Definition of Yard

Yard

Slang for one billion dollars. Used particularly in currency trading, e.g. for Japanese yen since on
billion yen only equals approximately US$10 million. It is clearer to say, " I'm a buyer of a yard of yen," than
to say, "I'm a buyer of a billion yen," which could be misheard as, "I'm a buyer of a million yen."

economic components model

Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
This model consists of four components: the measure of the economic impact of the delay-to-sale, monopsony power to buyers, and incremental transactions costs to both buyers and sellers.

Adjustable rate preferred stock (ARPS)

Publicly traded issues that may be collateralized by mortgages and MBSs.

Adjusted present value (APV)

The net present value analysis of an asset if financed solely by equity
(present value of un-levered cash flows), plUS the present value of any financing decisions (levered cash
flows). In other words, the varioUS tax shields provided by the deductibility of interest and the benefits of
other investment tax credits are calculated separately. This analysis is often USed for highly leveraged
transactions such as a leverage buy-out.

All or none

Requirement that none of an order be executed unless all of it can be executed at the specified price.

All-or-none underwriting

An arrangement whereby a security issue is canceled if the underwriter is unable
to re-sell the entire issue.

Asian currency units (ACUs)

Dollar deposits held in Singapore or other Asian centers.

At-the-money

An option is at-the-money if the strike price of the option is equal to the market price of the
underlying security. For example, if xyz stock is trading at 54, then the xyz 54 option is at-the-money.

Automated Clearing House (ACH)

A collection of 32 regional electronic interbank networks USed to
process transactions electronically with a guaranteed one-day bank collection float.

Basic business strategies

Key strategies a firm intends to pursue in carrying out its bUSiness plan.

Block house

Brokerage firms that help to find potential buyers or sellers of large block trades.

Blocked currency

A currency that is not freely convertible to other currencies due to exchange controls.

British clearers

The large clearing banks that dominate deposit taking and short-term lending in the domestic
sterling market.

Business cycle

Repetitive cycles of economic expansion and recession.

Business failure

A bUSiness that has terminated with a loss to creditors.

Business risk

The risk that the cash flow of an issuer will be impaired becaUSe of adverse economic
conditions, making it difficult for the issuer to meet its operating expenses.

Busted convertible

Related: Fixed-income equivalent.

Call money rate

Also called the broker loan rate , the interest rate that banks charge brokers to finance
margin loans to investors. The broker charges the investor the call money rate plUS a service charge.

Capital surplus

Amounts of directly contributed equity capital in excess of the par value.

Circus swap

A fixed rate currency swap against floating U.S. dollar LIBOR payments.

Clearing House Automated Payments System (CHAPS)

A computerized clearing system for sterling funds
that began operations in 1984. It includes 14 member banks, nearly 450 participating banks, and is one of the
clearing companies within the structure of the Association for Payment Clearing Services (APACS).

Clearing House Interbank Payments System (CHIPS)

An international wire transfer system for high-value
payments operated by a group of major banks.

Clearing house / Clearinghouse

An adjunct to a futures exchange through which transactions executed its floor are settled by a
process of matching purchases and sales. A clearing organization is also charged with the proper conduct of
delivery procedures and the adequate financing of the entire operation.

Cluster analysis

A statistical technique that identifies clUSters of stocks whose returns are highly correlated
within each clUSter and relatively uncorrelated between clUSters. ClUSter analysis has identified groupings
such as growth, cyclical, stable and energy stocks.

Collateral trust bonds

A bond in which the issuer (often a holding company) grants investors a lien on
stocks, notes, bonds, or other financial asset as security. Compare mortgage bond.

Commission house

A firm which buys and sells future contracts for cUStomer accounts. Related: futures
commission merchant, omnibUS account.

Consensus forecast

The mean of all financial analysts' forecasts for a company.

Continuous compounding

The process of accumulating the time value of money forward in time on a
continuoUS, or instantaneoUS, basis. Interest is earned continuoUSly, and at each instant, the interest that
accrues immediately begins earning interest on itself.

Continuous random variable

A random value that can take any fractional value within specified ranges, as
contrasted with a discrete variable.

Cumulative Translation Adjustment (CTA) account

An entry in a translated balance sheet in which gains
and/or losses from translation have been accumulated over a period of years. The CTA account is required
under the FASB No. 52 rule.

