Financial Glossary
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B
- A Nasdaq stock symbol specifying that the stock is Class B shares of the company.
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B-Share
- A class in a family of multi-class mutual funds. This class is characterized by a back-end load structure that is paid only when the fund is sold.
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B-Shares
- Shares in companies based in mainland China that trade on either the Shanghai or Shenzhen stock exchanges. B-Shares are eligible for foreign investment provided the investment account is in the proper currency (Shanghai B-shares trade in U.S. dollars, while Shenzhen B-shares trade in Hong Kong dollars).
- Shares in companies based in mainland China that trade on either the Shanghai or Shenzhen stock exchanges. B-Shares are eligible for foreign investment provided the investment account is in the proper currency (Shanghai B-shares trade in U.S. dollars, while Shenzhen B-shares trade in Hong Kong dollars).
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B/C Loan
- A classification of loans associated with the borrowers that have tainted or limited credit histories. Generally, B/C refers to any loan that is classified as subprime, or a "B" or "C" class loan.
Within the subprime sector borrowers are graded according to their credit history. Different lenders have different grading systems based on different credit requirements. One subprime lender might have a grading system with classifications designated as A to C minus, while another subprime lender might have a grading system with classifications designated as Premium to C which all fall within the subprime sector.
- A classification of loans associated with the borrowers that have tainted or limited credit histories. Generally, B/C refers to any loan that is classified as subprime, or a "B" or "C" class loan.
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B1/B+
- Usually the lowest investment grade rating assigned to a security or insurance carrier. This rating signifies that the issuer or carrier is relatively stable with a moderate chance of default. Investors and policyholders of the rated entity are taking a low to medium risk.
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B2/B
- This is generally the highest rating assigned to a non-investment grade security or carrier. This rating signifies that the security or carrier is not creditworthy enough to be considered as an investment, and is therefore considered speculative. Investors or policyowners are taking a higher level of risk with this entity.
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B3/B-
- One of the lower ratings that a ratings agency assigns to a security or insurance carrier. This rating signifies a higher risk of default and greater risk to investors or policyholders. Entities that receive this rating are often experiencing financial instability or hold inadequate cash reserves.
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Ba1/BB+
- This is generally one of the lowest investment grade ratings that a ratings agency assigns to a security or insurance carrier. This rating signifies a low to moderate level of risk for investors or policyholders. Entities that are assigned this rating generally possess adequate reserves and are reasonably stable but not as solid as higher-rated securities or carriers.
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Ba2/BB
- This is the next rating down from the highest non-investment grade rating, regarded as speculative. This rating is assigned to less creditworthy carriers and securities by the ratings agencies. Investors and policyholders of these entities face a higher risk of default.
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Baby Bells
- A common nickname given to the
- A common nickname given to the
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Baby Bills
- A nickname given to the hypothetical companies that would have formed if the Justice Department had broken up Microsoft Corporation.
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Baby Bond
- Any bond issued with a par value less than $1,000.
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Baby Boomer
- A person who was born between 1946 and 1964. The baby boomer generation makes up a substantial portion of the North American population. Representing nearly 20% of the American public, baby boomers have a significant impact on the economy. As a result, baby boomers are often the focus of marketing campaigns and business plans.
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Baby Boomer Age Wave Theory
- An economic theory popularized by economist and writer Harry Dent, who concludes that the U.S. and other European markets will peak between 2008 and 2012. This is based on Dent's finding that a human's consumer spending habits peak by age 50; therefore, as the baby boomer generation reaches this age, the economy may be approaching a peak in consumer spending and in the markets.
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Baccalaureate Bond
- A zero-coupon bond issued by certain states to assist families save for college tuition by means of added tax benefits.
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Back Door Listing
- A strategy of going public used by a company that fails to meet the criteria for listing on a stock exchange. To get onto the exchange, the company desiring to go public acquires an already listed company.
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Back Fee
- The premium charged upon the second term or portion of a compound option.
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Back Month Contract
- A type of futures contract that expires in any month past the front month futures contract. The price of the first back month futures contract is often used along with the front month futures price to calculate the calender spread.
Also referred to as a "far month contract".
- A type of futures contract that expires in any month past the front month futures contract. The price of the first back month futures contract is often used along with the front month futures price to calculate the calender spread.
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Back Months
- The available futures contracts for a particular commodity that possess expirations or delivery dates furthest into the future. Also referred to as deferred futures or forward months.
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Back Of The Napkin Business Model
- A slang term that refers to the representation of the basic components of a business model excluding any fine details. It incorporates only the core ideas and success factors of the business. The name comes from the notion that a quick outline of a business can be easily sketched on the back of a napkin to sufficiently demonstrate its fundamental concepts.
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Back Office
- Administration and support personnel in a financial services company. They carry out functions like settlements, clearances, record maintenance, regulatory compliance, and accounting. When order processing is slow due to high volume, it is commonly referred to as "back office crunch."
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Back Stop
- The act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares. A company will try and raise capital through an issuance and to guarantee the amount received through the issue, the company will get a back stop from an underwriter or major shareholder to buy any of the unsubscribed shares.
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Back Taxes
- Taxes that have been unpaid in the year that they were due. Taxpayers can have unpaid back taxes at the federal, state and/or local levels. Back taxes accumulate interest and penalties on a regular basis.
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Back Up The Truck
- Slang that refers to the purchase of a large position in a stock or other financial asset by an investor or trader. Typically, when someone is willing to back up the truck on a financial asset, this implies that they're extremely bullish on that asset's performance.
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Back-End Load
- A fee (sales charge or load) that investors pay when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.
Also known as a "contingent deferred sales charge or load."
- A fee (sales charge or load) that investors pay when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.
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Back-End Ratio
- A ratio that indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), credit-card payments, child support and other loan payments. Lenders use this ratio in conjunction with the front-end ratio to approve mortgages.
Also known as "debt-to-income ratio".
- A ratio that indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), credit-card payments, child support and other loan payments. Lenders use this ratio in conjunction with the front-end ratio to approve mortgages.
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Back-to-Back Commitment
- A commitment to make a second take-out loan that piggybacks another loan. With a back-to-back commitment, once the terms of the first loan are satisfied, it will be rolled into the second loan.
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Back-To-Back Letters Of Credit
- Two letters of credit (LCs) used together to help a seller finance the purchase of equipment or services from a subcontractor. With the original LC from the buyer's bank in place, the seller goes to his own bank and has a second LC issued, with the subcontractor as beneficiary. The subcontractor is thus ensured of payment upon fulfilling the terms of the contract.
- Two letters of credit (LCs) used together to help a seller finance the purchase of equipment or services from a subcontractor. With the original LC from the buyer's bank in place, the seller goes to his own bank and has a second LC issued, with the subcontractor as beneficiary. The subcontractor is thus ensured of payment upon fulfilling the terms of the contract.
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Back-to-Back Loan
- A loan in which two companies in different countries borrow offsetting amounts from one another in each other's currency. The purpose of this transaction is to hedge against currency fluctuations. With the advent of currency swaps this type of transaction is no longer used very often.
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Backdating
- Dating any document by a date earlier than the one on which the document was originally drawn up. Under most circumstances, backdating is seen as fraudulent and illegal, although there are some situations in which backdating can be used in a legal and beneficial way, such as backdating a claim for a past period.
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Backing Away
- The act of a market maker failing to honor a posted bid or ask even though the price and quantity are valid.
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Backlog
- The total value of sales orders waiting to be filled.
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Backorder Costs
- A cost incurred by a business when it is unable to fill an order and must complete it later. A backorder cost can be discrete, as in the cost to replace a specific piece of inventory, or intangible, such as the effects of poor customer service. Backorder costs are usually computed and displayed on a per-unit basis.
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Backpricing
- A pricing method used in specific futures contracts whereby the price of the commodity to be delivered is priced by the purchaser at some future date after entering into the position.
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Backspread
- A type of options spread in which a trader holds more long positions than short positions. The premium collected from the sale of the short option is used to help finance the purchase of the long options. This type of spread enables the trader to have significant exposure to expected moves in the underlying asset while limiting the amount of loss in the event prices do not move in the direction the trader had hoped for. This spread can be created using either all call options or all put options.
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Backstop Purchaser
- An entity that agrees to purchase all the remaining, unsubscribed securities from a rights offering. The backstop purchaser provides security to the issuing firm by guaranteeing that all of the newly issued shares will be purchased, allowing the company to fulfill its fundraising requirements.
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Backtesting
- The process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge the its effectiveness.
Most technical-analysis strategies are tested with this approach.
- The process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge the its effectiveness.
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Backup Withholding
- Tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. Backup withholding may be applied when an investor has not met rules regarding taxpayer identification numbers (TIN). At the time the investor withdraws his or her investment income, the amount mandated by the backup withholding tax is remitted to the government, providing the tax-collecting body with the required funds immediately, but leaving the investor with less short-term cash flow.
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Backward Integration
- A form of vertical integration that involves the purchase of suppliers in order to reduce dependency.
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Backwardation
- A theory developed in respect to the price of a futures contract and the contract's time to expire. Backwardation says that as the contract approaches expiration, the futures contract will trade at a higher price compared to when the contract was further away from expiration. This is said to occur due to the convenience yield being higher than the prevailing risk free rate.
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Bad Check
- A check drawn on a nonexistent account or on an account with insufficient funds to honor the check when presented.
"Passing" bad checks is illegal, and the crime can range from a misdemeanor to a felony, depending on the amounts involved and whether the activity involved crossing state lines.
- A check drawn on a nonexistent account or on an account with insufficient funds to honor the check when presented.
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Bad Debt
- A debt that is not collectible and therefore worthless to the creditor. This occurs after all attempts are made to collect on the debt. Bad debt is usually a product of the debtor going into bankruptcy or where the additional cost of pursuing the debt is more than the amount the creditor could collect. This debt, once considered to be bad, will be written off by the company as an expense.
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Bad Debt Expense
- An entry found on a business's income statement that represents the amount of noncollectable accounts receivable that occurs in a given period. In terms of accounting entries, every time an amount increases bad debt expense, an equivalent amount is credited to the business's allowance for bad debts.
- An entry found on a business's income statement that represents the amount of noncollectable accounts receivable that occurs in a given period. In terms of accounting entries, every time an amount increases bad debt expense, an equivalent amount is credited to the business's allowance for bad debts.
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Bad Debt Recovery
- A debt from a loan, credit line or accounts receivable that is recovered either in whole or in part after it has been written off or classified as a bad debt. Because it generally generates a loss when it is written off, a bad debt recovery usually produces income.
In accounting, the bad debt recovery would credit the "allowance for bad debts" or "bad debt reserve" categories, and reduce the "accounts receivable" category in the books.
- A debt from a loan, credit line or accounts receivable that is recovered either in whole or in part after it has been written off or classified as a bad debt. Because it generally generates a loss when it is written off, a bad debt recovery usually produces income.
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Bad Debt Reserve
- An account set aside by a company to account for and offset losses that arise as a result of defaults from futures loans. This figure may be calculated based on historical norms or other known information about the relative safety of the debt.
Also known as a "loss reserve".
- An account set aside by a company to account for and offset losses that arise as a result of defaults from futures loans. This figure may be calculated based on historical norms or other known information about the relative safety of the debt.
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Badwill
- The negative effect felt by a company when shareholders and the investment community find out that is has done something that is not in accordance with good business practices. Although typically not expressed in a dollar amount, badwill can play out in the form of decreased revenue, loss of clients or suppliers, loss of market share and federal indictments for any crimes committed.
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Bag Holder
- An informal investment term used to describe an investor who holds a position in a stock which decreases in value until it is worthless. Typically, the bag holder will hold the position for an extended period of time in which most of the investment is lost.
- An informal investment term used to describe an investor who holds a position in a stock which decreases in value until it is worthless. Typically, the bag holder will hold the position for an extended period of time in which most of the investment is lost.
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Bag Man
- Any person in charge of organizing and collecting contributions to political parties or funds gathered for political reasons.
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Bagel Land
- A slang term that represents a stock or other security that is approaching $0 in price. Arriving in bagel land is usually the result of one or more major business problems that may not be resolvable. This term is typically used to describe an asset that has fallen from grace as opposed to a penny stock or other historically cheap security.
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Bahrain Stock Exchange - BSE
- The stock exchange headquartered in Manama, Bahrain.
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Bailee's Customers Insurance
- Insurance coverage for legal liability resulting from damage or destruction of a bailor's property while temporarily under the care or custody of a bailee. A bailee is a person or organization that has temporary possession of someone else's personal property (dry cleaner, parking valet, jewelers, repairers, etc.)
The coverage includes property that is on, or in transit to and from, the bailee's premises. Events and perils covered include fire, lightning, theft, burglary, robbery, explosion, collision, flood, earthquake and damage or destruction in the course of transportation by a carrier. The insurance is in effect when the bailee issues a receipt to the bailor for the item. Coverage excludes property belonging to the insured bailee and loss due to vermin and insects.
- Insurance coverage for legal liability resulting from damage or destruction of a bailor's property while temporarily under the care or custody of a bailee. A bailee is a person or organization that has temporary possession of someone else's personal property (dry cleaner, parking valet, jewelers, repairers, etc.)
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Bailment
- The contractual transfer of possession of assets or property for a specific objective. In bailment, the deliverer of the asset is the bailor, and the receiver is the bailee. In a bailment transaction, ownership is never transfered, and the bailor is generally not entitled to use the property while it's in possession of the bailee. In these ways, bailment differs from gifting and leasing.
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Bailout
- A situation in which a business, individual or government offers money to a failing business in order to prevent the consequences that arise from a business's downfall. Bailouts can take the form of loans, bonds, stocks or cash. They may or may not require reimbursement.
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Bailout Bond
- A debt security issued by the Resolution Funding Corporation to bail out the savings and loan associations during the financial crisis of the late 1980s and early 1990s. The bailout bonds had zero-coupon Treasury bonds backing the principal amounts, making the instruments a safe investment.
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Bait And Switch
- A dishonest marketing tactic in which a marketer advertises a very attractive price/rate/term that is really a teaser rate meant to attract customers. Once the customer comes into the store/office to inquire about the advertised price/rate (the "bait"), the advertiser will attempt to sell the customer a more expensive product (the "switch").
- A dishonest marketing tactic in which a marketer advertises a very attractive price/rate/term that is really a teaser rate meant to attract customers. Once the customer comes into the store/office to inquire about the advertised price/rate (the "bait"), the advertiser will attempt to sell the customer a more expensive product (the "switch").
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Balance Of Payments - BOP
- A record of all transactions made between one particular country and all other countries during a specified period of time. BOP compares the dollar difference of the amount of exports and imports, including all financial exports and imports. A negative balance of payments means that more money is flowing out of the country than coming in, and vice versa.
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Balance Of Trade - BOT
- The difference between a country's imports and its exports. Balance of trade is the largest component of a country's balance of payments. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it imports more than it exports; the opposite scenario is a trade surplus.
Also referred to as "trade balance" or "international trade balance"
- The difference between a country's imports and its exports. Balance of trade is the largest component of a country's balance of payments. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it imports more than it exports; the opposite scenario is a trade surplus.
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Balance Reporting
- A report by a bank to a customer, normally a company or organization, informing the customer of the balances in their accounts. These real-time reports are key to the customer's cash-management program, especially for companies with far-flung operations and banking relationships in many countries.
- A report by a bank to a customer, normally a company or organization, informing the customer of the balances in their accounts. These real-time reports are key to the customer's cash-management program, especially for companies with far-flung operations and banking relationships in many countries.
