| D | Fifth letter of a NASDAQ stock symbol specifying that it is a new issue, such as the result of a reverse split. |
| D/A | See: Documents Against Acceptance |
| D/P | Abbreviation for Documents Against Payment. |
| Daily price limit | The level within many commodity, futures, and options markets are allowed to rise or fall in a day. Exchanges usually impose a daily price limit on each contract. |
| Daisy chain | Manipulation of the market by traders to create the illusion of active volume to attract investors. |
| Date of issue | Used in the context of bonds to refer to the date on which a bond is issued and when interest beings to accrue to the bondholder. Used in the context of stocks to refer to the date trading begins on a new stock issued to the public. |
| Date of payment | Date dividend checks are mailed. |
| Date of record | Date on which holders of record in a firm's stock ledger are designated as the recipients of either dividends or stock rights. |
| Dated date | The date one uses to calculate accrued interest on various debt instruments, specifically bonds. |
| Dates convention | Treating cash flows as being received on exact dates-date 0, date 1, and so forth-as opposed to the end-of-year convention. |
| Dating | Credit extension beyond normal terms of a credit supplier. |
| Dawn raid | A term of British origin used to describe the purchase of all available shares of a target company at the market's open by a raider. A dawn raid is a surprise technique that allows the raider to gain a substantial share of the target company before the target company knows what is happening. |
| Day around order | A day order that supersedes (cancels and replaces) the previous order by altering its size or price limit. |
| Day loan | A loan from a bank to a broker prior to the delivery of securities. Upon the delivery of the securities, a day loan becomes a regular brokercall loan for which securities serve as collateral. |
| Day of deposit to day of withdrawal account | A bank account that pays interest according to the number of days that the money is actually on deposit. |
| Day order | In the context of general equities, request from a customer to either buy or sell stock, that, if not cancelled or executed the day it is placed, expires automatically. All orders are day orders unless otherwise specified. Traders often make calls before the opening to check for renewals. |
| Day trade | Also known as a "daylight trade." The purchase and sale or the short sale and cover of the same security in a margin account on the same day. |
| Day trading | Establishing and liquidating the same position or positions within one day's trading. |
| Days in receivables | Average collection period. |
| Days' sales in inventory ratio | The average number of days' worth of sales that is held in inventory. |
| Days' sales outstanding | Average collection period. |
| DCF | See: Discounted Cash Flows |
| DDM | The ISO 4217 currency code for former East Germany Ostmark. |
| DDM | See: Discounted Dividend Model |
| DE | The two-character ISO 3166 country code for GERMANY. |
| De facto | Existing in actual fact although not by official recognition. |
| Dead cat bounce | A small up move in a bear market. |
| Deal flow | In investment banking, the rate at which new deals are referred to a brokerage firm. |
| Deal stock | Stock subject to merger or acquisition, either publicly announced or rumored. |
| Dealer | An entity that stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). Individual or firm acting as a principal in a securities transaction. Principals are market makers in securities, and thus trade for their own account and risk. Antithesis of broker. See: Agency. |
| Dealer loan | Overnight, collateralized loan from a money market bank made to a dealer financing his position by borrowing. |
| Dealer market | Where traders specializing in particular commodities buy and sell assets for their own accounts. |
| Dealer options | Over-the-counter options, such as those offered by government and mortgage-backed securities dealers. |
| Dealer's spread | See: markdown; underwriting spread. |
| Dealing desk (Trading desk) | Personnel at an international bank who trade spot and forward foreign exchange. |
| Dear money | British term for tight money. |
| Death play | A stock strategy that buys stock on the belief that a key executive will die, the company will be dissolved, and shares will command a higher price at their private market value. |
| Death Spiral Convertible | Used by companies that are in such bad shape, that there is no other way to get financing. This instrument is similar to a convertible bond, but convertible at a discount to the share price at issuance and for a fixed dollar amount rather than a specific number of shares. The further the stock falls, the more shares you get. Popular in the mid to late 1990s. Also known as toxic convertibles or floorless convertibles. |
| Death Valley Curve | In venture capital, refers to the period before a new company starts generating revenues, when it is difficult for the company to raise money. |
