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The absolute return or simply return is a measure of the gain or loss on an investment portfolio expressed as a percentage of invested capital.
Accounting software describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable,journal, general ledger, payroll, and trial balance.
An accrual bond is a fixed-interest bond that is issued at its face value and repaid at the end of the maturity period together with the accrued interest.
Active management (also called active investing) refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming an investment benchmark index.
In finance, active return refers to that segment of the returns in an investment portfolio that is due to active management decisions made by the portfolio manager.
An activist shareholder is a shareholder that uses an equity stake in a corporation to put pressure on its management.
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, finance and other industries and professions.
The method is to calculate the NPV of the project as if it is all-equity financed (so called base case).
An advising bank (also known as a notifying bank) advises a beneficiary (exporter) that a letter of credit (L/C) opened by an issuing bank for an applicant (importer) is available.
Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products.
Algorithmic trading is a method of executing a large order (too large to fill all at once) using automated pre-programmed trading instructions accounting for variables such as time, price, and volume to send small slices of the order (child orders) out to the market over time.
Alpha is a measure of the active return on an investment, the performance of that investment compared with a suitable market index.
The term annual percentage rate of charge (APR), corresponding sometimes to a nominal APR and sometimes to an effective APR (or EAPR), is the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc.
An annuity is a series of payments made at equal intervals.
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.
In finance, arbitrage pricing theory (APT) is a general theory of asset pricing that holds that the expected return of a financial asset can be modeled as a linear function of various factors or theoretical market indices, where sensitivity to changes in each factor is represented by a factor-specific beta coefficient.
An Asian option (or average value option) is a special type of option contract.
In financial accounting, an asset is an economic resource.
Asset allocation is the rigorous implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame.
An asset class is a group of instruments which have similar financial characteristics and behave similarly in the marketplace.
Asset location (AL) is a term used in personal finance to refer to how investors distribute their investments across savings vehicles including taxable accounts, tax-exempt accounts (e.g., TFSA, Roth IRA, ISAs, TESSAs), tax-deferred accounts (e.g., Canadian RRSP, American 401(k) and IRAs, British SIPPs, Irish Personal Retirement Savings Accounts (RPSA), and German Riester pensions), trust accounts (e.g., grantor retainer annuity trusts, generation-skipping trusts, charitable remainder trusts, charitable lead trusts), variable life insurance policies, foundations, and onshore vs.
In financial economics, asset pricing refers to a formal treatment and development of two main pricing principles, outlined below.
An asset swap refers to an exchange of tangible for intangible assets, in accountancy, or, in finance, to the exchange of the flow of payments from a given security (the asset) for a different set of cash flows.
An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern.
An automated teller machine (ATM) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, transfer funds, or obtaining account information, at any time and without the need for direct interaction with bank staff.
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business partnership, a corporation, private limited company or other organization such as Government or not-for-profit entity.
A bank is a financial institution that accepts deposits from the public and creates credit.
The Bank for International Settlements (BIS) is an international financial institution owned by central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks".
A bank holding company is a company that controls one or more banks, but does not necessarily engage in banking itself.
Bank regulation is a form of government regulation which subjects banks to certain requirements, restrictions and guidelines, designed to create market transparency between banking institutions and the individuals and corporations with whom they conduct business, among other things.
Banking secrecy, alternately known as financial privacy, banking discretion, or bank safety,Guex (2000), p. 240 is a conditional agreement between a bank and its clients that all foregoing activities remain secure, confidential, and private.
Banking in Switzerland began in the early 18th century through Switzerland's merchant trade and has, over the centuries, grown into a complex, regulated, and international industry.
A banking license is a legal prerequisite for a financial institution that wants to carry on a banking business.
A banknote (often known as a bill, paper money, or simply a note) is a type of negotiable promissory note, made by a bank, payable to the bearer on demand.
Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors.
The Basel Accords (see alternative spellings below) refer to the banking supervision Accords (recommendations on banking regulations)—Basel I, Basel II and Basel III—issued by the Basel Committee on Banking Supervision (BCBS).
The Basel Committee on Banking Supervision (BCBS) is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1974.
Basel I is the round of deliberations by central bankers from around the world, and in 1988, the Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland, published a set of minimum capital requirements for banks.
Basel II is the second of the Basel Accords, (now extended and partially superseded by Basel III), which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
Basel III (or the Third Basel Accord or Basel Standards) is a global, voluntary regulatory framework on bank capital adequacy, stress testing, and market liquidity risk.
Basis risk in finance is the risk associated with imperfect hedging.
A basis swap is an interest rate swap which involves the exchange of two floating rate financial instruments.
Bayesian efficiency is an analog of Pareto efficiency for situations in which there is incomplete information.
Behavioral economics studies the effects of psychological, cognitive, emotional, cultural and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.
Behavioral portfolio theory (BPT), put forth in 2000 by Shefrin and Statman,SHEFRIN, H., AND M. STATMAN (2000): "Behavioral Portfolio Theory," Journal of Financial and Quantitative Analysis, 35(2), 127–151.
Benchmark-driven investment strategy is an investment strategy where the target return is usually linked to an index or combination of indices of the sector or any other like S&P 500.
The Benjamin Graham formula is a formula proposed by investor and professor of Columbia University, Benjamin Graham, often referred to as the "father of value investing".
In finance, the beta (β or beta coefficient) of an investment indicates whether the investment is more or less volatile than the market as a whole.
The bias ratio is an indicator used in finance to analyze the returns of investment portfolios, and in performing due diligence.
A binary option is a financial option in which the payoff is either some fixed monetary amount or nothing at all.
In probability theory and statistics, the binomial distribution with parameters n and p is the discrete probability distribution of the number of successes in a sequence of n independent experiments, each asking a yes–no question, and each with its own boolean-valued outcome: a random variable containing a single bit of information: success/yes/true/one (with probability p) or failure/no/false/zero (with probability q.
In finance, the binomial options pricing model (BOPM) provides a generalizable numerical method for the valuation of options.
The Black model (sometimes known as the Black-76 model) is a variant of the Black–Scholes option pricing model.
In finance, Black Monday refers to Monday, October 19, 1987, when stock markets around the world crashed.
In finance, Black's approximation is an approximate method for computing the value of an American call option on a stock paying a single dividend.
In mathematical finance, the Black–Derman–Toy model (BDT) is a popular short rate model used in the pricing of bond options, swaptions and other interest rate derivatives; see Lattice model (finance) #Interest rate derivatives.
In financial mathematics, the Black–Karasinski model is a mathematical model of the term structure of interest rates; see short rate model.
In finance, the Black–Litterman model is a mathematical model for portfolio allocation developed in 1990 at Goldman Sachs by Fischer Black and Robert Litterman, and published in 1992.
The Black–Scholes or Black–Scholes–Merton model is a mathematical model for the dynamics of a financial market containing derivative investment instruments.
Boiler insurance (Boiler cover) is a type of insurance that covers repairs and in some instances, the replacement of a home boiler.
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders.
In finance, bond convexity is a measure of the non-linear relationship of bond prices to changes in interest rates, the second derivative of the price of the bond with respect to interest rates (duration is the first derivative).
In finance, the duration of a financial asset that consists of fixed cash flows, for example a bond, is the weighted average of the times until those fixed cash flows are received.
In finance, a bond option is an option to buy or sell a bond at a certain price on or before the option expiry date.
Bond valuation is the determination of the fair price of a bond.
Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business.
In the technical analysis of security prices, a bottom is a chart pattern where prices reach a low, then a lower low, and then a higher low.
In options trading, a box spread is a combination of positions that has a certain (i.e. riskless) payoff, considered to be simply "delta neutral interest rate position".
A breakout is when prices pass through and stay through an area of support or resistance.
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western Europe, Australia, and Japan after the 1944 Bretton-Woods Agreement.
A broker is an individual person who arranges transactions between a buyer and a seller for a commission when the deal is executed.
In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers.
A brokerage firm, or simply brokerage, is a financial institution that facilitates the buying and selling of financial securities between a buyer and a seller.
The Brownian motion models for financial markets are based on the work of Robert C. Merton and Paul A. Samuelson, as extensions to the one-period market models of Harold Markowitz and William F. Sharpe, and are concerned with defining the concepts of financial assets and markets, portfolios, gains and wealth in terms of continuous-time stochastic processes.
Brownian motion or pedesis (from πήδησις "leaping") is the random motion of particles suspended in a fluid (a liquid or a gas) resulting from their collision with the fast-moving molecules in the fluid.
A budget is a financial plan for a defined period of time, usually a year.It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.
A building society is a financial institution owned by its members as a mutual organization.
A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them.
Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business.
Buy and hold, also called position trading, is an investment strategy where an investor buys stocks and holds them for a long time, with the goal that stocks will gradually increase in value over a long period of time.
A call option, often simply labeled a "call", is a financial contract between two parties, the buyer and the seller of this type of option.
A callable bond (also called redeemable bond) is a type of bond (debt security) that allows the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches its date of maturity.
Calmar ratio (or Drawdown ratio) is a performance measurement used to evaluate Commodity Trading Advisors and hedge funds.
In mathematics, the Cameron–Martin theorem or Cameron–Martin formula (named after Robert Horton Cameron and W. T. Martin) is a theorem of measure theory that describes how abstract Wiener measure changes under translation by certain elements of the Cameron–Martin Hilbert space.
The Canadian Securities Institute (CSI; formerly, CSI Global Education) is a Canadian organizationthat offers licensing courses, advanced certifications, continuing education and custom training for financial services professionals in Canada and internationally.
In economics, capital consists of an asset that can enhance one's power to perform economically useful work.
Capital allocation line (CAL) is a graph created by investors to measure the risk of risky and risk-free assets.
In finance, the capital asset pricing model (CAPM) is a model used to determine a theoretically appropriate required rate of return of an asset, to make decisions about adding assets to a well-diversified portfolio.
Capital budgeting, and investment appraisal, is the planning process used to determine whether an organization's long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure (debt, equity or retained earnings).
A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was greater than the amount realized on the sale.
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold.
Capital market line (CML) is the tangent line drawn from the point of the risk-free asset to the feasible region for risky assets.
In finance, particularly corporate finance capital structure is the way a corporation finances its assets through some combination of equity, debt, or hybrid securities.
Capitalization rate (or "Cap Rate") is a real estate valuation measure used to compare different real estate investments.
In portfolio management the Carhart four-factor model is an extension of the Fama–French three-factor model including a momentum factor for asset pricing of stocks.
In economics, cash is money in the physical form of currency, such as banknotes and coins.
In management accounting, the Cash conversion cycle (CCC) measures how long a firm will be deprived of cash if it increases its investment in inventory in order to expand customer sales.
A cash flow describes a real or virtual movement of money.
In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities.
Cash management refers to a broad area of finance involving the collection, handling, and usage of cash.
Cashflow matching is a process of hedging in which a company or other entity matches its cash outflows (i.e. financial obligations) with its cash inflows.
Casualty insurance is a problematically defined term which broadly encompasses insurance not directly concerned with life insurance, health insurance, or property insurance.
Catastrophe modeling (also known as cat modeling) is the process of using computer-assisted calculations to estimate the losses that could be sustained due to a catastrophic event such as a hurricane or earthquake.
