Fastpath

advisory, amortization, analysis, assets, audit, bank, broker, clearing, clearing house, commodity, credit, debt, economics, exchange, federal reserve system, fiscal policy, float, foreign currency, fund, futures, hedge, insurance, interest, international, Internet, law, loan, market, money, mortgage, option, payment system, pension plan, portfolio, real estate, regulation, risk, securities, settlement, tariff, tax, trading, transportation, yield,

12L AADS ABA ABMS ABS ACE ACH ACSSS ADR AIBD ALA AMDA AMEX AMOS AMPS APAC APG APR APV ARC ARM ARP ASAM ASO ATI ATMs ATS ATS AVR AVS BBSS BEACON BHC BIF BIS BITS BLS BMA BOTCC BSE BV CAC CADS C&F CAP CAPM CBCH CBI Act CBOE CBOT CBT CCC CCD CCH CD CDB CEA CEBA CEMLA CETA CFATF CFTC CHECCS CHIPS CHX CIE CIF CIF CIIS CMB CME CMO CMS CNS COMB COMEX CPA CPI CPO CQS CRA CRA CRA CRD CRF CRR/HHT CSAC CSE CSMA CSP CST CTA CTA CTP CTR CTRS CTS CTX CUSIP DCF DCIA DDA DIDC DIDMCA DINB DIV DM DRR DTC DVP EAC EAF-2 ECCB ECCHO ECHO ECP ECR ECU EDBT EDC EDGAR EDS EFAA EFT EFTA EFTS EFTS EMIP EMS EMT EPS ERISA EROC ERTA ERV ESOP ESOP EST ET ETAC FAC FACS FACTS FADA Fannie Mae FASB FATF FBO FCIA FCM FCR FDDI FDI Act FDIC FDICIA FFB FFIEC FHA FHFB FHLB FHLBB FHLMC FIA FIBSEA FIBV FID FinCEN FIRREA FISR FIU FmHA FNMA FOCUS FOMC FORCE Forex FRA FRB FRBC FRBM FRBNY FRBSF Freddie Mac FRN FSC FSF FSLIC FTC FTR G-10 G&A GAAP GAO GATT GCR GDP GEM Ginnie Mae GMBH GNMA GNP GPM GPML GSCC GTC GTW HHD IAIS IANs IB IBCs IBF IBRD IBSGC ICASS ICC ICM ICON ICR ICS ID IDT IGS IIAC IIEDS IMA IMCR IMF INCSR INTERPOL IOSCO IOSCO IPO IRA IRB IRR IRS ISCC ISDA ISG ISIS ITAC ITCV ITDS ITPN ITS JDC KCBT KTT LAAC LAC LAR LCAC LIBOR LLC LOCOM LURA MAX MBS MCA MCR MDA MDS MICR MIDIS MIDS MLAT MMDA MPC MPC MPS MSA MSRB MTE NACHA NAIC NASAA NASAA NASD NASD NASDAQ NASS&LS NCUA NFA NIF NMS NOCH NOW NPR NPV NPV NSCC NSTA NSTS NV NWC NYAC NYACH NYCHA NYSE OARS OBA OBU OCC OCC OCC ODFI OECD OFAC OFHEO OFIA OGBS OIG OPEC ORE OTC OTS P&A PACE PAM PAX PBGC PC PCA PCCR PER PERK PHLX PIN PLAM PMAC PMI PMSR PPI Prenote PSE PSS PUD PVP QFC QOMC QT QTI QTL RAC RALA RAM RAP RCMM RCPC RDFI REAS REFCORP REIT REMIC REO REOMS REPO RFAC RFC RICO ROE ROI RP RR RRM RTC RTCCA RTCRRIA RTGS RUF SAIF Sallie Mae SAM SAMA SAMDA SBA SBIC SCOREX SDR's SEA SEC SECTOR SET SFAS S-HTTP SIA SIAC SIMAN SIPC SIPC S&L SMSA SPEQ SRO SSL SUPER DOT SWIFT TAA TAP TARP TARS T-bills TDPOB TFR TIAC TIES TLA UCC 4A UCC UDAA Un/Edifact UNODC USPAP UTAC UTPR VA WDS

Terms

10-K
Annual report required by the SEC each year. Provides a comprehensive overview of a company's state of business. Must be filed within 90 days after fiscal year end. A 10Q report is filed quarterly. [Harvey]
12B-1 fees
The percent of a mutual fund's assets used to defray marketing and distribution expenses. The amount of the fee is stated in the fund's prospectus. The SEC has recently proposed that 12B-1 fees in excess of 0.25% be classed as a load. A true ' no load' fund has neither a sales charge nor 12B-1 fee. [Harvey]
12B-1 funds
Mutual funds that do not charge an upfront or back-end commission, but instead take out up to 1.25% of average daily fund assets each year to cover the costs of selling and marketing shares, an arrangement allowed by the SEC's Rule 12b-I (passed in 1980). [Harvey]
48-hour rule
The requirement that all pool information, as specified under the PSA Uniform Practices, in a TBA transaction be communicated by the seller to the buyer before 3 p.m. EST on the business day 48-hours prior to the agreed upon trade date. [Harvey]
ABA number
A nine digit number (eight digits and a check digit) that identifies a specific financial institution. These numbers are assigned by the Thomson Financial Publishing and are listed in its annual publication Key to Routing and Transit Numbers. [ACH] A number, usually placed near the upper right corner of checks, which identifies the financial institution on which the check is drawn. The number is used in sorting and clearing checks. The ABA coding system was designed by the American Bankers Association. [OTS]
abandon
The act of an option holder in electing not to exercise or offset an option. [CFTC]
abandonment
The act of refusing delivery of a shipment so badly damaged in transit that it is worthless; OR damage to a vessel that is so severe that it is considered a constructive total loss. [ITDS]
abandonment option
The option of terminating an investment earlier than originally planned. [Harvey]
abatement
The reduction or cancellation of an assessed tax. [OTS]
abbrochment
The purchase at wholesale of all merchandise that is intended to be sold in a particular retail market for the purpose of controlling that market. [ITDS]
abnormal returns
Part of the return that is not due to systematic influences (market wide influences). In other words, abnormal returns are above those predicted by the market movement alone. [Harvey]
above par
A higher dollar amount than the face value, or par, of a security. The term is used when a security is sold for a price higher than its face value. [OTS]
absentee landlord
A property owner who does not occupy his or her property, but usually rents it to another or leaves it vacant. [OTS]
absolute advantage
A country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another country. [FRBSF] A person, company or country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another person, company or country. [FRB][FRBM] An advantage of one nation or area over another in the costs of manufacturing an item in terms of used resources. [ITDS] The ability of a producer to produce a higher absolute quantity of a good with the productive resource available. [FACS]
absolute auction
An open, outcry sale in which assets are sold to the highest bidder regardless of price, with no reserve price and no minimum bid. [FDIC]
absolute priority
Rule in bankruptcy proceedings whereby senior creditors are required to be paid in full before junior creditors receive any payment. [Harvey]
absolute title
A clear title that is free of any liens or judgments. A clear title is normally required before a mortgage is granted. [OTS]
absorption
Investment and consumption purchases by households, businesses and governments both domestic and imported. [ITDS]
abstract of title
A statement usually prepared by an attorney that traces the history of ownership of real property to determine the status of its present title, and includes all items of record that might impair the title, such as liens, charges or encumbrances. [OTS]
abundance
A term that applies when individuals can obtain all the goods they want without cost. If a good is abundant, it is free. [FACS]
academic consultants
An advisory group initiated by the board in the 1960's to provide a forum for the exchange of views between the Federal Reserve Board and members of the academic community in economics and banking. [FRBSF]
accelerated amortization
The restructuring of an existing mortgage loan by increasing the monthly payments in order to pay off the loan in a shorter time than the original maturity. [OTS]
accelerated cost recovery system
Schedule of depreciation rates allowed for tax purposes. [Harvey]
accelerated depreciation
Any depreciation method that produces larger deductions for depreciation in the early years of a project's life. Accelerated cost recovery system (ACRS), which is a depreciation schedule allowed for tax purposes, is one such example. [Harvey] Any depreciation method that produces larger deductions for depreciation in the early years of a project's life; e.g., double-declining-balance depreciation, sum-of-the-years'-digits depreciation [WCSU] The method of speeding up the write-off from income of qualifying investments at a faster than normal rate. Annual tax deductions are higher in the first years and diminish in later years of the write-off. [OTS]
accelerated dividend
A dividend paid to proven creditors of the receivership based on a projection of future funds available. Accelerated dividends are calculated based on estimates of asset collections, less projections of administrative expenses, other liabilities, and contingent liabilities. [FDIC]
Accelerated Resolution Program (ARP)
A means of resolving a failed thrift institution in which there is an expedited transfer of the insolvent thrift's assets and deposit liabilities to a healthy institution, without first placing the failed thrift in conservatorship. This approach, initiated jointly by the OTS and the RTC in 1990, was similar to FDIC resolutions at the time. The program was designed to allow thrifts that were below FIRREA-mandated capital levels, but that otherwise were perceived as having substantial franchise value, to continue to operate throughout the resolution process. [FDIC]
acceleration
A common security document remedy by which the Trustee may declare all future payments of principal immediately due and payable after the occurrence of certain events set forth in the security document as prerequisites to acceleration, generally the events of default. Once acceleration, has been declared, there is generally no preference or priority of one bond, one maturity or one payment of principal or interest over another unless the security document otherwise provides. [EPA]
acceleration clause
A clause commonly included in mortgages and bonds that gives the holder the right to demand the entire outstanding balance be paid in the event of default. Without this clause, the mortgagee may have to file separate foreclosure suits as each installment of the mortgage debt falls due and is in default. [OTS]
accelerator
The casual relationship between changes in consumption and changes in investment. [FACS]
acceptance
A time draft (bill of exchange or usance draft) drawn by one party and acknowledged by a second party. The drawee, known as the 'acceptor', stamps or writes the word 'accepted' on the face of the draft and above his or her signature the place and date of payment. Once the draft is accepted it carries an unconditional obligation on the part of the acceptor to pay the drawer the amount of the draft on the date specified. A 'bank acceptance' is a draft drawn on and accepted by a bank. A 'trade acceptance' is a draft drawn by the seller of goods on the buyer, and accepted by the buyer. [FDIC] A written agreement, usually in the form of a draft, in which one party, the drawee, accepts the obligation to pay a specified amount of money to another party at a specified place and time. The drawee is also known as the acceptor, and writes the word 'accepted' over his or her signature. A bank acceptance is a draft drawn on and accepted by a bank. [OTS] An unconditional assent to an offer; OR An assent to an offer conditioned on only minor changes that do not affect any material terms of the offer; OR Receipt by the consignee of a shipment thus terminating the common carrier liability. [ITDS]
accepted draft
A bill of exchange accepted by the drawee (acceptor) by putting his signature (acceptance) on its face. In doing so, he commits himself to pay the bill upon presentation at maturity. [ITDS]
accepting bank
A bank who by signing a time draft accepts responsibility to pay when the draft becomes due. In this case the bank is the drawee (party asked to pay the draft), but only becomes the acceptor (party accepting responsibility to pay) upon acceptance (signing the draft). See acceptance; bill of exchange. [ITDS]
acceptor
The party that signs a draft or obligation, thereby agreeing to pay the stated sum at maturity. [ITDS]
access
The right to enter and leave a tract of land from a public road, often used when an owners' property is accessible only by crossing property owned by another party. [OTS]
access savings account
A type of savings account in which funds are accessible to the account holder by check, telephone order, debit card or similar device in addition to in-person withdrawals. NOW accounts are a type of access savings account. [OTS]
accessions
Goods that are affixed to and become part of other goods. [ITDS] The process by which a country becomes a member of an international agreement, such as the General Agreement on Tariffs and Trade (GATT). [ITDS]
accessorial charges
Charges made for additional, special, or supplemental services, normally over and above the line haul services. [ITDS]
accessorial services
Services performed by a shipping line or airline in addition to the normal transportation service. [ITDS]
accommodation
An action by one individual or legal entity that is taken as a favor, without any consideration, for another individual or legal entity. [ITDS] The lending of one person's good name or credit standing to a second person with no compensation in order that the second person may borrow money from a third person. Historically, accommodation meant the making of a loan by one person to a second person who lacks sufficient collateral but has the backing of a third person. [OTS]
accommodation check
A check written by a thrift institution on its account with a bank, payable to a third party named by a customer withdrawing funds to cover the check from his or her account at the thrift institution. [OTS]
accommodation trading
Non-competitive trading entered into by a trader, usually to assist another with illegal trades. [CFTC]
accord and satisfaction
A means of discharging a contract or cause of action by which the parties agree (the accord) to alter their obligations and then perform (the satisfaction) the new obligations. [ITDS]
account
(1) an on-going business relationship in which a depository institution accepts, holds, invests, processes or disburses funds owned by a customer according to the customer's wishes within a framework of preestablished rules and procedures. (2) any continuing business relationship between two parties in which funds or debt is held and processed to compensate the parties for transactions between them. [OTS]
account authority digital signature (AADS)
relying party obtains public key from its own account registery record for digital signature authentication [misc]
Account Balance Monitoring System (ABMS)
Fedwire system allowing Reserve Banks to monitor depository institutions' account positions and payment activity on a real-time basis. Reserve Banks can hold or reject funds transfers that may cause account holders to exceed their net debit caps. [GAO]
account executive
The agent of a commission house who serves customers/traders by entering their commodity futures and options orders, reporting trade executions, advising on trading strategies, etc. [NYMEX]
account hold
A warning placed on a savings, loan or other account to indicate the need for special handling when transactions are made. [OTS]
Account Management Profile System (AMPS)
Provides access to information helpful to the NYSE staff in managing day-to-day relationships with listed companies, member firms, and institutions. [NYSE]
account number
An identifying number issued by a carriers accounting office to identify a shipper and/or consignee. [ITDS]
account or underwriting account
An association of underwriters (headed by a manager or joint co-managers) formed in accordance with an agreement among underwriters for the purpose of purchasing an issue from an issuer and reoffering it or sale to investors. the members of the account may have joint and several liability, or merely several liability, for the entire principal amount of bonds depending upon the terms of the agreement among underwriters and the bond purchase agreement. Often referred to as a 'syndicate'. [EPA]
account party
Buyer/importer or applicant who arranges for the establishment of a letter of credit. [FDIC]
accountant
A person who performs accounting work. [OTS]
accountant's opinion
accounting
The process of systematically recording, classifying, verifying and summarizing business transactions, and presenting this information in periodic, interpretative financial statements and reports. [OTS]
accounting earnings
Earnings of a firm as reported on its income statement. [Harvey]
accounting equation
The basic equation of double-entry accounting that reflects the relationship of assets, liabilities and net worth (reserves + stockholders equity + retained earnings). The equation may be expressed in its simplest form as: assets = liabilities + net worth. [OTS]
accounting exposure
The change in the value of a firm's foreign currency denominated accounts due to a change in exchange rates. [Harvey]
accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books. [Harvey]
accounting liquidity
The ease and quickness with which assets can be converted to cash. [Harvey]
accounting period
A period at the end of which and for which financial statements are prepared. [EPA]
accounting procedures
All processes which discover, record, classify, and summarize financial information to produce financial reports and to provide internal control. [EPA]
accounting system
(A) The total structure of records and procedures which discover, record, classify, summarize, and report information on the financial position and results of operations of a government or any of its funds, fund types, balance account groups, or organizational components . (B) The total structure of records and procedures which discover, record, classify, summarize and report information on the financial position and results of operations of a government or any of its funds, fund types, balanced account groups, or organizational components. [EPA]
accounts payable
A current liability representing the amount owed by an individual or a business to a creditor(s) for merchandise or services purchased on an open account or short-term credit. [ITDS] A liability account reflecting amounts on open account owing to private persons or organizations for foods and services furnished by a government (but not including amounts due from other funds of the same government or to other governments). [EPA] Money a company owes for services and supplies. For example, a record company would list as accounts payable the bill from a wax company that supplied the raw material for making records. [NYSE] Money owed to suppliers. [Harvey][WCSU] amounts recorded as liabilities on the books of a company, institution or individual that are owed, but have not yet been paid, to a creditor for previously purchased merchandise or services. [OTS]
accounts receivable
An asset account reflecting amounts owing on open account from private persons or organizations for goods and services furnished by a government (but not including amounts due from other funds of the same government). Although taxes and special assessments receivable are covered, by this term, they should be recorded and reported separately in Taxes Receivable and Special Assessments Receivable accounts respectively. Amounts due from other funds or from other governments should also be reported separately. [EPA] Money owed a business enterprise for merchandise or services bought on open account. [ITDS] Money owed by customers. [Harvey][WCSU] amounts recorded as assets on the books of a company, institution or individual that are due, but have not yet been collected, from a debtor for the previous purchase of merchandise or services. [OTS]
accounts receivable turnover
The ratio of net credit sales to average accounts receivable, a measure of how quickly customers pay their bills. [Harvey]
accreting swap
A swap with a notional principal amount which decreases over time. [TMAC]
accretion of discount
A straight-line accumulation of capital gains on discount bonds in anticipation of being paid par at maturity. [FRBSF] In portfolio accounting, a straight-line accumulation of capital gains on discount bond in anticipation of receipt of par at maturity. [Harvey]
accrual basis
The basis of accounting under which transactions are recognized when they occur, regardless of the timing of related cash flows. [EPA]
accrual basis accounting
A method of accounting whereby income and expense items are recognized and recorded when income is earned and expense is incurred, regardless of when cash is actually received or paid. [OTS]
accrual bond
A bond on which interest accrues, but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of the bond and is paid at maturity. [Harvey]
accrual of obligation
The time at which an obligation matures or vests, requiring the obligor to perform. [ITDS]
accrue
to increase or accumulate. Commonly used in reference to depreciation, expense, income, interest and other accounting factors. [OTS]
accrued expense
Expenses incurred but not due until a later date. [EPA] costs that have been incurred during an accounting period but have not yet been paid. [OTS]
accrued interest
Interest earned between the most recent interest payment and the present date but not yet paid to the lender. [CBOT][MIDAM] Interest that has been earned but not yet paid. [WCSU] The accumulated coupon interest earned but not yet paid to the seller of a bond by the buyer (unless the bond is in default). [Harvey] The dollar amount of interest accrued on a bond issue from its date to the date of delivery to the original purchaser. This is usually paid (and is required to be paid in most competitively bid sales) by the original purchaser to the issuer as part of the purchase price of the issue. Note that a security usually bears interest from its date. The dollar amount of unpaid interest that has accrued to a certain date, such as to a call date. [EPA] The interest due on a bond since the last interest payment was made. The buyer of the bond pays the market price plus accrued interest. [NYSE] interest that has been earned but which has not been paid or credited since the last time that interest was paid. [OTS]
accrued interest on securities issued
Interest for the period between the date of issue (dated date) and the settlement date. [EPA]
accrued-benefit cost method
Method for estimating thenormal costs of a pension plan. Its principle is that that company should contribute each year the present value of any benefits that have accrued. [WCSU]
accumulated benefit obligation
An approximate measure of the liability of a plan in the event of a termination at the date the calculation is performed. [Harvey]
accumulated depreciation
A valuation account to record the accumulation of periodic credits made to record the expiration of the estimated service life of fixed assets. [EPA]
ACH Association
An organization formed by financial institutions to regulate and support the exchange of electronic transactions among member institutions. [ACH]
ACH credit
A transaction through the ACH network originated to pay a receiver (deposit funds into an account). [ACH]
ACH debit
A transaction through the ACH network originated to remove funds from the receiver (withdrawal from account). [ACH]
ACH operator/processor
An ACH operator/processor is a central clearing facility that receives batches of ACH credit and debit transactions from originating depository institutions; edits, sorts, and distributes the transactions to receiving depository institutions; and facilitates the settlement among participants. [GAO]
acid-test ratio
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid items to current liabilities. [Harvey]
acquiree
A firm that is being acquired. [Harvey]
acquirer
A firm or individual that is acquiring something. [Harvey]
acquiring institution
A healthy bank or thrift institution that purchases some or all of the assets and assumes some or all of the liabilities of a failed institution in a purchase and assumption transaction. The acquiring institution is also referred to as the assuming institution. [FDIC]
acquiring processor
The processor provides credit card processing, billing, reporting and settlement and operational services to acquiring and issuing banks. Many financial institutions don't do their own bankcard processing because it's more cost-effective to let someone else invest in the equipment and people and do it for them. [GAO]
acquisition
Acquiring control of one corporation by another. In 'unfriendly' take-over attempts, the potential buying company may offer a price well above current market values, new securities and other inducements to stockholders. The management of the subject company might ask for a better price or try to join up with a third company. [NYSE] The purchase of complete or majority ownership in a business enterprise, usually by another business enterprise. [ITDS]
acquisition credit
fees other than interest charged by a thrift institution for making, refinancing or changing a loan or a loan commitment. Acquisition credits are sometimes referred to as loan origination fees. [OTS]
acquisition discount
The difference between the amount of unpaid principal of a mortgage and the price paid for the mortgage in the secondary market. [OTS]
acquisition loan
A loan for purchasing raw, or yet to be developed, land. [OTS]
acquisition of assets
A merger or consolidation in which an acquirer purchases the selling firm's assets. [Harvey]
acquisition of stock
A merger or consolidation in which an acquirer purchases the acquiree's stock. [Harvey]
acquisition, development and construction loan
A loan package to finance acquiring, developing and constructing real estate. [OTS]
acre
A tract of land containing 43,560 square feet, or 0.0016 square miles of land. An acre measures 208.71 feet on each side. In the metric system, one acre equals 0.4047 hectare or 40.47 ares. [OTS]
act of God
An act of nature beyond mans control such as lightning, flood, earthquake or hurricane. Many shipping and other performance contracts include a 'force majeure' clause which excuses a party who breaches the contract due to acts of God. [ITDS]
act of state doctrine
This doctrine says that a nation is sovereign within its own borders and its domestic actions may not be questioned in the courts of another nation. [Harvey]
action ex contractu
A legal action for breach of a promise stated in an express or implied contract. [ITDS]
action ex delicto
(a) A legal action for a breach of a duty that is not stated in a contract but arises from the contract. (b) A legal action that arises from a wrongful act, such as fraud. [ITDS]
active
A market in which there is much trading. [Harvey]
active portfolio strategy
A strategy that uses available information and forecasting techniques to seek a better performance than a portfolio that is simply diversified broadly. [Harvey]
activist fiscal policy
Use of the federal governments taxing, spending and borrowing powers in order to stimulate economic growth and employment. [FACS]
actual thrift investment percentage
A ratio whose numerator is housing-related investments, called qualified thrift investments, and whose denominator is portfolio assets. The ratio is used to determine whether a savings association meets the qualified thrift lender test. [OTS]
actual turnover
The number of times individuals actually spend their average money holding over a given period of time. Actual turnover is determined by the proportion of income that people receive and actually retain as money balances over a given period of time. [FACS]
actuals
Physical cash commodities as opposed to futures contracts. [NYMEX] Refers to debt securities, currencies, physical commodities and equity securities (versus derivatives) [TMAC] The physical commodity underlying a futures contract. Cash commodity, physical. [Harvey] The physical or cash commodity, as distinguished from a commodity futures contract. [CFTC] physical or cash commodities, as distinguished from commodity futures contracts. [OTS]
ad valorem (property) tax
A direct tax based 'according to value' of property. Counties and school districts and municipalities usually are, and special tax districts may be, authorized by law to levy ad valorem taxes on property other than intangible personal property. Local governmental bodies with taxing powers may issue bonds or short-term certificates payable from ad valorem taxation. [EPA]
ad valorem duty
A U.S. Customs duty assessed as a percentage rate or value of the imported merchandise. [ITDS]
ad valorem real property taxes
Taxes imposed on real property based on its value. [FDIC]
ad valorem tax
A tax measured or based on the value of the property being taxed. [EPA] property taxes on the assessed value of a property. Ad valorem is Latin for 'according to value.' [OTS]
add
Antidumping duties which are assessed when merchandise is sold to purchases in the US at less than fair value resulting in material injury to a US industry. [ITDS]
add-on interest
A procedure in which the interest payable during the term of the loan is added to the principal of the loan. The borrower signs a note promising to repay principal plus interest, although only the principal is initially disbursed to the borrower. [OTS]
add-on method
A method of paying interest where the interest is added onto the principal at maturity or interest payment dates. [CBOT][MIDAM]
addenda record
An ACH record type that carries the supplemental data needed to completely identify an account holder(s) or provide information concerning a payment to the Receiving Depository Financial Institution and the Receiver. [ACH]
additional bonds
Revenue bonds issued after the first issue in accordance with authorization and upon conditions specified in the security documents for the first issue. The conditions often include an historic and forecasted earnings coverage of debt service on the outstanding and the additional bonds. Additional bonds are usually, but not necessarily, on a parity with outstanding bonds. [EPA]
additional hedge
A protection against borrower fallout risk in the mortgage pipeline. [Harvey]
additional settlement obligation (ASO)
NYCHA loss-sharing arrangement to ensure that CHIPS settles even if a participant fails. Each CHIPS participant that has established bilateral limits with the failed participant agrees to assume an additional settlement obligcation equal to its pro rata share of the failed participan'ts net debit position. [GAO]
address of record
The official or primary location for an individual, company, or other organization. [ITDS]
address verification service (AVS)
AVS allows mail and telephone orders companies to verify a cardholder's billing address online. This program is designed to reduce fraudulent use of cardholder's credit card number [GAO]
adhesion contract
Contract with standard, often printed, terms for sale of goods and services offered to consumers who usually cannot negotiate any of the terms and cannot acquire the product unless they agree to the terms. [ITDS]
adjustable rate mortgage (ARM)
A loan in which the interest rate is periodically adjusted, moving higher or lower in the same ratio as a preselected index, such as Treasury bill rates. ARM loans may include caps on interest rate increases in a given time period, and over the life of the loan, and may include limits on the frequency of interest rate adjustments. ARM loans generally have initial below market interest rates in return for the borrower sharing the risk that interest rates may rise during the life of the loan. [OTS] A type of mortgage in which the interest rate is reset at regular intervals, typically at a spread over a stated short-term interest rate index. The most frequently used indexes have been the one-year U.S. Treasury constant maturity yield and the Eleventh District Cost of Funds Index. Because the interest rate paid by the borrower fluctuates with the general level of interest rates in the marketplace, ARMs shift most of the interest rate risk from the lender to the borrower. [FDIC]
adjustable rate preferred stock
Publicly traded issues that may be collateralized by mortgages and MBSs. [Harvey]
adjusted basis
The original cost of a property plus the value of any capital expenditures for improvements to the property, minus any depreciation taken. [OTS]
adjusted futures price
The cash-price equivalent reflected in the current futures price. This is calculated by taking the futures price times the conversion factor for the particular financial instrument (e.g., bond or note) being delivered. [CBOT][MIDAM]
adjusted present value (APV)
Net present value of an asset if financed solely by equity, plus the present value of any financing side affects. [WCSU] The net present value analysis of an asset if financed solely by equity (present value of un-levered cash flows), plus the present value of any financing decisions (levered cash flows). In other words, the various tax shields provided by the deductibility of interest and the benefits of other investment tax credits are calculated separately. This analysis is often used for highly leveraged transactions such as a leverage buy-out. [Harvey]
adjustment assistance
Financial, training and re-employment technical assistance to workers, and technical assistance to firms and industries, to help them cope with adjustment difficulties arising from increased import competition. [ITDS]
administered bank
A term used to describe a bank without a full stand-alone presence in Guernsey. An administered bank differs from a class 'B' or managed bank by requirement that its books and records must be maintained in Guernsey where they are locally audited. [UNODC]
administration costs
Costs of managing a utility, such as supervisory and clerical personnel and operating and maintaining administrative buildings and vehicles. Excludes costs related to billing and customer service. [EPA]
administrative law
law that is formulated by a government agency responsible for carrying out statute law. [OTS]
administrative law judge
An attorney appointed to conduct administrative hearings brought by federal agencies in civil cases. Such hearings are often held when a federal agency seeks to decide a contested issue or impose a directive or civil penalty on an individual or an institution. In most cases after conducting the hearing, the administrative law judge sends recommended findings and conclusions to the head of the federal agency, who makes the final decision. The agency head considers the recommendations of the administrative law judge and any briefs submitted by the agency staff and the respondent. The hearings are conducted under rules established by the Administrative Procedures Act. Federal agencies either have their own administrative law judges on staff or borrow them from other agencies when they need to conduct a hearing. The Office of Personnel Management assigns administrative law judges to other agencies upon request. Administrative law judges formerly were called hearing examiners. [OTS]
administrative pricing rules
IRS rules used to allocate income on export sales to a foreign sales corporation. [Harvey]
administrative workstation
A NYMEX ACCESS(R) workstation through which NYMEX Clearing Members monitor all activity in accounts they carry and set limits on their customers' accounts through the Trade Limit Monitoring System. [NYMEX]
admiralty
Any civil or criminal issue having to do with maritime law. [ITDS]
Admiralty Court
A court of law that has jurisdiction over maritime legal issues. [ITDS]
admission temporaire
The free entry of goods normally dutiable. [ITDS]
advance
(a) A drawing or payout of funds representing the disbursement of a loan, including disbursement in stages. (b) in international banking, an extension of credit usually recurring, when no instrument (other than a copy of the advice of an advance) is used as evidence of a specific indebtedness, except in special cases. A signed agreement must be on file in the department, stating the conditions applicable to payments made to the borrower. This loan category does not include commercial account overdrafts, but may be created to finance payments affected under a commercial letter of credit, to finance payments of collections or to refinance a maturing loan. [FDIC] A loan made by a Federal Home Loan Bank to a member financial institution. [OTS]
advance against documents
An advance made on the security of the documents covering a shipment. [FDIC]
advance arrangements
The shipment of certain classes of commodities that require arrangements in advance with carriers. [ITDS]
advance commitment
A promise to sell an asset before the seller has lined up purchase of the asset. This seller can offset risk by purchasing a futures contract to fix the sales price. [Harvey]
advance dividend
A payment made to an uninsured depositor or creditor after a bank or thrift failure. The amount of the advance dividend represents the FDIC's conservative estimate of the ultimate value of the receivership. Cash dividends equivalent to the board-approved advance dividend percentage (of total outstanding deposit claims) are paid to uninsured depositors, thereby giving them an immediate return of a portion of their uninsured deposit. [FDIC]
advance estimate
The first estimate of GDP and its components for a quarter. It is released 25-30 days after the end of the quarter and is based on source data that are incomplete and that are subject to revision. [BEA]
advance package
advance refunding
(A) The refunding of an outstanding issue of securities by the issuance and delivery of a new issue of securities prior to the date on which the outstanding issue of securities can be redeemed or paid in accordance with its terms. Thus, for a period of time both the issue being refunded and the refunding issue are outstanding, although the trust agreement or indenture securing the issue being refunded may be defeased or discharged by the deposit of the proceeds of the new issue in escrow. (B) The refunding of an outstanding issue of securities by the issuance an delivery of a new issue of securities prior to the date on which the prior issue of securities become due or callable. The proceeds of the refunding bonds are used to purchase U.S. government securities which are deposited in an escrow account, the principal and interest on which will retire the bonds being refunded at maturity or a call date. [EPA]
advance refunding bonds
Bonds issued to refund an outstanding bond issue prior to the date on which the outstanding bonds become due or callable. Proceeds of the advance refunding bonds are deposited in escrow with a fiduciary, invested in U.S. Treasury Bonds or other authorized securities, and used to redeem the underlying bonds at maturity or call date and to pay interest on the bonds being refunded or the advance refunding bonds. [EPA]
adverse domination
A legal doctrine advanced by the FDIC and the RTC in professional liability suits against the officers and directors of a failed institution. Under the doctrine of adverse domination, in a lawsuit against corporate wrongdoers, the statute of limitations does not run during the period when the defendants were in control of the board of directors of the failed institution. [FDIC]
adverse opinion
An opinion issued by an independent auditor when the financial statements of a financial institution do not fairly present the institution's financial condition. [OTS]
adverse possession
A claim to acquire the title to another owner's property by an occupant who has openly and peaceably occupied that property continuously for a period of time (usually 20 years) without being challenged by the original owner. [OTS]
adverse selection
A situation in which a pricing policy causes only the least desirable customers to do business, e.g., a rise in insurance prices that leads only the least-good risks to buy insurance. [WCSU] A situation in which market participation is a negative signal. [Harvey]
advice
A form of letter that relates or acknowledges a certain activity or result with regard to a customers relations with a bank. [ITDS]
advised credit
A letter of credit whose terms and conditions have been confirmed by a bank. [ITDS]
advised letter of credit
An export letter of credit issued by a bank which requests another bank to advise the beneficiary that the credit has been opened in its favor. This occurs when the issuing bank does not have an office in the country of the beneficiary and uses the facilities of a correspondent bank. An advised credit creates no liability on the part of the advising bank [FDIC]
advised line
An authorization for credit made known to the customer. [FDIC]
advising bank
The bank which receives a letter of credit or amendment to a letter of credit from the issuing bank and forwards it to the beneficiary. [ITDS]
advisory
affidavit
A sworn statement in writing before an authorized official, usually a notary. [OTS]
affiliate
A business enterprise located in one country which is directly or indirectly owned or controlled by a person of another country. [ITDS]
affiliated company
A company that exercises a significant influence over another company. Any direct or indirect common ownership. [OTS]
affiliated foreign group
Equivalent of the foreign parent or any foreign person associated with the foreign parent which is owned more than 50 percent by the person above it. [ITDS]
affiliated person
as defined by OTS regulations, an affiliated person is: (1) a director, officer, or controlling person of a thrift institution; (2) a spouse of a director, officer or controlling person of a thrift institution; (3) a member of the immediate family residing in the same household as a director, officer or controlling person of a thrift institution; (4) a corporation of which a director, officer or controlling person: (a) is chief executive officer, chief financial officer, or a person performing similar functions of a thrift institution, (b) is a general partner in a partnership with a thrift institution, (c) is a limited partner in a partnership with a thrift institution and (i) directly or indirectly, either alone or with members of his immediate family who are also affiliated persons, owns an interest of 10 percent or more in the partnership based on the value of his capital contribution, or (ii) directly or indirectly with other directors, officers and controlling persons, and their family members who are also affiliated persons, owns an interest of 25 percent or more of any class of equity securities; or (5) any trust or other estate in which a director, officer, or controlling person or the spouse of such person has a substantial beneficial interest or as to which such person or his spouse serves as trustee or in a similar fiduciary capacity. [OTS]
affirmative covenant
A bond covenant that specifies certain actions the firm must take. [Harvey]
affirmative lending
The practice of actively marketing and making loans in areas of particular need: inner-city, low- and moderate-income, minority and/or older neighborhoods in need of rehabilitation. [OTS]
Affordable Housing Program
A program established by FIRREA, under which each Federal Home Loan Bank uses a portion of its net income to make grants and advances to member institutions, which in turn use the funds to make loans for low- and moderate-income housing on below market terms. [OTS] An FDIC program that increases the stock of affordable housing through disposition of eligible residential properties to low- and moderate-income families. The RTC program was known as the Affordable Housing Disposition Program (AHDP). The affordable housing created comes from the agency's inventory of owned real estate. [FDIC]
affordable market value
A valuation model used to determine the sales price of multi-family residential property sold in the FDIC AHP. The affordable market value was determined by subtracting the cost to cure physical deficiencies and operating deficits from the maximum supportable loan amount, which was determined by applying a debt service coverage factor to the projected net operating income of the property. [FDIC]
affreightment
The hiring or chartering of all or part of a vessel for the transport of goods. [ITDS]
affreightment contract
A contract with a ship owner to hire. all or part of a ship for transporting goods. [ITDS]
afloat
Refers to a shipment of cargo which is currently on board a vessel between ports (as opposed to on land). [ITDS]
aft
Direction toward the stern of the vessel (ship or aircraft). [ITDS]
after date
A notation used on financial instruments (such as drafts or bills of exchange) to fix the maturity date as a fixed number of days past the date of drawing of the draft. [ITDS]
after sight
A draft where the time to maturity begins at its presentation or acceptance. [FDIC] A notation on a draft that indicates that payment is due a fixed number of days after the draft has been presented to the drawee. [ITDS]
after-acquired property
Buildings, equipment or furnishings added to the project after the issue is delivered. If so provided in the security documents, the property becomes subject to any lien of the security documents. [EPA]
after-tax real rate of return
Money after-tax rate of return minus the inflation rate. [Harvey]
against actuals
agencies
Federal agency securities. [Harvey] slang for securities issued by an agency of the federal government, or a corporation chartered by Congress, such as the FHLMC, FNMA or GNMA. [OTS]
agency bank
A foreign bank doing business in the United States as an agent for its parent bank; such banks arrange letters of credit financing on behalf of the parent but do not accept deposits or make loans in their own name. [UNODC] A form of organization commonly used by foreign banks to enter the U.S. market. An agency bank cannot accept deposits or extend loans in its own name; it acts as agent for the parent bank. [Harvey]
agency basis
The sale of securities by a broker acting as an agent for others and charging customers a commission for services. On an agency basis, the broker assumes no risk of holding the securities directly, but merely handles the buying and selling for others. [OTS]
agency cost view
The argument that specifies that the various agency costs create a complex environment in which total agency costs are at a minimum with some, but less than 100%, debt financing. [Harvey]
agency costs
The incremental costs of having an agent make decisions for a principal. [Harvey]
Agency for International Development
is a consolidation of most of the U.S. Government's foreign economic activities. After the U.S. Government has authorized funds to be used by foreign governments for the purpose of purchasing commodities, services for certain projects, AID works in cooperation with the foreign governments in the utilization of these funds. The foreign governments, usually represented by a Central Bank, will then apply to AID for a specified sum for a specific purpose and designates a U.S. bank which will open the related letters of credit. Upon approval, AID then sends a letter of commitment to the designated U.S. bank. The commitment letter authorizes the U.S. bank to open letters of credit in favor of beneficiaries who will supply the goods and services needed by the foreign government. Upon negotiation and payment under its letters of credit, the U.S. bank obtains reimbursement from AID in accordance with AID's letter of commitment. The U.S. opening bank's letters of credit, therefore, if properly handled and documented, are, in essence, guaranteed by the U.S. Government. [FDIC]
agency issues
debt securities issued by agencies of the federal government or corporations chartered by Congress. With the exception of the Government National Mortgage Association (Ginnie Mae), these issues are backed by the issuing agency but not by the full faith and credit of the U.S. Government. [OTS]
agency pass-throughs
Mortgage pass-through securities whose principal and interest payments are guaranteed by government agencies, such as the Government National Mortgage Association (' Ginnie Mae '), Federal Home Loan Mortgage Corporation (' Freddie Mac ') and Federal National Mortgage Association (' Fannie Mae'). [Harvey]
agency problem
Conflicts of interest among stockholders, bondholders, and managers. [Harvey]
agency swap program
A method of securitization in which single family residential mortgages conforming to agency underwriting guidelines are swapped for mortgage-backed securities issued by Fannie Mae or Freddie Mac. [FDIC]
agency theory
The analysis of principal-agent relationships, wherein one person, an agent, acts on behalf of another person, a principal. [Harvey] Theory concerning the relationship between principle, e.g. a shareholder, and an agent of the principal, e.g., the company's manager. [WCSU]
agent
A person or legal entity with the proper authorization to act on behalf of another person or legal entity. [ITDS] A person who acts for or in place of another with authority delegated by the other person. [OTS] The decision-maker in a principal-agent relationship. [Harvey]
agent bank
A bank acting on behalf of a foreign bank. [ITDS] The bank which leads and documents a syndicated loan. [FDIC]
aggregate
Any total (e.g., the gross national product; the sum of monthly sales). [FRBSF]
aggregated shipments
Several shipments from various shippers that are consolidated and treated as a single consignment. [ITDS]
aggregation
