Financial Dictionary

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Last Term

Margin Account

Margin Account

A brokerage account with the purpose for investor to borrow the money from the broker and invest it in securities. When using Margin Account, bought securities are used as collateral and certain amount of interest must be paid to the broker. There is also a limit on the borrowed money related to the whole investment, […]

Recently added Terms

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.

S&P Phenomenon

A situation when price of a stock temporarily increase in price in the moment when the stock is added to the S&P index. The price will rise because when the S&P adds the stock to the index, mutual funds and investors whose portfolios are following the index will also add the stock to their portfolios.

Earnings Report

A corporate financial statement that reports and nets out all earning and expenses to a profit or loss. It is therefore sometimes referred to as the profit and loss (P&L) statement.

Pay Czar

A nickname given to “Special Master for Compensation” Kenneth Feinberg. The term “pay czar” was applied to Feinberg following his appointment by the U.S. Treasury Department to monitor compensation awards to executives of the firms that accepted U.S. TARP funds during the 2008-2009 financial crisis.

Pacific Rim

Refers to 16 countries on the Far East embracing Pacific Ocean (Japan, Australia, Cambodia, Hong Kong, Singapore, New Zealand, Korea, Malaysia, Laos, Indonesia, Papua New Guinea, Philippines, Vietnam, Taiwan, Thailand and China).

External communication

External communication the exchange of information and messages between an organization and other organizations, groups, or individuals outside its formal structure. The goals of external communication are to facilitate cooperation with groups such as suppliers, investors, and stockholders, and to present a favorable image of an organization ....

Bureaucracy

Bureaucracy is a group of specifically non-elected officials within a government or other institution that implements the rules, laws, ideas, and functions of their institution; Bureaucracy may also be defined as a form of government: ” the political direction and control exercised over the actions of the members, citizens, or inhabitants of communities, societies, and […]

Entrepreneur

An person who, rather than working as an employee, runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of original ideas and business processes.

Indemnification

The process of compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability for damages. The concept of indemnity is based on a contractual agreement made between two parties, in which one party agrees to pay for potential losses or damages caused by the other party.

Proprietary

A process, system or item that is the property of a business or an individual and provides some sort of advantage. Companies that are able to develop useful proprietary technologies in-house are rewarded with a valuable asset: they can either use it exclusively or profit from the sale of licensing of their technology to other […]

Proprietary Trading

When a Broker trades for direct gain instead of commission dollars. Essentially, the company has decided to profit from the market rather than from commissions from processing trades.

Stewardship

Stewardship is an ethic that embodies accountable planning and management of resources. The concept of stewardship has been applied in assorted realms, including with respect to environment, economics, health, property, information, and religion, and is linked to the concept of sustainability.

Diagonal Spread

A spread of the same class of options but with different exercise prices and different expiration dates.

Differential

The fraction of a point added to the purchase price or subtracted from the sale price of odd lot orders. The charge represents compensation to the dealer/specialist for executing the odd lot order.

Double Taxation

Corporations pay taxes on revenue before paying dividends. The dividends, in the hands of the stockholder, are taxed again as ordinary income. Hence “double” taxation.

Downstairs Trader

A trader who operates on the floor of an exchange and who “trades” positions against the public market. See also Upstairs Trader.

DNR (Do Not Reduce)

An instruction that informs the order handling personnel not to reduce the price of the order by the amount of dividends, if and when paid by the corporation. DNR is placed on buy limit, sell stop and sell stop limit GTC orders.

Due Diligence Meeting

The last meeting between corporate officials and underwriters prior to the issuance of the security. At the meeting, the content of the prospectus is discussed, and relevant parts of the underwriting are put into place.