A central bank, reserve bank, or monetary authority is an institution that manages a state's currency, money supply, and interest rates.
The Certified Financial Planner (CFP) designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards (CFP Board) in the United States, and by 25 other organizations affiliated with Financial Planning Standards Board (FPSB), the international owner of the CFP mark outside of the United States.
Certified Public Accountant (CPA) is the title of qualified accountants in numerous countries in the English-speaking world.
CFA Institute is a global association of investment professionals.
A chart pattern or price pattern is a pattern within a chart when prices are graphed.
Chartered Accountants were the first accountants to form a professional accounting body, initially established in Scotland in 1854.
Chartered Alternative Investment Analyst (CAIA) (pronounced "KAI-ah") is a professional designation offered by the CAIA Association to investment professionals who complete a course of study and pass two examinations.
The Chartered Financial Analyst (CFA) Program is a professional credential offered internationally by the American-based CFA Institute (formerly the Association for Investment Management and Research, or AIMR) to investment and financial professionals.
Chartered Financial Consultant (ChFC) is the "Advanced Financial Planning" designation awarded by The American College of Financial Services.
The Chartered Insurance Institute (also known as the CII) is a professional body for the insurance sector.
Check may refer to.
In finance, the Chen model is a mathematical model describing the evolution of interest rates.
The Chepakovich valuation model uses the discounted cash flow valuation approach.
In finance, the clean price is the price of a bond excluding any interest that has accrued since issue or the most recent coupon payment.
A clearing house is a financial institution formed to facilitate the exchange (i.e., clearance) of payments, securities, or derivatives transactions.
A closed-end fund (CEF) or closed-ended fund is a collective investment model based on issuing a fixed number of shares which are not redeemable from the fund.
In the fields of actuarial science and financial economics there are a number of ways that risk can be defined; to clarify the concept theoreticians have described a number of properties that a risk measure might or might not have.
A coin is a small, flat, (usually) round piece of metal or plastic used primarily as a medium of exchange or legal tender.
A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS).
A collateralized mortgage obligation (CMO) is a type of complex debt security that repackages and directs the payments of principal and interest from a collateral pool to different types and maturities of securities, thereby meeting investor needs.
A commercial bank is an institution that provides services such as accepting deposits, providing business loans, and offering basic investment products.
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people.
The Committee of European Securities Regulators (CESR) was an independent committee of European Securities regulators in the Lamfalussy process established by the European Commission on June 6, 2001.
In economics, a commodity is an economic good or service that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.
A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission.
The U.S. Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974, that regulates futures and option markets.
Common stock is a form of corporate equity ownership, a type of security.
In the United States, community development banks (CDBs or CDFI Banks) are commercial banks that operate with a mission to generate economic development in low- to moderate-income (LMI) geographical areas and serve residents of these communities.
A community development financial institution (US) or community development finance institution (UK) - abbreviated in both cases to CDFI - is a financial institution that provides credit and financial services to underserved markets and populations, primarily in the USA but also in the UK.
The following comparison of accounting software documents the various features and differences between different professional accounting software and personal finance packages.
The following tables provide a comparison of numerical analysis software.
One in eight Canadian households lived in a residential condominium dwellings, mostly located in a few census metropolitan areas according to Statistics Canada Condominiums exist throughout Canada, although condominiums are most frequently found in the larger cities.
In mathematical finance, the CEV or constant elasticity of variance model is a stochastic volatility model, which attempts to capture stochastic volatility and the leverage effect.
A constant maturity swap, also known as a CMS, is a swap that allows the purchaser to fix the duration of received flows on a swap.
Constant proportion portfolio insurance (CPPI) is a trading strategy that allows an investor to maintain an exposure to the upside potential of a risky asset while providing a capital guarantee against downside risk.
In economics, consumer debt is the amount owed by consumers, as opposed to that of businesses or governments.
The consumption-based capital asset pricing model (CCAPM) is used in finance and economics as an expansion of the capital asset pricing model (CAPM).
Contango is a situation where the futures price (or forward price) of a commodity is higher than the anticipated spot price at maturity of the futures contract.
Analogous to continuous compounding, a continuous annuity is an ordinary annuity in which the payment interval is narrowed indefinitely.
A contract is a promise or set of promises that are legally enforceable and, if violated, allow the injured party access to legal remedies.
In finance, a contract for difference (CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time (if the difference is negative, then the buyer pays instead to the seller).
In finance, a convertible bond or convertible note or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value.
A convertible security is a security that can be converted into another security.
Cooperative banking is retail and commercial banking organized on a cooperative basis.
In probability theory and statistics, a copula is a multivariate probability distribution for which the marginal probability distribution of each variable is uniform.
Core & Satellite Portfolio Management is an investment strategy that incorporates traditional fixed-income and equity-based securities (i.e. index funds, exchange-traded funds (ETFs), passive mutual funds, etc.) known as the "core" portion of the portfolio, with a percentage of selected individual securities in the fixed-income and equity-based side of the portfolio known as the "satellite" portion.
A corporate action is an event initiated by a public company that will bring an actual change to the securities—equity or debt—issued by the company.
Corporate finance is the area of finance dealing with the sources of funding and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources.
Corporate governance is the mechanisms, processes and relations by which corporations are controlled and directed.
In business, a corporate raid is the process of buying a large stake in a corporation and then using shareholder voting rights to require the company to undertake novel measures designed to increase the share value, generally in opposition to the desires and practices of the corporation's current management.
In statistics, dependence or association is any statistical relationship, whether causal or not, between two random variables or bivariate data.
A cost driver is the unit of an activity that causes the change in activity's cost.
In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view "the required rate of return on a portfolio company's existing securities".
The counterfeit means to imitate something.
A coupon payment on a bond is the annual interest payment that the bondholder receives from the bond's issue date until it matures.
In probability theory and statistics, covariance is a measure of the joint variability of two random variables.
In probability theory and statistics, a covariance matrix (also known as dispersion matrix or variance–covariance matrix) is a matrix whose element in the i, j position is the covariance between the i-th and j-th elements of a random vector.
A Coverdell Education Savings Account (also known as an Education Savings Account, a Coverdell ESA, a Coverdell Account, or just an ESA, and formerly known as an education individual retirement account), is a tax-advantaged investment account in the United States designed to encourage savings to cover future education expenses (elementary, secondary, or college), such as tuition, books, and uniforms (for the same year as the distribution).
In finance a covered warrant (sometimes called naked warrant) is a type of warrant that has been issued without an accompanying bond or equity.
In mathematical finance, the Cox–Ingersoll–Ross model (or CIR model) describes the evolution of interest rates.
In numerical analysis, the Crank–Nicolson method is a finite difference method used for numerically solving the heat equation and similar partial differential equations.
Credit (from Latin credit, "(he/she/it) believes") is the trust which allows one party to provide money or resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead promises either to repay or return those resources (or other materials of equal value) at a later date.
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's promise to the card issuer to pay them for the amounts so paid plus the other agreed charges.
Credit counseling (known in the United Kingdom as Debt counselling) is commonly a process that is used to help individual debtors with debt settlement through education, budgeting and the use of a variety of tools with the goal to reduce and ultimately eliminate debt.
In finance, a default option, credit default swaption or credit default option is an option to buy protection (payer option) or sell protection (receiver option) as a credit default swap on a specific reference credit with a specific maturity.
A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event.
In finance, a credit derivative refers to any one of "various instruments and techniques designed to separate and then transfer the credit risk"The Economist Passing on the risks 2 November 1996 or the risk of an event of default of a corporate or sovereign borrower, transferring it to an entity other than the lender or debtholder.
A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely interest payments and the likelihood of default.
A credit risk is the risk of default on a debt that may arise from a borrower failing to make required payments.
A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual.
A credit union is a member-owned financial cooperative, controlled by its members and operated on the principle of people helping people, providing its members credit at competitive rates as well as other financial services.
Credit valuation adjustment (CVA) is the difference between the risk-free portfolio value and the true portfolio value that takes into account the possibility of a counterparty’s default.
In economics, crowding out is argued by some economists to be a phenomenon that occurs when increased government involvement in a sector of the market economy substantially affects the remainder of the market, either on the supply or demand side of the market.
A currency (from curraunt, "in circulation", from currens, -entis), in the most specific use of the word, refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins.
A currency future, also known as an FX future or a foreign exchange future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date; see Foreign exchange derivative.
In finance, a currency swap (more typically termed a cross-currency swap (XCS)) is an interest rate derivative (IRD).
A currency union (also known as monetary union) involves two or more states sharing the same currency without them necessarily having any further integration (such as an economic and monetary union, which would have, in addition, a customs union and a single market).
In accounting, a current asset is any asset which can reasonably be expected to be sold, consumed, or exhausted through the normal operations of a business within the current fiscal year or operating cycle (whichever period is longer).
In accounting, current liabilities are often understood as all liabilities of the business that are to be settled in cash within the fiscal year or the operating cycle of a given firm, whichever period is longer.
The current yield, interest yield, income yield, flat yield, market yield, mark to market yield or running yield is a financial term used in reference to bonds and other fixed-interest securities such as gilts.
A custodian bank, or simply custodian, is a specialized financial institution responsible for safeguarding a firm's or individual's financial assets and is not engaged in "traditional" commercial or consumer/retail banking such as mortgage or personal lending, branch banking, personal accounts, automated teller machines (ATMs) and so forth.
The cyclically adjusted price-to-earnings ratio, commonly known as CAPE, Shiller P/E, or P/E 10 ratio, is a valuation measure usually applied to the US S&P 500 equity market.
In finance, a day count convention determines how interest accrues over time for a variety of investments, including bonds, notes, loans, mortgages, medium-term notes, swaps, and forward rate agreements (FRAs).
Day trading is speculation in securities, specifically buying and selling financial instruments within the same trading day.
In finance, a dead cat bounce is a small, brief recovery in the price of a declining stock.
A debit card (also known as a bank card, plastic card or check card) is a plastic payment card that can be used instead of cash when making purchases.
Debt is when something, usually money, is owed by one party, the borrower or debtor, to a second party, the lender or creditor.
Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others.
The debt diet refers to a debt management plan made popular by a multi-part series for The Oprah Winfrey Show, first airing on February 17, 2006.
Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.
The debt-snowball method is a debt reduction strategy, whereby one who owes on more than one account pays off the accounts starting with the smallest balances first, while paying the minimum payment on larger debts.
Dedicated portfolio theory, in finance, deals with the characteristics and features of a portfolio built to generate a predictable stream of future cash inflows.
In finance, default is failure to meet the legal obligations (or conditions) of a loan, for example when a home buyer fails to make a mortgage payment, or when a corporation or government fails to pay a bond which has reached maturity.
A deposit account is a savings account, current account or any other type of bank account that allows money to be deposited and withdrawn by the account holder.
A depository bank (U.S. usage) or depositary bank (predominantly EU usage) is a specialist financial entity which, depending on jurisdiction, facilitates investment in securities markets.
In finance, a derivative is a contract that derives its value from the performance of an underlying entity.
Deterministic global optimization is a branch of numerical optimization which focuses on finding the global solutions of an optimization problem whilst providing theoretical guarantees that the reported solution is indeed the global one, within some predefined tolerance.
In financial mathematics, a deviation risk measure is a function to quantify financial risk (and not necessarily downside risk) in a different method than a general risk measure.