| Death-backed bonds | Bonds backed by loans of a policyholder against a life insurance policy. The policyholder will repay the loans while alive or with the benefits from the insurance policy upon death. |
| Debenture | Strictly speaking, any acknowledgment of indebtedness given by a company. In banking terms this is usually a secured debenture containing fixed and floating charges over the whole of a company’s assets. |
| Debenture | Any debt obligation backed strictly by the borrower's integrity, e.g. an unsecured bond. A debenture is documented in an indenture. |
| Debenture bond | An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond and collateral trust bonds. |
| Debenture stock | A type of stock that makes fixed payments at scheduled intervals of time. Debenture stock differs from a debenture in that it has the status of equity, not debt, in liquidation. |
| Debit | An expense, or money paid out from an account. A debit transaction is one which the net cost is greater than the net sale proceeds. See also Credit. |
| Debit balance | The amount that is owed to a broker by a margin customer for loans the customer uses to buy securities. |
| Debit card | A card that resembles a credit card but which debits a transaction account (checking account) with the transfers occurring contemporaneously with the customer's purchases. A debit card may be machine readable, allowing for the activation of an automated teller machine or other automated payments equipment. |
| Debit spread | Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a "debit spread." Antithesis of a credit spread. |
| Debt | Money borrowed. |
| Debt bomb | A default on debt and obligations by a major financial institution that disrupts the stability of the economic system. |
| Debt capacity | Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases. |
| Debt ceiling | See: Debt limit |
| Debt displacement | The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity. |
| Debt instrument | An asset requiring fixed dollar payments, such as a government or corporate bond. |
| Debt leverage | Amplification of the return earned on equity when an investment or firm is financed partially with borrowed money. |
| Debt limit | The maximum amount that a municipality can borrow. |
| Debt limitation | A bond covenant that restricts the firm's ability to incur additional indebtedness in some way. |
| Debt market | The market for trading debt instruments. |
| Debt outstanding subject to limitation | Obligations incurred by the Treasury subject to the statutory limit set by Congress. Until World War 1, a specific amount of debt was authorized for each separate security issue. Beginning with the Second Liberty Loan Act of 1917, the nature of the limitation was modified until, in 1941, it developed into an overall limit on the outstanding Federal debt. The statuatory limit may change from year to year. |
| Debt ratio | Total debt divided by total assets. |
| Debt relief | Reducing the principal and/or interest payments on Less developed country loans. |
| Debt retirement | The complete repayment of debt. See: Sinking fund. |
| Debt securities | IOUs created through loan-type transactions-commercial paper, bank CDs, bills, bonds, and other instruments. |
| Debt service | Interest payment plus repayments of principal to creditors (retirement of debt). |
| Debt service coverage | The ratio of cash flow available to the borrower to the annual interest and principal payments on a loan or other debt. |
| Debt service parity approach | Payment alternatives that provide the firm with the exact same schedule of after-tax debt payments (including both interest and principal). |
| Debt swap | A set of transactions in which a firm buys a country's dollar bank debt at a discount and swaps this debt with the central bank for local currency that it can use to acquire local equity. Also called a debt-equity swap. |
| Debt/equity ratio | Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity. |
| Debt-for-equity swap | A swap agreement to exchange equity/returns for debt returns or the converse over a prearranged length of time. |
| Debtholder | See: Bondholder |
| Debtor | Borrower of money. |
| Debtor in possession | A firm that continues to operate under the Chapter 11bankruptcy process. |
| Debtor-in-possession financing | New debt obtained by a firm during the Chapter 11bankruptcy process, Federal Bankruptcy Rule 4001 (c)(1). This financing is unique because it is secured, that is, it has priority over existing debt, equity and other claims. |
| Debt-service coverage ratio | Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate. |
| Decennial insurance | See latent defects insurance. |
| Decile rank | Performance over time, rated on a scale of 1-10. 1 indicates that a mutual fund's return is in the top 10% of funds being compared; while 3 means the return is in the top 30%. |
| Decimal trading | The quotation and trading of stock or bond prices in decimals, as opposed to the quotation of prices in fractions. |
| Decimalization | The quotation and trading of stock or bond prices in decimals, as opposed to fractions such as eighths. |
| Decision Break-Point Analysis | A type of sensitivity analysis that indicates the value at which a key variable will result in a negative NPV for an investment project. |
| Decision tree | Schematic way of representing alternative sequential decisions and the possible outcomes from these decisions. |
| Declaration | The Board of Directors motion to authorize dividend payments. |
| Declaration date | The date on which a firm's directors meet and announce the date and amount of the next dividend. |
| Dedicated capital | Total par value (number of shares issued, multiplied by the par value of each share). Also called dedicated value. |
| Dedicating a portfolio | Related: Cash flow matching |
| Dedication strategy | Refers to multi period cash-flow matching. |
| Deductible | An amount or period which must be deducted before an insurance payout or settlement is calculated. |
| Deductible contribution | Amount paid into an IRA, an employer-sponsored retirement plan, or other type of retirement plan for a particular tax year that is a deduction from income for tax purposes. |
| Deduction | An expense that is allowable as a reduction of gross taxable income by the IRS e.g., charity donations. |
| Deductive reasoning | Using known facts to draw a conclusion about a specific situation. |
| Deed | A document executed as a deed by an individual or a company. Traditionally a deed has been sealed but the requirement for a seal has been abolished for some time. A deed is distinguished from a simple written contract by the fact that a deed needs no consideration for it to be effective and the period for suing for breach is twelve years as opposed to six. |
| Deed of release | A document executed by a lender discharging its security. This method is preferred to a receipt on the security document as a purchaser will often wish to satisfy itself that the security has been effectively released at completion. The deed of release can be executed in escrow so as to take effect only on payment of the redemption monies. A receipt would need the actual security document to be sent to the lender following redemption as the receipt cannot usually be signed in preparation for redemption. A deed of release is also used when only part of the charged assets is to be released from the charge. |
| Deed of trust | See: Indenture |
| Deep in the money | A call option with an exercise price substantially below the underlying stock's market price. Also put option with an exercise price substantially above the underlying stock's market price. Often substantially below is defined as more than one strike price below (for calls)/above (for puts) the current value of the underlying security. |
| Deep out of the money | A call option with an exercise price substantially above the market price. Also put option with an exercise price substantially below the underlying stock's market price. Often substantially below is defined as more than one strike price below (for calls)/above (for puts) the current value of the underlying security. |
| Deep-discount bond | A bond issued with a very low coupon or no coupon that sells at a price far below par value. A bond that has no coupon is called a zero-coupon bond. |
| Default | The failure to make timely payment of interest or principal on a debt security or to otherwise comply with the provisions of a bond indenture. A breach of a covenant. In context of project financing, a technical default signals a project parameter is outside defined or agreed limits or a legal matter is not yet resolved. |
| Default interest | A higher interest rate payable after default. |
| Default premium | A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default. Often the premium is measured as the yield over and above a government bond yield of similar coupon and maturity. |
| Default risk | The risk that an issuer of a bond may be unable to make timely principal and interest payments. Also referred to as credit risk (as gauged by commercial rating companies). |
| Defeasance | The setting aside by a borrower of cash or bonds sufficient to service the borrower's debt. Both the borrower's debt and the offsetting cash or bonds are removed from the balance sheet. In securities trading, where a clearing house becomes counterparty to each side of a trade, after the trade has been agreed. This is necessary to facilitate netting, and reduce counterparty risk exposure. The term has become popular recently, because of the growth of central counterparty clearing services in European cash equities markets. |
| Defensive securities | Low-risk stocks or bonds that will provide a predictable and safe return on an investor's money. |
| Deferred account | A type of account that delays taxes on that account until some later date. An example is an IRA account. |
| Deferred annuities | Tax-advantaged life insurance products. Deferred annuities offer deferral of taxes with the option of withdrawing one's funds in the form of a life annuity. |
| Deferred call | A provision that prohibits the company from calling the bond before a certain date. During this period the bond is said to be call protected. |
| Deferred charge | An expenditure treated as an asset that carries forward until it becomes pertinent to the business at hand, e.g., the underwriting fees on a corporate bond issue, which the corporation capitalizes as a deferred charge and then amortizes over the life of the bond issue. |
| Deferred compensation | An amount that has been earned but is not actually paid until a later date, typically through a payment plan, pension, or stock option plan. |
| Deferred equity | A common term for convertible bonds, which recognizes their equity component and the expectation that the bond will ultimately be converted into shares of common stock. |
| Deferred futures | The most distant months of a futures contract. |
| Deferred interest bond | A bond that pays interest at a later date, usually in one lump sum, effectively reinvesting interest earned over the life of the bond. See: Zero coupon bond. |
| Deferred nominal life annuity | A monthly fixed-dollar payment beginning at retirement age. It is nominal because the payment is fixed in a dollar amount at any particular time, up to and including retirement. |
| Deferred payment annuity | An annuity that stipulates payments be made to the annuitant at a later date, such as when the annuitant reaches a certain age. |
| Deferred tax expense | A non-cash expense that provides a source of free cash flow. Amount allocated during the period to cover tax liabilities that have not yet been paid. |
| Deficiency | The amount by which a project's cash flow is not adequate to meet debt service. |
| Deficiency Agreement | An agreement that calls on the sponsor or another party to provide the shortfall when cash flow, working capital, or revenues are below agreed levels or are insufficient to meet debt service. |
| Deficiency letter | Notification from the SEC to a prospective issuer of securities that revisions or additions need to be made to the preliminary prospectus. |
| Deficit | An excess of liabilities over assets, of losses over profits, or of expenditure over income. |
| Deficit spending | When government spending overwhelms government revenue resulting in government borrowing. |
| Defined asset fund | A unit investment trust consisting of a fixed portfolio of securities, including blue chips, REITs, or high-yielding stocks on a major exchange such as the NYSE or FTSE. |
| Defined benefit plan | A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan |
| Defined contribution plan | A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan |
| Defined event | The definition applicable to the trigger of a loss in an insurance policy, particularly political risk insurance. |
| Deflation | Decline in the prices of goods and services. Antithesis of inflation. |
| Deflator | A statistical factor used to convert current dollar purchasing power into inflation-adjusted purchasing power. Enables the comparison of prices while accounting for inflation in two different time periods. |
| Delayed issuance pool | Refers to mortgage backed securities (MBS) that at the time of issuance were collateralized by seasoned loans originated prior to the MBS pool issue date. |
| Delayed opening | Postponement of the start of trading in a stock until correction of a gross imbalance in buy and sell orders. Such an imbalance is likely to follow on the heels of a significant event such as a takeover offer. See: Suspended trading. |
| Delayed settlement/delivery | In the context of general equities, transaction in which a contract is settled in excess of five full business days. Seller's option. See: Dividend play, settlement. |
| Delinquency | Failure to make a payment on a debt or obligation by the specified due date. |
| Delisting | Removal of a company's security from listing on an exchange because the firm has not abided by specific regulations. |
| Deliver | The sale of a futures or forward contract may require the seller to deliver the commodity during the delivery month, if the short position is not offset prior to that time. |
| Deliverable bills | The Treasury bills that fulfill a set of guidelines set forth by the exchange on which the bills are traded. |
| Deliverable instrument | The asset in a forward contract that will be delivered in the future at an agreed-upon price. |
| Delivered at Frontier (DAF) | Seller must supply the goods at his or her own risk and expense delivered to a named place (usually a border location) by a specified time. The buyer is responsible for the importation. This is normally is used with rail, truck, or multi-modal shipments. |
| Delivered Duty Paid (DDP) | Seller must supply the goods at his or her own risk and expense to a named place in the country of importation. The seller is responsible for importation, payment of duty, and on carriage to the location agreed upon with the buyer. |
| Delivered Duty Unpaid (DDU) | Seller fulfills the contract obligations when the goods have arrived at a named place in the importing country. The seller bears all the costs and risk except for import duties and other customs clearance costs. |
