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Day order
An order to buy or sell stock that automatically expires if it can't be executed on the day it is entered.
Day trading
Refers to establishing and liquidating the same position
or positions within one day's trading.
Dealer
An entity that stands ready and willing to buy a security
for its own account (at its bid
price) or sell from its own account (at its ask
price).
Dealer options
Over-the-counter options, such as those offered by government and mortgage-backed securities
dealers.
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
.
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
.
Debt instrument
An asset
requiring fixed dollar payments, such as a government or corporate bond
.
Debt market
The market for trading debt instruments.
Decile rank
Performance over time, rated on a scale of 1-10.1 indicates that a mutual fund's return
was in the top 10% of funds being compared, while 3 means the return
was in the top 30%. Objective Rank compares all funds in the same investment strategy category. All Rank compares all funds.
Declaration date
The date on which a firm's directors meet and announce the date and amount of the next dividend
.
Dedicating a portfolio
Related:
cash flow matching
Default risk
Also referred to as credit risk
(as gauged by commercial rating companies), the risk that an issuer
of a bond
may be unable to make timely principal and interest
payments.
Deferred futures
The most distant months of a futures contract
. A bond
that sells at a discount
and does not pay interest
for an initial period, typically from three to seven years. Compare step-up bond and payment-in-kind bond.
Deferred taxes
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.
Defined benefit plan
A pension plan
in which the sponsor agrees to make specified dollar payments to qualifying employees. The pension obligations are effectively the debt obligation of the plan sponsor. Related:
defined contribution plan
Defined contribution plan
A pension plan
in which the sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related:
defined benefit plan
Delivery
The tender
and receipt of an actual commodity
or financial instrument in settlement of a futures contract
.
Delivery notice
The written notice given by the seller of his intention to make delivery
against an open, short futures
position on a particular date. Related:
notice day
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 make the buyer uncertain of which Treasury Bond
will be delivered or when it will be delivered.
Delivery points
Those points designated by futures
exchanges at which the financial instrument or commodity
covered by a futures contract
may be delivered in fulfillment of such contract
.
Delivery price
The price fixed by the Clearing house at which deliveries on futures
are in invoiced; also the price at which the futures contract
is settled when deliveries are made.
Delta
Also called the hedge ratio, the ratio of the change in price of a call option
to the change in price of the underlying stock.
Demand deposits
Checking accounts that pay no interest
and can be withdrawn upon demand. Related:
Negotiable order of withdrawal accounts
Depreciation
A non-cash expense 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.
Derivative instruments
Contracts such as options and futures
whose price is derived from the price of the 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 security
.
Deterministic models
Liability-matching models that assume that the liability
payments and the asset
cash flows are known with certainty. Related:
Compare stochastic models
Detrend
To remove the general drift, tendency or bent of a set of statistical data as related to time.
Difference from S&P
A mutual fund's return
minus the change in the Standard & Poors 500 Index for the same time period. A notation of -5. 00 means the fund return was 5 percentage points less than the gain in the S&P, while 0. 00 means that the fund and the S&P had the same return.
Differential disclosure
The practice of reporting conflicting or markedly different information in official corporate statements including annual and quarterly reports and the 10-Ks and 10-Qs.
Diffusion process
A conception of the way a stock's price changes that assumes that the price takes on all intermediate values. dirty price. Related:
full price
Disclaimer of opinion
An auditor's statement disclaiming any opinion regarding the company's financial condition.
Discount
Referring to the selling price of a bond, a price below its par value
. Related:
premium
Discount rate
The interest
rate that the Federal Reserve charges a bank to borrow funds when a bank is temporarily short of funds. Collateral is necessary to borrow, and such borrowing is quite limited because the Fed views it as a privilege to be used to meet short-term liquidity
needs, and not a device to increase earnings
.
Discretionary account
Accounts over which an individual or organization, other than the person in whose name the account is carried, exercises trading authority or control.
Distributions
Payments from fund or corporate cash flow
. May include dividends from earnings, capital gains from sale of portfolio
holdings and return
of capital. Fund distributions
can be made by check or by investing in additional shares
. Funds are required to distribute capital gains (if any) to shareholders at least once per year. Some Corporations offer Dividend Reinvestment Plans (DRP).
Divergence
When two or more averages or indices fail to show confirming trends.
Diversifiable risk
Related:
unsystematic risk
Dividend
A dividend is a portion of a company's profit paid to common and preferred shareholders. A stock selling for $20 a share with an annual dividend of $1 a share yields the investor
5%.
Dividend Discount Model (DDM)
A model for valuing the common-stock of a company, based on the present value of the expected cash flows.
Dividend rate
The fixed or floating rate paid on preferred stock
based on par value
.
Dividend Reinvestment Plan (DRP)
Automatic reinvestment of shareholder dividends in more shares
of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount
to market price. Dividend
reinvestment plans allow shareholders to accumulate stock over the Long term using dollar cost averaging. The DRP is usually administered by the company without charges to the holder.
Dividend yield (Funds)
Indicated yield
represents return
on a share of a mutual fund
held over the past 12 months. Assumes fund was purchased 1 year ago. Reflects effect of sales charges (at current rates), but not redemption charges.
Dividend yield (Stocks)
Indicated yield
represents annual dividends divided by current stock price.
Dividends per share
Dividends paid for the past 12 months divided by the number of common shares
outstanding, as reported by a company. The number of shares
often is determined by a weighted average of shares outstanding over the reporting term.
Dollar duration
The product of modified duration
and the initial price.
Dollar return
The return
realized on a portfolio
for any evaluation period, including (1) the change in market value of the portfolio and (2) any distributions
made from the portfolio during that period.
Dollar safety margin
The dollar equivalent of the safety cushion
for a portfolio
in a contingent immunization
strategy.
Dollar-weighted rate of return
Also called the internal rate of return, the interest
rate that will make the present value of the cash flows from all the subperiods in the evaluation period
plus the terminal market value of the portfolio
equal to the initial market value of the portfolio
.
Domestic market
Part of a nation's internal market
representing the mechanisms for issuing and trading securities of entities domiciled within that nation. Compare external market
and foreign market
.
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on the New York stock exchange. The Dow, as it is called, is a barometer of how shares
of the largest U.S.companies are performing. There are thousands of investment indexes around the world for stocks, bonds, currencies and commodities.
Downgrade
A classic negative change in ratings for a stock, and or other rated security
.
Dual-currency issues
Eurobonds that pay coupon
interest
in one currency but pay the principal in a different currency.
Duration
A common gauge of the price sensitivity of an asset
or portfolio
to a change in interest
rates.
Dynamic asset allocation
An asset
allocation strategy in which the asset mix is mechanistically shifted in response to -changing market conditions, as in a portfolio
insurance strategy, for example.
Dynamic hedging
A strategy that involves rebalancing hedge positions as market conditions change; a strategy that seeks to insure the value of a portfolio
using a synthetic put option
.
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