In banking, a direct deposit (or direct credit) is a deposit of money by a payer directly into a payee's bank account.
The price of a bond is the present value of its future cash-flows.
Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work.
In finance, discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset using the concepts of the time value of money.
The discounted payback period (DPP) is the amount of time that it takes (in years) for the initial cost of a project to equal to discounted value of expected cash flows, or the time it takes to break even from an investment.
Discounting is a financial mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee.
Discounts and allowances are reductions to a basic price of goods or services.
In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
Diversified financials is a specific category of the Global Industry Classification Standard (GICS) that is used by the financial community.
A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.
The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.
Dividend policy is concerned with financial policies regarding paying cash dividend in the present or paying an increased dividend at a later stage.
A dividend tax is the tax imposed by a tax authority on dividends received by shareholders (stockholders) of a company.
The dividend yield or dividend-price ratio of a share is the dividend per share, divided by the price per share.
The dot-com bubble (also known as the dot-com boom, the dot-com crash, the Y2K crash, the Y2K bubble, the tech bubble, the Internet bubble, the dot-com collapse, and the information technology bubble) was a historic economic bubble and period of excessive speculation that occurred roughly from 1997 to 2001, a period of extreme growth in the usage and adaptation of the Internet.
The Dow Jones Industrial Average (DJIA), or simply the Dow, is a stock market index that shows how 30 large, publicly owned companies based in the United States have traded during a standard trading session in the stock market.
The Dow theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation.
In investing, downside beta is the element of beta that investors associate with risk in the sense of the uncertain potential for loss.
Downside risk is the financial risk associated with losses.
The drawdown is the measure of the decline from a historical peak in some variable (typically the cumulative profit or total open equity of a financial trading strategy).
In investing, dual-beta is a concept that states that a regular, market beta can be divided into downside beta and upside beta.
DuPont Analysis (also known as the dupont identity, DuPont equation, DuPont Model or the DuPont method) is an expression which breaks ROE (return on equity) into three parts.
In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit that includes all expenses except interest and income tax expenses.
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, pronounced,, or) is an accounting measure calculated using a company's net earnings, before interest expenses, taxes, depreciation, and amortization are subtracted, as a proxy for a company's current operating profitability (i.e., how much profit it makes with its present assets and its operations on the products it produces and sells, as well as providing a proxy for cash flow).
Earnings per share (EPS) is the monetary value of earnings per outstanding share of common stock for a company.
Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property.
Economic efficiency is, roughly speaking, a situation in which nothing can be improved without something else being hurt.
In economics, economic equilibrium is a state where economic forces such as supply and demand are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change.
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time.
In inventory management, economic order quantity (EOQ) is the order quantity that minimizes the total holding costs and ordering costs.
The economic production quantity model (also known as the EPQ model) determines the quantity a company or retailer should order to minimize the total inventory costs by balancing the inventory holding cost and average fixed ordering cost.
In corporate finance, economic value added (EVA) is an estimate of a firm's economic profit, or the value created in excess of the required return of the company's shareholders.
The effective interest rate (EIR), effective annual interest rate, annual equivalent rate (AER) or simply effective rate is the interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears.
In modern portfolio theory, the efficient frontier (or portfolio frontier) is an investment portfolio which occupies the 'efficient' parts of the risk-return spectrum.
The efficient-market hypothesis (EMH) is a theory in financial economics that states that asset prices fully reflect all available information.
The Elliott wave principle is a form of technical analysis that finance traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors.
An embedded option is a component of a financial bond or other security, and usually provides the bondholder or the issuer the right to take some action against the other party.
Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, or perks) include various types of non-wage compensation provided to employees in addition to their normal wages or salaries.
An employee stock option (ESO) is commonly viewed as a complex call option on the common stock of a company, granted by the company to an employee as part of the employee's remuneration package.
An employment contract or contract of employment is a kind of contract used in labour law to attribute rights and responsibilities between parties to a bargain.
Enterprise value (EV), total enterprise value (TEV), or firm value (FV) is an economic measure reflecting the market value of a business.
Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business.
In financial mathematics and stochastic optimization, the concept of risk measure is used to quantify the risk involved in a random outcome or risk position.
Environmental finance is the use of various financial instruments (usually land trusts and emissions trading) to protect the environment.
In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owned.
An equity swap is a financial derivative contract (a swap) where a set of future cash flows are agreed to be exchanged between two counterparties at set dates in the future.
In finance, the equivalent annual cost (EAC) is the cost per year of owning and operating an asset over its entire lifespan.
The Erie War was a 19th-century conflict between American financiers for control of the Erie Railway Company, which owned and operated the Erie Railroad.
An ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans.
The European Securities Committee (ESC) advises the European Commission in the field of securities.
The European Union (EU) is a political and economic union of EUnum member states that are located primarily in Europe.
Enterprise value/EBITDA (more commonly referred to by the acronym EV/EBITDA) is a popular valuation multiple used in the finance industry to measure the value of a company.
In finance, an exchange rate is the rate at which one currency will be exchanged for another.
An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks.
In finance, an exotic option is an option which has features making it more complex than commonly traded vanilla options.
Expected shortfall (ES) is a risk measure—a concept used in the field of financial risk measurement to evaluate the market risk or credit risk of a portfolio.
An export credit agency (known in trade finance as an ECA) or investment insurance agency is a private or quasi-governmental institution that acts as an intermediary between national governments and exporters to issue export financing.
Extended coverage is a term used in the property insurance business.
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.
In economics, factors of production, resources, or inputs are which is used in the production process to produce output—that is, finished goods and services.
In accounting and in most Schools of economic thought, fair value is a rational and unbiased estimate of the potential market price of a good, service, or asset.
In asset pricing and portfolio management the Fama–French three-factor model is a model designed by Eugene Fama and Kenneth French to describe stock returns.
The Fama-MacBeth regression is a method used to estimate parameters for asset pricing models such as the Capital asset pricing model (CAPM).
In mathematical optimization, a feasible region, feasible set, search space, or solution space is the set of all possible points (sets of values of the choice variables) of an optimization problem that satisfy the problem's constraints, potentially including inequalities, equalities, and integer constraints.
The "Fed model" is a theory of equity valuation that has found broad application in the investment community.
The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the central banking system of the United States of America.
The Federal Trade Commission (FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act.
Feminist economics is the critical study of economics including its methodology, epistemology, history and empirical research, attempting to overcome alleged androcentric (male and patriarchal) biases.
In finance, Fibonacci retracement is a method of technical analysis for determining support and resistance levels.
A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals.
Finance is a field that is concerned with the allocation (investment) of assets and liabilities (known as elements of the balance statement) over space and time, often under conditions of risk or uncertainty.
Financial accounting (or financial accountancy) is the field of accounting concerned with the summary, analysis and reporting of financial transactions pertaining to a business.
The Financial Accounting Standards Board (FASB) is a private, non-profit organization standard setting body whose primary purpose is to establish and improve generally accepted accounting principles (GAAP) within the United States in the public's interest.
A financial adviser is a professional who suggests and renders financial services to clients based on their financial situation.
Financial capital is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based, i.e. retail, corporate, investment banking, etc.
The financial crisis of 2007–2008, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.
Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on both sides of a trade".
Financial engineering is a multidisciplinary field involving financial theory, methods of engineering, tools of mathematics and the practice of programming.
A financial forecast is an estimate of future financial outcomes for a company or country (for futures and current markets).
In the United States, the Financial Industry Regulatory Authority, Inc. (FINRA) is a private corporation that acts as a self-regulatory organization (SRO).
Financial institutions, otherwise known as banking institutions, are corporations which provide services as intermediaries of financial markets.
A financial intermediary is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions.
Financial literacy is the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.
A financial market is a market in which people trade financial securities and derivatives such as futures and options at low transaction costs.
Financial modeling is the task of building an abstract representation (a model) of a real world financial situation.
A financial planner or personal financial planner is a professional who prepares financial plans for people.
A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements.
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system.
Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default.
Financial risk management is the practice of economic value in a firm by using financial instruments to manage exposure to risk: operational risk, credit risk and market risk, foreign exchange risk, shape risk, volatility risk, liquidity risk, inflation risk, business risk, legal risk, reputational risk, sector risk etc.
The Financial Services Authority (FSA) was a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom between 2001 and 2013.
Financial statements (or financial report) is a formal record of the financial activities and position of a business, person, or other entity.
In mathematics, finite-difference methods (FDM) are numerical methods for solving differential equations by approximating them with difference equations, in which finite differences approximate the derivatives.
Finite difference methods for option pricing are numerical methods used in mathematical finance for the valuation of options.
The First Chicago Method or Venture Capital Method is a context specific business valuation approach used by venture capital and private equity investors that combines elements of both a multiples-based valuation and a discounted cash flow (DCF) valuation approach.
The Fisher equation in financial mathematics and economics estimates the relationship between nominal and real interest rates under inflation.
In economics, the Fisher separation theorem asserts that the primary objective of a corporation will be the maximization of its present value, regardless of the preferences of its shareholders.
Fixed assets, also known as tangible assets or property, plant and equipment (PP&E), is a term used in accounting for assets and property that cannot easily be converted into cash.
In economics, fixed costs, indirect costs or overheads are business expenses that are not dependent on the level of goods or services produced by the business.
Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule.
Fixed income analysis is the valuation of fixed income or debt securities, and the analysis of their interest rate risk, credit risk, and likely price behavior in hedging portfolios.
In finance, a fixed rate bond is a type of debt instrument bond with a fixed coupon (interest) rate, as opposed to a floating rate note.
Fixed-income attribution refers to the process of measuring returns generated by various sources of risk in a fixed income portfolio, particularly when multiple sources of return are active at the same time.
A flexible spending account (FSA), also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States.
Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a quoted spread (also known as quoted margin).
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
Foreign exchange fraud is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market.
A foreign exchange hedge (also called a FOREX hedge) is a method used by companies to eliminate or "hedge" their foreign exchange risk resulting from transactions in foreign currencies (see foreign exchange derivative).
In finance, a foreign exchange option (commonly shortened to just FX option or currency option) is a derivative financial instrument that gives the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.
In finance, a foreign exchange swap, forex swap, or FX swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates (normally spot to forward) and may use foreign exchange derivatives.
In trade finance, forfaiting is a financial transaction involving the purchase of receivables from exporters by a forfaiter.
In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or to sell an asset at a specified future time at a price agreed upon today, making it a type of derivative instrument.
The forward rate is the future yield on a bond.
In finance, a forward rate agreement (FRA) is an interest rate derivative (IRD).
Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities.
In corporate finance, free cash flow (FCF) or free cash flow to firm (FCFF) is a way of looking at a business's cash flow to see what is available for distribution among all the securities holders of a corporate entity.
In corporate finance, free cash flow to equity (FCFE) is a metric of how much cash can be distributed to the equity shareholders of the company as dividends or stock buybacks—after all expenses, reinvestments, and debt repayments are taken care of.
In economics, a free market is an idealized system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.
Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health; and its competitors and markets.
The fundamental theorems of asset pricing (also: of arbitrage, of finance) provide necessary and sufficient conditions for a market to be arbitrage free and for a market to be complete.
Funding is the act of providing financial resources, usually in the form of money, or other values such as effort or time, to finance a need, program, and project, usually by an organization or company.