| Delivered Ex Quay (DEQ) | Seller fulfills the contract obligations to deliver when the goods are made available to the buyer at the wharf of the destination port. A DEQ can further specify "Duty Paid" or "Duty Unpaid." If "Duty Paid" is specified, the seller is responsible for all risks and costs, including duty, to the wharf of the destination port. If "Duty Unpaid" is specified, the buyer is to clear the goods and pay duty. Since unloading costs are included in the ocean freight charged by most ship lines. This is most often used for charter shipments. |
| Delivered Ex Ship (DES) | Seller fulfills the contract obligations when the goods have been made available to the buyer on board a ship at the named port of destination. The seller must bear all costs and risks associated in bringing the goods to the named port of destination. The buyer is responsible for all costs necessary to unload the goods and clear them through customs. Unloading costs are included the ocean freight charged by most ship lines. The DES is most often used for charter shipments. |
| Delivery | The tender and receipt of an actual commodity or financial instrument in settlement of a futures contract. |
| Delivery date | Date by which a seller must fulfill the obligations of a forward or futures contract. |
| Delivery notice | The written notice given by the seller of its intention to make delivery against an open, short futures position on a particular date. Related: Notice day. |
| Delivery options | The options available to the seller of an interest rate futures contract, including the quality option, the timing option, and the wild card option. Delivery options mean that the buyer is uncertain of which Treasury bond will be delivered or when it will be delivered. |
| Delivery points | Locations designated by futures exchanges at which the financial instrument or commodity covered by a futures contract may be delivered in fulfilment of such a contract. |
| Delivery price | The price fixed by the clearinghouse at which deliveries on futures are invoiced; also the price at which the futures contract is settled when deliveries are made. |
| Delivery versus payment | A in which the buyer's payment for securities is due at transaction the time of delivery (usually to a bank acting as agent for the buyer) upon receipt of the securities. The payment may be made by bank wire, check, or direct credit to an account. |
| Delphi technique | Collection of independent opinions without group discussion by the analysts providing the opinions; used for various sorts of evaluations (such as country risk assessment). |
| Delta | The ratio of the change in price of an option to the change in price of the underlying asset. Also called the hedge ratio. Applies to derivative products. For a call option on a stock, a delta of 0.50 means that for every $1.00 that the stock goes up, the option price rises by $0.50. As options near expiration, in-the-money call option contracts approach a delta of 1.0, while in-the-money put options approach a delta of -1. See: hedge ratio, neutral hedge. Call deltas range from 0.00 to +1.00; put deltas range from 0.00 to -1.00. If the call delta is 0.69, the put delta is -0.31 (call delta minus 1 equals put delta; 0.69 -1 =-0.31). |
| Delta cross-hedge | A futures hedge that has both maturity and currency mismatches with an underlying exposure. |
| Delta hedge | A dynamic hedging strategy using options that calls for constant adjustment of the number of options used, as a function of the delta of the option. |
| Delta neutral | Describes value of a portfolio not affected by changes in the value of the asset on which the options are written. |
| Delta Spread | A ratio spread that is established as a neutral position by utilizing the deltas of the options involved. The neutral ratio is determined by dividing the delta of the purchased option by the delta of the written option. See also Ratio Spread and Delta. |
| DEM | The ISO 4217 currency code for Deutschemark. |
| Demand deposits | Checking accounts that pay no interest and from which funds can be withdrawn upon demand. |
| Demand facility | A loan repayable on the demand of the lender. |
| Demand line of credit | A bank line of credit that enables a customer to borrow on a daily or on-demand basis. |
| Demand loan | A loan which can be called by the lender at any time and carries no set maturity date. |
| Demand master notes | Short-term securities that are repayable immediately upon the holder's demand. |
| Demand shock | An event that affects the demand for goods and services in an economy. |
| Demand-pull inflation | A theory of inflation or price increases resulting from so-called excess demand. Related: Cost-push inflation. |
| Denomination | Corresponds to the face value of currency units, coins, and securities. An international transaction may be denominated in US dollars, for example, or in British pounds. |
