In accounting and finance, 'Margin' can refer to several different concepts ranging from profit margin in sales to the difference in buy/sell prices by market makers.
A margin account is a type of brokerage account that allows customers to borrow money from their broker to buy securities, following regulations from the Federal Reserve Board, the National Association of Securities Dealers (NASD), the New York Stock Exchange, and individual brokerage house rules.
A Margin Call is a demand, usually resulting from the price decline of a security bought on margin, that a customer deposit enough money or securities to bring a margin account up to the initial margin or minimum maintenance requirements. If a customer fails to respond, securities in the account may be liquidated.
Mark to Market (MTM) is a financial accounting method where the value of an asset is adjusted to reflect its current market value rather than its book value. It's used in margin accounts to ensure compliance and by mutual funds to report daily net asset values.
Market Timing refers to the strategic decision-making process of buying or selling securities based on economic conditions, interest rates, stock price directions, and trading volumes.
An individual whose overall assets exceed $1 million but are not liquid cash. These assets could be in the form of securities, real estate, or other investments.
A Minus Tick, also known as a downtick, is a term used in trading and investing to describe a trade of a security that occurs at a price lower than the previous trade.
A Mortgage-Backed Certificate (MBC) is a type of security that is backed by a collection of mortgages. Investors in MBCs receive periodic payments derived from the interest and principal payments made on the underlying mortgages.
An MTF is a European Union-regulated financial trading venue, offering a platform different from traditional stock exchanges to match buyers and sellers in a transparent and efficient manner.
A computerized system that provides brokers and dealers with price quotations for securities traded over the counter (OTC) as well as for many New York Stock Exchange-listed securities. NASDAQ quotes are published in the financial pages of most newspapers.
Net proceeds refer to the amount received from the sale or disposition of property, from a loan, or the sale or issuance of securities after the deduction of all costs incurred in the transaction.
A net transaction in the securities market refers to a transaction where the buyer and seller do not incur any fees or commissions. This typically occurs when an investor buys a new issue of stock.
New money refers to the additional long-term financing provided to a company or government through new issues or issues exceeding the amount of a maturing issue or by issues that are being refunded.
In the USA and Canada, stock (shares) that have no par value or assigned value printed on the stock certificate, thus avoiding contingent liabilities and simplifying accounting entries.
Nominal price refers to a minimal or face value of a security at issuance, often not reflective of the current market value.
Nominal value refers to the face value of a security as stated by the issuer, often used interchangeably with 'par value.' It represents the value printed on the instrument, such as a bond or share certificate.
A nondiscretionary trust, also known as a fixed investment trust, is an investment trust that may only invest in specific securities pre-determined by its organizing documents. The percentage of total assets that may be invested in a specific security or type of securities is usually predetermined.
Corporate securities that do not empower a holder to vote on corporate resolutions or the election of directors. Commonly issued during takeovers to dilute equity and discourage mergers.
The New York Stock Exchange (NYSE) is the largest stock exchange in the world by market capitalization. It provides a platform for buying and selling an extensive range of securities, including stocks, bonds, and other financial instruments.
The price at which a security is offered for sale by a market maker, and the price at which an institution sells units in a unit trust.
An offering circular is a document used to provide details about a property or security offering when a prospectus is not required.
The offering price is the price per share at which new or secondary distribution of securities is offered for sale to the public. It is also commonly referred to as the public offering price.
The Official List refers to two primary components within the London Stock Exchange framework: a comprehensive list of all traded securities and a daily record of transactions, dividends, rights issues, prices, and other relevant data.
In various contexts such as accounting, banking, printing, and securities, the term 'offset' refers to actions or functions intended to counterbalance or neutralize other actions or amounts. It is used differently across diverse fields, reflecting its versatile nature.
Online trading involves the buying and selling of stocks or other securities over the Internet without the need for a physical broker, leading to lower fees and faster transactions.
The term 'Open' varies in meaning across different fields such as Banking, Finance, Securities, and Computers. It generally signifies the initiation of an action or status that is currently active and not yet completed.
An open order refers to a buy or sell order for securities that has not yet been executed or canceled.
A trading position where a trader holds commodities, securities, or currencies that are bought but unsold or unhedged, exposing them to market fluctuations until the position is closed or hedged.
An option holder is someone who has bought a call or put option but has not yet exercised or sold it. Call option holders want the price of the underlying security to rise, while put option holders want it to fall.
A regulated quotation service providing real-time quotes and last-sale prices for equities sold in the US over-the-counter market. Created by the National Association of Securities Dealers, Inc. (NASD) in 1990.
Over The Counter (OTC) refers to the trading of financial instruments, including stocks and bonds or pharmaceuticals, that are not listed on formal exchanges. This can occur via a network of dealers or directly between parties.
The over-the-counter market (OTC market) facilitates the trading of financial instruments that occur directly between two parties, outside of formal exchanges.
Par value, also known as face value or nominal value, is the minimum price at which shares or other securities are issued and can be redeemed. The par value is typically set by the company at the time of issuance and does not fluctuate.
In finance, partial delivery occurs when a broker or seller fails to deliver the full quantity of a security or commodity that is stipulated in a contract. For instance, if a contract requires the delivery of 10,000 shares of a stock, but only 7,000 shares are delivered, this would be termed as a partial delivery.
Passive investment income refers to the earnings derived from investments in which the individual or entity does not actively participate. This includes royalties, rents, dividends, interest, annuities, and gains from the sale of stocks and securities.
A Pathfinder Prospectus is an outline document designed to test market reaction to the initial public offering (IPO) or flotation of a new company.
Penny shares are securities with very low market prices traded on a stock exchange, often appealing to small investors due to the potential for significant holdings at a low cost.
Penny stocks are securities trading at a low price, generally less than $5 per share, and are issued by small companies with short or erratic revenue and earnings histories, often traded over-the-counter.
A placed deal is a financial transaction in which a bank or a group of banks commit to marketing an entire new issue of bonds or similar securities without guaranteeing the success of the issuance.
A 'Plus Tick' indicates a security transaction executed at a price higher than the preceding transaction. This term is often used in trading and market analysis to denote positive price movements.
A poison pill is a defensive strategy employed by a target company to thwart hostile takeover attempts by making the company's stock less attractive to the acquirer.
The term 'pool' has various definitions across different industries including corporate finance, industry, insurance, investments, and real estate. It generally refers to a combination of resources or funds for a specific purpose.
In the world of finance, a portfolio refers to the collection of investments held by an individual or institution. This diversified set of holdings could include stocks, bonds, commodities, real estate, and other assets.
A professional responsible for managing the securities portfolio of an individual or institutional investor, ensuring alignment with the client's financial goals and risk appetite.
The term 'position' can refer to various contexts, from strategic market placement to financial conditions, and investments. In investments, it is a key concept involving either long or short stakes in securities or markets.
In accounting and finance, the term 'premium' can refer to the consideration payable for a contract of insurance, an amount in excess of the nominal value of a share, or an amount in excess of the issue price of a share or other security. Premiums play a significant role in insurance policies and in the valuation of shares and securities.
Information (usually unpublished) about a company that is likely to cause its share prices to move. It is often critical and confidential, impacting investor decisions and market valuation.
A private issue, also known as a private placement, refers to the sale of securities to a relatively small number of chosen investors as a way of raising capital.
A private offering, also known as private placement, refers to an investment or business offered for sale to a small group of investors, generally under exemptions to registration allowed by the Securities and Exchange Commission (SEC) and state securities registration laws.
A company registered under the Companies Act as a public company, authorized to offer shares and securities to the public. A PLC has stricter regulatory requirements compared to private companies.
A public offering refers to the sale of equity shares or other financial instruments by an organization to the public to raise capital. This process typically involves issuing stock through an initial public offering (IPO).
A public offering involves inviting the public to apply for a new issue of shares or other securities, typically through advertisements in the national press and at a price fixed by the issuing company.
A public offering refers to the process where securities are offered for sale to the general public, typically through a stock exchange. This mechanism allows companies to raise equity capital from a broad investor base.
The term 'quarterly' commonly refers to events, processes, or publications occurring every three months, but it holds special significance in the contexts of business, finance, and securities.
A marked rise in the price of a security, commodity future, or market after a period of decline or sideways movement.
The process of systematically assigning ranks or evaluations to goods and services based on set criteria, encompassing various domains such as credit, investment, and insurance.
The redemption premium, also known as a call premium, is the amount over the par value that a bond issuer must pay an investor if the security is redeemed early.
Refunding refers to the process of issuing new securities to retire existing ones, aiming to extend the maturity period or reduce the cost of debt service, particularly in finance. In merchandising, it describes returning money to a dissatisfied customer.
A registered bond is a type of bond that is recorded in the name of the holder on the books of the issuer or the issuer's registrar. It can be transferred to another owner only when endorsed by the registered owner. This is in contrast with a coupon bond.
Coverage for damage or destruction of high-value property during shipments, often involving securities and money transfers. The insurance operates on an ALL-RISK basis, with common exclusions such as war, nuclear disaster, and illegal trade items.
A registered representative (RR) is an employee of a broker/dealer member of a stock exchange who acts as an account executive for clients.
A registrar is an individual or official body responsible for keeping and maintaining the accurate records of an organization, institution, or legal entity. Their responsibilities vary depending on the field, such as education, real estate, and securities.
Regulation T is a regulation enforced by the Federal Reserve Board that sets the minimum amount of credit that securities brokers and dealers can extend to customers for the initial purchase of regulated securities.
Regulation U is a rule of the Securities and Exchange Commission (SEC) that governs the maximum amount of credit that banks may extend for the purchase of regulated securities.
Return can have varied meanings in different contexts, including finance, investment, retailing, taxes, and trade. Generally, it refers to profits, exchanges, and refunds or credits, often associated with securities, merchandise, or taxpayer information.
The term 'RICH' has various meanings in finance and everyday language, from denoting high-valued securities or interest rates to simply describing wealth.
A sale represents an exchange of goods or services for money. The concept and details of a sale vary across fields such as finance, law, marketing, and securities trading.
A salesperson is an individual whose primary responsibility is selling products, services, or investments. Salespersons in various industries, such as real estate, insurance, and securities, are often required to hold licenses.
A seasoned issue refers to securities that are typically from established companies, have gained a reputation for quality with the investing public, and enjoy a high level of liquidity in the secondary market.
A secondary distribution refers to the public sale of previously issued securities held by large investors, such as corporations, institutions, or affiliated persons, rather than a new issue where the seller is the issuing corporation.
A secondary offering, also known as a secondary distribution, is the sale of new or closely held shares of a company by investors, usually institutions, who are selling off their positions entirely or part of it.
Financial instruments that represent ownership or debt and provide the holder with a right to receive financial returns or an interest in the profits or assets of an enterprise.
Securitization is the process of turning assets into securities by packaging asset cash flows into tradable financial instruments. It involves an originator, a special purpose vehicle, and investors.
A sell-off refers to the rapid selling of securities due to underlying panic or to avoid further declines in prices, often resulting in a sharp decline in the market.
Selling short involves selling securities, commodities, or foreign currencies not actually owned by the seller, with the hope of repurchasing them later at a lower price to earn a profit.
Senior refunding refers to the process of replacing securities maturing in 5 to 12 years with issues that have original maturities of 15 years or longer. Objectives can include reducing the bond issuer's interest costs, consolidating several issues into one, or extending the maturity date.
A Separately Managed Account (SMA) is a professionally managed portfolio of securities that uses pooled money to buy investments owned directly by the account holder. SMAs, also known as separate accounts, individually managed accounts, or managed accounts, are usually marketed by broker-dealers who select money managers, or subadvisors, for clients from a curated list.
Series bonds are a group of bonds issued at different times with different maturities but under the same indenture.
Settlement day refers to the date on which trades are officially cleared through the delivery of the securities or foreign exchange, finalizing the transaction.
A Share Broker, also known as a Stock Broker, is a professional who buys and sells stocks, bonds, and other securities on behalf of clients, typically in exchange for a fee or commission. Share brokers have extensive knowledge of the financial markets and help clients make informed investment decisions.
A share transfer refers to the change in ownership of a share or stock, where the process is carried out electronically in modern brokerage systems.
A share warrant is a financial instrument that gives the holder the right, but not the obligation, to purchase company stock at a specified price before a warrant expiration date.
Short covering is the process by which a short seller purchases securities in the open market to repay the borrowed securities originally sold short. It is an essential action taken to mitigate potential losses or lock in profits.
A position held by a dealer in securities, commodities, currencies, etc., where sales exceed holdings because the dealer expects prices to fall, enabling the shorts to be covered at a profit. Contrasts with a long position.
For tax purposes, a short-term capital gain (loss) is the profit (loss) realized from the sale of securities or other capital assets not held long enough to qualify for a long-term capital gain (loss).
A specialist is an individual with extensive knowledge and expertise in a specific field or area. In the context of securities, a specialist is a member of a stock exchange responsible for maintaining a fair and orderly market in one or more securities.
The Specific Identification inventory method considers the sale and cost of each item specifically. It is particularly useful for investors managing securities acquired at different costs, providing flexibility in reporting taxable income.
Stabilization refers to various efforts and actions aimed at maintaining equilibrium in financial, economic, or market environments, ensuring stability in currency exchange rates, economic cycles, or securities prices.
Stamp Duty is a tax collected for stamping legal documents, primarily related to the transfer of shares, securities, and land. It is calculated based on the consideration given, with a specific rate that may be rounded up to the nearest multiple of a designated currency unit.
Stamp Duty Reserve Tax (SDRT) is a tax on electronic paperless transactions of UK shares, debenture stock, and other securities. SDRT is charged at a rate of 0.5% of the transaction's value.
Stock transfer refers to the process of transferring the ownership of stock or shares from one person to another. It's a critical mechanism in corporate finance that enables the buying and selling of company shares in the stock market.
An agent who buys and sells securities on a stock exchange on behalf of clients and earns commission for this service.
Street name refers to the practice of holding securities in the name of a broker or another nominee instead of the customer's own name. This facilitates easier and faster transfer of shares.
An agreement to receive or participate in a service, product, or offering, typically involving periodic payments or commitments.
A contractual right allowing existing shareholders to purchase additional shares of a new issue of common stock before it is offered to the public, aiding in preemptive protection against dilution of ownership.
Substitution refers to the act of replacing one element with another in various contexts including banking, contract law, economics, law, and securities.
A support level is a price level at which a security tends to stop falling because there is more demand for the security than supply of the security. It is an important concept in technical analysis used by traders and investors to make informed decisions.
Systemic risk, also known as market risk or systematic risk, refers to the part of a security’s risk that is common to all securities within the same general class and cannot be eliminated by diversification. The measure of systemic risk for individual stocks is the Beta Coefficient.
The term 'take' can have multiple interpretations depending on the context, ranging from profit realization to the act of seizing property, as well as particular connotations in the securities market.
To speculate, usually with the knowledge that the investment is highly risky, often in the context of buying securities.
