Financial Dictionary

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K-Percent Rule

Theory of macroeconomic money-supply growth first postulated by Nobel Prize-winning economist Milton Friedman. The theory states that the best way to control inflation over the long term is to have central banking authorities automatically grow the money supply by a set amount (the “k” variable) each year, regardless of the cyclical state of the economy. […]

Kairi Relative Index

A technical indicator used to spot relationships in trending markets. The Kairi Relative Index was created long ago in Japan and bears resemblance to the Relative Strength Index.

Kamikaze Defense

A type of takeover defense mechanism sometimes resorted to by a company that is the target of a hostile bid. Kamikaze defense involves reshaping the target company – either by divesting substantial assets or by making unappealing acquisitions – so that its attraction to a corporate raider is greatly reduced.

Kappa

Represents the ratio of price change in an option relative to a 1% change in the volatility of the underlying security. Kappa ratio is used in regression analysis.

Keepwell Agreement

A contract between a parent company and its subsidiary to maintain solvency and financial backing throughout the term set in the agreement.

Keiretsu

A Japanese term describing loose conglomeration of two or more companies for mutual profit. Those companies sometimes have shares in each other, but not necessarily.

Kelly Criterion

A mathematical formula relating to the long-term growth of capital developed by John Larry Kelly Jr. The formula was developed by Kelly while working at the AT&T Bell Laboratories. The formula is currently used by gamblers and investors to determine what percentage of their bankroll/capital should be used in each bet/trade to maximize long-term growth. […]

Keogh Plan

A tax deferred retirement plan established by unemployed or self-employed individual for his own sake and/or for his employees.

Key Currency

The currency used as a reference in an international transaction or when setting an exchange rate. The key currency used is usually issued by a stable, developed country such as the United States. Central banks also hold key currencies in reserve.

Key Employee

An employee with a major ownership and/or decision-making role in the business. Key employees are usually highly compensated. They may also receive special benefits as an incentive both to join the company and to stay with the company.

Keynesian Economics

An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

Kickback

A term representing a commission rebate for investors with frequent trade habits. Kickback also refers to an illegal practice of paying someone (either in cash or favor) in order to persuade him to make a contract, a transaction or take steps that will gain benefit for the persuader.

Kicker

A feature added to a debt obligation in order to make it more desirable to investors. A warrant and a right are good examples of a kicker.

Kicking The Tires

A slang term for researching an investment before putting any money into it. The process of kicking the tires for a stock might include reading the company’s annual report, examining the company’s management, looking at its historical performance, considering the company’s competitors and reading news articles about the company.

Kidnap Insurance

A type of insurance designed to protect individuals from the risk of kidnapping. Kidnap insurance often covers other events related to kidnapping, including extortion. In the case of a kidnapping, the policy holder is compensated for money paid as ransom, medical expenses, counseling or for accidental death of the kidnap victim.

Killer Application

Killer application or “killer app” is a buzzword that describes a software application that surpasses all of its competitors.

Killer Bee

An investment banker that can help a company defend itself against hostile takeovers by using a poison pill, macaroni defense, sandbags, white knight or any other defensive strategy. An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an attempted hostile takeover from occurring. […]

Kiosk

A small, temporary, standalone booth used in high-foot-traffic areas for marketing purposes. A kiosk will usually be manned by one or two individuals who help attract attention to the booth to get new customers.

Kiwi Bond

Retail stock offered directly to the public and available only to New Zealand residents. Application forms and investment statements are available from the new Zealand Debt Management Office Registry, as well as some registered banks, NZX firms, NZX brokers, chartered accountant, solicitors, investment advisors and investment brokers.

Klinger Oscillator

Developed by Stephen Klinger, A technical indicator that is used to determine long-term trends of money flow while remaining sensitive enough to short-term fluctuations to enable a trader to predict short-term reversals. This indicator compares the volume flowing in and out of a security to price movement, and it is then turned into an oscillator.

Knock-in Option

An option contract that will become valid only if and when certain price level is exceeded before expiration date.

Knock-out Option

An option that will become worthless if underlying security exceeds certain price. Knock-out option is mostly used for currencies and commodities.

Korea Stock Exchange

The Stock Market Division of Korea Exchange, formerly an independent South Korean exchange, was established in 1956. Some of its milestones include the launching of the Stock Index Futures Market in 1996 and the Stock Index Options Market in 1997, as well as the adoption of electronic trading in 1988, and equity options and ETFs […]

Krannert School of Management

The school of business at Purdue University. Its enrollment is approximately 2,700 students. The Krannert School of Management offers undergraduate, graduate and doctoral degree programs in a variety of business disciplines, including accounting, management, economics, industrial management, marketing and finance.