| Dependent | Acceptance of a capital budgeting project contingent on the acceptance of another project. |
| Dependent variable | Term used in regression analysis to represent the element or condition that is dependent on values of one or more other independent variables. |
| Deposit insurance | See: FDIC: Federal Deposit Insurance Corporation |
| Depositary | An agent appointed for a Tender or Exchange Offer who accepts certificates from shareholders, processes them and assures that the appropriate cash or new securities are properly remitted to the tendering party. |
| Depository institution | A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. |
| Depository Institutions Deregulation and Monetary Control Act | The 1980 federal legislation that ended the regulation of the banking industry. |
| Depository preferred | Device enabling an issuer to circumvent an arbitrary corporate limit on the number of preferred sharesissuable. Applies mainly to convertible securities. |
| Depository receipt | See: ADR American Depository Receipt |
| Depository transfer check (DTC) | Check made out directly by a local bank to a particular firm or person. |
| Depository Trust and Clearing Corporation (DTCC) | The Depository Trust and Clearing Corporation (DTCC), through its subsidiaries, provides post-trade clearance, settlement, custody and information services for equities, corporate and municipal debt, money market instruments, American depositary receipts, exchange-traded funds, unit investment trusts, mutual funds, insurance products and other securities. The National Securities Clearing Corporation (NSCC) subsidiary, which acts as a central counterparty (CCP), provides trade guarantee, netting and risk management services for equity and debt transactions from all U.S. stock exchanges and markets. The Depository Trust Company(DTC) subsidiary has custody of and provides asset servicing for millions of securities issues of issuers from the U.S. and over 60 other countries. DTC serves as a major clearinghouse for institutional post-trade settlement. DTCC's two subsidiary businesses have Standard and Poors' highest rating: AAA. |
| Depository Trust Company (DTC) | DTC is the world's largest central securities depository. It accepts deposits of over 2 million equity and debt securities issues (valued at $23 trillion) from over 65 countries for custody, executes book-entry deliveries (valued at over $116 trillion in 2000) records book-entry pledges of those securities, and processes related income distributions.. DTC is a member of the Federal Reserve System and is owned by The Depository Trust and Clearing Corporation (DTCC), which is in turn owned primarily by most of the major banks, broker-dealers, and exchanges on Wall Street. |
| Depreciate | To allocate the purchase cost of an asset over its life. |
| Depreciated cost | In terms of economics: The measure of capital consumption during production, e.g., machine and equipment wear. In terms of finance: The process of amortization of fixed assets (equipment) to spread the cost over the depreciable life of the assets. |
| Depreciation | A non-cash expense (also known as non-cash charge) that provides a source of free cash flow. Amount allocated during the period to amortize the cost of acquiring long-term assets over the useful life of the assets. To be clear, this is an accounting expense not a real expense that demands cash. The sum of depreciation expenses of prior years leads to the balance sheet item Accumulated Depreciation. |
| Depreciation tax shield | The value of the tax write-off on depreciation of plant and equipment. |
| Depressed market | Market in which supply overwhelms demand, leading to weak and lower prices. |
| Depressed price | In the context of stocks, stock whose market price is low in comparison to stocks in its sector. |
| Depression | Period when excess aggregate supply overwhelms aggregate demand, resulting in falling prices, unemployment problems, and economic contraction. |
| DEQ | Abbreviation for the Incoterm "Delivered Ex Quay." |
| Deregulation | The reduction of government's role in controlling markets, which lead to freer markets, and presumably a more efficient marketplace. |
| Derivative | In the context of property investment, an instrument that can be traded separately from the underlying property, for example a PINCS or a unit in a unit trust. |
| Derivative | A financial contract whose value is based on, or "derived" from, a traditional security (such as a stock or bond), an asset (such as a commodity), or a market index. |
| Derivative instruments | Contracts such as options and futures whose price is derived from the price of an underlying financial asset. |
| Derivative markets | Markets for derivative instruments. |
| Derivative security | A financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying asset. |
| DES | Abbreviation for "Delivered Ex Ship." |
| Descending tops | A chart pattern which in which each successive peak in a security's price is lower than the preceding peak over a period of time. Antithesis of ascending tops. |