Currency

Money.

Currency arbitrage

Taking advantage of divergences in exchange rates in different money markets by
buying a currency in one market and selling it in another market.

Currency basket

The value of a portfolio of specific amounts of individual currencies, USed as the basis for
setting the market value of another currency. It is also referred to as a currency cocktail.

Currency future

A financial future contract for the delivery of a specified foreign currency.

Currency option

An option to buy or sell a foreign currency.

Currency risk

Related: Exchange rate risk

Currency risk sharing

An agreement by the parties to a transaction to share the currency risk associated with
the transaction. The arrangement involves a cUStomized hedge contract embedded in the underlying
transaction.

Currency selection

Asset allocation in which the investor chooses among investments denominated in
different currencies.

Currency swap

An agreement to swap a series of specified payment obligations denominated in one currency
for a series of specified payment obligations denominated in a different currency.

Cushion bonds

High-coupon bonds that sell at only at a moderate premium becaUSe they are callable at a
price below that at which a comparable non-callable bond would sell. CUShion bonds offer considerable
downside protection in a falling market.

Custodial fees Fees

charged by an institution that holds securities in safekeeping for an investor.

Customary payout ratios

A range of payout ratios that is typical based on an analysis of comparable firms.

Customized benchmarks

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

Customs union

An agreement by two or more countries to erect a common external tariff and to abolish
restrictions on trade among members.

Day trading

Refers to establishing and liquidating the same position or positions within one day's trading.

Deed of trust

Indenture.

Delivery versus payment

A transaction in which the buyer's payment for securities is due at the time of
delivery (USually to a bank acting as agent for the buyer) upon receipt of the securities. The payment may be
made by bank wire, check, or direct credit to an account.

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.

Devaluation A decrease in the spot price of the currency

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

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.

Dual-currency issues

Eurobonds that pay coupon interest in one currency but pay the principal in a different
currency.

Economic surplus

For any entity, the difference between the market value of all its assets and the market
value of its liabilities.

Endogenous variable

A value determined within the context of a model.

Equipment trust certificates

Certificates issued by a trUSt that was formed to purchase an asset and lease it
to a lessee. When the last of the certificates has been repaid, title of ownership of the asset reverts to the
lessee.

Eurocurrency deposit

A short-term fixed rate time deposit denominated in a currency other than the local
currency (i.e. US$ deposited in a London bank).

Eurocurrency market

The money market for borrowing and lending currencies that are held in the form of
deposits in banks located outside the countries of the currencies issued as legal tender.

European Currency Unit (ECU)

An index of foreign exchange consisting of about 10 European currencies,
originally devised in 1979.

European Monetary System (EMS)

An exchange arrangement formed in 1979 that involves the currencies
of European Union member countries.

Euroyen bonds

Eurobonds denominated in Japanese yen.

Exclusionary self-tender

The firm makes a tender offer for a given amount of its own stock while excluding
targeted stockholders.

Exogenous variable

A variable whose value is determined outside the model in which it is USed. Also called
a parameter.

Field warehouse

WarehoUSe rented by a warehoUSe company on another firm's premises.

Foreign currency

Foreign money.

Foreign currency option

An option that conveys the right to buy or sell a specified amount of foreign
currency at a specified price within a specified time period.

Foreign currency translation

The process of restating foreign currency accounts of subsidiaries into the
reporting currency of the parent company in order to prepare consolidated financial statements.

Grantor trust

A mechanism of issuing MBS wherein the mortgages' collateral is deposited with a trUStee
under a cUStodial or trUSt agreement.

Hard currency

A freely convertible currency that is not expected to depreciate in value in the foreseeable future.

Homogeneous

Exhibiting a high degree of homogeneity.

Homogenous expectations assumption

An assumption of Markowitz portfolio construction that investors
have the same expectations with respect to the inputs that are USed to derive efficient portfolios: asset returns,
variances, and covariances.

Hot money

Money that moves across country borders in response to interest rate differences and that moves
away when the interest rate differential disappears.

Industry

The category describing a company's primary bUSiness activity. This category is USually determined
by the largest portion of revenue.

Industrial revenue bond (IRB)

Bond issued by local government agencies on behalf of corporations.

Inflation-escalator clause

A claUSe in a contract providing for increases or decreases in inflation based on
fluctuations in the cost of living, production costs, and so forth.

Insider trading

trading by officers, directors, major stockholders, or others who hold private inside
information allowing them to benefit from buying or selling stock.

Interest-only strip (IO)

A security based solely on the interest payments form a pool of mortgages, Treasury
bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest payments stop
and the value of the IO falls to zero.

International Monetary Fund

An organization founded in 1944 to oversee exchange arrangements of
member countries and to lend foreign currency reserves to members with short-term balance of payment
problems.

International Monetary Market (IMM)

A division of the CME established in 1972 for trading financial
futures. Related: Chicago Mercantile Exchange (CME).

In-the-money

A put option that has a strike price higher than the underlying futures price, or a call option
with a strike price lower than the underlying futures price. For example, if the March COMEX silver futures
contract is trading at $6 an ounce, a March call with a strike price of $5.50 would be considered in-the-money
by $0.50 an ounce.
Related: put.

Investment trust

A closed-end fund regulated by the Investment Company Act of 1940. These funds have a
fixed number of shares which are traded on the secondary markets similarly to corporate stocks. The market
price may exceed the net asset value per share, in which case it is considered at a "premium." When the
market price falls below the NAV/share, it is at a "discount." Many closed-end funds are of a specialized
nature, with the portfolio representing a particular indUStry, country, etc. These funds are USually listed on US
and foreign exchanges.

In-house processing float

Refers to the time it takes the receiver of a check to process the payment and
deposit it in a bank for collection.

Just-in-time inventory systems

Systems that schedule materials/inventory to arrive exactly as they are
needed in the production process.

Last trading day

The final day under an exchange's rules during which trading may take place in a particular
futures or options contract. Contracts outstanding at the end of the last trading day mUSt be settled by delivery
of underlying physical commodities or financial instruments, or by agreement for monetary settlement
depending upon futures contract specifications.

Law of one price

An economic rule stating that a given security mUSt have the same price regardless of the
means by which one goes about creating that security. This implies that if the payoff of a security can be
synthetically created by a package of other securities, the price of the package and the price of the security
whose payoff it replicates mUSt be equal.

Mangement's discussion

A report from management to the shareholders that accompanies the firm's
financial statements in the annual report. This report explains the period's financial results and enables
management to discUSs other ideas that may not be apparent in the financial statements in the annual report.

Manufactured housing securities (MHSs)

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

Monetary gold

Gold held by governmental authorities as a financial asset.

Monetary policy

Actions taken by the Board of Governors of the Federal Reserve System to influence the
money supply or interest rates.

Monetary / non-monetary method

Under this translation method, monetary items (e.g. cash, accounts
payable and receivable, and long-term debt) are translated at the current rate while non-monetary items (e.g.
inventory, fixed assets, and long-term investments) are translated at historical rates.

Money base

Composed of currency and coins outside the banking system plUS liabilities to the deposit money banks.

Money center banks

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

Money management

Related: Investment management.

Money manager

Related: Investment manager.

Money market

Money markets are for borrowing and lending money for three years or less. The securities in
a money market can be U.S.government bonds, treasury bills and commercial paper from banks and
companies.

Money market demand account

An account that pays interest based on short-term interest rates.

Money market fund

A mutual fund that invests only in short term securities, such as bankers' acceptances,
commercial paper, repurchase agreements and government bills. The net asset value per share is maintained at
$1. 00. Such funds are not federally insured, although the portfolio may consist of guaranteed securities
and/or the fund may have private insurance protection.

Money market hedge

The USe of borrowing and lending transactions in foreign currencies to lock in the
home currency value of a foreign currency transaction.

Money market notes

Publicly traded issues that may be collateralized by mortgages and MBSs.

Money purchase plan

A defined benefit contribution plan in which the participant contributes some part and
the firm contributes at the same or a different rate. Also called and individual account plan.

Money rate of return

Annual money return as a percentage of asset value.

Money supply

M1-A: currency plUS demand deposits
M1-B: M1-A plUS other checkable deposits.
M2: M1-B plUS overnight repos, money market funds, savings, and small (less than $100M) time deposits.
M3: M-2 plUS large time deposits and term repos.
L: M-3 plUS other liquid assets.

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