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Financial Terms | |
Buy |
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Definition of BuyBuyTo purchase an asset; taking a long position.
Related Terms:Builder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the Buy-and-hold strategyA passive investment strategy with no active buying and selling of stocks from the Buy-backAnother term for a repo. Buy inTo cover, offset or close out a short position. Related: evening up, liquidation. Buy limit orderA conditional trading order that indicates a security may be purchased only at the designated Buy on closeTo buy at the end of the trading session at a price within the closing range. Buy on marginA transaction in which an investor borrows to buy additional shares, using the shares ![]() Buy on openingTo buy at the beginning of a trading session at a price within the opening range. Buy/Sell AgreementThis is an agreement entered into by the owners of a business to define the conditions under which the interests of each shareholder will be bought and sold. The agreement sets the value of each shareholders interest and stipulates what happens when one of the owners wishes to dispose of his/her interest during his/her lifetime as well as disposal of interest upon death or disability. Life insurance, critical illness coverage and disability insurance are major considerations to help fund this type of agreement. Buy-side analystA financial analyst employed by a non-brokerage firm, typically one of the larger money BuydownsMortgages in which monthly payments consist of principal and interest, with portions of these Buying the indexPurchasing the stocks in the S&P 500 in the same proportion as the index to achieve the BuyoutPurchase of a controlling interest (or percent of shares) of a company's stock. A leveraged buy-out is Conditional BuyerOne of two parties to a conditional sale agreement, the other being the conditional seller. Equity Buy-BackRefers to the investors percentage ownership of a company that can be re-acquired by the company, usually at a pre-determined amount. Forward buyingThe purchase of items exceeding the quantity levels indicated Leveraged buyoutThe purchase of one business entity by another, largely using borrowed Leveraged buyout (LBO)A transaction used for taking a public corporation private financed through the use leveraged buyout (LBO)Acquisition of the firm by a private group using substantial borrowed funds. make-or-buy decisiona decision that compares the cost of Management buyout (MBO)Leveraged buyout whereby the acquiring group is led by the firm's management. management buyout (MBO)Acquisition of the firm by its own management in a leveraged buyout. Protective put buying strategyA strategy that involves buying a put option on the underlying security that is Swap buy-backThe sale of an interest rate swap by one counterparty to the other, effectively ending the swap. 48-hour ruleThe requirement that all pool information, as specified under the PSA Uniform Practices, in a accounts payableShort-term, non-interest-bearing liabilities of a business Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the Adjusted present value (APV)The net present value analysis of an asset if financed solely by equity AnalystEmployee of a brokerage or fund management house who studies companies and makes buy-and-sell ArbitrageThe simultaneous buying and selling of a security at two different prices in two different markets, Arm's length priceThe price at which a willing buyer and a willing unrelated seller would freely agree to AskThis is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically speaking, this Auction marketsMarkets in which the prevailing price is determined through the free interaction of Back feeThe fee paid on the extension date if the buyer wishes to continue the option. Balanced mutual fundThis is a fund that buys common stock, preferred stock and bonds. The same as a Barrier optionsContracts with trigger points that, when crossed, automatically generate buying or selling of Basket optionsPackages that involve the exchange of more than two currencies against a base currency at Bid priceThis is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically BidderA firm or person that wants to buy a firm or security. Block houseBrokerage firms that help to find potential buyers or sellers of large block trades. BondBonds are debt and are issued for a period of more than one year. The U.S. government, local Bought dealSecurity issue where one or two underwriters buy the entire issue. BreakoutA rise in a security's price above a resistance level (commonly its previous high price) or drop BrokerAn agent who handles public orders to buy or sell financial assets. Brokered marketA market where an intermediary offers search services to buyers and sellers. Bull spreadA spread strategy in which an investor buys an out-of-the-money put option, financing it by CallAn option that gives the right to buy the underlying futures contract. Call a. An option to buy a certain quantity of a stock or commodity for a Call OptionA contract that gives the holder the right to buy an asset for a call optionRight to buy an asset at a specified exercise price on or before the exercise date. Call provisionAn embedded option granting a bond issuer the right to buy back all or part of the issue prior Call