| Descriptor | A variable describing assets, used as an element of a risk index. For example, a volatility risk index, distinguishing high volatility assets from low volatility assets, could consist of several descriptors based on short term volatility, long term volatility, systematic and residual volatility, etc. |
| Design and build contracts | A system of construction procurement where the main contractor is responsible for the design of the building as well as the construction of it (although the design will often be subcontracted by the contractor). Under a traditional building contract, the design is the responsibility of an architect and design team. The advantages of a design and build contract include short lead-in times and having a single point of responsibility. Design and build is a very popular form of procurement for buildings. |
| Design risk | The risk associated with the impact on project cash flow from deficiencies in design or engineering. Also known as engineering risk. |
| Designated order turnaround system (DOT) | Computerized order entry system that allows orders to buy or sell large baskets of stock to be transmitted immediately to the specialist on the exchange, where execution will occur quickly, depending on the basket size. Also used for odd-lot transactions to occur at the prices and quantities available. See: AOS. |
| Desk | The New York Federal Reserve Bank's trading desk (or securities department) where all transactions of the Federal Reserve System are executed in the money market or the government securities market. |
| Detachable warrant | A warrant entitles the holder to buy a given number of shares of stock at a stipulated price. A detachable warrant is one that may be sold separately from the package it may have originally been issued with (usually a bond). |
| Determinism | Fully ordained in advance. A deterministic chaos system is one that gives random looking results, even though the results are generated from a system of equations. |
| Deterministic models | Liability-matching models that assume that the liability payments and the asset cash flows are known with certainty. Related: Stochastic models. |
| Detrend | To remove the general drift, tendency, or bent of a set of statistical data as related to time. Often accomplished by regressing a variable or a time index and perhaps the square of the time index and capturing the residuals. A stochastic detrend would be to subtract a moving-average (say for five years) from the value of the variable. Deutsche Börse Germany's major securities market, including the Frankfurt Stock Exchange. |
| Deutsche Börse AG (DBAG) | Deutsche Börse AG (DBAG) is the operating company for the German cash and derivatives markets. It has four subsidiaries: Deutsche Börse Clearing AG, Deutsche Börse Systems AG, Frankfurter Wertpapierbörse (FWB), and the derivatives market, EUREX Deutschland (formerly the Deutsche Terminbörse ). |
| Deutsche Terminbörse (DTB) | Formerly the German financial futures and options market. Merged with the Swiss Options and Financial Futures Exchange (SOFFEX) in 1998 to form EUREX, the European derivatives exchange. |
| Devaluation | A decrease in the spot price of a currency. Often initiated by a government announcement. |
| Developer’s fit out | Construction of a building, usually offices, to include suspended ceilings and raised floors but not partitioning. This is unsatisfactory for a tenant who requires fitting-out works different from those the landlord is prepared to offer. In this case shell and core may be more appropriate. |
| Diagonal spread | An options strategy requiring a long and a short position in the same class of option at different strike prices and different expiration dates. For example, buying an XYZ April 50 call and selling an XYZ July 55 call. See: Calendar spread; vertical spread. |
| Dialing and smiling | See: Cold calling |
| Dialing for dollars | A term used to describe the practice of cold calling, but which has negative implications as it is frequently applied to salespeople selling speculative or fraudulent investments. |
| Diamonds | Units of interest in the diamonds trust, a unit investment trust that serves as an index to the Dow Jones Industrial Average in that its holdings consist of the 30 component stocks of the Dow. |
| Diff | Short version of Euro rate differential, which is a Chicago Mercantile Exchange Futures contract that is founded on the interest rate spread between the U.S. dollar and the British pound, the German mark, or the Japanese yen. |
| Difference check | The difference in interest payments that is paid to a swap counterparty to close out a deal. |
| Difference from S&P | A mutual fund's returnminus the change in the Standard & Poor's 500 index for the same time period. A notation of -5.00 means the fund return is 5 percentage points less than the gain in the S&P, while 0.00 means that the fund and the S&P have the same return. |
| Differential | A small charge added to the purchase price and subtracted from the selling price by the dealer for odd-lot quantities. |