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Balance Sheet
- A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.
To learn more, check out our balance sheet video:
The balance sheet must follow the following formula:
Assets = Liabilities + Shareholders' Equity
- A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.
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Balance Sheet Reserves
- An amount expressed as a liability on the insurance company's balance sheet for benefits owed to policy owners. Balance sheet reserves represent the amount of money insurance companies set aside for future insurance claims or claims that have been filed but not yet reported to the insurance company or settled. The amount of balance sheet reserves to be maintained is regulated by law.
Also known as "claim reserves."
- An amount expressed as a liability on the insurance company's balance sheet for benefits owed to policy owners. Balance sheet reserves represent the amount of money insurance companies set aside for future insurance claims or claims that have been filed but not yet reported to the insurance company or settled. The amount of balance sheet reserves to be maintained is regulated by law.
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Balanced Budget
- A situation in financial planning or the budgeting process where total revenues are equal to or greater than total expenses. A budget can be considered balanced in hindsight, after a full year's worth of revenues and expenses have been incurred and recorded; a company's operating budget for an upcoming year can also be called balanced based on predictions or estimates.
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Balanced Fund
- A fund that combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation.
- A fund that combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation.
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Balanced Investment Strategy
- A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
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Balanced Scorecard
- A performance metric used in strategic management to identify and improve various internal functions and their resulting external outcomes. The balanced scorecard attempts to measure and provide feedback to organizations in order to assist in implementing strategies and objectives.
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Balloon Interest
- An increased coupon rate on the longer term maturity instruments within a serial bond issue. In a serial issue, bonds mature at different intervals, creating a string of short- to long-term instruments. Higher interest is earned on the long-term bonds, providing incentive to investors for holding the instrument for an increased period.
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Balloon Loan
- A type of loan which does not fully amortize over its term. Since it is not fully amortized, a balloon payment is required at the end of the term to repay the remaining principal balance of the loan.
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Balloon Maturity
- 1. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date).
2. A final loan payment that is considerably higher than prior payments. This is also known as a "balloon payment."
- 1. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date).
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Balloon Option
- An option whose notional payments increase significantly after a set threshold is broken.
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Balloon Payment
- An oversized payment due at the end of a mortgage, commercial loan or other amortized loan. Because the entire loan amount is not amortized over the life of the loan, the remaining balance is due as a final repayment to the lender.
Balloon payments are often prepackaged into what are called "two-step mortgages." In this type of mortgage, the balloon payment is rolled into a new or continuing amortized mortgage at the prevailing market rates.
Balloon payments can occur within a fixed-rate or adjustable-rate mortgage (ARM).
- An oversized payment due at the end of a mortgage, commercial loan or other amortized loan. Because the entire loan amount is not amortized over the life of the loan, the remaining balance is due as a final repayment to the lender.
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Ballot
- The documentation representing a shareholder's decision when a company's ownership group votes on corporate issues. Ballots are usually dispersed at annual meetings, when shareholders vote in the board of directors.
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Baltic Dry Index - BDI
- A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed).
The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) - Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index's composite measurement.
It is also known as the "Dry Bulk Index".
- A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed).
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Bancassurance
- A French term referring to the selling of insurance through a bank's established distribution channels, known as a Bancassurer.
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Bandwidth
- The data transfer capacity of a network. It is measured in bits per second.
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Bank
- A commercial institution licensed as a receiver of deposits. Banks are mainly concerned with making and receiving payments as well as supplying short-term loans to individuals.
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Bank Administration Institute - BAI
- A non-profit organization that focuses on improving banking standards (in the operations and auditing areas) while analyzing risks and promoting productivity-enhancing technology solutions. The BAI runs professional schools, conferences and individual programs. In addition to teaching, learning and development programs, it also operates a research affiliate.
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Bank Bill Swap Bid Rate - BBSY
- A benchmark interest rate quoted and dispersed by Reuters Information Service. The BBSY is typically used by financial institutions or corporations engaging in interest rate swaps and related transactions.
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Bank Capital
- The difference between the value of a bank's assets and its liabilities. The bank capital represents the net worth of the bank or its value to investors. The asset portion of a bank’s capital includes cash, government securities and interest-earning loans like mortgages, letters of credit and inter-bank loans. The liabilities section of a bank's capital includes loan-loss reserves and any debt it owes.
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Bank Card
- Any card issued against a depositary account, such as an ATM card or a debit card. Sometimes the phrase is also used to refer to Visa and Mastercard, since these are also issued by banks, but they are credit cards and not linked directly to a depositary account.
Bank cards may be limited in their use, Some can only be used at ATM machines or for certain purchases.
- Any card issued against a depositary account, such as an ATM card or a debit card. Sometimes the phrase is also used to refer to Visa and Mastercard, since these are also issued by banks, but they are credit cards and not linked directly to a depositary account.
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Bank Card Association
- An organization owned by financial institutions that licenses bank credit card programs. The Bank Card Association also performs operational functions for its members, including transaction processing and authorizations, interchange settlements and fee processing.
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Bank Confirmation Letter - BCL
- A letter confirming that a line of credit has been secured from a financial institution or bank. The bank confirms that a person is eligible for a specified amount of borrowed funds to be used for a predetermined purpose.
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Bank Discount Basis
- A quoting convention used by financial institutions when quoting prices for fixed-income securities sold at a discount, particularly U.S. Government issues. The quote is presented as a percentage of face value, and is determined by discounting the bond by using a 360-day-count convention, which assumes there are twelve 30-day months in a year.
Also referred to as "discount yield".
- A quoting convention used by financial institutions when quoting prices for fixed-income securities sold at a discount, particularly U.S. Government issues. The quote is presented as a percentage of face value, and is determined by discounting the bond by using a 360-day-count convention, which assumes there are twelve 30-day months in a year.
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Bank Draft
- A type of check where the payment is guaranteed to be available by issuing bank. Typically, banks will review the bank draft requester's account to see if sufficient funds are available for the check to clear. Once it has been confirmed that sufficient funds are available, the bank effectively sets aside the funds from the person's account to be given out when the bank draft is used.
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Bank Endorsement
- An endorsement by a bank for a negotiable instrument, such as a banker's acceptance or time draft, that assures the counterparty that the bank will stand behind the obligations of the creator of the instrument.
- An endorsement by a bank for a negotiable instrument, such as a banker's acceptance or time draft, that assures the counterparty that the bank will stand behind the obligations of the creator of the instrument.
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Bank Fees
- Many banks charge nominal fees for various services, such as requesting a deposit slip or counter check or notarizing a document. Bank fees generally constitute a major portion of revenue for the bank, particularly for regional and local branches.
- Many banks charge nominal fees for various services, such as requesting a deposit slip or counter check or notarizing a document. Bank fees generally constitute a major portion of revenue for the bank, particularly for regional and local branches.
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Bank For International Settlements - BIS
- An international organization fostering the cooperation of central banks and international monetary policy makers. Established in 1930, it is the oldest international financial organization, and was created to administer the transaction of monies according to the Treaty of Versailles. Among others, its main goals are to promote information sharing and to be a key center for economic research.
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Bank Giro Transfer
- A method of transferring money by instructing a bank to directly transfer funds from one bank account to another without the use of checks. Bank giro transfers are predominantly used in European countries such as Germany, Austria, the Netherlands and Sweden, where they are seen as an effective way for companies to receive payments from foreign customers.
Also known as a "Giro credit".
- A method of transferring money by instructing a bank to directly transfer funds from one bank account to another without the use of checks. Bank giro transfers are predominantly used in European countries such as Germany, Austria, the Netherlands and Sweden, where they are seen as an effective way for companies to receive payments from foreign customers.
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Bank Guarantee
- A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.
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Bank Holiday
- Any business day during which commercial banks and savings & loans institutions are closed for business to the public, specifically at physical locations. These holidays usually coincide with a federal holiday in the United States, but each country defines is own bank holidays.
Infrequently, a bank holiday can also refer to a day where there is an emergency bank closing to avert a bank run, such as what occured in Emergency Banking Act of 1933 during the Great Depression in the United States.
- Any business day during which commercial banks and savings & loans institutions are closed for business to the public, specifically at physical locations. These holidays usually coincide with a federal holiday in the United States, but each country defines is own bank holidays.
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Bank Identification Number - BIN
- The first four to six digits of a credit card. The bank identification number identifies the institution issuing the card. It is critical to the correct matching of transactions to the issuer of the charge card.
This prefix system also applies to debit cards, charge cards and electronic benefit cards.
- The first four to six digits of a credit card. The bank identification number identifies the institution issuing the card. It is critical to the correct matching of transactions to the issuer of the charge card.
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Bank Insurance
- A guarantee on a specified amount of deposits in a bank.
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Bank Investment Contract - BIC
- A security with an interest rate guaranteed by a bank. It provides a specific yield on a portfolio over a specified period.
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Bank Lending Survey
- A questionnaire circulated by a country's central banking authority to help clarify their understanding of the overall lending environment. Typical bank lending surveys include questions about the number of loans made, the interest rates on loans, demand for new loans, default rates, differences between commercial and retail lending, and information on a bank's existing loan and financial portfolios. Surveys are typically circulated quarterly, but may be circulated more or less frequently depending on a central bank's role in regulating lending and the overall state of the economy.
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Bank Letter Of Credit Policy
- An insurance policy that allows U.S. banks to confirm letters of credit issued by foreign financial institutions, facilitating the purchase of domestic exports. The policy was established by the Export-Import Bank of the United States and insures the domestic bank against the possible default of the foreign institution.
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Bank Marketing Association - BMA
- The publishing arm of the American Bankers Association, a trade association and lobbying group representing the US banking industry. The BMA publishes periodic newsletters on the subject of marketing financial services.
Also known as the ABA Marketing Network.
- The publishing arm of the American Bankers Association, a trade association and lobbying group representing the US banking industry. The BMA publishes periodic newsletters on the subject of marketing financial services.
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Bank Of Canada - BOC
- The central bank of Canada, that came into existence after the passing of the Bank of Canada Act in 1935, influences the country's economy and money supply.
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Bank of England - BoE
- The Bank of England is the central bank for the United Kingdom. It has a wide range of responsibilities, similar to those of most central banks around the world. For example, it acts as the government's bank and the lender of last resort, it issues currency and, most importantly, it oversees monetary policy.
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Bank Of Japan - BoJ
- Headquartered in the business district of Nihonbashi in Tokyo, the Bank of Japan is the Japanese central bank. The bank is responsible for issuing and handling currency and treasury securities, implementing monetary policy, maintaining the stability of the Japanese financial system, and providing settling and clearing services.
Like most central banks, the Bank of Japan also compiles and aggregates economic data and produces economic research and analysis.
- Headquartered in the business district of Nihonbashi in Tokyo, the Bank of Japan is the Japanese central bank. The bank is responsible for issuing and handling currency and treasury securities, implementing monetary policy, maintaining the stability of the Japanese financial system, and providing settling and clearing services.
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Bank Panic of 1907
- A financial crisis that arose near the beginning of the twentieth century as result of a plan to limit the popularity of trust companies. The banking industry was unsettled with the emerging successes of trusts companies, so they attempted to bring financial ruin to F. Augustus Heinze's Knickerbocker Trust in order to falter the public's favor in trust companies. Since the Knickerbocker Trust was unable to receive any financial support from other financial institutions to save itself from failure, the public started to fear that the banking and trust industries were experiencing liquidity issues and thus starting to perform bank runs.
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Bank Rate
- The rate at which central banks lend funds to national banks.
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Bank Rate Monitor Index
- An index of money market interest rates paid on deposits at 100 banks in the United States. The index is comprised of the average of interest rates paid on different types of consumer savings on deposit.
- An index of money market interest rates paid on deposits at 100 banks in the United States. The index is comprised of the average of interest rates paid on different types of consumer savings on deposit.
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Bank Reconciliation Statement
- A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.
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Bank Restriction Act of 1797
- An act passed by the British government in 1797 to free the central Bank of England from converting bank notes and other financial claims into gold. The act was created in response to the flood of paper money issued by the British government that resulted in an economic catastrophe.
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Bank Run
- A situation in which numerous bank customers try to withdraw their bank deposits simultaneously and the bank's reserves are not sufficient to cover the withdrawals
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Bank Secrecy Act - BSA
- Government legislation that was created in 1970 to prevent financial institutions from being used as tools by criminals to hide or launder their ill-gotten gains. This is achieved by requiring banks and other financial institution to provide documentation (such as currency transaction reports) whenever clients deal with transactions that involve substantial sums of money ($10,000 or more) that appear to be suspicious. This way, authorities have the ability to easily reconstruct the entire situation.
Also known as "Currency and Foreign Transactions Reporting Act".
- Government legislation that was created in 1970 to prevent financial institutions from being used as tools by criminals to hide or launder their ill-gotten gains. This is achieved by requiring banks and other financial institution to provide documentation (such as currency transaction reports) whenever clients deal with transactions that involve substantial sums of money ($10,000 or more) that appear to be suspicious. This way, authorities have the ability to easily reconstruct the entire situation.
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Bank Statement
- A record, usually sent to the account holder once per month, summarizing all transactions in an account during the time from the previous statement to the current statement. The opening balance from the prior month combined with the net of all transactions during the period should result in the closing balance for the current statement.
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Bank Trust Custodial Account
- A type of Individual Retirement Account (IRA) allowed by the Employee Retirement Income Security Act of 1974 (ERISA) in which contributions are paid into the bank's interest-bearing financial instruments or a self-directed account. The difference between a self directed account and the bank's interest bearing financial instrument is that the investor is in charge of investment decisions. Self-directed accounts are usually set up by a brokerage and the investor is charged an amount above trading costs.
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Bank Wire
- An electronic message system allowing major banks to communicate various actions or occurrences regarding client accounts. The wire represents a secure computerized messaging system that sends account information, notifications and transaction requests between banks.
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Bank-Owned Life Insurance - BOLI
- A form of life insurance purchased by banks where the bank is the beneficiary, and/or owner. This form of insurance is a tax shelter for the administering bank, as it is a tax-free funding scheme for employee benefits.
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Bankable Funds
- Forms of payment that are accepted at financial institutions. Retailers and other organizations that directly accept payments from customers typically request that any payments be made in forms that can be redeemed and accepted by the bank.
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Banker's Acceptance - BA
- A short-term credit investment created by a non-financial firm and guaranteed by a bank.
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Banker's Blanket Bond
- A fidelity bond purchased from an insurance broker that protects a bank against losses from a variety of criminal acts carried out by employees. Some states require blanket bond coverage as a condition of operating a bank.
Also known as a blanket fidelity bond.
- A fidelity bond purchased from an insurance broker that protects a bank against losses from a variety of criminal acts carried out by employees. Some states require blanket bond coverage as a condition of operating a bank.
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Banking And Securities Industry Committee - BASIC
- A committee established in 1970 to standardize, automate and streamline stock certificate and options processing. The Banking and Securities Industry Committee (BASIC) sought to uphold uniform rules and regulations regarding the trading and settlement of securities.
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Banking Department
- A state-specific regulatory body that oversees the operations of financial institutions within its jurisdiction. The primary responsibility of the banking department is to ensure that the financial system is accessible, stable and safe for all consumers.
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Bankmail
- An agreement made between a company planning a takeover and a bank, which prevents the bank from financing any other potential acquirer's bid.
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Banknote
- A negotiable promissory note issued by a bank and payable to the bearer on demand. The amount payable is stated on the face of the note. Banknotes are considered legal tender, and, along with coins, make up the bearer forms of all modern money.
Also known as a "bill" or a "note."
- A negotiable promissory note issued by a bank and payable to the bearer on demand. The amount payable is stated on the face of the note. Banknotes are considered legal tender, and, along with coins, make up the bearer forms of all modern money.
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Bankruptcy
- A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of creditors (less common). All of the debtor's assets are measured and evaluated, whereupon the assets are used to repay a portion of outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.
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Bankruptcy Financing
- Financing arranged by a company while under the chapter 11 bankruptcy process. Clearly, such financing is extremely high risk and is done at a relatively high interest rate.
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Bankruptcy Risk
- The risk that a company will be unable to meet its debt obligations. Often referred to as "default" or "insolvency risk".
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Bankruptcy Trustee
- A person appointed by the United States Trustee, an officer of the Department of Justice, to represent the debtor's estate in a bankruptcy proceeding.
Although a bankruptcy judge has the ultimate authority on the distribution of assets, the trustee is charged with evaluating and making recommendations about various debtor demands in accordance with the U.S. Bankruptcy Code.
- A person appointed by the United States Trustee, an officer of the Department of Justice, to represent the debtor's estate in a bankruptcy proceeding.
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Banks For Cooperatives
- Established by the Farm Credit Act of 1933, these regional, privately-owned and government-sponsored banks make loans to farmer-owned marketing, supply and service cooperatives, and rural utilities. The loans are financed primarily by the sale of debt securities issued by the Federal Farm Credit Bank. Banks for cooperatives are part of the Federal Farm Credit System and are subject to regulation by the Farm Credit Administration.
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Banner Advertising
- A common form of advertising on the internet. The banner is an advertisement of 460x68 pixels, usually placed at the top of the page
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Banque D'Affaires
- A type of French financial institution that resembles a merchant bank. Banques d'affaires typically specialize in providing financing for organizations and also advising corporations on the best course of action in certain financial matters.
- A type of French financial institution that resembles a merchant bank. Banques d'affaires typically specialize in providing financing for organizations and also advising corporations on the best course of action in certain financial matters.
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BanxQuote Money Markets Index
- A money market index, which can be used as a rate-comparison tool by consumers and financial institutions. BanxQuote provides many kinds of data and tools. The money market index gives national, regional, state and local compendiums of money market rates offered by representative lending institutions. Rates are gathered from commercial banks and savings and loan institutions, as well as local certificates of deposit (CDs).
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Baptism of Fire
- A difficult situation that a company or individual experiences that will result in either success or failure. Examples include Initial Public Offerings (IPOs), a new CEO hired to manage a struggling company, and hostile takeover attempts.
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Bar
- A graphical representation of a stock's movement that usually contains the open, high, low and closing prices for a set period of time.
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Bar Chart
- A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates the highest price a security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading.
- A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates the highest price a security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading.
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Barbell
- A bond investment strategy that concentrates holdings in both very short-term and extremely long-term maturities. This is also known as the "dumbbell" or "barbelling."
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Barcelona Stock Exchange (BAR) .BC
- One of Spain's four major securities exchanges. Established in 1915 during the industrial boom and coinciding with the emergence of the region's first corporations, the Barcelona Stock Exchange (in Spanish, the Bolsa de Barcelona) trades warrants, ETFs, public debt, Latin American stocks and more, using both computer-assisted trading and open-outcry floor trading.
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Barefoot Pilgrim
- Slang for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market.
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Barings Bank
- A British merchant bank that was started in 1762, and for centuries was considered the largest and most stable bank in the world. In 1995, Barings - then the oldest bank in Britain - collapsed after it was unable to meet its cash requirements following unauthorized speculative trading in derivatives at its Singapore office by then-trader Nick Leeson.
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Barometer
- An investment instrument whose movements forecast trends.
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Barometer Stock
- A security whose price pattern is regarded as an indicator of the state of the overall market.
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Barra Risk Factor Analysis
- A multi-factor model created by Barra Inc., which is used to measure the overall risk associated with a security relative to the market. Barra Risk Factor Analysis incorporates over 40 data metrics including: earnings growth, share turnover and senior debt rating. The model then measures risk factors associated with three main components: industry risk, risk from exposure to different investment themes and company-specific risk.
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Barratry
- The act of a vessel's captain or crew knowingly endangering the vessel's cargo and/or the vessel itself.
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Barrel Of Oil Equivalent (BOE)
- A term used to summarize the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil. There are 42 gallons (approximately 159 liters) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh).
Also known as crude oil equivalent (COE).
- A term used to summarize the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil. There are 42 gallons (approximately 159 liters) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh).
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Barrels Of Oil Equivalent Per Day - BOE/D
- A term that is used often in conjunction with the production or distribution of oil. One barrel of oil is generally deemed to have the same amount of energy content as 6,000 cubic feet of natural gas.
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Barrels Per Day - B/D
- A measure of oil output, represented by the number of barrels of oil produced in a single day. For example, you might hear "country ABC has the potential to produce five million barrels per day". The abbreviation "bbl/d" can also be used to represent this production measure.
- A measure of oil output, represented by the number of barrels of oil produced in a single day. For example, you might hear "country ABC has the potential to produce five million barrels per day". The abbreviation "bbl/d" can also be used to represent this production measure.
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Barrier Option
- A type of option whose payoff depends on whether or not the underlying asset has reached or exceeded a predetermined price.
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Barriers To Entry
- The existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing companies already operating in an industry because they protect an established company's revenues and profits from being whittled away by new competitors.
- The existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing companies already operating in an industry because they protect an established company's revenues and profits from being whittled away by new competitors.
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Barron's Confidence Index
- A confidence indicator calculated by dividing the average yield on high-grade bonds by the average yield on intermediate-grade bonds. The discrepancy between the yields is indicative of investor confidence.
A rising ratio indicates investors are demanding a lower premium in yield for increased risk and so are showing confidence in the economy.
- A confidence indicator calculated by dividing the average yield on high-grade bonds by the average yield on intermediate-grade bonds. The discrepancy between the yields is indicative of investor confidence.
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Barter
- The act of trading goods and services between two or more parties without the use of money. Bartering benefits companies and countries that see a mutual benefit in exchanging goods and services rather than cash, and it also enables those who are lacking "hard currency" to obtain goods and services.
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Base Currency
- The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.
It is sometimes referred to as the "primary currency".
- The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.
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Base I
- The data processing network used by Visa
- The data processing network used by Visa
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Base II
- A data processing network operated by Visa USA for the clearing and settlement of bank card transactions between card-honoring merchant banks and card issuers. This system provides net daily account settlement among Visa member institutions. The other data processing network by VISA, Base I, authorizes transactions, while the Base II clears and settles the transactions.
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Base Pay
- An employee's initial rate of compensation, excluding extra lump sum compensation or increases in the rate of pay. An employee's base pay can be expressed as a base hourly rate of pay or as an annual salary.
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Base Period
- A particular time period whose data is used for comparative purposes when measuring economic data of other periods.
Also referred to as "Reference Period."
- A particular time period whose data is used for comparative purposes when measuring economic data of other periods.
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Basel Accord
- A set of agreements set by the Basel Committee on Bank Supervision (BCBS), which provides recommendations on banking regulations in regards to capital risk, market risk and operational risk. The purpose of the accords is to ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses.
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Basel Committee On Bank Supervision
- A committee established by the central bank governors of the Group of Ten countries in 1974 that seeks to improve the supervisory guidelines that central banks or similar authorities impose on both wholesale and retail banks. The committee makes banking policy guidelines for both member and non-member countries and helps authorities to implement its suggestions.
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Basel I
- A set of international banking regulations put forth by the Basel Committee on Bank Supervision, which set out the minimum capital requirements of financial institutions with the goal of minimizing credit risk. Banks that operate internationally are required to maintain a minimum amount (8%) of capital based on a percent of risk-weighted assets.
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Basel II
- A set of banking regulations put forth by the Basel Committee on Bank Supervision, which regulates finance and banking internationally. Basel II attempts to integrate Basel capital standards with national regulations, by setting the minimum capital requirements of financial institutions with the goal of ensuring institution liquidity.
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Baseline
- A benchmark used as a basis for comparison.
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Basic Balance
- An economic measure for the balance of payments that combines the current account and capital account balances. The basic balance represents an alternative approach to the surplus or deficit for the balance of payments under pegged exchange rate systems.
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Basic Materials Sector
- A category of stocks that accounts for companies involved with the discovery, development and processing of raw materials. The basic materials sector includes the mining and refining of metals, chemical producers and forestry products.
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Basing
- A period in which a stock price has very little or no trend. The resulting price pattern is a flat line.
- A period in which a stock price has very little or no trend. The resulting price pattern is a flat line.
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Basing Point
- A specific location used in the basing point pricing system. Usually, the basing point is where the manufacturing of a product or production of a commodity takes place. Once set, the manufacturer will quote the base price plus a set shipping cost from that location, regardless of where the actual goods are shipped from.
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Basing Point Pricing System
- A pricing system in which the buyer pays a base price plus a set shipping price depending on the distance from a specific location. The basing point pricing system sets a predetermined location, known as the basing point, then adds a transportation charge depending on how far away the buyer is from that location. Typically, the basing point is the same location as the manufacturing point, and the shipping charge is determined despite the actual location of the buyer or seller.
In other words, prices include transportation charges from the basing point, regardless of the location from which the actual shipment is made.
- A pricing system in which the buyer pays a base price plus a set shipping price depending on the distance from a specific location. The basing point pricing system sets a predetermined location, known as the basing point, then adds a transportation charge depending on how far away the buyer is from that location. Typically, the basing point is the same location as the manufacturing point, and the shipping charge is determined despite the actual location of the buyer or seller.
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Basis
- 1. The variation between the spot price of a deliverable commodity and the relative price of the futures contract for the same actual that has the shortest duration until maturity.
2. A security's basis is the purchase price after commissions or other expenses. Also known as "cost basis" or "tax basis".
3. In the context of IRAs, basis is the after-tax balance in the IRA, which originates from nondeductible IRA contributions and rollover of after-tax amounts. Earnings on these amounts are tax-deferred, similar to earnings on deductible contributions and rollover of pretax amounts.
- 1. The variation between the spot price of a deliverable commodity and the relative price of the futures contract for the same actual that has the shortest duration until maturity.
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Basis Grade
- The minimum accepted standard that a deliverable commodity must meet to be used as the actual of a futures contract. Also known as "par grade" or "contract grade."
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Basis Point - BPS
- A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.
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Basis Price
Price quotation for a security expressed in terms of yield to maturity. This will usually only be quoted on fixed-income securities such as bonds.
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Basis Quote
- A method for simplifying and shortening the quoted price of a futures contract. Used in the futures markets, a basis quote gives the variation above or below the price of a futures contract.
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Basis Rate Swap
- A type of swap in which two parties swap variable interest rates based on different money markets. This is usually done to limit interest-rate risk that a company faces as a result of having differing lending and borrowing rates.
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Basis Risk
- The risk that offsetting investments in a hedging strategy will not experience price changes in entirely opposite directions from each other. This imperfect correlation between the two investments creates the potential for excess gains or losses in a hedging strategy, thus adding risk to the position.
- The risk that offsetting investments in a hedging strategy will not experience price changes in entirely opposite directions from each other. This imperfect correlation between the two investments creates the potential for excess gains or losses in a hedging strategy, thus adding risk to the position.
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Basket Of Goods
- A relatively fixed set of consumer products and services valued and used on an annual basis to track inflation in a specific market or country. The goods in the basket are often adjusted periodically to account for changes in consumer habits The basket of goods is used primarily to calculate the Consumer Price Index (CPI).
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Basket Option
- A type of option whose underlying asset is a basket of commodities, securities, or currencies.
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Basket Trade
- A single order to buy or sell a set of 15 or more securities.
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Batch Header Record
- A standard record of information regarding the transfer of a group of data (a batch), usually within the banking field. The batch header record contains information that is crucial for the successful processing of the batch. It identifies the origin of the transaction and summarizes the debits and/or credits involved. When combined with the entry detail records, the batch header record fully describes the transaction.
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Batch Trading
- A method of transacting different security orders that involves the accumulation of orders and their simultaneous execution.
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Batting Average
- A statistical measure used to measure an investment manager's ability to meet or beat an index. Batting average is calculated by dividing the number of days (or months, quarters, etc.) in which the manager beats or matches the index by the total number of days (or months, quarters, etc.) in the period of question and multiplying that factor by 100.
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BAX Contract
- A BAX contract is a short-term investment instrument that uses a Canadian banker's acceptance (BA) as its underlying security. The specific BA underlying the contract has a nominal value of C$1 million and a maturity of three months. The contracts are traded on the Montreal Derivatives Exchange.
Also known as a "banker's acceptance contract".
- A BAX contract is a short-term investment instrument that uses a Canadian banker's acceptance (BA) as its underlying security. The specific BA underlying the contract has a nominal value of C$1 million and a maturity of three months. The contracts are traded on the Montreal Derivatives Exchange.
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Bay Street
- 1.The street in Toronto where the Toronto Stock Exchange (TSE) is located.
2. The collective name for the financial institutions in Toronto including stock exchanges, banks, commodity markets, money markets, etc.
- 1.The street in Toronto where the Toronto Stock Exchange (TSE) is located.
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Bayes' Theorem
- A formula for determining conditional probability named after 18th-century British mathematician Thomas Bayes. The theorem provides a way to revise existing predictions or theories given new or additional evidence. In finance, Bayes’ Theorem can be used to rate the risk of lending money to potential borrowers.
The formula is as follows:
Also called "Bayes’ Rule."
- A formula for determining conditional probability named after 18th-century British mathematician Thomas Bayes. The theorem provides a way to revise existing predictions or theories given new or additional evidence. In finance, Bayes’ Theorem can be used to rate the risk of lending money to potential borrowers.
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BBD (Barbados Dollar)
- The currency abbreviation or currency symbol for the Barbados dollar (BBD). The Barbados dollar is made up of 100 cents, and is often presented with the dollar sign as Bds$ to allow it to be distinguished from other currencies denominated in dollars, such as the U.S. dollar (USD).
Also known as the "Barbadian dollar".
- The currency abbreviation or currency symbol for the Barbados dollar (BBD). The Barbados dollar is made up of 100 cents, and is often presented with the dollar sign as Bds$ to allow it to be distinguished from other currencies denominated in dollars, such as the U.S. dollar (USD).
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BCG Growth Share Matrix
- A graphical approach to resource allocation within a multi-segmented corporation.
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BDT (Bangladesh Taka)
- The currency abbreviation or currency symbol for the Bangladesh taka (BDT), the currency for Bangladesh. The Bangladesh taka is made up of 100 poisha and is often presented with the symbol ó, ò, or Tk. The word "taka" originated from ancient denominations of silver coins called tanka.
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Beacon Score
- A number that is generated by the Equifax Credit Bureau to rank the credit-worthiness of individuals. Beacon scores are credit scores, which are determined through a complex algorithm. These numbers tell the lender how likely the chance is that the borrower will repay the loan. When NextGen FICO Scores started being used the Beacon score was replaced with the Pinnacle Score.
Mathematical criteria can include late payments, current debts, length of time account has been open, types of credit and new applications for credit.
- A number that is generated by the Equifax Credit Bureau to rank the credit-worthiness of individuals. Beacon scores are credit scores, which are determined through a complex algorithm. These numbers tell the lender how likely the chance is that the borrower will repay the loan. When NextGen FICO Scores started being used the Beacon score was replaced with the Pinnacle Score.
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Bear
- An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.
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Bear Call Spread
- A type of options strategy used when a decline in the price of the underlying asset is expected. It is achieved by selling call options at a specific strike price while also buying the same number of calls, but at a higher strike price. The maximum profit to be gained using this strategy is equal to the difference between the price paid for the long option and the amount collected on the short option.
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Bear CD
- A certificate of deposit whose interest rate fluctuates in inverse correlation to the value of an underlying market index. In other words, the interest rate paid on the CD increases as the underlying market index decreases in value.
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Bear Flattener
- A yield-rate environment in which short-term interest rates are increasing at a faster rate than long-term interest rates. This causes the yield curve to flatten as short-term and long-term rates start to converge.
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Bear Hug
- An offer made by one company to buy the shares of another for a much higher per-share price than what that company is worth. A bear hug offer is usually made when there is doubt that the target company's management will be willing to sell. By offering a price far in excess of the target company's current value, the offering party can usually obtain an agreement. The target company's management is essentially forced to accept such a generous offer because it is legally obligated to look out for the best interests of its shareholders.
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Bear Market
- A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows. Although figures can vary, for many, a downturn of 20% or more in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over at least a two-month period, is considered an entry into a bear market.
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Bear Market Rally
- A period in which prices of stocks increase during a bear market. A bear market rally is usually a short-lived market increase following a period of market decline and is followed by another period of market decline leading to a pronounced down trend.
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Bear Put Spread
- A type of options strategy used when an option trader expects a decline in the price of the underlying asset. Bear Put Spread is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower strike price. The maximum profit to be gained using this strategy is equal to the difference between the two strike prices, minus the net cost of the options.
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Bear Raid
- The illegal practice of attempting to push the price of a stock lower by taking large short positions and spreading unfavorable rumors about the target firm.
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Bear Spread
- 1. An option strategy seeking maximum profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of options; puts or calls can be used. A higher strike price is purchased and a lower strike price is sold. The options should have the same expiration date.
2. A trading strategy used by futures traders who intend to profit from the decline in commodity prices while limiting potentially damaging losses.
- 1. An option strategy seeking maximum profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of options; puts or calls can be used. A higher strike price is purchased and a lower strike price is sold. The options should have the same expiration date.
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Bear Steepener
- A widening of the yield curve caused by long-term rates increasing at a faster rate then short-term rates. This causes a larger spread between the two rates as the long-term rate moves further away from the short-term rate.
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Bear Tack
- A fall in the price of a stock, sector, or market, or investor sentiment that assumes a fall will happen soon. A bear tack is usually used to describe bearish movement in the short to medium term.
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Bear Trap
- A false signal that the rising trend of a stock or index has reversed when it has not.
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Bearer Bond
- A fixed-income instrument that is owned by whoever is holding it, rather than having a registered owner.
Coupons representing interest payments are likely to be physically attached to the security and it is the bondholder's responsibility to submit the coupons for payment. As with registered bonds, bearer bonds are negotiable instruments with a stated maturity date and coupon interest rate.
- A fixed-income instrument that is owned by whoever is holding it, rather than having a registered owner.
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Bearer Form
- A security not registered in the issuing corporation's books but that is payable to its bearer (the person possessing it). Securities can be issued in two forms: registered or bearer. Registered form means the issuing firm keeps records of a security's owner and mails out payments to him or her. Bearer form means the security is traded without any record of ownership, so physical possession of the security is the sole evidence of ownership. Most securities issued today are in registered form.
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Bearer Instrument
- A bearer instrument, or bearer bond, is a type of fixed-income security where no ownership information is recorded and the security is issued in physical form to the purchaser. The holder is presumed to be the owner, and whoever is in possession of the physical bond is entitled to the coupon payments.
To receive coupon payments, the bondholder must clip the coupons attached to the bond and submit them for payment. This contrasts with book-entry, where ownership information is noted in a computer database and there are no physical bond certificates.
- A bearer instrument, or bearer bond, is a type of fixed-income security where no ownership information is recorded and the security is issued in physical form to the purchaser. The holder is presumed to be the owner, and whoever is in possession of the physical bond is entitled to the coupon payments.
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Bearer Share
- An equity security that is wholly owned by whoever holds the physical stock certificate. The issuing firm neither registers the owner of the stock, nor does it track transfers of ownership. The company disperses dividends to bearer shares when a physical coupon is presented to the firm.
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Bearish Abandoned Baby
- A type of candlestick pattern that is used by traders to signal a reversal in the current uptrend. This pattern is formed by three distinct candlesticks that show the following characteristics:
1. The first bar is a large white candlestick located within a defined uptrend.
2. The second bar is a doji candle (open equal to the close) that gaps above the close of the first bar.
3. The last bar is a large red candle that opens below the second bar and is used to show the change in trader sentiment.
As you can see from the chart below, the pattern is a charting signal that the uptrend is about to reverse.
- A type of candlestick pattern that is used by traders to signal a reversal in the current uptrend. This pattern is formed by three distinct candlesticks that show the following characteristics:
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Bearish Belt Hold
- A candlestick pattern that forms during an upward trend. This is what happens in the pattern: following a stretch of bullish trades, a bearish or black candlestick occurs; the opening price, which becomes the high for the day, is higher than the close of the previous day; the stock price declines throughout the day, resulting in a long black candlestick with a short lower shadow and no upper shadow.
- A candlestick pattern that forms during an upward trend. This is what happens in the pattern: following a stretch of bullish trades, a bearish or black candlestick occurs; the opening price, which becomes the high for the day, is higher than the close of the previous day; the stock price declines throughout the day, resulting in a long black candlestick with a short lower shadow and no upper shadow.
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Bearish Engulfing Pattern
- A chart pattern that consists of a small white candlestick with short shadows or tails followed by a large black candlestick that eclipses or "engulfs" the small white one.
- A chart pattern that consists of a small white candlestick with short shadows or tails followed by a large black candlestick that eclipses or "engulfs" the small white one.
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Bearish Harami
- A trend indicated by a large candlestick followed by a much smaller candlestick whith a that body is located within the vertical range of the larger candle's body. Such a pattern is an indication that the previous upward trend is coming to an end.
- A trend indicated by a large candlestick followed by a much smaller candlestick whith a that body is located within the vertical range of the larger candle's body. Such a pattern is an indication that the previous upward trend is coming to an end.
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Beating The Gun
- A slang phrase used when an investor purchases or sells a security at a beneficial price by executing a trade before the market can respond to new information. Beating the gun denotes an investor's ability to time the market and react more quickly than other investors.
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Before Reimbursement Expense Ratio
- The percentage of a fund's average net assets that is used to cover the annual operating expenses of managing a mutual fund before reimbursements are made to the fund by managers.
Also known as the "gross expense ratio".
- The percentage of a fund's average net assets that is used to cover the annual operating expenses of managing a mutual fund before reimbursements are made to the fund by managers.
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Beggar-Thy-Neighbor
- An international trading policy that utilizes currency devaluations and protective barriers to alleviate a nation's economic difficulties at the expense of other countries. While the policy may help repair an economic hardship in the nation, it will harm the country's trading partners, worsening its economic status.
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Beginning Inventory - BI
- The book value of goods, inputs, or materials available for use or sale at the beginning of an inventory accounting period.
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Beginning Market Value (BMV)
- The valuation at which the property should exchange at the date of origin, and the beginning of each period. The beginning market value at the start of every period is equal to the ending market value of the previous period.
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Behavioral Accounting
- An accounting method which takes into account key decision makers as part of the value of a company. Behavioral accounting was developed to make the behavioral effects transparent to potential and current stakeholders. This is done to better understand the impact that business processes, opinions, and human variables have on the value of the overall corporation, now and in the future.
Also known as "human resource accounting".
- An accounting method which takes into account key decision makers as part of the value of a company. Behavioral accounting was developed to make the behavioral effects transparent to potential and current stakeholders. This is done to better understand the impact that business processes, opinions, and human variables have on the value of the overall corporation, now and in the future.
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Behavioral Economics
- A field of economics that studies how the actual decision-making process influences the decisions that are reached.
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Behavioral Finance
- A field of finance that proposes psychology-based theories to explain stock market anomalies. Within behavioral finance, it is assumed that the information structure and the characteristics of market participants systematically influence individuals' investment decisions as well as market outcomes.
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Behaviorist
- 1. One who accepts or assumes the theory of behaviorism (behavioral finance in investing.)
2. A psychologist who subscribes to behaviorism.
- 1. One who accepts or assumes the theory of behaviorism (behavioral finance in investing.)
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Beige Book
- A commonly used name for the Fed report called the Summary of Commentary on Current Economic Conditions by Federal Reserve District. It is published just before the FOMC meeting on interest rates and is used to inform the members on changes in the economy since the last meeting.
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Beirut Stock Exchange - BSE
- The stock exchange headquartered in Beirut, Lebanon.
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Bell
- The ring that marks the open and close of each trading day on many organized financial exchanges, most notably the NYSE.
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Bell Curve
- The most common type of distribution for a variable. The term "bell curve" comes from the fact that the graph used to depict a normal distribution consists of a bell-shaped line.
The bell curve is also known as a normal distribution. The bell curve is less commonly referred to as a Gaussian distribution, after German mathematician and physicist Karl Gauss, who popularized the model in the scientific community by using it to analyze astronomical data.
- The most common type of distribution for a variable. The term "bell curve" comes from the fact that the graph used to depict a normal distribution consists of a bell-shaped line.
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Bellwether
- A leading indicator of trends.
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Bellwether Stock
- A stock that is believed to be a leading indicator of the direction of a sector, industry or market as a whole. Bellwether stocks are often used to determine the direction in which an industry or market is headed in the short term.
- A stock that is believed to be a leading indicator of the direction of a sector, industry or market as a whole. Bellwether stocks are often used to determine the direction in which an industry or market is headed in the short term.
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Below Full-Employment Equilibrium
- A macroeconomic term used to describe a situation where an economy's short-run real gross domestic product (GDP) is currently lower than that same economy's long-run potential real GDP. Under this scenario, there is a recessionary gap between the two levels of GDP (measured by the difference between potential GDP and current GDP) that would have been produced had the economy been in long-run equilibrium.
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Below Par
- A term describing a bond whose price is below the face value or principal value, usually $1,000. As bond prices are quoted as a percentage of face value, a price below par would typically be anything less than 100.
- A term describing a bond whose price is below the face value or principal value, usually $1,000. As bond prices are quoted as a percentage of face value, a price below par would typically be anything less than 100.
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Below the Market
- An order to buy or sell a security at a price lower than the current market price.
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Ben Bernanke
- The chairman of the board of governors of the U.S. Federal Reserve. Bernanke took over the helm from Alan Greenspan on February 1, 2006, ending Greenspan's 18-year leadership at the Fed. A former Fed governor, Bernanke was chairman of the U.S. President's Council of Economic Advisors prior to being nominated as Greenspan's successor in late 2005.
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Benchmark
- A standard against which the performance of a security, mutual fund or investment manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for this purpose.
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Benchmark Bond
- A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".
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Benchmark Error
- A situation in which the wrong benchmark is selected in a financial model. This error can create large dispersions in an analyst or academic's data, but can easily be avoided by selecting the most appropriate benchmark at the onset of an analysis.
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Beneficial Owner
- 1. A person who enjoys the benefits of ownership even though title is in another name.
2. Any individual or group of individuals that, either directly or indirectly, has the power to vote or influence the transaction decisions regarding a specific security.
- 1. A person who enjoys the benefits of ownership even though title is in another name.
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Beneficiary
- A person or entity named in a will or a financial contract as the inheritor of property when the property owner dies.
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Benefit Cost Ratio - BCR
- A ratio attempting to identify the relationship between the cost and benefits of a proposed project.
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Benefit Offset
- A reduction in the amount of benefit payments received by a member of a retirement plan which may result when the member owes money to the plan.
- A reduction in the amount of benefit payments received by a member of a retirement plan which may result when the member owes money to the plan.
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Beneish Model
- A mathematical model that uses financial ratios and eight variables to identify whether a company has manipulated its earnings. The variables are constructed from the data in the company's financial statements and, once calculated, create an M-Score to describe the degree to which the earnings have been manipulated.
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Benjamin Graham
- A scholar and financial analyst who is widely recognized as the father of value investing. His famous book, "The Intelligent Investor", has gained recognition as one of the best and most important investment pieces written illustrating the fundamentals of a value-investing strategy.
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Bequest
- The process of giving stocks, bonds, or any other assets to beneficiaries through the provisions of a will.
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Berkshire Hathaway
- A holding company for a multitude of businesses run by Chairman and CEO Warren Buffett. Berkshire Hathaway is headquartered in Omaha, Nebraska and began as just a group of textile milling plants, but when Buffett became the controlling shareholder in the mid 1960s he began a progressive strategy of diverting cash flows from the core business into other investments.
Insurance subsidiaries tend to represent the largest pieces of Berkshire Hathaway, but the company manages hundreds of diverse businesses all over the world.
- A holding company for a multitude of businesses run by Chairman and CEO Warren Buffett. Berkshire Hathaway is headquartered in Omaha, Nebraska and began as just a group of textile milling plants, but when Buffett became the controlling shareholder in the mid 1960s he began a progressive strategy of diverting cash flows from the core business into other investments.
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Berlin Stock Exchange (BER) .B
- Originally one of the oldest stock exchanges in Germany, BER was founded in 1685. The Berlin Stock exchange merged with Borse Bremen in 2003, and the new version is called the Borse Berlin-Bremen. The exchange eventually adopted Equiduct Trading, which allows it to trade more foreign stocks and expand its product offerings.
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Bermuda Option
- A type of option that can only be exercised on predetermined dates, usually every month.
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Bermuda Stock Exchange - BSX
- The stock exchange headquartered in Hamilton, Bermuda.
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Bermuda Swaption
- A swaption with predefined limitations on exercise.
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Bernard Madoff
- The former chairman of the Nasdaq and founder of the market-making firm Bernard L. Madoff Investment Securities. Madoff, who also ran a hedge fund, was arrested on December 11, 2008, for running an alleged Ponzi scheme; his hedge fund lost about $50 billion, but kept it hidden by paying out earlier investors with money from later investors.
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Bernoulli's Hypothesis
- Hypothesis proposed by mathematician Daniel Bernoulli that expands on the nature of investment risk and the return earned on an investment. Bernoulli stated that an investor's acceptance of risk should incorporate not only the possible losses that can occur, but also the utility, or intrinsic value, of the investment itself.
Also known as the "expected utility hypothesis".
- Hypothesis proposed by mathematician Daniel Bernoulli that expands on the nature of investment risk and the return earned on an investment. Bernoulli stated that an investor's acceptance of risk should incorporate not only the possible losses that can occur, but also the utility, or intrinsic value, of the investment itself.
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Berry Ratio
- The ratio of a company's gross profits to operating expenses. This ratio is used as an indicator of a company's profits in a given period of time. A ratio coefficient of 1 or more indicates that the company is making profit above all variable expenses, whereas a coefficient below 1 indicates that the firm is losing money.
The formula is as follows:
- The ratio of a company's gross profits to operating expenses. This ratio is used as an indicator of a company's profits in a given period of time. A ratio coefficient of 1 or more indicates that the company is making profit above all variable expenses, whereas a coefficient below 1 indicates that the firm is losing money.
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Best Ask
- The lowest quoted ask price for a particular stock among those offered from competing market makers.
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Best Bid
- The highest quoted bid for a particular stock among all those offered by competing market makers.
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Best Efforts
- An agreement an underwriter makes to act as an agent between an issuing company and investors.
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Best Efforts Mortgage Lock
- When the sale of a mortgage in the secondary mortgage market requires that the seller, usually a mortgage originator, make a "best efforts" attempt to deliver the mortgage to the buyer. This type of trade exists to transfer the risk that a loan will not close from the originator to the secondary market.
- When the sale of a mortgage in the secondary mortgage market requires that the seller, usually a mortgage originator, make a "best efforts" attempt to deliver the mortgage to the buyer. This type of trade exists to transfer the risk that a loan will not close from the originator to the secondary market.
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Best Execution
- The responsibility of brokers to provide the most advantageous, or best price, order execution for customers.
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Best Of Breed
- A stock that represents the most optimal investment choice for a specific sector or industry due to its high quality compared to its competitors. This slang is derived from dog shows, where the highest quality dog for each breed wins an award and is given the "best of breed" title.
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Best Practices
- A set of guidelines, ethics or ideas that represent the most efficient or prudent course of action. Best practices are often set forth by an authority, such as a governing body or management, depending on the circumstances. While best practices generally dictate the recommended course of action, some situations require that such practices be followed.
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Best-Price Rule - Rule 14D-10
- An SEC regulation that stipulates that a tender offer is open to all security holders of that class of security and the amount paid to the security holder is the highest paid to any other holder of the same security.
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Beta
- A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns..
Also known as "beta coefficient".
- A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns..
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Betterment
- A type of action or cost expenditure that contributes towards improving an asset's performance and/or increasing its value. Betterments do not include general maintenance-related actions that seek to sustain an asset's current value.
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BGN (Bulgarian Lev)
- The currency abbreviation or currency symbol for the Bulgarian lev (BGN). The Bulgarian lev is made up of 100 stotinki. The Bulgarian name comes from the archaic Bulgarian word "lev", which can be translated to mean "lion." BGN is expected to be replaced by the euro in 2012.
Also known as the "Bulgarian leva".
- The currency abbreviation or currency symbol for the Bulgarian lev (BGN). The Bulgarian lev is made up of 100 stotinki. The Bulgarian name comes from the archaic Bulgarian word "lev", which can be translated to mean "lion." BGN is expected to be replaced by the euro in 2012.
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BHD (Bahraini Dinar)
- The currency abbreviation for the Bahrain dinar (BHD), the currency for Bahrain. The Bahraini dinar is made up of 1,000 fuloos, which is plural for fils, and is often presented with the symbol BD. It is a highly valued currency in the world and is pegged at 1 dinar to 2.652 U.S. dollars.
- The currency abbreviation for the Bahrain dinar (BHD), the currency for Bahrain. The Bahraini dinar is made up of 1,000 fuloos, which is plural for fils, and is often presented with the symbol BD. It is a highly valued currency in the world and is pegged at 1 dinar to 2.652 U.S. dollars.
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Bi-Monthly Mortgage
- A mortgage plan where half the scheduled monthly payment is made twice a month. This plan is not to be confused with a bi-weekly plan where half the scheduled monthly payment is made every two weeks.
The difference between a bi-monthly and bi-weekly plan is subtle - a bi-weekly plan results in two more payments being made annually than on a bi-monthly plan. In other words, under a bi-monthly plan 24 payments are made annually, while under a bi-weekly plan 26 payments are made annually. This is the equivalent of 12 monthly payments for a bi-monthly plan and 13 monthly payments under a bi-monthly plan.
- A mortgage plan where half the scheduled monthly payment is made twice a month. This plan is not to be confused with a bi-weekly plan where half the scheduled monthly payment is made every two weeks.
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Bi-weekly Mortgage
- A mortgage payment plan where payments are made every two weeks, as opposed to the more traditional monthly payment plan. Making mortgage payments every two weeks, as opposed to monthly, will result in the equivalent of one additional monthly payment being made each year. This extra payment is applied toward the principal balance of the mortgage, and will lead to substantial interest savings over the life of a long-term mortgage.
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Biased Expectations Theory
- A theory that the future value of interest rates is equal to the summation of market expectations. Proponents of the biased expectation theory argue that the shape of the yield curve is created by ignoring systematic factors and that the term structure of interest rates is solely derived by the market's current expectations.
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Bid
- 1. An offer made by an investor, a trader or a dealer to buy a security. The bid will stipulate both the price at which the buyer is willing to purchase the security and the quantity to be purchased.
2. The price at which a market maker is willing to buy a security. The market maker will also display an ask price, or the amount and price at which it is willing to sell.
- 1. An offer made by an investor, a trader or a dealer to buy a security. The bid will stipulate both the price at which the buyer is willing to purchase the security and the quantity to be purchased.
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Bid Bond
- A debt secured by a bidder for a construction job or similar type of bid-based selection process for the purpose of providing a guarantee to the project owner that the bidder will take on the job if selected. The existence of a bid bond provides the owner with assurance that the bidder has the financial means to accept the job for the price quoted in the bid.
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Bid Price
- The price a buyer is willing to pay for a security. This is one part of the bid with the other being the bid size, which details the amount of shares the investor is willing to purchase at the bid price. The opposite of the bid is the ask price, which is the price a seller is looking to get for his or her shares.
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Bid Size
- The number of shares a buyer is willing to purchase at the quoted bid price.
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Bid Tick
- An indication of whether the latest bid price is higher, lower, or the same as the previous bid.
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Bid Wanted In Competition - BWIC
- A situation where an institutional investor submits its bond bid list to various securities dealers. In a bid-wanted-in-competition situation, the dealers are allowed to make bids on the listed securities. The dealers with the highest bids are then contacted.
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Bid Whacker
- A slang term for an investor who sells shares at or below the bid price. This is considered outside the norm, as sellers normally settle for a price between the bid and ask quotes.
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Bid-Ask Spread
- The amount by which the ask price exceeds the bid. This is essentially the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price for which a seller is willing to sell it.
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Bid-to-Cover Ratio
- A ratio that compares the number of bids received in a Treasury security auction to the number of bids accepted.
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Bidding War
- A situation where two or more buyers are so interested in an item (such as a house or a business) that they make increasingly higher offers of the price they are willing to pay to try to become the new owner of the item. The bidding usually occurs at a fast pace, requiring potential buyers to make less thought-out decisions than they normally might. While a bidding war is a seller's dream come true, it may cause buyer's remorse.
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BIF (Burundi Franc)
- The currency abbreviation or currency symbol for the Burundi franc (BIF). The Burundi franc is made up of 100 centimes, but coins haven't been issued in these denominations since Burundi introduced its own currency.
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Bifurcation
- A term used in finance that refers to a splitting of something into two separate pieces.
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Big Bang
- The day of deregulation for the securities market in
- The day of deregulation for the securities market in
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Big Bath
- The strategy of manipulating a company's income statement to make poor results look even worse. The big bath is often implemented in a bad year to enhance artificially next year's earnings. The big rise in earnings might result in a larger bonus for executives. New CEOs sometimes use the big bath so they can blame the company's poor performance on the previous CEO and take credit for the next year's improvements.
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Big Board
- A nickname for the New York Stock Exchange.
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Big Box Retailer
- A retail store that occupies an enormous amount of physical space and offers a variety of products to its customers. These stores achieve economies of scale by focusing on large sales volumes. Because volume is high, the profit margin for each product can be lowered, which results in very competitively priced goods.
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Big Figure
- The stem, or whole dollar price, of a quote, often used in reference to foreign currencies or money markets.
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Big Five Banks
- A reference used in Canada to describe Royal Bank, The Bank of Montreal, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia and TD Canada Trust, which are the five largest banks in the country.
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Big Four (or Big Five, Big Six, Big Eight)
- The largest accounting firms in the United States as measured by revenue.
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Big Mac PPP
- A survey done by The Economist that determines what a country's exchange rate would have to be for a Big Mac in that country to cost the same as it does in the United States. Purchase power parity (PPP) is the theory that currencies adjust according to changes in their purchasing power. With the Big Mac PPP, purchasing power is reflected by the price of a McDonald's Big Mac in a particular country. The measure gives an impression of how overvalued or undervalued a currency is.
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Big Six Banks
- A term used in Canada to describe the National Bank of Canada, Royal Bank, The Bank of Montreal, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia and TD Canada Trust.
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Big Three
- A reference to the three largest automobile manufacturers in North America:
1. General Motors
2. DaimlerChrysler
3. Ford Motor Co.
- A reference to the three largest automobile manufacturers in North America:
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Big Uglies
- Old industrial companies in gritty industries (such as mining, steel and oil) and as a result, they tend to be unpopular stocks with investors.
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Bilateral Credit Limit
- Intraday credit limits set by two institutions for use with one another, usually within a large clearing system that operates by netting amounts due to and due from institutions by other members on a daily basis. Within the banking community, the most well-known clearing system that uses netting as the mechanism for settlement is the Clearing House Interbank Payments System (CHIPS) in the United States.
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Bilateral Monopoly
- A market that has only one supplier and one buyer. The one supplier will tend to act as a monopoly power, and look to charge high prices to the one buyer. The lone buyer will look towards paying a price that is as low as possible. Since both parties have conflicting goals, the two sides must negotiate based on the relative bargaining power of each, with a final price settling in between the two sides's points of maximum profit.
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Bilateral Netting
- The process of consolidating swap agreements between two parties into a single agreement. As a result, instead of each swap agreement leading to a stream of individual payments by either party, all of the swaps are netted together so that only one net payment is being made to one party based on the flows of the combined swaps.
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Bilbao Stock Exchange (BIL) .BI
- One of Spain's four major securities exchanges. Founded July 1890 and opened for trading in 1891, the Bilbao Stock Exchange (in Spanish, the "Bolsa de Bilbao") supports the financial, industrial and economic development of the Basque Country. It has provided financing for many major investment projects in the region, including shipyards, shipping companies, mines and banks.
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Bill And Hold
- A form of sales arrangement in which a seller of a good bills a customer for products but does not ship the product until a later date. In order for a transfer of ownership to occur, certain conditions must be met. These conditions include: payment for the goods, that the goods be segregated from all other similar goods by the seller, and that the goods be finished and ready for use.
This is also referred to as "bill in place".
- A form of sales arrangement in which a seller of a good bills a customer for products but does not ship the product until a later date. In order for a transfer of ownership to occur, certain conditions must be met. These conditions include: payment for the goods, that the goods be segregated from all other similar goods by the seller, and that the goods be finished and ready for use.
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Bill And Melinda Gates
- Two out of the three co-chairs of the Bill and Melinda Gates Foundation. William (Bill) H. Gates III, founder of Microsoft and his wife Melinda French Gates founded the Bill and Melinda Gates Foundation with the directive of improving the lives of persons both in the United States, and abroad in 2000. The third co-founder of the Bill and Melinda Gates foundation is Bill Gate’s father, William H. Gates Sr.
The foundation is guided by 15 principles that reflect the Gates' beliefs and values, and how their philanthropy can improve life for those around them.
- Two out of the three co-chairs of the Bill and Melinda Gates Foundation. William (Bill) H. Gates III, founder of Microsoft and his wife Melinda French Gates founded the Bill and Melinda Gates Foundation with the directive of improving the lives of persons both in the United States, and abroad in 2000. The third co-founder of the Bill and Melinda Gates foundation is Bill Gate’s father, William H. Gates Sr.
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Bill Announcement
- An announcement published by the U.S. Treasury regarding the next bill auction. This announcement outlines the terms of the bill auction. Bill announcements must contain the date and time of the auction, as well as the amount of bills to be tendered.
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Bill Auction
- A public auction for Treasury bills that is held weekly by the U.S. Treasury. Currently there are 17 authorized primary dealers that are required to bid directly upon each issue. This is the manner in which all U.S. Treasury bills are issued.
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Bill Of Exchange
- A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.
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Bill Of Lading
- A legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver.
- A legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver.
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Bill Of Sale
- A document that details in writing a sale of goods or transfer of property from one party to another. A bill of sale serves as legal evidence that full consideration has been provided in a transaction and that the seller has transferred the rights to the assets detailed in the bill of sale to the buyer.
- A document that details in writing a sale of goods or transfer of property from one party to another. A bill of sale serves as legal evidence that full consideration has been provided in a transaction and that the seller has transferred the rights to the assets detailed in the bill of sale to the buyer.
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Bill-And-Hold Basis
- A method of conducting sales by billing the customer on the same day the transaction occurs, but not delivering the goods until a later date. Using the bill-and-hold basis is sometimes regarded as a controversial practice because allowing the seller to receive payment now, but making them wait a length of time before transferring the product could be used to inflate revenues meant for subsequent quarters.
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Billions Of Cubic Feet Equivalent - BCFE
- A natural gas industry term typically used to measure the amount of natural gas that is either untapped in reserves, or being pumped and delivered over extended periods of time (such as months or years). The "equivalent" is used to describe the equivalent amount of energy liberated by the burning of this type of fuel versus crude oil, with every 6,000 cubic feet of natural gas being equal to one barrel of oil.
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Bills Payable
- Similar to accounts payable, this term is used to describe a bank's indebtedness to other banks, principally a Federal Reserve Bank, that is backed by collateral consisting of the bank's promissory note and a pledge of government securities. In other words, bills payable is the money a bank borrows, mainly on a short-term basis, and owes to other banks.
- Similar to accounts payable, this term is used to describe a bank's indebtedness to other banks, principally a Federal Reserve Bank, that is backed by collateral consisting of the bank's promissory note and a pledge of government securities. In other words, bills payable is the money a bank borrows, mainly on a short-term basis, and owes to other banks.
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Bimetallic Standard
- A monetary system in which a government recognizes coins composed of gold or silver as legal tender. The bimetallic standard (or bimetallism) backs a unit of currency to a fixed ratio of gold and/or silver.
- A monetary system in which a government recognizes coins composed of gold or silver as legal tender. The bimetallic standard (or bimetallism) backs a unit of currency to a fixed ratio of gold and/or silver.
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Binary Option
- A type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money.
These types of options are different from plain vanilla options
Also sometimes referred to as "all-or-nothing options" or "digital options".
- A type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money.
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Binomial Distribution
- A probability distribution that summarizes the likelihood that a value will take one of two independent values under a given set of parameters or assumptions. The underlying assumptions of the binomial distribution are that there is only one outcome for each trial, that each trial has the same probability of success and that each trial is mutually exclusive.
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Binomial Option Pricing Model
- An options valuation method developed by Cox, et al, in 1979. The binomial option pricing model uses an iterative procedure, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option's expiration date.
The model reduces possibilities of price changes, removes the possibility for arbitrage, assumes a perfectly efficient market, and shortens the duration of the option. Under these simplifications, it is able to provide a mathematical valuation of the option at each point in time specified.
- An options valuation method developed by Cox, et al, in 1979. The binomial option pricing model uses an iterative procedure, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option's expiration date.
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Binomial Tree
- A graphical representation of possible intrinsic values that an option may take at different nodes or time periods. The value of the option depends on the underlying stock or bond, and the value of the option at any node depends on the probability that the price of the underlying asset will either decrease or increase at any given node.
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Biodiesel
- A fuel derived from organic oils, such as vegetable oil, rather than petroleum. Biodiesel’s use and production are increasing. It’s typically used for aircraft, vehicles and as heating oil. Biodiesel filling stations are common throughout Europe and as of 2008 they are becoming more common in
The price gap between traditional diesel and biodiesel is expected to narrow, as petroleum based products become scarcer. Agricultural and environmental subsidies will also help with this.
- A fuel derived from organic oils, such as vegetable oil, rather than petroleum. Biodiesel’s use and production are increasing. It’s typically used for aircraft, vehicles and as heating oil. Biodiesel filling stations are common throughout Europe and as of 2008 they are becoming more common in
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Bioeconomics
- A progressive branch of social science that seeks to integrate the disciplines of economics and biology for the sole purpose of creating theories that do a better job of explaining economic events using a biological basis and vice versa. The proponents of bioeconomics believe that the same patterns that can be seen in biological evolution can be applied to stock market behavior, as many of the same "causal interactions" and "survival elements" can be found there as well as in nature.
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Birth-Death Ratio
- A figure that represents the net number of jobs provided from newly started businesses (births) and business closings (deaths) during a period of time, typically a month in conjunction with government-sponsored jobs reports. Birth-death figures are put out by the Bureau of Labor Statistics (BLS) as part of the monthly employment report; they use a rolling average to determine the monthly total based on historical averages over the past several years.
- A figure that represents the net number of jobs provided from newly started businesses (births) and business closings (deaths) during a period of time, typically a month in conjunction with government-sponsored jobs reports. Birth-death figures are put out by the Bureau of Labor Statistics (BLS) as part of the monthly employment report; they use a rolling average to determine the monthly total based on historical averages over the past several years.
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Biweekly Mortgage
- A mortgage with principal and interest payments due every two weeks. A biweekly mortgage adds up to 26 payments per year, two payments more than a mortgage with semimonthly payments. These two extra payments significantly lower the interest payments paid over the life of the mortgage. In addition, biweekly payments are usually lower than semimonthly payments.
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Black
- A description of a positive balance on a company's financial statements.
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Black Box Model
- A computer program into which users enter information and the system utilizes pre-programmed logic to return output to the user.
- A computer program into which users enter information and the system utilizes pre-programmed logic to return output to the user.
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Black Friday
- 1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold speculators, including Jay Gould and James Fist, who attempted to corner the gold market. The attempt failed and the gold market collapsed, causing the stock market to plummet.
2. The day after Thanksgiving in the United States. Retailers generally see an upward spike in sales and consider this to be the start of the holiday shopping season. It's common for retailers to offer special promotions and to open early to draw in customers.
- 1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold speculators, including Jay Gould and James Fist, who attempted to corner the gold market. The attempt failed and the gold market collapsed, causing the stock market to plummet.
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Black Knight
- A company that makes a hostile takeover offer on a target company.
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Black Liquor Tax Credit
- A term coined by the forest-products industry to describe an abusive subsidy scheme within the industry. Black liquor is a byproduct of creating wood pulp and is used as fuel. As part of the 2005 transportation and ethanol bill, the U.S. government created a tax credit designed to encourage companies to use biofuels by mixing them with fossil fuels (presumed to be their existing energy source). An extension of the bill in 2007 created a loophole whereby paper companies, who were already using a biofuel (black liquor) did the reverse of what the bill intended, adding diesel to their black liquor, to qualify for tax credits.
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Black Market
A type of economic activity that takes place outside of government-sanctioned channels. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table'. The black market is also the means by which illegal substances or products - such as illicit drugs, firearms or stolen goods - are bought and sold.
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Black Monday
- October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning of a global stock market decline, making Black Monday one of the most notorious days in recent financial history. By the end of the month, most of the major exchanges had dropped more than 20%.
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Black Scholes Model
- A model of price variation over time of financial instruments such as stocks that can, among other things, be used to determine the price of a European call option. The model assumes that the price of heavily traded assets follow a geometric Brownian motion with constant drift and volatility. When applied to a stock option, the model incorporates the constant price variation of the stock, the time value of money, the option's strike price and the time to the option's expiry.
Also known as the Black-Scholes-Merton Model.
- A model of price variation over time of financial instruments such as stocks that can, among other things, be used to determine the price of a European call option. The model assumes that the price of heavily traded assets follow a geometric Brownian motion with constant drift and volatility. When applied to a stock option, the model incorporates the constant price variation of the stock, the time value of money, the option's strike price and the time to the option's expiry.
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Black Swan
- An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict. This term was popularized by Nassim Nicholas Taleb, a finance professor and former Wall Street trader.
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Black Thursday
- The name given to Thursday, October 24, 1929, when the New York Stock Exchange plummeted, leading to the Great Depression of the 1930s.
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Black Tuesday
- October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million shares were traded in a panic selloff.
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Black Wednesday
- The day when the British government was forced to withdraw the pound from the European Exchange Rate Mechanism. The date of the Black Wednesday crash was September 16, 1992, and five years later the UK Treasury estimated that the loss from that day was around £3.14 billion.
- The day when the British government was forced to withdraw the pound from the European Exchange Rate Mechanism. The date of the Black Wednesday crash was September 16, 1992, and five years later the UK Treasury estimated that the loss from that day was around £3.14 billion.
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Black's Model
- A variation of the Black-Scholes model that allows for the valuation of options on futures contracts.
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Black-Litterman Model
- An asset allocation model that was developed by Fischer Black and Robert Litterman of Goldman Sachs. The Black-Litterman model is essentially a combination of two main theories of modern portfolio theory, the Capital Asset Pricing Model (CAPM) and Harry Markowitz's mean-variance optimization theory.
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Blackberry Addiction
- A slang term used to describe an over reliance on and almost obsessive need to use one's Blackberry. Blackberry addiction has become a prevalent condition for many professional and non-professional users of the Blackberry device. Some common symptoms of Blackberry addiction include constant checking of emails and texts, answering phone calls at inappropriate times and the need to always have the smartphone device within reach.
Due to the addictive nature of the device, the device is often referred to in popular culture as the "crackberry".
- A slang term used to describe an over reliance on and almost obsessive need to use one's Blackberry. Blackberry addiction has become a prevalent condition for many professional and non-professional users of the Blackberry device. Some common symptoms of Blackberry addiction include constant checking of emails and texts, answering phone calls at inappropriate times and the need to always have the smartphone device within reach.
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Blackboard Trading
- The trading of commodities and futures contracts off a blackboard found on the wall of a commodity exchange.
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Blackout Period
- 1. A term that refers to a temporary period in which access is limited or denied.
2. A period of around 60 days during which employees of a company with a retirement or investment plan cannot modify their plans. Notice must be given to employees in advance of a pending blackout.
- 1. A term that refers to a temporary period in which access is limited or denied.
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Blank Check Preferred Stock
- A method companies use to simplify the process of creating new classes of preferred stock to raise additional funds from sophisticated investors without obtaining separate shareholder approval.
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Blank Endorsement
- A signature by the creator of an instrument, such as a check, which enables any holder of the instrument to assert a claim for payment. Because no payee is specified, such an endorsement essentially turns the instrument into a bearer security.
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Blank-Check Company
- A company in a developmental stage that either doesn't have an established business plan or has a business plan that revolves around a merger or acquisition with another firm.
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Blanket Bond
- Insurance coverage carried by brokerages, investment bankers, and other financial institutions to protect them against losses due to employee dishonesty.
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Blanket Honesty Bond
- A kind of fidelity bond that covers an employer for all of the losses that are incurred through the dishonest acts of its employees. No matter how many employees are involved, the maximum amount of the coverage will be applied to any one loss. The employer is indemnified even if the the guilty employee(s) cannot be identified. Also known as commercial blanket bond.
- A kind of fidelity bond that covers an employer for all of the losses that are incurred through the dishonest acts of its employees. No matter how many employees are involved, the maximum amount of the coverage will be applied to any one loss. The employer is indemnified even if the the guilty employee(s) cannot be identified. Also known as commercial blanket bond.
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Blanket Insurance
- A single policy on an insured property that covers more than one type of property at the same location, the same kind of property at more than one location, or two or more kinds or property at two or more locations. Homeowner's insurance that covers personal possessions as well as the actual dwelling "blankets" all the homeowners' goods..
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Blanket Lien
- A lien covering nearly all types of assets and collateral owned by a debtor.
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Blanket Mortgage
- A mortgage which covers two or more pieces of real estate. The real estate is held as collateral on the mortgage, but the individual pieces of the real estate may be sold without retiring the entire mortgage.
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Blanket Recommendation
- A situation in which a financial professional or institution sends a recommendation to all clients to buy or sell a particular security or product, regardless of whether or not the particular asset is compatible with the client's investment goals, objectives and risk tolerance.
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Blend Fund
- A category of equity mutual funds with portfolios that are made up of a mix of value and growth stocks.
This is also referred to as a "hybrid fund".
- A category of equity mutual funds with portfolios that are made up of a mix of value and growth stocks.
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Blended Rate
- 1. An interest rate charged on a loan, which is in between a previous rate and the new rate. Blended rates are usually offered through the refinancing of previous loans, and charge a rate that is higher than the old loan's rate but lower than the rate on a new loan.
2. A rate that is calculated for accounting purposes to better understand the debt obligation for several loans with different rates or the revenue from streams of interest income. The blended rate is used to calculate the pooled cost of funds.
- 1. An interest rate charged on a loan, which is in between a previous rate and the new rate. Blended rates are usually offered through the refinancing of previous loans, and charge a rate that is higher than the old loan's rate but lower than the rate on a new loan.
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Blind Brokering
- When brokerage firms ensure anonymity to both the buyer and the seller in a transaction. In the ordinary course of securities trading, most brokerage transactions are "blind". Exceptions occur for broker/dealers or others acting as both broker and principal on a given trade
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Blind Entry
- An accounting entry found in financial bookkeeping that is made without giving any explanatory description of the transaction that precipitated the entry. Blind entries do contain the necessary basic information required to keep accounting records correct and up-to-date, as they specify the currency value of the entry and whether it is a debit or a credit.
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Blind Pool
- A limited partnership or stock offering with no stated investment goal for the funds that are raised from investors. In a blind pool, money is raised from investors, usually trading on the name of a particular individual or firm, but few restrictions or safeguards are in place for investor security.
May also be called "blank check underwriting" or a "blank check offering".
- A limited partnership or stock offering with no stated investment goal for the funds that are raised from investors. In a blind pool, money is raised from investors, usually trading on the name of a particular individual or firm, but few restrictions or safeguards are in place for investor security.
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Blind Taxpayer
- A taxpayer who qualifies for the additional standard deduction amount accorded to blind persons. Blind taxpayers are eligible to have their standard deductions increased by the same amount as taxpayers over age 65.
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Blind Trust
- A trust in which the executors have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust.
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Blitzkrieg Tender Offer
- A takeover offer that is intended to be so attractive that very few objections will arise and the takeover will occur swiftly. In German, "blitz" means lightning and "krieg" means war. Thus, a blitzkrieg (lightning war) refers to a surprise offensive that is both powerful and swift and was used to describe World War II bombing raids.
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Block
- A large amount of the same security bought or sold by institutional or other large investors. There is no official size designation constituting a block of securities, but a commonly used threshold is more than 10,000 equity shares or more than $200,000 of debt securities.
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Block House
- A brokerage whose major concern is finding potential buyers and sellers of block trades.
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Block Order
- A signficant order placed for sale or purchase of a large number of securities. Block orders are often used by institutional investors.
Also known as a "Block Trade".
- A signficant order placed for sale or purchase of a large number of securities. Block orders are often used by institutional investors.
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Block Positioner
- A securities dealer who will take a long or short position in order to accommodate a seller or buyer of a large block of securities. The dealer takes on the risk of the securities in order to help clear the trade for the seller. Block positioners aim to unload the position quickly, and typically hedge their risk with options or by selling the securities short.
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Block Trade
- An order/trade submitted for sale or purchase of a large quantity of securities. Also known as "Block Order".
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Blockage Discount
- The difference between the market value of a security and its sale price when transacted under a block trade. Each blockage discount is negotiated by the involved institutional investors, which incorporates such factors as market liquidity and the size of the trade.
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Blocked Account
- An account that is subject to foreign exchange controls in a country that restricts the amount of its currency that can be transferred to other countries or exchanged into other currencies.
It can also refer to accounts that are frozen, either by the U.S. government for political reasons, or for other reasons (such as death of the account holder.)
- An account that is subject to foreign exchange controls in a country that restricts the amount of its currency that can be transferred to other countries or exchanged into other currencies.
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Blocked Currency
- Any currency that is mainly used for domestic transactions and does not freely trade on a forex market (usually due to government restrictions). Also referred to as a "nonconvertible currency".
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Blockholder
- The owner of a large amount of a company's shares and/or bonds, or block. In terms of shares, these owners are often able to influence the company with the voting rights awarded with their holding.
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Bloodletting
- A period of severe investing losses.
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Bloomberg
- A major global provider of 24-hour financial news and information including real-time and historic price data, financials data, trading news and analyst coverage, as well as general news and sports. Its services, which span their own platform, television, radio and magazines, offer professionals analytic tools.
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Bloomberg Terminal
- A computer system that allows investors to access the Bloomberg data service, which provides real-time financial data, news feeds, messages and also facilitates the placement of trades. Bloomberg charges a monthly fee, typically in the range of thousands of dollars per workstation for access to its system.
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Blotter
- A record of trades and the details of the trades made over a period of time (usually one trading day). The details of a trade will include such things as the time, price, order size and a specification of whether it was a buy or sell order. The blotter is usually created through a trading software program that records the trades made through a data feed.
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Blow-Off Top
- A steep and rapid increase in price followed by a steep and rapid drop in price.
Here is an example of a blow-off top, a steep rise followed by a steep fall.
- A steep and rapid increase in price followed by a steep and rapid drop in price.
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Blowoff
- A term in technical analysis that refers to a sharp price increase that comes after a long period of price appreciation, and is followed by a fall in the price. A blowoff is seen as a rally's last breath and is a highly bearish sign.
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Blue Book
- A guidebook that compiles and quotes prices for new and used automobiles and other vehicles of all makes, models and types. Formally known as the Kelley Blue Book, it was originally only available to those in the automotive industry, but both a consumer edition and an online edition was made available in the 1990s for the general public.
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Blue Chip
- A nationally recognized, well-established and financially sound company. Blue chips generally sell high-quality, widely accepted products and services. Blue chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth.
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Blue Chip Swap
- When a domestic investor purchases a foreign asset and then transfers that asset to a domestic bank branch located offshore. Then, the funds from the foreign asset are transfered into a bank account in the domestic country. The domestic investor usually has a partner transferring assets to the foreign branch on his or her behalf.
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Blue Collar
- A working-class person historically defined by hourly rates of pay and manual labor. A blue collar worker refers to the fact that most manual laborers at the turn of the century wore blue shirts, which could hold a little dirt around the collar without standing out.
This working class stands in contrast to white collar workers, which historically have had the higher-paying, salaried positions to go with their clean and pressed white shirts.
- A working-class person historically defined by hourly rates of pay and manual labor. A blue collar worker refers to the fact that most manual laborers at the turn of the century wore blue shirts, which could hold a little dirt around the collar without standing out.
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Blue Collar Trader
- A trader who has another source of income, and does not trade as a means, but rather as a savings plan, or bonus, etc. This person typically does not trade in large volumes, leaning more towards trying to earn smaller returns. Such a trader is not significantly experienced or knowledgeable in the field, and will therefore tend to stick to less risky investments.
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Blue List
- A daily digest of municipal and corporate bond offerings, market commentaries, fixed-income statistics and other bond information. The blue list is used by bond investors to identify investment opportunities in the bond market.
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Blue Ocean
- A slang term for the uncontested market space for an unknown industry or innovation. Coined by professors W. Chan Kim and Renee Mauborgne in their book "Blue Ocean Strategy: How to Create Uncontested Market Space and the Make Competition Irrelevant" (2005), blue oceans are associated with high potential profits.
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Blue Sheets
- Requests for information sent out by the Securities and Exchange Commission to market makers.
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Blue Sky Laws
- State regulations designed to protect investors against securities fraud by requiring sellers of new issues to register their offerings and provide financial details. This allows investors to base their judgments on trustworthy data.
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Blue-Chip Stock
- Stock of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times.
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BMD (Bermudian Dollar)
- The currency abbreviation or currency symbol for the Bermudian dollar (BMD). The Bermudian dollar is made up of 100 cents, and is often presented with the dollar sign as BD$ to allow it to be distinguished from other currencies denominated in dollars, such as the U.S. dollar (USD).
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BND (Brunei Dollar)
- The currency abbreviation, or currency symbol, for the Brunei dollar (BND), the currency for Brunei, which also acceptable tender in Singapore. The Brunei dollar is made up of 100 sen (also known as cents in English) and is often presented with the symbol B$. The dollar is pegged to the Singapore dollar 1:1 and is called the "ringgit Brunei" in the Malay language.
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Bo Derek
- A slang term used to describe a perfect stock or investment. In the 1979 hit movie "10", actress Bo Derek portrayed the "perfect woman", or "the perfect 10".
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Board Broker
- A member or member nominee of a commodity exchange who is entrusted with the responsibility of executing and matching orders, providing price quotations, and maintaining orderliness of trading accounts for the designated commodity.
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Board Broker System
- The system used by many commodity exchanges in which members are assigned specific commodities to manage.
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Board Certified In Estate Planning - BCE
- A certification offered by the Institute of Business & Finance (IBF) aimed at brokers, advisors and financial planners whose clients are interested in estate accumulation, preservation and distribution (estate planning).
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Board Lot
- A standardized number of shares defined by a stock exchange as a trading unit. In most cases, this means 100 shares. The purpose of a board lot is to avoid "odd lots" and to facilitate easier trading. It's more difficult for a broker to find a buyer for, say, 17 shares, than if everybody agrees to trade in 100 share lots.
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Board of Directors
- An appointed or elected body or committee that has overall responsibility for the management of a nonprofit or nonstock organization, such as a foundation, university or mutual fund. The board of trustees holds "in-trust" the funds, assets or property that belong to others and has a fiduciary duty to protect them. Importantly, the board of trustees oversees and advises management on issues facing the organization.
- An appointed or elected body or committee that has overall responsibility for the management of a nonprofit or nonstock organization, such as a foundation, university or mutual fund. The board of trustees holds "in-trust" the funds, assets or property that belong to others and has a fiduciary duty to protect them. Importantly, the board of trustees oversees and advises management on issues facing the organization.
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Board Of Directors - B Of D
- A group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues. Such issues include the hiring/firing of executives, dividend policies, options policies and executive compensation. Every public company must have a board of directors.
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BOB (Bolivian Boliviano)
- The currency abbreviation or currency symbol for the Bolivian boliviano (BOB), the currency of Bolivia. The Bolivian boliviano is made up of 100 centavos. Although the currency has changed many times, the name has been used to represent the Bolivian currency unit since 1864.
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BOBL Futures Contract
- A futures contract with medium term debt that is issued by the Federal Republic of Germany as its underlying asset. The contract has a notional contract value of 100,000 euros, with a term to maturity of 4.5 to five years. Unlike most other types of future contracts, BOBL future contracts tend to be settled by delivery.
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Bogey
- A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the investment scope of the funds investment. Comparing a fund's performance to a benchmark index gives investors an idea of how well the fund is doing compared to the market.
Also known referred to as "bogy".
- A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the investment scope of the funds investment. Comparing a fund's performance to a benchmark index gives investors an idea of how well the fund is doing compared to the market.
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Boiler Room
- A place where high-pressure salespeople use banks of telephones to call lists of potential investors (known as a "sucker lists") in order to peddle speculative, even fraudulent, securities. A boiler room is called as such because of the high-pressure selling.
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Boilerplate
- The standardization of a legal document's structure and language. This leads to quicker and more efficient practices in terms of the filling out and processing of documents.
Most often used in contracts, prospectuses and indentures.
- The standardization of a legal document's structure and language. This leads to quicker and more efficient practices in terms of the filling out and processing of documents.
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Bollinger Band
- A band plotted two standard deviations away from a simple moving average, developed by famous technical trader John Bollinger.
In this example of Bollinger bands, the price of the stock is banded by an upper and lower band along with a 21-day simple moving average.
- A band plotted two standard deviations away from a simple moving average, developed by famous technical trader John Bollinger.
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Bolsa Boliviana de Valores - BBV
- The stock exchange headquartered in La Paz, Bolivia .
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Bombay Stock Exchange (BSE) .BO
- The first and largest securities market in India, the Bombay Stock Exchange (BSE) was established in 1875 as the Native Share and Stock Brokers' Association. Based in Mumbai, India, the BSE lists over 6,000 companies and is one of the largest exchanges in the world. The BSE has helped develop the country's capital markets, including the retail debt market, and helped grow the Indian corporate sector.
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Bona Fide Error
- An error that was unintentional; an "honest error." If a bona fide error is corrected immediately, then a defendant may not be liable for an action.
For example, under the Truth in Lending Act, a creditor can avoid liability by demonstrating that a violation was unintentional and was caused by a bona fide error, including clerical, calculation, computer malfunction or printing error. An error in legal judgment, however, is not ordinarily considered a bona fide error.
- An error that was unintentional; an "honest error." If a bona fide error is corrected immediately, then a defendant may not be liable for an action.
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Bond
- A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.
Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents..
- A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.
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Bond Anticipation Note - BAN
- A short-term interest-bearing security issued in the anticipation of larger future bond issues.
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Bond Attorney
- A lawyer who represents the bondholders' interests during a bond offering and who prepares the legal opinion attesting that the issue is legal, valid and binding.
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Bond Broker
- A broker who executes over-the-counter bond trades between institutional investors (bond traders). Bond brokers act as an intermediary between institutional investors to keep the identities of the other parties anonymous. Brokers communicate with traders on telephone and over the internet to obtain quotes from both parties.
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Bond Buyer 11
- An average yield on a particular day of 11 selected general obligation municipal bonds with an average 'AA' rating, maturing in 20 years. It is comprised of 11 of the 20 bonds in the Bond Buyer 20. The Bond Buyer 11 is published by The Bond Buyer and used as a benchmark in tracking municipal bond yields.
Also referred to as the "11 Bond Index".
- An average yield on a particular day of 11 selected general obligation municipal bonds with an average 'AA' rating, maturing in 20 years. It is comprised of 11 of the 20 bonds in the Bond Buyer 20. The Bond Buyer 11 is published by The Bond Buyer and used as a benchmark in tracking municipal bond yields.
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Bond Buyer 20
- A representation of municipal bond trends based on a portfolio of 20 general obligation bonds that mature in 20 years. The index is based on a survey of municipal bond traders rather than actual prices or yields. The Bond Buyer 20 is published by The Bond Buyer, a daily financial publication.
Also referred to as the "20 Bond Index".
- A representation of municipal bond trends based on a portfolio of 20 general obligation bonds that mature in 20 years. The index is based on a survey of municipal bond traders rather than actual prices or yields. The Bond Buyer 20 is published by The Bond Buyer, a daily financial publication.
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Bond Buyer Index
- An index published by The Bond Buyer, a daily finance newspaper that covers the municipal bond market. Investors use the Bond Buyer Index to plot interest rate patterns in the municipal market. Traders use the daily Bond Buyer Index to trade municipal bond index futures and futures options at the Chicago Board Of Trade (CBOT).
Also referred to as the "Bond Buyer's Municipal Bond Index".
- An index published by The Bond Buyer, a daily finance newspaper that covers the municipal bond market. Investors use the Bond Buyer Index to plot interest rate patterns in the municipal market. Traders use the daily Bond Buyer Index to trade municipal bond index futures and futures options at the Chicago Board Of Trade (CBOT).
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Bond Circular
- A standardized legal document that contains an abbreviated version of the relevant terms from the prospectus of a new bond issue. The bond circular is made available to prospective investors and contains basic information including: issuer, amount of the issue, coupon, use of proceeds and final legal maturity of the bond.
Also known as an "offering circular".
- A standardized legal document that contains an abbreviated version of the relevant terms from the prospectus of a new bond issue. The bond circular is made available to prospective investors and contains basic information including: issuer, amount of the issue, coupon, use of proceeds and final legal maturity of the bond.
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Bond Crowd
- A slang term used to describe members of the stock exchange that transact bond orders from the floor of the exchange. The label “bond crowd” differentiates them from the members of the exchange who trade stocks.
- A slang term used to describe members of the stock exchange that transact bond orders from the floor of the exchange. The label “bond crowd” differentiates them from the members of the exchange who trade stocks.
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Bond Discount
- The amount by which the market price of a bond is lower than its principal amount due at maturity. This amount, called its par value, is often $1,000. As bond prices are quoted as a percent of face value, a price of 98.00 means that the bond is selling for 98% of its face value of $1,000.00 and the bond discount is 2%.
- The amount by which the market price of a bond is lower than its principal amount due at maturity. This amount, called its par value, is often $1,000. As bond prices are quoted as a percent of face value, a price of 98.00 means that the bond is selling for 98% of its face value of $1,000.00 and the bond discount is 2%.
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Bond Equity Earnings Yield Ratio - BEER
- A metric used to evaluate the relationship between bond yields and earnings yields in the stock market. The Bond Equity Earnings Yield Ratio (BEER) has two parts – the top is represented by a benchmark bond yield (such as five- or 10-year Treasuries) while the bottom is the current earnings yield of a stock benchmark (such as the S&P 500).
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Bond Equivalent Yield - BEY
- A calculation for restating semi-annual, quarterly, or monthly discount-bond or note yields into an annual yield. For a fixed income security with a par value of $1000, the calculation is as follows:
- A calculation for restating semi-annual, quarterly, or monthly discount-bond or note yields into an annual yield. For a fixed income security with a par value of $1000, the calculation is as follows:
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Bond ETF
- A type of exchange-traded fund (ETF) that exclusively invests in bonds. Bond ETFs are very much like bond mutual funds in that they hold a portfolio of bonds and can differ widely in strategies, ranging from U.S. Treasuries to high yields, from long-term to short-term. Bond ETFs trade like stocks and are passively managed.
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Bond Floor
- 1. The lowest value that convertible bonds can fall to, given the present value of the remaining future cash flows and principal repayment. The bond floor is the value at which the convertible option becomes worthless because the underlying stock price has fallen substantially below the conversion value.
2. The aspect of constant proportion portfolio insurance that ensures that the value of a given portfolio does not fall below a predefined level.
- 1. The lowest value that convertible bonds can fall to, given the present value of the remaining future cash flows and principal repayment. The bond floor is the value at which the convertible option becomes worthless because the underlying stock price has fallen substantially below the conversion value.
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Bond for Bond Lending
- A lending structure used in the Federal Reserve's security lending facility, whereby borrowers receive a loan of bonds, by using all or a portion of their own portfolio of bonds for collateral. The bond for bond lending structure is different from the traditional cash for bond lending structure, in which the borrower takes the funds as cash instead.
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Bond Fund
- A fund invested primarily in bonds and other debt instruments. The exact type of debt the fund invests in will depend on its focus, but investments may include government, corporate, municipal and convertible bonds, along with other debt securities like mortgage-backed securities.
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Bond Futures
- A bond future is a contractual obligation for the contract holder to purchase or sell a bond on a specified date at a predetermined price. A bond future can be bought in a futures exchange market and the prices and dates are determined at the time the future is purchased.
- A bond future is a contractual obligation for the contract holder to purchase or sell a bond on a specified date at a predetermined price. A bond future can be bought in a futures exchange market and the prices and dates are determined at the time the future is purchased.
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Bond Insurance
- A type of insurance policy that a bond issuer purchases that guarantees the repayment of the principal and all associated interest payments to the bondholders in the event of default. Bond issuers buy insurance to enhance their credit rating to 'AAA' in order to reduce the amount of interest that it needs to pay.
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Bond Ladder
- A strategy for managing fixed-income investments by which the investor builds a ladder by dividing his or her investment dollars evenly among bonds or CDs that mature at regular intervals simultaneously (for example, every six months, once a year or every two years).
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Bond Laddering
- A portfolio management strategy and model for investing in fixed income that involves purchasing multiple bonds, each with different maturity dates, in order to achieve the following goals:
- Decrease interest rate risk by holding both short-term and long-term bonds, thereby spreading risk along the interest rate curve. If rates are rising, as one bond matures the funds can be re-invested into higher yield bonds.
- Decrease re-investment risk because as one bond in the ladder matures, the cash is re-invested, but it only represents a portion of the total portfolio. Even if prevailing rates at the time of re-investment are lower than the previous bond was returning, the smaller amount of reinvestment dollars mitigates the risk of investing a lot of cash at a low return.
- Maintain steady cash flows to encourage regular saving for investors looking for an income-producing portfolio.
- A portfolio management strategy and model for investing in fixed income that involves purchasing multiple bonds, each with different maturity dates, in order to achieve the following goals:
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Bond Market
- The environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities, and facilitates the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and ongoing operations.
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Bond Market Association (BMA) Swap
- A type of swap arrangement in which two parties agree to exchange interest rates on debt obligations, where the floating rate is based on the bond market association's swap index. One of the parties involved will swap a fixed interest rate for a floating rate, while the other party will swap a floating rate for a fixed rate.
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Bond Option
- An option contract in which the underlying asset is a bond. Other than the different characteristics of the underlying assets, there is no significant difference between stock and bond options. Just as with other options, a bond option allows investors the ability to hedge the risk of their bond portfolios or speculate on the direction of bond prices with limited risk.
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Bond Quote
- The statement of a bond's price.
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Bond Rating
- A grade given to bonds that indicates their credit quality. Private independent rating services such as Standard & Poor's, Moody's and Fitch provide these evaluations of a bond issuer's financial strength, or its the ability to pay a bond's principal and interest in a timely fashion.
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Bond Swap
- A strategy in which an investor sells a bond and at the same time purchases a different bond with the proceeds from the sale.
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Bond Trustee
- A financial institution with trust powers, such as a commercial bank or trust company, that is given fiduciary powers by a bond issuer to enforce the terms of a bond indenture. An indenture is a contract between a bond issuer and a bond holder. A trustee sees that bond interest payments are made as scheduled, and protects the interests of the bondholders if the issuer defaults.
- A financial institution with trust powers, such as a commercial bank or trust company, that is given fiduciary powers by a bond issuer to enforce the terms of a bond indenture. An indenture is a contract between a bond issuer and a bond holder. A trustee sees that bond interest payments are made as scheduled, and protects the interests of the bondholders if the issuer defaults.
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Bond Valuation
- A technique for determining the fair value of a particular bond. Bond valuation includes calculating the present value of the bond's future interest payments, also known as its cash flow, and the bond's value upon maturity, also known as its face value or par value. Because a bond's par value and interest payments are fixed, an investor uses bond valuation to determine what rate of return is required for an investment in a particular bond to be worthwhile.
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Bondholder
- The owner of a government or corporate bond. Being a bondholder is often considered safer than being a shareholder because if a company liquidates, it must pay its bondholders before it pays its shareholders. Being a bondholder entitles one to receive regular interest payments, if the bond pays interest (usually semiannually or annually), as well as a return of principal when the bond matures.
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Bonus
- 1. Additional compensation given to an employee above his/her normal wage. A bonus can be used as a reward for achieving specific goals set by the company, or for dedication to the company.