In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable.
Future value is the value of an asset at a specific date.
In finance, a futures contract (more colloquially, futures) is a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future.
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
Gap Financing is a term mostly associated with mortgage loans or property loans such as a bridge loan.
A geometric Brownian motion (GBM) (also known as exponential Brownian motion) is a continuous-time stochastic process in which the logarithm of the randomly varying quantity follows a Brownian motion (also called a Wiener process) with drift.
The German income approach (German: Ertragswertverfahren, abbr. EWV) is the standard approach used in Germany for the valuing of property that produces a stream of future cash flows.
In economics, a gift tax is the tax on money or property that one living person gives to another.
In probability theory, the Girsanov theorem (named after Igor Vladimirovich Girsanov) describes how the dynamics of stochastic processes change when the original measure is changed to an equivalent probability measure.
The Glass–Steagall legislation describes four provisions of the U.S.A Banking Act of 1933 separating commercial and investment banking.
Global Tactical Asset Allocation, or GTAA, is a top-down investment strategy that attempts to exploit short-term mis-pricings among a global set of assets.
Of all the precious metals, gold is the most popular as an investment.
Goldman Sachs asset management (GSAM) factor model is one of the quantitative/ factor models used by financial analysts to assess the performance and financial condition of a company.
A government bond or sovereign bond is a bond issued by a national government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date.
A government-sponsored enterprise (GSE) is a type of financial services corporation created by the United States Congress.
The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress (1999–2001).
The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States.
In mathematical finance, the Greeks are the quantities representing the sensitivity of the price of derivatives such as options to a change in underlying parameters on which the value of an instrument or portfolio of financial instruments is dependent.
The green economy is defined as an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment.
Gross Rent Multiplier (GRM) is the ratio of the price of a real estate investment to its annual rental income before accounting for expenses such as property taxes, insurance, and utilities; GRM is the number of years the property would take to pay for itself in gross received rent.
In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry.
In corporate finance, Hamada’s equation, named after Robert Hamada, is used to separate the financial risk of a levered firm from its business risk.
A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property.
Health insurance is insurance that covers the whole or a part of the risk of a person incurring medical expenses, spreading the risk over a large number of persons.
A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP).
The heat equation is a parabolic partial differential equation that describes the distribution of heat (or variation in temperature) in a given region over time.
The Heath–Jarrow–Morton (HJM) framework is a general framework to model the evolution of interest rate curve – instantaneous forward rate curve in particular (as opposed to simple forward rates).
A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment.
A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques.
In finance, the Heston model, named after Steven Heston, is a mathematical model describing the evolution of the volatility of an underlying asset.
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade.
The history of banking began with the first prototype banks were the merchants of the world, who made grain loans to farmers and traders who carried goods between cities.
The history of insurance traces the development of the modern business of insurance against risks, especially regarding cargo, property, death, automobile accidents, and medical treatment.
In financial mathematics, the Ho–Lee model is a short rate model widely used in the pricing of bond options, swaptions and other interest rate derivatives, and in modeling future interest rates.
In finance, holding period return (HPR) is the return on an asset or portfolio over the whole period during which it was held.
Home insurance, also commonly called homeowner's insurance (often abbreviated in the US real estate industry as HOI), is a type of property insurance that covers a private residence.
In financial mathematics, the Hull–White model is a model of future interest rates.
In economics, hyperinflation is very high and typically accelerating inflation.
During a period between 1918 and January 1924, the German mark suffered hyperinflation.
The Interpolated Spread or I-spread or ISPRD of a bond is the difference between its yield to maturity and the linearly interpolated yield for the same maturity on an appropriate reference yield curve.
An idiosyncrasy is an unusual feature of a person (though there are also other uses, see below).
In financial mathematics, the implied volatility of an option contract is that value of the volatility of the underlying instrument which, when input in an option pricing model (such as Black–Scholes) will return a theoretical value equal to the current market price of the option.
The Income Approach is one of three major groups of methodologies, called valuation approaches, used by appraisers.
An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a profit and loss statement (P&L), statement of profit or loss, revenue statement, statement of financial performance, earnings statement, operating statement, or statement of operations) is one of the financial statements of a company and shows the company’s revenues and expenses during a particular period.
An income tax is a tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income).
Independent Financial Advisers or IFAs are professionals who offer independent advice on financial matters to their clients and recommend suitable financial products from the whole of the market.
An index fund (also index tracker) is a mutual fund or exchange-traded fund (ETF) designed to follow certain preset rules so that the fund can a specified basket of underlying investments.
This page is an index of accounting topics.
This is a list of international trade topics.
An individual retirement account (IRA) is a form of "individual retirement plan", provided by many financial institutions, that provides tax advantages for retirement savings in the United States.
An industrial loan company (ILC) or industrial bank is a financial institution in the United States that lends money, and may be owned by non-financial institutions.
The industrial policy of a country, sometimes denoted IP, is its official strategic effort to encourage the development and growth of part or all of the manufacturing sector as well as other sectors of the economy.
The information ratio, also known as appraisal ratio, is a measure of the risk-adjusted return of a financial security (or asset or portfolio).
A tax paid by a person who inherits money or property or a levy on the estate (money and property) of a person who has died.
Initial public offering (IPO) or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors; an IPO is underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges.
Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to nonpublic information about the company.
Insurable interest, It exists when an insured person derives a financial or other kind of benefit from the continuous existence, without impairment or damage, of the insured object (or in the case of a person, their continued survival).
An insurable risk is a risk that meets the ideal criteria for efficient insurance.
Insurance is a means of protection from financial loss.
An insurance broker sells, solicits, or negotiates insurance for compensation.
In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay.
Interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (i.e., the amount borrowed), at a particular rate.
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum).
An interest rate cap is a type of interest rate derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price.
In finance, an interest rate derivative (IRD) is a derivative whose payments are determined through calculation techniques where the underlying benchmark product is an interest rate, or set of different interest rates.
An interest rate future is a financial derivative (a futures contract) with an interest-bearing instrument as the underlying asset.
An Interest rate option is a specific financial derivative contract whose value is based on interest rates.
In finance, an interest rate swap (IRS) is an interest rate derivative (IRD).
The internal rate of return (IRR) is a method of calculating rate of return.
The International Accounting Standards Board (IASB) is the independent, accounting standard-setting body of the IFRS Foundation.
The International Association of Insurance Supervisors (IAIS) is a voluntary membership-driven standards-setting organization of insurance supervisors and regulators from over 190 jurisdictions in more than 140 countries.
The International Bank Account Number (IBAN) is an internationally agreed system of identifying bank accounts across national borders to facilitate the communication and processing of cross border transactions with a reduced risk of transcription errors.
The International Monetary Market (IMM), a spin-off from the old Chicago Mercantile Exchange and largely the creation of Leo Melamed, is today one of four divisions of the Chicago Mercantile Exchange (CME), the largest futures exchange in the United States, for the trading of futures contracts and options on futures.
The International Organisation of Securities Commissions (IOSCO) is an association of organisations that regulate the world’s securities and futures markets.
The International Swaps and Derivatives Association (ISDA) is a trade organization of participants in the market for over-the-counter derivatives.
The Intertemporal Capital Asset Pricing Model, or ICAPM, is an alternative to the CAPM provided by Robert Merton.
Intertemporal portfolio choice is the process of allocating one's investable wealth to various assets, especially financial assets, repeatedly over time, in such a way as to optimize some criterion.
In finance, intrinsic value refers to the value of a company, stock, currency or product determined through fundamental analysis without reference to its market value.
Inventory (American English) or stock (British English) is the goods and materials that a business holds for the ultimate goal of resale (or repair).
An inverse exchange-traded fund is an exchange-traded fund (ETF), traded on a public stock market, which is designed to perform as the inverse of whatever index or benchmark it is designed to track.
Investing online, also known as online trading or trading online, is a process by which individual investors and traders buy and sell securities over an electronic network, typically with a brokerage firm.
In general, to invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future – for example, investment in durable goods, in real estate by the service industry, in factories for manufacturing, in product development, and in research and development.
The Investment Advisers Act of 1940, codified at through, is a United States federal law that was created to monitor and regulate the activities of investment advisers (also spelled "advisors") as defined by the law.
An investment bank is typically a private company that provides various finance-related and other services to individuals, corporations, and governments such as raising financial capital by underwriting or acting as the client's agent in the issuance of securities.
Investment brokers are individuals who bring together buyers and sellers of investments.
An investment club is a group of individuals who meet for the purpose of pooling money and investing; members typically meet on a periodic basis to make investment decisions as a group through a voting process and recording of minutes, or gather information and perform investment transactions outside the group.
An investment company is a company whose main business is holding and managing securities for investment purposes.
An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group.
Investment management is the professional asset management of various securities (shares, bonds and other securities) and other assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors.
Investment performance is the return on an investment portfolio.
In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio.
Investment style refers to different style characteristics of equities, bonds or financial derivatives within a given investment philosophy.
An investment trust is a form of collective investment found mostly in the United Kingdom.
An investor is a person that allocates capital with the expectation of a future financial return.
An investor profile or style defines an individual's preferences in investment decisions, for example.
Islamic banking or Islamic finance (مصرفية إسلامية) or sharia-compliant finance is banking or financing activity that complies with sharia (Islamic law) and its practical application through the development of Islamic economics.
Islamic economics (الاقتصاد الإسلامي) is a term used to refer to Islamic commercial jurisprudence (فقه المعاملات, fiqh al-mu'āmalāt).
ISO 4217 is a standard first published by International Organization for Standardization in 1978, which delineates currency designators, country codes (alpha and numeric), and references to minor units in three tables.
In mathematics, Itô's lemma is an identity used in Itô calculus to find the differential of a time-dependent function of a stochastic process.
The January effect is a hypothesis that there is a seasonal anomaly in the financial market where securities' prices increase in the month of January more than in any other month.
In finance, Jensen's alpha (or Jensen's Performance Index, ex-post alpha) is used to determine the abnormal return of a security or portfolio of securities over the theoretical expected return.
Jesse Lauriston Livermore (July 26, 1877 – November 28, 1940) was an American investor and security analyst.
John Burr Williams (November 27, 1900 – September 15, 1989) was an American economist, recognized as an important figure in the field of fundamental analysis, and for his analysis of stock prices as reflecting their “intrinsic value.” He is best known for his 1938 text The Theory of Investment Value, based on his Ph.D. thesis, in which he articulated the theory of Discounted Cash Flow (DCF) based valuation, and in particular, dividend based valuation.
John Exter (September 17, 1910 – February 28, 2006) was an American economist, member of the Board of Governors of the United States Federal Reserve System, and founder of the Central Bank of Sri Lanka.
A jump process is a type of stochastic process that has discrete movements, called jumps, with random arrival times, rather than continuous movement, typically modelled as a simple or compound Poisson process.
Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota Production System (TPS), is a methodology aimed primarily at reducing flow times within production system as well as response times from suppliers and to customers.
In probability theory and intertemporal portfolio choice, the Kelly criterion, Kelly strategy, Kelly formula, or Kelly bet is a formula used to determine the optimal size of a series of bets in order to maximise the logarithm of wealth.
Keogh plans are a type of retirement plan for self-employed people and small businesses in the United States.