swaptionA swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The Callable bondA bond that allows the issuer to buy back the bond at a Capital marketThe market in which investors buy and sell shares of companies, normally associated with a Stock Exchange. Channel StuffingShipments of product to distributors who are encouraged to overbuy under Cheapest to deliver issueThe acceptable Treasury security with the highest implied repo rate; the rate that a Circular FlowIncome payments to factors of production are spent to buy output. The receipts from these sales are used to pay factors of production, creating a circular flow of income. ClearA trade is carried out by the seller delivering securities and the buyer delivering funds in proper form. Commission brokerA broker on the floor of an exchange acts as agent for a particular brokerage house and Commission houseA firm which buys and sells future contracts for customer accounts. Related: futures CommodityA commodity is food, metal, or another physical substance that investors buy or sell, usually via Conditional Sale AgreementAn agreement entered into between a conditional buyer and a conditional seller setting out the terms under which goods change hands. Conditional SellerOne of two parties to a conditional sale agreement, the other being the conditional buyer. ContractA term of reference describing a unit of trading for a financial or commodity future. Also, the actual Counterparty riskThe risk that the other party to an agreement will default. In an options contract, the risk Coupon rateThe nominal interest rate that the issuer promises to pay the Covered or hedge option strategiesStrategies that involve a position in an option as well as a position in the Creditbuying or selling goods or services now with the intention of payment following at some time in Currency arbitrageTaking advantage of divergences in exchange rates in different money markets by Currency optionAn option to buy or sell a foreign currency. Day orderAn order to buy or sell stock that automatically expires if it can't be executed on the day it is entered. DealerAn entity that stands ready and willing to buy a security for its own account (at its bid price) or sell DealerA person or firm in the financial asset business who buys for his or her own account and then resells to customers, in contrast to a broker, who buys only on behalf of a customer. Dealer marketA market where traders specializing in particular commodities buy and sell assets for their Debt swapA set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank Delivery optionsThe options available to the seller of an interest rate futures contract, including the quality Delivery versus paymentA transaction in which the buyer's payment for securities is due at the time of DerivativeA financial instrument that is based on some underlying asset. Detachable warrantA warrant entitles the holder to buy a given number of shares of stock at a stipulated Direct quoteFor foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency. Direct search marketbuyers and sellers seek each other directly and transact directly. Dirty priceBond price including accrued interest, i.e., the price paid by the bond buyer. Discounting of Accounts ReceivableShort-term financing in which accounts receivable are used as collateral to secure a loan. The lender does not buy the accounts receivable but simply uses them as collateral for the loan. Also called pledging of accounts receivable. Dollar Cost AveragingA way of smoothing out your investment deposits by investing regularly. Instead of making one large deposit a year into your RRSP, you make smaller regular monthly deposits. If you are buying units in a mutual fund or segregated equity fund, you would end up buying more units in the month that values were low and less units in the month that values were higher. By spreading out your purchases, you don't have to worry about buying at the right time. dual pricing arrangementa transfer pricing system that allows Due billAn instrument evidencing the obligation of a seller to deliver securities sold to the buyer. economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. Employee stock ownership plan (ESOP)A company contributes to a trust fund that buys stock on behalf of Equity optionsSecurities that give the holder the right to buy or sell a specified number of shares of stock, at equivalent annual costThe cost per period with the same present value as the cost of buying and operating a machine. Evening upbuying or selling to offset an existing market position. Ex-dividendThis literally means "without dividend." The buyer of shares when they are quoted ex-dividend Ex-dividend dateThe first day of trading when the seller, rather than the buyer, of a stock will be entitled to ExecutionThe process of completing an order to buy or sell securities. Once a trade is executed, it is reported ExerciseTo implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of Exercise priceThe price set for buying an asset (call) or selling an asset (put). Exercising the optionThe act buying or selling the underlying asset via the option contract. ExpensesThe costs incurred in buying, making or producing goods and services. Extension swapExtending maturity through a swap, e.g. selling a 2-year note and buying one with a slightly Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |