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Foreign Institutional Investors (FIIs)
Foreign Institutional Investors (FIIs)
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Asset Coverage Ratio
The asset coverage ratio is a financial metric that measures how well a company can repay its debts by selling or liquidating its assets. The asset coverage ratio is important because it helps lenders, investors, and analysts measure the financial solvency of a company. Banks and creditors often look for a minimum asse...
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Lender (elementary)
Someone who gives money or some item to a borrower and expects the borrower to repay the money or return the item.
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Feeder Fund
A feeder fund is one of several sub-funds that put all of their investment capital into an overarching umbrella fund, known as a master fund, for which a single investment advisor handles all portfolio investments and trading. This two-tiered investment structure of a feeder fund and a master fund is commonly used by h...
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RAROC
See RISK-ADJUSTED RETURN ON CAPITAL.
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Negative Interest Rate Policy (NIRP)
A negative interest rate policy (NIRP) is an unconventional monetary policy tool employed by a central bank whereby nominal target interest rates are set with a negative value, below the theoretical lower bound of zero percent. A NIRP is a relatively new development (since the 1990s) in monetary policy used to mitigate...
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Transmission mechanism
The process by which changes in the MONEY SUPPLY affect the level of total DEMAND in an economy.
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Multinational Corporation (MNC)
A multinational corporation (MNC) has facilities and other assets in at least one country other than its home country. A multinational company generally has offices and/or factories in different countries and a centralized head office where they coordinate global management. These companies, also known as international...
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Unified Managed Account (UMA)
A unified managed account (UMA) is a professionally managed private investment account that can include multiple types of investments all in a single account. Investments may include mutual funds, stocks, bonds, and exchange-traded funds. Unified managed accounts are often rebalanced on a specified schedule.
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RENT-A-CAPTIVE
A licensed INSURER or REINSURER that makes an account available to a firm that wishes to SELF-INSURE but does not want to administer its own CAPTIVE program. A rent-a-captive prevents account commingling by segregating ASSETS, LIABILITIES, and RISK exposures into individual accounts that are separated through a SHAREHO...
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Debt-to-Income Ratio (DTI)
The debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes to paying your monthly debt payments and is used by lenders to determine your borrowing risk.
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Hidden Values
Hidden values are assets that are undervalued on a company's balance sheet and therefore may not be incorporated into or reflected in the company's share price.
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FRONTING COMPANY
See FRONTING INSURER.
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Tomorrow Next (Tom Next)
Tomorrow next (tom next) is a short-term foreign exchange (forex) transaction where a currency is simultaneously bought and sold over two separate business days: those being tomorrow (in one business day) and the following day (two business days from today).
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Cost Accounting
Cost accounting is a form of managerial accounting that aims to capture a company's total cost of production by assessing the variable costs of each step of production as well as fixed costs, such as a lease expense.
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Environmental, Social, and Governance (ESG) Criteria
Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees...
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REAL EXCHANGE RATE
A FOREIGN EXCHANGE RATE that has been cali- brated to take account of INFLATION.
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FINANCIAL RISK
The RISK of loss arising from the financial activities of a firm, broadly taken to include CREDIT RISK, MARKET RISK, and LIQUIDITY RISK. See also OPERATING RISK.
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Vested Interest
A vested interest generally refers to a personal stake or involvement in a project, investment, or outcome. In finance, a vested interest is the lawful right of an individual or entity to gain access to tangible or intangible property such as money, stocks, bonds, mutual funds, and other securities at some point in the...
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ELECTRICITY SWAP
An OVER-THE-COUNTER SWAP involving the exchange of fixed and floating electricity prices based on the average level of a recognized electricity pool or pricing index; transactions are often settled monthly or quarterly (to coincide with billing cycles), on a physical or finan- cial basis. Also known as POWER SWAP. See ...
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Taxes
Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional or national. Tax revenues finance government activities, including such public works and services as roads and schools, or programs like Social Security and Medicare. In economics, taxes fall on whomev...
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Third World
Third World is an outdated and derogatory phrase that has been used historically to describe a class of economically developing nations. It is part of a four-part segmentation that was used to describe the world’s economies by economic status. Third World falls behind First World and Second World but was ahead of Fourt...
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Barriers to entry (or exit)
How firms keep out competition--an important source of incumbent advantage. There are four main sorts of barriers.
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Menu Costs
Menu costs are a type of transaction cost incurred by firms when they change their prices. Menu costs are one microeconomic explanation offered by New Keynesian economists for macroeconomic price-stickiness, which may cause an economy to fail to adjust to changing macroeconomic conditions.
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Trust
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distri...
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Law and economics
Laws can be an important source of economic ­EFFICIENCY - or inefficiency. Early economists such as ADAM SMITH often wrote about the economic impact of legal matters. But ECONOMICS subsequently focused more narrowly on things monetary and commercial. It was only in the 1940s and 1950s, at the University of Chicago Law ...
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BUYING FORWARD
The process of entering into a FORWARD contract or a FUTURES contract to achieve a future delivery of an ASSET or cash and/or to lock in a particular forward price.
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Smith, Adam
The founder of ECONOMICS as we know it. Born in Kirkcaldy, Fife, Adam Smith (1723-90) was educated at Glasgow and Oxford, and in 1751 became professor of logic at Glasgow University. Eight years later he made his name by publishing the THEORY OF MORAL SENTIMENTS. His 1776 book, An Inquiry into the Nature and Causes of ...
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Brexit
Brexit is a portmanteau of the words "British" and "exit" coined to refer to the U.K.'s decision in a June 23, 2016 referendum to leave the European Union (EU). Brexit took place at 11 p.m. Greenwich Mean Time, Jan. 31, 2020.
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Australian Securities Exchange (ASX)
The Australian Securities Exchange is headquartered in Sydney, Australia. The Exchange in its current form was created through the merger of the Australian Stock Exchange and Sydney Futures Exchange in 1999. The ASX acts as a market operator, clearing house, and payments facilitator. It also provides educational materi...
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Deposit Multiplier
The deposit multiplier is the maximum amount of money a bank can create for each unit of reserves. The deposit multiplier is normally a percentage of the amount on deposit at the bank. The deposit multiplier requirement is key to maintaining an economy's basic money supply. Reliance on a deposit multiplier is called a ...
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Foreign Currency Convertible Bond (FCCB)
A foreign currency convertible bond (FCCB) is a type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of foreign currency. A convertible bond is a mix between a debt and equity instrument. It acts like a ...
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Rate of return regulation
An approach to REGULATION often used for a PUBLIC UTILITY to stop it exploiting MONOPOLY power. A public utility is forbidden to earn above a certain RATE OF RETURN decided by the regulator. In practice, this often encourages the utility to be inefficient, slow to innovate and quick to spend money on such things as big...
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BLOCK ORDER EXPOSURE SYSTEM
In the United Kingdom, an electronic mechanism that provides QUOTES for BLOCK ORDERS of STOCK.
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Fisher Transform Indicator
The Fisher Transform is a technical indicator created by John F. Ehlers that converts prices into a Gaussian normal distribution. The indicator highlights when prices have moved to an extreme, based on recent prices. This may help in spotting turning points in the price of an asset. It also helps show the trend and iso...
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FIXED INTEREST
See FIXED INCOME.RATE MORTGAGE.
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Organic Growth
Organic growth is the growth a company achieves by increasing output and enhancing sales internally. This does not include profits or growth attributable to mergers and acquisitions but rather an increase in sales and expansion through the company's own resources. Organic growth stands in contrast to inorganic growth, ...
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Appropriable
Term applied to resources for which the owner can capture the full economic value. In a well-functioning competitive market, appropriable resources ciently. Also refer to inappropriable.
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Material Requirements Planning (MRP)
Material requirements planning (MRP) is a computer-based inventory management system designed to improve productivity for businesses.
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Confirmation
Contract confirming verbal agreement between two parties to a trade in the over-the-counter market.
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dividend discount model
model showing that the value of a share is equal to the discounted value of future dividends.
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Liquidity Premium
The amount that forward interest rates exceed expected future spot interest rates.
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STUCK DEAL
See HUNG DEAL
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Autarky
Autarky refers to a nation that operates in a state of self-reliance. Nations that follow a policy of autarky are characterized by self-sufficiency and limited trade with global partners. The definition of autarky comes from the Greek—autos, meaning "self" and arkein, meaning "to ward off" and "to be strong enough, to ...
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Overleveraged
A business is said to be overleveraged when it is carrying too much debt when compared to its operating cash flows and equity. An overleveraged company has difficulty in paying its interest and principal payments and is often unable to pay its operating expenses because of excessive costs due to its debt burden, which ...
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Outward Direct Investment (ODI)
An outward direct investment (ODI) is a business strategy in which a domestic firm expands its operations to a foreign country.
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brokered market
A market where an intermediary @a broker@ offers search services to buyers and sellers.
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Nationalisation
Nationalisation
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Stigma
A stain on one's reputation; a mark or token of disgrace.
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REDEMPTION PRICE
See CALL PRICE, PUT PRICE.
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NMS
See NATIONAL MARKET SYSTEM.
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Default Rate
The default rate is the percentage of all outstanding loans that a lender has written off as unpaid after a prolonged period of missed payments. The term default rate–also called penalty rate–may also refer to the higher interest rate imposed on a borrower who has missed regular payments on a loan.
