant to substitute qualified legal advice given by a specialist knowing your particular situation. We are not a bank and can’t be held responsible for any loss or damages whether direct, incidental, indirect, special, or consequential, among others, relating access to this W eb site. Read our Disclaimer / Terms and Conditions.

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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 corresponding orders to buy and sell. The market has reached the absorption point when further assimilation is impossible without an adjustment in price. Sell the book. Abusive tax shelter A limited partnership that the IRS judges to be claiming tax deductions illegally. Accelerated cost recovery system (ACRS) Schedule of depreciation rates allowed for tax purposes. 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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. 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. 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 accumulates shares of a stock. On-balance volume and distribution area. Acid test ratio Also called the quick ratio, the ratio of current assets minus inventories, 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. Term insurance. Annual report Yearly record of a publicly held company's financial condition. It includes a description of the firm's operations, as well as balance sheet, income statement, and cash flow statement information. SEC rules require that it be distributed to all shareholders. A more detailed version is called a 10-K. Annualized gain If stock X appreciates 1.5% in one month, the annualized gain for that stock over a twelve month period is 121.5% = 18%. Compounded over the 12 month period, the gain is (1.015)^12 -1 = 19.6%. Annualized holding-period return The annual rate of return that when compounded t times generates the same t-period holding return as actually occurred from period 1 to period t. Annualizing Annual basis. Annuitant An individual who receives benefits from an annuity. Annuitize To commence a series of payments from the capital that has accumulated in an annuity. The payments may be a fixed amount, for a fixed period of time, or for a lifetime. Annuity A regular periodic payment made by an insurance company to a policyholder for a specified period of time. Annuity certain An annuity that pays a specific amount on a monthly basis for a set amount of time. Annuity due An annuity with n payments, where the first payment is made at time t = 0, and the last payment is made at time t = n - 1. Annuity factor Present value of $1 paid for each of t periods. Annuity in arrears An annuity with a first payment one full period hence, rather than immediately. Annuity starting date The date when an annuitant starts receiving payments from an annuity. Anticipated holding period The period of time an individual expects to hold an asset. Anticipation Paying what is owed before it is due (usually to save interest charges). Antidilutive effect Result of a transaction that increases earnings per common share (e.g., by decreasing the number of shares outstanding). Anti-Persistence In R/S Analysis, an anti-persistent time series reverses itself more often than a random series would. If the system had been up in the previous period, it is more likely that it will be down in the next period and vice versa. Also called pink noise, or 1/f noise. Persistence, R/S Analysis, Hurst Exponent, Joseph Effect, Noah Effect. Antigreenmail Greenmail refers to the agreement between a large shareholder and a company in which the shareholder agrees to sell his stock back to the company, usually at a premium, in exchange for the promise not to seek control of the company for a specified period of time. Antigreenmail provisions prevent such arrangements unless the same repurchase offer is made to all shareholders or approved by shareholder vote. There are some states that have antigreenmail laws. Antitrust laws Legislation established by the federal government to prevent the formation of monopolies and to regulate trade. Any-interest-date A call provision in a municipal bond indenture that establishes the right of redemption for the issuer on any interest payment due date. Any-or-all bid Often used in risk arbitrage. Takeover bid in which the acquirer offers to pay a set price for all outstanding shares of the target company, or any part thereof; contrasts with two-tier bid. Any-part-of order In context of general equities, order to buy or sell a quantity of stock in pieces if necessary. Antithesis of an all-or-none order (AON). Appraisal ratio The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard deviation. Appraisal rights A right of shareholders in a merger to demand the payment of a fair price for their shares, as determined independently. Appreciation Increase in the value of an asset. The written statement that follows any "trade" in the securities markets. Confirmation is issued immediately after a trade is executed. It spells out settlement date, terms, commission, etc. Confirmed Letter of Credit A letter of credit which a bank other than the bank that opened it agrees to honor as though they had themselves issued it. This additional confirmation is in addition to the obligation of the bank which issued the letter of credit. Confirming Bank The bank which has confirmed a letter of credit opened by another bank. Conflict between bondholders and stockholders Bondholders and stockholders may have interests in a corporation that conflict. Sources of conflict include dividends, distortion of investment, and underinvestment. Protective covenants in bond documents work to resolve these conflicts. Conforming loans Mortgage loans that meet the qualifications of Freddie Mac or Fannie Mae, which are bought from lenders and issued as pass-through securities. Conglomerate A firm engaged in two or more unrelated businesses. Conglomerate merger A merger involving two or more firms that are in unrelated businesses. Consensus forecast The mean of all financial analysts' forecasts for a company. Consignee The party named in the bill of lading to whom delivery is promised and/or title is passed. Consignment Transfer of goods to a seller while title to the merchandise is retained by the owner. Consol A government bond with no maturity . Popular in Great Britain. The formula for valuing these bonds is simple. The consol payment divided by yield to maturity is the price of the bond. Consolidated financial statement A financial statement that shows all the assets, liabilities, and operating accounts of a parent company and its subsidiaries. Consolidated mortgage bond A bond that covers several units of property, sometimes refinancing mortgages on the properties. Consolidated tape Used for listed equity securities. Combined ticker tapes of the NYSE and the curb. Network A covers the NYSE-listed securities and is used to identify the originating market. Network B does the same for AMEX-listed securities and also reports on securities listed on regional stock exchanges. tape. Consolidated tax return A tax return combining the reports of affiliated companies, that are at least 80% owned by a parent company. Consolidation The combining of two or more firms to form an entirely new entity. Consolidation loan A loan that is used to combine and finance payments on other loans. Consortium A group of companies that cooperate and share resources in order to achieve a common objective. Consortium banks A merchant banking subsidiary set up by several banks that may or may not be of the same nationality. Consortium banks are common in the Euromarket and are active in loan syndication. Constant dollar Condition in which inflation or escalation is not applicable. Prices and costs are deescalated or reescalated to a single point in time. Constant-dollar plan Method of purchasing securities by investing a fixed amount of money at set intervals. The investor buys more shares when the price is low and fewer shares when the price is high, thus reducing the average cost. Constant-growth model Also called the Gordon-Shapiro model, an application of the dividend discount model that assumes (1) a fixed growth rate for future dividends, and (2) a single discount rate. Constant ratio plan Maintaining a predetermined ratio between stock and fixed income investments through regular adjustments of distribution of funds into different investments. formula investing. Constant yield method Allocation of annual interest on a zero-coupon security for income tax use. Construction loan A short-term loan to finance building costs. Constructive receipt The date a taxpayer receives dividends or other income, for use in the determination of taxes. Consular Invoice A document prepared by the shipper and certified in the country of origin by a consul of the country of importation. It shows the transaction details and origin of the goods. Consumer Advisory Council (CAC) A statutory body established by Congress in 1976. The Council, with 30 members who represent a broad range of consumer and creditor interests, advises the Federal Reserve Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on which the Board seeks its advice. Consumer credit Credit a firm grants to consumers for the purchase of goods or services. Also called retail credit. Consumer Credit Protection Act of 1968 Federal legislation establishing rules for the disclosure of the terms of a loan to protect borrowers. Truth in lending. Consumer debenture An investment note issued directly to the public by a financial institution. Consumer durables Consumer products that are expected to last three years or more, such as an automobile or a home appliance. Consumer finance company Finance company Consumer goods Goods not used in production but bought for personal or household use such as food, clothing, and entertainment. Consumer interest Interest paid on consumer loans; e.g., interest on credit cards and retail purchases. Consumer Price Index (CPI) The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of US inflation. The US Department of Labor publishes the CPI every month. Consumption tax Value-added tax Contagion Excess correlation of delivering or bond returns. For example, under usual conditions we might observe a certain level of correlation of market returns. A period of contagion would be associated with much higher-than-expected correlation. Some examples are the conjectured contagion in East Asian markets beginning in July 1997 when the Thai currency devalued and the impact across many emerging markets of the Russian default. Contagion is difficult to identify because you need some sort of measure of the expected correlation. It is complicated because correlations are known to change through time, for example, see Erb, Harvey and Viskanta's article in the 1994 Financial Analysts Journal. In periods of negative returns, correlations (and volatility) are known to increase, so what might appear to be excessive may not be contagion. Contango A market condition in which futures prices are higher in the distant delivery months. Contingency An additional amount or percentage added to any cash flow item (ie. Capex). Care is needed to ensure it is either to be spent or to remain as a cushion. Contingency graph A plot of the net profit to a speculator in currency options under various exchange rate scenarios. Contingency order In the context of general equities, order to buy one security, if the trader can sell another, usually given that certain price limits or conditions reach a certain level. Swap, switch order. Contingent In context of liabilities, those liabilities that do not yet appear on the balance sheet (ie. guarantees, supports, lawsuit settlements). For support or recourse, the trigger may occur at any time in the future. Contingent claim A claim that can be made only if one or more specified outcomes occur. Contingent conversion trigger Used in the context of convertible instruments. The price of the stock must exceed the trigger price before the bond holder can convert to common stock at a pre-established conversion price. The trigger price exceeds the conversion price. In addition, after a certain number of years, the convertible instrument usually specifies that both the conversion price and the contingent conversion trigger will increase every year by, for example, a rate equal to LIBOR. Contingent deferred sales charge (CDSC) The formal name for the load of a back-end load fund. Contingent immunization An arrangement in which the money manager pursues an active bond portfolio strategy until an adverse investment experience drives the then-available potential return down to the safety net level. When that point is reached, the money manager is obligated to pursue an immunization strategy to lock in the safety-net level return. Contingent order An order which can be executed only if another event occurs; i.e. "sell Oct 45 call 7-1/4 with stock 52 or lower". Contingent pension liability Under ERISA, a firm is liable to its pension plan participants for up to 39% of the net worth of the firm. Contingent Voting Power Enables preferred stockholders to vote when the company fails to satisfy the agreement between itself and the preferred stockholders. Continuous compounding The process of accumulating the time value of money forward in time on a continuous, or instantaneous, basis. Interest is earned constantly, and at each instant, the interest that accrues immediately begins earning interest on itself. Continuous net settlement (CNS) Method of securities clearing and settlement using a clearing house, which matches transactions to securities available, resulting in one net receive or deliver position at the end of the day. Continuous random variable A random value that can take any fractional value within specified ranges, as contrasted with a discrete variable. Contra broker The broker on the buy side of a sell order or the sell side of a buy order. Contract A term of reference describing a unit of trading for a financial or commodity future. Also, the actual bilateral agreement between the buyer and seller of a transaction as defined by an exchange. Contract month The month in which futures contracts may be satisfied by making or accepting a delivery. Contractual Claim An amount that by legal agreement must be paid periodically to the buyer of a security; contractual claim may also specify the time at which the principal must be repaid and other details. Contractual Intermediary Holder of an indirect claim through a legal agreement that specifies that the individual must make periodic, fixed payments to the intermediary in exchange for the right to receive payments from the intermediary in the future. Contractual plan A plan in which fixed dollar amounts of mutual fund shares are purchased through periodic investments, usually featuring some sort of additional incentive for the fixed period payments. Contramarket stock In the context of general equities, stock that tends to go against the trend of the market as a whole, such as a commodities-related stock or one in an industry out of favor with investors in a bull market. Contrarian An investment style that leads one to buy assets that have performed poorly and sell assets that have performed well. There are two possible reasons this strategy might work. The first is a mean-reversion argument; that is, if the asset has deviated from its usual level, it should eventually return to that usual level. The second reason has to do with overreaction. Investors might have overreacted to bad news sending the asset price lower than it should be. Contrarian investing Ignoring market trends by buying securities that the investor considers undervalued and out of favor with other investors. Contributed capital Paid-in capital Contribution Money placed in an individual retirement account (IRA), an employer-sponsored retirement plan, or other retirement plan for a particular tax year. Contributions may be deductible or nondeductible, depending on the type of account. Contribution margin The difference between variable revenue and variable cost. Control 50% of the outstanding votes plus one vote. Control Limits The upper and lower limits on the acceptable level of cash that minimizes the sum of the opportunity cost of excessive cash and the cost of marketable security transactions. Control parameters In a nonlinear dynamic system, the coefficient of the order parameter; the determinant of the influence of the order parameter on the total system. Order Parameter. Control person Affiliated person Control-share Acquisition Laws See Supermajority. Control stock The shares owned by the controlling shareholders of a corporation. Sometimes refers to stock that has voting rights rather than stock that carries no voting rights. In a situation where all stock has voting rights, it sometimes refers to the shareholdings of one investors or a group of investors that effectively control the firm. Employee contribution An employee's own deposit to a company retirement plan. Employee Retirement Income Security Act (ERISA) The law that regulates the operation of private pensions and benefit plans. Employee stock fund A firm-sponsored program that enables employees to purchase shares of the firm's common stock on a preferential basis. Employee stock ownership plan (ESOP) A company contributes to a trust fund that buys stock on behalf of employees. Employee Stock Purchase Plan (ESPP) A plan usually linked to a corporation's payroll deduction system allowing employees to purchase shares at a discount from current market value. Employer matching contribution The amount, if any, a company contributes on an employee's behalf to the employee's retirement account, usually tied to the employee's own contribution. Employment rate The percentage of the labor force that is employed. The employment rate is one of the economic indicators that economists examine to help understand the state of the economy. See also: Unemployment rate. Empty head and pure heart test Securities and Exchange Commission rule that allows only the bidder of a tender offer to trade in the stock while possessing inside information. Encumbered A property owned by one party on which a second party reserves the right to make a valid claim, e.g., a bank's holding of a home mortgage encumbers property. End-of-year convention Treating cash flows as if they occur at the end of a year as opposed to the date convention. Under the end-of-year convention, the present is time 0, the end of year 1 occurs one year hence; and so on. Endogenous uncertainty Describes factors within the control of the firm, such as a decision to reveal information about price or input costs. Converse of exogenous. Endogenous variable A value determined within the context of a model. Related: Exogenous variable. Endorse Transferring asset ownership by signing the back of the asset's certificate. Endowment Gift of money or property to a specified institution for a specified purpose. Endowment funds Investment funds established for the support of institutions such as colleges, private schools, museums, hospitals, and foundations. The investment income may be used for the operation of the institution and for capital expenditures. Energy mutual fund Mutual fund investing in energy stocks only, e.g., oil and gas companies. Engineering risk The risk associated with the impact on a project's cash flows from deficiencies in design or engineering. Also known as design risk. Enhanced indexing Also called indexing-plus, an indexing strategy whose objective is to exceed or replicate the total return performance of some predetermined index. Enhancement An innovation that has a positive impact on one or more of a firm's existing products. Enterprise A business firm. Enterprise Value The market capitalization of a firm's equity plus the market value of the firm's debt. Often the value of assets that are non-core are excluded from the final calculation. Entrepreneur A person starting a new company who takes on the risks associated with starting the enterprise, which may require venture capital to cover start-up costs. Entropy The level of disorder in a system. Environmental fund A mutual fund that invests strictly in stocks of companies that are environmentally friendly and/or have the goal of environmental betterment. The investors are trying to support and profit from opportunities related to the environmental movement. Environmental risk The risk associated with economic or administrative consequences of slow or catastrophic environmental pollution. EPS Earnings per share Equal dollar swap Selling common stock/convertibles in one company and reinvesting the proceeds in as many shares of (1) another type of security issued by the company, or (2) another security of the same type but of another company -- as can be bought with the proceeds of the sale. Equal shares swap. Equal percentage contribution rule (EPCoR) Principle that each asset contributes the same proportion to the equilibrium portfolio rate premium and risk. Equal shares swap Applies mainly to convertible securities. Selling the underlying common and reinvesting the proceeds in as much of the convertible as can be converted into the number of shares of common just sold. See equal dollar swap. Equalizing dividend Special dividends received by investors of a firm for income the investor lost because the firm altered the dividends payment schedule. Equilibrium The stable state of the system. Attractor. Equilibrium exchange rate Exchange rate at which demand for a currency is equal to the supply of the currency in the economy. Equilibrium market price of risk The slope of the capital market line (CML). Since the CML represents the expected return offered to compensate for a perceived level of risk, each point on the line is a balanced market condition, or equilibrium. The slope of the line determines the additional expected return needed to compensate for a unit change in risk. The equation of the CML is defined by the capital asset pricing model. Equilibrium price The price at which the supply of goods matches demand. Equilibrium rate of interest The interest rate that clears the market. Also called the trade-clearing interest rate. Equipment leasing partnership A limited partnership that receives income and tax benefits such as depreciation costs by purchasing equipment and leasing it to other parties. Equipment trust certificates Certificates issued by a trust that is formed to purchase an asset and lease it to a lessee. When the last of the certificates has been repaid, title and ownership of the asset transfers to the lessee. Equitable owner The beneficiary of a property held in a trust. Equity Ownership interest in a firm. Also, the residual dollar value of a futures trading account, assuming its liquidation is at the going trade price. In real estate, dollar difference between what a property could be sold for and debts claimed against it. In a brokerage account, equity equals the value of the account's securities minus any debit balance in a margin account. Equity is also shorthand for stock market investments. Equity cap An agreement in which one party, for an up-front premium, agrees to pay the other at specific time periods if a designated stock market benchmark tops a predetermined level. Equity carve out Usually occurs when a company decides to IPO one of their subsidiaries or divisions. The company usually only offers a minority share to the equity market. Also known as carve out. Equity claim Also called a residual claim; a claim to a share of earnings after debt obligations have been satisfied. Equity collar The simultaneous purchase of an equity floor and sale of an equity cap. Equity contribution agreement An agreement to contribute equity to a project under certain specified conditions. Equity floor An agreement in which one party agrees to pay the other at specific time periods if a specific stock market benchmark falls below a predetermined level. Equity funding An investment consisting of a life insurance policy and a mutual fund. The insurance policy is paid by the collateral value of fund shares, giving the investor the advantages of insurance protection with the growth potential of a mutual fund. Equity kicker Stock warrants issued attached to a new debt, preferred or common stock issue to improve the salability of the issue. Equity-linked Eurobonds A Eurobond including a convertibility option or warrant. Equity-linked policies Related: Variable life Equity market Related: stock market Equity multiplier Total assets divided by total common stockholders' equity; the total assets per dollar of stockholders' equity. Equity options Securities that give the holder the right (but not the obligation) to buy or sell a specified number of shares of stock, at a specified price for a certain (limited) time period. Typically one option equals 100 shares of stock. Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. Equity swap A swap in which the cash flows exchanged are based on the total return on some stock market index and an interest rate (either a fixed rate or floating rate). Related: Interest rate swap. Equityholders Stockholders; those holding shares of the firm's equity. Equivalent annual annuity The amount per year for some number of years that has a present value equal to a given amount. Equivalent annual benefit The annual annuity with the same value as the net present value of an investment project. Equivalent annual cash flow Annuity with the same net present value as the company's proposed investment. Equivalent annual cost The cost per year of owning an asset over its entire life. Equivalent bond yield Effective annual yield on a short-term, noninterest-bearing security calculated for comparison to yields quoted on coupon securities. Equivalent loan Given the after-tax stream associated with a lease, the maximum amount of conventional debt that the same period-by-period after-tax debt service stream is capable of supporting. Equivalent taxable yield The yield that must be offered on a taxable bond issue to give the same after-tax yield as a tax-exempt issue. Erosion A negative impact on one or more of a firm's existing assets. Escalator clause Provision in a contract allowing cost increases to be passed on. In an employment contract, for example an escalator clause may call for wage increases in line with inflation. Escheat Reversion of monies or securities to the state in which the securityholder was last known to reside, when no claim by the securityholder has been made after a certain period of time fixed by state law. This is known as the holding period or cut-off date. Escheat Period The period of elapsed time required by applicable state law for property to be presumed abandoned. Escheatment The process of turning over unclaimed or abandoned property to a state authority. Escheatment laws require mutual funds to turn over uncashed or returned check dollars and/or client account fund shares if the owner cannot be located within a length of time determined by each state. Escrow Property or money held by a third party until the agreed upon obligations of a contract are met. Escrow receipt A document