Financial Dictionary

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Tailgating

An immoral practice by a broker or financial advisor who places orders for his clients and then places the exact same orders in his own account.

Tailgating Broker

hoping to profit from information that a client has, which is something like trading on inside information basis. This practice is not illegal, but is considered unethical.

Take a Bath

A slang term referring to a situation when investor experiences huge losses from his investments. Investor whose stocks have entered significantly downward movement are said to have taken a bath.

Target Price

A behavioral component of a stock price. It represents the desired price at which investors would exit their position and realize largest possible gain. There is no sure way to determine the target price of any particular stock, because it depends on individual opinion of each stockholder. Technical analysts will often use different tools, such […]

Targeted Repurchase

An attempt of targeted company to buy back its shares from the potential acquiring company. Targeted company will usually purchase stocks at premium price over current market price, all in order to avoid takeover. Do not mix up targeted repurchase action with share repurchase plan, because there are fundamental differences between those two terms.

Tax Anticipation Note

A short-term debt instrument issued by municipal or state government in order to raise cash for project that should deliver public value, from whom government will collect taxes. These taxes are used to pay off the obligation.

Tax Deferred

Refers to earnings that are postponed and free from taxation until investor withdraws them. It is a system of paying taxes in the future for incomes earned in the current period, but only if incomes are not taken in possession in that period. This is a good way for to defer taxes for investors with […]

Tax Equivalent Yield

It is the yield on a taxable bond that should complete the yield generated by non-taxable municipal bond. It is also called “After Tax Yield” or “Yield Equivalence.” Tax Equivalent Yield = calculated by dividing Tax Free Municipal Bond Yield with (1- Tax Rate). If a Tax Rate is 10% and Tax Free Municipal Bond […]

Tax Evasion

An illegal method, when individual avoid paying his taxes intentionally, by falling to report or report inaccurately his incomes. Tax Evasion is considered a criminal act and is subject to strict and serious penalties. Do not mix up tax evasion with tax avoidance, which is the right of every citizen to try to minimize his […]

Tax Exempt

To be free from taxation by the government. Interest earned on municipal bonds is excluded from government taxation policy. Government itself encourages investments excluding tax costs on some securities.

Tax Swap

An investing technique for realizing losses for tax purposes while maintaining a position. Tax swap is conducted by selling the security that declined in price (a losing position) and simultaneously purchasing similar security, but not identical, all in order to utilize tax benefits and outflank the IRS.

Technical Analysis

A method of evaluating securities by analyzing statistical indicators, such as charts of price and volume. Technical Analysis uses indicators generated in the past in order to predict future performance of some security. Investors who use technical analysis are not interested in including the intrinsic value of a security in their calculations, but its past […]

TED Spread

The difference between the rate for US Treasury bills and the rate for Eurodollar bills with identical expiration dates. The difference between these two categories is an indicator of credit risk, because rate associated for Eurodollar bills reflects credit ratings of corporate borrowers, while the US Treasury bills are considered risk-free. The greater the gap […]

Tender Offer

A takeover offer, a public invitation to shareholders to buy their shares at price at premium to the market price. Like every takeover bid, tender offer may be qualified as friendly or hostile, and gives various ways to the target company to defend itself. Security & Exchange Commission demands any acquisition above 5% of a […]

Terminal Value

Refers to the value of an investment at the end of specific time period. To calculate terminal value of the bond at the time of maturity or the value of a fully depreciated asset, calculation includes a specified interest rate of that bond, and is based on the following equation: Terminal value = p * […]

Test

Aterm used in technical analysis, used to show price potential to break trough certain levels. When a stock price approaches support or resistance level set by the market, technical analysts will watch out to see will the stock stay within that level or it will reach new high or low. If the stock remains within […]

Tick Test

A temporary trading restriction, either when the market is falling or when the market is rising. When the market is falling, a short sale rule will be engaged, which allows trading only when the price of particular stock is higher than the last trade price (called uptick) or when the price of particular stock is […]

Ticker

A computerized scrolling display that shows important trading information to investors worldwide. It displays current or recent changes in security prices and trading volume of traded securities, marked with their current stock symbol.

Timberland Investment

An investment instrument used primarily by large institutional investors. The two main assets that underlie timberland investments are tree farms and managed natural forests. The returns on these forestland investments come from biological growth, upward product class movement, timber price appreciation and land price appreciation.The benefits of timberland investments arise from the tendency for the […]

Time Value of Money

Based on the premise that money available in the present is worth more than the same amount of money in the future. The whole idea about time value of money stands on the premise that money received now is able to earn interest if deposited in bank or otherwise invested. Present value of money will […]

TIPS

Refers to a US Treasury securities that are protected from inflation. Actually, they are not really “protected,” but offer coupon payment and underlying principal increased for inflation impact, as measured by the Consumer Price Index (CPI). As all Treasuries, TIPS offer coupon payments at every six months and principal payment at the date of maturity. […]

Toehold Purchase

Refers to event of acquiring less than 5% of shares of any company. In accordance to Schedule 13D, when any company purchases shares of another company in volume larger than 5%, it must file it with the Securities and Exchange Commission, and also explain the reason and intentions to the target company in writing. Information […]

Tombstone

An advertisement in business newspapers and magazines, placed by investment bank in a public offering. The announcement is placed in order to inform potential investors about the issue, list syndicate members in order in importance and direct investors to where they can find prospectus. Tombstone got its name by its strong black border and prints […]

Top-down Approaching

Refers to a bond, issued by a municipal, county or state government, whose interest payments are not subject to federal income tax, and sometimes also state or local income tax. Any capital gains generated are subject to taxation and special tax rules, such as the Alternative Minimum Tax, may apply.

Top-Down Investing

An investment strategy that implies insight in the global financial world as the first step in determining in which stocks to invest. By going deeper in researches, investor will narrow every investigated segment of the market until he finds the best possible stock to invest in. Because of the approach, the strategy got its name […]