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Odd Lot
An odd lot is an order amount for a security that is less than the normal unit of trading for that particular asset. Odd lots are considered to be anything less than the standard 100 shares for stocks. Trading commissions for odd lots are generally higher on a percentage basis than those for standard lots since most br...
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Financial intermediary
A middleman. An individual or institution that brings together investors (the source of funds) and users of funds (such as borrowers). May be increasingly at risk of disintermediation.
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General Partner
A general partner is one of two or more investors who jointly own a business and assume a day-to-day role in managing it.
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LOCKBOX
A service provided by a BANK to corporate customers where it receives payments by mail into a post box which it collects several times per day; the payments are deposited by the bank immediately so that the corporate customers can begin earning INTEREST immediately.
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Double Bottom
A double bottom pattern is a technical analysis charting pattern that describes a change in trend and a momentum reversal from prior leading price action. It describes the drop of a stock or index, a rebound, another drop to the same or similar level as the original drop, and finally another rebound. The double bottom ...
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With Discretion
With discretion is a term that refers to an order type executed by a floor broker or trader according to their best judgment. A with discretion order allows for greater customization and flexibility to try and achieve the best price for the trade. Brokers may also refer to a with discretion order as a "not-held order,"...
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Arbitrage
The purchase of a good or asset in one market for immediate resale in another market in order t from a price discrepancy.
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Rule 72(t)
Rule 72(t) allows penalty-free withdrawals from IRA accounts and other tax-advantaged retirement accounts like 401(k) and 403(b) plans. It is issued by the Internal Revenue Service.
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Earned Income Credit (EIC)
The earned-income credit (EIC) is a refundable tax credit that helps certain U.S. taxpayers with low earnings by reducing the amount of tax owed on a dollar-for-dollar basis. Taxpayers may be eligible for refunds if their tax credit exceeds their tax liability for the year. Legislation enacted in 2020 recognized that m...
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Unearned Discount
An unearned discount is interest or a fee that has been collected on a loan by a lending institution but has not yet been counted as income (or earnings). Instead, it is initially recorded as a liability. As the life of the loan progresses, proportionate parts of the fee or interest collected up front are removed from ...
1
Producer Price Index (PPI)
The producer price index (PPI), published by the Bureau of Labor Statistics (BLS), is a group of indexes that calculates and represents the average movement in selling prices from domestic production over time.
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Treynor-Black model
A special case of the Markowitz model of efficient diversification, derived by assuming returns are generated by the index model.Treynor™s measure Ratio of excess return to beta.
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Creditor
A creditor is an entity (person or institution) that extends credit by giving another entity permission to borrow money intended to be repaid in the future. A business that provides supplies or services to a company or individual and does not demand payment immediately is also considered a creditor, based on the fact t...
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DEPOSITARY
An AGENT authorized to place funds in a DEPOSITORY insti- tution such as a BANK, SECURITIES FIRM, or SAVINGS AND LOAN.
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Social Welfare System
A social welfare system provides assistance to individuals and families in need. The types and amount of welfare available to individuals and families vary depending on the country, state, or region. In the U.S., the federal government provides grants to each state through the Temporary Assistance for Needy Families (T...
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ASSET-AT-HIT OPTION
A BINARY-BARRIER OPTION that grants the buyer an immediate payoff equal to a fixed ASSET amount if the price of the UNDERLYING market reference exceeds the BARRIER. See also ASSET-AT-EXPIRY OPTION, BINARY OPTION.a SPECIAL PURPOSE ENTITY or a CONDUIT, which is secured by pools of ASSETS, such as short-term LOANS, RECEIV...
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Mortgage Banker
A mortgage banker is a company, individual, or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages. After a mortgage is originated, a mortgage banker might retain the mortgage in a portfolio, or they might sell the mortgage to an inve...
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PAPER PROFIT
See UNREALIZED PROFIT.
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BILL FUTURE
An INTEREST RATE FUTURES contract, bought or sold via an EXCHANGE, which references a short-term GOVERNMENT BILL rate. See alsoBOND FUTURE, DEPOSIT FUTURE.
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Total Cost of Ownership (TCO)
The total cost of ownership (TCO) is the purchase price of an asset plus the costs of operation. Assessing the total cost of ownership represents taking a bigger picture look at what the product is and what its value is over time.
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Ichimoku Kinko Hyo
The Ichimoku Kinko Hyo, or Ichimoku for short, is a technical indicator that is used to gauge momentum along with future areas of support and resistance. The all-in-one technical indicator is comprised of five lines called the tenkan-sen, kijun-sen, senkou span A, senkou span B and chikou span.
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Hybrid Fund
A hybrid fund is an investment fund that is characterized by diversification among two or more asset classes. These funds typically invest in a mix of stocks and bonds. They may also be known as asset allocation funds.
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Return on Average Assets (ROAA)
Return on average assets (ROAA) is an indicator used to assess the profitability of a firm's assets, and it is most often used by banks and other financial institutions as a means to gauge financial performance. It is also known as simply return on assets (ROA).
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TWO-WAY PRICES
A BID and an OFFER on an individual SECURITY as quoted by a MARKET MAKER or other DEALER. In certain cases institutions that choose to act as market makers must be prepared to quote two-way prices in all market conditions. Also known as MAKING A MARKET, TWO-WAY MARKET.
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Loan Modification
Loan modification is a change made to the terms of an existing loan by a lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three.
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INSIDE MARKET
BIDS and OFFERS between DEALERS expressly for dealer accounts, rather than those intended for BROKERS or their clients.
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DVA
See Debt (or Debit) Value Adjustment.
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Applied Economics
Applied economics applies the conclusions drawn from economic theories and empirical studies to real-world situations with the desired aim of informing economic decisions and predicting possible outcomes. The purpose of applied economics is to improve the quality of practice in business, public policy, and daily life b...
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Tracking Error
Tracking error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge fund, mutual fund, or exchange-traded fund (ETF) that did not work as effectively as intended, creating an unexpected profit or loss.
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WORLD TRADE ORGANIZATION (WTO)
A supranational organization, created in 1994 as a successor body to the GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT), that manages functions and negotiations related to multi- lateral TRADE in goods and services.
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J
The term J refers to a designation for Nasdaq-listed stocks that specifies that the stock has voting rights. The designation appears as the fifth letter following a dot after a stock's four-letter ticker symbol. It is added to denote a shareholder vote situation. The letter J is a temporary suffix that is removed once ...
1
Certificate of deposit (CD)
A savings alternative in which money is left on deposit for a stated period of time to earn a specific interest rate.
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PRUDENTIAL RATIO
See CAPITAL ADEQUACY RATIO.
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Tax Holiday
A tax holiday is a government incentive program that offers a tax reduction or elimination to businesses. Tax holidays are often used to reduce sales taxes by local governments, but they are also commonly used by governments in developing countries to help stimulate foreign investment.
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Market Value
Market value (also known as OMV, or "open market valuation") is the price an asset would fetch in the marketplace, or the value that the investment community gives to a particular equity or business. Market value is also commonly used to refer to the market capitalization of a publicly traded company, and is calculated...
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PRICE LIMIT
A boundary placed on certain EXCHANGE-traded ASSETS (e.g., FUTURES, OPTIONS, COMMON STOCKS) that limits the amount of upward or downward price movement that can occur during a TRADING session. A price limit is a form of CIRCUIT BREAKER that is intended to control excessive VOLATILITY and/or market overreaction.
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Fourth World
The Fourth World is an outdated term used to describe the most underdeveloped, poverty-stricken, and marginalized regions of the world.
1
Short Interest Ratio
The short Interest ratio is a simple formula that divides the number of shares short in a stock by the stock's average daily trading volume.
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Lis Pendens
A lis pendens is an official notice to the public that a lawsuit involving a claim on a property has been filed. Lis pendens is connected to the concept that a buyer of a property must assume any litigation that exists pertaining to the property. If a bank is suing the owner of a lot and a new buyer purchases the lot, ...
1
CP
See COMMERCIAL PAPER.
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ACTIVE RISK
The RISK that the ACTIVE BETS in an INVESTMENT MAN- AGER’S PORTFOLIO will lead to underperformance versus the BENCHMARK portfolio. Active risk is most often estimated through TRACKING RISK.
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SEATS
See STOCK EXCHANGE ALTERNATIVE TRADING SERVICE.
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CALL
See OPTION.
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International Bank of Reconstruction and Development (IBRD)
The International Bank of Reconstruction and Development (IBRD) is a development bank administered by the World Bank. The IBRD offers financial products and policy advice to countries aiming to reduce poverty and promote sustainable development. The International Bank of Reconstruction and Development is a cooperative ...
1
Geographical Labor Mobility
Geographical labor mobility refers to the level of flexibility and freedom laborers have to move in order to find gainful employment in their field.
1
Loss Adjustment Expense (LAE)
A loss adjustment expense (LAE) is an expense associated with investigating and settling an insurance claim.
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Decreasing Term Insurance
Decreasing term insurance is renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate. Premiums are usually constant throughout the contract, and reductions in coverage typically occur monthly or annually. Terms range between 1 year and 30 years but it depends on the in...
1
Learning Curve
A learning curve is a concept that graphically depicts the relationship between the cost and output over a defined period of time, normally to represent the repetitive task of an employee or worker. The learning curve was first described by psychologist Hermann Ebbinghaus in 1885 and is used as a way to measure product...
1