provided by a bank in options trading to guarantee that the underlying security is on deposit and available for potential delivery. Escrowed to Maturity (ETM) Holding of the proceeds from a new bond issue to pay off an existing bond issue at its maturation date. Essential purpose (or function) bond Public purpose bond Estate planning The preparation of a plan to carry out an individual's wishes as to the administration and disposition of his/her property before or after his/her death. Estate tax A federal or state tax imposed on an individual's assets inherited by heirs. Estimated tax Tax to be paid quarterly on income that is not subject to withholding tax, including self-employed income, investment income, alimony, rent, and capital gains. Ethical fund Social conscious mutual fund. Ethics Standards of conduct or moral judgment. Euclidean Geometry The Plane geometry learned in high school, based upon a few ideal, smooth, symmetric shapes. Euro Originally, the term for a deposit made outside one's home country but denominated in the home country currency. This terminology is confusing now since the new European Currency unit, also called the Euro, was introduced on January 1, 1999. Euro CDs CDs issued by a U.S. bank branch or foreign bank located outside the U.S. Almost all Euro CDs are issued in London. Eurodollar obligations Certificates of deposit issued in U.S. dollars by foreign banks and foreign branches of U.S. banks. Euro lines Lines of credit granted by banks (foreign or foreign branches of U.S. banks) for Eurocurrencies. Euro straight A fixed-rate coupon Eurobond. Eurobank A bank that regularly accepts foreign currency-denominated deposits and makes foreign currency loans. Eurobond A bond that is (1) underwritten by an international syndicate, (2) issued simultaneously to investors in a number of countries, and (3) issued outside the jurisdiction of any single country. Eurobonds are often bearer bonds. Euroclear The Euroclear group is the world's largest settlement system for domestic and international securities transactions, covering both bonds and equities for financial institutions located in over 80 countries. Euro-commercial paper Short-term notes with maturities up to 360 days that are issued by companies in international money markets. Eurocredit market Comprises banks that accept deposits and provide loans in large denominations and in a variety of currencies. The banks that constitute this market are the same banks that constitute the Eurocurrency market; the difference is that Eurocredit loans are longer-term than so-called Eurocurrency loans. Eurocredits Intermediate-term loans of Eurocurrencies made by banking syndicates to corporate and government borrowers. Eurocurrency Instrument issued outside your country, but denominated in your currency. A Eurodollar is a Certificate of Deposit in U.S. dollars issued in some other country (though mainly traded in London). A Euroyen is a CD issued in yen outside Japan. Eurocurrency deposit A short-term fixed-rate time deposit denominated in a currency other than the local currency (e.g., U.S. dollars deposited in a London bank). Eurocurrency market The money market for borrowing and lending currencies that are held in the form of deposits in banks located outside the countries where the currencies are issued as legal tender. Eurodollar Refers to a certificate of deposit in U.S. dollars in a bank that is not located in the U.S. Most of the Eurodollar deposits are in London banks, but Eurodeposits may be anywhere other than the U.S. Similarly, a Euroyen or Euro DM deposit represents a CD in yen or DM outside Japan and Germany, respectively. Eurodollar bonds Eurobonds denominated in U.S.dollars. Eurodollar certificate of deposit A certificate of deposit paying interest and principal in dollars, but issued by a bank outside the United States, usually in Europe. Euroequity issues Securities sold in the Euromarket. That is, securities initially sold to investors simultaneously in several national markets by an international syndicate. Related: External market. Euro-medium term note (Euro-MTN) A nonunderwritten Euronote issued directly to the market. Euro-MTNs are offered continuously rather than all at once as a bond issue is. Most Euro-MTN maturities are under five years. Euro.NM Created on March 1, 1996, Euro.NM is a pan- network of regulated markets dedicated to growth companies, regardless of their sector of activity or country of origin. Euro.NM member exchanges and their respective new markets consist of the Paris Stock Exchange (Le Nouveau Marché), the Deutsche Börse AG (Neuer Markt), the Amsterdam Exchanges (NMAX), and the Brussels Stock Exchange (Euro.NM Belgium). Euro-note Short- to medium-term debt instrument sold in the Eurocurrency market. Euroyen bonds Eurobonds denominated in Japanese yen. European, Australia, and Far East index (EAFE index) Stock index, computed by Morgan Stanley Capital International. European Association of Securities Dealers Automated Quotation (EASDAQ) European equivalent of Nasdaq. European Bank for Reconstruction and Development Bank targeted at Eastern Europe and the former Soviet Union. European Central Bank (ECB) Bank created to monitor the monetary policy of the countries that have converted to the Euro from their local currencies. The original 11 countries are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. European Currency Unit (ECU) An index of foreign exchange consisting of European currencies, originally devised in 1979. Also see Euro. European exchange rate mechanism (ERM) The system that countries in the European Union once used to pay exchange rates within bands around an ERM central value. European Exercise A feature of an option that stipulates that the option may only be exercised at its expiration. Therefore, there can be no early assignment with this type of option. Most index options are European-style exercise. European Monetary System (EMS) A system adopted by European Community members with the aim of promoting stability by limiting exchange-rate fluctuations. The system was originated in 1979 by the nine members of the European Community (EC). The EMS comprised three principal elements: the European Currency Unit (ECU), the monetary unit used in EC transactions; the Exchange Rate Mechanism, ERM, whereby those member states taking part agreed to maintain currency fluctuations within certain agreed limits; and the European Monetary Cooperation Fund, which issues the ECU and oversees the ERM. The 1992 Maastricht Treaty provided for the move to Economic and Monetary Union (EMU), including a European Monetary Institute to coordinate the economic and monetary policy of the EU, a European Central Bank (ECB) to govern these policies, and the presentation of a single European currency. European option Option that may be exercised only at the expiration date. Related: American option. European Options Exchange (EOE) Now AEX-Optiebeurs. Amsterdam Exchanges (AEX). European-style exercise A method of exercising options contracts in which the buyer can only exercise the contract on the last day before expiration. European-style option An option contract that can be exercised only on the expiration date. European terms A foreign exchange quotation that states the foreign currency price of one U.S. dollar. Opposite of direct quote. European Union (EU) An economic association of European countries founded by the Treaty of Rome in 1957 as a common market for six nations. It was known as the European Community until January 1, 1994 and currently comprises 15 European countries. Its goals are a single market for goods and services without any economic barriers, and a common currency with one monetary authority. Evaluation period The time interval over which funds assess a money manager's performance. Even lot Round lot Evening up Buying or selling to offset an existing market position. Event anomalies Occurrences such as earnings surprises or stock splits that seem to present opportunity to generate abnormal returns for those trading on the news. Event driven In the context of hedge funds, a style of management that combines many different types of hedge fund investing such as merger arbitrage, distressed securities and high yield investing, in conjunction with an important "event" that is supposed to unlock firm value (like a merger announcement, earnings announcement, or a regulator decision). Event risk The risk that the ability of an issuer to make interest and principal payments will change because of rare, discontinuous, and very large, unanticipated changes in the market environment such as (1) a natural or industrial accident or some regulatory change or (2) a takeover, or corporate restructuring. Event study A statistical study that examines how the release of information affects prices at a particular time. Events of default Contractually specified events that allow lenders to demand immediate repayment of a debt. Evergreen A contract that rolls over after each agreed (short-term) period until cancelled by one party. Evergreen credit Revolving credit without maturity. Evergreen funding A British term referring to the gradual injection of capital into a new or existing enterprise. Ex Works (EXW) A transaction in which the seller's only responsibility is to make the ordered goods available to the buyer at the seller's premises. The buyer bears the cost and risk in transporting the goods from the seller's premises to destination. Since this includes pre- carriage and export clearance in the seller's country, EXW is not a very practical Incoterm for U.S. exports. Ex-all The sale of a security without the privileges associated with the security such as dividends, voting rights, or warrants. Ex ante return The expected return or anticipation return of an asset or portfolio. Ex ante value The forecasted price or value. Exception A proxy which does not authorize the proxy committee to act on its behalf concerning any other business, adjournments or substitutions. Exceptional Return Residual return plus benchmark timing return. For a given asset with beta equal to one, if its residual return is 2%, and the benchmark portfolio exceeds its consensus expected returns by 1%, then the asset's exceptional return is 3%. Excess accumulation The amount of a required minimum distribution that an IRA holder fails to remove from an IRA in a timely manner. Excess accumulations are subject to a 50% IRS penalty tax. Excess contribution The amount by which an IRA contribution exceeds the allowable limits. If an excess contribution is not properly corrected, a 6% IRS penalty applies. Excess reserves Amount of reserves held by an institution in excess of its reserve requirement and required clearing balance. Also see reserves. Exchange Ratio The number of new shares in an acquiring firm that are given for each outstanding share of an acquired firm. Exchange Traded Fund Similar to an index mutual fund, these tracking stocks trade continuously. Two popular ETFs are the Standard and Poor's depositary receipt (SPDR) launched in 1993 and the NASDAQ-100 Index Tracking Stock (QQQ) which was launched in 1999. These vehicles are popular for hedging as well as investment. Ex-dividend This literally means "without dividend." The buyer of shares when they are quoted ex-dividend is not entitled to receive a declared dividend. It is the interval between the record date and the payment date during which the stock trades without its dividend-the buyer of a stock selling ex-dividend does not receive the recently declared dividend. Antithesis of cum dividend (with dividend). Ex-dividend date The first day of trading when the buyer of a stock is no longer entitled to the most recently announced dividend payment ( i.e. the trade will settle the day after the record date, too late for the buyer to appear on the shareholder record and receive the dividend.) The date set by the NYSE (and generally followed on other U.S. exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is denoted by an x in newspaper listings on that date. Executor An individual or trust institution nominated in a will and appointed by a court to settle the estate of a deceased person. Ex-legal A municipal bond offered without a law firm's legal opinion. A majority of bonds are issued with legal opinions. Expatriate An employee who is a U.S. citizen living and working in a foreign country. Ex-pit transaction The closing out of a futures position off the exchange floor. Effected when two hedgers, one long and one short, make a private deal in the cash market, and no longer need their (equal and opposite) futures contracts to hedge. The hedgers contact the exchange and request the contracts be nullified without making a trade on the floor. This must be done (1) to ensure neither contract results in delivery/the requirement to deliver; (2) to properly reflect open interest; and (3) to eliminate the uncertainty of the fill price should a trade actually be done to offset the positions. Extremely rare. Also known as an EFP transaction, an exchange-for-physicals transaction or an against-actuals transaction. Ex post return Related: Holding-period return Ex-rights Shares of stock that are trading without rights attached. Ex-rights date The date on which a share of common stock with rights on it begins trading ex-rights. Expropriation The taking over of a company or project by the state, implying compensation will be paid. Nationalization. Ex-warrants Describes a stock sale during the time in which the buyer of the stock is not entitled to the warrant accompanying the stock. Exact interest Interest paid based on the basis of a 365-day/year schedule by a bank or other financial_institution as opposed to a 360-day basis (ordinary interest). Difference can be material when large principal sums of money are involved. Exact matching A bond portfolio management strategy that involves finding the lowest cost portfolio generating cash inflows exactly equal to cash outflows that are being financed by investment. Except for opinion An auditor's opinion reflecting the fact that the auditor is unable to audit certain areas of the company's operations because of restrictions imposed by management or other conditions beyond the auditor's control. Expected rate of inflation The public's expectations for inflation. These expectations determine how large an effect a given policy action by the Fed will have on economic activity. Excess kurtosis Kurtosis measures the "fatness" of the tails of a distribution. Positive excess kurtosis means that distribution has fatter tails than a normal distribution. Fat tails means there is a higher than normal probability of big positive and negative returns realizations. When calculating kurtosis, a result of +3.00 indicates the absence of kurtosis (distribution is mesokurtic). For simplicity in its interpretation, some statisticians adjust this result to zero (i.e. kurtosis minus 3 equals zero), and then any reading other than zero is referred to as excess kurtosis. Negative numbers indicate a platykurtic distribution; positive numbers indicate a leptokurtic distribution. Excess margin Equity present in an individual's account above the legal minimum required for a margin account or the maintenance requirement at a brokerage firm. Excess profits tax Additional federal taxes placed on the earnings of a business, used only in time of national emergency such as war. Excess reserves Actual reserves that exceed required reserves. Excess return on the market portfolio Difference between the return on the market portfolio and the riskless rate. Excess returns Difference between an asset's return and the riskless rate. Sometimes confused with abnormal returns, returns in excess of those required by some asset pricing model. Exchange A marketplace in which shares, options and futures on stocks, bonds, commodities, and indexes are traded. Principal U.S. stock exchanges are: New York Stock Exchange (NYSE), American Stock Exchange (AMEX), and National Association of Securities Dealers Automatic Quotation System (Nasdaq). Exchange, The A nickname for the New York Stock Exchange. Also known as the Big Board, where more than 2000 common and preferred stocks are traded. The exchange is the oldest in the United States, founded in 1792, and the largest. It is located on Wall Street in New York City. Exchange of assets Acquisition of another company by purchase of its assets in exchange for cash or stock. Exchange controls Government restrictions on the purchase of foreign currencies by domestic citizens or on the purchase of the local domestic currency by foreigners. Exchange distribution A sale on an exchange floor of a large block of stock in a single transaction. A broker bunches a large number of buy orders and sells the block all at once. The broker receives a special commission from the seller. Exchange fund (also known as swap fund) Investment vehicle introduced in 1999 that appeals to wealthy investors with large holdings in a single stock who want to diversify without paying capital gains taxes. These funds allow investors to exchange their stock for shares in a diversified portfolio of stocks in a tax-free transaction. Exchange members Member firm; seat Exchange offer An offer by a firm to give one security, such as a bond or preferred stock, in exchange for another security, such as shares of common stock. Exchange privilege A mutual fund shareholder's right to switch from one fund to another within one fund family, usually at no additional charge. Exchange rate The price of one country's currency expressed in another country's currency. Exchange Rate Mechanism (ERM) The methodology by which members of the EMS maintain their currency exchange rates within an agreed-upon range with respect to other member countries. Exchange rate risk Also called currency risk; the risk that an investment's value will change because of currency exchange rates. Exchange risk The variability of a firm's value that results from unexpected exchange rate changes, or the extent to which the present value of a firm is expected to change as a result of a given currency's appreciation or depreciation. Exchange of stock Acquisition of another company by purchase of its stock in exchange for cash or shares. Exchange Traded Funds (ETF) Also known as ETF. A basket of stocks similar to an index mutual fund. However, there are a number of important differences between ETFs and mutual funds. The ETF can be traded within the day, they can be shorted, purchased on margin and there even exists options on some ETFs. Exchangeable Applies mainly to convertible securities. Means the issuer, if so stated, may substitute a convertible debenture for an existing convertible preferred with identical terms. Most often used when a corporation has an immediate need for equity capital and a low tax rate, and expects either or both conditions to change. This would make the debenture less attractive if the interest tax-deductibility is lost. Exchangeable instrument Applies mainly to convertible securities. Bond or preferred stock that may be exchangeable into the common stock of a different public corporation. Exchangeable Security Investment instrument that grants its holder the right to exchange it for the common stock of a firm other than the issuer of the instrument. Excise tax Federal or state tax placed on the sale or manufacture of a commodity, typically a luxury item e.g., alcohol. Fresh picture Updated estimation of a stock or market, usually following recent trading activity or news that has changed the previous look. Fresh signal Piece of information (fundamental or technical) leading one to believe a stock will move in a certain manner. Friction costs Costs, both implied and direct, associated with a transaction. Such costs include time, effort, money, and associated tax effects of gathering information and making a transaction. Frictional cost The difference between an index fund return and the index it represents. The typically lower rate of return from the fund results from transactions costs. Frictionless market Ideal trading environment that imposes no costs or restraints on transactions. Frictions The "stickiness" involved in making transactions; the total process including time, effort, money, and tax effects of gathering information and making a transaction such as buying a stock or borrowing money. Friendly Merger A business combination that the management of both firms believes will be beneficial to stockholders. Friendly takeover Merger when the target firm's management and board of directors is in favor of the takeover. Antithesis of hostile takeover. Front-end load The fee applied to an investment at the time of initial purchase, e.g., on a mutual fund purchased from a broker or mutual fund company. Front fee The fee initially paid by the buyer upon entering a split-fee option contract. Front office Refers to revenue generating sales personnel in a brokerage, insurance, or other financial services operation. Front running Entering into an equity trade, options or futures contracts with advance knowledge of a block transaction that will influence the price of the underlying security to capitalize on the trade. This practice is expressly forbidden by the SEC. Traders are not allowed to act on nonpublic information to trade ahead of customers lacking that knowledge. Frozen account A disciplinary action taken by the Federal Reserve Board for some violation of Regulation T, an individual investor cannot sell securities until they are paid for in full and certificates delivered. Fry a bigger fish Used in the context of general equities. Work on a trade of larger size than a trade just disclosed. Full Handle. Full compensation Payment for delivery of goods to one party by buying back more than 100 % of the value that was originally sold. Full coupon bond A bond with a coupon equal to the going market rate; the bond is therefore selling at par. Full disclosure Describes exchange and government regulations providing for the release and free exchange of all information pertinent to a given security. Full Employment and Balance Growth Act of 1978(Humphrey-Hawkins Act) Federal legislation that, among other things, specifies the primary objectives of U.S. economic policy-maximum employment, stable prices, and moderate long-term interest rates. Full faith-and-credit obligations The security pledges for larger municipal bond issuers, such as states and large cities that have diverse funding sources. Full-payout lease Financial lease Full price Also called dirty price; the price of a bond including accrued interest. Related: Flat price. Full recourse No matter what risk event occurs, the borrower or its guarantors guarantee to repay the debt. This is not a project financing unless the borrower's sole asset is the project. Full-service broker A broker who provides clients an all-inclusive selection of services such as advice on security selection and financial planning. Full-service lease Also called rental lease. Arrangement in which lessor promises to maintain and insure the equipment leased. Full Set of Bills of Lading All originals of an ocean bill of lading. Full trading authorization Indication that a broker with a discretionary account can operate free of all trading guidelines from the client. Fully depreciated An asset that has already been charged with the maximum amount of depreciation allowed by the IRS for accounting purposes. Fully diluted earnings per shares Earnings per share expressed as if all outstanding convertible securities and warrants have been exercised. Fully distributed A new stock issue that has been completely resold to the investing public and is no longer held by dealers. Fully invested Used to describe an investor whose assets are totally committed to investments, typically stock. Fully modified pass-throughs Agency pass-throughs that guarantee the timely payment of both interest and principal. Related: Modified pass-throughs. Fully valued Used in the context of general equities. Said of a stock that has reached a price at which analysts think the underlying company's fundamental earnings power has been fully recognized by the market. Functional currency As defined by FASB No. 52, an affiliate's functional currency is the currency of the primary economic environment in which the affiliate generates and expends cash. Fund assets The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. Fund family Set of funds with different investment objectives offered by one management company. In many cases, investors may move their assets from one fund to another within the family at little or no cost. Fund of funds A mutual fund or hedge fund that invests in other funds. Fund manager The person whose responsibility it is to oversee the allocation of the pool of money invested in a particular mutual fund. The fund manager is charged with investing the money to attain the returns and level of risk of the mutual fund investors. Fund switching Moving money within a mutual fund family from one mutual fund to another. Fun money Money that can be used to invest in risky investments with high potential return. Fundamental analysis Security analysis that seeks to detect misvalued securities through an analysis of the firm's business prospects. Research often focuses on earnings, dividend prospects, expectations for future interest rates, and risk evaluation of the firm. Antithesis of technical analysis. In macroeconomic analysis, information such as interest rates, GNP, inflation, unemployment, and inventories is used to predict the direction of the economy, and therefore the stock market. In microeconomic analysis, information such as balance sheet, income statement, products, management, and other market items is used to forecast a company's imminent success or failure, and hence the future price action of the stock. Fundamental beta The product of a statistical model to predict the fundamental risk of a security using not only price data but also other market-related and financial data. Fundamental descriptors In the model for calculating fundamental beta, ratios in risk indexes other than market variability, which rely on financial data other than price data. Fundamental forecasting Analyzing the future on the basis of fundamental relationships between economic variables and exchange rates. Fundamental Information Information relating to the economic state of a company or economy. In market analysis, fundamental information is related to the earnings prospects of the firm only. Funded debt Debt maturing after more than one year. Funded Liability A source of funds that a firm must take overt action to arrange and that carries an interest cost. Funded pension plan A pension plan in which all liabilities, including payments to be made to pensioners in the immediate future, are completely funded. Funding Used to describe the refinancing of a debt prior to its maturity (the same as refunding). In corporate finance refers to the floating of bonds to raise finance and levels of capital. See also: refunding. Funding ratio The ratio of a pension plan's assets to its liabilities. Funding risk The risk associated with the impact on a project's cash flow from higher funding costs or lack of availability of funds. interest rate risk. Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. A similar term increasingly used is funds available for distribution (FAD), which is FFO less capital investments in trust property and the amortization of mortgages. Fungibility The substitutability of listed options, which is dependent upon their common expiration dates and strike prices. The congruence of expiration dates and strike prices lets investors close positions by offsetting transactions through the options clearing corporation. Furthest month Used in the context of commodities or options trading to refer to the month that is away from the contract's date of settlement. FUTOP The Danish derivatives market, merged with the Copenhagen Stock Exchange in 1997. Future A term used to designate all contracts covering the sale of financial instruments or physical commodities for future delivery on a commodity exchange. Future investment opportunities The identification of additional, more valuable, investment opportunities in the future that result from a current opportunity or operation. Futures A term used to designate all contracts covering the sale of financial instruments or physical commodities for future delivery on a commodity exchange. Futures commission merchant (FCM) A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of futures contracts, subject to the rules of a futures exchange and, who, in connection with such solicitation or acceptance of orders, accepts any money or securities to provide margin for any resulting trades or contracts. The FCM must be licensed by the CFTC. Related: Commission house, omnibus account. Futures contract A legally binding agreement to buy or sell a commodity or financial instrument in a designated future month at a price agreed upon today by the buyer and seller. Futures contracts are standardized according to the quality, quantity, and delivery time and location for each commodity. A futures contract differs from an option because an option is the right to buy or sell, while a futures contract is the promise to actually make a transaction. A future is part of a class of securities called derivatives, so named because such securities derive their value from the worth of an underlying investment. Futures contract multiple A constant set by an exchange, which when multiplied by the futures price gives the dollar value of a stock index futures contract. Futures market A market where contracts for future delivery of a commodity or a security are bought or sold. Futures option An option on a futures contract. Related: Options on physicals. Futures price The price at which parties to a futures contract agree to transact upon the settlement date. Future value The amount of cash at a specified date in the future that is equivalent in value to a specified sum today. Fuzzy Logic A system which mathematically models complex relationships which are usually handled in a vague manner by language. Under the title of "Fuzzy Logic" falls formal fuzzy logic (a multi-valued form of logic), and fuzzy sets. Fuzzy sets measure the similarity between an object and a group of objects. A member of a fuzzy set can belong to both the set, and its compliment. Fuzzy sets can more closely approximate human reasoning than traditional "crisp" sets. Crisp sets. FVO (for valuation only) For your information G Fifth letter of a Nasdaq stock symbol specifying that the issue is the first convertible bond of the company. GA The two-character ISO 3166 country code for GABON. GAAP Generally Accepted Accounting Principles GB The two-character ISO 3166 country code for UNITED KINGDOM. GBP Pound Sterling currency GBP The ISO 4217 currency code for the United Kingdom Pound. GD The two-character ISO 3166 country code for GRENADA. GDP Gross Domestic Product GE The two-character ISO 3166 country code for GEORGIA. GF The two-character ISO 3166 country code for FRENCH GUIANA. GH The two-character ISO 3166 country code for GHANA. GI The two-character ISO 3166 country code for GIBRALTAR. GIC Guaranteed Investment Contract GL The two-character ISO 3166 country code for GREENLAND. GNP Gross National Product GM The two-character ISO 3166 country code for GAMBIA. GMC Guaranteed Mortgage Certificate GN The two-character ISO 3166 country code for GUINEA. GP The two-character ISO 3166 country code for GUADELOUPE. GPM Graduated Payment Mortgages GQ An investment banking firm's letter indicating that the firm is highly confident it will be able to arrange financing for a securities deal. Highly leveraged transaction (HLT) Bank loan to a highly leveraged firm. Highs Stocks that have hit an all-time high for the current 52-week time period. Hire Purchase The right to purchase an asset by the user of the asset according to a pre-agreed method. The user may be the owner for tax purposes. Historical cost Describes the accounting cost carried in the books for a current cost of the item. Historical Cost Accounting Convention An accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition. Historical exchange rate An accounting term that refers to the exchange rate in effect at the time an asset or liability is acquired. Historical trading range The range of price over which a security or a commodity has traded since listing on a exchange. Historical volatility Fluctuations estimated from a historical time series. Historical yield A measure of a mutual fund's yield over a specific period of time, e.g., 1 year, 2 year, 5 year, or year to date. Hit the bid A dealer who agrees to sell at the bid price quoted by another dealer is said to "hit" that bid. Antithesis of take the offer. Hit the ribbon Used in the context of general equities. Print. Hold To maintain ownership of a security over a long period of time. "Hold" is also a recommendation of an analyst who is not positive enough on a stock to recommend a buy, but not negative enough on the stock to recommend a sell. Holder The purchaser of an option. Holder of record date The date on which holders of record in a firm's stock ledger are designated as the recipients of either dividends or stock rights. Also called date of record. Holding company A corporation that owns enough voting stock in another firm to control management and operations by influencing or electing its Board of Directors. Holding the market The illegal practice of maintaining and/or placing a sufficient number of buy orders to create price support for a security or commodity in an amount to of stabilize a downward trend. Holding period Length of time a security is held. Holding-period return Rate of return on an investment over a given period. Holding-Period Yield (HPY) The annual rate of return actually realized on an investment in a bond. Home asset bias The tendency of investors to over invest in their own county's assets. Home run Large capital gain in a stock in a short period of time. Homemade dividend Sale of some shares of stock to get cash in an amount similar to that of a cash dividend. Homemade leverage Idea that as long as individuals borrow (or lend) on the same terms as the firm, they can duplicate the effects of corporate leverage on their own. Thus, if levered firms are priced too high, rational investors will simply borrow on personal accounts to buy shares in unlevered firms. Homeowner's equity account A credit line offered bymortgage lenders allowing a homeowner a second mortgage that uses the equity present in the customer's account as collateral. Homeowner's insurance policy An insurance policy protecting a homeowner against damage or loss to property. Homogeneity The degree to which items are similar. Homogeneous Exhibiting a high degree of homogeneity. Homogeneous expectations assumption An assumption of Markowitz portfolio construction that investors have the same expectations with respect to the inputs that are used to derive efficient portfolios: asset returns, variances, and covariances. Hong Kong Futures Exchange (HKFE) Established in 1976, the Hong Kong Futures Exchange (H.K.F.E.) operates futures and options markets in index, stock, interest rate, and foreign exchange products. Horizon analysis An analysis of returns using total return to assess performance over some investment horizon. Horizon matching strategy An income immunization strategy that cash-matches over the next few years and duration-matches the rest. Horizon return Total return over a given horizon. Horizontal acquisition Merger between two companies producing similar goods or services. Horizontal analysis The process of dividing each expense item of a given year by the same expense item in the base year. It allows assessment of changes in the relative importance of expense items over time and the behavior of expense items as sales change. Horizontal merger A merger involving two or more firms in the same industry that are both at the same stage in the production cycle; that is, two or more competitors. Horizontal price movement Stock price movement within a narrow price range over an extended period of time which creates the appearance of a relatively straight line on a graph of the stock's price. Horizontal spread The simultaneous purchase and sale of two options that differ only in their expiration dates. Hospital revenue bond A bond issued to finance construction of a hospital by a municipal or state agency. Host security The security to which a warrant is attached. Hostile takeover A takeover of a company (usually made by an open tender offer to shareholders) against the wishes of the current management and the Board of Directors by an acquiring company or raider. Hot Used in the context of general equities. Active, usually with positive price implications. Hot money Money that moves across country borders in response to interest rate differences and that moves away when the interest rate differential disappears. House Firms that conduct business as broker-dealers in securities or in the investment banking field are characterized as houses. House account A type of account at a brokerage firm that is given a high level of priority and is handled by the main office or an executive, rather than a traditional salesperson. House Air Waybill (AWB) An air waybill issued by an air freight consolidator. House call Notification by a brokerage house that a customer's margin account is below the minimum maintenance level. The client must provide more cash or equity, or the account will be liquidated. House of issue An investment banking firm whose business it is to underwrite stock or bond issues and offer the securities to the public. House maintenance requirement The internal rules of a brokerage house that govern the minimum amount of equity that must be present in a customer's margin account. House poor People who are short on cash because most of their money is tied up in their homes are "house poor." House rules Internal rules of broker-dealer firm that govern the handling of its customers' accounts. Housing bond Bonds issued by a local housing authority to finance housing projects. "How are you making XXX?" "What is your market in a particular stock?" Quotation. Hubris An arrogance due to excessive pride and an insolence toward others. A classic character flaw of a trader or investor. Hulbert rating A rating by Hulbert Financial Digest, a service of CBS MarketWatch, of how well the recommendations of various investment advisory newsletters have performed. Human capital The unique capabilities and expertise of individuals. Humphrey-Hawkins Act Informal name for the Full Employment and Balanced Growth Act of 1978, from the names of the act's original sponsors. Hung up Used to describe the position of an investor whose stocks or bonds have dropped in value below their original purchase price. Hunkering down A term used to describe a trader selling off a big position in a stock. Hurdle rate The required return in capital budgeting. For example, if a project has an expected rate of return higher than the hurdle rate, the project may be accepted. Hurst Exponent(H) 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. Legal capital Value at which a company's shares are recorded in its books. Legal bankruptcy A legal proceeding for liquidating or reorganizating a business. Legal defeasance 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. Legal entity A person or organization that can legally enter into a contract, and may therefore be sued for failure to comply with the terms of the contract. Legal investments Investments that a regulated entity is permitted to make under the rules and regulations that govern its conduct. Legal list A list of high-quality debt and equity securities chosen by a state agency that are acceptable holdings for fiduciary institutions. Legal monopoly A government-regulated firm that is legally entitled to be the only company offering a particular service in a particular area. Legal opinion A statement, usually written by a specialized law firm, required for a new municipal bond issue stating that the issue is legally acceptable. Legal risk The risk associated with the impact of a defect in the documentation on cash flow or debt service. Legal transfer A stock transaction that requires special documentation in addition to standard stock or bond power to be legally valid. Legislative risk The risk that new or changed legislation will have a large positive or negative effect on an investment. Legitimate Used in the context of general equities. Real interest in trading as compared to a profile stance. Natural. Lehman Brothers Adjustable-Rate Mortgage Index A benchmark index that includes all agency-guaranteed securities with coupons that periodically adjust based on a spread over a published index. Lehman Brothers Aggregate Bond Index A benchmark index made up of the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset-Backed Securities Index, including securities that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million. Lehman Brothers California Municipal Bond Index A benchmark index that includes investment-grade, tax-exempt, and fixed-rate bonds issued in California. All securities have long-term maturities (greater than two years) and are selected from issues larger than $50 million. Lehman Brothers Corporate Bond Index A benchmark index that includes all publicly issued, fixed-rate, nonconvertible, dollar-denominated, SEC-registered, investment-grade corporate debt. Lehman Brothers Government Bond Index A benchmark index 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. Lehman Brothers Government/Corporate Bond Index A benchmark index made up of the Lehman Brothers® Government and Corporate Bond indexes, including U.S. government Treasury and agency securities as well as corporate and Yankee bonds. Lehman Brothers Mortgage-Backed Securities Index A benchmark index that includes 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), and Federal National Mortgage Association (FNMA). Lehman Brothers Municipal Bond Index A benchmark index that includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than two years) selected from issues larger than $50 million. Lehman Brothers New York Municipal Bond Index A benchmark index that includes investment-grade, tax-exempt, and fixed-rate bonds issued in the state of New York. All securities have long-term maturities (greater than two years) and are selected from issues larger than $50 million. Lemon An investment with poor results. Lemons problem Named after 2001 Nobel Laureate George Akerlof's 1970 paper "The Market for Lemons". His original example had to do with used cars. Why does the seller want to get rid of the car? It might be a lemon. The buyer and seller have asymmetric information. Hence, the buyer will demand a deep discount on the car because of the possibility it is a lemon. Lend To provide money temporarily on the condition that it or its equivalent will be returned, often with an interest fee. Lendable funds The pool of funds available to borrows; typically categorized by currency and maturity. Lender Businesses that provide loans to others. Lender of last resort 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. Lender liability lawsuits Legal action of debtor against creditors that alleges unfair enforcement of loan covenants or violation of implied terms of a loan agreement. Lending agreement A contract regarding funds transferred between a lender and a borrower. Lending at a premium A loan from one broker to another of securities to cover a customer's short position, with a borrowing fee included. A fee is unusual since securities are normally lent freely between brokers. Lending at a rate Interest paid to a customer on the credit balance received from a short sale. Lending securities Securities borrowed from a broker's inventory, from another customer's margin account, or from another broker, when a customer is required to deliver on a short sale. Leptokurtosis The condition of a probability density curve to have fatter tails and a higher peak at the mean than the normal distribution. Less-developed countries (LDCs) Also known as emerging markets. Countries who's per capita GDP is below a World Bank-determined level. Less Than Container Load Shipments of less than container load size (<$50,000). Lessee An entity that leases an asset from another entity. Lessor An entity that leases an asset to another entity. Letter of Administration A certificate issued by the Court evidencing the appointment of the Administrator of an Estate. Letter of comment A communication to the firm from the SEC that suggests changes to its registration statement. Letter of credit (LOC) 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. Letter of Guarantee A letter from a bank to a brokerage firm which states that a customer (who has written a call option) does indeed own the underlying stock and the bank will guarantee delivery if the call is assigned. Thus the call can be considered covered. Not all brokerage firms accept letters of guarantee. Also: letter issued to Option Clearing Corporation by member firms covering a guarantee of any trades made by one of its customers, (a