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Definition of Security
Piece of paper that proves ownership of stocks, bonds and other investments.
Either the collateral on a loan, or some type of equity ownership or debt, such
A share or an interest in a property or an enterprise such as a stock certificate or a bond.
Collateral offered by a borrower to a lender to secure a loan.
A security that is collateralized by loans, leases, receivables, or installment contracts
A security that can be converted into common stock at the option of the security holder,
A financial security, such as an option, or future, whose value is derived in part from the
security that grants the security holder the right to exchange the security for the
A nonnegotiable debt security that can be redeemed at some fixed price or according to
The security to which a warrant is attached.
A convertible security whose optioned common stock is trading in a middle range, causing
Preferred stock issued by a subsidiary located in a tax haven.
Also called a passthrough, a security created when one or more mortgage
An instrument such as a stock or bond for which payments depend only on the financial
A plot of the excess return on a security over the risk-free rate as a function of
Synonymous with the term margin. A cash amount of funds that must be deposited
Related: Maintenance margin security market line (SML). A description of
Line representing the relationship between expected return and market risk.
Choosing the particular securities to include in a portfolio.
Options: the security subject to being purchased or sold upon exercise of an option
Variable price security
A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.
Security Market Line
A graph illustrating the equilibrium relationship between the
A security that pays a specified cash flow over a
An easily traded investment, such as treasury bills, which is
security paying dividends or interest that vary with short-term interest rates.
security market line
Relationship between expected return and beta.
Employee Retirement Income Security Act of 1974 (ERISA)
A federal Act that sets minimum operational and funding standards for employee benefit
Social Security Act of 1935
A federal Act establishing Old Age and Survivorâ€™s
A 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.
A security representing a debt relationship with an enterprise, including a government
An ownership interest in an enterprise, including preferred and common stock.
A debt security for which the investing entity has both the positive
A debt or equity security for which there is no posted price or bidand-
A debt or equity security bought and held for sale in the near term to generate income on short-term price changes.
The monetary value placed on security by a lender in determining the extent to which it can make loans against such security.
An arrangement whereby a security issue is canceled if the underwriter is unable
The simultaneous buying and selling of a security at two different prices in two different markets,
A dealer's price to sell a security; also called the offer price.
The receipt of an exercise notice by an options writer that requires the writer to sell (in the case
An option is at-the-money if the strike price of the option is equal to the market price of the
1) When bond yields and prices fall, the market is said to back-up.
Regarding a futures contract, the difference between the cash price and the futures price observed in the
Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically
A firm or person that wants to buy a firm or security.
With respect to convertible bonds, the value the security would have if it were not convertible
security issue where one or two underwriters buy the entire issue.
A rise in a security's price above a resistance level (commonly its previous high price) or drop
security prices sometimes move wildly above their true values.
Bond whose principal repayment is linked to the price of another security. The bonds are
Buy limit order
A conditional trading order that indicates a security may be purchased only at the designated
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
Cash and carry
Purchase of a security and simultaneous sale of a future, with the balance being financed
A short-term security that is sufficiently liquid that it may be considered the financial
Also called spot markets, these are markets that involve the immediate delivery of a security
The market model applied to a single security. The slope of the line is a security's beta.
Cheapest to deliver issue
The acceptable Treasury security with the highest implied repo rate; the rate that a
Collateral trust bonds
A bond in which the issuer (often a holding company) grants investors a lien on
Collateralized mortgage obligation (CMO)
A security backed by a pool of pass-throughs , structured so that
The combination of all of the individual opinions about a stock's or security's value.
These are securities that represent equity ownership in a company. Common shares let an
Common stock equivalent
A convertible security that is traded like an equity issue because the optioned
Complete capital market
A market in which there is a distinct marketable security for each and every
Also called private-label pass-throughs, any mortgage pass-through security not
The percentage by which the conversion price in a convertible security exceeds the
The contractually specified price per share at which a convertible security can be
The number of shares of common stock that the security holder will receive from
Also called parity value, the value of a convertible security if it is converted immediately.
An entity that stands ready and willing to buy a security for its own account (at its bid price) or sell
Failure to make timely payment of interest or principal on a debt security or to otherwise comply
Similar to the reverse repurchase agreement - a simultaneous agreement to sell a security held in a
A classic negative change in ratings for a stock, and or other rated security.
Effective annual yield
Annualized interest rate on a security computed using compound interest techniques.
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
An option that is part of the structure of a bond that provides either the bondholder or
Equivalent bond yield
Annual yield on a short-term, non-interest bearing security calculated so as to be
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
The difference between the execution price of a security and the price that would have
To implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of
Expected return-beta relationship
Implication of the CAPM that security risk premiums will be
An expiration cycle relates to the dates on which options on a particular security expire. A
A way of decomposing the factors that influence a security's rate of return into common and
Figuring the tail
Calculating the yield at which a future money market (one available some period hence) is
A rule that stipulates when a security should be bought or sold according to past price action.
Also called a busted convertible, a convertible security that is trading like a straight
1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid,
A market in which participants agree to trade some commodity, security, or foreign
Full faith-and-credit obligations
The security pledges for larger municipal bond issuers, such as states and
security analysis that seeks to detect misvalued securities by an analysis of the firm's
The product of a statistical model to predict the fundamental risk of a security using not
A market in which contracts for future delivery of a commodity or a security are bought or sold.
The margin or difference between the actual market value of a security and the value assessed by the
The whole-dollar price of a bid or offer is referred to as the handle (ie. if a security is quoted at
Length of time that an individual holds a security.
A stock index option issued by either a corporate or sovereign entity as part of a security
Initial margin requirement
When buying securities on margin, the proportion of the total market value of
Interest-only strip (IO)
A security based solely on the interest payments form a pool of mortgages, Treasury
Interest rate risk
The risk that a security's value changes due to a change in interest rates. For example, a
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