Process in corporate financial planning whereby the smaller investment proposals of each of the firm's operational units are added up and in effect treated as a big picture. [Harvey] The principle under which all futures positions owned or controlled by one trader (or group of traders acting in concert) are combined to determine reporting status and compliance with speculative limits. [CFTC]
aging schedule
A table of accounts receivable broken down into age categories (such as 0-30 days, 30-60 days, and 60-90 days), which is used to see whether customer payments are keeping close to schedule. [Harvey] Record of the length of time that accounts receivable have been outstanding. [WCSU]
agreed valuation
The set value of a shipping load that is agreed upon by both the shipper and the carrier to define rate and/or liability. [ITDS]
agreement among underwriters or agreement among
An agreement setting forth the respective rights and responsibilities of the members of an account, including such terms as the period during which the initial offering price will not be changed, whether the account is a joint and several account or a several account, who the manager or managers of the account are and the managerial powers to act on behalf of the account, assumption of expenses in the event the account dissolves, and relegate of individual members of the account. (This agreement is to be distinguished from the bond purchase agreement, the contract of purchase or the underwriting agreement, which is between the account and the issuer.) This agreement is generally prepared by underwriters' counsel, but is reviewable by bond counsel because its terms, particularly as to joint and several liability, will affect the terms of the bond purchase agreement, underwriting agreement or contract of purchase. [EPA]
agreement corporation
An Agreement corporation is a federally or state- chartered corporation that has entered into an agreement or understanding with the Board that it will not exercise any power that is impermissable for an Edge corporation. [FRBC] An agreement corporation is a federally or state-chartered corporation that has entered into an agreement or understanding with the Board that it will not exercise any power that is impermissable for an Edge corporation. [FRB] An agreement corporation is a federally or state-chartered corporation that has entered into an agreement or understanding with the Board that it will not exercise any power that is impermissible for an [FRB][FRBM] Corporation chartered by a state to engage in international banking; so named because the corporation enters into an 'agreement' with the Board of Governors to limit its activities to those permitted an Edge Act corporation. [FRBSF]
agricultural bank
Banks of the Farm Credit System and certain other farm-oriented commercial banks, typically located in the farm belt states, that specialize in providing credit to the farming industry. [FDIC]
AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation Committee is charged with the responsibility to interpret, revise and update the AIMR Performance Presentation Standards (AIMR-PPS(TM)) for portfolio performance presentations. [Harvey]
air cargo
Property of any kind that is transported by aircraft (excluding passenger baggage). [ITDS]
air express
Expedited air freight service. [ITDS]
air lot
A legal description for a condominium unit, containing both horizontal and vertical dimensions. The air lot generally extends to the inner faces of the walls, floors and ceiling of the condominium unit. [OTS]
air parcel post
Term used to describe priority mail, consisting of first class mail which weighs more than 13 ounces. [ITDS]
air rights
The ownership rights of everything above the physical surface of the land. [OTS]
air space
A two- or three-dimensional space located above ground level. All condominiums above the first floor are located in, and represent title to, air space. [OTS]
air waybill
Shipping document used for the transportation of air freight: includes conditions, liability, shipping instructions, description of commodity, and applicable transportation charges. [ITDS]
alienable
Ability to be transferred or conveyed. [ITDS]
alienate
to transfer the title to a property from one party to another. [OTS]
aliquot
A fractional share. [ITDS]
all equity rate
The discount rate that reflects only the business risks of a project and abstracts from the effects of financing. [Harvey]
all or none
An order which must be filled in its entirety or not at all. [NYMEX] Requirement that none of an order be executed unless all of it can be executed at the specified price. [Harvey]
all or nothings
The option payout is a predetermined amount, which is paid out only if a trigger point is reached. [TMAC]
all savers certificate
A one-year certificate of deposit account, with a fixed rate tied to new Treasury bills, issued from October 1, 1981, through December 31, 1982, with a minimum deposit of $500. The saver received a once-in-a-lifetime exemption from federal income taxes for ASC earnings of up to $1,000 ($2,000 on a joint return). All savers certificates were authorized by the Economic Recovery Tax Act of 1981 as a means of attracting funds primarily to thrift institutions. [OTS]
all-cargo aircraft
Any aircraft that is used for the sole purpose of transporting cargo. [ITDS]
all-in cost
Total costs, explicit and implicit. [Harvey]
all-or-none underwriting
An arrangement whereby a security issue is canceled if the underwriter is unable to re-sell the entire issue. [Harvey] The security issue is canceled if the underwriter is unable to resell the entire issue. [WCSU]
Allocation Review Committee (ARC)
Convened from time to time, the ARC reviews and makes recommendations to the Quality of Markets Committee with respect to the Exchange's policies and procedures for the allocation of listing securities to specialist units. [NYSE]
allowances
An amount paid by the seller as restitution or reimbursement if the receiving party was dissatisfied with the shipment for any number of reasons: faulty packaging, late arrival, etc. [ITDS] The discounts (premiums) allowed for grades or locations of a commodity lower (higher) than the par (or basis) grade or location specified in the futures contract. [CFTC]
alpha
A measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A positive alpha is the extra return awarded to the investor for taking a risk, instead of accepting the market return. For example, an alpha of 0.4 means the fund outperformed the market-based return estimate by 0.4%. An alpha of -0.6 means a fund's monthly return was 0.6% less than would have been predicted from the change in the market alone. In a Jensen Index, it is factor to represent the portfolio's performance that diverges from its beta, representing a measure of the manager's performance. [Harvey]
alpha equation
The alpha of a fund is determined as follows: [ (sum of y) -((b)(sum of x)) ] / n ; where: n = number of observations (36 months), b = beta of the fund, x = rate of return for the S&P 500, y = rate of return for the fund. [Harvey]
alternative delivery procedure
A provision of a futures contract that allows buyers and sellers to make and take delivery under terms or conditions that differ from those prescribed in the contract. An ADP may occur at any time during the delivery period, once long and short futures positions have been matched for the purpose of delivery. [NYMEX]
alternative mortgage instruments (ATI)
Variations of mortgage instruments such as adjustable-rate and variable-rate mortgages, graduated-payment mortgages, reverse-annuity mortgages, and several seldom-used variations. [Harvey] all mortgage plans that differ from the conventional fixed rate, fixed term, fixed monthly payment, fully amortized mortgage. [OTS]
alternative tariff
A tariff with two or more rates for the same goods, to and from the same points, with the discretion to use the lowest of the charges. [ITDS]
amendment
An addition, deletion, or change in a document. [ITDS]
amenity
any feature that makes a property more attractive or valuable. Amenities include such items as off-street parking, a swimming pool, tennis courts, and proximity to good schools, transportation and shopping facilities. [OTS]
America's Community Bankers
A national trade association representing savings institutions and community banks. It was formed on June 1, 1992, through the merger of the United States League of Savings Institutions and the National Council of Community Bankers. At that merger, its original name was Savings & Community Bankers of America. The name was changed to America's Community Bankers on January 29, 1995. [OTS]
American Bankers Association (ABA)
A national trade organization of the banking industry formed in 1875. [OTS]
American Commodity Exchange (ACE)
American Council of State Savings Supervisors (ACSSS)
A national organization of state savings institution regulators. It was formerly called the National Association of State Savings & Loan Supervisors (NASS&LS). [OTS]
American Depositary Receipt (ADR)
American Depositary Receipt. A security issued by a U.S. bank in place of the foreign shares held in trust by that bank, thereby facilitating the trading of foreign shares in U.S. markets. [NYSE] Certificates issued by a U.S. depositary bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADR's are 'sponsored,' the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADRs. 'Unsponsored' ADRs do not receive such assistance. ADRs carry the same currency, political and economic risks as the underlying foreign share; the prices of the two, adjusted for the SDR/ordinary ratio, are kept essentially identical by arbitrage. American depositary shares(ADSs) are a similar form of certification. [Harvey]
American Express
American option
An option contract that may be exercised at any time prior to expiration. This differs from a 'European option,' which may only be exercised on the expiration date. NYMEX options are 'American.' [NYMEX] An option that may be exercised at any time up to and including the expiration date. [Harvey] that can be exercised any time before the final exercise date. [WCSU]
American Petroleum Institute
The primary U.S. oil industry trade association; based in Washington, D.C. [NYMEX]
American Savings and Loan League
A thrift institution trade organization primarily representing minority-owned savings and loan associations. It is affiliated with America's Community Bankers. [OTS]
American shares
Securities certificates issued in the U.S. by a transfer agent acting on behalf of the foreign issuer. The certificates represent claims to foreign equities. [Harvey]
American Society for Testing Materials
Grade and quality specifications for petroleum products and metals are determined by the ASTM in test methods. [NYMEX]
American Stock Exchange (AMEX)
The second largest stock exchange in New York, located in the financial district of New York City. [NYSE] The second-largest stock exchange in the United States. It trades mostly in small-to medium-sized companies. [Harvey]
American Stock Exchange Options Switching System (AMOS)
American-style option
An option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American style. [Harvey] An option that can be exercised any time during its life up to and including the last trading day. [TMAC]
amidships
In the middle of the vessel; often preferred by shippers because of the minimal motion and the benefits to fragile freight. [ITDS]
amortization
(1) Repayment of a loan by installments; (2) allowance for depreciation. [WCSU] The gradual diminishment of any amount over a period of time. [ITDS] The payment of the principal amount of an issue by a series of periodic payments either directly to bondholders or to a sinking fund and thence to bondholders. Amortization payments usually are calculated to include interest in addition to a partial payment of principal. [EPA] The process of fully paying off indebtedness by installments of principal and earned interest over a definite time. [FRB][FRBC][FRBM][FRBSF] The repayment of a loan by installments. [Harvey] The repayment of a loan calculated so that the principal will be paid in full through monthly payments of principal and interest for a predetermined period of time. Many home mortgages are fully amortized in 15, 20 or 30 years. [OTS]
amortization factor
The pool factor implied by the scheduled amortization assuming no prepayemts. [Harvey]
amortizing interest rate swap
Swap in which the principal or national amount rises (falls) as interest rates rise (decline). [Harvey]
amortizing swap
A swap in which the notional amount of the agreement declines over time according to an amortization schedule. The rate of amortization may be preset or may be determined by interest rates. [OTS]
analysis
analyst
Employee of a brokerage or fund management house who studies companies and makes buy-and-sell recommendations on their stocks. Most specialize in a specific industry. [Harvey]
announcement date
Date on which particular news concerning a given company is announced to the public. Used in event studies, which researchers use to evaluate the economic impact of events of interest. [Harvey]
annual fund operating expenses
For investment companies, the management fee and 'other expenses,' including the expenses for maintaining shareholder records, providing shareholders with financial statements, and providing custodial and accounting services. For 12B-1 funds, selling and marketing costs are included. [Harvey]
annual input-output accounts
Set of I-O tables -- make tables, use tables, and direct and total requirements tables -- that are an update of the most recent benchmark I-O accounts. Annual tables incorporate less comprehensive and less reliable source data than those used for the benchmark tables. [BEA]
annual percentage rate (APR)
The cost of credit on a yearly basis expressed as a percentage. [FRB][FRBC][FRBM][FRBSF] The periodic rate times the number of periods in a year. For example, a 5% quarterly return has an APR of 20%. [Harvey] The rate required by Truth in Lending laws. It is designed to show customers the total cost of credit, including the stated interest rate plus certain finance and service charges. [OTS]
annual percentage yield
The effective, or true, annual rate of return. The APY is the rate actually earned or paid in one year, taking into account the affect of compounding. The APY is calculated by taking one plus the periodic rate and raising it to the number of periods in a year. For example, a 1% per month rate has an APY of 12.68% (1.01^12). [Harvey]
annual report
A report prepared by management once each year describing the financial and organizational condition of the company, institution or agency and describing the activities that were engaged in during the past year. [OTS] The formal financial statement issued yearly by a publicly owned corporation. The report shows assets, liabilities, revenues, expenses and earnings. The report also shows the company's financial condition at the close of the business year and other basic information of interest to shareholders. [NYSE] Yearly record of a publicly held company's financial condition. It includes a description of the firm's operations, its balance sheet and income statement. SEC rules require that it be distributed to all shareholders. A more detailed version is called a 10-K. [Harvey]
annualized gain
If stock X appreciates 1.5% in one month, the annualized gain for that sock over a twelve month period is 12*1.5% = 18%. Compounded over the twelve month period, the gain is (1.015)^12 = 19.6%. [Harvey]
annualized holding period return
The annual rate of return that when compounded 't' times, would have given the same t-period holding return as actually occurred from period 1 to period t. [Harvey]
annuity
(1) a payment of funds, often at a minimum guaranteed amount, made yearly, monthly or at other regular intervals. (2) a type of policy offered by insurance companies in which the policy holder makes payments for a fixed period or until a stated age, and then receives annuity payments from the insurance company. [OTS] A regular periodic payment made by an insurance company to a policyholder for a specified period of time. [Harvey] An insurance-based contract that provides future payments at regular intervals in exchange for current premiums. [UNODC] Investment that produces a level stream of cash flows for a limited number of periods. [WCSU]
annuity due
An annuity with 'n' payments, wherein the first payment is made at time t = 0 and the last payment is made at time t = n - 1. [Harvey]
annuity factor
Present value of $1 paid for each of 't' periods. [Harvey]
annuity in arrears
An annuity with a first payment on full period hence, rather than immediately. [Harvey]
ANSI X12
A communications format for electronic business data interchange established by the American National Standards Institute, a voluntary body supported by the American Bankers Association. [ACH]
anticipation
A deposit of funds to meet the payment of an acceptance prior to the maturity date. Should be applied to reduce customer's liability on acceptances. [FDIC] Arrangements whereby customers who pay before the final date may be entitled to deduct a normal rate of interest. [Harvey]
anticipation request
Formal request for funds for a capital investment project. [WCSU]
antidilutive effect
Result of a transaction that increases earnings per common share (e.g. by decreasing the number of shares outstanding). [Harvey]
antidumping
The opposite of dumping as defined by the system of laws to remedy dumping. [ITDS]
antitrust laws
Designed to promote open markets by limiting practices that reduce competition. [FACS]
any quantity
A cargo rating that applies to an article without consideration of weight. [ITDS]
apartment
A complete and separate rental living unit in a building containing other units. [OTS]
API gravity
Gravity (weight per unit volume) of oils as measured by the API scale whereby: API Gravity = 141.5 - 131.5 specific gravity at 60o F [NYMEX]
appellant
The party that appeals a decision of a lower court. [OTS]
appellee
The party that is the defendant in an appeal of a lower court decision. [OTS]
Applications Tracking System (ATS)
An electronic system employed by the Office of Thrift Supervision to keep track of the processing and status of thrift industry applications requiring regulatory approval. [OTS]
appraisal
An estimate of the market value of a piece of property by a qualified appraiser. [OTS]
appraisal fee
The charge for estimating the value of property offered as security. [FRB][FRBC][FRBM][FRBSF]
appraisal ratio
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard deviation. [Harvey]
appraisal rights
A right of shareholders in a merger to demand the payment of a fair price for their shares, as determined independently. [Harvey]
appraised equity capital
A regulatory capital item established by the former FHLBB that allowed a savings association to count as part of its regulatory capital the difference between the book value and the fair market value (appraised value) of fixed assets, including owner-occupied real estate. [FDIC] The amount of the difference between the book value of certain thrift institution assets such as land, buildings and equipment, and the higher market value of such assets. [OTS]
appreciation
An increase in the value of one form of currency as compared to the currency of another nation. [ITDS] The increase in value of an item, specifically the increase in market value of real estate. [OTS]
appropriation request
Formal request for funds for capital investment project. [Harvey]
approved carriers
Armored carriers approved by the Exchange for the transportation of gold, platinum, and palladium. [NYMEX]
approved delivery facility
Any bank, stockyard, mill, storehouse, plant, elevator or other depository that is authorized by an exchange for the delivery of commodities tendered on futures contracts. [CFTC]
approving opinion or approving legal opinion
Written opinion of bond counsel to the effect that the issuance of the securities complies with the law (applicable constitutional, statutory and, in the case of certain municipalities, charter provisions, and court decisions). Usually also expresses the opinion that interest on the securities is exempt from federal income tax and, in some cases, from designated state and local taxes. Also referred to as 'legal opinion' or simply as 'the legal'. [EPA]
appurtenance
An accessory connected to a primary property used in conjunction with the primary property; usually permanently affixed (i.e. a crane on a ship). [ITDS] anything attached to the land and therefore part of the property and subject to being passed to a new owner if the property is sold. An appurtenance may be something tangible, such as a barn, garage, driveway or septic system, or abstract, such as an easement. [OTS]
apron
Area of the airport where planes are parked for loading and unloading. [ITDS]
arbitrage
(A) With respect to the issuance of municipal bonds, arbitrage usually refers to the difference between the interest paid on the bonds issued and the interest earned by investing the bond proceeds in other securities. (B) Investing funds borrowed at a lower interest cost in investments providing a higher rate of return. (C) The profit derived from the simultaneous purchase of securities, generally U.S. government securities, by the borrowing of funds through the use of tax-free securities. [EPA] A technique employed to take advantage of differences in price. If, for example, ABC stock can be bought in New York for $10 a share and sold in London at $10.50, an arbitrageur may simultaneously purchase ABC stock here and sell the same amount in London, making a profit of 50 cents a share, less expenses. Arbitrage may also involve the purchase of rights to subscribe to a security, or the purchase of convertible security -- and the sale at or about the same time of the security obtainable through exercise of the rights or of the security obtainable through conversion. [NYSE] A transaction in which an investor buys commodities, funds, mortgages, futures contracts, mortgage-backed securities or other securities in one market and simultaneously sells them in a different market in order to profit from differences in price between the two markets. [OTS] Purchase of one security and simultaneous sale of another to give a risk-free profit. 'Arbitrage' or 'risk arbitrage' often used loosely to describe the taking of positions in related securities, e.g., at the time of the takeover bid. [WCSU] Simultaneous buying and selling of foreign currencies, or securities and commodities, to realize profits from discrepancies between exchange rates prevailing at the same time in different markets, between forward margins for different maturities, or between interest rates prevailing at the same time in different markets or currencies. [FDIC] Simultaneous purchase of cash commodities or futures in one market against the sale of cash commodities or futures in the same or a different market to profit from a discrepancy in prices. Also includes some aspects of hedging. [CFTC] The simultaneous buying and selling of a security at two different prices in two different markets, resulting in profits without risk. Perfectly efficient markets present no arbitrage opportunities. Perfectly efficient markets seldom exist. [Harvey] The simultaneous purchase and sale of similar commodities in different markets to take advantage of a price discrepancy. [CBOT][MIDAM] The simultaneous purchase and sale of the same (or equivalent or related) securities to take advantage of a price differences prevailing in separate markets. A pure arbitrage involves trading effectively the same instruments for different prices at the same time. The term is now used widely in connection with concurrent purchases and sales of securities of proposed acquiring and acquired companies in pending tender offers and other acquisitions. [TMAC] The simultaneous purchase of one commodity against the sale of another in order to profit from fluctuations in the usual price relationships. Variations include the simultaneous purchase and sale of different delivery months of the same commodity; of the same delivery month, but different grades of the same commodity; and of different commodities. [NYMEX]
arbitrage certificate
Certificate evidencing compliance with the limitations on arbitrage imposed by §103 of the Internal Revenue Code and the regulations under that section. [EPA]
arbitrage pricing theory
An alternative model to the capital asset pricing model developed by Stephen Ross and based purely on arbitrage arguments. [Harvey]
arbitrage-free option-pricing models
Yield curve option-pricing models. [Harvey]
arbitrageurs
People who search for and exploit arbitrage opportunities. [Harvey]
arbitration
A low-cost alternative to settling disputes over securities transactions in the court system. The NYSE administers this service. [NYSE] The procedure of settling disputes between members, or between members and customers. [CBOT][MIDAM]
are
A metric unit of land measuring 10 meters by 10 meters, or 100 square meters. An are is also 0.1 of a hectare and is 119.60 square yards. [OTS]
arithmetic average (mean) rate of return
Arithmetic mean return. [Harvey]
arithmetic mean return
An average of the subperiod returns, calculated by summing the subperiod returns and dividing by he number of subperiods. [Harvey]
arm's length price
The price at which a willing buyer and a willing unrelated seller would freely agree to transact. [Harvey]
arm's length transaction
A transaction in which the parties involved act independently of each other, and in which the mechanics of the transaction are handled as they would be between strangers. Sometimes the transaction is conducted by a mutually agreed upon third party, to ensure that one of the principal parties does not influence the other. [OTS]
Arms index
Also known as a trading index (TRIN)= (number of advancing issues)/ (number of declining issues) (Total up volume)/ (total down volume). An advance/decline market indicator. Less than 1.0 indicates bullish demand, while above 1.0 is bearish. The index often is smoothed with a simple moving average. [Harvey]
arrears
(1) the state of a debt that remains unpaid following the date of maturity. The term is commonly used in connection with mortgages, installment payments and other obligations that are due and payable on specified dates. (2) the money that is past due but unpaid. [OTS]
arrivals
Imported goods which have been placed in a bonded warehouse for which duty has not been paid. [ITDS]
articles of association
The regulations for governing the rights and duties of the members of the company among themselves. Articles deal with internal matters such as general meetings, appointment of directors, issue and transfer of shares, dividends, accounts and audits. [UNODC]
articles of incorporation
Legal document establishing a corporation and its structure and purpose. [Harvey]
as is
Indicates goods for sale do not include a warranty or guarantee. [ITDS]
ascending or positive yield curve
The interest rate structure which exists when long-term interest rates exceed short-term interest rates. Compare 'Inverted or Negative Yield Curve'. [EPA]
Asia Pacific Advisory Committee (APAC)
Advises on matters involving international capital markets and the views and concerns of the business and financial communities of the countries represented. [NYSE]
Asia-Pacific Group on Money Laundering (APG)
Established in February 1997 and is located in Sydney, Australia. The purpose of APG is to provide a focus for co-operative anti-money laundering efforts in the region. Membership is open to any country within the Asia/Pacific region which commits itself to introducing anti-money laundering legislation and other measures. [UNODC]
Asian currency units
Dollar deposits held in Singapore or other Asian centers. [Harvey]
Asian option
An option whose payoff depends on the average price of the underlying asset during some portion of the life of the option. [CFTC] Option based on the average price of the asset during the life of the option. [Harvey]
ask
A motion to sell. The same as Offer. [NYMEX] The lowest price a broker asks customers to pay for a security. [SEC] This is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically speaking, this is the quoted offer at which an investor can buy shares of stock; also called the offer price. [Harvey]
ask price
A dealer's price to sell a security; also called the offer price. [Harvey] The price at which a security is offered for sale. [OTS]
asked price
The price at which securities are offered in the market to potential buyers. [EPA]
assay
To test a metal or an oil for purity or quality. [NYMEX]
assembly service
A service under which an airline combines multiple shipments from multiple shippers into one shipment to one receiver. [ITDS]
assess
To value property officially for the purpose of taxation. [EPA]
assessed valuation
(A) A valuation set upon real estate or other property by a government as a basis for levying taxes . (B) The value of property against which an ad valorem tax is levied, usually a percentage of 'true' or 'market' value. In some states, real property has an 'assessed valuation' of some percentage (less than 100%) of 'true value'.
(C) An annual determination of the just or fair market value of property by the county property appraiser for purposes of ad valorem taxation. [EPA] The value that a taxing authority places on real or personal property for the purpose of calculating taxes. [OTS]
assessment
(1) an estimate of the value of a piece of real property for the purpose of levying taxes; also called assessed valuation. (2) a charge against real property levied by a public governing body for a local improvement, such as a sewer repair or street paving. [OTS] The placement of antidumping duties on imported goods. [ITDS] The process of making the official valuation of property for purposes of taxation. The valuation placed upon property as a result of this process. [EPA]
assessment role
In the case of real property, the official list containing the legal description of each parcel of property and its assessed valuation. the name and address of the last known owner are also usually shown. In the case of personal property, the assessment roll is the official list containing the name and address of the owner, a description of the personal property, and its assessed value. [EPA]
assessment rolls
The public record of taxable property within the jurisdiction of the taxing authority. [OTS]
assessor
A public official who evaluates property for the purpose of determining the taxable value of property. [OTS]
asset activity ratios
Ratios that measure how effectively the firm is managing its assets. [Harvey]
asset allocation decision
The decision regarding how an institution's funds should be distributed among the major classes of assets in which it may invest. [Harvey]
asset classes
Categories of assets, such as stocks, bonds, real estate and foreign securities. [Harvey]
asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another defaulting borrower. [Harvey]
Asset Liquidation Agreement (ALA)
An asset management contract between the FDIC and a bank affiliate or private-sector contractor for the management and disposition of distressed assets of all types. The ALA contract was designed for asset pools with an aggregate book value in excess of $1 billion. [FDIC]
Asset Management and Disposition Agreement (AMDA)
A partnership agreement between the FDIC as manager of the FSLIC Resolution Fund (FRF) and the acquirers of certain failed savings and loan institutions, created as a result of the RTC's review and renegotiation of the FSLIC's 1988 and 1989 assistance agreements. Assets with a book value of $3.7 billion were assigned to two partnerships under AMDA contracts. [FDIC]
asset management contract
A contract with a private-sector asset management contractor for managing and disposing of distressed assets. [FDIC]
asset manager
A term often used to describe an asset management contractor who manages and disposes of assets (for example, an ALA or SAMDA contractor). The term 'asse t manager ' may also be used in a broad, generic sense to describe a person or entity responsible for the management of an asset or a portfolio of assets. [FDIC]
asset pool
A portfolio of assets, often composed of assets with similar characteristics. [FDIC]
asset pricing model
A model for determining the required rate of return on an asset. [Harvey] A model, such as the Capital Asset Pricing Model (CAPM), that determines the required rate of return on a particular asset. [Harvey]
asset protection trust
A trust established offshore to protect settlor's assets against those who may attempt to make claims against them, creditors, former spouses and dependents on death. Some offshore jurisdictions provide protection from creditor claims against persons who have guaranteed bank loans. [UNODC]
asset specialist
An FDIC or RTC employee with responsibility for the management and disposition of assets, or for the oversight of asset managers employed under asset management contracts. [FDIC]
asset substitution
A firm's investing in assets that are riskier than those that the debtholders expected. [Harvey]
asset substitution problem
Arises when the stockholders substitute riskier assets for the firm's existing assets and expropriate value from the debtholders. [Harvey]
asset swap
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to provide a better match with its iabilities. [Harvey]
asset turnover
The ratio of net sales to total assets. [Harvey] total gross income divided by total assets. [OTS]
asset valuation review (AVR)
A review of a failing institution's assets to estimate the liquidation value of the assets. An AVR estimate is used in the least cost analysis that is required by FDICIA. [FDIC]
asset-backed security
A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. [Harvey]
asset-based financing
Methods of financing in which lenders and equity investors look principally to the cash flow from a particular asset or set of assets for a return on, and the return of, their financing. [Harvey]
asset-coverage test
A bond indenture restriction that permits additional borrowing on if the ratio of assets to debt does not fall below a specified minimum. [Harvey]
asset/equity ratio
The ratio of total assets to stockholder equity. [Harvey]
asset/liability management
A plan or program to control the difference (also known as spread or net interest margin) between the rate of interest or earnings received on assets and the rate of interest due on liabilities. In addition to selecting the mix of complimenting assets and liabilities, a key part of such a plan is timing the maturity of matched assets and liabilities. When they come due at the same time, assets can be reinvested and balancing liabilities can be repurchased at new interest rates that maintain the desired spread. [OTS] Also called surplus management, the task of managing funds of a financial institution to accomplish the two goals of a financial institution: (1) to earn an adequate return on funds invested and (2) to maintain a comfortable surplus of assets beyond liabilities. [Harvey] Matching the amounts of assets and liabilities by term and interest rate type. Financial institutions carry out asset/liability management when they match the maturity of their deposits with the length of their loan commitments to keep from being adversely affected by rapid changes in interest rates. [TMAC]
assets
A firm's productive resources. [Harvey] Any possession that has value in an exchange. [Harvey] Anything a person, company, or group owns or is owed, including money, investments and property. [NYSE] Resources owned or held by a government which have monetary value. [EPA] What a person or business owns. [FACS] anything owned by an individual or company that has commercial usefulness or value if sold. An asset may be physical property or items, or enforceable claims against others. Loans made by a thrift institution are assets of that institution. Assets also include real estate, equipment, cash, investments in stocks and bonds, and any other resource that can be converted into cash. [OTS]
assets requirements
A common element of a financial plan that describes projected capital spending and the proposed uses of net working capital. [Harvey]
assign
To make an option seller perform his obligation to assume a short futures position (as a seller of a call option) or a long futures position (as a seller of a put option). [CBOT][MIDAM]
assignable contract
One which allows the holder to convey his rights to a third party. Exchange-traded contracts are not assignable. [CFTC]
assignee
The person or institution to whom an agreement, contract, or interest in real property is transferred. [OTS]
assignment
Notice to an option writer that an option holder has exercised the option and that the writer will now be required to deliver (receive) under the terms of the contract. [NYSE] The process by which the seller of an option is notified of a buyer's intention to exercise the rights associated with the option. [NYMEX] The receipt of an exercise notice by an options writer that requires the writer to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price. [Harvey] The transfer in writing of some or all ownership rights to real or personal property from one party to another. [OTS]
assignment of rents
A legal document that assigns all rents and income from a property to the mortgagee if a mortgagor defaults. [OTS]
assignment or assignment agreement
Agreement under which the issuer assigns directly to the trustee or the bondholders certain rights and/or security interests it obtains under its agreement with a private entity, for the purposes of securing payment of debt service. [EPA]
assignor
A person or institution from whom an agreement, contract or property is transferred to another. [OTS]
assistance agreement
An agreement pertaining to a failing institution under which a deposit insurer, such as the FDIC, provides financial assistance to the failing institution or to an acquiring institution. The assistance agreement includes the terms of the purchase of assets and assumption of liabilities of the failing institution by the assuming institution; it may also include provisions regarding a reorganization of the failing institution under new management or a merger of the failing institution into a healthy institution. [FDIC]
assisted merger
A failing institution is absorbed into an acquiring institution that receives FDIC assistance. In 1950, the FDIC was authorized by section 13(e) of the FDI Act to implement assisted mergers. In 1982, when the FDI Act was amended, the merger authority, as amended, was written into section 13(c) of the FDI Act. Such transactions allow the FDIC to take direct action to reduce or avert a loss to the deposit insurance fund and to arrange the merger of a troubled institution with a healthy FDIC insured institution without closing the failing institution. Assisted merger was the FSLIC's preferred resolution method. [FDIC] The takeover of a troubled savings institution by another savings institution with financial assistance provided from the federal deposit insurance fund. [OTS]
associate broker
A person who has qualified as a real estate broker but who works for a principal broker licensed by the state. [OTS]
associate membership
A Chicago Board of Trade membership that allows an individual to trade financial instrument futures and other designated markets. [CBOT][MIDAM]
associated gas
Natural gas present in a crude oil reservoir, either separate from or in solution with the oil. [NYMEX]
associated person
A person associated with any futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, or leverage transaction merchant as a partner, officer, employee, consultant, or agent. Also, any person occupying a similar status or performing similar functions, in any capacity that involves: (a) the solicitation or acceptance of customers' orders, discretionary accounts, or participation in a commodity pool (other than in a clerical capacity); or (b) the supervision of any person or persons so engaged. [CFTC] An individual who solicits orders, customers, or customer funds (or who supervises persons performing such duties) on behalf of a Futures Commission Merchant, an Introducing Broker, a Commodity Trading Adviser, or a Commodity Pool Operator. [CBOT][MIDAM]
Association of Banking Supervisory Authorities of Latin America and the Caribbean
Established on July 29, 1981, in Mexico to define and improve supervisory systems. [UNODC]
Association of International Bond Dealers (AIBD)
assumable mortgage
A mortgage contract that gives the mortgagor the option of transferring primary liability for payment of the mortgage to a buyer if the property is re-sold with interest rates and other terms of the original mortgage remaining in effect. [OTS]
assuming institution
A healthy bank or thrift that purchases some or all of the assets and assumes some or all of the deposits and other liabilities of a failed institution in a purchase and assumption transaction. The assuming institution is also referred to as the acquiring institution. [FDIC]
assumption
The transfer of primary liability for payment of an existing mortgage (or deed of trust) from the seller to the buyer of a property. The seller remains secondarily liable unless specifically released by the lender. [OTS]
assumption fee
A fee paid to a lender, usually by the purchaser of a property, upon the assumption of a mortgage. [OTS]
asymmetric information
Information that is known to some people but not to other people. [Harvey]
asymmetric taxes
A situation wherein participants in a transaction have different net tax rates. [Harvey]
asymmetry
A lack of equivalence between two things, such as the unequal tax treatment of interest expense and dividend payments. [Harvey]
at sight
A negotiable instrument payable upon presentation or demand. [FDIC]
at-the-market
An order to buy or sell a financial instrument (eg. futures, options, etc.) at whatever price the contract is trading when the order is executed. [TMAC] An order to buy or sell a futures contract at whatever price is obtainable when the order reaches the trading floor. [CFTC] An order to buy or sell a futures contract at whatever price is obtainable when the order reaches the trading floor. Also called a Market Order. [NYMEX] An order to buy or sell securities, executed by a broker at the best price available, rather than at a predetermined price. [OTS]
at-the-money
An option is at-the-money if the strike price of the option is equal to the market price of the underlying security. For example, if xyz stock is trading at 54, then the xyz 54 option is at-the-money. [Harvey] An option whose exercise price is equal to the market price of the underlying stock, index or other security. [TMAC] An option whose exercise, or strike, price is closest to the futures price. [NYMEX]
at-the-money option
An option purchased by an investor to buy or sell, with a strike price equal to the current market price of the underlying cash or futures contract. In this instance, the intrinsic value of the option is zero. Its value reflects the premium paid for the additional time the holder has to decide whether or not to exercise the option, in especially in times of price volatility. [OTS] An option with a strike price that is equal, or approximately equal, to the current market price of the underlying futures contract. [CBOT][MIDAM]
athwartships
Across a vessel form side to side. [ITDS]
ATS accounts
Automatic transfer from savings to demand deposit accounts. [WCSU]
attached house
any low-rise residential structure attached to another by a shared wall, such as a row house or town house. [OTS]
attachment
A seizure of a defendant's property by court order with the property held as security for any judgment the plaintiff may recover in a legal action. [OTS]
attest
to witness or testify; to affirm that a document is genuine. [OTS]
attractive nuisance
A structure or object on a property that might entice others, especially young children, into danger, such as a vacant building or swimming pool [OTS]
attribute bias
The tendency of stocks preferred by the dividend discount model to share certain equity attributes such as low price/earnings ratios, high dividend yield, high book-value ratio or membership in a particular industry sector. [Harvey]
auction
An asset sales strategy in which assets are sold either individually or in pools to the highest bidder in an open-outcry auction. [FDIC] The way price and interest are determined. [FRBSF]
auction market
Markets in which the prevailing price is determined through the free interaction of prospective buyers and sellers, as on the floor of the stock exchange. [Harvey] The system of trading securities through brokers or agents on an exchange such as the New York Stock Exchange. Buyers compete with other buyers while sellers compete with other sellers for the most advantageous price. [NYSE]
auction rate preferred stock
Floating rate preferred stock, the dividend on which is adjusted every seven weeks through a Dutch auction. [Harvey]
auction-rate preferred
A variant of floating-rate preferred stock where the dividend is reset every 49 days by auction. [WCSU]
audit
A methodical examination of utilization of resources. It concludes in a written report of its findings. An audit is a test of management's accounting system to determine the extent to which internal accounting controls are both available and being used. [EPA] A periodic or continuous official examination of a thrift institution's account records, policies and procedures, confirmation of account balances and tests of the accuracy of transactions to verify the stated assets and liabilities of the institution. [OTS] The examination of the accounting and financial documents of a company by an objective professional. The audit is done to determine the records' accuracy, consistency, and conformity to legal and accounting principles. [UNODC]
audit program
A detailed outline of work to be done and procedures to be followed in any given audit. [EPA]
audit report
(A) The report prepared by an auditor covering the audit or investigation made by him. As a rule, the report should include (a) a statement of the scope of the audit; (b) explanatory comments (if any) concerning exceptions by the auditor as to application of generally accepted auditing standards; (c) opinions; (d) explanatory comments (if any) concerning verification procedures; (e) financial statements and schedules; and (f) sometimes statistical tables, supplementary comments, and recommendations. The auditor's signature follows items (c) or (d) . (B) The report prepared by an auditor covering the audit or investigation of an entity's financial position for a given period of time. As a general rule, the report should include: (a) statement of the scope of the audit; (b) explanatory comments concerning exceptions from generally accepted auditing standards; (c) opinions; (d) explanatory comments concerning verification procedures; (e) financial statements and schedules; and (f) statistical tables, supplementary comments and recommendations. The auditor's signature follows item (c) or (d). [EPA]
audit trail
Reconstructs trading by explicitly aligning all member firms involved in a specific trade. [NYSE] The record of trading information identifying, for example, the brokers participating in each transaction, the firms clearing the trade, the terms and time of the trade, and, ultimately, and when applicable, the customers involved. [CFTC]
auditor's opinion
A statement signed by an auditor in which he or she states that he or she has examined the financial statements in accordance with generally accepted auditing standards (with exceptions, if any) and in which he or she expresses an opinion of some or all of the constituent funds and balanced account groups of the government as inappropriate. [EPA]
auditor's report
A section of an annual report containing the auditor's opinion about the veracity of the financial statements. [Harvey] Often called the accountant's opinion, it is the statement of the accounting firm's work and its opinion of the corporation's financial statements, especially if they conform to the normal and generally accepted practices of accountancy. [NYSE]
authentication
(A) The certification by the trustee of the genuineness or authenticity of a particular security under the governing security document (see 'Authentication Certificate'). Authentication is generally required of securities issued pursuant to a trust agreement or indenture. The act of authentication is generally the signature of an officer of the trustee on an authentication certificate printed on the security.