| Differential disclosure | The practice of reporting conflicting or markedly different information in official corporate statements including annual and quarterly reports and 10-Ks and 10-Qs. |
| Differential swap | Swap between two LIBOR rates of interest, e.g., yen LIBOR for dollar LIBOR Payments are in one currency. |
| Diffusion process | A conception of the way a stock's price changes that assumes that the price takes on all intermediate values. |
| Digits deleted | Designation on securities exchange tape meaning that because the tape has been delayed, some digits have been dropped (e.g., 26 1/2 becomes 6 1/2). |
| Dilution | Diminution in the proportion of income to which each share is entitled. |
| Dilution protection | Standard provision that changes the conversion ratio in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder's potential equity position. Adjustment usually requires a split or stock dividend in excess of 5% or issuance of stock below book value. |
| Dilutive effect | Result of a transaction that decreases earnings per common share (EPS). |
| Dip | Slight drop in securities prices after a sustained uptrend. Analysts often advise investors to buy on dips, meaning to buy when a price is momentarily weak. See: Correction, break, crash. |
| Direct Claim | A financial claim issued by a deficit unit to acquire funds for investment in real assets. |
| Direct costs of financial distress | Costs such as fees or penalties incurred as a result of bankruptcy or liquidation proceedings. |
| Direct deposit | A method of payment which electronically credits your checking or savings account. |
| Direct deposit service | A service that electronically transfers all or part of any recurring payment—including dividends, pay checks, pensions, and Social Security payments—directly to a shareholder's account. |
| Direct estimate method | A method of cash budgeting based on detailed estimates of cash receipts and cash disbursements category by category. |
| Direct Exchange Rate | The home currency price of one unit of a foreign currency. |
| Direct foreign investment (DFI) | Investment in real assets (such as land, buildings, or plants) outside one's own country. |
| Direct investment | The purchase of a controlling interest in a company or at least enough interest to have enough influence to direct the course of the company. |
| Direct lease | Contract in which a lessor purchases new equipment from the manufacturer and leases it to the lessee. |
| Direct Loan Program | Fixed-rate loans offered by the Ex-Im Bank directly to the foreign buyer to purchase US capital equipment and services. |
| Direct overhead | A fraction of overhead costs devoted to the manufacturing sector of a firm to cover expenses such as rent and utilities. |
| Direct paper | Commercial paper sold directly by the issuer to investors. |
| Direct participation program | An investment program enabling investors to directly participate in the cash flow and tax benefits of the partnership invested in by the investor, typically a form of passive investment. |
| Direct placement | Selling a new issue not by offering it for sale publicly, but by placing it with one of several institutional investors. Also known as a private placement. |
| Direct Purchase Plan | A plan that enables interested first-time individual investors to purchase a company's stock directly from the company or without the direct intervention of a broker. The administrator also ensures the safekeeping of the shares by registering them directly on the books of the company. Eliminates the need for shareholders to hold on to physical certificates. |
| Direct quote | For foreign exchange, the number of US dollars needed to buy one unit of a foreign currency. |
| Direct Registration System | A system, sometimes referred to as DRS, that allows electronic direct registration of securities in an investor's name on the books for the transfer agent or issuer, and allows shares to be transferred between a transfer agent and broker electronically. DRS provides investors with a different way of holding their securities in certificate or street form. Under DRS, investors can elect to have their securities registered directly on the issuer's records in book-entry form. An investor electing to hold a security in a DRS book-entry position will receive a statement from the issuer or its transfer agent verifying ownership of the security. The investor can subsequently transfer electronically the DRS book-entry position to their bank or broker/dealer. |
| Direct rollover | Movement of tax-deferred retirement plan money from one qualified plan or custodian to another. No immediate tax liabilities or penalties are incurred, but there is an IRS reporting requirement. |
| Direct search market | Buyers and sellers seek each other directly and transact directly. |
| Direct stock-purchase programs | Investors purchase securities directly from the issuer. |
| Direct terms | The price of a unit of foreign currency in domestic currency terms, such as $.9850/Euro for a US resident. See: Indirect terms. |
| Director |