A land/location value tax (LVT), also called a site valuation tax, split rate tax, or site-value rating, is an ad valorem levy on the unimproved value of land.
Large and complex financial institutions (LCFI) is a polite term for the bulge bracket banks.
In finance, a lattice model is a technique applied to the valuation of derivatives, where a discrete time model is required.
In probability theory, a Lévy process, named after the French mathematician Paul Lévy, is a stochastic process with independent, stationary increments: it represents the motion of a point whose successive displacements are random and independent, and statistically identical over different time intervals of the same length.
The LBO (or leveraged buyout) valuation model estimates the current value of a business to a "financial buyer", based on the business's forecast financial performance.
The legal origins theory claims that the two main legal traditions or origins, civil law and common law, crucially shape lawmaking and dispute adjudication and have not been reformed after the initial exogenous transplantation by Europeans.
In finance, leverage (sometimes referred to as gearing in the United Kingdom and Australia) is any technique involving the use of borrowed funds in the purchase of an asset, with the expectation that the after tax income from the asset and asset price appreciation will exceed the borrowing cost.
A leveraged buyout (LBO) is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company's cash flow is the collateral used to secure and repay the borrowed money.
Liabilities subject to compromise refers to the debtors' liabilities, in the US, incurred before the start of Chapter 11 bankruptcy cases.
Liability insurance is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims.
Liability-driven investment policies and asset management decisions are those largely determined by the sum of current and future liabilities attached to the investor, be it a household or an institution.
The London Inter-bank Offered Rate is the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks.
The LIBOR market model, also known as the BGM Model (Brace Gatarek Musiela Model, in reference to the names of some of the inventors) is a financial model of interest rates.
A license (American English) or licence (British English) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit).
A life annuity is an annuity, or series of payments at fixed intervals, paid while the purchaser (or annuitant) is alive.
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder).
A life insurance tax shelter uses investments in insurance to protect income or assets from tax liabilities.
Linear programming (LP, also called linear optimization) is a method to achieve the best outcome (such as maximum profit or lowest cost) in a mathematical model whose requirements are represented by linear relationships.
Lipper Average also known as Lipper Index are a series of indices produced by Lipper, a subsidiary of Thomson Reuters, that establish benchmarks to measure the performance of a portfolio, or of various mutual funds and exchange-traded funds.
This is a list of banks in Africa, arranged by country.
This is a list of banks in Asia (alphabetically).
This is a list of banks in Europe.
This is a list of banks in Oceania.
This is a list of the banks in the Americas.
The following is a list of banks in the Arab World.
This is an annotated list of important business writers.
This is a list of central banks.
This is a list of notable futures exchanges. Those stock exchanges that also offer trading in futures contracts besides trading in securities are listed both here and the list of stock exchanges.
This is a list of International banking institutions.
The following is a limited list of mutual-fund families in the United States.
Listed here are end-user computer applications intended for use with numerical or data analysis.
The following is a list of publicly traded companies having the greatest market capitalization.
This is a list of major stock exchanges.
Commonly used stock market indices include.
The following is a list of traded commodities.
Lists of banks are contained in the following articles.
In finance, a loan is the lending of money by one or more individuals, organizations, and/or other entities to other individuals, organizations etc.
A loan covenant is a condition in a commercial loan or bond issue that requires the borrower to fulfill certain conditions or which forbids the borrower from undertaking certain actions, or which possibly restricts certain activities to circumstances when other conditions are met.
A local volatility model, in mathematical finance and financial engineering, is one that treats volatility as a function of both the current asset level S_t and of time t. As such, a local volatility model is a generalisation of the Black-Scholes model, where the volatility is a constant (i.e. a trivial function of S_t and t).
In probability theory, a log-normal (or lognormal) distribution is a continuous probability distribution of a random variable whose logarithm is normally distributed.
In finance, a long position in a financial instrument, means the holder of the position owns a positive amount of the instrument.
The Long Depression was a worldwide price and economic recession, beginning in 1873 and running either through the spring of 1879, or 1896, depending on the metrics used.
Long-Term Capital Management L.P. (LTCM) was a hedge fund management firmA financial History of the United States Volume II: 1970–2001, Jerry W. Markham, Chapter 5: "Bank Consolidation", M. E. Sharpe, Inc., 2002 based in Greenwich, Connecticut that used absolute-return trading strategies combined with high financial leverage.
Long-term care insurance (LTC or LTCI) is an insurance product, sold in the United States, United Kingdom and Canada, that helps pay for the costs associated with long-term care.
In mathematics, a low-discrepancy sequence is a sequence with the property that for all values of N, its subsequence x1,..., xN has a low discrepancy.
MACD, short for moving average convergence/divergence, is a trading indicator used in technical analysis of stock prices, created by Gerald Appel in the late 1970s.
In management accounting or managerial accounting, managers use the provisions of accounting information in order to better inform themselves before they decide matters within their organizations, which aids their management and performance of control functions.
Managerial economics deals with the application of the economic concepts,theories,tools and methodologies to solve practical problems in a business.it helps the manager in decision making and acts as a link between practice and theory".
Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques.
In finance, margin is collateral that the holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty.
In finance, marginal conditional stochastic dominance is a condition under which a portfolio can be improved in the eyes of all risk-averse investors by incrementally moving funds out of one asset (or one sub-group of the portfolio's assets) and into another.
In mathematical finance, Margrabe's formula is an option pricing formula applicable to an option to exchange one risky asset for another risky asset at maturity.
In some stock markets, the Mark Twain effect is the phenomenon of stock returns in October being lower than in other months.
Mark-to-market (MTM or M2M) or fair value accounting refers to accounting for the "fair value" of an asset or liability based on the current market price, or for similar assets and liabilities, or based on another objectively assessed "fair" value.
Market capitalization (market cap) is the market value of a publicly traded company's outstanding shares.
In financial markets, market impact is the effect that a market participant has when it buys or sells an asset.
In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset's price.
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. The U.S. Securities and Exchange Commission defines a "market maker" as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price.
Market microstructure is a branch of finance concerned with the details of how exchange occurs in markets.
Market portfolio is a portfolio consisting of a weighted sum of every asset in the market, with weights in the proportions that they exist in the market, with the necessary assumption that these assets are infinitely divisible.
In economics, market price is the economic price for which a good or service is offered in the marketplace.
Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements.
A market trend is a perceived tendency of financial markets to move in a particular direction over time.
Market value added (MVA) is the difference between the current market value of a firm and the capital contributed by investors.
A Market-based valuation is a form of stock valuation that refers to market indicators, also called extrinsic criteria (i.e. not related to economic fundamentals and account data, which are intrinsic criteria).
A Markov chain is "a stochastic model describing a sequence of possible events in which the probability of each event depends only on the state attained in the previous event".
Martingale pricing is a pricing approach based on the notions of martingale and risk neutrality.
In probability theory, the martingale representation theorem states that a random variable that is measurable with respect to the filtration generated by a Brownian motion can be written in terms of an Itô integral with respect to this Brownian motion.
Maslowian portfolio theory (MaPT) creates a normative portfolio theory based on human needs as described by Abraham Maslow.
Mathematical economics is the application of mathematical methods to represent theories and analyze problems in economics.
Maximum downside exposure (MDE) values the maximum downside to the portfolio.
A medical savings account (MSA) is an account into which tax-deferred amounts from income can be deposited.
A medium of exchange is a tradeable entity used to avoid the inconveniences of a pure barter system.
A merchant bank is historically a bank dealing in commercial loans and investment.
Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities.
Merton's portfolio problem is a well known problem in continuous-time finance and in particular intertemporal portfolio choice.
Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment, or a verifiable credit history.
In insurance, mid-term adjustment (MTA), also called a mid-term modification or mid-term change, refers to a change to an insurance policy prior to the end of the policy period (when coverage is offered).
In business and engineering, the minimum acceptable rate of return, often abbreviated MARR, or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other projects.
The Mississippi Company (Compagnie du Mississippi; founded 1684, named the Company of the West from 1717, and the Company of the Indies from 1719) was a corporation holding a business monopoly in French colonies in North America and the West Indies.
Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk.
The modified Dietz method is a measure of the ex post (i.e. historical) performance of an investment portfolio in the presence of external flows.
The modified internal rate of return (MIRR) is a financial measure of an investment's attractiveness.
Modigliani risk-adjusted performance (also known as M2, M2, Modigliani–Modigliani measure or RAP) is a measure of the risk-adjusted returns of some investment portfolio.
The Modigliani–Miller theorem (of Franco Modigliani, Merton Miller) is an influential element of economic theory; it forms the basis for modern thinking on capital structure.
Monetary reform is any movement or theory that proposes a system of supplying money and financing the economy that is different from the current system.
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context.
Money creation is the process by which the money supply of a country, or of an economic or monetary region,Such as the Eurozone or ECCAS is increased.
As money became a commodity, the money market became a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less.
A money market fund (also called a money market mutual fund) is an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper.
A money order is a payment order for a pre-specified amount of money.
In finance, moneyness is the relative position of the current price (or future price) of an underlying asset (e.g., a stock) with respect to the strike price of a derivative, most commonly a call option or a put option.
In mathematics, Monte Carlo integration is a technique for numerical integration using random numbers.
Monte Carlo methods (or Monte Carlo experiments) are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results.
In mathematical finance, a Monte Carlo option model uses Monte Carlo methods Although the term 'Monte Carlo method' was coined by Stanislaw Ulam in the 1940s, some trace such methods to the 18th century French naturalist Buffon, and a question he asked about the results of dropping a needle randomly on a striped floor or table.
Monte Carlo methods are used in finance and mathematical finance to value and analyze (complex) instruments, portfolios and investments by simulating the various sources of uncertainty affecting their value, and then determining the distribution of their value over the range of resultant outcomes.
A mortgage loan, or simply mortgage, is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged.
In statistics, a moving average (rolling average or running average) is a calculation to analyze data points by creating series of averages of different subsets of the full data set.
Multi-objective optimization (also known as multi-objective programming, vector optimization, multicriteria optimization, multiattribute optimization or Pareto optimization) is an area of multiple criteria decision making, that is concerned with mathematical optimization problems involving more than one objective function to be optimized simultaneously.
In mathematical finance, multiple factor models are asset pricing models that can be used to estimate the discount rate for the valuation of financial assets.
Multiple-criteria decision-making (MCDM) or multiple-criteria decision analysis (MCDA) is a sub-discipline of operations research that explicitly evaluates multiple conflicting criteria in decision making (both in daily life and in settings such as business, government and medicine).
A municipal bond, commonly known as a Muni Bond, is a bond issued by a local government or territory, or one of their agencies.
The Municipal Securities Rulemaking Board (MSRB) writes investor protection rules and other rules regulating broker-dealers and banks in the United States municipal securities market, including tax-exempt and taxable municipal bonds, municipal notes, and other securities issued by states, cities, and counties or their agencies to help finance public projects or for other public policy purposes.
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities.
In portfolio theory, a mutual fund separation theorem, mutual fund theorem, or separation theorem is a theorem stating that, under certain conditions, any investor's optimal portfolio can be constructed by holding each of certain mutual funds in appropriate ratios, where the number of mutual funds is smaller than the number of individual assets in the portfolio.
A mutual savings bank is a financial institution chartered by a central or regional government, without capital stock, that is owned by its members who subscribe to a common fund.
