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Financial Terms | |
Security market line |
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Definition of Security market lineSecurity market lineline representing the relationship between expected return and market risk. Security Market LineA graph illustrating the equilibrium relationship between the security market lineRelationship between expected return and beta.
Related Terms:Security deposit (maintenance)Related: Maintenance margin security market line (SML). A description of 45-Degree LineA line representing equilibrium in the goods and services market, on a diagram with aggregate demand on the vertical axis and aggregate supply on the horizontal axis. Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts Auction marketsmarkets in which the prevailing price is determined through the free interaction of Available-for-Sale SecurityA debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period. ![]() Bank lineline of credit granted by a bank to a customer. Bear marketAny market in which prices are in a declining trend. bear marketA market in which stock or bond prices are generally Bear MarketA prolonged period of falling stock market prices. Black marketAn illegal market. bottom lineA commonly used term that refers to the net income (profit) Brokered marketA market where an intermediary offers search services to buyers and sellers. Bull marketAny market in which prices are in an upward trend. bull marketA market in which stock or bond prices are generally rising. ![]() Bull MarketA prolonged period of rising stock market prices. Bulldog marketThe foreign market in the United Kingdom. Capital marketThe market for trading long-term debt instruments (those that mature in more than one year). Capital marketThe market in which investors buy and sell shares of companies, normally associated with a Stock Exchange. Capital MarketA market that specializes in trading long-term, relatively high risk Capital MarketThe market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded. Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Capital market imperfections viewThe view that issuing debt is generally valuable but that the firm's Capital market line (CML)The line defined by every combination of the risk-free asset and the market portfolio. capital marketsmarkets for long-term financing. Cash flow time-lineline depicting the operating activities and cash flows for a firm over a particular period. ![]() Cash marketsAlso called spot markets, these are markets that involve the immediate delivery of a security Characteristic lineThe market model applied to a single security. The slope of the line is a security's beta. Common marketAn agreement between two or more countries that permits the free movement of capital Common stock marketThe market for trading equities, not including preferred stock. Complete capital marketA market in which there is a distinct marketable security for each and every Convertible securityA security that can be converted into common stock at the option of the security holder, Corner A MarketTo purchase enough of the available supply of a commodity or stock in order to Dealer marketA market where traders specializing in particular commodities buy and sell assets for their Debt marketThe market for trading debt instruments. Debt SecurityA security representing a debt relationship with an enterprise, including a government Demand line of creditA bank line of credit that enables a customer to borrow on a daily or on-demand basis. Derivative marketsmarkets for derivative instruments. Derivative securityA financial security, such as an option, or future, whose value is derived in part from the Direct search marketBuyers and sellers seek each other directly and transact directly. DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. Domestic marketPart of a nation's internal market representing the mechanisms for issuing and trading Efficient capital marketA market in which new information is very quickly reflected accurately in share efficient capital marketsFinancial markets in which security prices rapidly reflect all relevant information about asset values. Efficient Market HypothesisIn general the hypothesis states that all relevant information is fully and Efficient Markets HypothesisThe hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security. Either-way marketIn the interbank Eurodollar deposit market, an either-way market is one in which the bid Emerging marketsThe financial markets of developing economies. Employee Retirement Income Security Act of 1974 (ERISA)A federal Act that sets minimum operational and funding standards for employee benefit Equilibrium market price of riskThe slope of the capital market line (CML). Since the CML represents the Equity marketRelated:Stock market Equity SecurityAn ownership interest in an enterprise, including preferred and common stock. Euro lineslines of credit granted by banks (foreign or foreign branches of U.S. banks) for Eurocurrencies. Eurocurrency marketThe money market for borrowing and lending currencies that are held in the form of Excess return on the market portfolioThe difference between the return on the market portfolio and the Exchangeable Securitysecurity that grants the security holder the right to exchange the security for the External marketAlso referred to as the international market, the offshore market, or, more popularly, the Fair market priceAmount at which an asset would change hands between two parties, both having Fair market valueThe price that an asset or service will fetch on the open market. Fair Market ValueThe highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact. Farm Improvement and Marketing Cooperatives Loans ActSee here Federal funds marketThe market where banks can borrow or lend reserves, allowing banks temporarily Federal Open Market Committee (FOMC)Fed committee that makes decisions about open-market operations. Financial marketAn organized institutional structure or mechanism for creating and exchanging financial assets. financial marketsmarkets in which financial assets are traded. Fixed-dollar securityA nonnegotiable debt security that can be redeemed at some fixed price or according to Fixed-income marketThe market for trading bonds and preferred stock. Fixed-income securityA security that pays a specified cash flow over a floating-rate securitysecurity paying dividends or interest that vary with short-term interest rates. Foreign banking marketThat portion of domestic bank loans supplied to foreigners for use abroad. Foreign bond marketThat portion of the domestic bond market that represents issues floated by foreign Foreign equity marketThat portion of the domestic equity market that represents issues floated by foreign companies. Foreign Exchange MarketA worldwide market in which one country's currency is bought or sold in exchange for another country's currency. Foreign marketPart of a nation's internal market, representing the mechanisms for issuing and trading Foreign market betaA measure of foreign market risk that is derived from the capital asset pricing model. Formalized Line of CreditA contractual commitment to make loans to a particular borrower up to a specified maximum during a specified period, usually one year. Forward Exchange MarketA market in which foreign exchange can be bought or sold for delivery (and payment) at some specified future date but at a price agreed upon now. Forward marketA market in which participants agree to trade some commodity, security, or foreign Fourth marketDirect trading in exchange-listed securities between investors without the use of a broker. Futures marketA market in which contracts for future delivery of a commodity or a security are bought or sold. Gray marketPurchases and sales of eurobonds that occur before the issue price is finally set. Held-to-Maturity SecurityA debt security for which the investing entity has both the positive Host securityThe security to which a warrant is attached. Hybrid securityA convertible security whose optioned common stock is trading in a middle range, causing Index and Option Market (IOM)A division of the CME established in 1982 for trading stock index Intermarket sectorspread The spread between the interest rate offered in two sectors of the bond market for Intermarket spread swapsAn exchange of one bond for another based on the manager's projection of a Internal marketThe mechanisms for issuing and trading securities within a nation, including its domestic Internally efficient marketOperationally efficient market. International marketRelated: See external market. International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Intramarket sector spreadThe spread between two issues of the same maturity within a market sector. For Inverted marketA futures market in which the nearer months are selling at price premiums to the more Investment product line (IPML)The line of required returns for investment projects as a function of beta line employeean employee who is directly responsible for Line itemGeneric types of assets, liabilities, income or expense that are common to all businesses and Line of credit An informal arrangement between a bank and a customer establishing a maximum loan Line of creditAn informal arrangement between a bank and a customer establishing a maximum loan Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |