Financial Dictionary

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Habendum Clause

A section in a real estate contract that transfers ownership of a property with no restrictions. The new owner has absolute ownership of the property and has the right to sell it, bequeath it to an heir, and so on. Because the clause begins with the phrase, “To have and to hold,” the habendum clause […]

Haircut

The difference between market value of the asset use as collateral and its reduced value for purpose of calculating capital requirement. Also refers to difference in buy and sell prices market makers are trading at.

Half Commission Man

A half commission man is an individual who introduces clients to stock brokers or other market professionals in exchange for an agreed upon percentage of any commissions earned as a result of the new client. Although a stock broker must share some of his or her commissions, the theory is that the broker will come […]

Half Stock

Stock sold with a par value half of what is considered standard. Half stock can be either common or preferred and, other than the reduced par value, acts as a regular share of stock. The par value of a typical share of stock is $100, meaning that half stock has a par value of $50.

Half-Life

A date some time in the future when half of the total principal of a mortgage-backed security will be paid off. The interest payments are not taken in to account when calculating the half-life. While an estimate can be made as to what the half-life will be, it is not definite as the variables of […]

Halo Effect

The halo effect is a term used in marketing to explain the bias shown by customers towards certain products because of a favorable experience with other products made by the same manufacturer or maker. Basically, the halo effect is driven by brand equity.

Halted Issue

A planned security offering that does not go forward as planned. A halted issue can relate to an initial public offering (IPO) that will no longer occur, or to a bond issue that has been canceled, along with any other form of security offering that does not go on as originally expected. While an issue […]

Hamburg Stock Exchange

This now-defunct exchange was located in Hamburg, Germany. It traded stocks, bonds and other securities and was a financial pillar of the city. It offered investment plans such as FONDS-X that impacted both open and closed-end funds.

Hammering the Market

An action performed by investors and speculators through large sell orders. These rapid sell orders are conducted in belief that the market price is overvalued and the price will decline soon.

Hang Seng Index

A market capitalization-weighted index of 40 of the largest companies that trade on the Hong Kong Exchange. The Hang Seng Index is maintained by a subsidiary of Hang Seng Bank, and has been published since 1969. The index aims to capture the leadership of the Hong Kong exchange, and covers approximately 65% of its total […]

Hard Asset

A tangible and physical item or object of worth that is owned by an individual or a corporation. In currency transactions, hard assets are synonymous with currencies that the public generally has faith in, such as the U.S. dollar or the euro. A hard asset is the opposite of an intangible item such as goodwill […]

Hard Currency

A currency, usually from a highly industrialized country, that is widely accepted around the world as a form of payment for goods and services. A hard currency is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex market.

Hard Dollars

Cash fees or payments made by an investor or customer to a brokerage firm in return for their services. Hard dollars differ from soft dollar payments because soft dollar payments are paid within the commission revenue from making trades or deducted from the value of any other transactions.

Hard Inquiry

A type of credit report check that may lower an individual’s credit score. A hard inquiry occurs when an individual applies for any type of credit, such as a mortgage, credit card or auto loan. The reason a hard inquiry may lower an individual’s credit score is because someone who has recently applied for new […]

Hard Landing

A term that describes an economy going from a period of expansion to a recession, following the government attempts to slow down the inflation.

Hard Loan

A foreign loan that must be paid in the currency of a nation that has stability and a reputation abroad for economic strength.

Hard Money

A. Funding by a government or organization that is repetitive, rather than a one-time grant. Examples include ongoing government daycare subsidies or firms that pay annual scholarships to post-secondary students. B. Describes gold/silver/platinum (bullion) coins. A government that uses a hard money policy backs the value of the currency it uses with a hard, tangible […]

Hard Money Loan

Loan of “last resort” or a short-term bridge loan. Hard money loans are backed by the value of the property, not by the credit worthiness of the borrower. Since the property itself is used as the only protection against default by the borrower, hard money loans have lower loan-to-value (LTV) ratios than traditional loans.

Hard Sell

Advertising and sales practices denoted by aggressive or forceful language. A hard sell is designed to get a consumer to purchase a good or service in the short-term, rather than evaluate his or her options and potentially decide to wait on the purchase. It is considered a high-pressure technique.

Hard Skills

Teachable abilities that can be defined and measured. By contrast, soft skills are less tangible and harder to quantify. Examples of hard skills include job skills like typing, writing, math, reading and the ability to use software programs; soft skills are personality-driven skills like etiquette, getting along with others, listening and engaging in small talk. […]

Hard Stop

A price level that, if reached, will trigger an order to sell an underlying security. Hard stops are set at a constant price and are inherently good until cancelled. A hard stop is used to protect the downside of holding an investment by always being active, and is only triggered once the price reaches the […]

Hard-To-Borrow List

A list used by brokerages to indicate securities considered difficult or unavailable to borrow for short selling transactions.

Hardening

A. A term used to describe a price of commodity or futures contracts that is gradually stabilizing. B. A futures market that is slowly advancing in prices.

Hardship Withdrawal

An emergency withdrawal from a retirement plan that may be subject to certain tax or account penalties. In the United States, funds withdrawn prior to the age of 59.5 are typically subject to a 10% Internal Revenue Service (IRS) early withdrawal penalty, as well as standard income taxes.

Harmless Warrant

A warrant that requires the holder to surrender a similar bond when purchasing a new fixed-income instrument. For the warrant to be exercisable, the two bonds must have similar terms, such as maturity, yield and principal.