Terms - Financial Dictionary - Investor Glossary
Fifth letter of a Nasdaq stock symbol indicate that it is when-issued or when-distributed.
A way of reporting fund performance whereby each reporting period is indexed at 100 or 1000. Hence, for a fund with a total return of 39% over the year, the VAMI indexed at 100 is 139.
A discount broker whose rates are a percentage of the dollar value of each transaction.
In the market for Eurodollar deposits and foreign exchange, the delivery date of funds traded. For spot transactions, it is normally on spot transactions two days after a transaction is agreed upon. In the case of a forward foreign exchange trade, it is the future date.
When value or credit is given for funds transferred between banks.
In the context of asset management, mutual funds, and hedge funds, the a style of investment that focuses on securities with low price to earnings ratios or low price to book ratios. Some of these securities are deemed cheap and are viewed by manager as having a lot of profit potential.
Value Line investment survey
A proprietary service that ranks stocks for timeliness and safety.
A manager who seeks to buy stocks that are at a discount to their "fair value" and to sell them at or in excess of that value. Often a value stock is one with a low price-to-book value ratio. Opposite of to growth stock.
Increases in owners' wealth achieved by maximizing of the value of a firm's common stock.
Value-at-risk model (VaR)
Procedure for estimating the probability of portfolio losses exceeding some specified proportion based on a statistical analysis of historical market price trends, correlations, and volatilities.
Stocks with low price/book ratios or price/earnings ratios. Historically, value stocks have enjoyed higher average returns than growth stocks (stocks with high price/book or P/E ratios) in a variety of countries.
Value stock fund
A mutual fund that emphasizes stocks of companies whose growth opportunities are generally regarded as subpar by the market. A value stock company often pays regular dividend income to shareholders and sells at relatively low prices in relation to its earnings or book value.
Vancouver Stock Exchange (VSE)
A securities and options exchange in Vancouver, British Columbia, (Canada), specializing in venture capital companies.
A security issue that has no unusual features.
An element in a model. For example, in the model RS&Pt+1 = a + b Tbill t + et, where RS&Pt+1 is the return on the S&P in month t+1 and Tbill is the Tbill return at month t, both RS&P and Tbill are "variables" because they change through time; i.e., they are not constant.
Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio.
A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero.
Variable interest rate
See: Adjustable rate
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the insured's portfolio market value at the time of death. Typically the company invests premiums in common stocks, so variable life policies are referred to as equity-linked policies.
A plan in which either the number of shares and/or the price at which they will be issued is not known on the grant date.
A security that sells at a fluctuating market-determined price stocks and bonds are example.
A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term. Limits are often placed on the degree to which the interest rate or the payments can vary.
Short-term certificate of deposits that pay interest periodically on roll dates. On each roll date, the coupon on the CD is adjusted to reflect current market rates.
Variable-rate demand note
A note that is payable on demand and bears interest tied to a money market rate.
Loan made at an interest rate that fluctuates depending on a base interest rate, such as the prime rate or LIBOR.
Variable rated demand bond (VRDB)
Floating-rate bond that periodically can be sold back to the issuer.
Variable Ratio Write
An option strategy in which the investor owns 100 shares of the underlying security and writes two call options against it, each option having a different striking price.
A measure of dispersion of a set of data points around their mean value. The mathematical expectation of the average squared deviations from the mean. The square root of the variance is the standard deviation.
Variance-minimization approach to tracking
An approach to bond indexing that uses historical data to estimate the variance of the tracking error.
Specifies the permitted minimum or maximum quantity of securities that can be delivered to satisfy a TBA trade. For Ginnie Mae, Fannie Mae, and Freddie Mac pass-through securities, the accepted variance is plus or minus 2.499999 % per million of the par value of the TBA quantity.
An additional required deposit to bring an investor's equity account up to the margin level when the balance falls below the maintenance margin requirement.
Cash kept on hand in a depository institution's vault to meet day-to-day business needs, such as cashing checks for customers; can be counted as a portion of the institution's required reserves.
A term that describes the sensitivity of the option price to a one-percent change in volatility.
Stands for Venture Enhancement and Loan Development Administration for Smaller Undercapitalized Enterprises. A federal agency that buys and pools small business loans made by banks, and then issues securities that are bought by large institutional investors.
The number of times a dollar is spent, or turns over, in a specific period of time. Velocity affects the amount of economic activity generated by a given money supply.
Seller or supplier.
An investment in a start-up business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
Venture capital limited partnership
A partnership between a startup company and a brokerage firm or entrepreneurial company that provides capital for the new business in return for stock in the company and a share of the profits.
Buying or taking over a firm in the same industry in which the acquired firm and the acquiring firm represent different steps in the production process.
Dividing each expense item in the income statement of a given year by net sales to identify expense items that rise more quickly or more slowly than a change in sales.
Vertical line charting
A form of technical charting that shows the high, low, and closing prices of a stock or a market on each day on one vertical line with the closing price indicated by a short horizontal mark.
When one firm acquires another firm that is in the same industry but at another stage in the production cycle. For example, the firm being acquired serves as a supplier to the firm doing the acquiring.
Simultaneous purchase and sale of two options that differ only in their exercise price. See: Horizontal spread.
A conveyance for the transport of goods by water.
Become applicable or exercisable. A term mainly used on the context of employee stock ownership or option programs. Employees might be given equity in a firm but they must stay with the firm for a number of years before they are entitled to the full equity. This is a vesting provision. It provides incentive for the employee to perform.
Nonforfeitable ownership (or partial ownership) by an employee of the retirement account balances or benefits contributed on the employees behalf by an employer. The Tax Reform Act of 1986 established minimum vesting rights for employees based on their years of serviceófull vesting in five years or 20% vesting per year starting by the end of the third year.
Schedule setting forth when, and to what extent, options become exercisable or restricted stock or stock units are no longer subject to forfeiture (for example, 20% per year over five years).
Veterans Administration (VA) mortgage
A home mortgage loan granted by a lending institution to U.S. veterans and guaranteed by the Veterans Administration.
A technical chart pattern that follows a letter V form, indicating that the security price has bottomed out, and is now in a bullish trend.
Common name for the United Nations Convention on Contracts for the International Sale of Goods. They are a body of law governing the international sale of goods between parties domiciled in member countries.
Vienna Stock Exchange (VSX)
One of the world's oldest exchanges, which accounts for approximately 50% of Austrian stock transactions; the balance are traded OTC.
A symbol or pictorial representation of the corporation on a stock certificate. Usually a complicated and artistic design, it is meant to make the counterfeiting of stock certificates as difficult as possible.
Virtual currency option
A new option contract introduced by the PHLX in 1994 that is settled in US dollars rather than in the underlying currency. These options are also called 3-Ds (dollar-denominated delivery).
New muni bond issues scheduled to come to market within the next 30 days.
The implied volatility on the S&P 100 (OEX) option. This volatility is meant to be a forward looking volatility. It is calculated from both calls and puts that are near the money. The VIX is a popular measure of market risk.
A measure of risk based on the standard deviation of the asset return. Volatility is a variable that appears in option pricing formulas, where it denotes the volatility of the underlying asset return from now to the expiration of the option. There are volatility indexes. Such as a scale of 1-9; a higher rating means higher risk.
The SEC dictates how volume is counted. Thus, volume is counted in the same manner on all markets based on the above reporting structure. Any time money changes hands (or any time capital is risked), it must be counted as a trade. Examples: 1) One registered market participant on Nasdaq buys 100 shares into inventory from another registered market participant or from one of its clients. In either case, it is counted as 100 shares. 2) One member firm on the NYSE or Amex buys 100 shares from another member firm. The Specialist matches the order between the two firms and it is counted as 100 shares. 3)The Specialist sells 100 shares from his inventory to a member firm on the NYSE. It is counted as 100 shares. 4) A Market Maker receives an order to buy 100 shares from it's client. It does not have 100 shares in its inventory. It must go buy 100 shares from someone else. It then sells these 100 shares to the client. Thus, there are two trades in this example for a total of 200 shares.
A note appearing on the consolidated tape when the tape is running behind under heavy trading, meaning that only the stock symbol and price will be shown for trades under 5000 shares.
A reduction in price based on the purchase of a large quantity.
Voluntary accumulation plan
Arrangement allowing shareholders of a mutual fund to purchase shares over a period of time on a regular basis, and in so doing take advantage of dollar cost averaging.
The legal proceeding that follows a petition of bankruptcy.
Liquidation proceedings that are supported by a company's shareholders.
A pension plan supported partially by the employee by pension contributions deducted from each paycheck.
The risk in the value of options portfolios due to the unpredictable changes in the volatility of the underlying asset.
Voting Instruction Card
The voting card sent to participants in an employee plan giving the trustee of the plan the authority to vote the shares as indicated on a proxy card.
This is the daily number of shares of a security that change hands between a buyer and a seller. Also known as volume traded. Also see Up volume and Down volume.
When a stock closes increases in value on a particular day, the volume in that stock is considered up volume. Related: Down volume.
Certificates issued by a voting trust to stockholders in exchange for their common stock, which represent all the rights of common stock except voting rights.
The right to vote on matters that are put to a vote of security holders. For example the right to vote for directors.
The shares in a corporation that entitle the shareholder to vote.
Voting trust certificate
A trust in which control of a corporation is given to a few individuals, usually to support reorganization of a corporation without interference.
The implied volatility on the Nasdaq 100 (NPX) option. This volatility is meant to be a forward looking volatility. It is calculated from both calls and puts that are near the money.
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