2. Dividends paid to shareholders from funds created out of additional profits realized by the company.
3. A premium paid for accepting an agreement. Sometimes referred to as a "signing bonus".
4. Anything over and above what is expected.
- 1. Additional compensation given to an employee above his/her normal wage. A bonus can be used as a reward for achieving specific goals set by the company, or for dedication to the company.
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Bonus Depreciation
- An additional amount of deductible depreciation that is awarded above and beyond what would normally be available. Bonus depreciation is always taken right away, in the first year that the depreciable item is placed in service. This type of incentive is offered either as an additional incentive or as a measure of relief for small businesses that want to buy additional equipment.
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Bonus Issue
- An offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout.
Also known as a "scrip issue" or "capitalization issue".
- An offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout.
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Book
- A record of all the positions that a trader is holding. This record shows the total amount of long and short position that the trader has undertaken.
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Book Balance
- Funds on deposit prior to any adjustment for check clearing, float funds or reserve requirements. The book balance is the term banks use to describe the amount of money available before any adjustments have been made for deposits in transit, checks that have not yet been cleared, reserve requirements and interest received from "float funds".
Also called "gross balance".
- Funds on deposit prior to any adjustment for check clearing, float funds or reserve requirements. The book balance is the term banks use to describe the amount of money available before any adjustments have been made for deposits in transit, checks that have not yet been cleared, reserve requirements and interest received from "float funds".
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Book Building
- The process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors.
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Book Closure
- A company's announcement of a dividend or bonus to investors.
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Book Runner
- The managing or lead underwriter who maintains the books of securities sold for a new issue.
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Book To Ship Ratio
- The demand-supply ratio of the amount that is recorded in the company's books to the amount of inventory it has shipped out. This ratio can be used to help measure a company's efficiency, and can be used to indentify potential problems in the supply chain.
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Book Transfer
- The transfer of funds from one deposit account to another at the same financial institution. Book transfer is a way to eliminate check clearing float because unlike with interbank transfers, there is no wait time for intrabank transfers.
- The transfer of funds from one deposit account to another at the same financial institution. Book transfer is a way to eliminate check clearing float because unlike with interbank transfers, there is no wait time for intrabank transfers.
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Book Value
- 1. The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated depreciation.
2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.
3. The initial outlay for an investment. This number may be net or gross of expenses such as trading costs, sales taxes, service charges and so on.
Also known as "net book value (NBV)".
In the U.K., book value is known as "net asset value".
- 1. The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated depreciation.
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Book Value Of Equity Per Share - BVPS
- A financial measure that represents a per share assessment of the minimum value of a company's equity. More specifically, this value is determined by relating the original value of a firm's common stock adjusted for any outflow (dividends and stock buybacks) and inflow (retained earnings) modifiers to the amount of shares outstanding.
Calculated as:
- A financial measure that represents a per share assessment of the minimum value of a company's equity. More specifically, this value is determined by relating the original value of a firm's common stock adjusted for any outflow (dividends and stock buybacks) and inflow (retained earnings) modifiers to the amount of shares outstanding.
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Book Value Per Common Share
- A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly.
Formula:
- A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly.
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Book-Entry Securities
- Securities that are recorded in electronic records called book entries rather than as paper certificates.
Also referred to as "book-entry receipt."
- Securities that are recorded in electronic records called book entries rather than as paper certificates.
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Book-to-Bill Ratio
- The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled.
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Book-To-Market Ratio
- A ratio used to find the value of a company by comparing the book value of a firm to its market value. Book value is calculated by looking at the firm's historical cost, or accounting value. Market value is determined in the stock market through its market capitalization.
Formula:
- A ratio used to find the value of a company by comparing the book value of a firm to its market value. Book value is calculated by looking at the firm's historical cost, or accounting value. Market value is determined in the stock market through its market capitalization.
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Booking the Basis
- An arrangement made between a buyer and seller giving either party the ability, at some future date, to determine the cash price of the forward sales agreement. Once the basis of a futures contract is booked, it is applied to the current futures price and is maintained for the duration of the contract. Also known as "deferred pricing."
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Bookout
- The process of closing out a position in a swap contract or another OTC derivative agreement prior to maturity.
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Boom
- A period of time during which sales or business activity increases rapidly.
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Boomerang
- An American slang term that refers to an adult who has moved back in with his or her parents (who are part of the baby boomer generation) instead of living independently. The phrase, when applied to an individual, makes reference to the fact that the person lived independently for a period, but subsequently returned home due to the financial costs associated with maintaining a separate household.
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Boomernomics
- An investing strategy that involves buying equities directly related to the spending behavior of baby boomers (people born between 1946 and 1964).
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Boon
- A general term that refers to a benefit or improvement for investors. This can include such things as increased dividends, a stock market rally and stock buybacks.
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Booster Shot
- The name given to the first formal recommendation report issued by an underwriter for an IPO. It is presented in the process of the public offering.
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Boot
- Cash or other property added to an exchange or a transaction in order to make the value of traded goods equal.
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Booth School of Business
- One of the leading business schools in America, located at the University of Chicago in Chicago, Illinois. The University of Chicago Booth School of Business was founded in 1898 and holds the distinction of being the second oldest business school in the U.S. and the first to offer executive MBA and PhD programs in business.
- One of the leading business schools in America, located at the University of Chicago in Chicago, Illinois. The University of Chicago Booth School of Business was founded in 1898 and holds the distinction of being the second oldest business school in the U.S. and the first to offer executive MBA and PhD programs in business.
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Bootstrap
- A situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.
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Bootstrapping
- 1. A procedure used to calculate the zero-coupon yield curve from market figures.
2. A situation in which an entrepreneur starts a company with little capital. An individual is said to be bootstrapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.
- 1. A procedure used to calculate the zero-coupon yield curve from market figures.
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Borrowing Base
- The amount of money a lender will loan to a company based on the value of the collateral the company pledges. The borrowing base is usually determined by a method called margining, where the lender determines a discount factor that is multiplied by the value of the collateral; the result is the amount that will be loaned to the company.
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Boston Equities Exchange - BEX
- A fully automated trading system created by the Boston Stock Exchange and five other financial conglomerates. The BEX offered a high-speed, low-cost alternative to market duopoly. The BEX also provided a superior ability to route market trades electronically and the opportunity for anonymous trade handling and execution.
- A fully automated trading system created by the Boston Stock Exchange and five other financial conglomerates. The BEX offered a high-speed, low-cost alternative to market duopoly. The BEX also provided a superior ability to route market trades electronically and the opportunity for anonymous trade handling and execution.
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Boston Options Exchange - BOX
- An all-electronic equity derivatives exchange launched on February 6, 2004, as a joint effort by the Montreal Exchange, Boston Stock Exchange and Interactive Brokers Group to provide an alternative to existing options markets. Technical operations of the Boston Options Exchange (BOX) are handled by the Montreal Exchange.
- An all-electronic equity derivatives exchange launched on February 6, 2004, as a joint effort by the Montreal Exchange, Boston Stock Exchange and Interactive Brokers Group to provide an alternative to existing options markets. Technical operations of the Boston Options Exchange (BOX) are handled by the Montreal Exchange.
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Boston Snow Indicator
- A market theory that states that a white Christmas in Boston will result in rising stock prices for the following year. For example, in Christmas of 1995, Boston received snow and the following year, the S&P 500 increased by more than 20%.
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Boston Stock Exchange (BSE) .B
- One of several regional stock exchanges located throughout the U.S. As the name states, the exchange is located in Boston, Massachusetts. The BSE is the third-oldest stock exchange in the U.S. as it was originally founded in 1834.
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Bottleneck
- A point of congestion in a system that occurs when workloads arrive at a given point more quickly than that point can handle them. The inefficiencies brought about by the bottleneck often create a queue and a longer overall cycle time.
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Bottom
- The lowest point or price reached by a financial security, commodity, index or economic cycle in a given time period, which is followed by a steady increase.
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Bottom Fisher
- An investor who looks for bargains among stocks whose prices have recently dropped dramatically. The investor believes that a price drop is temporary or is an overreaction to recent bad news and a recovery is soon to follow.
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Bottom Line
- Refers to a company's net earnings, net income or earnings per share (EPS). Bottom line also refers to any actions that may increase/decrease net earnings or a company's overall profit. A company that is growing its net earnings or reducing its costs is said to be "improving its bottom line".
- Refers to a company's net earnings, net income or earnings per share (EPS). Bottom line also refers to any actions that may increase/decrease net earnings or a company's overall profit. A company that is growing its net earnings or reducing its costs is said to be "improving its bottom line".
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Bottom-Up Investing
- An investment approach that de-emphasizes the significance of economic and market cycles. This approach focuses on the analysis of individual stocks. In bottom-up investing, therefore, the investor focuses his or her attention on a specific company rather than on the industry in which that company operates or on the economy as a whole.
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Bought Deal
- A new share issue that is bought entirely by one underwriter to resell to investors.
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Bounced Check
- A slang word for a check that cannot be processed because the writer has insufficient funds. A bounced check will often be returned to the writer along with a penalty fee for non-sufficient funds. "Passing" bad checks is illegal, and the crime can range from a misdemeanor to a felony, depending on the amounts involved and whether the activity involved crossing state lines.
Also known as a rubber check, dishonored check, or bad check.
- A slang word for a check that cannot be processed because the writer has insufficient funds. A bounced check will often be returned to the writer along with a penalty fee for non-sufficient funds. "Passing" bad checks is illegal, and the crime can range from a misdemeanor to a felony, depending on the amounts involved and whether the activity involved crossing state lines.
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Bourse
- Any European stock exchange.
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Boutique
- A small investment firm specializing in offering specific, but limited services to a select number of individuals.
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Bow Tie Loan
- A short-term, variable-rate loan in which unpaid interest charges above a predetermined interest rate are deferred. A variable rate loan is a loan in which the interest rate fluctuates in response to market interest rates. So, when these bow tie loans are issued, a predetermined interest rate is set and whenever the market rate goes up past that rate, interest payments for investors are deferred until the end of the loan's maturity.
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Box Size
- In the context of Point & Figure Charts, the box size is the minimum price change that must occur for a given period before a mark (an X or an O) is added to the chart.
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Box Spread
- A dual option position involving a bull and bear spread with identical expiry dates. This investment strategy provides for minimal risk. Additionally, it can lead to an arbitrage position as an investor attempts to lock in a small return at expiry.
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Box-Top Order
- A buy or sell order made at the best market price. If the order cannot be completely filled, a limit order is placed for the remaining shares at the price at which the filled portion was executed.
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Bracket Creep
- A situation where inflation pushes income into higher tax brackets. The result is an increase in income taxes but no increase in real purchasing power.
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Bracketed Buy Order
- A buy order that is accompanied by a sell limit order above the buy order's price and a sell stop order below the buy order's price. These three component orders will all be set at a price determined by the investor at the time the order is entered. This type of order allows investors to lock in profits with an upside movement and prevent a downside loss, without having to constantly follow the position.
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Bracketed Sell Order
- A sell order on a short sale that is accompanied (or "bracketed") by a buy stop order above the entry price of the sell order and a buy limit order below the entry price of the sell order. As the three component orders are based on set prices, this type of order protects the investor from the downside but also potentially locks in a gain without the investor constantly monitoring price.
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Brady Bonds
- Bonds that are issued by the governments of developing countries. Brady bonds are some of the most liquid emerging market securities. They are named after former U.S. Treasury Secretary Nicholas Brady, who sponsored the effort to restructure emerging market debt instruments.
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Brain Drain
- A slang term for a significant emigration of educated or talented individuals. A brain drain can result from turmoil within a nation, from there being better professional opportunities in other countries or from people seeking a better standard of living.
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Branch Automation
- Form of banking automation that connects the customer service desk in a bank office with the bank's customer records in the back office. Banking automation refers to the system of operating the banking process by highly automatic means so that human intervention is reduced to a minimum. Also referred to as platform automation.
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Branch Banking
- Engaging in banking activities such as accepting deposits or making loans at facilities away from a bank's home office. Branch banking has gone through significant changes since the 1980s in response to a more competitive nationwide financial services market. Financial innovation such as internet banking will greatly influence the future of branch banking by potentially reducing the need to maintain extensive branch networks to service consumers.
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Branch Manager
- An executive who is in charge of the branch office of a bank or financial institution. A branch manager is responsible for all of the functions of a branch office, like hiring employees, approving loans and lines of credit, marketing the branch, building a rapport with the community in order to attract business and assisting customers with account problems. A branch manager is also responsible for making sure that the branch's goals and objectives are met in a timely fashion.
- An executive who is in charge of the branch office of a bank or financial institution. A branch manager is responsible for all of the functions of a branch office, like hiring employees, approving loans and lines of credit, marketing the branch, building a rapport with the community in order to attract business and assisting customers with account problems. A branch manager is also responsible for making sure that the branch's goals and objectives are met in a timely fashion.
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Branch Office
- A location, other than the main office, where business is conducted. Most branch offices are comprised of smaller divisions of different aspects of the company such as human resources, marketing, accounting, etc. A branch office will typically have a branch manager who will report directly to, and take orders from, a management member of the main office.
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Brand
- A distinguishing symbol, mark, logo, name, word, sentence or a combination of these items that companies use to distinguish their product from others in the market.
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Brand Awareness
- The likelihood that consumers recognize the existence and availability of a company's product or service. Creating brand awareness is one of the key steps in promoting a product.
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Brand Equity
- An intangible value-added aspect of a particular good that is otherwise not considered unique.
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Brazil ETF
- An exchange-traded fund that invests in Brazilian stocks, either through local stock exchanges or with American and global depositary receipts on European and U.S. stock exchanges. Brazil ETFs are passively managed and are based on a country index created by fund managers, or a widely followed third party index.
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Brazil, Russia, India And China - BRIC
- An acronym for the economies of Brazil, Russia, India and China combined. The general consensus is that the term was first prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most of the current major economic powers.
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Bre-X Minerals Ltd.
- A company involved in one of the largest stock swindles in history. Its Indonesian gold property, which reportedly contained over 200 million ounces, was proven fraudulent in May of 1997.
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Breach Of Contract
- Violation of any of the agreed-upon terms and conditions of a binding contract. This breach could be anything from a late payment to a more serious violation, such as failure to deliver a promised asset. A contract is binding and will hold weight if taken to court; however, proof of the violation is imperative.
- Violation of any of the agreed-upon terms and conditions of a binding contract. This breach could be anything from a late payment to a more serious violation, such as failure to deliver a promised asset. A contract is binding and will hold weight if taken to court; however, proof of the violation is imperative.
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Breadth Indicator
- A specific type of indicator that uses advancing and declining issues to determine the amount of participation in the movement of the stock market.
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Breadth of Market Theory
- A technical analysis theory that predicts the strength of the market according to the number of stocks that advance or decline in a particular trading day.
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Breadwinner
- The primary, or sole, income earner in a household. Breadwinners, by contributing the largest portion of household income, generally cover most household expenses and financially support their dependents.
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Break
- A term used in futures markets to describe a rapid and sharp price decline.
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Break Fee
- 1. A fee paid by a target company to bidders (during an acquisition) if the pending deal is terminated.
2. A fee paid by one party of a contract to another in order to terminate or cancel legal obligations.
- 1. A fee paid by a target company to bidders (during an acquisition) if the pending deal is terminated.
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Break In Service
- The loss of use of the contribution or benefit plan of the corporation due to a lack of hours worked. Break in service may require an employee to work a specific amount of hours over a twelve month period in order to maintain their benefits.