The Nasdaq Stock Market is an American stock exchange.
In banking, the term national bank carries several meanings.
In finance, the net present value (NPV) or net present worth (NPW) is a measurement of profit calculated by subtracting the present values (PV) of cash outflows (including initial cost) from the present values of cash inflows over a period of time.
Niche insurance is insurance that is provided for small, low-demand areas.
In finance and economics, the nominal interest rate or nominal rate of interest is either of two distinct things.
The coupon rate (or nominal rate or nominal yield) of a fixed income security is the (annualized) amount of the coupon, which is a fixed percentage of the par value.
A non-bank financial institution (NBFI) is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency.
In mathematics, nonlinear programming is the process of solving an optimization problem defined by a system of equalities and inequalities, collectively termed constraints, over a set of unknown real variables, along with an objective function to be maximized or minimized, where some of the constraints or the objective function are nonlinear.
In corporate finance, net operating profit after tax (NOPAT) is a company's after-tax operating profit for all investors, including shareholders and debt holders.
Normal backwardation, also sometimes called backwardation, is the market condition wherein the price of a commodities' forward or futures contract is trading below the expected spot price at contract maturity.
Numerical partial differential equations is the branch of numerical analysis that studies the numerical solution of partial differential equations (PDEs).
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and thrift institutions and the federal branches and agencies of foreign banks in the United States.
An offshore bank is a bank regulated under international banking license (often called offshore license), which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment.
The Omega ratio is a risk-return performance measure of an investment asset, portfolio, or strategy.
Open interest (futures) is the number of "open" contracts or open interest of derivatives in the futures market.
Open-end fund (or open-ended fund) is a collective investment scheme that can issue and redeem shares at any time.
In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities.
In microeconomic theory, the opportunity cost, also known as alternative cost, is the value (not a benefit) of the choice in terms of the best alternative while making a decision.
In mathematics, the theory of optimal stopping or early stopping is concerned with the problem of choosing a time to take a particular action, in order to maximise an expected reward or minimise an expected cost.
In finance, an option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on a specified date, depending on the form of the option.
In finance, the style or family of an option is the class into which the option falls, usually defined by the dates on which the option may be exercised.
In finance, the time value (TV) (extrinsic or instrumental value) of an option is the premium a rational investor would pay over its current exercise value (intrinsic value), based on the probability it will increase in value before expiry.
Option-adjusted spread (OAS) is the yield spread which has to be added to a benchmark yield curve to discount a security's payments to match its market price, using a dynamic pricing model that accounts for embedded options.
Options brokers specialize in offering options trading, research, education and other tools to individual investors.
An order is an instruction to buy or sell on a trading venue such as a stock market, bond market, commodity market, financial derivative market or cryptocurrency exchange.
In mathematics, the Ornstein–Uhlenbeck process (named after Leonard Ornstein and George Eugene Uhlenbeck), is a stochastic process that, roughly speaking, describes the velocity of a massive Brownian particle under the influence of friction.
An outline, also called a hierarchical outline, is a list arranged to show hierarchical relationships and is a type of tree structure.
The following outline is provided as an overview of and topical guide to actuarial science: Actuarial science – discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries.
The following outline is provided as an overview of and topical guide to management: Business management – management of a business.
The following outline is provided as an overview of and topical guide to commercial law: Commercial law – body of law that governs business and commercial transactions.
The following outline is provided as an overview of and topical guide to economics: Economics – analyzes the production, distribution, and consumption of goods and services.
The following outline is provided as an overview of and topical guide to marketing: Marketing – social and managerial processes by which products, services, and value are exchanged in order to fulfill individuals' or groups' needs and wants.
The following outline is provided as an overview of and topical guide to production: Production – act of creating 'use' value or 'utility' that can satisfy a want or need.
Over-investing in finance, particularly personal finance, refers to the practice of investing more into an asset than what that asset is worth on the open market.
In business, overhead or overhead expense refers to an ongoing expense of operating a business.
Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property.
The price-to-book ratio, or P/B ratio, is a financial ratio used to compare a company's current market price to its book value.
The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until the mid-1840s.
Paper Valuation is a value of privately held shares that is not directly tradable at an exchange.
In stock and securities market technical analysis, parabolic SAR (parabolic stop and reverse) is a method devised by J. Welles Wilder, Jr., to find potential reversals in the market price direction of traded goods such as securities or currency exchanges such as forex.
Pareto efficiency or Pareto optimality is a state of allocation of resources from which it is impossible to reallocate so as to make any one individual or preference criterion better off without making at least one individual or preference criterion worse off.
In mathematics, a partial differential equation (PDE) is a differential equation that contains unknown multivariable functions and their partial derivatives.
Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio.
The USA PATRIOT Act is an Act of Congress signed into law by US President George W. Bush on October 26, 2001.
Payback period in capital budgeting refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even point.
Payment protection insurance (PPI), also known as credit insurance, credit protection insurance, or loan repayment insurance, is an insurance product that enables consumers to ensure repayment of credit if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that may prevent them from earning income to service the debt.
A payroll is a company's list of its employees, but the term is commonly used to refer to.
Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.
The PEG ratio (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected growth.
A pension is a fund into which a sum of money is added during an employee's employment years, and from which payments are drawn to support the person's retirement from work in the form of periodic payments.
Performance attribution, profit attribution, or investment performance attribution is a set of techniques that performance analysts use to explain why a portfolio's performance differed from the benchmark.
A perpetuity is an annuity that has no end, or a stream of cash payments that continues forever.
Personal financial management (PFM) refers to software that helps users manage their money.
Pet insurance pays, partly or in total, for veterinary treatment of the insured person's ill or injured pet.
A petition mill is a fraud in which the perpetrator poses as a financial advisor, sometimes as a credit counselor or paralegal, filing hastily prepared bankruptcy documents in the name of victims who come to the advisor as clients.
The philosophy of accounting is the conceptual framework for the professional preparation and auditing of financial statements and accounts.
Point and figure (P&F) is a charting technique used in technical analysis.
In probability theory and statistics, the Poisson distribution (in English often rendered), named after French mathematician Siméon Denis Poisson, is a discrete probability distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space if these events occur with a known constant rate and independently of the time since the last event.
Political risk insurance is a type of insurance that can be taken out by businesses, of any size, against political risk—the risk that revolution or other political conditions will result in a loss.
A Ponzi scheme (also a Ponzi game) is a form of fraud in which a purported businessman lures investors and pays profits to earlier investors using funds obtained from newer investors.
In finance, a portfolio is a collection of investments held by an investment company, hedge fund, financial institution or individual.
Portfolio insurance is a method of hedging a portfolio of stocks against the market risk by short selling stock index futures.
A Portfolio Manager is a professional who is responsible for making investment decisions and carrying out investment activities on behalf of individuals or institutions.
Portfolio optimization is the process of selecting the best portfolio (asset distribution), out of the set of all portfolios being considered, according to some objective.
Post-modern portfolio theory (or PMPT) is an extension of the traditional modern portfolio theory ("MPT", which is an application of mean-variance analysis or "MVA").
A dual-currency note (DC) pays coupons in the investor's domestic currency with the notional in the issuer’s domestic currency.
In lending, pre-approval has two meanings: The first is that a lender, via public or proprietary information, feels that a potential borrower is completely credit worthy enough for a certain credit product, and approaches the potential customer with a guarantee that should they want that product, they would be guaranteed to get it.
Pre-qualification is a process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.
Predatory lending is the unfair, deceptive, or fraudulent practices of some lenders during the loan origination process.
Preferred stock (also called preferred shares, preference shares or simply preferreds) is a type of stock which may have any combination of features not possessed by common stock including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument.
In economics and finance, present value (PV), also known as present discounted value, is the value of an expected income stream determined as of the date of valuation.
The price/earnings ratio (often shortened to the P/E ratio or the PER) is the ratio of a company's stock price to the company's earnings per share.
The primary market is the part of the capital market that deals with issuing of new securities.
Prime brokerage is the generic name for a bundled package of services offered by investment banks and securities firms to hedge funds which need the ability to borrow securities and cash in order to be able to invest on a netted basis and achieve an absolute return.
Principal component analysis (PCA) is a statistical procedure that uses an orthogonal transformation to convert a set of observations of possibly correlated variables into a set of values of linearly uncorrelated variables called principal components.
Private banks are the banks owned by either the individual or a general partner(s) with limited partner(s).
Private equity typically refers to investment funds organized as limited partnerships that are not publicly traded and whose investors are typically large institutional investors, university endowments, or wealthy individuals.
Probability is the measure of the likelihood that an event will occur.
In probability theory and statistics, a probability distribution is a mathematical function that provides the probabilities of occurrence of different possible outcomes in an experiment.
The Professional Risk Managers' International Association (PRMIA) is a professional organization focused on the "promotion of sound risk management standards and practices globally", and "the integration of practice and theory"; it was founded in 2002 as a non-profit.
Profitability index (PI), also known as profit investment ratio (PIR) and value investment ratio (VIR), is the ratio of payoff to investment of a proposed project.
Property insurance provides protection against most risks to property, such as fire, theft and some weather damage.
A property tax or millage rate is an ad valorem tax on the value of a property, usually levied on real estate.
Pull to Par is the effect in which the price of a bond converges to par value as time passes.
In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).
In financial mathematics, put–call parity defines a relationship between the price of a European call option and European put option, both with the identical strike price and expiry, namely that a portfolio of a long call option and a short put option is equivalent to (and hence has the same value as) a single forward contract at this strike price and expiry.
Quadratic programming (QP) is the process of solving a special type of mathematical optimization problem—specifically, a (linearly constrained) quadratic optimization problem, that is, the problem of optimizing (minimizing or maximizing) a quadratic function of several variables subject to linear constraints on these variables.
Quantitative analysis is the use of models, or algorithms, to evaluate assets for investment.
Quantitative behavioral finance is a new discipline that uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation.
In numerical analysis, the quasi-Monte Carlo method is a method for numerical integration and solving some other problems using low-discrepancy sequences (also called quasi-random sequences or sub-random sequences).
High-dimensional integrals in hundreds or thousands of variables occur commonly in finance.
In mathematics, the Radon–Nikodym theorem is a result in measure theory.
Railway Mania was an instance of speculative frenzy in Britain in the 1840s.
Random number generation is the generation of a sequence of numbers or symbols that cannot be reasonably predicted better than by a random chance, usually through a hardware random-number generator (RNG).
The random walk hypothesis is a financial theory stating that stock market prices evolve according to a random walk (so price changes are random) and thus cannot be predicted.
In finance, a range accrual is a type of derivative product very popular among structured-note investors.
In finance, return is a profit on an investment.
The rate of return on a portfolio is the ratio of income generated (whether realized or not) by a portfolio to the size of the portfolio.
In economics, "rational expectations" are model-consistent expectations, in that agents inside the model are assumed to "know the model" and on average take the model's predictions as valid.
Rational pricing is the assumption in financial economics that asset prices (and hence asset pricing models) will reflect the arbitrage-free price of the asset as any deviation from this price will be "arbitraged away".
Real estate is "property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more generally) buildings or housing in general.
Real estate economics is the application of economic techniques to real estate markets.
A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate.
Real options valuation, also often termed real options analysis,Adam Borison (Stanford University).
In economics, a real value of a good or other entity has been adjusted for inflation, enabling comparison of quantities as if prices had not changed.
A reference rate is a rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract.
Reinsurance is insurance that is purchased by an insurance company.
Relative return is a measure of the return of an investment portfolio relative to a theoretical passive reference portfolio or benchmark.
The relative strength index (RSI) is a technical indicator used in the analysis of financial markets.
The Rendleman–Bartter model (Richard J. Rendleman, Jr. and Brit J. Bartter) in finance is a short rate model describing the evolution of interest rates.
Renters' insurance, often called tenants' insurance, is an insurance policy that provides some of the benefits of homeowners' insurance, but does not include coverage for the dwelling, or structure, with the exception of small alterations that a tenant makes to the structure.
A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a transaction concluded on a deal date tD between two parties A and B: If positive interest rates are assumed, the repurchase price PF can be expected to be greater than the original sale price PN.
Reset also known as fixing is a generic concept in the financial markets, meaning the determination and recording of a reference rate, usually in order to calculate the settlement value of a periodic payment schedule between two parties.
Residual income valuation (RIV; also, residual income model and residual income method, RIM) is an approach to equity valuation that formally accounts for the cost of equity capital.
The return on assets (ROA) shows the percentage of how profitable a company's assets are in generating revenue.
Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies after taking into account the amount of initial capital invested.
In corporate finance, the return on equity (ROE) is a measure of the profitability of a business in relation to the book value of shareholder equity, also known as net assets or assets minus liabilities.
Return on investment (ROI) is the ratio between the net profit and cost of investment resulting from an investment of some resource.
Returns-based style analysis is a statistical technique used in finance to deconstruct the returns of investment strategies using a variety of explanatory variables.
A revenue model is a framework for generating revenues.
Risk is the potential of gaining or losing something of value.
A risk factor is a concept in finance theory such as the CAPM, arbitrage pricing theory and other theories that use pricing kernels.
Risk management is the identification, evaluation, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinator and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.
In financial mathematics, a risk measure is used to determine the amount of an asset or set of assets (traditionally currency) to be kept in reserve.
Risk parity (or risk premia parity) is an approach to investment portfolio management which focuses on allocation of risk, usually defined as volatility, rather than allocation of capital.
A risk retention group (RRG) is an alternative risk transfer entity created by the federal Liability Risk Retention Act (LRRA).
The risk-return-ratio is a measure of return in terms of risk for a specific time period.
The risk-free interest rate is the rate of return of a hypothetical investment with no risk of financial loss, over a given period of time.
In mathematical finance, a risk-neutral measure (also called an equilibrium measure, or equivalent martingale measure) is a probability measure such that each share price is exactly equal to the discounted expectation of the share price under this measure.
The risk–return spectrum (also called the risk–return tradeoff or risk–reward) is the relationship between the amount of return gained on an investment and the amount of risk undertaken in that investment.
In finance, rNPV ("risk-adjusted net present value") or eNPV ("expected NPV") is a method to value risky future cash flows.
Roll's critique is a famous analysis of the validity of empirical tests of the capital asset pricing model (CAPM) by Richard Roll.
A Roth IRA (individual retirement account) plan under United States law is generally not taxed, provided certain conditions are met.
Roy's safety-first criterion is a risk management technique that allows an investor to select one portfolio rather than another based on the criterion that the probability of the portfolio's return falling below a minimum desired threshold is minimized.
A royalty is a payment made by one party, the licensee or franchisee to another that owns a particular asset, the licensor or franchisor for the right to ongoing use of that asset.
In mathematical finance, the SABR model is a stochastic volatility model, which attempts to capture the volatility smile in derivatives markets.
A salary is a form of payment from an employer to an employee, which may be specified in an employment contract.
In bookkeeping, accounting, and finance, Net sales are operating revenues earned by a company for selling its products or rendering its services.
The SCA relies on the assumption that a matrix of attributes or significant features of a property drive its value.
A sales tax is a tax paid to a governing body for the sales of certain goods and services.
The Sarbanes–Oxley Act of 2002, also known as the "Public Company Accounting Reform and Investor Protection Act" (in the Senate) and "Corporate and Auditing Accountability, Responsibility, and Transparency Act" (in the House) and more commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms.
A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings, deposits, and making mortgage and other loans.
The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995: the Federal Savings and Loan Insurance Corporation (FSLIC) closed or otherwise resolved 296 institutions from 1986 to 1989 and the Resolution Trust Corporation (RTC) closed or otherwise resolved 747 institutions from 1989 to 1995.
A savings bank is a financial institution whose primary purpose is accepting savings deposits and paying interest on those deposits.
Scenario analysis is a process of analyzing possible future events by considering alternative possible outcomes (sometimes called "alternative worlds").
Seasonal spread traders are spread traders that take advantage of seasonal patterns by holding long and short positions in futures contracts simultaneously in the same or a related commodity markets.
The secondary market, also called the aftermarket and follow on public offering is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold.
Sector rotation is a theory of stock market trading patterns.
The United States Congress enacted the Securities Act of 1933, also known as the 1933 Act, the Securities Act, the Truth in Securities Act, the Federal Securities Act, or the '33 Act, Title I of Pub.
The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (codified at et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America.
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs).
A security is a tradable financial asset.
Security characteristic line (SCL) is a regression line, plotting performance of a particular security or portfolio against that of the market portfolio at every point in time.
The Security Commission, sometimes known as the Standing Security Commission,Geoffrey Philip Wilson, "Cases and materials on constitutional and administrative law", Cambridge University Press, 1976 p. 98.
Security market line (SML) is the representation of the capital asset pricing model.
Self-insurance describes a situation in which a person does not take out any third party insurance.
A Simplified Employee Pension Individual Retirement Arrangement (SEP IRA) is a variation of the Individual Retirement Account used in the United States.
A separation property is a crucial element of modern portfolio theory that gives a portfolio manager the ability to separate the process of satisfying investing clients' assets into two separate parts.
In finance, the Sharpe ratio (also known as the Sharpe index, the Sharpe measure, and the reward-to-variability ratio) is a way to examine the performance of an investment by adjusting for its risk.
In finance, a short sale (also known as a short, shorting, or going short) is the sale of an asset (securities or other financial instrument) that the seller does not own.
A short-rate model, in the context of interest rate derivatives, is a mathematical model that describes the future evolution of interest rates by describing the future evolution of the short rate, usually written r_t \,.
The simple Dietz method is a means of measuring historical investment portfolio performance, compensating for external flows into/out of the portfolio during the period.
A Savings Incentive Match Plan for Employees Individual Retirement Account, commonly known by the abbreviation "SIMPLE IRA", is a type of tax-deferred employer-provided retirement plan in the United States that allows employees to set aside money and invest it to grow for retirement.
Simple living encompasses a number of different voluntary practices to simplify one's lifestyle.
The single-index model (SIM) is a simple asset pricing model to measure both the risk and the return of a stock.
In finance, a single-stock future (SSF) is a type of futures contract between two parties to exchange a specified number of stocks in a company for a price agreed today (the futures price or the strike price) with delivery occurring at a specified future date, the delivery date.
With regard to futures contracts as well as other financial instruments, slippage is the difference between where the computer signaled the entry and exit for a trade and where actual clients, with actual money, entered and exited the market using the computer’s signals.
Smart beta investment portfolios offer the benefits of passive strategies combined with some of the advantages of active ones, placing it at the intersection of efficient-market hypothesis and classic value investing.
Social security is "any government system that provides monetary assistance to people with an inadequate or no income." Social security is enshrined in Article 22 of the Universal Declaration of Human Rights, which states: Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.
The Sortino ratio measures the risk-adjusted return of an investment asset, portfolio, or strategy.
The South Sea Company (officially The Governor and Company of the merchants of Great Britain, trading to the South Seas and other parts of America, and for the encouragement of fishing) was a British joint-stock company founded in 1711, created as a public-private partnership to consolidate and reduce the cost of national debt.
A special-purpose entity (SPE; or, in Europe and India, special-purpose vehicle/SPV, or, in some cases in each EU jurisdiction – FVC, financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives.
In finance, a specific risk is a risk that affects a very small number of assets.
A Spectral risk measure is a risk measure given as a weighted average of outcomes where bad outcomes are, typically, included with larger weights.
Speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable at a future date.
In finance, a spread trade (also known as relative value trade) is the simultaneous purchase of one security and sale of a related security, called legs, as a unit.
Stamp duty is a tax that is levied on documents.
A standard of deferred payment is the accepted way, in a given market, to settle a debt – a deferred payment is not as widely used as other terms for functions of money, namely medium of exchange, store of value, and unit of account, though it is distinguished in some works.
In finance, statistical arbitrage (often abbreviated as Stat Arb or StatArb) is a class of short-term financial trading strategies that employ mean reversion models involving broadly diversified portfolios of securities (hundreds to thousands) held for short periods of time (generally seconds to days).
In statistics, dispersion (also called variability, scatter, or spread) is the extent to which a distribution is stretched or squeezed.
The Sterling ratio (SR) is a measure of the risk-adjusted return of an investment portfolio.
Stochastic calculus is a branch of mathematics that operates on stochastic processes.
A stochastic differential equation (SDE) is a differential equation in which one or more of the terms is a stochastic process, resulting in a solution which is also a stochastic process.
Stochastic dominance is a partial order between random variables.
In technical analysis of securities trading, the stochastic oscillator is a momentum indicator that uses support and resistance levels.
Stochastic portfolio theory (SPT) is a mathematical theory for analyzing stock market structure and portfolio behavior introduced by E. Robert Fernholz in 2002.
--> In probability theory and related fields, a stochastic or random process is a mathematical object usually defined as a collection of random variables.
In the field of mathematical optimization, stochastic programming is a framework for modeling optimization problems that involve uncertainty.
In statistics, stochastic volatility models are those in which the variance of a stochastic process is itself randomly distributed.
In mathematical finance, the stochastic volatility jump (SVJ) model is suggested by Bates.
The stock (also capital stock) of a corporation is constituted of the equity stock of its owners.
A stock exchange, securities exchange or bourse, is a facility where stock brokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments.
A stock market, equity market or share market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange as well as those only traded privately.
A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation.
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth.
In 2001, stock prices took a sharp downturn (some say "stock market crash" or "the Internet bubble bursting") in stock markets across the United States, Canada, Asia, and Europe.
In finance, a stock market index future is a cash-settled futures contract on the value of a particular stock market index, such as the S&P 500.
Stock selection criteria or stock picking is a multi-method technique for investing when specifically dealing with stocks (equity markets).
A stock split or stock divide increases the number of shares in a company.
A stock swap is a strategy used during a merger or acquisition of a company.
A stock trader or equity trader or share trader is a person or company involved in trading equity securities.
In financial markets, stock valuation is the method of calculating theoretical values of companies and their stocks.
A stockbroker is a regulated professional individual, usually associated with a brokerage firm or broker-dealer, who buys and sells stocks and other securities for both retail and institutional clients through a stock exchange or over the counter in return for a fee or commission.
A store of value is the function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.
In finance, a straddle refers to two transactions that share the same security, with positions that offset one another.
Straight-through processing (STP) is an initiative used by financial companies to speed up the transaction process.
In finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.
Structured finance is a sector of finance, specifically Financial law that manages leverage and risk.
Style investing is an investment approach in which rotation among different "styles" is supposed to be important for successful investing.
In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc.
The sum of perpetuities method (SPM) is a way of valuing a business assuming that investors discount the future earnings of a firm regardless of whether earnings are paid as dividends or retained.
Sum of the parts analysis (SOTP), or break-up analysis, is a method of valuation of a multi-divisional company, holding company, or a conglomerate.
In commerce, supply chain management (SCM), the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.
In stock market technical analysis, support and resistance is a concept that the movement of the price of a security will tend to stop and reverse at certain predetermined price levels.
A surety bond or surety is a promise by a surety or guarantor to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract.
According to PIMS (profit impact of marketing strategy), an important lever of business success is growth.
A swap is a derivative contract where two parties exchange financial instruments.
A swaption is an option granting its owner the right but not the obligation to enter into an underlying swap.
In finance and economics, systematic risk (in economics often called aggregate risk or undiversifiable risk) is vulnerability to events which affect aggregate outcomes such as broad market returns, total economy-wide resource holdings, or aggregate income.
The T-model is a formula that states the returns earned by holders of a company's stock in terms of accounting variables obtainable from its financial statements.
Listed below is a table of historical exchange rates relative to the U.S. dollar, at present the most widely traded currency in the world.
Tactical asset allocation (TAA) is a dynamic investment strategy that actively adjusts a portfolio's asset allocation.
Tail risk parity is an extension of the risk parity concept that takes into account the behavior of the portfolio components during tail risk events.
In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder).
A tax (from the Latin taxo) is a mandatory financial charge or some other type of levy imposed upon a taxpayer (an individual or other legal entity) by a governmental organization in order to fund various public expenditures.
Tax advantage refers to the economic bonus which applies to certain accounts or investments that are, by statute, tax-reduced, tax-deferred, or tax-free.
In accounting, tax amortization benefit (or tax amortisation benefit) refers to the present value of income tax savings resulting from the tax deduction generated by the amortization of an intangible asset.
In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.
Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term.
In finance, the terminal value (continuing value or horizon value) of a security is the present value at a future point in time of all future cash flows when we expect stable growth rate forever.
Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities.
A time horizon, also known as a planning horizon, is a fixed point of time in the future at which point certain processes will be evaluated or assumed to end.
The time value of money is the greater benefit of receiving money now rather than later.
Times interest earned (TIE) or interest coverage ratio is a measure of a company's ability to honor its debt payments.
Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans.
In technical analysis, a top is an event in which a security's market price reaches a high, then a higher high, and then a lower high.
Total return swap, or TRS (especially in Europe), or total rate of return swap, or TRORS, or Cash Settled Equity Swap is a financial contract that transfers both the credit risk and market risk of an underlying asset.
In finance, tracking error or active risk is a measure of the risk in an investment portfolio that is due to active management decisions made by the portfolio manager; it indicates how closely a portfolio follows the index to which it is benchmarked.
Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money.
Trade credit insurance, business credit insurance, export credit insurance, or credit insurance is an insurance policy and a risk management product offered by private insurance companies and governmental export credit agencies to business entities wishing to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy.
A traditional IRA is an individual retirement arrangement (IRA), established in the United States by the Employee Retirement Income Security Act of 1974 (ERISA) (codified in part at). Normal IRAs also existed before ERISA.
A transfer tax is a tax on the passing of title to property from one person (or entity) to another.
Travel insurance is insurance that is intended to cover medical expenses, trip cancellation, lost luggage, flight accident and other losses incurred while traveling, Travel insurance can usually be arranged at the time of the booking of a trip to cover exactly the duration of that trip, or a "multi-trip" policy can cover an unlimited number of trips within a set time frame.
A treasury stock or reacquired stock is stock which is also bought back by the issuing company, reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings).
The Treynor ratio (sometimes called the reward-to-volatility ratio or Treynor measure), named after Jack L. Treynor, is a measurement of the returns earned in excess of that which could have been earned on an investment that has no diversifiable risk (e.g., Treasury bills or a completely diversified portfolio), per each unit of market risk assumed.
In Finance the Treynor–Black model is a mathematical model for security selection published by Fischer Black and Jack Treynor in 1973.
The trinomial tree is a lattice based computational model used in financial mathematics to price options.
A trust company is a corporation, especially a commercial bank, organized to perform the fiduciary of trusts and agencies.
A trust is a three-party fiduciary relationship in which the first party, the trustor or settlor, transfers ("settles") a property (often but not necessarily a sum of money) upon the second party (the trustee) for the benefit of the third party, the beneficiary.
Tulip mania (Dutch: tulpenmanie) was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637.
In decision theory, economics, and finance, a two-moment decision model is a model that describes or prescribes the process of making decisions in a context in which the decision-maker is faced with random variables whose realizations cannot be known in advance, and in which choices are made based on knowledge of two moments of those random variables.
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government.
In investments, uncompensated risk is the level of additional risk for which no additional returns are generated and when taking systematic withdrawals make the probability of failure unacceptably high.
In finance, the underlying of a derivative is an asset, basket of assets, index, or even another derivative, such that the cash flows of the (former) derivative depend on the value of this underlying.
Uneconomic growth, in human development theory, welfare economics (the economics of social welfare), and some forms of ecological economics, is economic growth that reflects or creates a decline in the quality of life.
A unit of account in economics is a nominal monetary unit of measure or currency used to represent the real value (or cost) of any economic item; i.e. goods, services, assets, liabilities, income, expenses.
The United States housing bubble was a real estate bubble affecting over half of the U.S. states.
Universal life insurance (often shortened to UL) is a type of cash value life insurance, sold primarily in the United States of America.
The universal portfolio algorithm is a portfolio selection algorithm from the field of machine learning and information theory.
The University of Arizona (also referred to as U of A, UA, or Arizona) is a public research university in Tucson, Arizona.
In investing, upside beta is the element of traditional beta that investors do not typically associate with the true meaning of risk.
The upside-potential ratio is a measure of a return of an investment asset relative to the minimal acceptable return.
In investing, upside risk is the uncertain possibility of gain.
A use tax is a type of tax levied in the United States by numerous state governments.
Within economics the concept of utility is used to model worth or value, but its usage has evolved significantly over time.
In microeconomics, the utility maximization problem is the problem consumers face: "how should I spend my money in order to maximize my utility?" It is a type of optimal decision problem.
The V2 ratio (V2R) is a measure of excess return per unit of exposure to loss of an investment asset, portfolio or strategy, compared to a given benchmark.
In finance, valuation is the process of determining the present value (PV) of an asset.
In finance, a price (premium) is paid or received for purchasing or selling options.
Valuation risk is the financial risk that an asset is overvalued and is worth less than expected when it matures or is sold.
In economics, valuation using multiples is a process that consists of.
Economic value is a measure of the benefit provided by a good or service to an economic agent.
Value at risk (VaR) is a measure of the risk of loss for investments.
A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market.
The Value Line Composite Index was launched on the Kansas City Board of Trade(KCBT) in 1982, pioneering the first market index to trade futures market, ushering in a ground-breaking approach to risk management.
The Value of Earth, i.e. the net worth of our planet, is a debated concept both in terms of the definition of value, as well as the scope of "earth".
The value of life is an economic value used to quantify the benefit of avoiding a fatality.
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally, based on the increase in value of a product or service at each stage of production or distribution.
Value-in-use is the net present value (NPV) of a cash flow or other benefits that an asset generates for a specific owner under a specific use.
Variable costs are costs that change in proportion to the good or service that a business produces.
Variable universal life insurance (often shortened to VUL) is a type of life insurance that builds a cash value.
A variance swap is an over-the-counter financial derivative that allows one to speculate on or hedge risks associated with the magnitude of movement, i.e. volatility, of some underlying product, like an exchange rate, interest rate, or stock index.
In finance, the Vasicek model is a mathematical model describing the evolution of interest rates.
Vehicle insurance (also known as car insurance, motor insurance or auto insurance) is insurance for cars, trucks, motorcycles, and other road vehicles.
Vix pervenit: On Usury and Other Dishonest Profit was an encyclical, promulgated by Pope Benedict XIV on November 1, 1745, which condemned the practice of charging interest on loans as usury.
In finance, volatility (symbol σ) is the degree of variation of a trading price series over time as measured by the standard deviation of logarithmic returns.
Volatility smiles are implied volatility patterns that arise in pricing financial options.
A wage is monetary compensation (or remuneration, personnel expenses, labor) paid by an employer to an employee in exchange for work done.
The Wall Street Crash of 1929, also known as Black Tuesday (October 29), the Great Crash, or the Stock Market Crash of 1929, began on October 24, 1929 ("Black Thursday"), and was the most devastating stock market crash in the history of the United States, when taking into consideration the full extent and duration of its after effects.
In finance, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed price called exercise price until the expiry date.
Wealth is the abundance of valuable resources or valuable material possessions.
The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets.
Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), sometimes called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date.
In mathematics, the Wiener process is a continuous-time stochastic process named in honor of Norbert Wiener.
Wire transfer, bank transfer or credit transfer is a method of electronic funds transfer from one person or entity to another.
Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organisation or other entity, including governmental entities.
An X-Value Adjustment (XVA, xVA) is a generic term referring collectively to a number of different “Valuation Adjustments” in relation to derivative instruments held by banks.
In finance, the yield on a security is the amount of cash (in percentage terms) that returns to the owners of the security, in the form of interest or dividends received from it.
In finance, the yield curve is a curve showing several yields or interest rates across different contract lengths (2 month, 2 year, 20 year, etc....) for a similar debt contract.
The yield gap or yield ratio is the ratio of the dividend yield of an equity and the yield of a long-term government bond.
In finance, the yield spread or credit spread is the difference between the quoted rates of return on two different investments, usually of different credit qualities but similar maturities.
The yield to maturity (YTM), book yield or redemption yield of a bond or other fixed-interest security, such as gilts, is the (theoretical) internal rate of return (IRR, overall interest rate) earned by an investor who buys the bond today at the market price, assuming that the bond is held until maturity, and that all coupon and principal payments are made on schedule.
The Z-spread, ZSPRD, zero-volatility spread or yield curve spread of a mortgage-backed security (MBS) is the parallel shift or spread over the zero-coupon Treasury yield curve required for discounting a pre-determined cash flow schedule to arrive at its present market price.
A zero-coupon bond (also discount bond or deep discount bond) is a bond where the face value is repaid at the time of maturity.
The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo.
The 1979 (or second) oil crisis or oil shock occurred in the world due to decreased oil output in the wake of the Iranian Revolution.
The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.
In the United States, a 401(a) plan is a tax-deferred retirement savings plan defined by subsection 401(a) of the Internal Revenue Code.
In the United States, a 401(k) plan is the tax-qualified, defined-contribution pension account defined in subsection 401(k) of the Internal Revenue Code.
In the United States, a 403(b) plan is a U.S. tax-advantaged retirement savings plan available for public education organizations, some non-profit employers (only Internal Revenue Code 501(c)(3) organizations), cooperative hospital service organizations, and self-employed ministers in the United States.
The 457 plan is a type of nonqualified, tax advantaged deferred-compensation retirement plan that is available for governmental and certain non-governmental employers in the United States.
A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary.