Financial Glossary - Anne & Lynn Wheeler

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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 volatilit