(B) The action of a bank or trust company certifying that the signature and seal on debt instruments is correct and true. [EPA] Authentication is the process of verifying the identification of the true sender of a message and also that the text of the message itself has not been altered. [GAO]
authentication certificate
A certification that the security on which the statement is printed is a security issued pursuant to a specific document, which statement is signed by an authorized officer of the trustee. [EPA]
authority
(A) A unit or agency of government established to perform specialized functions, usually financed by service charges, fees or tolls, although it may also have taxing powers. An authority may be independent of other government units, or it may depend upon other units for its creation, funding or operation. (B) A body, generally both corporate and political, created to perform a single or a group of closely related functions. The authorities generally are independent and sometimes even have taxing powers. They usually have debt issuing abilities and finance the repayments of the debt via user charges and fees. [EPA]
authorization
The act of insuring that the cardholder has adequate funds available against their line of credit. A positive authorization results in an authorization code being generated, and those funds being set aside. The cardholder's available credit limit is reduced by the authorized amount. [GAO]
authorization agreement
A written agreement signed by an employee or customer to allow the posting of ACH transactions to their account. [ACH]
authorized agent
A Bahamian bank or trust company authorized by regulatory authorities to deal in foreign currency securities. [UNODC]
authorized dealer bank
Bahamian Banks permitted by their regulating authority to deal in precious metals and all foreign currencies. [UNODC]
authorized share capital
Maximum number of shares that a company can issue, as specified in the firm's articles of incorporation. [WCSU]
authorized shares
Number of shares authorized for issuance by a firm's corporate charter. [Harvey]
autocorrelation
The correlation of a variable with itself over successive time intervals. [Harvey]
Automated Bond System (ABS)
Processes orders in all listed nonconvertible bonds and suggests matches for possible execution. [NYSE]
automated clearinghouse (ACH)
A collection of 32 regional electronic interbank networks used to process transactions electronically with a guaranteed one-day bank collection float. [Harvey] A computer-based clearing and settlement facility established to process the exchange of electronic transactions between participating depository institutions. Such electronic transactions (or wire transfers) take the place of paper checks. [OTS] A computer-based clearing and settlement operation, often operated by a Federal Reserve Bank, established for the exchange of electronic transactions among participating depository institutions. Such electronic transactions can be substituted for paper checks used to make recurring payments such as payroll or preauthorized insurance premiums. The U.S. Treasury uses the ACH extensively to pay certain obligations of the government. [FRB][FRBC][FRBM] A service used by banks to exchange electronic payments drawn on one another. Total debits and credits (payments and deposits) and itemized accounting of individual items are presented. This reduces transportation expenses and simplifies the transfer of funds between customers accounts. [FRB][FRBC] An automated clearinghouse networks is an electronic batch processing system by which payment orders are exchanged among finanical institutions. [GAO] Electronic clearing and settlement system for exchanging electronic transactions among participating depository institutions; such electronic transactions are substitutes for paper checks and are typically used to make recurring payments such as payroll or loan payments. The Federal Reserve Banks operate an automated clearinghouse, as do some private-sector firms. [FRBSF]
automated deposit
A deposit made directly to an account at a depository institution through the ACH network (i.e., payroll deposits, social security payments, and retirement benefits). [ACH]
Automated Search And Match (ASAM)
Researches and cross-references publicly available information on individuals, corporations, and service organizations possibly connected to a particular trading situation. [NYSE]
automated teller machines (ATMs)
A computer terminal to dispense cash, accept deposits and loan payments, and enable a financial institution's customer to order transfers among accounts and make account inquiries. [ACH] A machine that permits customers to gain access to their accounts through the use of a magnetically encoded plastic card and by pushing appropriate buttons on a computer terminal. ATMs dispense cash, transfer funds from one account to another, accept deposits, perform other functions, and are generally available 24 hours a day. [OTS] A machine used for banking services, including withdrawals and deposits, balance inquiries, transfers, and other services. Customers access an ATM by using a plastic card encoded with electromagnetic identification such as an access card or credit card. Transactions are processed electronically with the aid of computer systems. [FRB][FRBC] Computer-controlled terminals located on the premises of financial institutions or elsewhere, through which customers may make deposits, withdrawals, or other transactions as they would through a bank teller. Other terms sometimes used to describe such terminals are customer-bank communications terminal (CBCT) and remote service unit (RSU). Groups of banks sometimes share ATM networks located throughout a region of the country that may include portions of several states. [FRB][FRBC][FRBM][FRBSF]
automatic deposit
automatic exercise
Following option expiration, an option which is in-the-money by $100 or more is exercised automatically by the clearing house, unless the holder of the option submits specific instructions to the contrary. [NYMEX]
automatic payment
A service allowing customers to authorize their bank to make regular transfers for certain expenses (such as mortgage, insurance premiums, utilities, etc.) from their checking or savings account. [FRB][FRBC]
automatic stabilizers
Measures built into the governments budget that cause its spending to increase and its tax revenues to decrease when the economy goes into slumps, and that cause government expenditures to decrease and taxes to increase when the economy goes into booms. [FACS]
automatic stay
The restricting of liability holders from collection efforts of collateral seizure, which is automatically imposed when a firm files for bankruptcy under Chapter 11. [Harvey]
automatic transfer service (ATS)
automatic transfer service account
A depositor's savings account from which funds may be transferred automatically to the same depositor's checking account to cover a check written or to maintain a minimum balance. [FRB][FRBC][FRBM][FRBSF][OTS]
automatic transfer services account
A depositor's savings account from which funds may be transferred automatically to the same depositor's checking account to cover a check written or to maintain a minimum balance. [FRB][FRBC][FRBM][FRBSF][OTS]
autoregressive
Using past data to predict future data. [Harvey]
availability float
Checks deposited by a company that have not yet been cleared. [Harvey][WCSU]
aval
Bank guarantee for debt purchased by forfaiter. [WCSU]
average (across-day) measures
An estimation of price that uses the average or representative price of a large number of trades. [Harvey]
average
An arithmetic mean of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA's stocks, and divides the results by a predetermined number, the divisor. [Harvey] Various ways of measuring the trend of securities prices, one of the most popular of which is the Dow Jones average of 30 industrial stocks listed on the New York Stock Exchange. The prices of the 30 stocks are totaled and then divided by a divisor that is intended to compensate for past stock splits and stock dividends and that is changed from time to time. As a result, point changes in the average have only the vaguest relationship to dollar price changes in stocks included in the average. [NYSE]
average accounting return
The average project earnings after taxes and depreciation divided by the average book value of the investment during its life. [Harvey]
average age of accounts receivable
The weighted-average age of all of the firm's outstanding invoices. [Harvey]
average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a percentage of capital contributed to the firm. Average cost of capital is computed by dividing the total required cost of capital by the total amount of contributed capital. [Harvey]
average life
(A) A factor in the pricing decisions by an underwriter, relating to the average of 12 calendar month periods of all the maturities of an issue, measured from the date of the issue. Calculated by dividing number of bond years by number of bonds ($1,000 increments). For example, an issue maturing serially on a level debt service basis over 25 years could have an 'average life' of 16.297 years. (B)Aggregate life of all bonds (in bond years) divided by the number of bonds. [EPA] Also referred to as the weighted-average life (WAL). The average number of years that each dollar of unpaid principal due on the mortgage remains outstanding. Average life is computed as the weighted average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal paydowns. [Harvey]
average maturity
The average time to maturity of securities held by a mutual fund. Changes in interest rates have greater impact on funds with longer average life. [Harvey]
average rate of return
The ratio of the average cash inflow to the amount invested. [Harvey] The return on an investment calculated by totaling the cash flow over the years during which earnings are received and dividing that amount by the number of years that the investment is outstanding. [OTS]
average tax rate
Taxes as a fraction of income; total taxes divided by total taxable income. [Harvey]
average-style (or Asian) options
The payoff of average-style options is based on the average price of the underlying interest over a period relative to the strike price. This contrasts with American and European style options which pay off based on a prices as at a single date relative to the strike price. [TMAC]
averaging
avoidance of contract
The legal cancellation of a contract because an event occurs that makes performance of the contract terms impossible or inequitable and that releases the parties from their obligations. [ITDS]
Avoirdupois unit
Customary U.S. weights. 1 troy ounce = 1.09 ounces avoirdupois. [NYMEX]
award
Action by the issuer, via its legislative body or an officer of the issuer authorized by the legislative body, accepting an offer to purchase a issue on the terms stated in the offer. [EPA]
away
A trade, quote, or market that does not originate with the dealer in question, e.g., 'the bid is 98-10 away from me.' [Harvey]
B bearer bond
A bond that does not have the owner's name registered on the books of the issuer. Interest and principal, when due, are payable to the owner [NYSE]
back fee
The fee paid on the extension date if the buyer wishes to continue the option. [Harvey]
back haul
To haul a shipment back over part of a route which it has traveled. [ITDS]
back months
Those futures delivery months with expiration or delivery dates furthest into the future; futures delivery months other than the spot or nearby delivery month. [CFTC]
back office
Brokerage house clerical operations that support, but do not include, the trading of stocks and other securities. Includes all written confirmation and settlement of trades, record keeping and regulatory compliance. [Harvey] The back office of a financial institution is made up of employees responsible for (1) recording and maintaining the official records of the financial institutions and (2) processing transactions entered into by the financial institutions or its customers. [GAO] departments of a financial institution that perform work out of sight of customers, including bookkeeping and the processing of checks and loan payments. [OTS]
back order
That portion of an order that cannot be delivered at the scheduled time, but will be delivered at a later date when available. [ITDS]
back-end loan fund
A mutual fund that charges investors a fee to sell (redeem) shares, often ranging from 4% to 6%. Some back-end load funds impose a full commission if the shares are redeemed within a designated time, such as one year. The commission decreases the longer the investor holds the shares. The formal name for the back-end load is the contingent deferred sales charge, or CDSC. [Harvey]
back-to-back borrowing
The process whereby a bank brings together a borrower and a lender so that they agree on a loan contract. [ITDS]
back-to-back financing
An intercompany loan channeled through a bank. [Harvey]
back-to-back letter of credit
An irrevocable letter of credit issued on the strength of another irrevocable letter of credit involving a related transaction. The latter credit is usually issued by a foreign bank with the beneficiary being a U.S. seller. The U.S. seller requests his bank of account to open a letter of credit in favor of the party who will ultimately sell the merchandise to him. As collateral, the U.S. seller deposits with his bank of account, the irrevocable credit in his favor opened by the foreign bank. The terms of the U.S. letter of credit must be identical with those of the backing credit except for the name of the beneficiary, the account party, the amount of the U.S. credit which may be less than that of the backing credit but not more, and the expiration date. [FDIC]
back-to-back loan
A loan in which two companies in separate countries borrow each other's currency for a specific time period and repay the other's currency at an agreed upon maturity. [Harvey] A loan structure when 'A' deposits a sum of money with a bank in country 'X' on condition that a related branch, agency, Edge Corporation or bank located in country 'Y' will lend an equivalent sum to 'A' or a designee in country 'Y'. [UNODC] Operations whereby a loan is made in one currency in one country against a loan in another currency in another country. [ITDS]
back-up
(1) When bond yields and prices fall, the market is said to back-up. (2) When an investor swaps out of one security into another of shorter current maturity he is said to back up. [Harvey]
backpricing
Fixing the price of a commodity for which the commitment to purchase has been made in advance. The buyer can fix the price relative to any monthly or periodic delivery using the futures markets. [CFTC]
backwardation
A market condition in which futures prices are lower in the distant delivery months than in the nearest delivery month. This situation may occur in when the costs of storing the product until eventual delivery are effectively subtracted from the price today. The opposite of contango. [Harvey] A market situation where the spot price trades at a premium to the forward price. Opposite of contango. [TMAC] Market situation in which futures prices are lower in each succeeding delivery month. Also known as an Inverted Market. The opposite of Contango. [NYMEX]
bad debt reserve
A reserve account maintained by thrift institutions and used to offset losses from foreclosed or uncollectable loans. Within certain guidelines, contributions to the bad debt reserve are deductible from the institution's taxable income. The deduction is known as the bad debt deduction. [OTS]
bad faith
The intent to mislead or deceive. It does not include misleading by an honest, inadvertent or uncalled-for misstatement. [ITDS]
bagged cargo
Goods shipped in sacks. [ITDS]
bailment
A delivery of goods or personal property by one person (the bailer) to another (the bailee) on an express or implied contract and for a particular purpose related to the goods while in possession of the bailee, who has a duty to redeliver them to the bail. [ITDS]
Baker Plan
A plan by U.S. Treasury Secretary James Baker under which 15 principal middle-income debtor countries (the Baker 15) would undertake growth-oriented structural reforms, to be supported by increased financing from the World Bank and continued lending from commercial banks. [Harvey]
balance
The remaining amount credited to a customer's account, representing the amount the customer is entitled to withdraw, or conversely, the remaining amount of a customer's debt, which is the amount the customer is obligated to repay. The term also refers to the ratio of total credits to total debits. [OTS]
balance of payments
A record of all the financial transactions between a country and the rest of the world during a given year. [FACS] A statement identifying all the economic and financial transactions between companies, banks, private households and public authorities of one nation with those of other nations of the world over a specific time period. [ITDS] A statistical compilation formulated by a sovereign nation of all economic transactions between residents of that nation and residents of all other nations during a stipulated period of time, usually a calendar year. [Harvey] A summary of the international transactions of a country over a period of time including commodity and service transactions, and gold movements. [CBOT] A summary of the international transactions of a country over a period of time including commodity and service transactions, capital transactions, and gold movements. [MIDAM] An accounting statement of the money value of international transactions between one nation and the rest of the world over a specific time period. The statement shows the sum of transactions of individuals, businesses and government agencies located in one nation, against those of all other nations. [FRB][FRBM][FRBSF] Statistical statement that systematically summarizes the economic transactions of an economy with the rest of the world. Transactions, for the most part between residents and nonresidents, consist of those involving goods, services, and income; those involving financial claims on, and liabilities to, the rest of the world; and those (such as gifts) classified as transfers, which involve offsetting entries to balance--in an accounting sense--one-sided transactions. A transaction itself is defined as an economic flow that reflects the creation, transformation, exchange, transfer, or extinction of economic value and involves changes in ownership of goods and/or financial assets, the provision of services, or the provision of labor and capital. [BEA] The relationship between money flowing into and out of a country for a given period of time. Directly affected by the country's foreign trade position, capital inflows and outflows, remittances into and out of the country, grants and aid, and tourism. A deficit balance occurs when outflows exceed inflows with the converse situation reflecting a balance of payments surplus. [FDIC]
balance of trade
Net flow of goods (exports minus imports) between countries. [Harvey] That part of a nation's balance of payments dealing with imports and exports, that is trade in goods and services, over a given time period. If exports of goods exceed imports, the trade balance is said to be 'favorable'; if imports exceed exports, the trade balance if said to be 'unfavorable.' [FRB][FRBM][FRBSF] The difference between a countrys imports and exports. [ITDS] The difference in money value between a country's merchandise imports and exports excluding capital transactions and services such as tourism. A favorable balance of trade exists when exports exceed imports. An unfavorable trade balance is reflected when imports exceed exports. [FDIC]
balance sheet
A condensed financial statement showing the nature and amount of a company's assets, liabilities and capital on a given date. In dollar amounts the balance sheet shows what the company owned, what it owed, and the ownership interest in the company of its stockholders. [NYSE] A financial statement that contains the types and amounts of assets, liabilities and net worth of a company, institution or individual. Also called a statement of condition. [OTS] Also called the statement of financial condition, it is a summary of the assets, liabilities, and owners' equity. [Harvey] The basic financial statement which discloses the assets, liabilities, and equities of an entity at a specified date in conformity with GAAP. [EPA]
balance sheet identity
Total Assets = Total Liabilities + Total Stockholders' Equity [Harvey]
balanced economy
A condition of national finances in which imports and exports are equal. [ITDS]
balanced fund
An investment company that invests in stocks and bonds. The same as a balanced mutual fund. [Harvey]
balanced mutual fund
This is a fund that buys common stock, preferred stock and bonds. The same as a balanced fund. [Harvey]
bale
A large bundle of compressed and bound goods, such as cotton. [ITDS]
bale cargo
Bulky cargo shipped in bales, usually of burlap. [ITDS]
ballast
Heavy material placed on a ship to improve its stability. [ITDS]
balloon
The maturity of an issue which contains a large percentage of the aggregate principal amount of the issue. In the case of an issue structured with all the bonds maturing on the final date the bonds are outstanding, the term 'balloon' is generally not used and the bonds are referred to as tem bonds. (See 'Term Bonds'.) Balloons are often subject to mandatory sinking fund redemption. If no mandatory sinking fund redemption is provided for, the maturity schedule would be a 'bullet'. See 'Bullet''. [EPA]
balloon maturity
Any large principal payment due at maturity for a bond or loan with or without a a sinking fund requirement. [Harvey]
balloon mortgage
A mortgage that does not fully amortize by the end of the loan term. Periodic payments may be for principal and interest, or for interest only. At maturity, the unpaid principal is due in a lump sum. [OTS]
balloon payment
A large extra payment that may be charged at the end of a loan or lease. [FRB][FRBC][FRBM][FRBSF] Large final payment (e.g., when loan is repaid in installments). [WCSU] The lump sum payment of the unpaid principal remaining at the end of the term of a balloon mortgage loan or other non-amortizing loan. [OTS]
Baltimore Plan
An early housing plan implemented in 1944 to upgrade and maintain inner city housing standards. It included building, zoning, fire protection, and housing laws; a citizens' advisory council; a housing bureau in the health department; rodent control and sanitation. The plan was enforced by a special housing court. The Baltimore Plan was a model and an example to other cities trying to solve similar urban problems. [OTS]
Bane
In the words of Warren Buffet, Bill Bane Sr., is, 'a great American and one of the last real traders around. I like to call him 'Salvo.'' His wife, Carol, is a huge NASCAR fan, and in her own words 'delights in pulling the legs off central bankers.' Cooper Bane, son number two, is a thriving artiste who specializes in making art that is much better than the stuff most folks are doing. Jackson, son number three, is a world renowned master chef and plans on opening a restaurant. Bill Bane Jr., son number one, plans on giving Mr. Monroe Trout a run for his money. [Bill Bane, Jr. helped Professor Harvey put the hypertextual glossary together while an MBA student at Duke University.] [Harvey]
bank
When capitalized in this glossary refers to one of the 12 Federal Home Loan Banks. [OTS] When lower case in this glossary, refers to a commercial bank. A commercial bank is an institution that accepts demand deposits and makes commercial loans. [OTS]
bank check
A check drawn by a bank on itself and signed by an authorized bank officer. Also referred to as a cashier's check, officer's check, or treasurer's check. [OTS]
bank collection float
The time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank. [Harvey]
bank discount basis
A convention used for quoting bids and offers for treasury bills in terms of annualized yield, based on a 360-day year. [Harvey]
bank draft
A check drawn by one bank against funds deposited to its account in another bank. [ITDS] A check written by one bank on its account with another bank. [OTS] A draft addressed to a bank. [Harvey]
Bank for International Settlements (BIS)
Acts as the agent for the European Monetary Agreement and promotes cooperation among European central bankers. [FDIC] An international bank headquartered in Basel, Switzerland, which serves as a forum for monetary cooperation among several European central banks, the Bank of Japan, and the U.S. Federal Reserve System. Founded in 1930 to handle the German payment of World War I reparations, it now monitors and collects data on international banking activity and promulgates rules concerning international bank regulation. [Harvey] The BIS, located in Basle, Switzerland, was established in 1930 to administer the post-World War I reparations agreements. Since the 1960s, the BIS has evolved into an important international monetary institution, and has provided a forum in which central bankers meet and consult on a monthly basis. As an independent financial organization, the BIS performs a variety of banking, trustee, and agent functions, primarily with central banks. [FRB][FRBM][FRBSF] The BIS, located in Basle, Switzerland, was established in 1930 to administer the post-World War I reparations agreements. Since the 1960s, the BIS has evolved into an important international monetary institution, and has provided a forum in which central bankers meet and consult on a monthly basis. As an independent financial organization, the BIS performs a variety of banking, trustee, and agent functions, primarily with central banks. At present the BIS has 29 members, 28 of which are central banks. The Federal Reserve is represented at BIS meetings, but is not a member. The BIS is the only international financial institution in which most Eastern European countries are members. The Soviet Union, East Germany, and Albania, however, are not members. [FRB][FRBC] The Bank for International Settlements (BIS) was established 20 January 1930 to promote cooperation among central banks in international financial settlements. BIS is located in Basel, Switzerland. [UNODC]
bank guarantee
Unilateral contract in which the bank commits itself to pay a certain sum if a third party fails to perform or if any other form of default occurs. [ITDS]
bank holding company (BHC)
A company that owns or controls one or more banks. The Board of Governors has responsibility for regulating and supervising bankholding companies, such as approving acquisitions and mergers and inspecting the operations of such companies. This authority applies even though a bankowned by a holding company may be under the primary supervision of the Comptroller of the Currency or the FDIC. [FRB][FRBC][FRBM] Any company which directly controls, with power to vote, more than five percent of voting shares of one or more other banks. [ITDS] Company that owns, or has controlling interest in, one or more banks. A company that owns more than one bank is known as a multibank holding company. (A bank holding company may also own another bank holding company, which in turn owns or controls a bank; the company at the top of the ownership chain is called the top holder.) The Board of Governors is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is under the primary supervision of a different federal agency (the Comptroller of the Currency or the Federal Deposit Insurance Corporation). [FRBSF]
bank holiday
A day on which banks are closed. [ITDS]
Bank Insurance Fund (BIF)
One of the two federal deposit insurance funds created by Congress in 1989 and placed under the FDIC's administrative control. The BIF insures deposits in most commercial banks and many savings banks. The FDIC's 'permanent insurance fund,' which had been in existence since 1934, was dissolved when the BIF was established. The money for a deposit insurance fund comes from the assessments contributed by member banks and also from investment income earned by the fund. [FDIC] The fund that provides deposit insurance for commercial banks. It is administered by the Federal Deposit Insurance Corporation (FDIC). [OTS]
bank line
Line of credit granted by a bank to a customer. [Harvey]
Bank Merger Act (BMA)
popular nickname for a section of the Federal Deposit Insurance Act (FDIA). [OTS]
bank note
A promissory note issued by an authorized bank that is payable on demand to a bearer and can be used as cash. Under law, such notes are redeemable as money and are considered full legal tender. Bank notes are also called bank bills or bank currency. [OTS] A term used synonymously with paper money or currency issued by a bank. Notes are, in effect, a promise to pay the bearer on demand the amount stated on the face of the note. Today, only the Federal Reserve Banks are authorized to issue bank notes, i.e. Federal Reserve notes, in the United States. [FRB][FRBM][FRBSF] Paper issued by a bank, redeemable as money and considered to be full legal tender. [ITDS]
bank panic
Bank Protection Act of 1968
A federal law that authorized the Federal Home Loan Bank Board and other federal regulators of depository institutions to set minimum standards to be met by financial institutions in installing security devices to discourage robberies, burglaries and larcenies. [OTS]
bank regulation
The formulation and issuance by authorized agencies of specific rules or regulations, under governing law, for the conduct and structure of banking. [FRB][FRBC][FRBM][FRBSF]
bank release
A document issued by a bank, after it has been paid or given an acceptance, giving authority to a person to take delivery of goods. [ITDS]
bank reserves
The total quantity of Federal Reserve notes held in bank vaults or checkable deposits held by the banks at the Fed district banks. [FACS]
bank run
A series of unexpected cash withdrawals caused by a sudden decline in depositor confidence or fear that the bank will be closed by the chartering agency, i.e. many depositors withdraw cash almost simultaneously. Since the cash reserve a bank keeps on hand is only a small fraction of its deposits, a large number of withdrawals in a short period of time can deplete available cash and force the bank to close and possibly go out of business. [FRB][FRBM][FRBSF]
bank supervision
Concern of financial regulators with the safety and soundness of individual banks, involving the general and continuous oversight of the activities of this industry to ensure that banks are operated prudently and in accordance with applicable statutes and regulations. [FRB][FRBC][FRBM] Oversight of individual banks to ensure that they are operated prudently and in accordance with applicable statutes and regulations. [FRBSF]
banker's bill
A negotiable draft without supporting papers drawn by one bank on its credit balance at a foreign bank. [OTS]
bankers bank
A bank that is established by mutual consent by independent and unaffiliated banks to provide a clearinghouse for financial transactions. [ITDS]
bankers draft
A draft payable on demand and drawn by, or on behalf of, a bank upon itself. [ITDS]
bankers' acceptance
A draft drawn on a bank, which when accepted by the bank, constitutes the bank's obligation to pay the draft writer's bills from a specified creditor when the bills are due. The bank literally stamps 'Accepted for payment by (name of bank) on (date)' across the face of the draft. Acceptance converts a depositor's 'order to pay' into an unconditional 'promise to pay' by the accepting bank. Bankers acceptances are effectively a guaranty of payment for a purchase and are usually used in financing the import, export, transfer or storage of goods, and qualify as liquid assets when held by a thrift institution. [OTS] A draft or bill of exchange accepted by a bank where the accepting institution guarantees payment. Used extensively in foreign trade transactions. [CFTC] A draft or bill of exchange accepted by a bank; payment is guaranteed by the accepting institution. [NYMEX] A short-term credit investment created by a non-financial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts from face value in the secondary market. These instruments have been a popular investment for money market funds. They are commonly used in international transactions. [Harvey] A time or sight draft drawn on a commercial bank by a borrower, usually in connection with a commercial transaction. The borrower is liable for payment, as is the bank, which is the primary obligor, to pay the draft at its face amount on the maturity date. [TMAC] Bankers acceptances are negotiable time drafts, or bills of exchange, that have been accepted by a bank which, by accepting, assumes the obligation to pay the holder of the draft the face amount of the instrument on the maturity date specified. They are used primarily to finance the export, import, shipment, or storage of goods. [FRB][FRBC][FRBM][FRBSF] Written demand that has been accepted by a bank to pay a given sum at a future date. [WCSU]
Banking Act of 1933
The first major banking legislation of the Roosevelt administration, it created the Federal Deposit Insurance Corporation to provide insurance of deposits of member banks. The Act also provided for the regulation of banks, and limited branch banking. Also known as the Glass-Steagall Act. [OTS]
banking day
Any day on which a participating financial institution is open to the public during any part of the day for carrying on substantially all its financial functions. With reference to an automated clearinghouse, any day on which the appropriate facility of the clearing house is being operated. [ACH]
bankruptcy
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from the stockholders to the bondholders. [Harvey] The condition of a legal entity that does not have the financial means to pay their incurred debts as they come due. [ITDS] The legal process in which a person or firm declares inability to pay debts. Any available assets are liquidated and the proceeds are distributed to creditors. A person or firm may be declared bankrupt under one of several chapters of the federal bankruptcy code: Chapter 7, which covers liquidation of the doubter's assets; Chapter 11, which covers reorganization of bankrupt businesses; or Chapter 13, which covers work-outs of debts by individuals. Upon a court declaration of bankruptcy, a person or firm surrenders assets to a court-appointed trustee, and is relieved from the payment of previous debts. [OTS]
bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt finaning. [Harvey]
bankruptcy risk
The risk that a counterparty, which owes your institution money, goes bankrupt. [TMAC] The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk. [Harvey]
bankruptcy view
The argument that expected bankruptcy costs preclude firms from being financed entirely with debt. [Harvey]
bankwire
A computer message system linking major banks. It is used not for effecting payments, but as a mechanism to advise the receiving bank of some action that has occurred, e.g. the payment by a customer of funds into that bank's account. [Harvey] An electronic communications network owned by an association of banks and used to transfer messages between subscribing banks. Bankwire also offers a clearing service called Cashwire that includes a settlement facility. [FRB][FRBC][FRBSF][OTS]
bar
Slang for one million dollars. [Harvey]
bar chart
A chart that graphs the high, low, and settlement prices for a specific trading session over a given period of time. [CBOT][MIDAM]
barbell strategy
A strategy in which the maturities of the securities included in the portfolio are concentrated at two extremes. [Harvey]
bare trusts
Also known as dry, formal, naked, passive or simple trusts. These are trusts where the trustees have no duties to perform other than to convey the trust property to the beneficiary(s) when called upon to do so. [UNODC]
bareboat charter
The charter of a vessel where the character party has the right to use his own master and crew on the vessel. [ITDS]
bargain-purchase-price option
Gives the lessee the option to purchase the asset at a price below fair market value when the lease expires. [Harvey]
barge
A flat bottomed cargo vessel primarily used on rivers and canals. [ITDS] A vessel, either motorized or towed, used to carry products in navigable waterways. Inland river barges that carry oil products generally hold 25,000 barrels. Ocean-going barges range in size up to 120,000 barrels. [NYMEX]
BARRA's performance analysis
A method developed by BARRA, a consulting firm in Berkeley, Calif. It is commonly used by institutional investors applying performance attribution analysis to evaluate their money managers' performances. [Harvey]
barratry
The intentional misconduct of the ships master or crew; includes theft, intentional casting away of vessel, or breach of trust. [ITDS]
barrel
A unit of volume measure used for petroleum and refined products. 1 barrel = 42 U.S. gallons. [NYMEX]
barrels per day
Usually used to quantify a refiner's output capacity or an oilfield's rate of flow. [NYMEX]
barrier options
Contracts with trigger points that, when crossed, automatically generate buying or selling of other options. These are very exotic options. [Harvey] These options operate in the same way as standard options, except that payout or receipt only occurs if certain thresholds in the related reference rate or index are or are not exceeded during the exercise period. Barrier options include Knock-in options and Knock-out options. [TMAC]
barter
Trade of goods for other goods without the use of money or a third party. [ITDS]
base metal
Copper, aluminum, lead, nickel, tin. [NYMEX]
base probability of loss
The probability of not achieving a portfolio expected return. [Harvey]
Basel Agreement
An accord developed during a 1975 meeting in Basel, Switzerland of central bankers of the industrialized nations setting forth guidelines for the supervision of banks. Included are guidelines for minimum capital requirements. The agreement was reached by the Committee on Banking Regulations and Supervisory Practices (also known as the Cooke Committee after its chairman, Peter Cooke), meeting under the auspices of The Bank for International Settlements. [OTS] An agreement signed by various countries, stating that they agree with the twenty-five core principles of the Basel Committee as of 1997, aimed at strengthening financial institutions. [UNODC]
Basel committee on banking supervision
The Basel Committee was established as the Committee on Banking Regulations and Supervisory Practices by the central bank Governors of the Group of Ten (G-10) countries at the end of 1974. BIS provides Secretariat for the Basel Committee in Basel, Switzerland. [UNODC]
Basel minimum standards
The Minimum Standards for the supervision of international banking groups and their cross-border establishments issued by the Basel Committee on Banking Supervision in July 1992, establish four main principles:
  1. All international banks should be supervised by a home country authority that capably performs consolidated supervision.
  2. The creation of a cross-border banking establishment should receive the prior consent of both the host country and the home country authority.
  3. Home country authorities should possess the right to gather information from their cross-border banking establishments.
  4. If the host country authority determines that any of these three standards is not being met, it could impose restrictive measures or prohibit the establishment of the banking office.
[UNODC]
baseline program
another name for the standard program, under which the Federal Home Loan Mortgage Corporation purchases mortgages for cash. [OTS]
basic balance
In a balance of payments, the basic balance is the net balance of the combination of the current account and the capital account. [Harvey]
basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan. [Harvey]
basic financial statements
Those financial statements, including notes thereto, which are necessary for a fair presentation of the financial position and results of operations of an entity in conformity with GAAP. Under Statement 1, basic financial statements include a balance sheet, an 'all inclusive' operating statement, and (for proprietary funds, Pension Trust Funds, and Nonexpendable Trust Funds) a statement of changes in financial position. [EPA]
basic IRR rule
Accept the project if IRR is greater than the discount rate; reject the project is lower than the discount rate. [Harvey]
basic rent
The rent charged in a subsidized housing project and computed on the basis of a maximum subsidy resulting in a minimum rent payment under provisions of the HUD Section 236, Subsidized Housing Program. [OTS]
basing point
A location which is used to determine rates between other points. [ITDS]
basing rate
A rate which is used for the sole purpose of determining other rates. [ITDS]
basis
Regarding a futures contract, the difference between the cash price and the futures price observed in the market. Also, it is the price an investor pays for a security plus any out-of-pocket expenses. It is used to determine capital gains or losses for tax purposes when the stock is sold. [Harvey] The difference between a futures contract price for an item and the current spot price of the same item. [TMAC] The difference between the current cash price and the futures price of the same commodity. Unless otherwise specified, the price of the nearby futures contract month is generally used to calculate the basis. [CBOT][MIDAM] The difference between the price of related commodities in the same market or of the same commodity in different markets. Most commonly used in reference to the difference between the cash market price of a commodity and the corresponding futures market price. [OTS] The difference between the spot or cash price of a commodity and the price of the nearest futures contract for the same or a related commodity. Basis is usually computed in relation to the futures contract next to expire and may reflect different time periods, product forms, qualities, or locations. [CFTC] The differential that exists at any time between the cash, or spot price of a given commodity and the price of the nearest futures contract for the same or a related commodity. Basis may reflect different time periods, product forms, qualities or locations. Cash minus Futures equals Basis. [NYMEX]
basis grade
The grade of a commodity used as the standard or par grade of a futures contract. [CFTC]
basis point
.01 percent. [WCSU] In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 5% is 50 basis points greater than an interest rate of 4.5%. [Harvey] One gradation on a 100-point scale representing one percent; used especially in expressing variations in the yields of bonds. Fixed income yields vary often and slightly within one percent and the basis point scale easily expresses these changes in hundredths of one percent. For example, the difference between 12.83% and 12.88% is 5 basis points. [NYSE] Shorthand reference to one one-hundredth of one percent (.01 percent). Example: 5.49% is four 'basis points' less than 5.53%. [EPA] The measurement of a change in the yield of a debt security. One basis point equals 1/100 of one percent. [CFTC] one basis point equals 1/1OOth of one percent, or .0001. For example, 50 basis points is equal to 1/2 percent. Basis points are frequently used to describe spreads or changes in yields of interest rates. [OTS]
basis price
Price expressed in terms of yield to maturity or annual rate of return. [Harvey]
basis quote
Offer or sale of a cash commodity in terms of the difference above or below a futures price (e.g., 10 cents over December corn). [CFTC]
basis risk
The risk associated with an unexpected widening or narrowing of basis between the time a hedge position is established and the time that it is lifted. [CFTC] The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for price risk. [Harvey] The uncertainty as to whether the cash-futures spread will widen or narrow between the time a hedge position is implemented and liquidated. [NYMEX]
basket of currencies
A means of establishing value for a composite unit consisting of the currencies of designated nations. [ITDS]
basket options
Packages that involve the exchange of more than two currencies against a base currency at expiration. The basket option buyer purchases the right, but not the obligation, to receive designated currencies in exchange for a base currency, either at the prevailing spot market rate or at a prearranged rate of exchange. A basket option is generally used by multinational corporations with multicurrency cash flows since it is generally cheaper to buy an option on a basket of currencies than to buy individual options on each of the currencies that make up the basket. [Harvey]
basket provision
thrift industry slang for provisions in the law that allow savings and loan associations, savings banks and insurance companies to invest a portion of their assets in investments not otherwise permitted. [OTS]
batch
A group of records or documents considered as a single unit for the purpose of data processing. [ACH] A measured amount in which crude oil and refined product shipments are sent through a pipeline. [NYMEX]
batch processing
Batch processing is the transmission or processing of a group of payment orders and/or securities transfer instructions. [GAO]
batching sequence
The order in which shipments are sent through a pipeline. [NYMEX]
battens
The protruding fixtures of the inside walls of a vessels hold which keep cargo away from the walls of the vessel. [ITDS]
bauverein
The German word for building association. In some U.S. German neighborhoods, local savings associations were called bauvereins. [OTS]
bear
An investor who believes a stock or the overall market will decline. A bear market is a prolonged period of falling stock prices, usually by 20% or more. [Harvey] One who anticipates a decline in price or volatility. Opposite of a Bull. [NYMEX] One who expects a decline in prices. The opposite of a 'bull.' A news item is considered bearish if it is expected to result in lower prices. [CFTC] Someone who believes the market will decline. [MIDAM][NYSE] Someone who thinks market prices will decline. [CBOT]
bear hug
An unsolicited corporate takeover proposal, made privately or publicly to directors. [OTS]
bear market
A condition of a stock market characterized by a selling trend and declining prices. Opposite of a bull market. [OTS] A condition of the stock market when prices of stocks are generally declining. [NYSE] A market in which prices are declining. [CFTC] A period of declining market prices. [CBOT][MIDAM] Any market in which prices are in a declining trend. [Harvey][NYMEX] Widespread decline in security prices. [WCSU]
bear raid
A situation in which large traders sell positions with the intention of driving prices down. [Harvey]
bear spread
1) The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a decline in prices, but at the same time limiting the potential loss if this expectation is wrong. This can usually be accomplished by selling a nearby delivery and buying a deferred delivery. 2) A delta-negative option position comprised of long and short options of the same type, either calls or puts, designed to be profitable in a declining market. An option with a lower strike price is sold and one with a higher strike price is bought. [NYMEX] In most commodities and financial instruments, the term refers to selling the nearby contract month, and buying the deferred contract, to profit from a change in the price relationship. [CBOT][MIDAM] The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a decline in prices but at the same time limiting the potential loss if this expectation does not materialize. In agricultural products, this is accomplished by selling a nearby delivery and buying a deferred delivery. [CFTC]
bear vertical spread
A strategy employed when an investor expects a decline in a commodity price but at the same time seeks to limit the potential loss if this expectation is not realized. This spread requires the simultaneous purchase and sale of options of the same class and expiration date but different strike prices. For example, if call options are spread, the purchased option must have a higher exercise price than option that is sold. [CFTC]
bearer
The person in possession. [ITDS]
bearer bond
A bond that does not have the owner's name registered on the books of the issuing agency or company, and is payable to whomever holds the bond and bears it to the issuer for payment. [OTS] bonds that are not registered on the books of the issuer. Such bonds are held in physical form by the owner, who receives interest payments by physically detaching coupons from the bond certificate and delivering them to the paying agent. [Harvey]
bearer check
A check payable to 'cash' or to 'the bearer' rather than to a specific party. [OTS]
bearer security
A security, freely negotiable, that is payable to 'bearer'. [EPA] Security for which the primary evidence of ownership is possession of the certificate. [WCSU]
bearer share certificate
A negotiable share certificate filled out in the name of 'bearer' and not to a particular person or organization. [UNODC]
before-tax profit margin
The ratio of net income before taxes to net sales. [Harvey]
before-tax-income
gross income less all expenses except income taxes. [OTS]
beggar-thy-neighbor
An international trade policy of competitive devaluations and increased protective barriers where one country seeks to gain at the expense of its trading partners. [Harvey]
beggar-thy-neighbor devaluation
A devaluation that is designed to cheapen a nation's currency and thereby increase its exports at other countries' expense and reduce imports. Such devaluations often lead to trade wars. [Harvey]
belly pits or holds
Compartments beneath the cabin of an aircraft used for the transport of cargo or baggage. [ITDS]
belly-up
slang, used to describe a failed project or institution. [OTS]
below-market interest rate
An interest rate below the current rate for conventional financing in a given area. Programs with below-market rates may be used to assist low- or moderate-income buyers. [OTS]
belvedere
another name for a gazebo. [OTS]
benchmark
A mark made on a permanent object indicating elevation and serving as a reference in land surveys. [OTS] The performance of a predetermined set of securities, for comparison purposes. Such sets may be based on published indexes or may be customized to suit an investment strategy. [Harvey]
benchmark error
Use of an inappropriate proxy for the true market portfolio. [Harvey]
benchmark input-output accounts
Statistical description -- presented in make tables, use tables, and direct and total requirements tables -- of the production of goods and services and the transaction flows of goods and services between different producing sectors of the economy and to different components of final use. They are prepared primarily from Census data. [BEA]
benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will demand for investing in a non-Treasury security. It is also tied to the yield to maturity offered on a comparable-maturity Treasury security that was most recently issued ('on-the-run'). [Harvey]
benchmark issues
Also called on-the-run or current coupon issues or bellwether issues. In the secondary market, it's the most recently auctioned Treasury issues for each maturity. [Harvey]
benchmark survey
A census intended to cover the entire universe of potential survey respondents, in terms of the value of selected data items. It is the most comprehensive survey in terms of coverage and number of data items collected. Data collected in benchmark surveys are treated as 'actual' values from which annual 'estimates' are extrapolated (or interpolated) based on sample surveys in non-benchmark years. Benchmark surveys generally occur once every five years. [BEA]
benchmarking
Comparing information of one entity to like information of another entity or composite group for the purpose of determining areas for potential improvement and to identify the best practices. [TMAC]
beneficial owner
The actual or economic owner of an offshore company as distinct from the registered or nominal owner. [UNODC] The true owner of a security which may, for convenience, be recorded under the name of a nominee. [SEC]
beneficiary
A person named in a life insurance policy, annuity, will, trust, or other agreement to receive a financial benefit upon the death of the owner. A beneficiary can be an individual, company, organization, etc. [UNODC] An individual or company who gains upon the opening of a letter of credit. [ITDS] The person designated to receive funds in a trust account or an insurance policy. [OTS] The person or company in whose favor a letter of credit is opened or a draft is drawn. [FDIC]
beneficiary statement
The statement of a lender that shows the remaining principal balance and other information about a loan. It is usually obtained when a property owner wants to sell or refinance. It is also called a bene statement, offset statement, or estoppel certificate, and it is normally requested by escrow or title companies. [OTS]
benefit-cost ratio
benefits in kind
Noncash forms of pay or assistance. [FACS]
bequeath
to give personal property in a will. [OTS]
bequest
A gift of personal property made by a deceased person. [OTS]
berm
A mound of earth created for either decorative purposes or functional reasons, such as controlling the flow of water or obscuring undesirable views. [OTS]
berth
The place beside a docking area where the ship is secured and cargo can be loaded or unloaded. [ITDS]
besloten vennootschap (BV)
This form of incorporation under Dutch company law is broadly comparable to the private limited liability company in the United Kingdom. [UNODC]
best-efforts sale
A method of securities distribution/ underwriting in which the securities firm agrees to sell as much of the offering as possible and return any unsold shares to the issuer. As opposed to a guaranteed or fixed price sale, where the underwriter agrees to sell a specific number of shares (with the securities firm holding any unsold shares in its own account if necessary). [Harvey]
best-efforts underwriting
A relationship under which an underwriter acts as agent of the issuer for the original offering of an issue, but with no commitment by that underwriter to purchase any portion of the issue. (Compare 'Firm Commitment'.) [EPA] Underwriters do not commit themselves to selling a security issue but promise only to use best efforts. [WCSU]
best-interests-of-creditors test
The requirement that a claim holder voting against a plan of reorganization must receive at least as much as he would have if the debtor were liquidated. [Harvey]
beta (mutual funds)
The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means the fund's total return is likely to move up or down 70% of the market change; 1.3 means total return is likely to move up or down 30% more than the market. Beta is referred to as an index of the systematic risk due to general market conditions that cannot be diversified away. [Harvey]
beta
Measure of market risk. [WCSU]
beta coefficient
A measure of the variability of rate of return or value of a stock or portfolio compared to that of the overall market. [CFTC]
beta equation
The beta of a stock is determined as follows: [(n) (sum of (xy)) ]-[(sum of x) (sum of y)] / [(n) (sum of (xx)) ]-[(sum of x) (sum of x)]; where: n = # of observations (24-60 months), x = rate of return for the S&P 500 Index, y = rate of return for the stock. [Harvey]
betterment
An addition made to, or change made in, a fixed asset which is expected to prolong its life or to increase its efficiency over and above that arising from maintenance, and the cost of which is therefore added to the book value of the asset. the term is sometimes applied to sidewalks, sewers, and highways. [EPA]
bid
(1) an offer of money in exchange for property, or anything of value that has been placed for sale. (2) an offer to purchase something of value at a specified price made during an auction. (3) a formal offer in writing by a contractor to provide a product or service for a certain price, usually within a specified period of time. (4) in securities markets, an indication of a willingness to buy at a given price. [OTS] A motion to buy a futures or option contract at a specified price. Opposite of Offer. [NYMEX] An expression indicating a desire to buy a commodity at a given price, opposite of offer. [CBOT][MIDAM] An offer to buy a specific quantity of a commodity at a stated price. [CFTC] An offer to purchase an issue, usually at competitive bidding, specifying the interest rate(s) offered and the purchase price (that is, par plus a stated premium or less a stated discount). [EPA] The highest price a broker is willing to pay for a security. [SEC]
bid and asked
Often referred to as a quotation or quote. The bid is the highest price anyone wants to pay for a security at a given time, the asked is the lowest price anyone will take at the same time. [NYSE]
bid bond
Guarantee established in connection with international tenders. Guarantees fulfillment of the offer. [ITDS]
bid price
The price at which a buyer offers to purchase securities, whether from the issuer (see 'Purchase Price') or in the market. Bid Date is the date and hour beyond which bids shall not be received on securities. [EPA] This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically speaking, this is the available price at which an investor can sell shares of stock. [Harvey]
bid-asked spread
The difference between the bid and asked prices. [Harvey]
bidder
A firm or person that wants to buy a firm or security. [Harvey]
big bang
The term applied to the liberalization in 1986 of the London Stock Exchange in which trading was automated with the use of computers. [Harvey]
Big Board
A nickname for the New York Stock Exchange. Also known as The Exchange. More than 2,000 common and preferred stocks are traded. Founded in 1792, the NYSE is the oldest exchange in the United States, and the largest. It is located on Wall Street in New York City. [Harvey]
bilateral trade
The commerce between two countries. [ITDS]
bilateralism
bilevel
A house with two distinct levels that are side-by-side and less than one story apart in height; also called a split-level. [OTS]
bill
A written statement of contract terms. [ITDS]
bill check
A system of payment, in which a debtor authorizes a creditor to obtain payment directly from the debtor's deposit account. [OTS]
bill of credit
A written statement that authorizes the recipient to receive or collect money from a foreign correspondent. [ITDS] The written request of an individual to his or her depository institution asking it to deliver money to the bearer of the request, with the money drawn from the individual's deposit account, or advanced on the individual's credit. [OTS]
bill of exchange
An unconditional order written from one person (the drawer) to another person (the drawee) directing the latter to pay a certain sum of money at a fixed or future determinable date to the order of a third party. The terms 'bill of exchange' and 'draft' are generally used interchangeably. [FDIC] General term for a document demanding payment. [Harvey][WCSU] instructions from one party to a second party to pay a third party following the completion of an assignment. [OTS]
bill of health
A certificate issued by customs declaring the proper health of crew or passengers of a vessel or airplane upon arrival or departure from port. [ITDS]
bill of lading
A contract between the exporter and a transportation company in which the latter agrees to transport the goods under specified conditions which limit its liability. It is the exporter's receipt for the goods as well as proof that goods have been or will be received. [Harvey] A document issued by a carrier to a shipper that provides written evidence regarding receipt of the goods, the conditions on which transportation is made, and the engagement to deliver goods at the prescribed destination to the lawful holder of the bill of lading. [ITDS] A receipt issued by a carrier to a shipper for merchandise delivered to the carrier for transportation from one point to another. A bill of lading serves as a receipt for the goods, a document of title, and a contract between the carrier and the shipper, covering the delivery of the merchandise to a certain point or to a designated person. It is issued in two primary forms: an 'order bill of lading', which provides for the delivery of goods to a named person or to his or her order (designee) but only on proper endorsement and surrender of a bill of lading to the carrier or its agents; and a 'straight bill of jading', which provides for delivery of the goods to the person designated by the bill of lading and no other. [FDIC] A written statement in which a carrier acknowledges the receipt of freight, identifies the freight, and sets forth terms under which the freight will be delivered to a destination. [OTS] Document establishing ownership of goods in transit. [WCSU]
bill of parcels
A statement sent with a shipment that gives descriptions and prices for included items; often referred to as a packing slip. [ITDS]
bill of sale
A written document by which a party legally transfers ownership of goods to another party. [ITDS] A written document that transfers title to personal property from the seller to the buyer. [OTS]
bill of sight
A Customs document which allows a party to see the goods before they pay duties on them. [ITDS]
bill-to party
Refers to the party designated on a bill of lading as the one responsible for payment of the freight charges. [ITDS]
billable volume
The volume upon which charges may be levied. [EPA]
billed weight
The designated weight shown on the freight bill. [ITDS]
billing third party
The transference of transportation charges to a party other than the shipper or consignee. [ITDS]
binary
A math system based on 2s rather than lOs, using only the digits O and 1. It is the operating system for computers. [OTS]
binder
A written statement binding two parties to an agreement until a formal contract can be executed. A binder is used to secure insurance for a mortgage until a complete policy is issued. [OTS]
binomial option pricing model
An option pricing model in which the underlying asset can take on only two possible, discrete values in the next time period for each value that it can take on in the preceding time period. [Harvey]
biological agents
A biologically active material. [ITDS]
black market
An illegal market. [Harvey] Any private market that operates in contravention of government restrictions. [UNODC] Buying or selling of products that violate government restrictions. [ITDS]
Black-Scholes formula
An option valuation formula based on the principle that an option can be priced by combining it with its underlying asset into a riskless hedge portfolio. [TMAC]
Black-Scholes model
An option pricing formula initially developed by Fisher Black and Myron Scholes for securities options and later refined by Black for options on futures. [CFTC][NYMEX]
Black-Scholes option-pricing model
A model for pricing call options based on arbitrage arguments that uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the standard deviation of the stock return. [Harvey]
blackboard trading
The practice of selling commodities from a blackboard on a wall of a commodity exchange. [CFTC]
blanket
something that pertains to more than one item, or more than one piece of property. In a blanket condemnation, a number of properties are sold through the power of eminent domain. A blanket insurance policy covers more than one property. A blanket mortgage is a lien on more than one parcel of land and is frequently used by developers and subdividers. [OTS]
blanket inventory lien
A secured loan that gives the lender a lien against all the borrower's inventories. [Harvey]
blanket mortgage loan
A loan made to developers or contractors to purchase one or more tracts of land with the intention of dividing the land into smaller parcels for resale or development. [OTS]
blanket rate
A special single rate applied to multiple articles in a single shipment. [ITDS]
blighted area
A run-down area in a community or a neighborhood that is close to becoming a slum. [OTS]
blind trust
A trust in which the trustees are enjoined from providing any information to the beneficiaries about the administration of assets of the trust. [UNODC]
block
A large holding or transaction of stock popularly considered to be 10,000 shares or more. [NYSE] The smallest square or rectangular portion of a city or town surrounded by four streets. A block may be wholly or partially occupied by buildings or be vacant land. [OTS]
block house
Brokerage firms that help to find potential buyers or sellers of large block trades. [Harvey]
block trade
A large trading order, defined on the New York Stock Exchange as an order that consists of 10,000 shares of a given stock or a total market value of $200,000 or more. [Harvey]
block voting
A group of shareholders banding together to vote their shares in a single block. [Harvey]
blockade
Prevention of commercial exchange by physically preventing carriers from entering a specific port or nation. [ITDS]
blockbusting
The illegal practice of some real estate dealers who start rumors that play on prejudices against minorities, creating panic selling by an area's residents. The dealers buy the houses from frightened owners at below market prices, and then sell the homes to minority groups at above market prices. [OTS]
blocked account
Any account in a bank the handling of which is closely circumscribed by government regulations. The term is used in the United States to designate any account whose administration is subject to U.S. Treasury license because of enemy or suspected enemy interest. [UNODC]
blocked currency
A currency that is not freely convertible to other currencies due to exchange controls. [Harvey]
blocked exchange
Exchange which cannot be freely converted into other currencies. [FDIC]
blow-off top
A steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen in charts and used in technical analysis of stock price and market trends. [Harvey]
blue sky memorandum
A memorandum for use by the Account specifying the way a specific issue will be treated under all or specified state securities laws. This memorandum is prepared first in preliminary form which may note that certain steps need to be taken in various jurisdictions in order to qualify the issue for sale within these jurisdictions. The memorandum is then issued in supplemental form which generally reports that the required actions in the various jurisdictions have been taken. [EPA]
blue-chip company
Large and creditworthy company. [Harvey][WCSU]
blue-chip stock
Stock in a company with a national reputation for quality, reliability and the ability to operate profitably in good and bad times. [NYSE] The common stock of large, stable companies that have shown consistent earnings and usually have long-term growth potential. [OTS]
blue-sky laws
A popular name for laws various states have enacted to protect the public against securities fraud. The term is believed to have originated when a judge ruled that a particular stock had about the same value as a patch of blue sky. [NYSE] State laws covering the issue and trading of securities. [Harvey][WCSU]
board broker system
A system of trading in which an individual member of an exchange (or a nominee of the member) is designated as a Board Broker for a particular commodity with the responsibility of executing orders left with him by other members on the floor, providing price quotations, and maintaining orderliness in the trading crowd. A Board Broker may not trade for his own account or the account of an affiliated organization. [CFTC]
board foot
A unit used to measure lumber. One board foot is one inch thick, one foot wide and one foot long. [OTS]
board of directors
The group of persons who make up the governing body of an institution, and are responsible for policy and overall direction of the organization. [OTS]
Board of Governors
Central, governmental agency of the Federal Reserve System, located in Washington, DC, and composed of seven members who are appointed by the President and confirmed by the Senate. The Board is responsible for domestic and international economic analysis; with other components of the System, for the conduct of monetary policy; for supervision and regulation of certain banking organizations; for operation of much of the nation's payments system; and for administration of most of the nation's laws that protect consumers in credit transactions. [FRBSF] Governmental agency of the Federal Reserve System, located in Washington, DC, and composed of seven members who are appointed by the President and confirmed by the Senate. The Board is responsible for domestic and international economic analysis; with other components of the System, for the conduct of monetary policy; for supervision and regulation of certain banking organizations; for operation of much of the nation's payments system; and for administration of most of the nation's laws that protect consumers in credit transactions. [FRB][FRBM]
board of trade
Any exchange or association, whether incorporated or unincorporated, of persons who are engaged in the business of buying or selling any commodity or receiving the same for sale on consignment. [CFTC]
Board of Trade Clearing Corporation (BOTCC)
An independent corporation that settles all trades made at the Chicago Board of Trade acting as a guarantor for all trades cleared by it, reconciles all clearing member firm accounts each day to ensure that all gains have been credited and all losses have been collected, and sets and adjusts clearing member firm margins for changing market conditions. Also referred to as clearing corporation. [CBOT][MIDAM]
board of trustees
The group of persons that manages a mutual savings bank, establishes the policies under which it is to be operated, and appoints executive officers. In some states it is called a board of managers. [OTS]
bogey
The return an investment manager is compared to for performance evaluation. [Harvey]
bogus
false, counterfeit, nonexistent or fraudulent. [OTS]
boiler room
An enterprise which often is operated out of inexpensive, low-rent quarters (hence the term 'boiler room') that uses high pressure sales tactics (generally over the telephone) and possibly false or misleading information to solicit generally unsophisticated investors. [CFTC] An enterprise which often is operated out of inexpensive, low-rent quarters that uses high pressures sales tactics, generally over the telephone, and possibly false or misleading information to solicit generally unsophisticated investors. [NYMEX]
boilerplate
Standard legal language, often in fine print, used in most contracts, wills, indentures, prospectuses and other legal documents. [UNODC] Standard terms and conditions, e.g., in a debt contract. [WCSU] Standard terms and conditions. [Harvey] slang for standard legal language used in loan forms, real estate closings, etc. [OTS]
bona fide
In or with good faith, honesty, and sincerity. [ITDS] something that is in good faith, not a fraud, the real thing. [OTS]
bond
(A) the written evidence of debt, bearing a stated rate or stated rates of interest, or stating a formula for determining that rate, and maturing on a date certain, on which date and upon presentation a fixed sum of money plus interest (usually represented by interest coupons attached to the bond) is payable to the holder or owner. An issue is usually comprised of many bonds that mature over a number of years. (Compare 'Note'.) For purposes of computations based on a 'per bond' calculation, 'per bond' means a $1,000 increment of an issue (no matter what the actual denominations are). (B)A written promise to pay a specified sum of money called the face value or principal amount, at a specified date or dates in the future, called the maturity date(s), together with periodic interest at a specified rate. The difference between a note and a bond is that the latter runs for a longer period of time and requires a greater legal formality. (C) Written evidence of the issuer's obligation to repay a specified principal amount on a date certain (maturity date), together with interest at a stated rate, or according to a formula for determining that rate. Bonds are distinguishable from notes, which mature in a much shorter period of time. Bonds may be classified according to maturity (serial vs. term), source of payment (general obligation vs. revenue), method of transfer (bearer vs. registered), issuer (state vs. municipality vs. special district) or price (discount vs. premium). [EPA] A bond is a debt security representing a loan by the buyer to the corporation or government issuing the bond; it may pay interest, or it may be discounted in price from the value at maturity. [GAO] A bond is evidence of a debt in which the issuer promises to pay the bondholders a specified amount of interest and to repay the principal at maturity. [UNODC] A certificate that is evidence of a debt. The debt is initiated when the issuer sells the bond to the holder for a specific amount of cash. The issuer is obligated to pay the holder of the bond a fixed sum (the bond's face value) at a stated future date and to pay interest (usually twice a year) at a specified rate during the life of the bond. Bonds may be issued by corporations, the federal government, and by state and local governments as a means of raising funds in the capital markets. Bonds may be issued in registered form, in which the name of the holder is on record with the issuer, or in bearer form, in which the name of the owner is not registered and the bond is payable to whomever bears, or presents the bond to the issuer for redemption. [OTS] A certificate which is evidence of a debt in which the issuer promises to repay a specific amount of money to the bondholder, plus a certain amount of interest, within a fixed period of time. [SEC] An interest-bearing certificate of debt by which the issuer is obligated to pay the principal amount at a specific time and interest periodically. [ITDS] Bonds are debt and are issued for a period of more than one year. The U.S. government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically. [Harvey] Long-term debt. [WCSU] basically an I.O.U. or promissory note of a corporation or municipality, usually issued in multiples of $1,000 or $5,000. A bond is an evidence of debt on which the issuing company usually promises to pay the bondholder a specified amount of interest for a specified length of time, and to repay the loan on the expiration date. A bondholder is a creditor of the corporation, not a part owner as is the shareholder. While the interest paid on corporate bonds is fully taxable, the interest on municipal bonds is usually exempt from federal income tax and state and local taxes within the state of the issue. [NYSE]
bond agreement
A contract for privately placed debt. [Harvey]
bond anticipation note
(A) A note issued in anticipation of later issuance of bonds, usually payable from the proceeds of the sale of the bonds anticipated or of renewal notes. (B)A note issued in the anticipation of a later issuance of bonds to provide financing for the purpose of the issue; or the issuance of renewal notes.
(C) Short-term, interest-bearing notes issued by a government in anticipation of bonds to be issued at a later date. The notes are retired from proceeds of the bond issue to which they are related. [EPA]
bond counsel
(A) Lawyers with expertise in the municipal bond field who render 'approving opinions'. (B) An attorney (or firm of attorneys) retained by the issuer to give a legal opinion that the issuer is authorized to issue proposed bonds, the issuer has met all legal requirements necessary for issuance, and interest on the proposed bonds will be exempt from federal income taxation and, where applicable, from state and local taxation. [EPA]
bond covenant
A contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions. [Harvey]
bond discount
The difference between the purchase price and face value of a bond when the face value exceeds the purchase price. [OTS] The excess of the face value of a bond over the price for which it is acquired or sold. The price does not include accrued interest at the date of acquisition -or sale. [EPA]
bond fund
(A) A fund formerly used to account for the proceeds of general obligation bond issues. Such proceeds are now accounted for in a Capital Projects Fund. (B) A registered mutual fund that invests in tax-exempt obligations, or an account held by the trustee of an issue used to pay debt service and call premiums (if any) on an issue. (C) A special fund customarily held by the trustee to be used to pay debt service and call premiums on an issue. (also called 'Bond Payment Fund' or 'Debt Service Fund'.) A tax-exempt mutual fund comprised of tax-exempt issues. [EPA]
bond indenture
The contract that sets forth the promises of a corporate bond issuer and the rights of investors. [Harvey]
bond indexing
Designing a portfolio so that its performance will match the performance of some bond index. [Harvey]
bond of indemnity
An agreement made with a carrier that relieves them of any liability incurred under stated conditions. [ITDS]
bond ordinance or resolution
(A) An ordinance or resolution authorizing a bond issue . (B) An action of a governing body of a state or local government, or agency thereof, authorizing a bond issue. The resolution may be in the form of an amendment to a state constitution; an act or resolution of the state legislature; a local law or ordinance; or a resolution of the governing body of the issuer. [EPA]
bond points
A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face value of the bond. A price of 80 means that the bond is selling at 80% of its face, or par value. [Harvey]
bond premium
The difference between the purchase price and the face value of a bond when the face value is less than the purchase price. [OTS] The excess of the price at which a bond is acquired or sold over its face value. The price does not include accrued interest at the date of acquisition or sale. [EPA]
bond proceeds
(A) Proceeds or funds received as a result of the issuance of a bond or note. (B) The money paid to the issuer by the purchaser or underwriter for a new issue of municipal bonds, used to finance the project or purpose for which the bonds were issued and to pay certain costs of issuance as may be provided in the bond contract. [EPA]
bond purchase agreement
The agreement between the issuer and the account or individual underwriter or purchaser which has agreed to purchase the issue setting forth the terms of the sale, including the price of the securities, any premium or discount, the interest rate or rates, the conditions to closing (including the contents, or a description of the contents, of the opinions and certificates to be rendered and delivered at closing), any restrictions on the liability of the issuer, and, occasionally, indemnity provisions if there is not a separate indemnity letter or agreement. Generally, if a matter is to be considered a prerequisite to closing, it must be stated as such in this agreement. (also called 'Contract of Purchase' or 'Underwriting Agreement'.) [EPA]
bond revenues
Revenues levied or collected for the purpose of providing for payment of the debt service on outstanding bonds. [EPA]
bond system
A computerized bond control system (part of ACS). [ITDS]
bond value
With respect to convertible bonds, the value the security would have if it were not convertible apart from the conversion option. [Harvey]
bond year
An element in calculating average life of an issue and in calculating net interest cost on an issue. A bond year is the number of 12 month intervals between the date of the bond and its maturity date, measured in $1,000 increments. For example, the 'bond years' allocable to a $5,000 bond dated April 1, 1982 and maturing June 1, 1983 is 5.830 (1.166 [14 months % 12 months] X 5 (number of $1,000 increments in $5,000 bond)).
Usual computations include bond years per maturity or per an interest rate, and total bond years for the issue. [EPA]
bond-equivalent basis
The method used for computing the bond-equivalent yield. [Harvey]
bond-equivalent yield
A bond, Treasury bill, or other discount instrument's yield over its life, assuming it is purchased at the asked price and the return is annualized using a simple interest approach. The bond equivalent yield is equal to a bill's discount, expressed as a fraction of the purchase price multiplied by 365 divided by the number of days to maturity. BEY = (discount/purchase price) x (365/days to maturity) [FDIC] Bond yield calculated on an annual percentage rate method. Differs from annual effective yield. [Harvey] The annualized yield to maturity computed by doubling the semiannual yield. [Harvey]
bonded
Goods stored by customs until the import duties are paid or the goods are exported. [ITDS]
bonded debt
That portion of issuer's total indebtedness represented by outstanding bonds. [EPA]
bonded terminal
An airline terminal approved by the U.S. Treasury Department for storage of goods until Customs duties are paid or released. [ITDS]
bonded warehouse
An approved warehouse used for the storage of goods until duties are paid or the goods are properly released. [ITDS]
bonds authorized and unissued
Bonds which have been legally authorized but not issued and which can be issued and sold without further authorization. This term must not be confused with the term 'margin of borrowing power' or 'legal debt margin,' either one of which represents the difference between the legal debt limit of a government and the debt outstanding against it. [EPA]
bonds issued
Bonds sold. [EPA]
boning
Charging a lot more for an asset than it's worth. [Harvey]
bonus
A borrowing facility that allows the firm to issue either eurnotes or U.S. domestic debt. Also called global note facility. [WCSU]
bonus account
A savings account that earns interest at a higher rate if the customer makes regular, scheduled deposits to the account, leaves a specified amount on deposit for a specified term, or fulfills other conditions of the account agreement. [OTS]
book
A banker or trader's positions. [Harvey]
book cash
A firm's cash balance as reported in its financial statements. Also called ledger cash. [Harvey]
book profit
The cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT. [Harvey]
book runner
The managing underwriter for a new issue. The book runner maintains the book of securities sold. [Harvey]
book transfer
A series of accounting or bookkeeping entries used to settle a series of cash market transactions. [CFTC] Transfer of title without actually delivering the product. [NYMEX]
book value
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A company's book value might be more or less than its market value. [Harvey] An accounting term. Book value of a stock is determined from a company's records, by adding all assets then deducting all debts and other liabilities, plus the liquidation price of any preferred issues. The sum arrived at is divided by the number of common shares outstanding and the result is book value per common share. Book value of the assets of a company or a security may have little relationship to market value. [NYSE] The dollar amount shown on the institution's accounting records or related financial statements. The 'gross book value' of an asset is the value without consideration for adjustments such as valuation allowances. The 'net book value' is the book value net of such adjustments. The FDIC restates amounts on the books of a failed institution to conform to the FDIC's liquidation accounting practices. Therefore, in the FDIC accounting environment, book value generally refers to the unpaid balance of loans or accounts receivable, or the recorded amount of other types of assets (for example, ORE or securities). [FDIC] The value of an asset as it appears on the accounting books of an organization. Book value is the initial cost of the asset, less depreciation. Book value may be different from market value, which is the estimated amount the asset would command if sold. Book value also refers to the total value of a company and is computed by adding all assets, then deducting all debts and other liabilities, and deducting the liquidation price of any preferred stock. The book value of a company may be divided by the number of outstanding shares of common stock to get the book value per share of common stock. [OTS]
book value per share
The ratio of stockholder equity to the average number of common shares. Book value per share should not be thought of as an indicator of economic worth, since it reflects accounting valuation (and not necessarily market valuation). [Harvey]
book value reduction
The decrease in book value of all types of assets resulting from activities such as the collection of loan principal, the sale of an asset, the forgiveness of a debt, and the write-off or donation of an asset. [FDIC]
book-entry
One form in which Treasury and certain government agency securities are held. Book-entry form consists of an entry on the records of the U.S. Treasury Department, a Federal Reserve Bank, or a financial institution. [FRB][FRBC][FRBM]
book-entry securities
Electronically recorded securities that include each creditor's name, address, Social Security or tax identification number, and dollar amount loaned, (i.e., no certificates are issued to bond holders, instead the transfer agent electronically credits interest payments to each creditor's bank account on a designated date). [CBOT][MIDAM] Securities that are recorded in electronic records, called book entries, rather than as paper certificates. Ownership of U.S. government book-entry securities is transferred over Fedwire. [FRBSF] The Treasury and federal agencies are moving to a book-entry system in which securities are not represented by engraved pieces of paper but are maintained in computerized records at the Fed in the names of member banks, which in turn keep records of the securities they own as well as those they are holding for customers. In the case of other securities where a book-entry has developed, engraved securities do exist somewhere in quite a few cases. These securities do not move from holder to holder but are usually kept in a central clearinghouse or by another agent. [Harvey]
book-entry system
A book-entry system is an accounting system that permits the transfer of assets (e.g., securities) without the physical movement of paper documents or certificates. [GAO] The recording, transferring and processing of securities solely by electronic means. The ownership of a security is recorded in a computer file and the purchaser does not receive a piece of paper evidencing ownership. [OTS]
booking
The act of recording arrangements for the movement of goods by vessel. [ITDS]
booking the basis
A forward pricing sales arrangement in which the cash price is determined either by the buyer or seller within a specified time. At that time, the previously-agreed basis is applied to the then-current futures quotation. [CFTC]
bookkeeping
The recording and balancing of financing transactions of an institution. [OTS]
booths
About 1,400 workspaces, each equipped with a computer system, around the perimeter of the Trading Floor where member firms and independent brokers receive orders. [NYSE]
bootstrapping
A process of creating a theoretical spot rate curve, using one yield projection as the basis for the yield of the next maturity. [Harvey]
borrow
To obtain or receive money on loan with the promise or understanding that it will be repaid. [Harvey]
borrower
individual or institution receiving funds in the form of a loan and obligated to repay the loan, usually with interest. A borrower is called a mortgagor when the loan is secured by real estate. [OTS]
borrower fallout
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be closed will elect to withdraw from the contract. [Harvey]
borrowing
A way of acquiring necessary capital. One form of borrowing is when an individual or a company asks a bank to loan them a certain amount of money, over a certain period of time, and agrees to pay a certain amount of interest. [NYSE]
Boston Exchange Automated Communications and Order Routing Network (BEACON)
Boston Stock Exchange (BSE)
bottom-up equity management style
A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks. [Harvey]
bought deal
Security issue where one or two underwriters buy the entire issue. [Harvey]
bounties
Government payments to producers to strengthen their competitive position. [ITDS]
bourse
A term of French origin used to refer to stock markets. [Harvey]
box
Colloquial term referring to a trailer, semi-trailer, or container. [ITDS]
box car
A closed freight car. [ITDS]
box spread
An option market arbitrage in which both a bull spread and a bear spread are established for a riskless profit. One spread includes put options and the other includes calls. [NYMEX]
box transaction
An option position in which the holder establishes a long call and a short put at one strike price and a short call and a long put at another strike price, all of which are in the same contract month in the same commodity. [CFTC]
boycott
Refusing to deal commercially with a person, firm, or country. [ITDS]
bracket
A term signifying the extent of an underwriter's commitment in a new issue, e.g., major bracket or minor bracket. [Harvey][WCSU]
bracket creep
The process by which inflation drives personal incomes upward into higher tax brackets. In a progressive income tax system, this causes an increase in tax burdens. [FACS]
Brady bonds
Bonds issued by emerging countries under a debt reduction plan. [Harvey]
branch
An operation in a foreign country incorporated in the home country. [Harvey]
branch banking
Multi-office banking. Branch banking occurs when a single bank conducts its business at a number of different offices located in the same or different cities, states, or countries. The ability to operate branches is controlled by state law; most states permit branches within city limits and a few states permit statewide banking. Federal law ties the ability of a national bank to establish and operate branches to the scope of the branching powers granted by state law to the state banks located in the state in which the national bank is situated. [FDIC]
branch breakup
A resolution strategy that provides bidders with the choice of bidding on the entire franchise or on individual or groups of branches of the failing institution. Marketing failing institutions on both a whole franchise and a branch breakup basis can expand the universe of potential buyers and may result in better bids in the aggregate. In branch breakup transactions, prospective acquirers are required to submit bids on both the 'all deposits' and 'insured deposits' options except for bids on the entire franchise. The branch breakup resolution strategy was developed by the RTC to allow smaller institutions to participate in the resolution process and to increase competition among the bidders. [FDIC]
branch office
An office of a savings institution that is physically separated from the association's home office, but that offers the same kinds of deposit taking, loan and other services conducted at the home office. [OTS]
brand
Insignia identifying the producer of a specific commodity. [NYMEX]
breach
A violation of a legal obligation. [OTS]
break
A rapid and sharp price decline. [CFTC][Harvey][NYMEX]
break-even analysis
An analysis of the level of sales at which a project would make zero profit. [Harvey] Analysis of the level of sales at which a project would break even. [WCSU]
break-even lease payment
The lease payment at which a party to a prospective lease is indifferent between entering and not entering into the lease arrangement. [Harvey]
break-even payment rate
The prepayment rate of a MBS coupon that will produce the same CFY as that of a predetermined benchmark MBS coupon. Used to identify for coupons higher than the benchmark coupon the prepayment rate that will produce the same CFY as that of the benchmark coupon; and for coupons lower than the benchmark coupon the lowest prepayment rate that will do so. [Harvey]
break-even point
The level of sales or production at which the total costs and total revenue of a business are equal. [OTS] The underlying futures price at which a given option strategy is neither profitable nor unprofitable. For call options, it is the strike price plus the premium. For put options, it is the strike price minus the premium. [NYMEX]
break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering into and not entering into the transaction. [Harvey]
breakage
In marine insurance, 'breakage' refers to breakage of fragile goods such as glass and china and is excluded from coverage, unless the policy specifically covers breakage. [ITDS]
breakbulk
Unloading or distributing portions of a consolidated shipment for delivery. [ITDS]
breakbulk cargo
Cargo that is shipped as a unit but not containerized. [ITDS]
breakout
A rise in a security's price above a resistance level (commonly its previous high price) or drop below a level of support (commonly the former lowest price.) A breakout is taken to signify a continuing move in the same direction. Can be used by technical analysts as a buy or sell indicator. [Harvey]
Bretton Woods
An international monetary system operating from 1946-1973. The value of the dollar was fixed in terms of gold, and every other country held its currency at a fixed exchange rate against the dollar; when trade deficits occurred, the central bank of the deficit country financed the deficit with its reserves of international currencies. [FACS]
Bretton Woods Agreement
An agreement signed by the original United Nations members in 1944 that established the International Monetary Fund (IMF) and the post-World War II international monetary system of fixed exchange rates. [Harvey]
bribe
A payment that results in a benefit that would not have been received except for receipt of that money; a bribe is a criminal offense. [ITDS]
brick
slang used to describe a package of currency that is banded with steel straps. [OTS]
bricks and mortar
slang for physical branch or main offices of a thrift institution. [OTS]
bridge
Interim financing for a project to be subsequently financed permanently by bonds. The 'bridge' is generally in the form of notes which are retired with the proceeds of the bonds. [EPA]
bridge bank
A temporary national bank established and operated by the FDIC on an interim basis to acquire the assets and assume the liabilities of a failed institution until final resolution can be accomplished. The use of bridge banks generally is limited to situations in which more time is needed to permit the least costly resolution of a large or complex institution. [FDIC]
bridge financing
Interim financing of one sort or another used to solidify a position until more permanent financing is arranged. [Harvey]
bridging loan
Short-term loan to provide temporary financing until more permanent financing is arranged. [WCSU]
British clearers
The large clearing banks that dominate deposit taking and short-term lending in the domestic sterling market. [Harvey]
British thermal unit
The amount of heat required to increase the temperature of a pound of water 1o Fahrenheit. A Btu is used as a common measure of heating value for different fuels. Prices of different fuels and their units of measure (dollars per barrel of crude, dollars per ton of coal, cents per gallon of gasoline, cents per thousand cubic feet of natural gas) can be easily compared when expressed as dollars and cents per million Btus. [NYMEX]
broker
1) An individual who is paid a fee or commission for acting as an agent in making contracts, sales, or purchases. 2) A Floor Broker is a person who actually executes trading orders on the floor of an exchange. 3) An Account Executive, Registered Commodity Representative, or Customers' Man who deals with customers and their orders in commission house offices. [NYMEX] A company or individual that executes futures and options orders on behalf of financial and commercial institutions and/or the general public. [CBOT] A person who acts as an agent for others in selling or buying funds, securities, real estate, insurance or other services or products. [OTS] One that acts as an agent for others, as in negotiating contracts, purchases, or sales in return for a fee or commission. [ITDS]
broker association
Two or more exchange members who (1) share responsibility for executing customer orders; (2) have access to each other's unfilled customer orders as a result of common employment or other types of relationships; or (3) share profits or losses associated with their brokerage or trading activity. [CFTC]
Broker Booth Support System (BBSS)
A state-of-the-art order-management system designed exclusively for NYSE members. BBSS enables member firms to quickly and efficiently process and manage their orders and selectively route orders via SuperDot directly to either the trading post or the booths on the NYSE Trading Floor. [NYSE] An order management and routing system for brokers. [NYSE]
Broker ITS (BITS)
Pre-opening indications service received on trading floor at broker terminals. Copies of Pre-opening Indications delivered through the Broker to Booth System in relevant issues. [NYSE]
broker-dealer
An entity engaged in the business of buying and selling securities. [SEC] Any person, other than a bank, engaged in the business of buying or selling securities on its own behalf or for others. [FRB][FRBC][FRBM][FRBSF]
brokerage fee
brokerage house
brokered deposits
deposits placed in a savings institution by a broker. The broker gathers funds from others and packages the funds in batches of $100,000. The broker then shops for thrift institutions paying the highest rates and takes out multiple jumbo ($100,000) certificates of deposit, which typically pay the highest rates of interest and are federally insured. The practice allows persons with less than $100,000 to pool their money and earn the higher rates paid by jumbo certificates of deposit. For his services, the broker charges fees to the investors for getting them higher rates and/or to the thrift institutions for placing deposits with them. [OTS]
brokered market
A market where an intermediary offers search services to buyers and sellers. [Harvey]
brokers' loans
Money borrowed by brokers from banks for uses such as financing specialists' inventories of stock, financing the underwriting of new issues of corporate and municipal securities, and financing customer margin accounts. [FRB][FRBC][FRBM] Money borrowed by brokers from banks for uses such as financing specialists' inventories of stock, the underwriting of new issues of corporate and municipal securities, and customer margin accounts. [FRBSF] Money borrowed by brokers from banks or other brokers for a variety of uses. It may be used by specialists to help finance investments of stock they deal in; by brokerage firms to finance the underwriting of new issues of corporate and municipal securities; to help finance a firm's own investments; and to help finance the purchase of securities for customers who prefer to use the broker's credit when they buy securities. [NYSE]
browser
A browser is a computer program that facilitates locating and displaying information on the World Wide Web (e.g., Netscape Navigator or Microsoft Explorer). The browser could work on the Internet or through internal information management systems called Intranets. [GAO]
bubble theory
Security prices sometimes move wildly above their true values. [Harvey]
buck
Slang for one million dollars. [Harvey]
bucket shop
A brokerage enterprise which 'books' (i.e., takes the opposite side of) a customer's order without actually having it executed on an exchange. [CFTC]
bucketing
Directly or indirectly taking the opposite side of a customer's order into a broker's own account or into an account in which a broker has an interest, without open and competitive execution of the order on an exchange. [CFTC]
budget
A detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget. [Harvey] A plan of financial operation embodying an estimate of proposed expenditures for a given period and the proposed means of financing them. Used without any modifier, the term usually indicates a financial plan for a single fiscal year. [EPA] An itemized listing, usually prepared annually, of anticipated revenue and projected expenses. [OTS]
budget deficit
The amount by which government spending exceeds government revenues. [Harvey]
budget document
The instrument used by the budget-making authority to present a comprehensive financial program to the appropriating body. the budget document usually consists of three parts. the first part contains a message from the budget-making authority, together with a summary of the proposed expenditures and the means of financing them. The second consists of schedules supporting the summary. These schedules show in detail the information as to past years' actual revenues, expenditures, and other data used a making the estimates. The third part is composed of drafts of the appropriation, revenue, and borrowing measures necessary to put the budget into effect. [EPA]
buffer zone
An area separating two or more types of land use, such as between a residential area and a commercial area. [OTS]
builder buydown loan
A mortgage loan on newly developed property that the builder subsidizes during the early years of the development. The builder uses cash to buy down the mortgage rate to a lower level than the prevailing market loan rate for some period of time. The typical buydown is 3% of the interest-rate amount for the first year, 2% for the second year, and 1% for the third year (also referred to as a 3-2-1 buydown). [Harvey]
building and loan association
another name for a savings and loan association. [OTS]
building codes
city, county or state regulations that set forth standards and requirements for the construction, maintenance and occupancy of buildings. The codes are designed to provide for the safety, health and welfare of the public. [OTS]
building efficiency
The ratio of net rentable area to gross building area expressed as a percentage. [OTS]
building loan
A mortgage loan made to finance the construction of a building. It is advanced in stages as the work is completed. Also called a construction loan. [OTS]
building society
The British term for a savings and loan association. [OTS]
built-ins
cabinets, ranges, ovens, and other appliances or furniture that are attached to the structure. [OTS]
bulge
A rapid advance in futures prices. [NYMEX] A rapid advance in prices. [CFTC] slang for a sudden, temporary increase in the price of a security, stock or debt obligation. Any temporary, significant increase, such as that in the volume of work. [OTS]
bulk cargo
Cargo that is made up of one commodity; examples include grain, oil, and ore. [ITDS]
bulk carrier
A vessel designed for the shipment of bulk cargo. [ITDS]
bulk freight
Freight not in packages or containers. [ITDS]
bulk sale
The sale of a large number of assets to one purchaser in a single transaction. Also known as a 'portfolio sale.' [FDIC] The transfer of a large amount of inventory in a single transaction not in the usual course of business. [ITDS]
bulk solids
Dry cargo shipped loose in containers. [ITDS]
bull
An investor who thinks the market will rise. [Harvey] One who anticipates an increase in price or volatility. Opposite of a Bear. [NYMEX] One who believes the market will rise. [NYSE] One who expects a rise in prices. The opposite of 'bear.' A news item is considered bullish if it portends higher prices. [CFTC] Someone who believes the market will rise. [CBOT][MIDAM]
bull CD, bear CD
A bull CD pays its holder a specified percentage of the increase in return on a specified market index while guaranteeing a minimum rate of return. A bear CD pays the holder a fraction of any fall in a given market index. [Harvey]
bull FRN
bull market
A condition of a stock or securities market characterized by increased buying and rising prices. Opposite of a bear market. [OTS] A condition of the stock market when prices of stocks are generally rising. [NYSE] A market in which prices are rising. [CFTC] A period of rising market prices. [CBOT][MIDAM] Any market in which prices are in an upward trend. [Harvey][NYMEX] Widespread rise in security prices. [WCSU]
bull spread
1) The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a rise in prices but at the same time limiting the potential loss if this expectation is wrong. This can be accomplished by buying the nearby delivery and selling the deferred. 2) A delta-positive option position composed of both long and short options of the same type, either calls or puts, designed to be profitable in a rising market. An option with a lower strike price is bought and one with a higher strike price is sold. [NYMEX] A spread strategy in which an investor buys an out-of-the-money put option, financing it by selling an out-of-the money call option on the same underlying. [Harvey] In most commodities and financial instruments, the term refers to buying the nearby month, and selling the deferred month, to profit from the change in the price relationship. [CBOT][MIDAM] The simultaneous purchase and sale of two futures contracts in the same or related commodities with the intention of profiting from a rise in prices but at the same time limiting the potential loss if this expectation is wrong. In agricultural commodities, this is accomplished by buying the nearby delivery and selling the deferred. [CFTC]
bull vertical spread
A strategy used when an investor expects that the price of a commodity will go up but at the same time seeks to limit the potential loss should this judgment be in error. This strategy involves the simultaneous purchase and sale of options of the same class and expiration date but different strike prices. For example, if call options are spread, the purchased option must have a lower exercise or strike price than the sold option. [CFTC]
bull-bear bond
Bond whose principal repayment is linked to the price of another security. The bonds are issued in two tranches: in the first tranche repayment increases with the price of the other security, and in the second tranche repayment decreases with the price of the other security. [Harvey] Bonds whose principle repayment is linked to the price of another security. The bonds are issued in two tranches: In the first the repayment increases with the price of the other security; in the second the repayment decreases with the price of the other security. [WCSU]
bulldog bond
Foreign bond issue made in London. [Harvey][WCSU]
bulldog market
The foreign market in the United Kingdom. [Harvey]
bullet
A maturity schedule structured to have a single payment of the entire principal amount of the issue on the final date the bonds are outstanding, with no mandatory sinking fund redemption. There may be a sinking fund to provide for payment on the single maturity date, perhaps in combination with an understood requirement that the principal amount not covered by sinking fund deposits will have to be refinanced at that time. An example of a bullet would be the $20,000,000 payment on January 15, 1990 on a $20,000,000 issue of bonds which matures in its entirety January 15, 1990. A bullet is a form of term bond. [EPA]
bullet contract
A guaranteed investment contract purchased with a single (one-shot) premium. [Harvey]
bullet loan
A bank term loan that calls for no amortization. [Harvey]
bullet payment
Single final payment, e.g., of a loan (in contrast to payment in installments). [WCSU]
bullet strategy
A strategy in which a portfolio is constructed so that the maturities of its securities are highly concentrated at one point on the yield curve. [Harvey]
bullion
Bars or ingots of precious metals, usually cast in standardized sizes. [CFTC] Precious metals cast into bars or other uncoined form. [NYMEX]
bullion coin
A precious metal coin whose market value is determined by its inherent precious metal content. They are bought and sold mainly for investment purposes. [NYMEX]
bullish, bearish
Words used to describe investor attitudes. Bullish refers to an optimistic outlook while bearish means a pessimistic outlook. [Harvey]
Bundesbank
Established in 1875, the central bank of West Germany, located in Frankfurt. [FRBSF]
bundle
A stack of copper cathodes strapped together for shipping. [NYMEX]
bundling
A trend allowing creation of securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes. [Harvey]
bungalow
A one- or one and one-half story house with low exterior lines. In Chicago, a bungalow is a gable-roofed brick building with two to three bedrooms, a half-sunken basement, and stairs leading to an attic. Most bungalows were built in Chicago in the 1920s. In India, a bungalow is a small cottage with a thatched or tiled roof surrounded by a wide veranda. [OTS]
bunker
A compartment on a ship for storage or fuel. [ITDS]
bunker adjustment factor
An adjustment in shipping charges to offset price fluctuations in the cost of bunker fuel. [ITDS]
bunker c fuel oil
(or bunkering fuel) Fuel used for ships. Generally refers to a No. 6 grade of residual fuel oil with an API gravity about 10.5o. [NYMEX]
bunker fuel
The fuel used to power a ship. [ITDS]
bunny bonds
Multiplier bonds. [WCSU]
buoyant
A market in which prices have a tendency to rise easily with a considerable show of strength. [CFTC]
Bureau of Labor Statistics (BLS)
A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices, and many other variables. [FRBSF]
bureau rate
in some states, a standard rate is established by a rating bureau for all companies writing policies for hazard insurance and for title insurance. [OTS]
business cycles
Periodic swings in the pace of national economic activity, characterized by alternating expansion and contraction phases. [FACS] Repetitive cycles of economic expansion and recession. [Harvey]
business failure
A business that has terminated with a loss to creditors. [Harvey]
business risk
The risk that the cash flow of an issuer will be impaired because of adverse economic conditions, making it difficult for the issuer to meet its operating expenses. [Harvey]
business transfer payments
business, professional, and technical services
An abbreviation for business, professional, and technical services, both receipts and payments. These services cover a wide range of private services sold to or purchased from foreigners, including advertising, telecommunications, data base and other information services, accounting and legal services, among others. [BEA]
butterfly shift
A non-parallel shift in the yield curve involving the height of the curve. [Harvey]
butterfly spread
A three-legged spread in futures or options. In the option spread, the options have the same expiration date but differ in strike prices. For example, a butterfly spread in soybean call options might consist of two short calls at a $6.00 strike price, one long call at a $6.50 strike price, and one long call at a $5.50 strike price. [CFTC] The placing of two interdelivery spreads in opposite directions with the center delivery month common to both spreads. [CBOT][MIDAM]
Buttonwood Agreement
A 1792 trade agreement banding the original 24 brokers in New York together into an investment community. The agreement was named for a Buttonwood tree that served as their informal meeting place on Wall Street. [NYSE]
buy (or sell) on close
To buy (or sell) at the end of the trading session within the closing price range. [CFTC]
buy (or sell) on opening
To buy (or sell) at the beginning of a trading session within the open price range. [CFTC]
buy
(1) to acquire ownership of something in exchange for money. (2) The quality of a purchase, as 'It is a good buy.' [OTS] To purchase an asset; taking a long position. [Harvey]
buy American acts
U.S. federal and state government statutes that give a preference to U.S. produced goods in government contracts. [ITDS]
buy in
To cover, offset or close out a short position. [Harvey]
buy limit order
A conditional trading order that indicates a security may be purchased only at the designated price or lower. [Harvey]
buy on close
To buy at the end of the trading session at a price within the closing range. [Harvey]
buy on margin
A transaction in which an investor borrows to buy additional shares, using the shares themselves as collateral. [Harvey] The act of purchasing securities and paying cash for only a fraction of the purchase price. The remainder of the price is provided by credit extended by the broker to the buyer. [OTS]
buy on opening
To buy at the beginning of a trading session at a price within the opening range. [Harvey]
buy side
An institution who buys services from a broker/dealer, i.e., pays a commission on the execution of an order. [NYSE]
buy-and-hold strategy
A passive investment strategy with no active buying and selling of stocks from the time the portfolio is created until the end of the investment horizon. [Harvey]
buy-back
Another term for a repo. [Harvey]
buy-back agreement
A provision in a real estate sales contract stating that the seller will repurchase the property within a specific period of time, usually for the selling price, for a specific cause such as the purchaser being transferred by his or her employer from the area. [OTS]
buy-sell agreement
A written agreement between a homeowner/borrower, a construction lender and a permanent lender that assigns the mortgage to the permanent lender when the construction is completed. Also called a tri-party agreement. [OTS]
buy-side analyst
A financial analyst employed by a non-brokerage firm, typically one of the larger money management firms that purchase securities on their own accounts. [Harvey]
buydown
A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness. [FRB][FRBC][FRBM][FRBSF] Mortgages in which monthly payments consist of principal and interest, with portions of these payments during the early period of the loan being provided by a third party to reduce the borrower's monthly payments. [Harvey] The practice of a seller, builder or other party advancing money to a mortgage lender resulting in lower monthly mortgage payments by a third party, the homebuyer. As the result of a buydown, monthly mortgage payments may be reduced for the entire life of the mortgage, or for just an initial period of one or more years. Frequently, the amount of the buydown is added to the selling price of the property. [OTS]
buyer's option contract
When the buyer has the right to settle a forward contract at his or her option anytime within a specified period. [FDIC]
buyers market
A condition of the market in which there is an abundance of goods available and hence buyers can afford to be selective and may be able to buy at less than the price that previously prevailed. [CFTC][NYMEX] A market condition characterized by an oversupply of items for sale resulting in lower prices for the buyer. Opposite of a seller's market. [OTS]
buying hedge
Also called a long hedge. Buying futures contracts to protect against possible increased costs of commodities that will be needed in the future. [NYMEX] Hedging transaction in which futures contracts are bought to protect against possible increases in the cost of commodities. [CFTC] also called a long hedge. Term refers to buying futures contracts to protect against a possible increase in the cost of buying commodities that will be needed in future. [OTS]
buying power
money and other liquid assets, plus credit, that is available for spending and consumption of goods and services. [OTS]
buying the index
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the same return. [Harvey]
buyout
Purchase of a controlling interest (or percent of shares) of a company's stock. A leveraged buy-out is done with borrowed money. [Harvey]
bylaws
The regulations that an institution adopts that set forth duties, limit authority and establish orderly procedures for conducting business. [OTS]
bypass trust
An agreement allowing parents to pass assets on to their children to reduce estate taxes. The trust must be made irrevocable, meaning that the terms can never be changed. [UNODC]
cable
A message sent and delivered by an international record carrier via satellite or cable connections to a foreign country. [UNODC] Exchange rate between British pounds sterling and the U.S.$. [Harvey]
cabotage
Coast-wide water transportation, navigation or trade between ports of a nation. [ITDS]
cadastral map
A legal map for recording title to a property. The map indicates legal boundaries and the ownership of the property. [OTS]
calamity provision
A provision for extraordinary optional call of an entire issue in the event of, for example, destruction or loss of the project through fire, calamity, eminent domain or otherwise, or financial hardship due to frustration of purpose. See 'Extraordinary Optional Call'. [EPA]
calendar
List of new issues scheduled to come to market shortly. [Harvey]
calendar effect
The tendency of stocks to perform differently at different times, including such anomalies as the January effect, month-of-the-year effect, day-of-the-week effect, and holiday effect. [Harvey]
calendar spread
An option position comprised of the purchase and sale of two option contracts of the same type that have the same strike prices but different expiration dates. Also known as a Horizontal, or Time, Spread. [NYMEX]
California Bankers Clearing House (CBCH)
CBCH provides check exchange services to over 100 depository institutions located mainly in California [GAO]
call
(1) an option to buy a specific security at a specified price within a designated period. (2) to demand payment of a loan because of the failure of the borrower to comply with the terms of the loan. (3) to demand payment for stocks or bonds that have been purchased or subscribed. [OTS] A demand of payment on a loan, often because of failure on the part of the borrower to comply with conditions of the loan. [ITDS] Actions taken to pay the principal amount prior to the stated maturity date, in accordance with the provisions for 'redemption' stated in the proceedings and on the securities. Often referred to as 'prior redemption'. Compare 'Prepayment'. [EPA] An option that gives the right to buy the underlying futures contract. [Harvey] The right in options contracts to buy underlying securities at a specified price at a specified time. Also refers to provisions in bond contracts that allows issuers to buy back bonds prior to their stated maturity. [SEC]
call account
A deposit account with a financial institution without a fixed maturity date. The deposit can be 'called' (withdrawn) at any time. Call account deposits are usually one to seven day placements, however, two parties can agree on different maturities. [UNODC]
call an option
To exercise a call option. [Harvey]
call cotton
Cotton bought or sold on call. [CFTC]
call date
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond for a specified call price. [Harvey]
call loans
loans used to finance the purchase of securities, and which may be terminated (called) at the discretion of the borrower or the lender on demand. [OTS]
call money
Currency lent by banks on a very short-term basis, which can be called the same day, at one days notice or at two days notice. [ITDS]
call money rate
Also called the broker loan rate, the interest rate that banks charge brokers to finance margin loans to investors. The broker charges the investor the call money rate plus a service charge. [Harvey]
call option
A call option is a contract that gives one the right, but not the obligation, to buy a specified amount of an underlying asset, such as stocks or currency, at a specified price by a certain date. [GAO] A contract that entitles the buyer/taker to buy a fixed quantity of commodity at a stipulated basis or striking price at any time up to the expiration of the option. The buyer pays a premium to the seller/grantor for this contract. A call option is bought with the expectation of a rise in prices. [CFTC] An option contract that gives its holder the right (but not the obligation) to purchase a specified number of shares of the underlying stock at the given strike price, on or before the expiration date of the contract. [Harvey] An option that gives the buyer the right, but not the obligation, to purchase (go 'long') the underlying futures contract at the strike price on or before the expiration date. [CBOT][MIDAM] Option to buy an asset at a specified exercise price on or before a specified exercise date. [WCSU] The buyer of a call option has the right to buy an underlying instrument at a predetermined price during a determined period. The seller of a call option has the obligation to sell, if the option is exercised. [TMAC] The option to buy a given amount of a commodity at a specified price during a specific period of time. Opposite of put option. [OTS]
call premium
(1) Difference between the price at which a company can call its bonds and their face value; (2) price of an option. [WCSU] A dollar amount, usually stated as a percentage of the principal amount of bonds called, paid as a penalty or premium to the investor for the exercise of a call provision. [EPA] Premium in price above the par value of a bond or share of preferred stock that must be paid to holders to redeem the bond or share of preferred stock before its scheduled maturity date. [Harvey]
call price
The price at which a callable bond or security is redeemable. It is used in connection with preferred stocks and debt securities having a fixed redemption value. It is the price the issuer must pay to call in the security and retire it by paying the holder. The call price often exceeds the par, or face value, of the security in order to compensate the holder for the disruption of earnings and the bother of having to reinvest the funds, possibly at a lower rate of return. [OTS] The price for which a bond can be repaid before maturity under a call provision. [Harvey] The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a specified call date. [Harvey]
call protection
A feature of mortgage loans or mortgage-backed securities designed to reduce the risk of an early call, or early prepayment, of a loan or security. Call protection may be accomplished by including prepayment penalties and lock-in periods in mortgages. Call protection also may be achieved by structuring a mortgage-backed security in such a way that if underlying loans are paid earlier than scheduled, the payments are not immediately passed through to the investor holding the mortgage-backed security. Investors and lenders sometimes desire call protection so that their funds will remain invested for the entire planned length of time, providing a consistent cash flow at predictable rates and reducing the premature need to look for new investments. [OTS] A feature of some callable bonds that establishes an initial period when the bonds may not be called. [Harvey]
call provision
A clause in a mortgage giving the lender the right to demand and receive payment of the balance of the unpaid principal in full under certain conditions. A call provision is similar to an acceleration clause. [OTS] An embedded option granting a bond issuer the right to buy back all or part of the issue prior to maturity. [Harvey]
call report
A quarterly report of income and financial condition commercial banks file with their federal and state regulatory agencies. It is equivalent to the quarterly thrift financial report that savings institutions file with the Office of Thrift Supervision. [OTS]
call risk
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision. [Harvey]
call rule
An exchange regulation under which an official bid price for a cash commodity is competitively established at the close of each day's trading. It holds until the next opening of the exchange. [CFTC]
call swaption
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The writer therefore becomes the fixed-rate receiver/floating rate payer. [Harvey]
callable
A bond issue, all or parts of which may be redeemed by the issuing corporation under specified conditions before maturity. The term also applies to preferred shares that may be redeemed by the issuing corporation. [NYSE] A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to call the security. [Harvey] Subject to payment of the principal of the principal amount (and accrued interest) prior to the stated maturity date. [EPA]
callable bond
(A) A type of bond which permits the issuer to pay the obligation before the stated maturity date by giving notice of redemption in a manner specified in the bond contract . (B) A bond subject to repayment prior to the stated maturity date. [EPA]
called
Another term for 'exercised' when the option is a call. The writer of a call must deliver the indicated underlying commodity when the option is exercised or called. [CFTC]
calling officer
A financial institution employee who goes out to call on prospective new customers and on current customers in order to strengthen their affiliation with the institution. [OTS]
camouflage passport
A fake passport ostensibly issued by a country that no longer exists. [UNODC]
Canadian agencies
Agency banks established by Canadian banks in the U.S. [Harvey]
Canadian rollover mortgage
The standard home financing loan in Canada. Like standard mortgages in the U.S., the Canadian rollover mortgage is fully amortizing. However, it differs in that the loan's interest rate is subject to renegotiation every five years, with no limit or cap on how much interest rates, and therefore monthly payments, can increase during the life of the loan. [OTS]
canceled check
A check that has been paid by the financial institution on which it was drawn. It is stamped 'paid' on the day it is paid and it is charged to the account of the person who wrote the check. [OTS]
canceling order
An order that deletes a customer's previous order. [CBOT][MIDAM]
cap
(1) the maximum allowable interest rate increase for adjustable rate mortgages. Caps embedded in mortgage agreements may limit the amount of upward change in the rate of interest at each adjustment period and provide a fixed maximum over which the rate cannot rise during the life of the loan. (2) an agreement negotiated between a buyer and seller. The buyer of a cap agreement pays a fee to the seller. In return, the seller will pay the buyer if a designated floating index rate is higher than a specified fixed rate on designated days. The seller pays nothing If the floating rate is below the fixed rate. Buyers of cap agreements use them to hedge against rising interest rates, because payments to the buyer increase as rates rise. [OTS] A contract between a borrower and a lender where the borrower is assured that he will not have to pay more than some maximum interest rate on borrowed funds. [TMAC] A supply contract between a buyer and seller, whereby the buyer is assured that he will not have to pay more than a given maximum price. This type of contract is analogous to a call option. [NYMEX] An upper limit on the interest rate on a floating-rate note. [Harvey][WCSU]
capacity
The ability of a borrower to repay a debt. It is determined by subtracting total expenses from the total income of the borrower. [OTS] The quantity that can be contained exactly or the rate of flow that can be carried exactly. Also, the load for which a machine, apparatus, station, or system is rated. [EPA]
capacity to contract
Legal competency to make a contract. [ITDS]
capacity utilization rate
The percentage of the economy's total plant and equipment that is currently in production. Usually a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. [FRBSF]
capital
(1) funds raised by a business through the sale of stock plus retained earnings. (2) wealth, including money and property, owned, used, or accumulated by a person or a company. (3) assets minus liabilities equals net worth or capital. [OTS] Money invested in a firm. [Harvey] The existing stock of productive resources, such as machines and buildings, that have been produced. [FACS]
capital account
Net result of public and private international investment and lending activities. [Harvey]
capital adequacy
The capacity of a financial institution's net worth to absorb potential adverse changes in the value of its assets without becoming insolvent. [UNODC]
capital allocation decision
Allocation of invested funds between risk-free assets versus the risky portfolio. [Harvey]
capital asset
A long-term or permanent thing of value used to carry on a business or profession. [OTS]
capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and expected return, and serves as a model for the pricing of risky securities. The CAPM asserts that the only risk that is priced by rational investors is systematic risk, because that risk cannot be eliminated by diversification. The CAPM says that the expected return of a security or a portfolio is equal to the rate on a risk-free security plus a risk premium. [Harvey]
capital budget
A firm's set of planned capital expenditures. [Harvey] A plan of proposed capital outlays and the means of financing them. [EPA] List of planned investment projects, usually prepared annually. [WCSU]
capital budgeting
The process of choosing the firm's long-term capital assets. [Harvey]
capital charges
One of GSP's four components. This component is composed of corporate profits with inventory valuation adjustment (IVA), corporate capital consumption allowances (CCA), business transfer payments, net interest, rental income of persons, and subsidies less current surplus of government enterprises. [BEA]
capital consumption allowances
capital controls
Government restrictions on the acquisition of foreign assets or foreign liabilities by domestic citizens, or the acquisition of domestic assets or domestic liabilities by foreigners. [UNODC]
capital directive
An enforceable order issued by the Office of Thrift Supervision to a savings association requiring the institution to increase its capital to minimum requirements. [OTS]
capital expenditure
Amount used during a particular period to acquire or improve long-term assets such as property, plant or equipment. [Harvey] money spent for additions or improvements to structures or equipment that are used to carry on the activities of an organization or individual. [OTS]
capital flight
The transfer of capital abroad in response to fears of political risk. [Harvey]
capital flows table
Table that expands the gross private fixed investment component of the I?O use table to show the types of equipment and structures used by industry. [BEA]
capital forbearance
The temporary permission for a bank or thrift to operate with capital levels below regulatory standards if the bank or thrift has adequate plans to restore capital. For example, banks suffering because of the energy and agricultural crises in the mid-1980s were permitted to operate with capital levels below regulatory standards if they had adequate plans to restore capital. A joint policy statement issued in March 1986 by the FDIC, the OCC, and the Federal Reserve Board encouraged a capital forbearance program for agricultural banks. [FDIC]
capital gain
Profit made on securities, either through dividends or by selling the securities for a higher price than they originally cost. [NYSE] When a stock is sold for a profit, it's the difference between the net sales price of securities and their net cost, or original basis. If a stock is sold below cost, the difference is a capital loss. [Harvey]
capital gain or loss
The gain or loss incurred from the sale or disposition of assets including securities and real estate. [OTS]
capital gains yield
The price change portion of a stock's return. [Harvey]
capital goods
Manufactured goods that are productive industrial use. [ITDS]
capital improvement
A structure or major piece of equipment built or installed to permanently add value and capacity to property. [OTS]
capital improvement program
A written program of future capital expenditures (usually for five to ten years) and methods for financing them. The CIP is usually adopted by the governing body and updated annually. [EPA]
capital intensive
Production methods with a high quantity of capital per worker. [FACS]
capital lease
A lease obligation that has to be capitalized on the balance sheet. [Harvey]
capital loss
The difference between the net cost of a security and the net sale price, if that security is sold at a loss. [Harvey]
capital loss coverage
A form of aid in assistance transactions that provided for a payment equal to the difference between an asset's original value (book value) and the proceeds received when the asset was sold. [FDIC]
capital market
A financial market in which long-term debt obligations and equity securities are bought and sold. [OTS] Financial market (particularly the market for long-term securities). [WCSU] The market for buying and selling long term loans, in the form of bonds, mortgages, etc. [ITDS] The market for trading long-term debt instruments (those that mature in more than one year). [Harvey] The market in which corporate equity and longer-term debt securities (those maturing in more than one year) are issued and traded. [FRB][FRBC][FRBM][FRBSF]
capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient capital market allows the transfer of assets with little wealth loss. [Harvey]
capital market imperfections view
The view that issuing debt is generally valuable but that the firm's optimal choice of capital structure is a dynamic process that involves the other views of capital structure (net corporate/personal tax, agency cost, bankruptcy cost, and pecking order), which result from considerations of asymmetric information, asymmetric taxes, and transaction costs. [Harvey]
capital market line
The line defined by every combination of the risk-free asset and the market portfolio. [Harvey]
capital market rates
capital outlays
Expenditures which result in the acquisition of or addition to fixed assets. Usually have a useful life of over one year and a cost greater than a threshold value established by the owner. [EPA]
capital plan
A written strategy developed by a thrift institution detailing steps to be taken to increase its capital to at least minimum requirements. [OTS]
capital projects fund
A fund created to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds, Special Assessment Funds, and Trust Funds). [EPA]
capital rationing
Placing one or more limits on the amount of new investment undertaken by a firm, either by using a higher cost of capital, or by setting a maximum on parts of, and/or the entirety of, the capital budget. [Harvey] Shortage of funds that forces a company to choose between projects. [WCSU]
capital stock
All shares representing ownership of a business, including preferred and common. [NYSE] The amount of stock a corporation is authorized to sell by the government authority that grants the corporate charter. Capital stock is sold by the corporation to raise funds to be used to expand or stimulate the business activities of the company. [OTS]
capital structure
Mix of different securities issued by a firm. [WCSU] The makeup of the liabilities and stockholders' equity side of the balance sheet, especially the ratio of debt to equity and the mixture of short and long maturities. [Harvey]
capital surplus
Amounts of directly contributed equity capital in excess of the par value. [Harvey]
capitalism
An economic system based on private ownership of the means of production. Under capitalism, individuals, companies or corporations invest in, own, and share in profits (or losses) of the entities that produce goods, distribute products or provide services. [OTS]
capitalist economies
Economies which use market-determined prices to guide peoples choices about the production and distribution of goods; these economies generally have productive resource which are privately owned. [FACS]
capitalization
(1) the value of authorized or outstanding shares of stock or bonds in a business firm. (2) the process of adding earned but uncollected interest to the loan balance, a practice prohibited in some states. (3) a method of estimating the present value of future income. (4) the total value of an owner's investments in a business. [OTS] Long-term debt, preferred stock plus net worth. [WCSU] The debt and/or equity mix that fund a firm's assets. [Harvey] Total amount of various securities issued by a corporation. Capitalization may include bonds, debentures, preferred and common stock, and surplus. [NYSE]
capitalization method
A method of constructing a replicating portfolio in which the manager purchases a number of the largest-capitalized names in the index stock in proportion to their capitalization. [Harvey]
capitalization rate
The ratio of net rentals from an income property to the market value of the property, expressed as a percentage. In appraising, the capitalization rate is used to judge value for investment purposes and can be compared to the rate of return on other kinds of investments. [OTS]
capitalization ratios
Also called financial leverage ratios, these ratios compare debt to total capitalization and thus reflect the extent to which a corporation is trading on its equity. Capitalization ratios can be interpreted only in the context of the stability of industry and company earnings and cash flow. [Harvey]
capitalization table
A table showing the capitalization of a firm, which typically includes the amount of capital obtained from each source - long-term debt and common equity - and the respective capitalization ratios. [Harvey]
capitalize
(1) to supply with capital. (2) to authorize the sale of a specified amount of capital stock. (3) The accounting treatment of large expenses as part of a firm's assets. Thus, rather than treating an expense as a deduction from the income statement, it is treated as an investment and is expected to generate future income. [OTS]
capitalized
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives greater than one year. [Harvey]
capitalized interest
(A) A portion of the proceeds of a bond issue set aside, upon issuance of the bonds, to pay interest on the bonds for a specified period of time. Interest is often capitalized during the construction period of a revenue-producing project. (B)A dollar amount, set aside from the proceeds of an issue, to pay interest on the issue for a period of time (often during the construction period being financed). [EPA] Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. [Harvey]
capping
Effecting commodity or security transactions shortly prior to an option's expiration date depressing or preventing a rise in the price of the commodity or security so that previously written call options will expire worthless and the premium the writer received will be protected. [CFTC]
captains protest
A document prepared by the captain of a vessel upon arrival in port that notes any unusual conditions encountered during the voyage; relieves the ship owner of liability. [ITDS]
captive insurance company
A wholly owned or controlled subsidiary company established by a non-insurance parent for the purpose of participation in the insurance risks of the parent and its other affiliates or associates. [UNODC]
capture
Converting the credit card authorization amount into a billable transaction record within a batch. Transactions cannot be captured unless previously authorized, and authorizations cannot be captured until the goods or services have been shipped or transmitted to the consumer. [GAO]
car
A loose quantity term sometimes used to describe a the amount of a commodity underlying one commodity contract; e.g., 'a car of bellies.' Derived from the fact that quantities of the product specified in a contract used to correspond closely to the capacity of a railroad car. [Harvey]
card reader replacement/hand held terminal (CRR/HHT)
Wireless devices used to report trades and quotes to the market data system. Also used for supervisory functions relating to Trading Halt, Delay, Indication, etc. [NYSE]
career-average plan
Pension plan offering a pension that depends on the employee's average compensation during his or her years of membership (a final average plan). [WCSU]
cargo
Merchandise hauled by transpiration lines. [ITDS]
cargo agent
An agent appointed by an airline shipping line to solicit and process international air and ocean freight for shipments. [ITDS]
cargo manifest
A list of a ships cargo or passengers but without a listing of charges. [ITDS]
cargo selectivity system
An ACS module which is used to sort high risk cargo from low risk cargo and to determine the type of examination required. [ITDS]
cargo tonnage
The weight of a shipment or of ships total cargo expressed in tons. [ITDS]
Caribbean Development Bank (CDB)
The CDB was established 18 October 1969 to promote economic development and cooperation. It is located in St. Michael, Barbados. [UNODC]
Caribbean Financial Action Task Force (CFATF)
endorsed the original 40 recommendations of FATF, which were amended in 1996, as well as issued the 19 Aruba Recommendations in June 1990. [UNODC]
carnet
A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries (for display, demonstration, or similar purposes) without paying duties or posting bonds. [ITDS]
carrier
A legal entity that is in the business of transporting passengers or goods for hire. [ITDS]
carriers certificate
A document issued by the shipping company which certifies the ownership of the goods to a named individual. [ITDS]
carring costs
Costs that increase with increases in the level of investment in current assets. [Harvey]
carrying broker
A member of a commodity exchange, usually a futures commission merchant, through whom another broker or customer elects to clear all or part of its trades. [CFTC]
carrying charge
(1) the part of the finance charge levied by most creditors to cover administrative costs of loaning money, such as billing, statement mailing costs, and bad debt losses. (2) costs incurred in order to hold title to property that is idle, non-productive, or in an interim use. (3) charges added to the price of goods or services to compensate for deferred payment. (4) fees charged by investment brokers for handling margin accounts. [OTS] For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of funds necessary to buy the instrument. Also referred to as cost of carry or carry. [CBOT][MIDAM] The total cost of storing a physical commodity over a period of time. Includes storage charges, insurance, interest, and opportunity costs. [NYMEX]
carrying value
Book value. [Harvey]
carryover
Grain and oilseed commodities not consumed during the marketing year and remaining in storage at year's end. These stocks are 'carried over' into the next marketing year and added to the stocks produced during that crop year. [CBOT][MIDAM]
cartage agent
A ground service which provides transport and delivery of freight in areas not directly served by air or ocean. [ITDS]
cartel
A collection of independent producers formed to regulate production, pricing, and marketing of members to maximize market power and limit competition. [ITDS]
cash
(1) coins or negotiable paper issued by governments as well as the balance in demand deposit accounts. For accounting purposes, cash includes money in the cash drawer, the vault, petty cash and checking account deposits in thrift institutions or banks. (2) the process of presenting a check for payment: literally of converting a check to cash. [OTS] An asset account reflecting currency, coin, checks, postal and express money orders, and bankers' drafts on hand or on deposit with an official or agent designated as custodian of cash and bank deposits. All cash must be accounted for as a part of the fund to which it belongs. Any restrictions or limitations as to its availability must be indicated in the records and statements. It is not necessary, however, to have a separate bank account for each fund unless required by law. [EPA] The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and Banker's Acceptances. Cash equivalents on balance sheets include securities (e.g., notes) that mature within 90 days. [Harvey]
cash account
A type of account with a broker-dealer in which the customer agrees to pay the full amount due for the purchase of securities within a short period of time, usually three business days. [SEC]
cash and carry
Purchase of a security and the multaneous sale of a future, with balance being financed with loan or repo. [Harvey][WCSU]
cash and equivalents
The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and Banker's Acceptances. Cash equivalents on balance sheets include securities (e.g., notes) that mature within 90 days. [Harvey]
cash basis
A basis of accounting under which transactions are recognized only when cash changes hands. [EPA]
cash basis accounting
A method of accounting in which income and expense items are recorded and recognized when cash is received or disbursed. Opposite of accrual basis accounting. [OTS]
cash budget
A forecasted summary of a firm's expected cash inflows and cash outflows as well as its expected cash and loan balances. [Harvey] Forecast of sources and uses cash. [WCSU]
cash commodity
An actual physical commodity someone is buying or selling, e.g., soybeans, corn, gold, silver, Treasury bonds, etc. Also referred to as actuals. [CBOT][MIDAM] The actual physical commodity, as distinguished from a futures contract. [Harvey] The actual, physical commodity. Sometimes called a Spot Commodity or Actuals. [NYMEX] The physical or actual commodity as distinguished from the futures contract. [CFTC]
cash concentration and disbursement (CCD)
A format for ACH payments. [ACH]
cash contract
A sales agreement for either immediate or future delivery of the actual product. [CBOT][MIDAM]
cash conversion cycle
The length of time between a firm's purchase of inventory and the receipt of cash from accounts receivable. [Harvey]
cash cow
A company that pays out all earnings per share to stockholders as dividends. Or, a company or division of a company that generates a steady and significant amount of free cash flow. [Harvey]
cash cycle
In general, the time between cash disbursement and cash collection. In net working capital management, it can be thought of as the operating cycle less the accounts payable payment period. [Harvey]
cash deficiency agreement
An agreement to invest cash in a project to the extent required to cover any cash deficiency the project may experience. [Harvey]
cash delivery
The provision of some futures contracts that requires not delivery of underlying assets but settlement according to the cash value of the asset. [Harvey]
cash discount
An incentive offered to purchasers of a firm's product for payment within a specified time period, such as ten days. [Harvey]
cash dividend
A dividend paid in cash to a company's shareholders. The amount is normally based on profitability and is taxable as income. A cash distribution may include capital gains and return of capital in addition to the dividend. [Harvey]
cash equivalents
A short-term security that is sufficiently liquid that it may be considered the financial equivalent of cash. [Harvey] Short-term investments, like U.S. treasury securities, certificates of deposit, and money market fund shares, which can be readily converted into cash. [UNODC]
cash flow
In investments, it represents earnings before depreciation, amortization and non-cash charges. Sometimes called cash earnings. Cash flow from operations (called funds from operations) by real estate and other investment trusts is important because it indicates the ability to pay dividends. [Harvey] Reported net income of a corporation plus amounts charged for depreciation, depletion, amortization, extraordinary charges to reserves, which are bookkeeping deductions and not paid out in actual dollars and cents. [NYSE] The amount of cash earned after paying all expenses and taxes. Cash flow is calculated by adding: net after-tax income plus any bookkeeping expenses that result in items being deducted but not paid out in cash. Such bookkeeping entries include amounts charged off for depreciation, depletion, amortization, and charges to reserves. Cash flow is a measure of a company's worth and its ability to pay dividends on its stock. [OTS]
cash flow after interest and taxes
Net income plus depreciation. [Harvey]
cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments, preferred stock dividends, and rental payments) are covered by earnings before interest, taxes, rental payments, and depreciation. [Harvey]
cash flow forecasting
The process of identifying and/or estimating all known future cash receipts and obligations, and calculating cash balances for each future date in order to cover shortfalls and invest surpluses. [TMAC]
cash flow from operations
A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus non-cash expenses that were deducted in calculating net income. [Harvey]
cash flow matching
Also called dedicating a portfolio, this is an alternative to multiperiod immunization in which the manager matches the maturity of each element in the liability stream, working backward from the last liability to assure all required cash flows. [Harvey]
cash flow per common share
Cash flow from operations minus preferred stock dividends, divided by the number of common shares outstanding. [Harvey]
cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period. [Harvey]
cash investment
The underlying security for which futures are traded. [OTS]
cash letter
A cash letter is a group of checks, accompanied by a listing of the checks, which is sent to a clearing house, a correspondent bank, or the Federal Reserve for collection. [GAO]
cash letter of credit
A letter addressed from one bank to a correspondent bank making available to the party named in the letter a fixed sum of money up to a future specific date. The sum indicated in the letter is equal to an amount deposited in the issuing bank by the party before the letter is issued. [FDIC]
cash management bill (CMB)
Very short maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days. [Harvey] Very-short-maturity bills that the Treasury sells on an irregular basis to bridge low points in the Treasury's cash balance. [FRBSF]
cash market
A market in which the delivery of commodities or securities occurs immediately after the sale. Also called a spot market. [OTS] A place where people buy and sell the actual commodities, i.e., grain elevator, bank, etc. [CBOT][MIDAM] Also called spot markets, these are markets that involve the immediate delivery of a security or instrument. [Harvey] The market for a cash commodity where the actual physical product is traded. [NYMEX] The market for the cash commodity (as contrasted to a futures contract), taking the form of: (1) an organized, self-regulated central market (e.g., a commodity exchange); (2) a decentralized over-the-counter market; or (3) a local organization, such as a grain elevator or meat processor, which provides a market for a small region. [CFTC]
cash method of accounting
A system, used especially in computing income tax, in which income is not credited until it is actually or constructively received and expenses are not charged until they have been paid; to be distinguished from the accrual method, in which income is credited when the legal right to the income occurs and expenses are charged when the legal liability becomes enforceable. [FRBSF]
cash offer
A public equity issue that is sold to all interested investors. [Harvey]
cash price
The price in the marketplace for actual cash or spot commodities to be delivered via customary market channels. [CFTC]
cash ratio
The proportion of a firm's assets held as cash. [Harvey]
cash sale
A transaction on the floor of the Stock Exchange that calls for delivery of the securities the same day. In 'regular way' trades, the seller is to deliver on the third business day, except for bonds, which are the next day. [NYSE]
cash settlement
A way of settling some futures and options contracts. The seller pays the buyer the cash value of the underlying interest. [TMAC] Transactions generally involving index-based futures contracts that are settled in cash based on the actual value of the index on the last trading day, in contrast to those that specify the delivery of a commodity or financial instrument. [CBOT][MIDAM]
cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving the delivery of the underlying. [Harvey]
cash transaction
A transaction where exchange is immediate, as contrasted to a forward contract, which calls for future delivery of an asset at an agreed-upon price. [Harvey]
cash-deficiency arrangement
Arrangement whereby a project's shareholders agree to provide the operating company with sufficient net working capital. [WCSU]
cash-equivalent items
Temporary investments of currently excess cash in short-term, high-quality investment media such as treasury bills and Banker's Acceptances. [Harvey]
cash-flow break-even point
The point below which the firm will need either to obtain additional financing or to liquidate some of its assets to meet its fixed costs. [Harvey]
cash-out merger
A merger in which the acquiring company buys the stock of the target company for cash, in effect cashing out the stock of the company being absorbed. This is a variation of a traditional merger in which shareholders of the target company trade in their stock for stock in the acquiring company. By paying cash, the acquiring company reduces its capital by the amount of the cash-out, but gains the assets of the target company. In a cash-out merger, shareholders of the target company have no interest in the company that results from the merger. [OTS]
cash-surrender value
An amount the insurance company will pay if the policyholder ends a whole life insurance policy. [Harvey]
cashier's check
A check written by a bank or thrift institution on its own funds and signed by a cashier. It is payable to a third party named by the customer who pays for the check at the time it is written. A cashier's check, which is drawn against the funds of the institution itself, differs from a certified check, which is drawn against the funds in a specific depositor's account. [OTS]
cashout
Refers to a situation where a firm runs out of cash and cannot readily sell marketable securities. [Harvey]
casinghead gas
Gas present in an oil well that is removed when it flows to the surface at the well's casing. [NYMEX]
casus major
A major casualty that is usually accidental, such as flood or shipwreck. [ITDS]
cat
A U.S. Treasury bond reissued by Solomon Brothers as a series of zero-coupon bonds. [WCSU]
category groups
Groupings of controlled products. [ITDS]
cathode
A flat rectangular piece of metal which has been refined by electrolysis. Copper is commonly traded and delivered in this form. [NYMEX]
caveat
Latin for 'let him beware.' In real estate transactions, it is a formal warning against the performance of specified acts. [OTS]
caveat emptor
Latin for 'let the buyer beware.' It refers to the sale of something of value, without a warranty from the seller. The buyer takes all risk of any loss in case of defects in the item sold. [OTS] The purchaser buys at his own risk. [ITDS]
caveat subscriptor (or caveat venditor)
Latin for 'let the seller beware.' It refers to the sale of something of value in which the seller does not disclaim responsibility prior to the sale. In this situation, the seller assumes liability to the buyer for any deviations from the specifications stated in the written sales contract. [OTS]
cease-and-desist order
A formal demand from the Office of Thrift Supervision, other government agency, or court, to a person or institution ordering an immediate halt to a specified activity. An OTS cease and desist order is a formal enforcement action. If the respondent does not challenge the issuance of the order, it is called a consent cease and desist order. [OTS] An order issued after notice and opportunity for hearing, requiring a depository institution, a holding company, or a depository institution official to terminate unlawful, unsafe, or unsound banking practices. Cease-and-desist orders are issued by the appropriate federal regulatory agencies under the Financial Institutions Supervisory Act and can be enforced directly by the courts. [FRB][FRBC][FRBM][FRBSF]
CEDEL
A centralized clearing system for eurobonds. Also Euroclear. [WCSU]
cell
The on board storage space for one shipping container on a ship. [ITDS]
census interface
An ACS module that captures US Bureau of Census data. [ITDS]
cent
The United States coin with the lowest value. It is equal to one one-hundredth of a dollar ($0.01). [OTS]
centare
A metric unit that equals one square meter, or 10.75 square feet. An are has 100 centares, and 100 ares equal one hectare. Also spelled centiare. [OTS]
Center for Latin American Monetary Studies (CEMLA)
Founded in September 1952 as a school to train Latin American central bank personnel. Aims are to increase understanding of monetary, central banking and bank supervision questions in Latin America, particularly with regard to financial policies; undertake research and synthesize the experience acquired in these fields; and to help in training personnel of central banks and other financial institutions [UNODC]
central american common market
An economic union composed of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. [FDIC]
central bank
An institution with the sole right to issue bank notes and power to dictate the monetary policy for a currency zone. [ITDS] Principal monetary authority of a nation, which performs several key functions, including issuing currency and regulating the supply of credit in the economy. The Federal Reserve is the central bank of the United States. [FRB][FRBC] The principal monetary authority of a nation, a central bank performs several key functions, including issuing currency and regulating the supply of credit in the economy. The Federal Reserve is the central bank of the United States. [FRB][FRBM][FRBSF]
central bank intervention
Direct action by a central bank to increase or decrease the supply of its currency to stabilize prices in the spot or forward market or move them in a desired direction. On occasion the announcement of an intention to intervene night achieve the desired results. [FDIC] In order to influence market conditions or exchange rate movements, central banks buy or sell their currency or the currency of other countries. [FRB][FRBM] Influence on exchange rates in the foreign exchange market when exchange rates are not fixed by law; i.e., a central bank buys its countrys currency with foreign currencies to drive its currency up in value; to drive it down, a central bank sells its currencies in return for foreign currencies. [FACS] The buying or selling of currency, foreign or domestic, by central banks, in order to influence market conditions or exchange rate movements. [FRBSF]
central information file (CIF)
A master file maintained by the ACH containing information on each depository financial institution. This file includes the depository financial institution's name, transit routing number, address, settlement and delivery information and output medium requested. [ACH]
Central Registration Depository (CRD)
Provides information on securities sales representatives and supervisory personnel. This data base is compiled from application forms, Exchange developed examinations, reported enforcement actions, and related information. The NASD owns the CRD system and its facilities, operating them on behalf of the NYSE, state regulators, and other users. [NYSE]
central standard time (CST)
certainty equivalent
An amount that would be accepted in lieu of a chance at a possible higher, but uncertain, amount. [Harvey]
certificate
(1) a piece of paper that is evidence of ownership. A stock certificate is evidence of ownership of one or more shares of a corporation. A savings certificate is evidence that the holder owns a savings account, usually one in which a fixed amount of funds is deposited for a specified term. (2) a form of paper money. It is a receipt for silver or gold held by the government. U.S. silver certificates are the best known. The privilege to redeem the paper certificate for the gold or silver backing it was revoked by Congress on June 14, 1968. (3) any written or printed document that can be used as proof of a fact. [OTS] The actual piece of paper that is evidence of ownership of stock in a corporation. Watermarked paper is finely engraved with delicate etchings to discourage forgery. [NYSE]
certificate account
A savings account in which the depositor is issued a certificate of deposit that states the amount of funds deposited, the rate of interest to be paid, and the minimum length of time the certificate must be held in order to collect that interest. Certificate accounts generally pay higher interest than regular passbook or statement accounts. The customer is charged a penalty for premature withdrawal of the funds originally deposited. [OTS]
certificate of claim
A written agreement to reimburse a lender for certain costs incurred in the event of a foreclosure, contingent on proceeds from the sale of the foreclosed property being sufficient to cover these costs. [OTS]
certificate of completion
A document issued by an architect or engineer stating that a construction project has been completed in accordance with approved terms, conditions, plans and specifications. [OTS]
certificate of conformance in financial reporting program
A voluntary program administered by MFOA to encourage governments to publish efficiently organized and easily readable CAFRs and to provide peer recognition and technical assistance to the finance officers preparing them. [EPA]
certificate of deposit (CD)
A certificate providing evidence of a bank time deposit. [WCSU] A form of time deposit at a bank or savings institution which cannot be withdrawn before a specified maturity date without being subject to an interest penalty for early withdrawal. Small-denomination CDs are often purchased by individuals. Large CDs of $100,000 or more are often in negotiable form, meaning they can be sold or transferred among holders before maturity. [FRBSF] A form of time deposit at a bank or savings institution; a time deposit cannot be withdrawn before a specified maturity date without being subject to an interest penalty for early withdrawal. Small-denomination CDs are often purchased by individuals. Large CDs of $100,000 or more are often in negotiable form, meaning they can be sold or transferred among holders before maturity. [FRB][FRBC][FRBM] A negotiable instrument issued by a bank and payable to the bearer. CDs pay a stated amount of interest and mature on a stated date, but may be bought and sold daily in a secondary market. [UNODC] A time deposit with a specific maturity evidenced by a certificate. [CBOT][MIDAM] A time deposit with a specific maturity evidenced by a certificate. Large-denomination CDS are typically negotiable. [CFTC] Also called a time deposit, this is a certificate issued by a bank or thrift that indicates a specified sum of money has been deposited. A CD bears a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years. [Harvey] An agreement with a bank that you will leave your money on deposit for a specified period of time in return for a specific amount of interest. [NYSE] The certificate issued to a depositor who opens a certificate account. The certificate is the written document issued by the financial institution as evidence of a deposit. It includes the issuer's promise to return the deposit at a specified future date plus earnings at a specified rate of interest. [OTS]
certificate of inspection
A certificate issued by an independent third party verifying the condition of cargo (or of other property). [ITDS]
certificate of occupancy
A written authorization given by a local government that allows a newly completed or substantially completed structure to be inhabited. [OTS]
certificate of origin
A document issued by the exporter certifying the place of origin of the merchandise to be exported. The information contained in this document is needed primarily to comply with tariff laws that may extend more favorable treatment to products of certain countries. [FDIC]
certificate of title
A document showing ownership, usually of real property, an automobile, or recreational vehicle, giving a description of the thing owned and any liens against the property. [OTS]
certificate of weight
A document stating the weight of a shipment. [ITDS]
certification
Official proof of authenticity. [ITDS]
certification authority digital signature (CADS)
relying party uses certificate manufactored by a certification authority to obtain the public key for digital signature authentication [misc]
certified check
A check drawn on funds in a depositor's account that have been set aside to pay the check on demand. The face of the check bears the words 'certified,' or 'accepted,' and is signed by an official of the bank or thrift institution issuing the check to signify that (1) the signature of the drawer is genuine and that (2) sufficient funds are on deposit and earmarked for payment of the check. [OTS]
certified public accountant (CPA)
A designation given to accountants who have passed a qualifying examination and met certain educational and public accounting experience requirements established by a state licensing authority. [OTS]
certified thrift regulator (CTR)
The designation given an examiner, supervisor or other employee of the Office of Thrift Supervision who has completed education and experience requirements. [OTS]
cession of goods
A surrender of goods. [ITDS]
cetane number
A measure of the ignitability of diesel fuel. Diesel fuel generally has to meet a cetane number specification of 40. As a measure of performance, the cetane number serves a similar purpose as does the octane number of gasoline. [NYMEX]
chain
A measure of length equal to 66 feet. [OTS]
chain of title
The history of all the documents that have transferred title to a parcel of real property starting with the earliest existing document and ending with the most recent. [OTS]
change
money returned from the seller to the buyer when the buyer gives a sum of money greater than the purchase price. The change is the difference between the selling price plus taxes, fees or other charges, and the greater amount of money tendered by the buyer. [OTS]
change in demand
A shift in the entire demand curve so that at any given price, people will want to buy a different amount. A change in demand is caused by some change other than a change in the goods price. [FACS]
change in quantity demanded
Movement up or down a given demand curve caused by a change in the goods price with no shift in the curve itself. [FACS]
change in quantity supplied
A price change causing movement along the supply curve but no shift in the position of the curve itself. [FACS]
change in supply
A change in one of the cost determinants of supply causing a shift in the position of the supply curve. [FACS]
change order
A change in the original construction plans ordered by the owner or the general contractor. [OTS]
changer
A clearing member of both the Mid-America Commodity Exchange (MCE) and another futures exchange who, for a fee, will assume the opposite side of a transaction on the MCE by taking a spread position between the MCE and another futures exchange which trades an identical, but larger, contract. Through this service, the changer provides liquidity for the MCE and an economical mechanism for arbitrage between the two markets. [CFTC]
changes in financial position
Sources of funds internally provided from operations that alter a company's cash flow position: depreciation, deferred taxes, other sources, and capital expenditures. [Harvey]
characteristic line
The market model applied to a single security. The slope of the line is a security's beta. [Harvey]
charge
(1) a cost or expense. (2) to purchase on credit. (3) a judge's instruction to a jury. [OTS]
charge account
A line of credit that may be used repeatedly up to a stated limit of credit. [OTS]
charge-off
A book value amount that was expensed as a loss before receivership and that continues to be a legal obligation of the borrower to the institution. A charge-off is technically an off-book memorandum accounting item that represents the book value of an asset that the bank or thrift previously wrote off. [FDIC]
chargeable weight
The weight of a shipment used in determining freight charges. [ITDS]
chargeback
A credit card purchase disputed by the credit cardholder and the amount of the transaction is subsequently 'charged back' to the merchant. [misc]
charitable lead trust
A trust established for the benefit of a charitable organization under which the settlor receives income from an asset for a set number of years or for the life of the settlor. Upon termination of the trust, the asset reverts to the settlor or designated heirs. This type of trust reduces estate taxes and permits heirs to retain control of the assets in the trust. [UNODC]
charitable remainder trust
A trust established for the benefit of a charitable organization under which the charitable organization receives income from an asset for a set number of years or for the settlor's lifetime. Upon termination of the trust, assets revert to the settlor or designated heirs. [UNODC]
charter
The legal authorization to conduct business granted by the federal or state government to a thrift institution or other business or organization. [OTS]
charter party
A contract, expressed in writing on a special form, between the owner of a vessel and the one (the charterer) desiring to employ the vessel setting forth the terms of the arrangement such as freight rate and ports involved in the trip contemplated. [FDIC]
charter service
Temporary hiring of an aircraft for the transportation of cargo or passengers. [ITDS]
chartered ship
A ship leased by its owner for a stated time, voyage, or voyages. [ITDS]
chartering authority
A state or federal agency that grants charters to new depository institutions. For state chartered institutions, the chartering authority is usually the state banking department; for national banks, it is the OCC; and for federal savings institutions, it is the OTS. [FDIC]
charting
The use of charts to analyze market behavior and anticipate future price movements. Those who use charting as a trading method plot such factors as high, low, and settlement prices; average price movements; volume; and open interest. Two basic price charts are bar charts and point-and-figure charts. [CBOT][MIDAM] The use of graphs and charts in the analysis of market behavior, so as to plot trends of price movements, average movements of price, volume, and open interest, in the hope that such graphs and charts will help one to anticipate and profit from price trends. Contrasts with Fundamental Analysis. [NYMEX] The use of graphs and charts in the technical analysis of futures markets to plot trends of price movements, average movements of price, volume of trading and open interest. [CFTC]
chartist
Technical trader who reacts to signals derived from graphs of price movements. [CFTC]
chassis
A special trailer or undercarriage on which containers are moved over the road. [ITDS]
chattel
personal property. All property that is not real property (owned real estate). [OTS]
chattel mortgage
A loan secured by personal property rather than real estate. [OTS]
cheap
Colloquialism implying that a commodity is underpriced. [CBOT][MIDAM]
cheapest-to-deliver
A method to determine which particular cash debt instrument is most profitable to deliver against a futures contract. [CBOT][MIDAM] Usually refers to the selection of bonds deliverable against an expiring bond futures contract. [CFTC]
cheapest-to-deliver issue
The acceptable Treasury security with the highest implied repo rate; the rate that a seller of a futures contract can earn by buying an issue and then delivering it at the settlement date. [Harvey]
check
A check is a written order from one party (the payor) to another party (the payee) requiring the payor to pay a specified sum on demand to the payee or to a third party specified by the payee. [GAO] A written order instructing a thrift institution or bank to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment. [OTS]
check clearing
Check clearing is the movement of a check from the depository institution at which it was deposited back to the institution on which it was written. The funds move in the opposite direction, with a corresponding credit and debit to the involved accounts. [GAO] The movement of checks from the banks or other depository institutions where they are deposited back to those on which they are written, and funds movement in the opposite direction. This process results in credits to the accounts at the institutions of deposit and corresponding debits to the accounts at the paying institutions. The Federal Reserve participates in check clearing through its nationwide facilities, though many checks are cleared by private sector arrangement. [FRB][FRBC][FRBM][FRBSF]
check credit
A line of credit that customers can access by writing a check, up to a preapproved loan limit. Also called overdraft protection. [OTS]
check kiting
Occurs when a depositor with accounts at two or more banks draws checks against the uncollected balance at one bank to take advantage of the float-that is, the time required for the bank of deposit to collect from the paying bank; and the depositor initiates the transaction with the knowledge that sufficient collected funds will not be available to support the amount of the checks drawn on all of the accounts. [UNODC]
check truncation
Check truncation is the practice of holding a paper check at the bank at which it was deposited (or at an intermediary bank) and electronically forwarding the essential information on the check to the bank on which it was written. A truncated check is not returned to the writer. [GAO]
checking account
A demand deposit account, withdrawals from which may be made by a written, negotiable instrument. [OTS]
cherry-pick
The tendency of an asset manager to dispose of the assets in a portfolio that are relatively easy to sell before disposing of the hard-to-sell assets; a P&A variation in which no loans are transferred as of closing but the acquiring institution has an option to acquire loans from the FDIC for a designated time period. [FDIC]
Chicago Board of Trade (CBOT) (CBT)
Chicago Board Options Exchange (CBOE)
Chicago Clearing House Association (CCH)
CCH provides check exchange services to its 8 member banks and its 260 affiliate members. [GAO]
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary functions are to provide a location for trading futures and options, collect and disseminate market information, maintain a clearing mechanism and enforce trading rules. [Harvey]
Chicago Stock Exchange (CHX)
chinese wall
Communication barrier between financiers (investment bankers) and traders. This barrier is erected to prevent the sharing of inside information that bankers are likely to have. [Harvey]
choice
The act of selecting among alternatives, a concept crucial to economics. [FACS]
churning
Excessive trading of a client's \ account in order to increase the broker's commissions. [Harvey] Excessive trading of an account by a broker with control of the account for the purpose of generating commissions while disregarding the interests of the customer. [CFTC] slang for excessive trading in a customer's account by a broke. [OTS]
Cincinnati Stock Exchange (CSE)
circle
Underwriters, actual or potential, often seek out and 'circle' investor interest in a new issue before final pricing. The customer circled basically made a commitment to purchase the issue if it comes at an agreed-upon price. In the latter case, if the price is other than that stipulated, the customer supposedly has first offer at the actual price. [Harvey]
circuit breaker
A state income tax credit for property taxes paid by elderly or low-income persons. [OTS]
circus swap
A fixed rate currency swap against floating U.S. dollar LIBOR payments. [Harvey]
city gate
Generally refers to the location at which gas changes ownership or transportation responsibility from a pipeline to a local distribution company or gas utility. [NYMEX]
city terminal service
A service provided by some airlines that involves transporting cargo to in town terminals at lower rates than charged for door to door delivery. [ITDS]
civil law
The code regulating conduct between private persons. It is to be distinguished from criminal law, which regulates individual conduct and is enforced by the government. Under civil law, the government provides the forum for the settlement of disputes between private parties in such matters as contracts, domestic relations, business relations and auto accidents. In a civil suit the government may be either the plaintiff or defendant. In a criminal case the government is always the prosecution. [UNODC]
civilian labor force
All persons over the age of sixteen who are not in the armed forces nor institutionalized and who are either employed or unemployed. [FACS]
claim
A demand of payment of money or property. [ITDS] An assertion of the indebtedness of a failed institution to a depositor, general creditor, subordinated debt holder, or shareholder. [FDIC]
claim dilution
A reduction in the likelihood one or more of the firm's claimants will be fully repaid, including time value of money considerations. [Harvey]
claimant
A party to an explicit or implicit contract. [Harvey]
class of options
A class of options consists of options that are of the same type and style and cover the same underlying asset. [GAO] All call options, or all put options, exercisable for the same underlying futures contract and which expire on the same expiration date. [NYMEX] Options of the same type (i.e., either puts or calls, but not both) covering the same underlying futures contract or physical commodity (e.g., a March call with a strike price of 62 and a May call with a strike price of 58). [CFTC]
class of service
A utility's sales categories such as residential, commercial, industrial, other, and sales for resale. [NYMEX]
classification
The categorization of merchandise. [ITDS]
classification of assets
The process of identifying a loan that is not being repaid on schedule and designating it as one of three types of troubled loans: substandard, doubtful or loss. An asset classified substandard has at least one well-defined weakness such as being under capitalized, or not protected by the paying capacity of the borrower or the worth of the pledged collateral. A doubtful classification means an asset that has all of the weaknesses of a doubtful asset plus other characteristics that make collection or liquidation highly questionable and improbable, but still possible. As asset classified loss is considered uncollectible and of such little value that its continuance as an asset on the books of a thrift institution is not warranted. Designating an asset to one of these categories is called classifying an asset. [OTS]
classified assets
An asset that is designated as substandard, doubtful, or subject to loss. An asset becomes classified when it is so designated by the appropriate regulatory agency. [FDIC] assets, generally loans, for which payments are not being made on time. Such assets are classified as substandard, doubtful or loss. [OTS]
classified loan
A loan that is not being repaid on time and has been designated a troubled asset. [OTS]
claused bill of lading
A notation on the bill of lading which denotes a deficient condition of the goods or packaging. [ITDS]
clean bank P&A
A purchase and assumption transaction in which the acquiring institution assumes the deposit liabilities and the cash and cash equivalent assets of the failed institution. In addition, the assuming bank purchases the 'good' loans of the failed institution or receives an exclusive call option to purchase designated fixed assets and assume certain contracts of the failed institution. [FDIC]
clean bill of lading
A bill of lading received by the carrier for goods delivered in 'apparent good order and condition. [ITDS]
clean cargo
Refined products such as kerosene, gasoline, home heating oil, jet fuel carried by tankers, barges and tank cars. All refined products except bunker fuels, residual fuel oil, asphalt and coke. [NYMEX]
clean draft
A sight or time draft to which no other documents such as shipping documents, bills of lading, or insurances certificates eve attached. [FDIC]
clean opinion
An auditor's opinion reflecting an unqualified acceptance of a company's financial statements. [Harvey]
clean price
Bond price excluding accrued interest. [Harvey]
clear
The process by which a clearinghouse maintains records of all trades and settles margin flow on a daily mark-to-market basis for its clearing member. [CBOT]
clear a position
To eliminate a long or short position, leaving no ownership or obligation. [Harvey]
clear title
title to property that is marketable by virtue of its title being free from demands or claims by other parties and not encumbered in any other manner. [OTS]
clearance
Clearance is the process of transmitting, reconciling, and in some cases, confirming payment orders or security transfer instructions prior to settlement, possibly including the netting of instructions and the establishment of final positions for settlement. In the context of securities markets, this process is often referred to as clearance. [GAO] The completion of customs entry requirements which results in the release of goods to the importer. [ITDS]
clearing
The procedure through which the clearing house or association becomes the buyer to each seller of a futures contract, and the seller to each buyer, and assumes responsibility for protecting buyers and sellers from financial loss by assuring performance on each contract. [CFTC]
clearing account
A bank account used by a mortgage servicing company for the temporary, short-term deposit of mortgage payments that have been collected and are either awaiting transmittal to investors who bought the mortgages or awaiting deposit in escrow accounts. [OTS]
clearing agent bank
Clearing agent banks are Fedwire participants that are regularly engaged in the business of providing clearing services in eligible securities for members and GSCC. [GAO]
clearing corporation
clearing house
(1) an agency operated by financial organizations to exchange and pay checks drawn on each other. (2) an organization connected with a commodity exchange through which all futures contracts are reconciled, settled, guaranteed, and later either offset or fulfilled through delivery of the commodity, and through which financial settlements are made. [OTS] A clearing house is a voluntary association of depository institutions that facilitates the exchange of payment transactions such as checks, automated clearinghouse transactions, and large-value funds transfers and the settlement of participants' net debit or credit positions. [GAO] An adjunct to a futures exchange through which transactions executed its floor are settled by a process of matching purchases and sales. A clearing organization is also charged with the proper conduct of delivery procedures and the adequate financing of the entire operation. [Harvey] An adjunct to, or division of, a commodity exchange through which transactions executed on the floor of the exchange are settled. Also charged with assuring the proper conduct of the exchange's delivery procedures and the adequate financing of the trading. [CFTC] An agency or separate corporation of a futures exchange that is responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery, and reporting trading data. Clearinghouses act as third parties to all futures and options contracts; acting as a buyer to every clearing member seller and a seller to every clearing member buyer. [CBOT][MIDAM] An exchange-associated body charged with the function of insuring the financial integrity of each trade. Orders are 'cleared' by means of the clearinghouse acting as the buyer to all sellers and the seller to all buyers. [NYMEX] An institution where mutual claims are settled between accounts of member depository institutions. Clearinghouses among banks have traditionally been organized for check-clearing purposes, but more recently have cleared other types of settlements, including electronic fund transfers. [FRB][FRBC][FRBM][FRBSF]
Clearing House Automated Payments System
A computerized clearing system for sterling funds that began operations in 1984. It includes 14 member banks, nearly 450 participating banks, and is one of the clearing companies within the structure of the Association for Payment Clearing Services (APACS). [Harvey]
Clearing House Electronic Check Clearing System (CHECCS)
clearing house funds
Funds used in settlement of a transaction available for use after one business day. [FDIC]
Clearing House Interbank Payment System (CHIPS)
An automated clearing system used primarily for international payments. This system is owned and operated by the New York Clearinghouse banks and engages Fedwire for settlement. [FRB][FRBC][FRBM][FRBSF] An international wire transfer system for high-value payments operated by a group of major banks. [Harvey] CHIPS is a private-sector electronic funds transfer system run by the New York Clearing House Association (NYCHA) [GAO]
clearing margin
Financial safeguards to ensure that clearing members (usually companies or corporations) perform on their customers' open futures and options contracts. Clearing margins are distinct from customer margins that individual buyers and sellers of futures and options contracts are required to deposit with brokers. [CBOT][MIDAM]
clearing members
A member firm of a clearing house. Each clearing member must also be a member of the exchange. Not all members of the exchange, however, are members of the clearing organization. All trades of a non-clearing member must be registered with, and eventually settled through, a clearing member. [Harvey] A member of a commodity exchange who is also a member of the exchange's clearing house. [OTS] A member of an exchange clearinghouse. Memberships in clearing organizations are usually held by companies. Clearing members are responsible for the financial commitments of customers that clear through their firm. [CBOT][MIDAM] A member of the Clearing House or Association. All trades of a non-clearing member must be registered and eventually settled through a clearing member. [CFTC] Clearing Members of the New York Mercantile Exchange accept responsibility for all trades cleared through them, and share secondary responsibility for the liquidity of the Exchange's clearing operation. They earn commissions for clearing their customers' trades, and enjoy special margin privileges. Original margin requirements for Clearing Members are lower than for customers, and Clearing Members may use letters of credit posted with the clearinghouse as original margin for customer accounts as well as for their own trades. Clearing Members must meet a minimum capital requirement. [NYMEX] Clearing members are firms that are determined by OCC to be qualified to interact with OCC on behalf of market participants. [GAO]
clientele effect
The grouping of investors who have a preference that the firm follow a particular financing policy, such as the amount of leverage it uses. [Harvey]
Clifford trust
A fixed-term, irrevocable trust account usually opened as a means of reducing the income taxes of the grantor (the person who opens the account and deposits funds in the account). The trust must last for a minimum of 10 years. During that time, income from the account is paid to a named beneficiary, and thus is not taxable to the grantor. At the end of the term of the trust, the principal, or property placed in trust, reverts to the grantor. [OTS]
close, the
The period at the end of the trading session. Sometimes used to refer to closing price. [Harvey]
closed period
The period of time during the term of a mortgage loan when the loan cannot be prepaid. [OTS]
closed-end credit
A type of credit arrangement in which the lender, at the time credit is first extended, limits the amount of credit to a specific amount, determines the length of time for repayment and determines the amount of each periodic payment. Most real estate and automobile loans are closed-end agreements. [OTS] An agreement in which advanced credit, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed-end agreements. [FRBSF] Generally, any loan or credit sale agreement in which the amounts advanced, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed-end agreements. [FRB][FRBC][FRBM]
closed-end fund
A type of investment company whose securities are traded on the open market rather than being redeemed by the issuing company. [SEC] An investment company that sells shares like any other corporation and usually does not redeem its shares. A publicly traded fund sold on stock exchanges or over the counter that may trade above or below its net asset value. [Harvey]
closed-end mortgage
A mortgage in which the amount of debt is fixed and cannot be increased during the life of the loan. It is the opposite of an open-end mortgage. [OTS] Mortgage against which no additional debt may be issued. [Harvey][WCSU]
closed-end transaction
A credit transaction with a fixed amount of time for repayment. [ITDS]
closing
The consummation of a financial transaction. In mortgage lending, closing is the process of delivering a deed, signing notes, mortgages and other loan documents, and advancing funds by the lender. All of these transactions normally occur at the same time. [OTS] The occasion (on a date and at a location) at which the securities are delivered to the original purchaser and the original purchaser pays the purchase price for the securities. If security interests are involved, the concept of 'closing' also includes the perfection of those security interests by recording of the necessary instruments of notice, including either a mortgage, or a security agreement and appropriate UCC financing statements, or, in the case of motor vehicles, certificates of title with lien notation thereon. [EPA]
closing a position
Covering open long or short positions by means of a spot operation and/or outright forward operation. [FDIC]
closing costs
expenses paid by a buyer and/or seller for the cost of processing the sale or financing of real property. Such costs include loan fees, title fees, and appraisal fees. [OTS]
closing documents
Documents which are called for either by the bond purchase agreement or by the requirements of law and bond and/or underwriters' counsel. Such documents generally are included in the transcript, and evidence or certify that all actions, warranties or representations required by any law or document in connection with the transaction or by any counsel as a prerequisite to the rendering of its opinion have been taken or given. Closing documents requiring signature are signed by the appropriate officer or person. For example, in the case of certificates indicating that legislative or corporate action has been taken, the certificate is generally given by the keeper of the records of the public body or corporation. Certificates that represent or certify that the transaction is not in violation of any existing covenant or document of a particular body are usually given by the chief financial officer and chief legal officer. The terms 'closing documents' and 'transcript requirements' are often used interchangeably, although the items covered by the references may vary. [EPA]
closing memorandum
A memorandum describing the actions that will be taken in connection with the closing. This memorandum sets forth in detail the time and the place of the closing, and the events which must occur prior to the exchange of securities and purchase price. [EPA]
closing price
The price at which transactions are made just before the end of trading on a given day. [OTS]
closing purchase
A transaction in which the purchaser's intention is to reduce or eliminate a short position in a stock, or in a given series of options. [Harvey]
closing range
A range of prices at which buy and sell transactions took place during the market close. [CBOT][MIDAM] A range of prices at which transactions took place at the closing of the market; buying and selling orders at the closing might have been filled at any point within such a range. [NYMEX] Also known as the range. The high and low prices, or bids and offers, recorded during the period designated as the official close. [Harvey]
closing sale
A transaction in which the seller's intention is to reduce or eliminate a long position in a stock, or a given series of options. [Harvey]
closing-out
Liquidating an existing long or short futures or option position with an equal and opposite transaction. [CFTC]
cloud on the title
An expression meaning that a claim or encumbrance on a property prevents the conveyance of a clear title when the property is sold. [OTS]
club account
A savings account dedicated to a specific goal, such as a Christmas club account or vacation club account, and based on weekly or biweekly deposits of a fixed amount. [OTS]
cluster analysis
A statistical technique that identifies clusters of stocks whose returns are highly correlated within each cluster and relatively uncorrelated between clusters. Cluster analysis has identified groupings such as growth, cyclical, stable and energy stocks. [Harvey]
cluster zoning
A type of zoning in which density is determined for an entire area, rather than on a lot-by-lot basis. Within the cluster zone, the developer has greater flexibility in designing and placing structures so long as the overall density requirement is met. Developments in cluster zoning often incorporate open, common areas with park-like settings. [OTS]
Coastal Barrier Improvement Act (CBI Act)
Legislation enacted in 1990 that placed limitations on property transfers and required special disposition procedures for certain environmentally significant properties located in coastal areas or located adjacent to publicly managed conservation areas. The act imposed a waiting period of up to six months on FDIC and RTC sales of environmentally sensitive property located in coastal areas or adjacent to publicly managed conservation areas. [FDIC]
coastal trade
Trade between ports of one nation. [ITDS]
COD options
The premium is paid only if a certain trigger point is reached. [TMAC]
coefficient of determination
A measure of the goodness of fit of the relationship between the dependent and independent variables in a regression analysis; for instance, the percentage of variation in the return of an asset explained by the market portfolio return. [Harvey]
coin
A small, usually round, flat piece of metal stamped with a design and issued by a government as currency. [OTS]
coinsurance effect
Refers to the fact that the merger of two firms decreases the probability of default on either firm's debt. [Harvey]
cold comfort
The assurance given by the primary obligor or its independent public accountants that the information contained in the financial statements which were included as a part of the offering materials are true and correct as of the date of the assurance, which is generally the date of initial delivery. The assurance given is not conditional and based upon financial statements which are good as of a date close to, or the date of, closing. [EPA]
collar
(1) the highest and lowest rates of interest that will be paid on the face value of a floating-rate note. (2) an agreement between a buyer and seller. The buyer pays a fee to the seller. In return, the seller will pay the buyer if a designated floating index rate rises above or falls below a specified range of fixed rates. [OTS] A floating rate debt contract that establishes a maximum and a minimum interest rate to be paid by the borrower. [TMAC] A supply contract between a buyer and seller of a commodity, whereby the buyer is assured that he will not have to pay more than some maximum price, and whereby the seller is assured of receiving some minimum price. This is analogous to an option fence, also known as a range forward. [NYMEX] An agreement that puts upper and lower limits on the interest rate of an agreement that is binding even if the market rate falls outside of this range. [ITDS] An upper and lower limit on the interest rate on a floating-rate note. [Harvey][WCSU]
collateral
Assets pledged to a lender until a loan is repaid. If the borrower defaults, the lender has the legal right to seize the collateral and sell it to pay off the loan. [UNODC] Assets than can be repossessed if a borrower defaults. [Harvey] Property that is offered to secure a loan or other credit and that becomes subject to seizure on default. (also called security) [FRB][FRBC][FRBM][FRBSF] Securities or other property pledged by a borrower to secure repayment of a loan. [NYSE] assets that are given security for a loan. [WCSU] something of value that is pledged as security for a loan. The lender can repossess the collateral if the loan is not repaid. [OTS]
collateral trust bonds
A bond in which the issuer (often a holding company) grants investors a lien on stocks, notes, bonds, or other financial asset as security. [Harvey] Bonds secured by common stocks that are owned by the borrower. [WCSU]
collateralized mortgage obligation (CMO)
A corporate bond backed by a pool of mortgages in which the cash flows of the pool are channeled into two or more series of bonds. Interest payments generally are made to the purchasers of such securities. [FDIC] A security backed by a pool of pass-throughs, structured so that there are several classes of bondholders with varying maturities, called tranches. The principal payments from the underlying pool of pass-through securities are used to retire the bonds on a priority basis as specified in the prospectus. [Harvey] A type of bond having mortgages or mortgage-backed securities as collateral. Principal and interest payments from an underlying pool of mortgages are redirected to pay the CMO holders until the CMOs are retired. A single issue of CMOs contains two or more classes of bonds called tranches, each with a different length of maturity, providing a form of call protection to the holder of a CMO. A holder who wants to lock in a CMO investment for a specific length of time will buy into a tranche with a low risk of being retired early because the underlying mortgages are paid off early. Such low prepayment risk tranches are called planned amortization classes (PACs). Changes in prepayment rates in the underlying pool of mortgages are absorbed first by another tranche, so that the PAC remains unaffected by prepayment risk. CMOs generally pay principal and interest semiannually. CMO were first issued by the Federal Home Loan Mortgage Corporation (Freddie Mac) in June 1983. [OTS]
collect charges
Transportation practice where the receiver of the goods pays the charges. [ITDS]
collect on delivery
A service where the purchase price of a good is collected by the carrier upon delivery of the shipment and subsequently paid to the shipper. [ITDS]
collection
(1) the presentation for payment and the subsequent actual payment of a draft, check or other obligation. (2) the process of resolving a delinquent, or past due, mortgage loan including, when necessary, proceeding with foreclosure. [OTS] The presentation for payment of an obligation and the payment thereof. [ITDS]
collection float
Checks written by customers that have not been received, deposited, and added to the company's available balance. [WCSU] The negative float that is created between the time when you deposit a check in your account and the time when funds are made available. [Harvey]
collection fractions
The percentage of a given month's sales collected during the month of sale and each month following the month of sale. [Harvey]
collection papers
All the documents given to the buyer in order to receive payments for a shipment; includes invoices, bills of lading, etc. [ITDS]
collection policy
Procedures followed by a firm in attempting to collect accounts receivables. [Harvey]
collection system
An ACS module that controls and accounts for payments collected by the US Customs Service. [ITDS]
collective investment fund (CIF)
A term used broadly to describe any fund which consists of shared or common ownership among participating accounts. Common trust funds and commingled employee benefit funds (pooled funds) of banks and trust companies are examples of CIF's. [UNODC]
collective wisdom
The combination of all of the individual opinions about a stock's or security's value. [Harvey]
COM membership
A Chicago Board of Trade membership that allows an individual to trade contracts listed in the commodity options market category. [CBOT][MIDAM]
comanger
A bank that ranks just below a lead manager in a syndicated Eurocredit or international bond issue. Comanagers may assist the lead manger bank in the pricing and issue of the instrument. [Harvey]
combination
Puts and calls held either long or short with different strike prices and expirations. [CFTC]
combination aircraft
An aircraft capable of transporting both cargo and passengers on the same flight. [ITDS]
combination matching
Also called horizon matching, a variation of multiperiod immunization and cash flow matching in which a portfolio is created that is always duration matched and also cash-matched in the first few years. [Harvey]
combination strategy
A strategy in which a put and with the same strike price and expiration are either both bought or both sold. [Harvey]
combination utility
A utility which provides both gas and electric service. [NYMEX]
combined bill of lading
A bill of lading covering a shipment of goods by more than one mode of transportation. [ITDS]
combined transport
Consignment sent by means of various modes of transport. [ITDS]
comfort certificate or letter
The certificate or letter given by the parties responsible for an official statement or offering circular which states that all or specified portions of the materials contained in the offering materials in all material respects are, as of the date of the certificate or letter (and, usually, as of the date of the offering materials), true and do not contain any untrue statements of a material fact and do not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. The assurances given in the certificate are addressed to the requirements of the fraud sections of the federal securities laws, particularly §10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 under that Section. [EPA]
comity
Courtesy, respect, and good will. [ITDS]
command economy
An economic system where decisions about resources are made by a central government authority. [ITDS]
commercial
An entity involved in the production, processing, or merchandising of a commodity. [CFTC]
commercial banks
A bank that specializes in accepting demand deposits and granting loans. [ITDS] A financial institution chartered by a state or federal agency that accepts demand deposits and offers commercial loans. Other types of financial services usually are provided as well. [OTS] Bank that offers a broad range of deposit accounts, including checking, savings, and time deposits, and extends loans to individuals and businesses. Commercial banks can be contrasted with investment banking firms, such as brokerage firms, which generally are involved in arranging for the sale of corporate or municipal securities. [FRBSF] Commercial Banks are allowed to engage in more varied lending activities and to offer more financial services than are the other depository institutions. Commercial banks are owned by stockholders and operated for profit. [FRBC] Privately owned banks receiving deposits and making loans, generally through a large number of branches. [EPA]
commercial draft
Demand for payment. [Harvey][WCSU]
commercial grain stocks
Domestic grain in store in public and private elevators at important markets and grain afloat in vessels or barges in lake and seaboard ports. [CFTC]
commercial invoice
A document which identifies the seller and buyer of a shipment; also includes invoice number, date, shipping date, mode of transport, delivery and payment terms, and description of goods. [ITDS]
commercial loan
A loan to a company to meet business operating expenses or to finance the purchase of inventory. [OTS]
commercial mortgage loan
A mortgage loan secured by real estate used by a business or to generate income. Also called an income property loan. [OTS]
commercial officers
Embassy officials who assist businesses through arranging appointments with local business and government officials and providing counsel on local trade regulations, laws, and customs. [ITDS]
commercial online service
A commercial online service is an integrated package of services providing news, e-mail, a special-interest forum, information resources, shopping, and other services accessed by consumer and business computer users using proprietary software and a modem (examples include America Online, Microsoft Network, CompuServe, etc.). [GAO]
commercial paper
A short-term, unsecured debt instrument issued by a corporation and sold at a discount from its maturity value. [UNODC] A written agreement setting forth the terms and conditions under which funds are borrowed by a corporation and promising to repay the debt. Commercial paper is issued by large corporations of good credit standing to borrow unsecured funds for a short time, usually 90 days, but no more than nine months. Commercial paper is bought, sold, and traded by individual and corporate investors. [OTS] Debt instruments issued by companies to meet short-term financing needs. [NYSE] Generally, unsecured promissory obligations having a maturity of substantially less than a year, the proceeds of which are employed to support current operations or for interim capital asset financing. The short maturity (which may be measured in days) is the basic factor that distinguishes commercial paper from 'notes', although under governing state law the commercial paper may technically be 'notes' or 'bond anticipation notes'. Usually backed by a line of credit, or by an existing agreement to purchase securities (commercial paper, notes or bonds) that would pay off the commercial paper at its maturity. [EPA] Negotiable instruments used in commerce. [ITDS] Short-term promissory notes issued in bearer form by large corporations, with maturities ranging from 5 to 270 days. Since the notes are unsecured, the commercial papers market generally is dominated by large corporations with impeccable credit ratings. [CFTC] Short-term unsecured promissory notes issued by a corporation. The maturity of commercial paper is typically less than 270 days; the most common maturity range is 30 to 50 days or less. [Harvey] Unsecured notes issued by companies and maturing within 9 months. [WCSU]
commercial risk
The risk that a foreign debtor will be unable to pay its debts because of business events, such as bankruptcy. [Harvey]
commercial set
The primary documents required to ship goods; usually includes an invoice, bill of lading, bill of exchange, and certificate of insurance. [ITDS]
commercial treaty
An agreement between two or more countries that establishes the conditions under which business may be contracted. [ITDS]
commercial/merchant server
A commercial/merchant server is a computer and/or computer program that provides information in response to requests by other computer programs. Some servers are capable of sending and receiving secure messages. [GAO]
commingling
The packing or mingling of various goods subject to different rates of duty so that the value of each class of goods cannot be readily determined. [ITDS]
commission
(1) The charge made by a commission house for buying and selling commodities; (2) the CFTC. [CFTC] A fee paid to a person for conducting a business transaction or performing a service. A commission is usually based on a percentage of the total transaction. [OTS] The amount paid to an agent for their role in the completion of a transaction involving the sale of goods or services. [ITDS] The broker's basic fee for purchasing or selling securities or property as an agent. [NYSE] The fee charged by a broker-dealer for services performed in buying or selling securities on behalf of a customer. [SEC] The fee charged by a futures broker for the execution of an order. [NYMEX] The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or their dollar value. In 1975, deregulation led to the creation of discount brokers, who charge lower commissions than full service brokers. Full service brokers offer advice and usually have a full staff of analysts who follow specific industries. Discount brokers simply execute a client's order -- and usually do not offer an opinion on a stock. Also known as a round-turn. [Harvey]
commission broker
A broker on the floor of an exchange acts as agent for a particular brokerage house and who buys and sells stocks for the brokerage house on a commission basis. [Harvey] An agent who executes the public's order for the purchase or sale of securities or commodities. [NYSE]
commission fee
A fee charged by a broker for executing a transaction. Also referred to as brokerage fee. [CBOT][MIDAM]
commission house
A firm which buys and sells future contracts for customer accounts. [Harvey] An organization that trades commodities and/or futures and options contracts for customer accounts in return for a fee. [NYMEX]
commission merchant
One who makes a trade, either for another member of an exchange or for a nonmember client, but who makes the trade in his own name and become liable as principal to the other. [NYMEX]
commitment
(1) an agreement between a lender and a borrower to lend money at a future date, provided stated conditions are met. (2) a promise by Freddie Mac to a primary mortgage lender to buy mortgage loans at a future date. [OTS] A trader is said to have a commitment when he assumes the obligation to accept or make delivery on a futures contract. [Harvey]
commitment fee
(1) a payment by a prospective borrower to a prospective lender in return for the lender's promise to loan money at a specified future date. (2) in the secondary market, a payment by a primary lender to Freddie Mac or other mortgage buyer for the buyer's promise to buy loans at a future date. [OTS] A fee paid to a commercial bank in return for its legal commitment to lend funds that have not yet been advanced. [Harvey]
commitment letter
A letter sent by a lender informing a borrower that the lender has approved a loan application for a specific amount, term and rate, and listing any conditions that must be met before the loan funds are disbursed. [OTS]
commitment or open interest
The number of open or outstanding contracts for which an individual or entity is obligated to the Exchange because that individual or entity has not yet made an offsetting sale or purchase, an actual contract delivery, or, in the case of options, exercised the option. [NYMEX]
Committee on Uniform Securities Identification Procedures (CUSIP)
Each type and issue of security will have its own unique CUSIP number. [GAO] The organization that develops and assigns identifying numbers and symbols for all securities. [OTS]
Commodities Exchange Center
The location of five New York futures exchanges: Commodity Exchange, Inc. (COMEX), the New York Mercantile exchange (NYMEX), the New York Cotton Exchange, the Coffee, Sugar and Cocoa exchange (CSC), and the New York futures exchange (NYFE). common size statement A statement in which all items are expressed as a percentage of a base figure, useful for purposes of analyzing trends and the changing relationship between financial statement items. For example, all items in each year's income statement could be presented as a percentage of net sales. [Harvey]
commodities futures
contracts for the future delivery at a fixed price of goods, such as agricultural or mining products, or future delivery at a fixed price of securities backed by those products. The contracts are bought and sold on commodities exchanges. [OTS]
commodity
A commodity is food, metal, or another physical substance that investors buy or sell, usually via futures contracts. [Harvey] An article of commerce or a product that can be used for commerce. In a narrow sense, products traded on an authorized commodity exchange. The types of commodities include agricultural products, metals, petroleum, foreign currencies, and financial instruments and indexes, to name a few. [CBOT][MIDAM] As defined by the CFTC, specifically enumerated agricultural commodities, all other goods and articles, except onions, and all services, rights and interests in which contracts for future delivery are presently, or in the future may be, dealt. [NYMEX] something of value that can be bought or sold, usually a product or raw material. [OTS]
commodity code
The system of identifying a commodity by a certain number to determine its commodity rate for transport. [ITDS]
Commodity Credit Corporation (CCC)
A branch of the U.S. Department of Agriculture, established in 1933, that supervises the government's farm loan and subsidy programs. [CBOT][MIDAM] A government-owned corporation established in 1933 to assist American agriculture. Major operations include price support programs, foreign sales, and export credit programs for agricultural commodities. [CFTC] An agency of the U.S. Department of Agriculture, with its primary purpose being to promote the export of U.S. surplus agricultural commodities. Many of the letters of credit opened by U.S. banks are supported by purchase authorizations similar to AID letters of commitment. These authorizations enable the U.S. bank to obtain reimbursement from CCC for any drawings negotiated under this type of letter of credit. This particular type of CCC credit, however, is not to be confused with another CCC credit which is issued or confirmed by U.S. banks for account of a foreign government, central bank or importer. Under this latter form of credit, CCC is the beneficiary of the credit and not the account party. CCC therefore, does not reimburse the U.S. banks for any drawings made thereunder the U.S. bank must obtain reimbursement from its foreign customer for whom the credit was opened (account party of the letter of credit). Normal credit standards should be used in analyzing this latter type of credit, particularly since they often provide for terms of up to three years but are related to commodity transactions which are customarily financed on shorter terms. [FDIC]
commodity exchange authority (CEA)
A regulatory agency of the U.S. Department of Agriculture established to administer the Commodity Exchange Act prior to 1975; the predecessor of the Commodity Futures Trading Commission. [CFTC]
commodity exchange commission
A commission consisting of the Secretary of Agriculture, Secretary of Commerce, and the Attorney General, responsible for administering the Commodity Exchange Act prior to 1975. [CFTC]
Commodity Exchange of New York (COMEX)
commodity flow method
Method used to estimate purchases of a commodity by intermediate or final users. The method generally begins with an estimate of the total supply of a commodity available for domestic uses; it then either attributes a fixed percentage of supply to an intermediate or final user, or it adjusts for intermediate purchases and attributes the residual to intermediate or final users. [BEA]
Commodity Futures Trading Commission (CFTC)
A federal agency responsible for coordinating the commodities industry in the United States. Established in April 1975, the CFTC is charged with detecting and prosecuting violators of the Commodity Exchange Act of 1976. [OTS] A federal regulatory agency authorized under the Commodity Futures Trading Commission Act of 1974 to regulate futures trading in all commodities. The commission is comprised of five commissioners, one of whom is designated as chairman, all appointed by the President, subject to Senate confirmation. The CFTC is independent of the Cabinet departments. [NYMEX] A federal regulatory agency established under the Commodity Futures Trading Commission Act, as amended in 1974, that oversees futures trading in the United States. The commission is comprised of five commissioners, one of whom is designated as chairman, all appointed by the President subject to Senate confirmation, and is independent of all cabinet departments. [CBOT] CFTC and SEC are the primary regulators and oversee the actions of the clearing organizations under their jurisdictions to determine whether or not they are functioning in accordance with regulations and the law [GAO] Created by Congress in 1974 to regulate exchange trading in futures. [NYSE] The Federal regulatory agency established by the CFTC Act of 1974 to administer the Commodity Exchange Act. [CFTC]
commodity pool
A venture, usually a limited partnership, in which funds contributed by a number of investors are combined for the purpose of trading futures. Also called a commodity fund or a futures fund. [NYMEX] An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options. [CBOT][MIDAM] An investment trust, syndicate or similar form of enterprise operated for the purpose of trading commodity futures or option contracts. [CFTC]
commodity pool operator (CPO)
Acts as general partner of commodity pools. CPOs hire independent Commodity Trade Advisors to handle daily trading decisions. Responsible for the pool's administration, structure, and selecting and monitoring the traders who conduct transactions using the fund's money. [NYMEX] An individual or organization that operates or solicits funds for a commodity pool. [CBOT][MIDAM] Individuals or firms in businesses similar to investment trusts or syndicates that solicit or accept funds, securities or property for the purpose of trading commodity futures contracts or commodity options. [CFTC]
commodity price index
Index or average, which may be weighted, of selected commodity prices, intended to be representative of the markets in general or a specific subset of commodities (for example, grains or livestock). [CFTC]
commodity prices
An index of commodities (such as oil and steel) traded in worldwide markets. [FRB][FRBC][FRBSF]
commodity rate
The rate applicable to shipping a given commodity between points. [ITDS]
commodity swap
Commodity swaps can either swap a fixed and a floating price for the underlying commodity, or can swap two different commodities. [TMAC]
commodity technology assumption
Assumption about the input structure required for the production of secondary products. The input structure for the secondary product is assumed to be the same as the industry where the product is primary. [BEA]
commodity trading adviser
A person who, for compensation or profit, directly or indirectly advises others as to the value or the advisability of buying or selling futures contracts or commodity options. Advising indirectly includes exercising trading authority over a customer's account as well as providing recommendations through written publications or other media. [CBOT][MIDAM]
commodity trading advisor (CTA)
Directs trading in the managed accounts of a commodity pool. Professional money managers who manage client assets on a discretionary basis, using global futures markets as an investment medium. [NYMEX] Individuals or firms that, for pay, issue analyses or reports concerning commodities, including the advisability of trading in commodity futures or options. [CFTC]
commodity-linked bond
A bond in which payment to the investor is dependent on the price level of such commodities as crude oil, gold, or silver at maturity. [CFTC]
common area
land or improvements that are designated for common use by all occupants, tenants, or owners. [OTS]
common law
A judge-made law that originated in England from the decisions shaped according to prevailing custom. Decisions were reapplied to similar situations and, thus, gradually became common to the nation. [UNODC] The body of law developed first in England from judicial decisions shaped by custom and precedent, but not written in any formal statute. Common law is the basis of the legal system in England and the United States. [OTS]
common market
An agreement between two or more countries that permits the free movement of capital and labor as well as goods and services. [Harvey]
Common Message Switch (CMS)
Handles virtually all orders, and reports between member firms and NYSE and AMEX trading floors. CMS, designed and operated by SIAC, simplifies firms' order-delivery report procedures, and eliminates equipment and communications line duplication. [NYSE]
common point
A location serviced by two or more transportation lines. [ITDS]
common property resources
Resources for which there are no clearly defined property rights; property owned in common by a society. [FACS]
common stock
One of two types of stock an investor may purchase in a company. Most stock is common stock. Investors who purchase it have voting rights at the company's annual stockholders' meeting. Common Stockholders are not guaranteed dividends, buy they may receive higher dividends during the company's prosperous periods. If a company fails or liquidates, common stockholders are paid after bondholders and preferred stockholders. [NYSE] These are securities that represent equity ownership in a company. Common shares let an investor vote on such matters as the election of directors. They also give the holder a share in a company's profits via dividend payments or the capital appreciation of the security. [Harvey] securities that are evidence of proportionate equity or ownership of a corporation, and give the holder an unlimited proportionate interest in the corporation's earnings and assets after claims from creditors and the holders of preferred stock have been met. [OTS]
common stock equivalent
A convertible security that is traded like an equity issue because the optioned common stock is trading high. [Harvey]
common stock market
The market for trading equities, not including preferred stock. [Harvey]
common stock ratios
Ratios that are designed to measure the relative claims of stockholders to earnings (cash flow per share), and equity (book value per share) of a firm. [Harvey]
common stock/other equity
Value of outstanding common shares at par, plus accumulated retained earnings. Also called shareholders' equity. [Harvey]
common-base-year analysis
The representing of accounting information over multiple years as percentages of amounts in an initial year. [Harvey]
common-size analysis
The representing of balance sheet items as percentages of assets and of income statement items as percentages of sales. [Harvey]
Community Investment Program
A program offered by each Federal Home Loan Bank to provide advances to member institutions which use them in community lending to moderate income families. [OTS]
community property
A form of ownership in some states in which property acquired during a marriage is presumed to be owned jointly unless specifically acquired as separate property of either spouse. [OTS]
Community Reinvestment Act (CRA)
Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. [FRBSF] Encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. [FRB][FRBC][FRBM] requires financial institutions to meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods. [OTS]
Community Reinvestment Act of 1977 (CRA)
Community Reinvestment Act Statement
A description available for public inspection at each bank office indicating, on a map, the communities served by that office and the types of credit the bank is prepared to extend within the communities served. [FRBSF]
company
A business entity which creates paperless entries for introduction into the ACH network. [ACH]
company limited by guarantee
An incorporated entity without share capital. [UNODC]
comparative advantage
Describes the ability of a person, company or country to produce a good or service at a lower cost relative to other goods and services. Even though a country may have an [FRB][FRBM] The ability of a producer to produce a good at a lower marginal cost than other producers; marginal cost in the sacrifice of some other good compared to the amount of a good obtained. [FACS]
comparative credit analysis
A method of analysis in which a firm is compared to others that have a desired target debt rating in order to infer an appropriate financial ratio target. [Harvey]
comparison member
Comparison members are primarily government securities broker-dealers and clearing agent banks that are capable of interacting with GSCC operations. [GAO]
comparison universe
The collection of money managers of similar investment style used for assessing relative performance of a portfolio manager. [Harvey]
compensating balance
A dollar amount equal to the lowest percentage of a line of credit that the customer of a financial institution is expected to maintain, usually in a demand deposit account, as a condition for being granted the line of credit. [OTS] An excess balance that is left in a bank to provide indirect compensation for loans extended or services provided. [Harvey] Non-interest-bearing demand deposits to compensate banks for bank loans or services. [WCSU]
compensatory trade
A form of countertrade where any combination of goods and services are bartered. [ITDS]
competence
Sufficient ability or fitness for ones needs. Possessing the necessary abilities to be qualified to achieve a certain goal or complete a project. [Harvey]
competition
Intra- or intermarket rivalry between businesses trying to obtain a larger piece of the same market share. [Harvey] Rivalry among individuals in order to acquire more of something that is scarce. [FACS]
competitive bid
A bid submitted for an issue sold at a competitive sale. [EPA]
competitive bidders
One of two categories of bidders on Treasury securities: competitive and noncompetitive. Competitive bidders are usually financial institutions. [FRBSF]
competitive bidding
A securities offering process in which securities firms submit competing bids to the issuer for the securities the issuer wishes to sell. [Harvey] Means by which public utilities holding companies are required to choose their underwriter. [WCSU] Provisions for sale of an issue on the best bid after published notice requesting bids. [EPA]
Competitive Equality Banking Act (CEBA)
Legislation enacted in 1987 that permitted qualifying agricultural banks to amortize losses over a seven-year period for agricultural loans, rather than having to deduct losses from capital as soon as the loss was incurred. CEBA also created the Financing Corporation, which was chartered by the FHLBB, to borrow up to $10.8 billion over three years to finance the closure of failed S&Ls or to subsidize their takeover by healthy S&Ls. In addition, CEBA encouraged the supervisory forbearance of well-managed but undercapitalized institutions. CEBA also expanded the FDIC's authority to permit out-of-state bank holding companies to acquire stock institutions and mutual savings banks before failure, providing those companies met certain conditions. In addition, CEBA provided the FDIC with authority to establish a bridge bank, a new national bank that was created to purchase the assets and assume the liabilities of a failing bank until resolution could be accomplished. Under CEBA a bridge bank could be established if--- . The cost of establishing the bridge bank did not exceed the cost of liquidating the failing bank; . The continued operation of the uninsured bank was essential to provide adequate banking services in the community; or . The continued operation of the institution was in the best interest of its depositors and the public. [FDIC]
competitive offering
An offering of securities through competitive bidding. [Harvey]
competitive rate
Rate determined by one transportation line to compete with the rate of another transportation line. [ITDS]
competitive risk
Occurs due to nature of the business the company is in and the type and location of its competition. It is the risk that the demand for a company's goods and services will decline due to the actions of competitors. [TMAC]
competitive trader
A member of the Exchange who trades in stocks on the Floor for an account in which the member firm has an interest. Also known as Registered Trader. [NYSE]
complementary imports
Imports of raw materials or products that a country does not internally possess or produce. [ITDS]
complements
A price change for one product leads to a shift in the opposite direction direction in the demand for another product. [FACS]
complete capital market
A market in which there is a distinct marketable security for each and every possible outcome. [Harvey]
complete portfolio
The entire portfolio, including risky and risk-free assets. [Harvey]
completion bonding
Insurance that a construction contract will be successfully completed. [Harvey][WCSU]
completion bonds
Additional bonds, often subject to a maximum principal amount, that may be issued on a parity with outstanding bonds if necessary to complete the project financed with the outstanding bonds. Completion bonds often may be issued without meeting earnings coverage tests. [EPA]
completion risk
The risk that a project will not be brought into operation successfully. [Harvey]
completion undertaking
An undertaking either (1) to complete a project such that it meets certain specified performance criteria on or before a certain specified date or (2) to repay project debt if the completion test cannot be met. [Harvey]
compliance exam
An examination of a savings institution to determine how well it is complying with federal law and regulations, particularly those dealing with consumer protection and non-discrimination. [OTS]
compliance period
The period of time during which a thrift institution must comply with a regulation, ruling, order, or resolution of its regulatory agency. [OTS]
composite receivers' file (CRF)
A file listing all depository financial institutions qualified to receive ACH entries. Call your association office to subscribe. The CRF is available from the FRB as magnetic tape for direct computer input, or on microfiche. [ACH]
composition
Voluntary arrangement to restructure a firm's debt, under which payment is reduced. [Harvey]
compound interest
Interest paid on previously earned interest as well as on the principal. [Harvey] Reinvestment of each interest payment on money invested, to earn more interest. [WCSU] The interest that accrues when earnings for each specified period of time are added to the principal, thus increasing the principal base on which subsequent interest is computed. [OTS]
compound option
Option on an option. [Harvey]
compounding
The process of accumulating the time value of money forward in time. For example, interest earned in one period earns additional interest during each subsequent time period. [Harvey]
compounding frequency
The number of compounding periods in a year. For example, quarterly compounding has a compounding frequency of 4. [Harvey]
compounding period
The length of the time period (for example, a quarter in the case of quarterly compounding) that elapses before interest compounds. [Harvey]
compradore
An agent in a foreign country employed by a domestic businessman to facilitate transactions with local businesses within the foreign country. [ITDS]
comprehensive annual financial report
The official annual report of a government. It includes five Combined Statements - Overview (the 'liftable' GPFS) and basic financial statements for each individual fund and account group prepared in conformity with GAAP and organized into a financial reporting pyramid. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. Every governments should prepare and publish a CAFR as a matter of public record. [EPA]
comprehensive due diligence investigation
The investigation of a firm's business in conjunction with a securities offering to determine whether the firm's business and financial situation and its prospects are adequately disclosed in the prospectus for the offering. [Harvey]
Comprehensive Employment and Training Act (CETA)
Federal funding for local governments to retrain and employ difficult-to-hire workers. [FACS]
Comptroller of the Currency (OCC)
A federal office created by Congress in 1863 as a part of the national banking system. The Comptroller of the Currency is a bureau of the Treasury Department and charters, regulates and examines national banks. The Comptroller of the Currency came into being during the civil war. In part to finance the war debt, Congress authorized federally chartered banks that were to issue bank notes -- in other words, currency. Initially, the OCC provided the bank notes to these federally chartered banks, and each bank then printed its own name on the paper money it put into circulation. Thus, the agency got its name from its original responsibility of controlling the currency it distributed to these federal banks. [OTS] The Comptroller of the Currency is an officer of the Treasury Department responsible for chartering national banks and has primary supervisory authority over them. All national banks are required to be members of the Federal Reserve System and are insured by the Federal Deposit Insurance Corporation. [FRB][FRBC][FRBM]
Computerized Trading Reconstruction System
A Chicago Board of Trade computerized surveillance program that pinpoints in any trade the traders, the contract, the quantity, the price, and time of execution to the nearest minute. [CBOT][MIDAM]
concealed damage
Damage to the contents of a package which is not apparent from the condition of the exterior. [ITDS]
concealed loss
Damage, loss, or shortage of goods within a package which is not apparent from its exterior condition. [ITDS]
concentration account
A single centralized account into which funds collected at regional locations (lockboxes) are transferred. [Harvey]
concentration banking
system whereby customers make payments to a regional collection center. The collection center pays the funds into a regional bank account and surplus money is transferred to the company's principle bank. [WCSU]
concentration services
Movement of cash from different lockbox locations into a single concentration account from which disbursements and investments are made. [Harvey]
concession
The allowance that an underwriter or syndicate allows a nonmember of the account. [EPA]
concession agreement
An understanding between a company and the host government that specifies the rules under which the company can operate locally. [Harvey]
concurrent indicators
condemnation
The legal process for taking over privately owned property for public use, under the right of eminent domain, with just compensation to the owner. [OTS]
conditional endorsement
A type of restrictive endorsement on a negotiable instrument that designates both the next titleholder and conditions to the endorser's liability. [OTS]
conditional sales
Sales in which ownership does not pass to the buyer until payment is completed. [WCSU]
conditional sales contracts
Similar to equipment trust certificates except that the lender is either the equipment manufacturer or a bank or finance company to whom the manufacturer has sold the conditional sales contract. [Harvey]
condominium
A single dwelling unit in a multi-unit structure in which each unit is individually owned. The owner holds legal title to his or her unit and owns the common areas (roof, basement, halls, stairs, etc.) and land jointly with other unit owners. An owner may live in his or her condominium, rent it or sell it. Owners pay individual property taxes and may claim tax exemptions just as they would if they owned a free standing, single-family home. [OTS]
conduit
(1) industry term for a firm through which mortgages flow. The company issues mortgage-backed securities based on mortgage loans it buys from a number of primary lenders. (2) a type of roll-over IRA used by individuals to transfer all or any part of a lump-sum distribution from one retirement plan to another retirement plan. (3) any intermediary between a lender and an investor. [OTS]
confession of judgment
A clause in a loan contract providing that the borrower waives the right to be notified and the right to be heard in court if the lender brings suit and obtains a judgment against the borrower in the event of a default. This credit practice was prohibited by regulation in 1985. [OTS]
confidence indicator
A measure of investors' faith in the economy and the securities market. A low or deteriorating level of confidence is considered by many technical analysts as a bearish sign. [Harvey]
confidence level
The degree of assurance that a specified failure rate is not exceeded. [Harvey]
Confidential Individual Information System (CIIS)
A computerized nationwide data base used by the various national and local offices of the Office of Thrift Supervision to collect and share information about persons who require particular supervisory attention. The system is designed to alert federal regulators to persons who have been the subject of supervisory concern. CIIS is used to prevent persons who have been caught violating regulations in one savings institution from moving to a different part of the country and causing problems in another institution. [OTS]
confidentiality agreement
An agreement between the FDIC and a potential acquiring financial institution that acknowledges the confidentiality of the information package pertaining to the failing institution and other documents, including the financial transaction agreements. To receive the information package and perform on-site due diligence at the institution before failure, potential acquirers must sign a confidentiality agreement. [FDIC]
confirmation
The written statement that follows any 'trade' in the securities markets. Confirmation is issued immediately after a trade is executed. It spells out settlement date, terms, commission, etc. [Harvey] Written communication to the counterparty in a foreign exchange transaction which recites all the relevant details agreed upon by telephone telex. [FDIC]
confirmed letter of credit
A letter of credit issued by a bank which bears the confirmation of the seller's (exporter's) bank. The 'confirming' bank undertakes to honor the draft drawn in accordance with the terms of the letter of credit. Thus, the beneficiary has the unconditional assurance that, if the issuing bank refused to honor the draft against the credit, the confirming bank will pay (or accept) it. In many instances, the seller (exporter) will ask that the letter of credit be confirmed by another bank since the seller is not familiar with the foreign issuing bank and as a precaution against unfavorable exchange regulations, foreign currency shortages, political upheavals, and similar situations that may arise in the foreign country. [FDIC]
confiscation
'The permanent deprivation of property by order of a court or other competent authority'. Includes forfeiture where applicable. - United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, Article 1. [UNODC]
conflict between bondholders and stockholders
These two groups may have interests in a corporation that conflict. Sources of conflict include dividends, distortion of investment, and underinvestment. Protective covenants work to resolve these conflicts. [Harvey]
conflict of interest
A situation in which a person may realize personal benefit from decisions or actions he or she may take on behalf of something the person is entrusted to manage or care for. For example, a director of a savings association would have a conflict of interest approving loans to companies in which the director has a personal interest. [OTS]
conforming loan
A mortgage loan that conforms to regulatory limits such as loan-to-value ratio, term and other characteristics. [OTS]
congestion
(1) A market situation in which shorts attempting to cover their positions are unable to find an adequate supply of contracts provided by longs willing to liquidate or by new sellers willing to enter the market, except at sharply higher prices; (2) in technical analysis, a period of time characterized by repetitious and limited price fluctuations. [CFTC]
conglomerate
A corporation that has diversified in operations usually by acquiring enterprises in widely varied industries. [NYSE] A firm engaged in two or more unrelated businesses. [Harvey]
conglomerate merger
A merger involving two or more firms that are in unrelated businesses. [Harvey] Merger between two companies in unrelated businesses. [WCSU]
congregate housing
A housing development in which a central dining facility is provided and some or all of the dwelling units have no kitchen facilities. This type of arrangement is sometimes used in housing for the elderly, who want to be free of cooking chores. [OTS]
connecting carrier
A carrier which has direct physical connection with another carrier or forms a connecting link between two or more carriers. [ITDS]
connection charge
A viable means of assessing new system users to recover the cost of system excess capacity constructed for their eventual use. [EPA]
consensus forecast
The mean of all financial analysts' forecasts for a company. [Harvey]
consent merger agreement
A type of supervisory agreement in which the board of directors of a troubled savings institution agrees to have the Office of Thrift Supervision arrange for a merger of the troubled institution into another institution. Such arrangements were formerly called consent agreements or consent resolutions, but in the late 1980s they began to be handled as a type of supervisory agreement. [OTS]
conservator
(1) a person appointed by a court to protect and preserve the property of an individual who is physically or mentally unable to handle his or her own affairs. (2) a person appointed by a court to protect the interests of an estate. (3) an agency or person placed in charge of a troubled savings institution or bank by federal or state authorities to protect and conserve the assets of the institution while more permanent measures for dealing with the institution are worked out. [OTS] A person or entity, including a government agency, appointed by a regulatory authority to operate a troubled financial institution in an effort to conserve, manage, and protect the troubled institution's assets until the institution has stabilized or has been closed by the chartering authority. [FDIC]
Conservator's Strategic Plan (CSP)
A plan prepared by the managing agent of an RTC-controlled institution within 60 days of the start of the conservatorship. The CSP describes the plan of operation for the failed institution during the conservatorship stage. The CSP formerly was known as the 'Conservator's Operating Plan. [FDIC]
conservatorship
The legal procedure provided by statute for the interim management of financial institutions used by the FDIC and RTC. Under the pass-through receivership method, after the failure of a savings institution, a new institution is chartered and placed under agency conservatorship; the new institution assumes certain liabilities and purchases certain assets from the receiver of the failed institution. Under a straight conservatorship, the FDIC or RTC may be appointed conservator of an open, troubled institution. In each case, the conservator assumes responsibility for operating the institution on an interim basis in accordance with the applicable laws of the federal or state authority that chartered the new institution. Under a conservatorship, the institution's asset base is conserved pending the resolution of the conservatorship. [FDIC] The state of being under the control of a conservator. A conservatorship affects the control and operation of an institution or company but does not alter its ownership. [OTS]
consideration
An element that is required in all valid contracts. A consideration is anything of value. All parties to the contract must exchange something of value. [OTS]
consignee
The person or firm named in a freight contract to whom goods have been shipped or turned over for care. [ITDS] The ultimate recipient of goods being shipped. [OTS]
consignment
A shipment made by a producer or dealer to an agent elsewhere with the understanding that the commodities in question will be cared for or sold at the highest obtainable price. Title to the merchandise shipped on consignment rests with the shipper until the goods are disposed of according to agreement. [CFTC] Delivery of merchandise from an exporter to an agent for sale by the agent, credited to the exporters account, with a commission earned by the agent. [ITDS] The act of entrusting goods to a dealer for sale, but retaining ownership of them until sold. The dealer pays the seller only when and if the goods are sold. [OTS]
consignor
The entity that ships goods to another for care; the exporter in a consignment relationship. [ITDS] The originator of a shipment of goods. [OTS]
consol
A type of bond that has an infinite life but is not issued in the U.S. capital markets. [Harvey]
consolidate
to bring together various financial obligations under one agreement, contract, or note. [OTS]
consolidated balance sheet
A balance sheet showing the financial condition of a corporation and its subsidiaries. [NYSE]
consolidated container
A shipping container that contains cargo from numerous shippers for delivery to numerous consignees. [ITDS]
consolidated metropolitan statistical area (CSMA)
A geographic unit composed of two or more adjacent standard metropolitan statistical areas having a combined population of one million or more, with close social and economic links. [OTS]
consolidated obligations
debt instruments (bonds and discount notes) sold by the Federal Home Loan Banks through the Office of Finance. The obligations consolidate the borrowing needs of all 12 Banks into joint securities offerings sold in the capital markets. The Banks share the funds raised by the sale of the securities, and they share the obligation to repay the debt. Thus each Bank is legally responsible for repayment of its own debt plus the debt of all other Federal Home Loan Banks. [OTS]
Consolidated Quotation System (CQS)
Collects and disseminates, electronically, current bid and asked quotations, with volume, from and to all market centers trading listed stocks. [NYSE]
consolidated tape
The ticker tape reporting transactions in NYSE listed securities that take place on the NYSE or any of the participating regional stock exchanges and other markets. Similarly, transactions in Amex listed securities, and certain other securities listed on regional stock exchanges, are reported on a separate tape. [NYSE]
Consolidated Tape Association (CTA)
Oversees the operations of the consolidated tape, which it developed, under a formal 'CTA Plan' filed with the Securities and Exchange Commission. CTA is an independent, industry-wide organization. [NYSE]
Consolidated Tape Reporting System (CTRS)
Receives and disseminates, electronically, listed stock last-sale prices in all markets in which they trade. CTS is under the operational guidance of the Consolidated Tape Association (CTA). [NYSE]
Consolidated Tape System (CTS)
Receives and disseminates, electronically, listed stock last-sale prices in all markets in which they trade. CTS is under the operational guidance of the Consolidated Tape Association (CTA). [NYSE]
consolidation
The combining of smaller shipments from a central location into a single shipment that is sent to a destination point at a lower shipping rate. [ITDS] The combining of two or more firms to form an entirely new entity. [Harvey] The results obtained on a balance sheet when the accounts of a parent company and its subsidiaries are combined to reflect the financial position and operating results of the group as if it operated as a single entity. [OTS]
consolidation loan
A loan that consolidates, or pays off, several old loans and replaces them with one new loan, usually to obtain a lower interest rate or lower monthly payment by extending the loan over a longer period of time. [OTS]
consolidator
A company that provides consolidation services. [ITDS]
consortium
A group of corporations, financial institutions or other companies that join forces to achieve a mutually agreed upon objective, requiring cooperation and pooling of resources. [OTS] A grouping of corporations to fulfill a combined objective or project that usually requires interbusiness cooperation and sharing of the goods. [FRBSF]
consortium banks
A merchant banking subsidiary set up by several banks that may or may not be of the same nationality. Consortium banks are common in the Euromarket and are active in loan syndication. [Harvey]
constant dollars
The price paid for something in previous years, adjusted for inflation to equal what the price would be in current dollars. Constant dollars permit comparisons of the true cost of goods and services or other financial data from different time periods. [OTS]
constant payment
A periodic payment of a fixed amount that includes interest and principal. While the total amount of the payment remains the same, the ratio of principal and interest included in the payment changes. As the loan is paid off, the portion of the payment applied to the principal increases. Most home mortgages are constant payment loans. [OTS]
constant-growth model
Also called the Gordon-Shapiro model, an application of the dividend discount model which assumes (1) a fixed growth rate for future dividends and (2) a single discount rate. [Harvey]
construction fund
A special fund, often held by the trustee or other fiduciary, into which the net proceeds of an issue are deposited to be used to pay project costs. The construction fund is often pledged for the payment of the securities, pending its use for the purpose of paying the project costs. [EPA]
construction loan
A short-term, interim loan for financing the cost of construction. The lender makes payments called draws to the builder at periodic intervals as the work progresses. [OTS]
consular documents
Bills of lading, certificates of origin, or special forms of invoice which carry the official signature of the consul of the country of destination. [FDIC]
consular invoice
An invoice covering the shipment of goods certified by the counsel of the country for which the merchandise is destined. [ITDS] Detailed statement regarding the character of goods shipped which is duly certified by the consul at the port of shipment. Required by certain countries, including the United States. Principal function is to record accurately the types of goods and their quantity, grade and value for import duty, balance of payments and other statistical purposes. [FDIC]
consulate
The offices representing the commercial interests of one country located within the borders of another country. [ITDS]
Consumer Advisory Council (CAC)
A statutory body established by Congress in 1976. The Council, with 30 members who represent a broad range of consumer and creditor interests, advises the Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on which the Board seeks its advice. [FRB][FRBC][FRBM] A statutory body established by Congress in 1976. The Council, with 30 members who represent a broad range of consumer and creditor interests, advises the Federal Reserve Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on which the Federal Reserve Board seeks its advice. [FRBSF]
consumer credit
Credit granted by a firm to consumers for the purchase of goods or services. Also called retail credit. [Harvey] any loan or extension of credit to an individual for personal, family, or household use not involving real estate. [OTS]
consumer goods
Any goods produced for the expressed use of individuals rather than the production or manufacturing of other goods. [ITDS]
consumer price index (CPI)
A major inflation measure computed by the U.S. Department of Commerce. It measures the change in prices of a fixed market basket of some 385 goods and services in the previous month. [CBOT][MIDAM] A measure of the average amount (price) paid for a market basket of goods and services by a typical U.S. consumer in comparison to the average paid for the same basket in an earlier base year. [FACS] A measurement of the cost of living determined by the Bureau of Labor Statistics. [FRBSF] A monthly measure of changes in the prices of goods and services consumed. The index is compiled by the U.S. Bureau of Labor Statistics. [OTS] The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S.Department of Labor publishes the CPI very month. [Harvey]
consumption entry
A customs entry where the importer pays the applicable dues and the goods are released from customs custody. [ITDS]
