Financial Terms

Main Page



Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.


Main Page: accounting, financial advisor, inventory control, money, tax advisor, investment, payroll, stock trading,


Also see related: property, financing, home financing, first time homebuyer, home, real estate, homebuying, credit, home buyer,

Definition of EDGAR

EDGAR Image 1


The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit
company documents such as 10-Ks, 10-Qs, quarterly reports, and other SEC filings, to investors.

Related Terms:

American Stock Exchange (AMEX)

The SECond-largest stock Exchange in the United States. It trades
mostly in small-to medium-sized companies.

Asset-backed security

A SECurity that is collateralized by loans, leases, receivables, or installment contracts
on personal property, not real estate.

Beta equation (Stocks)

The beta of a stock is determined as follows:
[(n) (sum of (xy)) ]-[(sum of x) (sum of y)]
[(n) (sum of (xx)) ]-[(sum of x) (sum of x)]
where: n = # of observations (24-60 months)
x = rate of return for the S&P 500 Index
y = rate of return for the stock

Bill of exchange

General term for a document demanding payment.

Blue-chip company

Large and creditworthy company.

Book-entry securities

The Treasury and federal agencies are moving to a book-entry system in which SECurities are not represented by engraved pieces of paper but are maintained in computerized records at the
Fed in the names of member banKs, which in turn keep records of the SECurities they own as well as those they
are holding for customers. In the case of other SECurities where a book-entry has developed, engraved
SECurities do exist somewhere in quite a few cases. These SECurities do not move from holder to holder but are
usually kept in a central clearinghouse or by another agent.

Chicago Mercantile Exchange (CME)

A not-for-profit corporation owned by its members. Its primary
functions are to provide a location for trading futures and options, collect and disseminate market information,
maintain a clearing mechanism and enforce trading rules.

EDGAR Image 1


The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or
their dollar value. In 1975, deregulation led to the creation of discount brokers, who charge lower
Commissions than full service brokers. Full service brokers offer advice and usually have a full staff of
analysts who follow specific industries. Discount brokers simply execute a client's order -- and usually do not
offer an opinion on a stock. Also known as a round-turn.

Commission broker

A broker on the floor of an Exchange acts as agent for a particular brokerage house and
who buys and sells stocKs for the brokerage house on a Commission basis.

Commission house

A firm which buys and sells future contracts for customer accounts. Related: futures
Commission merchant, omnibus account.

Commodities Exchange Center (CEC)

The location of five New York futures Exchanges: Commodity
Exchange, Inc. (COMEX), the New York Mercantile Exchange (NYMEX), the New York Cotton Exchange,
the Coffee, Sugar and Cocoa Exchange (CSC), and the New York futures Exchange (NYFE). common size
statement A statement in which all items are expressed as a percentage of a base figure, useful for purposes of
analyzing trends and the changing relationship between financial statement items. For example, all items in
each year's income statement could be presented as a percentage of net sales.

Common stock/other equity

Value of outstanding common shares at par, plus accumulated retained
earnings. Also called shareholders' equity.

Company-specific risk

Related: Unsystematic risk

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.

Convertible exchangeable preferred stock

Convertible preferred stock that may be Exchanged, at the
issuer's option, into convertible bonds that have the same conversion features as the convertible preferred

Convertible security

A SECurity that can be converted into common stock at the option of the SECurity holder,
including convertible bonds and convertible preferred stock.

EDGAR Image 2

Cost company arrangement

Arrangement whereby the shareholders of a project receive output free of
charge but agree to pay all operating and financing charges of the project.

Cross-sectional approach

A statistical methodology applied to a set of firms at a particular point in time.

Customized benchmarks

A benchmark that is designed to meet a client's requirements and long-term

Debt securities

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

Depository Trust Company (DTC)

DTC is a user-owned SECurities depository which accepts deposits of
eligible SECurities for custody, executes book-entry deliveries and records book-entry pledges of SECurities in
its custody, and provides for withdrawals of SECurities from its custody.

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.

Discount securities

Non-interest-bearing money market instruments that are issued at a discount and
redeemed at maturity for full face value, e.g. U.S. Treasury bills.

Dividend yield (Stocks)

Indicated yield represents annual dividends divided by current stock price.

Electronic data interchange (EDI)

The Exchange of information Electronically, directly from one firm's
computer to another firm's computer, in a structured format.

Electronic depository transfers

The transfer of funds between bank accounts through the Automated
Clearing House (ACH) system.


The marketplace in which shares, options and futures on stocKs, bonds, commodities and indices
are traded. Principal US stock Exchanges are: New York Stock Exchange (NYSE), American Stock Exchange
(AMEX) and the National Association of SECurities Dealers (NASDAQ)

The Exchange

A nickname for the New York stock Exchange. Also known as the Big Board. More than
2,000 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 controls

Governmental restrictions on the purchase of foreign currencies by domestic citizens or
on the purchase of the local domestic currency by foreigners.

Exchange of assets

Acquisition of another company by purchase of its assets in Exchange for cash or stock.

Exchange of stock

Acquisition of another company by purchase of its stock in Exchange for cash or shares.

Exchange offer

An offer by the firm to give one SECurity, such as a bond or preferred stock, in Exchange for
another SECurity, such as shares of common stock.

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 of an investment's value changing 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.

Exchangeable Security

SECurity that grants the SECurity holder the right to Exchange the SECurity for the
common stock of a firm other than the issuer of the SECurity.

Exempt securities

Instruments exempt from the registration requirements of the SECurities Act of 1933 or the
margin requirements of the SEC Act of 1934. such SECurities include government bonds, agencies, munis,
commercial paper, and private placements.

Federal agency securities

SECurities issued by corporations and agencies created by the U.S. government,
such as the Federal Home Loan Bank Board and Ginnie Mae.

Federal Home Loan Banks

The institutions that regulate and lend to savings and loan associations. The
Federal Home Loan BanKs play a role analogous to that played by the Federal Reserve BanKs vis-à-vis
member commercial banKs.

Fixed-dollar security

A nonnegotiable debt SECurity that can be redeemed at some fixed price or according to
some schedule of fixed values, e.g., bank deposits and government savings bonds.

Fixed-exchange rate

A country's decision to tie the value of its currency to another country's currency, gold
(or another commodity), or a basket of currencies.

Floating exchange rate

A country's decision to allow its currency value to freely change. The currency is not
constrained by central bank intervention and does not have to maintain its relationship with another currency
in a narrow band. The currency value is determined by trading in the foreign Exchange market.

Foreign exchange

Currency from another country.

Foreign exchange controls

Various forms of controls imposed by a government on the purchase/sale of
foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

Foreign exchange dealer

A firm or individual that buys foreign Exchange from one party and then sells it to
another party. The dealer makes the difference between the buying and selling prices, or spread.

Foreign exchange risk

The risk that a long or short position in a foreign currency might have to be closed out
at a loss due to an adverse movement in the currency rates.

Foreign exchange swap

An agreement to Exchange stipulated amounts of one currency for another currency
at one or more future dates.

Forward exchange rate

Exchange rate fixed today for exchanging currency at some future date.

Futures commission merchant

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 margin any resulting trades
or contracts. The FCM must be licensed by the CFTC. Related: Commission house , omnibus account

Gold exchange standard

A system of fixing Exchange rates adopted in the Bretton Woods agreement. It
involved the U.S. pegging the dollar to gold and other countries pegging their currencies to the dollar.

Government securities

Negotiable U.S. Treasury SECurities.

Historical exchange rate

An accounting term that refers to the Exchange rate in effect when an asset or
liability was acquired.

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.

Host security

The SECurity to which a warrant is attached.

Hybrid security

A convertible SECurity whose optioned common stock is trading in a middle range, causing
the convertible SECurity to trade with the characteristics of both a fixed-income SECurity and a common stock

Institutional investors

Organizations that invest, including insurance companies, depository institutions,
pension funds, investment companies, mutual funds, and endowment funds.

Intercompany loan

Loan made by one unit of a corporation to another unit of the same corporation.

Intercompany transaction

Transaction carried out between two units of the same corporation.

Intermarket sector

spread The spread between the interest rate offered in two SECtors of the bond market for
issues of the same maturity.

Intramarket sector spread

The spread between two issues of the same maturity within a market SECtor. For
instance, the difference in interest rates offered for five-year industrial corporate bonds and five-year utility
corporate bonds.

Listed stocks

StocKs that are traded on an Exchange.

London International Financial Futures Exchange (LIFFE)

A London Exchange where Eurodollar futures
as well as futures-style options are traded.

Listed stocks

StocKs that are traded on an Exchange.

London International Financial Futures Exchange (LIFFE)

London Exchange where Eurodollar futures as well as futures-style options are traded.

Manufactured housing securities (MHSs)

Loans on manufactured homes - that is, factory-built or
prefabricated housing, including mobile homes.

Margin account (Stocks)

A leverageable account in which stocKs can be purchased for a combination of
cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock
drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin
rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

Market sectors

The classifications of bonds by issuer characteristics, such as state government, corporate, or utility.

Money center banks

BanKs that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.

Monthly income preferred security (MIP)

Preferred stock issued by a subsidiary located in a tax haven.
The subsidiary relends the money to the parent.

Mortgage pass-through security

Also called a passthrough, a SECurity created when one or more mortgage
holders form a collection (pool) of mortgages sells shares or participation certificates in the pool. The cash
flow from the collateral pool is "passed through" to the SECurity holder as monthly payments of principal,
interest, and prepayments. This is the predominant type of MBS traded in the SECondary market.

Mortgage-Backed Securities Clearing Corporation

A wholly owned subsidiary of the Midwest Stock
Exchange that operates a clearing service for the comparison, netting, and margining of agency-guaranteed
MBSs transacted for forward delivery.

Mortgage-backed securities

SECurities backed by a pool of mortgage loans.

New York Stock Exchange (NYSE)

Also known as the Big Board or The Exhange. More than 2,00 common
and preferred stocKs are traded. The Exchange is the older in the United States, founded in 1792, and the
largest. It is lcoated on Wall Street in New York City

Nominal exchange rate

The actual foreign Exchange quotation in contrast to the real Exchange rate that has
been adjusted for changes in purchasing power.

Organized exchange

A SECurities marketplace wherein purchasers and sellers regularly gather to trade
SECurities according to the formal rules adopted by the Exchange.

Other capital

In the balance of payments, other capital is a residual category that groups all the capital
transactions that have not been included in direct investment, portfolio investment, and reserves categories. It
is divided into long-term capital and short-term capital and, because of its residual status, can differ from
country to country. Generally speaking, other long-term capital includes most non-negotiable instruments of a
year or more like bank loans and mortgages. other short-term capital includes financial assets of less than a
year such as currency, deposits, and bills.

Other current assets

Value of non-cash assets, including prepaid expenses and accounts receivable, due
within 1 year.

Other long term liabilities

Value of leases, future employee benefits, deferred taxes and other obligations
not requiring interest payments that must be paid over a period of more than 1 year.

Other sources

Amount of funds generated during the period from operations by sources other than
depreciation or deferred taxes. Part of Free cash flow calculation.

Pass-through securities

A pool of fixed-income SECurities backed by a package of assets (i.e. mortgages)
where the holder receives the principal and interest payments. Related: mortgage pass-through SECurity

Philadelphia Stock Exchange (PHLX)

A SECurities Exchange where American and European foreign
currency options on spot Exchange rates are traded.

Posttrade benchmarks

Prices after the decision to trade.

Preauthorized checks (PACs)

hecKs that are authorized by the payer in advance and are written either by
the payee or by the payee's bank and then deposited in the payee's bank account.

Preauthorized electronic debits (PADs)

Debits to its bank account in advance by the payer. The payer's
bank sends payment to the payee's bank through the _ACH)Automated Clearing House (ACH) system.

Pre-trade benchmarks

Prices occurring before or at the decision to trade.

Primitive security

An instrument such as a stock or bond for which payments depend only on the financial
status of the issuer.

Project loan securities

SECurities backed by a variety of FHA-insured loan types - primarily multi-family
apartment buildings, hospitals, and nursing homes.

Public Securities Administration (PSA)

The trade association for primary dealers in U.S. government
SECurities, including MBSs.

Real exchange rates

Exchange rates that have been adjusted for the inflation differential between two countries.

Retail investors, individual investors

Small investors who commit capital for their personal account.


The SECurities and Exchange Commission, the primary federal regulatory agency of the SECurities

Second pass regression

A cross-SECtional regression of portfolio returns on betas. The estimated slope is the
measurement of the reward for bearing systematic risk during the period analyzed.

Secondary issue

1) Procedure for selling blocKs of seasoned issues of stocKs.
2) More generally, sale of already issued stock.

Secondary market

The market where SECurities are traded after they are initially offered in the primary
market. Most trading is done in the SECondary market. The New York stock Exchange, as well as all other stock Exchanges, the bond markets, etc., are SECondary markets. Seasoned SECurities are traded in the
SECondary market.


Refers to a group of SECurities that are similar with respect to maturity, type, rating, industry, and/or coupon.

Section 482

United States Department of Treasury regulations governing transfer prices.

Secured debt

Debt that, in the event of default, has first claim on specified assets.

Securities & Exchange Commission

The SEC is a federal agency that regulates the markets.

Securities analysts

Related:financial analysts







Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.

Copyright© 2024