eFinancialCareers

D
Fifth letter of a NASDAQ stock symbol specifying that it is a new issue, such as the result of a reverse split.

D/A
See: Documents Against Acceptance

D/P
Abbreviation for Documents Against Payment.

Daily price limit
The level within many commodity, futures, and options markets are allowed to rise or fall in a day. Exchanges usually impose a daily price limit on each contract.

Daisy chain
Manipulation of the market by traders to create the illusion of active volume to attract investors.

Date of issue
Used in the context of bonds to refer to the date on which a bond is issued and when interest beings to accrue to the bondholder. Used in the context of stocks to refer to the date trading begins on a new stock issued to the public.

Date of payment
Date dividend checks are mailed.

Date of record
Date on which holders of record in a firm's stock ledger are designated as the recipients of either dividends or stock rights.

Dated date
The date one uses to calculate accrued interest on various debt instruments, specifically bonds.

Dates convention
Treating cash flows as being received on exact dates-date 0, date 1, and so forth-as opposed to the end-of-year convention.

Dating
Credit extension beyond normal terms of a credit supplier.

Dawn raid
A term of British origin used to describe the purchase of all available shares of a target company at the market's open by a raider. A dawn raid is a surprise technique that allows the raider to gain a substantial share of the target company before the target company knows what is happening.

Day around order
A day order that supersedes (cancels and replaces) the previous order by altering its size or price limit.

Day loan
A loan from a bank to a broker prior to the delivery of securities. Upon the delivery of the securities, a day loan becomes a regular broker call loan for which securities serve as collateral.

Day of deposit to day of withdrawal account
A bank account that pays interest according to the number of days that the money is actually on deposit.

Day order
In the context of general equities, request from a customer to either

Day trade
Also known as a "daylight trade." The purchase and sale or the short sale and cover of the same security in a margin account on the same day.

Day trading
Establishing and liquidating the same position or positions within one day's trading.

Days in receivables
Average collection period.

Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.

Days' sales outstanding
Average collection period.

DCF
See: Discounted Cash Flows

DDM
The ISO 4217 currency code for former East Germany Ostmark.

DDM
See: Discounted Dividend Model

DE
The two-character ISO 3166 country code for GERMANY.

De facto
Existing in actual fact although not by official recognition.

Dead cat bounce
A small upmove in a bear market.

Deal flow
In investment banking, the rate at which new deals are referred to a brokerage firm.

Deal stock
Stock subject to merger or acquisition, either publicly announced or rumored.

Dealer
An entity that stands ready and willing to

Dealer loan
Overnight, collateralized loan from a money market bank made to a dealer financing his position by borrowing.

Dealer market
Where traders specializing in particular commodities

Dealer options
Over-the-counter options, such as those offered by government and mortgage-backed securities dealers.

Dealer's spread
See: markdown; underwriting spread.

Dealing desk (Trading desk)
Personnel at an international bank who trade spot and forward foreign exchange.

Dear money
British term for tight money.

Death play
A stock strategy that buys stock on the belief that a key executive will die, the company will be dissolved, and shares will command a higher price at their private market value.

Death Spiral Convertible
Used by companies that are in such bad shape, that there is no other way to get financing. This instrument is similar to a convertible bond, but convertible at a discount to the share price at issuance and for a fixed dollar amount rather than a specific number of shares. The further the stock falls, the more shares you get. Popular in the mid to late 1990s. Also known as toxic convertibles or floorless convertibles.

Death Valley Curve
In venture capital, refers to the period before a new company starts generating revenues, when it is difficult for the company to raise money.

Death-backed bonds
Bonds backed by loans of a policyholder against a life insurance policy. The policyholder will repay the loans while alive or with the benefits from the insurance policy upon death.

Debenture
Any debt obligation backed strictly by the borrower's integrity, e.g. an unsecured bond. A debenture is documented in an indenture.

Debenture bond
An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond and collateral trust bonds.

Debenture stock
A type of stock that makes fixed payments at scheduled intervals of time. Debenture stock differs from a debenture in that it has the status of equity, not debt, in liquidation.

Debit
An expense, or money paid out from an account. A debit transaction is one which the net cost is greater than the net sale proceeds. See also Credit.

Debit balance
The amount that is owed to a broker by a margin customer for loans the customer uses to buy securities.

Debit card
A card that resembles a credit card but which debits a transaction account (checking account) with the transfers occurring contemporaneously with the customer's purchases. A debit card may be machine readable, allowing for the activation of an automated teller machine or other automated payments equipment.

Debit spread
Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a "debit spread." Antithesis of a credit spread.

Debt
Money borrowed.

Debt bomb
A default on debt and obligations by a major financial_institution that disrupts the stability of the economic system.

Debt capacity
Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.

Debt ceiling
See: Debt limit

Debt displacement
The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity.

Debt instrument
An asset requiring fixed dollar payments, such as a government or corporate bond.

Debt leverage
Amplification of the return earned on equity when an investment or firm is financed partially with borrowed money.

Debt limit
The maximum amount that a municipality can borrow.

Debt limitation
A bond covenant that restricts the firm's ability to incur additional indebtedness in some way.

Debt market
The market for trading debt instruments.

Debt outstanding subject to limitation
Obligations incurred by the Treasury subject to the statutory limit set by Congress. Until World War 1, a specific amount of debt was authorized for each separate security issue. Beginning with the Second Liberty Loan Act of 1917, the nature of the limitation was modified until, in 1941, it developed into an overall limit on the outstanding Federal debt. The statuatory limit may change from year to year.

Debt ratio
Total debt divided by total assets.

Debt relief
Reducing the principal and/or interest payments on Less developed country loans.

Debt retirement
The complete repayment of debt. See: Sinking fund.

Debt securities
IOUs created through loan-type transactions-commercial paper, bank CDs, bills, bonds, and other instruments.

Debt service
Interest payment plus repayments of principal to creditors (retirement of debt).

Debt service coverage
The ratio of cash flow available to the borrower to the annual interest and principal payments on a loan or other debt.

Debt service parity approach
Payment alternatives that provide the firm with the exact same schedule of after-tax debt payments (including both interest and principal).

Debt swap
A set of transactions in which a firm buys a country's dollar bank debt at a discount and swaps this debt with the central bank for local currency that it can use to acquire local equity. Also called a debt-equity swap.

Debt-for-equity swap
A swap agreement to exchange equity/returns for debt returns or the converse over a prearranged length of time.

Debt-service coverage ratio
Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate.

Debt/equity ratio
Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.

Debtholder
See: Bondholder

Debtor
Borrower of money.

Debtor in possession
A firm that continues to operate under the Chapter 11 bankruptcy process.

Debtor-in-possession financing
New debt obtained by a firm during the Chapter 11 bankruptcy process, Federal Bankruptcy Rule 4001 (c)(1). This financing is unique because it is secured, that is, it has priority over existing debt, equity and other claims.

Decile rank
Performance over time, rated on a scale of 1-10. 1 indicates that a mutual fund's return is in the top 10% of funds being compared; while 3 means the return is in the top 30%.

Decimal trading
The quotation and trading of stock or bond prices in decimals, as opposed to the quotation of prices in fractions.

Decimalization
The quotation and trading of stock or bond prices in decimals, as opposed to fractions such as eighths.

Decision Break-Point Analysis
A type of sensitivity analysis that indicates the value at which a key variable will result in a negative NPV for an investment project.

Decision tree
Schematic way of representing alternative sequential decisions and the possible outcomes from these decisions.

Declaration
The Board of Directors motion to authorize dividend payments.

Declaration date
The date on which a firm's directors meet and announce the date and amount of the next dividend.

Dedicated capital
Total par value (number of

Dedicating a portfolio
Related: Cash flow matching

Dedication strategy
Refers to multiperiod cash-flow matching.

Deductible
An amount or period which must be deducted before an insurance payout or settlement is calculated.

Deductible contribution
Amount paid into an IRA, an employer-sponsored retirement plan, or other type of retirement plan for a particular tax year that is a deduction from income for tax purposes.

Deduction
An expense that is allowable as a reduction of gross taxable income by the IRS e.g., charity donations.

Deductive reasoning
Using known facts to draw a conclusion about a specific situation.

Deed of trust
See: Indenture

Deep in the money
A call option with an exercise price substantially below the underlying stock's market price. Also put option with an exercise price substantially above the underlying stock's market price. Often substantially below is defined as more than one strike price below (for calls)/above (for puts) the current value of the underlying security.

Deep out of the money
A call option with an exercise price substantially above the market price. Also put option with an exercise price substantially below the underlying stock's market price. Often substantially below is defined as more than one strike price below (for calls)/above (for puts) the current value of the underlying security.

Deep-discount bond
A bond issued with a very low coupon or no coupon that sells at a price far below par value. A bond that has no coupon is called a zero-coupon bond.

Default
The failure to make timely payment of interest or principal on a debt security or to otherwise comply with the provisions of a bond indenture. A breach of a covenant. In context of project financing, a technical default signals a project parameter is outside defined or agreed limits or a legal matter is not yet resolved.

Default interest
A higher interest rate payable after default.

Default premium
A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default. Often the premium is measured as the yield over and above a government bond yield of similar coupon and maturity.

Default risk
The risk that an issuer of a bond may be unable to make timely principal and interest payments. Also referred to as credit risk (as gauged by commercial rating companies).

Defeasance
The setting aside by a borrower of cash or bonds sufficient to service the borrower's debt. Both the borrower's debt and the offsetting cash or bonds are removed from the balance sheet. In securities trading, where a clearing house becomes counterparty to each side of a trade, after the trade has been agreed. This is necessary to facilitate netting, and reduce counterparty risk exposure. The term has become popular recently, because of the growth of central counterparty clearing services in European cash equities markets.

Defensive securities
Low-risk stocks or bonds that will provide a predictable and safe return on an investor's money.

Deferred account
A type of account that delays taxes on that account until some later date. An example is an IRA account.

Deferred annuities
Tax-advantaged life insurance products. Deferred annuities offer deferral of taxes with the option of withdrawing one's funds in the form of a life annuity.

Deferred call
A provision that prohibits the company from calling the bond before a certain date. During this period the bond is said to be call protected.

Deferred charge
An expenditure treated as an asset that carries forward until it becomes pertinent to the business at hand, e.g., the underwriting fees on a corporate bond issue, which the corporation capitalizes as a deferred charge and then amortizes over the life of the bond issue.

Deferred compensation
An amount that has been earned but is not actually paid until a later date, typically through a payment plan, pension, or stock option plan.

Deferred equity
A common term for convertible bonds, which recognizes their equity component and the expectation that the bond will ultimately be converted into

Deferred futures
The most distant months of a futures contract.

Deferred interest bond
A bond that pays interest at a later date, usually in one lump sum, effectively reinvesting interest earned over the life of the bond. See: Zero coupon bond.

Deferred nominal life annuity
A monthly fixed-dollar payment beginning at retirement age. It is nominal because the payment is fixed in a dollar amount at any particular time, up to and including retirement.

Deferred payment annuity
An annuity that stipulates payments be made to the annuitant at a later date, such as when the annuitant reaches a certain age.

Deferred tax expense
A non-cash expense that provides a source of free cash flow. Amount allocated during the period to cover tax liabilities that have not yet been paid.

Deficiency
The amount by which a project's cash flow is not adequate to meet debt service.

Deficiency Agreement
An agreement that calls on the sponsor or another party to provide the shortfall when cash flow, working capital, or revenues are below agreed levels or are insufficient to meet debt service.

Deficiency letter
Notification from the SEC to a prospective issuer of securities that revisions or additions need to be made to the preliminary prospectus.

Deficit
An excess of liabilities over assets, of losses over profits, or of expenditure over income.

Deficit spending
When government spending overwhelms government revenue resulting in government borrowing.

Defined asset fund
A unit investment trust consisting of a fixed portfolio of securities, including blue chips, REITs, or high-yielding stocks on a major exchange such as the NYSE or FTSE.

Defined benefit plan
A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan

Defined contribution plan
A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan

Defined event
The definition applicable to the trigger of a loss in an insurance policy, particularly political risk insurance.

Deflation
Decline in the prices of goods and services. Antithesis of inflation.

Deflator
A statistical factor used to convert current dollar purchasing power into inflation-adjusted purchasing power. Enables the comparison of prices while accounting for inflation in two different time periods.

Delayed issuance pool
Refers to mortgage backed securities (MBS) that at the time of issuance were collateralized by seasoned loans originated prior to the MBS pool issue date.

Delayed opening
Postponement of the start of trading in a stock until correction of a gross imbalance in

Delayed settlement/delivery
In the context of general equities, transaction in which a contract is settled in excess of five full business days. Seller's option. See: Dividend play, settlement.

Delinquency
Failure to make a payment on a debt or obligation by the specified due date.

Delisting
Removal of a company's security from listing on an exchange because the firm has not abided by specific regulations.

Deliver
The sale of a futures or forward contract may require the seller to deliver the commodity during the delivery month, if the short position is not offset prior to that time.

Deliverable bills
The Treasury bills that fulfill a set of guidelines set forth by the exchange on which the bills are traded.

Deliverable instrument
The asset in a forward contract that will be delivered in the future at an agreed-upon price.

Delivered at Frontier (DAF)
Seller must supply the goods at his or her own risk and expense delivered to a named place (usually a border location) by a specified time. The buyer is responsible for the importation. This is normally is used with rail, truck, or multi-modal shipments.

Delivered Duty Paid (DDP)
Seller must supply the goods at his or her own risk and expense to a named place in the country of importation. The seller is responsible for importation, payment of duty, and on carriage to the location agreed upon with the buyer.

Delivered Duty Unpaid (DDU)
Seller fulfills the contract obligations when the goods have arrived at a named place in the importing country. The seller bears all the costs and risk except for import duties and other customs clearance costs.

Delivered Ex Quay (DEQ)
Seller fulfills the contract obligations to deliver when the goods are made available to the buyer at the wharf of the destination port. A DEQ can further specify "Duty Paid" or "Duty Unpaid." If "Duty Paid" is specified, the seller is responsible for all risks and costs, including duty, to the wharf of the destination port. If "Duty Unpaid" is specified, the buyer is to clear the goods and pay duty. Since unloading costs are included in the ocean freight charged by most ship lines. This is most often used for charter shipments.

Delivered Ex Ship (DES)
Seller fulfills the contract obligations when the goods have been made available to the buyer on board a ship at the named port of destination. The seller must bear all costs and risks associated in bringing the goods to the named port of destination. The buyer is responsible for all costs necessary to unload the goods and clear them through customs. Unloading costs are included the ocean freight charged by most ship lines. The DES is most often used for charter shipments.

Delivery
The tender and receipt of an actual commodity or financial instrument in settlement of a futures contract.

Delivery date
Date by which a seller must fulfill the obligations of a forward or futures contract.

Delivery notice
The written notice given by the seller of its intention to make delivery against an open,

Delivery options
The options available to the seller of an interest rate futures contract, including the quality option, the timing option, and the wild card option. Delivery options mean that the buyer is uncertain of which Treasury bond will be delivered or when it will be delivered.

Delivery points
Locations designated by futures exchanges at which the financial instrument or commodity covered by a futures contract may be delivered in fulfillment of such a contract.

Delivery price
The price fixed by the clearinghouse at which deliveries on futures are invoiced; also the price at which the futures contract is settled when deliveries are made.

Delivery versus payment
A in which the buyer's payment for securities is due at transaction the time of delivery (usually to a bank acting as agent for the buyer) upon receipt of the securities. The payment may be made by bank wire, check, or direct credit to an account.

Delphi technique
Collection of independent opinions without group discussion by the analysts providing the opinions; used for various sorts of evaluations (such as country risk assessment).

Delta
The ratio of the change in price of an option to the change in price of the underlying asset. Also called the hedge ratio. Applies to derivative products. For a call option on a stock, a delta of 0.50 means that for every $1.00 that the stock goes up, the option price rises by $0.50. As options near expiration, in-the-money call option contracts approach a delta of 1.0, while in-the-money put options approach a delta of -1. See: hedge ratio, neutral hedge. Call deltas range from 0.00 to +1.00; put deltas range from 0.00 to -1.00. If the call delta is 0.69, the put delta is -0.31 (call delta minus 1 equals put delta; 0.69 -1 =-0.31).

Delta cross-hedge
A futures hedge that has both maturity and currency mismatches with an underlying exposure.

Delta hedge
A dynamic hedging strategy using options that calls for constant adjustment of the number of options used, as a function of the delta of the option.

Delta neutral
Describes value of a portfolio not affected by changes in the value of the asset on which the options are written.

Delta Spread
A ratio spread that is established as a neutral position by utilizing the deltas of the options involved. The neutral ratio is determined by dividing the delta of the purchased option by the delta of the written option. See also Ratio Spread and Delta.

DEM
The ISO 4217 currency code for Deutschemark.

Demand deposits
Checking accounts that pay no interest and from which funds can be withdrawn upon demand.

Demand line of credit
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.

Demand loan
A loan which can be called by the lender at any time and carries no set maturity date.

Demand master notes
Short-term securities that are repayable immediately upon the holder's demand.

Demand shock
An event that affects the demand for goods and services in an economy.

Demand-pull inflation
A theory of inflation or price increases resulting from so-called excess demand. Related: Cost-push inflation.

Denomination
Corresponds to the face value of currency units, coins, and securities. An international transaction may be denominated in US dollars, for example, or in British pounds.

Dependent
Acceptance of a capital budgeting project contingent on the acceptance of another project.

Dependent variable
Term used in regression analysis to represent the element or condition that is dependent on values of one or more other independent variables.

Deposit insurance
See: FDIC: Federal Deposit Insurance Corporation

Depositary
An agent appointed for a Tender or Exchange Offer who accepts certificates from shareholders, processes them and assures that the appropriate cash or new securities are properly remitted to the tendering party.

Depository institution
A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions.

Depository Institutions Deregulation and Monetary Control Act
The 1980 federal legislation that ended the regulation of the banking industry.

Depository preferred
Device enabling an issuer to circumvent an arbitrary corporate limit on the number of preferred shares issuable. Applies mainly to convertible securities.

Depository receipt
See: ADR American Depository Receipt

Depository transfer check (DTC)
Check made out directly by a local bank to a particular firm or person.

Depository Trust and Clearing Corporation (DTCC)
The Depository Trust and Clearing Corporation (DTCC), through its subsidiaries, provides post-trade clearance, settlement, custody and information services for equities, corporate and municipal debt, money market instruments, American depositary receipts, exchange-traded funds, unit investment trusts, mutual funds, insurance products and other securities. The National Securities Clearing Corporation (NSCC) subsidiary, which acts as a central counterparty (CCP), provides trade guarantee, netting and risk management services for equity and debt transactions from all U.S. stock exchanges and markets. The Depository Trust Company(DTC) subsidiary has custody of and provides asset servicing for millions of securities issues of issuers from the U.S. and over 60 other countries. DTC serves as a major clearinghouse for institutional post-trade settlement. DTCC's two subsidiary businesses have Standard and Poors' highest rating: AAA.

Depository Trust Company (DTC)
DTC is the world's largest central securities depository. It accepts deposits of over 2 million equity and debt securities issues (valued at $23 trillion) from over 65 countries for custody, executes book-entry deliveries (valued at over $116 trillion in 2000) records book-entry pledges of those securities, and processes related income distributions DTC is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law, a registered clearing agency with the Securities and Exchange Commission, and is owned by the Depository Trust and Clearing Corporation (DTCC), which is in turn owned primarily by most of the major banks, broker-dealers, and exchanges on Wall Street.

Depreciate
To allocate the purchase cost of an asset over its life.

Depreciated cost
In terms of economics: The measure of capital consumption during production, e.g., machine and equipment wear. In terms of finance: The process of amortization of fixed assets (equipment) to spread the cost over the depreciable life of the assets.

Depreciation
A non-cash expense (also known as non-cash charge) that provides a source of free cash flow. Amount allocated during the period to amortize the cost of acquiring long-term assets over the useful life of the assets. To be clear, this is an accounting expense not a real expense that demands cash. The sum of depreciation expenses of prior years leads to the balance sheet item Accumulated Depreciation.

Depreciation tax shield
The value of the tax write-off on depreciation of plant and equipment.

Depressed market
Market in which supply overwhelms demand, leading to weak and lower prices.

Depressed price
In the context of stocks, stock whose market price is low in comparison to stocks in its sector.

Depression
Period when excess aggregate supply overwhelms aggregate demand, resulting in falling prices, unemployment problems, and economic contraction.

DEQ
Abbreviation for the Incoterm "Delivered Ex Quay."

Deregulation
The reduction of government's role in controlling markets, which lead to freer markets, and presumably a more efficient marketplace.

Derivative
A financial contract whose value is based on, or "derived" from, a traditional security (such as a stock or bond), an asset (such as a commodity), or a market index.

Derivative instruments
Contracts such as options and futures whose price is derived from the price of an underlying financial asset.

Derivative markets
Markets for derivative instruments.

Derivative security
A financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying