Financial Glossary
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H
- A Nasdaq stock symbol specifying that it is the second preferred bond of the company.
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H-Shares
- A share of a company incorporated in the Chinese mainland that is listed on the Hong Kong Stock Exchange or other foreign exchange. H-shares are still regulated by Chinese law, but they are denominated in Hong Kong dollars and trade the same as other equities on the Honk Kong exchange.
H-shares on the exchange are automatically included in the Hang Seng China Enterprise Index, provided that they maintain the Hong Kong exchange regulatory requirements.
- A share of a company incorporated in the Chinese mainland that is listed on the Hong Kong Stock Exchange or other foreign exchange. H-shares are still regulated by Chinese law, but they are denominated in Hong Kong dollars and trade the same as other equities on the Honk Kong exchange.
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Haircut
- 1. The difference between prices at which a market maker can buy and sell a security.
2. The percentage by which an asset's market value is reduced for the purpose of calculating capital requirement, margin and collateral levels.
- 1. The difference between prices at which a market maker can buy and sell a security.
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Half Stock
- A stock with a par value of $50.
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Half-Life
- A date some time in the future when half of the total principal of a mortgage-backed security will be paid off. The interest payments are not taken in to account when calculating the half-life. While an estimate can be made as to what the half-life will be, it is not definite as the variables of the security may change.
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Halloween Massacre
- Refers to Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, announced that all income trusts will be taxed in a similar manner as corporations at a rate over 30% on taxable income, causing unit holders' values to decrease dramatically virtually overnight.
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Halo Effect
- The halo effect is a term used in marketing to explain the bias shown by customers towards certain products because of a favorable experience with other products made by the same manufacturer or maker. The opposite of the halo effect is "cannibalization".
- The halo effect is a term used in marketing to explain the bias shown by customers towards certain products because of a favorable experience with other products made by the same manufacturer or maker. The opposite of the halo effect is "cannibalization".
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Hamada Equation
- A fundamental analysis method of analyzing a firm's costs of capital as it uses additional financial leverage, and how that relates to the overall riskiness of the firm. The measure is used to summarize the effects this type of leverage has on a firm's cost of capital (over and above the cost of capital as if the firm had no debt). The equation is:
- A fundamental analysis method of analyzing a firm's costs of capital as it uses additional financial leverage, and how that relates to the overall riskiness of the firm. The measure is used to summarize the effects this type of leverage has on a firm's cost of capital (over and above the cost of capital as if the firm had no debt). The equation is:
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Hamburg Stock Exchange (HAM) .H
- This now-defunct exchange was located in Hamburg, Germany. It traded stocks, bonds and other securities and was a financial pillar of the city. It offered investment plans such as FONDS-X that impacted both open and closed-end funds.
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Hammer
- A price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or close to its opening price. This pattern forms a hammer-shaped candlestick.
- A price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or close to its opening price. This pattern forms a hammer-shaped candlestick.
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Hammering
- The rapid and concentrated sale of a stock thought to be overvalued by the market. It performed by investors and speculators who beleive that prices are inflated and that a period of liquidation is imminent.
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Handelsgesetzbuch - HGB
- A law that governs the primary commercial code for companies in Germany. Included in the law is regulation related to the preparation of financial statements. This law is similar to GAAP, which is followed in the United States.
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Handle
- The whole dollar price, or stem, of a quote.
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Hands-Off Investor
- An investor who accepts a passive management role in a company, even while holding a large portion of the company's stock.
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Hands-On Investor
- An investor who holds a large portion of a company's shares and takes an active management role.
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Hang Seng Index - HSI
- A market capitalization-weighted index of 40 of the largest companies that trade on the Hong Kong Exchange. The Hang Seng Index is maintained by a subsidiary of Hang Seng Bank, and has been published since 1969. The index aims to capture the leadership of the Hong Kong exchange, and covers approximately 65% of its total market capitalization. The Hang Seng members are also classified into one of four sub-indexes based on the main lines of business including commerce and industry, finance, utilities and properties.
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Hanging Man
- A bearish candlestick pattern that forms at the end of an uptrend. It is created when there is a significant sell-off near the market open, but buyers are able to push this stock back up so that it closes at or near the opening price. Generally the large sell-off is seen as an early indication that the bulls (buyers) are losing control and demand for the asset is waning.
- A bearish candlestick pattern that forms at the end of an uptrend. It is created when there is a significant sell-off near the market open, but buyers are able to push this stock back up so that it closes at or near the opening price. Generally the large sell-off is seen as an early indication that the bulls (buyers) are losing control and demand for the asset is waning.
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Hanover Stock Exchange (HAN) .HA
- Formerly located in Hanover, Germany, this stock exchange is now defunct.
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Harami Cross
- A trend indicated by a large candlestick followed by a doji that is located within the top and bottom of the candlestick's body. This indicates that the previous trend is about to reverse.
- A trend indicated by a large candlestick followed by a doji that is located within the top and bottom of the candlestick's body. This indicates that the previous trend is about to reverse.
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Hard Asset
- A tangible and physical item or object of worth that is owned by an individual or a corporation. In currency transactions, hard assets are synonymous with currencies that the public generally has faith in, such as the U.S. dollar or the euro.
A hard asset is the opposite of an intangible item such as goodwill or a patent.
- A tangible and physical item or object of worth that is owned by an individual or a corporation. In currency transactions, hard assets are synonymous with currencies that the public generally has faith in, such as the U.S. dollar or the euro.
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Hard Call Protection
- The period in the life of a callable bond in which the issuing company is not permitted to redeem the bond.
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Hard Currency
- A currency, usually from a highly industrialized country, that is widely accepted around the world as a form of payment for goods and services. A hard currency is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex market.
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Hard Dollars
- Fees or payments paid to brokerage firms in return for their services.
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Hard Landing
- A term used to describe an economy going into recession as the government attempts to slow down inflation.
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Hard Loan
- A foreign loan that must be paid in the currency of a nation that has stability and a reputation abroad for economic strength (a hard currency).
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Hard Money
- 1. Funding by a government or organization that is repetitive, rather than a one-time grant. Examples include ongoing government daycare subsidies or firms that pay annual scholarships to post-secondary students.
2. Describes gold/silver/platinum (bullion) coins. A government that uses a hard money policy backs the value of the currency it uses with a hard, tangible and lasting material that will retain its relative value over time.
- 1. Funding by a government or organization that is repetitive, rather than a one-time grant. Examples include ongoing government daycare subsidies or firms that pay annual scholarships to post-secondary students.
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Hard Money Loan
- A loan of "last resort" or a short-term bridge loan. Hard money loans are backed by the value of the property, not by the credit worthiness of the borrower. Since the property itself is used as the only protection against default by the borrower, hard money loans have lower loan-to-value (LTV) ratios than traditional loans.
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Hard Stop
- A price level that, if reached, will trigger an order to sell an underlying security. Hard stops are set at a constant price and are inherently good until cancelled. A hard stop is used to protect the downside of holding an investment by always being active, and is only triggered once the price reaches the specified stop level.
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Hard-Coded Stock
- This is a term that refers to a company's stock symbol or ticker symbol. Every security listed anywhere on the globe has a unique symbol for the security. Knowing the symbol allows investors to check the price of the security.
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Hard-To-Borrow List
- A list used by brokerages to indicate securities considered difficult or unavailable to borrow for short selling transactions.
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Hardening
- 1. A term used to describe a price of commodity or futures contracts that is gradually stabilizing.
2. A futures market that is slowly advancing in prices.
- 1. A term used to describe a price of commodity or futures contracts that is gradually stabilizing.
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Hardship Withdrawal
- An emergency withdrawal from a retirement plan that may be subject to certain tax or account penalties. In the United States, funds withdrawn prior to the age of 59.5 are typically subject to a 10% Internal Revenue Service (IRS) early withdrawal penalty, as well as standard income taxes.
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Harmless Warrant
- A warrant that requires the holder to surrender a similar bond when purchasing a new fixed-income instrument. For the warrant to be exercisable, the two bonds must have similar terms, such as maturity, yield and principal.
Also known as a "wedding warrant."
- A warrant that requires the holder to surrender a similar bond when purchasing a new fixed-income instrument. For the warrant to be exercisable, the two bonds must have similar terms, such as maturity, yield and principal.
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Harmonic Average
- The mean of a set of positive variables. Calculated by dividing the number of observations by the reciprocal of each number in the series.
Also known as "harmonic mean".
- The mean of a set of positive variables. Calculated by dividing the number of observations by the reciprocal of each number in the series.
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Harmonized Index of Consumer Prices - HICP
- An inflation indicator used by the European Central Bank.
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Harry Markowitz
- A Nobel Memorial Prize winning economist who devised the modern portfolio theory in 1952. Markowitz's theories emphasized the importance of portfolios, risk, the correlations between securities and diversification. His work changed the way that people invested.
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Harry Potter Stock Index
- A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks to capture some of Harry Potter's success by investing in selected movie producers, merchandisers and advertisers currently associated with the franchise.
The success of the Harry Potter franchise has snowballed since the first of many Harry Potter books, "Harry Potter and the Sorcerer's Stone", by J. K. Rowling, was first published in 1997. With the addition of movies, toys, games and other accessories, Harry Potter has created an industry generating billions of dollars in sales. With each new book edition or movie release, StockPickr believes investors can benefit by investing in companies involved with Harry Potter branded items.
- A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks to capture some of Harry Potter's success by investing in selected movie producers, merchandisers and advertisers currently associated with the franchise.
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Harvard Business School
- This is one of America's top business schools and is located at Harvard University. Harvard business school was founded in 1908 and is widely considered to be one of the world's best graduate business schools. The school also owns Harvard Business School Publishing Corporation, which publishes numerous business books, business cases and the Harvard Business Review.
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Harvard MBA Indicator
- A long-term stock market indicator that evaluates the percentage of Harvard Business School graduates that accept "market sensitive" jobs in fields such as investment banking, securities sales & trading, private equity, venture capital and leveraged buyouts. If more than 30% of a year's graduating class take jobs in these areas, the Harvard MBA Indicator creates a sell signal for stocks. Conversely, if less than 10% of graduates take jobs in this sector, it represents a long-term buy signal for stocks.
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Haurlan Index
- A technical analysis indicator, developed by P.N. Haurlan, that is used to detect market breadth. There are three components of the Haurlan index:
Short Term: a 3-day exponential moving average is taken of the net NYSE advances over declines.
Intermediate Term: same, using a 20-day exponential moving average.
Long Term:same, using a 200-day exponential moving average.
- A technical analysis indicator, developed by P.N. Haurlan, that is used to detect market breadth. There are three components of the Haurlan index:
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Hawk
- An economic policy advisor who has a negative view toward inflation and its effects on society.
Also known as "inflation hawk".
- An economic policy advisor who has a negative view toward inflation and its effects on society.
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Hazard Insurance
- Insurance that protects a property owner against damage caused by fires, severe storms, earthquakes or other natural events. As long as the specific event is covered within the policy, the property owner will receive compensation to cover the cost of any damage incurred. Typically, the property owner will be required to pay for a year's worth of premiums at the time of closing, but this will depend on the exact details of the policy.
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Head And Shoulders Pattern
- A technical analysis term used to describe a chart formation in which a stock's price:
1. Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines.
3. And finally, rises again, but not to the second peak, and declines once more.
The first and third peaks are shoulders, and the second peak forms the head.
- A technical analysis term used to describe a chart formation in which a stock's price:
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Head Of Household
- A status held by the person in a household who is running the household and looking after a qualified dependent. In order to qualify as head of household, the designated household must be located at the person's home and the person must pay more than 50% of the costs involved in running the household. The benefit of having the head-of-household status is that it can result in lower tax rates in certain jurisdictions.
- A status held by the person in a household who is running the household and looking after a qualified dependent. In order to qualify as head of household, the designated household must be located at the person's home and the person must pay more than 50% of the costs involved in running the household. The benefit of having the head-of-household status is that it can result in lower tax rates in certain jurisdictions.
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Head Trader
- The manager of a trading business. He or she is responsible for the positions, risk and ultimate profitability of that business. In a registered securities firm, the head trader supervises all traders and other personnel within his or her purview. Most notably, the head trader is charged with insuring regulatory and internal compliance for every employee who is part of the trading operation (i.e., not just traders).
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Headline Earnings
- A basis for measuring earnings per share implemented by the Institute of Investment Management and Research. This method accounts for all the profits and losses from operational, trading, and interest activities, that have been discontinued or acquired at any point during the year. Excluded from this figure are profits or losses associated with the sale or termination of discontinued operations, fixed assets or related businesses, or from any permanent devaluation or write off of their values.
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Headline Effect
- The effect that negative news in the popular press has on a corporation or an economy. Whether it is justified or not, the investing public's reaction to various headlines can be very dramatic. Many economists believe that negative news headlines make consumers more reluctant to spend money.
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Headline Inflation
- The raw inflation figure as reported through the Consumer Price Index (CPI) that is released monthly by the Bureau of Labor Statistics. The CPI calculates the cost to purchase a fixed basket of goods as a way of determining how much inflation is occurring in the broad economy. The CPI uses a base year and indexes current year prices based on the base year's values.
The headline figure is not adjusted for seasonality or for the often volatile elements of food and energy prices, which are removed in the Core CPI. Headline inflation will usually be quoted on an annualized basis, meaning that a monthly headline figure of 4% inflation equates to a monthly rate that, if repeated for 12 months, would create 4% inflation for the year. Comparisons of headline inflation are typically made on a year-over-year basis.
Also known as "top-line inflation".
- The raw inflation figure as reported through the Consumer Price Index (CPI) that is released monthly by the Bureau of Labor Statistics. The CPI calculates the cost to purchase a fixed basket of goods as a way of determining how much inflation is occurring in the broad economy. The CPI uses a base year and indexes current year prices based on the base year's values.
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Heads of Agreement
- A non-binding document outlining the main issues relevant to a tentative partnership agreement.
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Health Insurance
- A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured. Health insurance can either reimburse the insured for expenses incurred from illness or injury or pay the care provider directly. Health insurance is often included in employer benefit packages as a means of enticing quality employees.
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Health Insurance Portability And Accountability Act - HIPAA
- An act created by the U.S Congress in 1996 that amends both the Employee Retirement Income Security Act (ERISA) and the Public Health Service Act (PHSA) in an effort to protect individuals covered by health insurance and to set standards for the storage and privacy of personal medical data.
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Health Maintenance Organization - HMO
- An organization that provides health coverage with providers under contract. A Health Maintenance Organization (HMO) differs from traditional health insurance by the contracts it has with its providers. These contracts allow for premiums to be lower, because the health providers has the advantage of having patients directed to them; but these contracts also add additional restrictions to the HMO's members.
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Health Reimbursement Account - HRA
- Employer-funded plans that reimburse employees for incurred medical expenses that are not covered by the company's standard insurance plan. Because the employer funds the plan, any distributions are considered tax deductible (to the employer). Reimbursement dollars received by the employee are generally tax free.
The downside to HRAs is that companies may choose whether to start or fund such a plan. Also, if a plan has already been established, the employer has the right to cancel it at virtually any time.
- Employer-funded plans that reimburse employees for incurred medical expenses that are not covered by the company's standard insurance plan. Because the employer funds the plan, any distributions are considered tax deductible (to the employer). Reimbursement dollars received by the employee are generally tax free.
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Health Savings Account - HSA
- An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual's employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs.
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Healthcare Power Of Attorney - HCPA
- A legal form that allows an individual to empower another with decisions regarding his or her healthcare and medical treatment. Healthcare power of attorney becomes active when a person is unable to make decisions or consciously communicate intentions regarding treatments.
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Healthcare Sector
- A category of stocks relating to medical and healthcare goods or services. The healthcare sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products.
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Heath-Jarrow-Morton Model - HJM Model
- A model that applies forward rates to an existing term structure of interest rates to determine appropriate prices for securities that are sensitive to changes in interest rates.
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Heating Degree Day - HDD
The number of degrees that a day's average temperature is below 65o Fahrenheit (18o Celsius), the temperature below which buildings need to be heated. The price of weather derivatives traded in the winter is based on an index made up of monthly HDD values. The settlement price for a weather futures contract is calculated by summing HDD values for a month and multiplying that sum by $20.
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Heavy
- A term used to describe a futures market showing difficulty in advancing or a tendency to decline.
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Heavy Industry
- Relates to a type of business that typically carries a high capital cost (capital-intensive), high barriers to entry and low transportability. The term "heavy" refers to the fact that the items produced by "heavy industry" used to be products such as iron, coal, oil, ships, etc. Today the reference also refers industries that cause disruption to the environment in the form of pollution, deforestation, etc.
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Hedge
- Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.
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Hedge Clause
- A provision included in published financial reports that indemnifies the author, or authors, against any responsibility for any errors, omissions, or oversights contained within the report. Hedge clauses can be found predominately in analyst reports, company press releases and on most investing websites.
A hedge clause is also known as a "disclaimer".
- A provision included in published financial reports that indemnifies the author, or authors, against any responsibility for any errors, omissions, or oversights contained within the report. Hedge clauses can be found predominately in analyst reports, company press releases and on most investing websites.
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Hedge Fund
- An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).
Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for at least one year.
- An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).
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Hedge Ratio
- 1. A ratio comparing the value of a position protected via a hedge with the size of the entire position itself.
2. A ratio comparing the value of futures contracts purchased or sold to the value of the cash commodity being hedged.
- 1. A ratio comparing the value of a position protected via a hedge with the size of the entire position itself.
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Hedged Tender
- A strategy in a tender offer where an investor short sells a portion of the shares he or she owns. This strategy is used to protect against the risk of loss in the event that the tender offer does not go through.
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Hedgelet
- A simplified derivative instrument that allows investors to hedge or speculate on economic events such as housing prices, commodity prices, interest rates, currencies and economic indicators.
The price for a hedgelet contract is based on the prevailing market price determined by participants in the market. Every contract has the same defined payout scheme: $10 for a correct contract and $0 for an incorrect one. Each hedgelet contract is set so that investors must make a decision on whether an economic event will occur or not occur.
- A simplified derivative instrument that allows investors to hedge or speculate on economic events such as housing prices, commodity prices, interest rates, currencies and economic indicators.
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HedgeStreet
- An internet-based, government-regulated market that allows traders to perform hedging activities or speculate on specific economic events. Binaries and futures contracts are provided on different markets including commodities, currencies, employment, inflation and other economic indicators.
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Hedging Transaction
- A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging transactions purchase opposite positions in the market in order to ensure a certain amount of gain or loss on a trade. They are employed by portfolio managers to reduce portfolio risk and volatility or lock in profits.
- A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging transactions purchase opposite positions in the market in order to ensure a certain amount of gain or loss on a trade. They are employed by portfolio managers to reduce portfolio risk and volatility or lock in profits.
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Hedonic Pricing
- A model identifying price factors according to the premise that price is determined both by internal characteristics of the good being sold and external factors affecting it.
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Hedonic Treadmill
- The tendency of a person to remain at a relatively stable level of happiness despite a change in fortune or the achievement of major goals. According to the hedonic treadmill, as a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness.
Also known as the "hedonistic treadmill".
- The tendency of a person to remain at a relatively stable level of happiness despite a change in fortune or the achievement of major goals. According to the hedonic treadmill, as a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness.
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Heikin-Ashi Technique
- A type of candlestick chart that shares many characteristics with standard candlestick charts, but differs because of the values used to create each bar. Instead of using the open-high-low-close (OHLC) bars like standard candlestick charts, the Heikin-Ashi technique uses a modified formula:
Close = (Open+High+Low+Close)/4
Open = [Open (previous bar) + Close (previous bar)]/2
High = Max (High,Open,Close)
Low = Min (Low,Open, Close)
- A type of candlestick chart that shares many characteristics with standard candlestick charts, but differs because of the values used to create each bar. Instead of using the open-high-low-close (OHLC) bars like standard candlestick charts, the Heikin-Ashi technique uses a modified formula:
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Heir
- A person who inherits some or all of the estate of a recently deceased person. The legal successor is usually selected because he or she is related to the deceased by a direct bloodline or has been designated in a will or by a legal authority.
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Held
- A situation where a security is temporarily unavailable for trading.
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Held At The Opening
- A situation in which a security is restricted from trading when the stock exchange opens for the day. Stock exchanges can halt trading on securities at any time, but trading usually resumes in under an hour. If the halt occurs before the beginning of a trading day, the stock is considered held at the opening. This kind of halt in trading is done to protect investors.
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Held Order
- A market order that must be promptly executed so that the request is immediately filled. In most cases, the trader will be required to hit the bid for purchase orders or, in case of a sell, to take the offer.
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Held-to-Maturity Securities
- Debt securities that a firm has the ability and intent to hold until maturity.
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Hell or High Water Contract
- A non-cancelable contract whereby the purchaser must make the specified payments to the seller, regardless of any difficulties they may encounter.
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Help-Wanted Index - HWI
- The
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Henry Hub
- A natural gas pipeline located in Erath, Louisiana that serves as the official delivery location for futures contracts on the NYMEX. The Henry Hub is owned by Sabine Pipe Line LLC and has access to many of the major gas markets in the United States. As of June 2007, the hub connects to four intrastate and nine interstate pipelines, including the Transcontinental, Acadian and Sabine pipeline.
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Henry Paulson
- Henry Paulson served as the 74th U.S. Secretary of the Treasury. Paulson was appointed by President George W. Bush to the post in July, 2006. He gained international acclaim with his solution to the mortgage crisis of 2008. He was one of the key individuals involved with the the initiation of various multi-billion dollar bailout packages.
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Herd Instinct
- A mentality characterized by a lack of individuality, causing people to think and act like the general population.
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Herfindahl-Hirschman Index - HHI
- A commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers. The HHI number can range from close to zero to 10,000. The HHI is expressed as:
HHI = s1^2 + s2^2 + s3^2 + ... + sn^2 (where sn is the market share of the ith firm).
The closer a market is to being a monopoly, the higher the market's concentration (and the lower its competition). If, for example, there were only one firm in an industry, that firm would have 100% market share, and the HHI would equal 10,000 (100^2), indicating a monopoly. Or, if there were thousands of firms competing, each would have nearly 0% market share, and the HHI would be close to zero, indicating nearly perfect competition.
The U.S. Department of Justice uses the HHI for evaluating mergers.
- A commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers. The HHI number can range from close to zero to 10,000. The HHI is expressed as:
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Heroes Earned Retirement Opportunities Act - HERO
- Legislation passed by Congress on May 18, 2006, that allows tax-free combat-related compensation received by military personnel to be considered taxable income for IRA contribution purposes. Military personnel also will be able to make IRA contributions based on combat pay earned from January 2004 to May 2006 - up to two years before the act became law.
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Heteroskedastic
- A measure in statistics that refers to the variance of the errors over the sample.
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Heteroskedasticity
- In statistics, when the standard deviations of a variable, monitored over a specific amount of time, are non-constant. Heteroskedasticity often arises in two forms, conditional and unconditional. Conditional heteroskedasticity identifies non-constant volatility when future periods of high and low volatility cannot be identified. Unconditional heteroskedasticity is used when futures periods of high and low volatility can be identified.
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Hiccup
- A slang term for a short-term disruption within a longer-term plan, goal, or trend. A hiccup can be used to describe the business actions of a particular company, a stock price downturn, or the stock market as a whole. Generally, a hiccup is not indicative of a larger trend, but is considered an aberration.
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Hidden Load
- An undisclosed fee or sales charge, which is often hidden in the fine print of a fund's prospectus or in an insurance contract. In some cases, investors and clients do not realize they are paying the hidden load, as explicit attention is never drawn to the issue.
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Hidden Taxes
- Taxes that are indirectly assessed upon consumer goods without the consumer's knowledge. Hidden taxes are levied upon the goods at some point during the production process and therefore raise the cost of the goods sold. However, this tax is never revealed directly to the consumer, who simply pays a higher price for the good, not knowing that part of that price is due to this tax.
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Hidden Values
- Assets that may be undervalued on a company's balance sheet and therefore not incorporated into or reflected in the company's share price.
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High Beta Index
- An index composed of companies with high betas trading on the NYSE.
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High Close
- A tactic used by stock manipulators; they make small trades at high prices during the final minutes of trading to give the impression that the stock did very well.
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High Earners, Not Rich Yet - HENRYs
- A buzzword coined in a 2003 Fortune Magazine article to refer to a segment of families earning between $250,000 and $500,000, but not having much left after taxes, schooling, housing and family costs - not to mention saving for an affluent retirement. The original article in which the "high earners, not rich yet (HENRYs)" term appeared discussed the alternative minimum tax (AMT) and how hard it hits this group of people.
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High Flier
- A stock that has seen its share price - and subsequently its valuation - rise to high multiples on metrics such as current earnings and current sales. Usually, the rise will happen quickly, with the stock well outpacing the gains in the overall market during the same time period. Also, higher levels of volatility are usually found in high-flying stocks to go along with frequent spikes in trade volume.
- A stock that has seen its share price - and subsequently its valuation - rise to high multiples on metrics such as current earnings and current sales. Usually, the rise will happen quickly, with the stock well outpacing the gains in the overall market during the same time period. Also, higher levels of volatility are usually found in high-flying stocks to go along with frequent spikes in trade volume.
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High Minus Low - HML
- One of three factors in the Fama and French asset pricing model. HML accounts for the spread in returns between value and growth stocks. HML argues that companies with high book-to-market ratios (value stocks) outperform those with low ones (growth stocks).
Also referred to as the "value premium".
- One of three factors in the Fama and French asset pricing model. HML accounts for the spread in returns between value and growth stocks. HML argues that companies with high book-to-market ratios (value stocks) outperform those with low ones (growth stocks).
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High Net Worth Individual - HNWI
- A classification used by the financial services industry to denote an individual or a family with high net worth. Although there is no precise definition of how rich somebody must be to fit into this category, high net worth is generally quoted in terms of liquid assets over a certain figure. The exact amount differs by financial institution and region. The categorization is relevant because high net worth individuals generally qualify for separately managed investment accounts instead of regular mutual funds.
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High Ratio Loan
- A loan of any type for which a relatively small down payment must be made. For mortgages, a high value loan usually covers more than 80% of the property's value. Most high ratio home loans require some form of insurance coverage in order to protect the lender.
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High-Deductible Health Plan - HDHP
- A health insurance plan that has a high minimum deductible, which does not cover the initial costs or all of the costs of medical expenses. The deductible forces the insurance holder to pay the first portion of a medical expense before the insurance coverage kicks in. The minimum deductible for a plan to fall into the category of an HDHP varies each year. In 2006, it was more than $1,000 for individuals and $2,000 for families.
- A health insurance plan that has a high minimum deductible, which does not cover the initial costs or all of the costs of medical expenses. The deductible forces the insurance holder to pay the first portion of a medical expense before the insurance coverage kicks in. The minimum deductible for a plan to fall into the category of an HDHP varies each year. In 2006, it was more than $1,000 for individuals and $2,000 for families.
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High-Frequency Trading - HFT
- A program trading platform that uses powerful computers to transact a large number of orders at very fast speeds. High-frequency trading uses complex algorithms to analyze multiple markets and execute orders based on market conditions. Typically, the traders with the fastest execution speeds will be more profitable than traders with slower execution speeds. As of 2009, it is estimated more than 50% of exchange volume comes from high-frequency trading orders.
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High-Water Mark
- The highest peak in value that an investment fund/account has reached. This term is often used in the context of fund manager compensation, which is performance based.
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High-Yield Bond
- A high paying bond with a lower credit rating than investment-grade corporate bonds, Treasury bonds and municipal bonds. Because of the higher risk of default, these bonds pay a higher yield than investment grade bonds.
Based on the two main credit rating agencies, high-yield bonds carry a rating of 'BBB' or lower from S&P, and 'Baa' or lower from Moody's. Bonds with ratings above these levels are considered investment grade.Credit ratings can be as low as 'D' (currently in default), and most bonds with 'C' ratings or lower carry a high risk of default; to compensate for this risk, yields will typically be very high.
Also known as "junk bonds".
- A high paying bond with a lower credit rating than investment-grade corporate bonds, Treasury bonds and municipal bonds. Because of the higher risk of default, these bonds pay a higher yield than investment grade bonds.
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High-Yield Bond Spread
- The percentage difference in current yields of various classes of high-yield bonds (often junk bonds) compared against investment-grade corporate bonds, Treasury bonds or another benchmark bond measure. Spreads are often expressed as a difference in percentage points or basis points (which equal one-one hundredth of a percentage point).
- The percentage difference in current yields of various classes of high-yield bonds (often junk bonds) compared against investment-grade corporate bonds, Treasury bonds or another benchmark bond measure. Spreads are often expressed as a difference in percentage points or basis points (which equal one-one hundredth of a percentage point).
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Highest In, First Out - HIFO
- In accounting, an inventory distribution method in which the inventory with the highest cost of purchase is the first to be used or taken out of stock. This will impact the company's books such that for any given period of time, the inventory expense will be the highest possible.
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Highly Leveraged Transaction - HLT
- A bank loan to a highly leveraged company. HLTs can be thought of as similar to junk bonds as they both face default risk, but HLTs are more secure and have stronger debt covenants due to their structure.
HLT guidelines are set out by the U.S. Office of the Comptroller of Currency, the Federal Reserve Board and the Federal Deposit Insurance Corporation.