consumption expenditures
The total dollar value of all goods and services purchased by the household sector for current use. [FACS]
consumption function
A mathematical expression relating personal consumption expenditures to disposable income. [FACS]
container
A single rigid, sealed, reusable metal 'box' in which merchandise is shipped by vessel, truck, or rail. [ITDS]
container freight charge
Charge made for the packing or unpacking of cargo from ocean freight containers. [ITDS]
container load
A shipment of cargo that according to weight or volume, will fit any number of standard containers. [ITDS]
container on flatcar
A container without wheels put on railcars for transport. [ITDS]
container part load
A shipment of cargo that according to weight or volume, will not fit into any number of standard containers. [ITDS]
container vessel
An ocean going vessel designed specifically to handle the loading, storage and removal of freight containers. [ITDS]
contango
A condition in a futures market where the more distant delivery months trade at a premium to the near term delivery months. [TMAC] A market condition in which futures prices are higher in the distant delivery months. [Harvey]
contango market
A market situation in which prices are higher in the succeeding delivery months than in the nearest delivery month. Opposite of Backwardation. [NYMEX]
contemporaneous reserve accounting (CRA)
An accounting method which allows member banks of the Federal Reserve a one day lag when calculating their required reserves and reserves held as vault cash. Except for the one-day lag, assets and liabilities used in calculating reserves and required reserves are those of the same week. [FRBSF]
contingency order
An order which becomes effective only upon the fulfillment of some condition in the marketplace. [NYMEX]
contingent claim
A claim that can be made only if one or more specified outcomes occur. [Harvey]
contingent deferred sales charge
The formal name for the load of a back-end load fund. [Harvey]
contingent immunization
An arrangement in which the money manager pursues an active bond portfolio strategy until an adverse investment experience drives the then-available potential return down to the safety-net level. When that point is reached, the money manager is obligated to pursue an immunization strategy to lock in the safety-net level return. [Harvey]
contingent liabilities
Items which may become liabilities as a result of conditions undetermined at a given date, such as guarantees, pending law suits, judgments under appeal, unsettled dispute claims, unfilled purchase orders, and uncompleted contracts. All contingent liabilities should be disclosed within the basic financial statements, including the notes thereto. [EPA]
contingent pension liability
Under ERISA, the firm is liable to the plan participants for up to 39% of the net worth of the firm. [Harvey]
contingent project
Project that can not be undertaken unless another project is also undertaken. [WCSU]
continuing examination file
A file containing information of continuing interest to on-site examiners. Such items as policies, business plans, articles of incorporation and bylaws are included in the file. [OTS]
continuous compounding
Interest compounded continuously rather than at fixed intervals. [WCSU] The process of accumulating the time value of money forward in time on a continuous, or instantaneous, basis. Interest is earned continuously, and at each instant, the interest that accrues immediately begins earning interest on itself. [Harvey]
Continuous Net Settlement (CNS)
Clears securities transactions, with the total settlement payable and receivable for each security balanced daily. Excess payables and receivables are adjusted to the market value of the underlying security by charges or credits to firms with unsettled transactions. [NYSE] System operated by NSCC. It receives compared or locked-in securities trades from most of the major securities marketplaces in the United States, nets each day's trades together with any outstanding failed delivery instructions, and settles the resulting netted position at DTC. This significantly reduces the number of shares and dollars that need to be settled, and reduces participant risk via novation and settlement guarantees. [NSCC]
continuous random variable
A random value that can take any fractional value within specified ranges, as contrasted with a discrete variable. [Harvey]
contra
against, opposite, or contrasting. In accounting, a contra entry is one which is offset by an opposite entry, either a debit or credit. [OTS]
contra asset
An item that is entered on the asset side of an accounting ledger even though the item has a credit (negative) balance. For a thrift institution, contra assets include such items as deferred income and loans in process. [OTS]
contraband
Any product that a nation has labeled as unsuitable to possess, produce, or transport. [ITDS]
contract
(1) A term of reference describing a unit of trading for a commodity future or option; (2) An agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable. [CFTC] 1) A term of reference describing a unit of trading for a commodity future or option. 2) An agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable. [NYMEX] A binding agreement between two or more persons or entities, such as companies or institutions, by which rights to specific goods, services or actions are acquired by the parties to the contract. [OTS] A term of reference describing a unit of trading for a financial or commodity future. Also, the actual bilateral agreement between the buyer and seller of a transaction as defined by an exchange. [Harvey]
contract carrier
Excluding common carriers, any person who under special contract will transport passengers or goods for agreed upon compensation. [ITDS]
contract for deed
A written agreement between the seller and buyer of a piece of property, whereby the buyer receives title to the property only after making a determined number of monthly payments; also called an installment contract or land contract. [OTS]
contract grades
That grade of product established in the rules of a commodity futures exchange as being suitable for delivery against a futures contract. [NYMEX] Those grades of a commodity which have been officially approved by an exchange as deliverable in settlement of a futures contract. [CFTC]
contract month
The month in which futures contracts may be satisfied by making or accepting a delivery. Also called value managers, those who assemble portfolios with relatively lower betas, lower price-book and P/E ratios and higher dividend yields, seeing value where others do not. [Harvey]
contract trading volume
Daily trading volume. [NYMEX]
contract unit
The actual amount of a commodity represented in a contract. [CFTC]
contraction phase
The part of the business cycle when GNP, employment and production are on the decline. [FACS]
contractionary fiscal policy
A policy to increase governmental spending and/or a reduction in taxes. [FRBSF]
contractionary monetary policy
A policy to restrict the growth of money and credit in the economy. [FRBSF]
contractor
An individual or other legal entity that directly or indirectly submits offers for or receives a government contract for goods or services. [FDIC]
Contractor Oversight and Monitoring Branch (COMB)
An organizational unit located in Dallas, Texas, within the FDIC's former Division of Liquidation and responsible for overseeing the FDIC's asset management contractors. This contractor oversight group has since been renamed but is still situated in Dallas. [FDIC]
contribution margin
The difference between variable revenue and variable cost. [Harvey]
control
50% of the outstanding votes plus one vote. [Harvey]
controlled account
Any account for which trading is directed by someone other than the owner. [CFTC]
controlled disbursement
A service that provides for a single presentation of checks each day (typically in the early part of the day). [Harvey]
controlled foreign corporation
A foreign corporation whose voting stock is more than 50% owned by U.S. stockholders, each of whom owns at least 10% of the voting power. [Harvey]
controller
Officer responsible for budgeting, accounting, and auditing in a firm. [WCSU] The chief financial officer of a company, financial institution or other entity. The controller is responsible for supervising the operations of the accounting department and preparing its financial reports. Also spelled comptroller. [OTS] The corporate manager responsible for the firm's accounting activities. [Harvey]
controlling person
anyone who directly, indirectly, or acting in concert with one or more persons or companies, or together with members of the immediate family, owns, controls, or holds with power to vote, 10 percent or more of the voting stock of a savings institution, or controls in any manner the election or appointment of a majority of the institution's board of directors. [OTS]
convenience yield
The extra advantage that firms derive from holding the commodity rather than the future. [Harvey]
convention statement
An annual statement filed by a life insurance company in each state where it does business in compliance with that state's regulations. The statement and supporting documents show, among other things, the assets, liabilities, and surplus of the reporting company. [Harvey]
conventional mortgage
A loan based on the credit of the borrower and on the collateral for the mortgage. [Harvey]
conventional mortgage loan
A fixed- or adjustable-rate, fully amortized loan secured by a mortgage or deed of trust that is not insured or guaranteed by an agency of the federal government (such as FHA or VA). [OTS]
conventional pass-throughs
Also called private-label pass-throughs, any mortgage pass-through security not guaranteed by government agencies. [Harvey]
conventional project
A project with a negative initial cash flow (cash outflow), which is expected to be followed by one or more future positive cash flows (cash inflows). [Harvey]
convergence
A term referring to cash and futures prices tending to come together (i.e., the basis approaches zero) as the futures contract nears expiration. [CBOT][MIDAM] The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is higher because of the time value. But as the contract nears expiration, the futures price and the cash price converge. [Harvey] The narrowing of futures prices to cash prices as the delivery date approaches. [OTS] The tendency for prices of physicals and futures to approach one another, usually during the delivery month. [CFTC]
conversion
A delta-neutral arbitrage transaction involving a long futures, a long put option, and a short call option. The put and call options have the same strike price and same expiration date. [NYMEX] When trading options on futures contracts, a position created by selling a call option, buying a put option, and buying the underlying futures contract, where the options have the same strike price and the same expiration. [CFTC] in the financial services industry, the term refers to a change of ownership of a thrift institution from mutual to stock form (or vice versa), or a change of charter from state to federal (or vice versa). [OTS]
conversion factor
A factor used to equate the price of T-bond and T-note futures contracts with the various cash T-bonds and T-notes eligible for delivery. This factor is based on the relationship of the cash-instrument coupon to the required 8 percent deliverable grade of a futures contract as well as taking into account the cash instrument's maturity or call. [CBOT][MIDAM] Rules set by the Chicago Board of Trade for determining the invoice price of each acceptable deliverable Treasury issue against the Treasury Bond futures contract. [Harvey]
conversion premium
The percentage by which the conversion price in a convertible security exceeds the prevailing common stock price at the time the convertible security is issued. [Harvey]
conversion price
Par value of a convertible security divided by the number of shares into which it may be exchanged. [WCSU]
conversion ratio
Number of shares for which a convertible security may be exchanged. [WCSU] The number of shares of common stock that the security holder will receive from exercising the call option of a convertible security. [Harvey]
conversion value
Also called parity value, the value of a convertible security if it is converted immediately. [Harvey]
convertibility
Ease of exchanging one currency for that of another nation or for gold. [ITDS] The ability of owners of one currency to exchange it for other foreign currencies (or gold) in the open market. Some countries permit portion of their currency to be convertible and will designate accounts that way, for example, 'External' sterling and 'Free' yen. [FDIC] The degree of freedom to exchange a currency without government restrictions or controls. [Harvey]
convertible
A bond or a preferred stock that, under specified conditions, may be exchanged for common stock or another security, usually of the same issuer. [OTS] A bond, debenture or preferred share that may be exchanged by the owner for common stock or another security, usually of the same company, in accordance with the terms of the issue. [NYSE]
convertible bonds
Bonds that can be converted into common stock at the option of the holder. [Harvey]
convertible Eurobond
A Eurobond that can be converted into another asset, often through exercise of attached warrants. [Harvey]
convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the issuer's option, into convertible bonds that have the same conversion features as the convertible preferred stock. [Harvey]
convertible preferred stock
Preferred stock that can be converted into common stock at the option of the holder. [Harvey]
convertible price
The contractually specified price per share at which a convertible security can be converted into shares of common stock. [Harvey]
convertible security
A security that can be converted into common stock at the option of the security holder, including convertible bonds and convertible preferred stock. [Harvey] Bond or preferred stock that maybe converted into another security at the beholder's option. [WCSU]
convex
Bowed, as in the shape of a curve. Usually referring to the price/required yield relationship for option-free bonds. [Harvey]
convexity
The rate of change in price of a position for a given change in yield. [TMAC] rate of change in duration with respect to changes in interest rates. Positive convexity occurs when durations shorten as interest rates rise or lengthen as interest rates decrease. Negative convexity occurs when durations lengthen as interest rates rise or shorten as interest rates decrease. Mortgages typically have negative convexity, because as interest rates rise the incentive to prepay is reduced, thus extending the duration of the mortgage. [OTS]
convexity risk
The risk of adverse changes in the price of a position due to changes in the yield. [TMAC]
convey
The act of transferring title to real property from one party to another. [OTS]
conveyance
A document, such as a deed, used to effect a transfer of property from one owner to another. [OTS]
cooperative
A system of indirect ownership of a single unit in a multi-unit structure. The individual owns shares in a non-profit corporation that holds title to the building. In turn, the corporation gives the owner a long-term proprietary lease on the unit. The corporation may finance the property with a blanket mortgage. Homeowners, in turn, may get a share loan to finance the purchase of the shares that entitle them to occupy a specific apartment. Also called a co-op. [OTS]
cooperative banks
state-chartered savings associations located in Massachusetts, New Hampshire, Rhode Island and Vermont. [OTS]
core branch P&A
A component in a purchase and assumption (P&A) transaction in an RTC branch breakup resolution. Under the terms of the core branch P&A agreement, the acquiring institution assumes all of the deposit liabilities directly attributable to the failed institution's headquarters branch and other acquired branches, and certain other liabilities. In addition, the acquirer purchases the assets directly attributable to the headquarters and other acquired branches as well as assets that are not branch-specific such as the trust or credit card business. The core branch P&A incorporates the terms of the standard P&A as the standard terms and conditions of the transaction. Generally, the core branch P&A was used in branch breakup transactions for the sale of the headquarters branch or core branch clusters while individual branch offices were sold under the limited branch P&A. [FDIC]
core capital
one of three capital standards established for savings institutions in 1989. The minimum amount of core capital for the soundest institutions is 3 percent of assets. [OTS]
core competency
Primary area of competence. Narrowly defined fields or tasks at which a company or business excels. Primary areas of specialty. [Harvey]
core deposit intangibles
A premium paid to acquire the core deposits of an institution. The premium is the amount paid in excess of the dollar amount of the deposits, and under accounting rules, the premium is listed on the books as an intangible asset. [OTS]
core deposits
That portion of a bank's deposits that is relatively stable and has a predictable cost. Deposits fluctuate seasonally and cyclically, but even in adverse circumstances, deposits normally do not fall below some minimum level. [FDIC] those deposits that are expected to remain with a savings institution for a relatively long period of time. Such deposits are attracted by the convenience and service offered by the institution rather than from interest rates paid. [OTS]
core inflation
The basic level of inflation over a period of time as opposed to temporary fluctuations. [ITDS]
corn laws
Tariffs which England placed on grain imports from 1815 to 1846. By restricting the supply or grain in England, these laws raised the price of grain in England and increased the value of English farmland. [FACS]
corner
(1) Securing such relative control of a commodity or security that its price can be manipulated; (2) In the extreme situation, obtaining contracts requiring the delivery of more commodities or securities than are available for delivery. [CFTC]
corner a market
To purchase enough of the available supply of a commodity or stock in order to manipulate its price. [Harvey]
corner lot
A lot abutting two or more streets at their intersection. [OTS]
corporate acquisition
The acquisition of one firm by another firm. [Harvey]
corporate bond
A bond issued by a corporation. [NYSE] Debt obligations issued by corporations. [Harvey]
corporate charter
A legal document creating a corporation. [Harvey]
corporate dumping
The practice of exporting banned or out of date goods to a foreign market where restrictions on that product are not as severe. [ITDS]
corporate finance
One of the three areas of the discipline of finance. It deals with the operation of the firm (both the investment decision and the financing decision) from that firm's point of view. [Harvey]
corporate financial management
The application of financial principals within a corporation to create and maintain value through decision making and proper resource management. [Harvey]
corporate financial planning
Financial planning conducted by a firm that encompasses preparation of both long- and short-term financial plans. [Harvey]
corporate payments
Corporate payments are payments that are used by businesses to pay other businesses for goods or services. [GAO]
corporate personality
The principle that a company is for legal purposes an independent person having an existence separate from that of the human beings who own, manage and service it. [UNODC]
corporate processing float
The time that elapses between receipt of payment from a customer and the depositing of the customer's check in the firm's bank account; the time required to process customer payments. [Harvey]
corporate profits
The income earned by corporations as a result of current production. This measure differs from profits as they are reported in corporate financial statements. It excludes capital gains and losses, and it is calculated by valuing depreciation of fixed assets and inventory withdrawals at current cost, rather than at historical cost. [BEA]
corporate tax view
The argument that double (corporate and individual) taxation of equity returns makes debt a cheaper financing method. [Harvey]
corporate taxable equivalent
Rate of return required on a par bond to produce the same after-tax yield to maturity that the premium or discount bond quoted would. [Harvey]
corporate trade exchange (CTX)
An ACH payment program for corporate to corporate payments. [ACH]
corporate trade payment (CTP)
A payment made between corporations through the ACH network. [ACH]
corporation
A group of people granted a charter legally recognizing them as a separate entity having its own rights, powers, privileges and liabilities distinct and separate from those of its members. [OTS] A legal 'person' that is separate and distinct from its owners. A corporation is allowed to own assets, incur liabilities, and sell securities, among other things. [Harvey]
corporator
(1) a member of a corporation, especially one of the original members who formed the corporation. (2) one of a group that, in certain states, elects the trustees of a mutual savings bank. [OTS]
corporeal property
real or personal property having form or structure, such as a house, furniture, land, equipment or an automobile. [OTS]
corrective action plan (CAP)
A plan for correcting organizational or operational weaknesses. As defined in the FDIC Internal Control Review program, a CAP states the deficiency, the corrective action required to cure the deficiency, the person or persons responsible for the action, and actual or expected completion dates for the required actions. [FDIC]
correlation
A measure of the degree to which returns on two risky assets move in tandem. A positive correlation means the returns move together. A negative correlation means they vary inversely. [TMAC]
correlation coefficient
A standardized statistical measure of the dependence of two random variables, defined as the covariance divided by the standard deviations of two variables. [Harvey] Measure of the closeness of the relationship between two variables. [WCSU]
correlation risk
The risk that the actual correlation between two risk assets is not equal to the estimated or expected correlation. [TMAC]
correspondent
A securities firm, bank or other financial organization that regularly performs services for another in a place or market to which the other does not have direct access. Securities firms may have correspondents in foreign countries or on exchanges of which they are not members. Correspondents are frequently linked by private wires. Member organizations of the NYSE with offices in New York City may also act as correspondents for out-of-town member organizations that do not maintain New York offices. [NYSE]
correspondent bank
A bank that accepts deposits of and performs banking services for other depository institutions. [FRB][FRBC][FRBM][FRBSF] A bank that regularly performs services for another financial institution usually located in another city or marketing area. Services typically include handling out-of-area checks, trusts and technical services, and acceptance of deposits from the out-of-area institution. [OTS] A correspondent bank is a bank that--by arrangement--holds the deposits of another bank and provides payments and other services for that bank. [GAO]
cosigner
A term referring to a person, other than the principle borrower, who signs for a loan. The cosigner(s) assumes equal liability for the loan. [FRBSF] An individual or entity that signs a legal document on an equal basis with the signer. On a promissory note, all cosigners are individually and jointly liable for repayment of the full debt. [OTS] Another person who signs for a loan and assumes equal liability for it. [FRB][FRBC][FRBM]
cost
(A) The amount of money or other consideration exchanged for property or services. Costs may be incurred even before money is paid; that is, as soon as liability is incurred. Ultimately, however, money or other consideration must be given in exchange. Again, the cost of some property or service may, in turn, become a part of the cost of another property or service. For example, the cost of part of all of the materials purchased at a certain time will be reflected in the cost of articles made from such materials or in the cost of those services in the rendering of which the materials were used. Expense . (B) The amount of money or other consideration exchanged for property or services. Costs may be incurred even before money is paid; that is as soon as liability is incurred. Ultimately, however, money or other consideration must be given to exchange. [EPA] The most valuable opportunity forsaken when a choice is made. [FACS] something of value, usually an amount of money, given up in exchange for something else, usually goods or services. All expenses are costs, but not all costs are expenses. (An expense is the cost of resources used to produce revenue.) As a verb, cost means to estimate the amount of money needed to produce a product or perform a service. [OTS]
cost accounting
A branch of accounting dealing with the classification, recording, allocation, summarization and reporting of current and prospective costs and analyzing their behaviors. Cost accounting is frequently used to facilitate internal decision making and provides tools with which management can appraise performance and control costs of doing business. [OTS]
cost allocation
The process of expressing the total utility revenue requirements, including operation and maintenance expense, depreciation expense, and other capital costs, in terms of costs related to various service requirements or functions. [EPA]
cost and freight (C&F)
'Cost and Freight' paid to a point of destination and included in the price quoted. [CFTC]
cost approach to value
An approximation of the market value of improved real estate measured as the cost of reproduction or replacement. [OTS]
cost basis
The original price of an asset, normally the purchase price or the appraised value of the asset at the time of acquisition. [OTS]
cost company arrangement
Arrangement whereby the shareholders of a project receive output free of charge but agree to pay all operating and finance charges of the project. [Harvey][WCSU]
cost of capital
The required return for a capital budgeting project. [Harvey]
cost of carry (or carry)
cost of funds
Interest rate associated with borrowing money. [Harvey] The interest paid or accrued on savings, advances from a Federal Home Loan Bank or interest on other funds borrowed by a thrift institution, expressed as a percent of its average total savings and borrowings during a given accounting period. [OTS]
cost of funds index
A measure of how much interest a financial institution must pay for money it borrows from savers in the form of deposits, or from other lenders such as a Federal Home Loan Bank. The index, expressed as a percentage, is calculated by dividing the total amount of interest (or costs) paid or accrued on deposits, on District Bank advances and on other borrowed money, by the average amount of deposits and borrowed money on hand during a reporting period. A cost of funds index, such as the one published by the Office of Thrift Supervision, may be used by lending institutions as the basis for adjusting interest rates on adjustable rate mortgage loans. [OTS]
cost of lease financing
A lease's internal rate of return. [Harvey]
cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital raised from limited partners. [Harvey]
cost of tender
Total of various charges incurred when a commodity is certified and delivered on a futures contract. [CFTC]
cost test
The statutory requirement before enactment of FDICIA that a P&A transaction be less costly to the relevant insurance fund than a payoff and liquidation. The 'cost test' was introduced in 1982 by the Garn--St Germain Depository Institutions Act, which enhanced the power of the FDIC and FSLIC to provide aid to troubled institutions and imposed the condition that the assistance provided must be less costly than the cost of liquidation. [FDIC]
cost, insurance, and freight
A price quotation under which the seller defrays all expenses involved in the delivery of goods. [FDIC]
cost, insurance, freight
Cost, insurance and freight paid to a point of destination and included in the price quoted. [CFTC] Term refers to a sale in which the buyer agrees to pay a unit price that includes the free on board (FOB) value at the port of origin plus all costs of insurance and transportation. This type of transaction differs from a 'delivered' agreement in that it is generally ex-duty, and the buyer accepts the quantity and quality at the loading port rather than pay on quality and quantity as determined at the unloading port. Risk and title are transferred from the seller to the buyer at the loading port, although the seller is obliged to provide insurance in a transferable policy at the time of loading. [NYMEX]
cost-benefit ratio
The net present value of an investment divided by the investment's initial cost. Also called the profitability index. [Harvey]
cost-causative agent
Effecting or operating as an agent which is responsible for the cost effect produced. [EPA]
cost-effective
economical in terms of tangible benefits produced by money spent. [OTS]
cost-of-living adjustments
Automatic adjustments in incomes paid to individual recipients which are tied to the inflation rate, usually measured by the Consumer Price Index. [FACS]
cost-plus
A pricing method where the purchaser agrees to pay the production cost of the good plus a fixed percentage to the seller for profit. [ITDS] The practice of establishing the selling price for a product or service by adding a fixed amount or percentage to costs. For example, the FDIC's ALA contractors received a cost-plus compensation package. [FDIC]
cost-plus contract
A construction contract in which the contract price is equal to the cost of construction plus a profit allowance to the builder, as opposed to a fixed price contract. [OTS]
cost-push inflation
A term that applies when increases in the price level are caused by increases in cost. [FACS]
costless collar
Is made up of two options, one purchased and one written, structured so that the value of the two premiums are equal and offsetting. [TMAC]
costs of issuance
The expenses associated with the sale of a new issue of municipal securities, including such items as underwriter's spread, printing, legal fees and rating costs. [EPA]
council of economic advisors
Three persons who act as the Presidents chief economic advisers. [FACS]
Council of Europe
The CoE was established 5 May 1949 to promote increased unity and quality of life in Europe. It is located in Strasbourg, France. [UNODC]
counter trade
The exchange of goods for other goods rather than for cash; barter. [Harvey]
counter-trend trading
In technical analysis, the method by which a trader takes a position contrary to the current market direction in anticipation of a change in that direction. [CFTC]
counterfeit
something that is an imitation and is made to deceive persons into believing that the forgery is genuine. Counterfeit money, for example, are bills printed by private parties to be passed off as legitimate U.S. currency. [OTS]
counterpart items
In the balance of payments, counterpart items are analogous to unrequited transfers in the current account. They arise because the double-entry system in balance of payments accounting and refer to adjustments in reserves owing to monetization or demonetization of gold, allocation or cancellation of SDRs, and revaluation of the various components of total reserves. [Harvey]
counterparty
Party on the other side of a trade or transaction. [Harvey] The other party in a swap transaction. [OTS] The parties to an interest rate swap. [Harvey]
counterparty risk
The risk that the other party to an agreement will default. In an options contract, the risk to the option buyer that the option writer will not buy or sell the underlying as agreed. [Harvey]
countersignature
An additional signature attesting to the authenticity of the first signature or the authenticity of the document being signed. [OTS]
country beta
Covariance of a national economy's rate of return and the rate of return the world economy divided by the variance of the world economy. [Harvey]
country economic risk
Developments in a national economy that can affect the outcome of an international financial transaction. [Harvey]
country financial risk
The ability of the national economy to generate enough foreign exchange to meet payments of interest and principal on its foreign debt. [Harvey]
country of departure
The country from which a ship or shipment has or is scheduled to depart. [ITDS]
country of destination
The country that is the ultimate destination for a ship or shipment of goods. [ITDS]
country of dispatch
The country from which cargo was shipped. [ITDS]
country of exportation
Usually, the country in which the merchandise was manufactured and produced and from where it was first exported. [ITDS]
country of origin
The country where merchandise was grown, mined or manufactured. [ITDS]
country risk
General level of political and economic uncertainty in a country affecting the value of loans or investments in that country. [Harvey] The financial risks of a transaction which relate to the political, economic, or social instability of a country. [ITDS]
country selection
A type of active international management that measures the contribution to performance attributable to investing in the better-performing stock markets of the world. [Harvey]
coupon
(1) Specifically, a coupon attached to the certificate of a bearer bond that must be surrendered to collect the interest payment. (2) More generally, interest payment on debt. [WCSU] (1) a tab attached to a bond, which can be torn off and presented to collect an interest payment, usually semiannually. (2) a percentage of a bond's face value, which is the annual rate of return received by the bondholder. [OTS] A fixed dollar amount of interest payable per annum, stated as a percentage of principal value, usually payable in semiannual installments. [CFTC] Negotiable instrument attached to a security, representing interest payable on the principal amount of the security on a date certain and upon presentation of the coupon. A coupon usually represents 'six months interest' on the principal amount of the security to which it is attached; often the 'first coupon' or the 'short coupon' (that representing the first interest payable after issuance)is for a period of fewer or more than six months. [EPA] The interest rate on a debt instrument expressed in terms of a percent on an annualized basis that the issuer guarantees to pay the holder until maturity. [CBOT][MIDAM] The periodic interest payment made to the bondholders during the life of the bond. [Harvey]
coupon bond
A written document evidencing a debt obligation to which interest coupons are attached. Each coupon bears a different maturity date and states the interest due on that date. The bondholder clips the coupons from the bond as they mature and presents the coupons to the bond issuer for payment of interest. [OTS] Bond with interest coupons attached. The coupons are clipped as they come due and presented by the holder for payment of interest. [NYSE] Bonds issued with coupons attached that are 'clipped' on each interest payment date and presented for payment. [EPA]
coupon book
A set of notices, usually computer generated, that the borrower returns to the lender, one at a time, with each loan repayment or with each deposit to a savings account such as a club account. [OTS]
coupon equivalent yield
True interest cost expressed on the basis of a 365-day year. [Harvey]
coupon payments
A bond's interest payments. [Harvey]
coupon rate
In bonds, notes or other fixed income securities, the stated percentage rate of interest, usually paid twice a year. [Harvey] The annual interest rate of a debt instrument. More generally, the annual interest rate on any indebtedness. In mortgage banking, the term is used to describe the contract interest rate on the face of a bond or note. [OTS] The interest rate specified on interest coupons attached to a bond. The term is synonymous with nominal interest rate. [EPA]
coupon security
Security with coupons attached. (Compare 'fully Registered'.) [EPA]
courier
Attendant who accompanies shipments. [ITDS]
court
(1) an open area between buildings or walls. (2) an institution in which disputes and conflicts are heard, argued and decided on the basis of law. (3) an area equipped for playing such games as tennis or racquetball, and sometimes provided as an amenity for owners or tenants in a housing development. [OTS]
court of equity
A court of law in which mortgage suits and foreclosure actions are heard and decided. [OTS]
covariance
A statistical measure of the degree to which random variables move together. [Harvey] Measure of the comovement between two variables. [WCSU]
covenant
Agreements and undertakings in the security documents to do or not to do something. (Covenants are distinguished from representations or warranties, which assert the existence or nonexistence of a set of facts.) Although it is generally clear that the breach of a covenant Would be a default under usual default provisions, it often is not clear under the language of most security documents that a default occurs if a representation or warranty turns out not to be true. [EPA] Clause in a loan agreement. [WCSU] Provisions in a bond indenture or preferred stock agreement that require the bond or preferred stock issuer to take certain specified actions (affirmative covenants) or to refrain from taking certain specified actions (negative covenants). [Harvey] The part of a loan agreement that sets forth constraints as to what the borrower will and will not do regarding the property pledged as collateral for the loan. Covenants may also be written into a deed. Real covenants bind subsequent owners of the property while personal covenants do not. [OTS]
cover
(1) Purchasing futures to offset a short position. [CFTC] The execution of an offsetting foreign exchange trade to close or eliminate an open exposure. [FDIC] The purchase of a contract to offset a previously established short position. [Harvey] To close out a short futures or option position. [NYMEX]
coverage
The ratio of net revenue available for debt service to the average annual debt service requirements of an issue of revenue bonds. [EPA]
coverage ratio
A key ratio for an enterprise fund, calculated by dividing the net revenues of the fund (total revenues minus operating expenses) by the annual debt service on revenue bonds outstanding and multiplying by 100. Quantity of revenues and stability and predictability of coverage r-age are all important analytical factors. [EPA] Ratios used to test the adequacy of cash flows generated through earnings for purposes of meeting debt and lease obligations, including the interest coverage ratio and the fixed charge coverage ratio. [Harvey]
covered assets
assets of a failed financial institution that are purchased or acquired under a government program that protects the new owner against all or partial loss when the assets are sold. [OTS]
covered call
A short call option position in which the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally limit the risk the writer takes because the stock does not have to be bought at the market price, if the holder of that option decides to exercise it. [Harvey]
covered call option writing
A call option seller is covered if he owns the underlying actuals (Naked Call Option Writing) for the call option contract. [TMAC]
covered call writing strategy
A strategy that involves writing a call option on securities that the investor owns in his or her portfolio. [Harvey]
covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges his resulting foreign exchange risk by selling the proceeds of the investment forward for dollars. [Harvey]
covered option
A short call or put option position which is covered by the sale or purchase of the underlying futures contract or physical commodity. For example, in the case of options on futures contracts, a covered call is a short call position combined with a long futures position. A covered put is a short put position combined with a short futures position. [CFTC] An option position that is offset by an equal and opposite position in the underlying security. [NYSE]
covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the underlying stock, designed so that one position will help offset any unfavorable price movement in the other, including covered call writing and protective put buying. [Harvey]
covered put
A put option position in which the option writer also is short the corresponding stock or has deposited, in a cash account, cash or cash equivalents equal to the exercise of the option. This limits the option writer's risk because money or stock is already set aside. In the event that the holder of the put option decides to exercise the option, the writer's risk is more limited than it would be on an uncovered or naked put option. [Harvey]
covered writing
The sale of an option against an existing position in the underlying futures contract. For example, short call and long futures. [NYMEX]
Cox-Ross-Rubinstein option pricing model
An option pricing logarithm developed by J. Cox, S. Ross and M. Rubinstein which can be adopted to include effects not included in the Black-Scholes model (e.g., early exercise and price supports). [CFTC]
crack
In energy futures, the simultaneous purchase of crude oil futures and the sale of petroleum product futures to establish a refining margin. [CFTC]
crack spreads
The simultaneous purchase or sale of crude oil against the sale or purchase of refined petroleum products. These spread differentials which represent refining margins are normally quoted in dollars per barrel by converting the product prices into dollars per barrel (divide the cents-per-gallon price by 42) and subtracting the crude price. [NYMEX]
craft unions
Exclusive combinations of workers in individual trades such as printers, shoemakers and bakers. [FACS]
cramdown
A court-ordered reduction of the secured balance due on a home mortgage loan, granted to a homeowner who has filed for personal bankruptcy. In a cramdown, the bankruptcy court splits the outstanding mortgage balance into two parts. The amount of debt equal to the current appraised value of the home is treated as a secured claim, which the borrower must continue to pay. The amount of debt in excess of the current property's value becomes an unsecured claim, which is usually not repaid in full. In areas where home prices have depreciated, cramdowns can result in significant mortgage reductions. In some cases, the judge may order the remaining secured debt amortized over the remaining life of the loan term, thus lowering monthly payments. In other cases, monthly payments remain the same as before the cramdown, and the secured mortgage is simply paid off faster. [OTS] The ability of the bankruptcy court to confirm a plan of reorganization over the objections of some classes of creditors. [Harvey]
crawling peg
An automatic system for revising the exchange rate. It involves establishing a par value around which the rate can vary up to a given percent. The par value is revised regularly according to a formula determined by the authorities. [Harvey]
credible signal
A signal that provides accurate information; a signal that can be distinguish among senders. [Harvey]
credit
(1) the provision of goods or services in exchange for the promise of future payment. (2) an accounting term that refers to the right-hand side of an account record in which the amounts are entered in a double-entry system of bookkeeping. [OTS] Money loaned. [Harvey] The capacity to borrow money up to a specified limit under specified conditions. [FACS] The promise to pay in the future in order to buy or borrow in the present. The right to defer payment of debt. [FRB][FRBC][FRBM][FRBSF]
credit analysis
The process of analyzing information on companies and bond issues in order to estimate the ability of the issuer to live up to its future contractual obligations. [Harvey]
credit bureau
An agency that collects and distributes credit-history information of individuals and businesses. [OTS]
credit card
A credit card is a payment card issued to a person for purchasing goods and services and obtaining cash against a line of credit established by the issuer. Credit cards can be of two types: those issued by merchants and vendors, such as department stores or oil companies, and general purpose credit cards issued by banks. [GAO] A plastic card that can be used by the cardholder to make purchases or obtain cash advances using a line of credit extended by the financial institution that issued the card. The card normally contains the cardholder's name and account number and may contain other information encoded on a magnetic strip. Some credit cards may be used in automatic teller machines. [OTS] Any card, plate, or coupon book that may be used repeatedly to borrow money or buy goods and services on credit. [FRB][FRBC][FRBM][FRBSF]
credit card company
A credit card company is a company that owns the trademark of a particular credit card and may also provide a number of marketing, processing, or other services to the members using the card services. [GAO]
credit crunch
slang for a general economic condition in which loans are harder to obtain. [OTS]
credit deposit
The value of a merchant's credit card purchases that are credited to its bank account after the acquirer buys the merchant's sales slips. The deposit is credited. It is not funded until the acquirer gets the monetary value from the issuer during settlement. [GAO]
credit enhancement
Lending of a superior credit for a fee to an issue or issuer for the purpose of increased marketability. [EPA] Purchase of the financial guarantee of a large insurance company to raise funds. [Harvey]
credit history
A record of how a person has borrowed and repaid debt. [FRB][FRBC][FRBM][FRBSF]
credit life insurance
insurance on the life of a borrower that pays off a specific amount of debt or a specified credit account if the borrower dies. [OTS]
credit line
A credit line is the maximum amount of credit available in an open-ended credit arrangement, such as a bank credit card, which the lender may change at any time. The credit line is disclosed in the credit card agreement. [GAO]
credit period
The length of time for which the customer is granted credit. [Harvey]
credit rating
An estimate of the likelihood that a borrower will repay a loan on time. This measure of creditworthiness is based on the borrower's present financial condition, past credit history, integrity and experience. [OTS]
credit risk
An estimate of the probability that a borrower will not repay all or a portion of a loan on time. The risk that a loan will not be repaid. [OTS] The risk of loss from a counterparty who is unwilling or unable to settle its side of a transaction. [TMAC] The risk that an issuer of debt securities or a borrower may default on his obligations, or that the payment may not be made on a negotiable instrument. [Harvey]
credit scoring
A procedure for assignment scores to companies on the basis of the risk of default. [WCSU] A statistical technique wherein several financial characteristics are combined to form a single score to represent a customer's creditworthiness. [Harvey]
credit scoring system
A statistical system used to determine whether or not to grant credit by assigning numerical scores to various characteristics related to creditworthiness. [FRB][FRBC][FRBM][FRBSF]
Credit Standards Advisory Committee (CSAC)
An independent committee established by Congress in the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The committee consists of representatives of the five federal bank/thrift regulatory agencies plus six members of the public who are knowledgeable with the credit standards and lending practices of insured depository institutions. The committee's mission is to monitor and review the credit standards and lending practices of federally insured depository institutions and recommend any needed changes in federal regulation and supervision. [OTS]
credit support providers
Are typically party to swap agreements where one of the counterparties is a member of a corporate group in which other members of the group are stronger credits. [TMAC]
credit unions
A cooperative organization chartered by state or federal government that accepts savings from its members and makes low interest loans to its members. Credit unions are normally formed among members who are employed by the same company or are members of the same organization. [OTS] Credit Unions are financial cooperative organizations of individuals with a common affiliation (such as employment, labor union membership, or place of residence). Credit unions accept deposits of members, pay interest (dividends) on them out of earnings, and primarily provide consumer installment credit to members. [FRBC] Financial cooperative organization of individuals who have a common bond, such as a place of employment, residence, or membership in a labor union. Credit unions accept deposits from members, pay interest (in the form of dividends) on the deposits out of earnings, and use their funds mainly to provide consumer installment loans to members. [FRBSF]
crediting rate
The interest rate offered on an investment type insurance policy. [Harvey]
creditor
An individual, business or other organization to whom money or something of value is owed. [OTS] Lender of money. [Harvey]
creditworthiness
A creditor's measure of a consumer's past and future ability and willingness to repay debts. [FRB][FRBC][FRBM][FRBSF]
critically undercapitalized
One of the five capital categories of financial condition established by FDICIA and codified in section 38 of the FDI Act. The five categories are wellcapitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Section 38 requires banking supervisors to impose constraints on insured depository institutions that are determined to be in any of the latter three categories. An insured depository institution is 'critically undercapitalized' if its ratio of tangible capital to total assets is equal to or less than 2 percent. [FDIC]
criticized assets
loans with payments in arrears that are rated by government examiners as substandard, doubtful, loss or special mention. Criticized assets include classified assets plus those listed as special mention. [OTS]
crop (marketing) year
The time span from harvest to harvest for agricultural commodities. The crop marketing year varies slightly with each ag commodity, but it tends to begin at harvest and end before the next year's harvest, e.g., the marketing year for soybeans begins September 1 and ends August 31. The futures contract month of November represents the first major new-crop marketing month, and the contract month of July represents the last major old-crop marketing month for soybeans. [CBOT][MIDAM]
crop reports
Reports compiled by the U.S. Department of Agriculture on various ag commodities that are released throughout the year. Information in the reports includes estimates on planted acreage, yield, and expected production, as well as comparison of production from previous years. [CBOT][MIDAM]
crop year
The time period from one harvest to the next, varying according to the commodity (i.e., July 1 to June 30 for wheat; September 1 to August 31 for soybeans). [CFTC]
cross default
A provision under which default on one debt obligation triggers default on another debt obligation. [Harvey]
cross guarantee
A provision of the FDI Act added by FIRREA that allows the FDIC to recover part of its costs of liquidating or assisting a troubled insured institution by assessing those costs to the remaining solvent insured institutions which are commonly controlled as defined in the statute. When the FDIC acts to protect its interests under this provision, the assessment can result in a liquidity strain or, in some cases, the immediate insolvency of an affiliated bank. [FDIC]
cross holdings
One corporation holds shares in another firm. [Harvey]
cross rates
In foreign exchange, the price of one currency in terms of another currency in the market of a third country. For example, a London dollar cross-rate could be the price of one U.S. dollar in terms of deutsche marks on the London market. [CFTC] The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency. [Harvey] The ratio between the exchange rate of two foreign currencies in terms of a third currency. [FDIC]
cross trade
Offsetting or noncompetitive match of the buy order of one customer against the sell order of another, a practice that is permissible only when executed in accordance with the Commodity Exchange Act, CFTC regulations, and rules of the contract market. [CFTC][NYMEX]
cross trading
Offsetting or noncompetitive match of the buy order of one customer against the sell order of