- A bank loan to a highly leveraged company. HLTs can be thought of as similar to junk bonds as they both face default risk, but HLTs are more secure and have stronger debt covenants due to their structure.
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Himalayan Option
- A type of exotic equity option belonging to a class known as mountain range options. Himalayan options are based on a basket of underlying securities, as opposed to the typical listed (vanilla) option, which has one underlying security.
- A type of exotic equity option belonging to a class known as mountain range options. Himalayan options are based on a basket of underlying securities, as opposed to the typical listed (vanilla) option, which has one underlying security.
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Hindenburg Omen
- A technical indicator named after the famous crash of the German airship of the late 1930s. The Hindenburg omen was developed to predict the potential for a financial market crash. It is created by monitoring the number of securities that form new 52-week highs relative to the number of securities that form new 52-week lows - the number of securities must be abnormally large. This criteria is deemed to be met when both numbers are greater than 2.2% of the total number of issues that trade on the NYSE (for that specific day).
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Hiring Freeze
- A situation whereas an employer has temporarily put into place that no further new hirings will occur for the foreseeable future. This type of cost-saving effort is put into place as a result of budgetary concerns, and to capitalize upon existing production capacity.
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Histogram
- 1. A graphical representation, similar to a bar chart in structure, that organizes a group of data points into user-specified ranges. The histogram condenses a data series into an easily interpreted visual by taking many data points and grouping them into logical ranges or bins.
2. The MACD histogram is a very common technical indicator that illustrates the difference between the MACD line and the trigger line. This difference is then plotted on a chart in the form of a histogram to make it easy for a trader to determine a specific asset's momentum.
- 1. A graphical representation, similar to a bar chart in structure, that organizes a group of data points into user-specified ranges. The histogram condenses a data series into an easily interpreted visual by taking many data points and grouping them into logical ranges or bins.
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Historical Cost
- A measure of value used in accounting in which the price of an asset on the balance sheet is based on its nominal or original cost when acquired by the company. The historical-cost method is used for assets in the U.S. under generally accepted accounting principals (GAAP).
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Historical Currency Exchange Rates
- A collection of historical exchange rates that are used to provide traders with a historical reference to where a currency pair has traded in the past. Historical currency rates are used by many forex traders to help shed light on the direction of a given currency pair.
- A collection of historical exchange rates that are used to provide traders with a historical reference to where a currency pair has traded in the past. Historical currency rates are used by many forex traders to help shed light on the direction of a given currency pair.
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Historical Volatility - HV
- The realized volatility of a financial instrument over a given time period. Generally, this measure is calculated by determining the average deviation from the average price of a financial instrument in the given time period. Standard deviation is the most common but not the only way to calculate historical volatility.
Also known as "statistical volatility".
- The realized volatility of a financial instrument over a given time period. Generally, this measure is calculated by determining the average deviation from the average price of a financial instrument in the given time period. Standard deviation is the most common but not the only way to calculate historical volatility.
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Hit The Bid
- A buzzword used to describe an event where a broker agrees to sell at a bid price quoted by another broker. The broker is ultimately agreeing to sell a given stock at the highest price that another broker is willing to buy at.
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HKD (Hong Kong Dollars)
- The currency abbreviation or currency symbol for the Hong Kong dollar (HKD), the currency for Hong Kong. The Hong Kong dollar is made up of 100 cents and if often presented with the symbol $ or HK$. Three Chinese note-issuing banks are authorized to issue Hong Kong dollars, subject to conditions laid out by the Hong Kong government. Banknotes then run through a government exchange fund which holds the U.S. dollars in reserves and records all transactions in the general accounts of the two currencies.
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HNL
- The currency abbreviation or currency symbol for the Honduran Lempira (HNL), the currency for Honduras. The Lempira is made up of 100 centavos and is often presented with the symbol L. The Lempira is named after the 16th-century ruler of Honduras who tried to throw off the yoke of Spanish rule.
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HNL (Honduran Lempira)
- The currency abbreviation or currency symbol for the Honduran lempira (HNL), the currency for Honduras. The lempira is made up of 100 centavos and is often presented with the symbol L. The lempira is named after the 16th-century Honduran ruler who fought against Spanish rule.
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Hobby Loss
- A non-deductible loss incurred as a result of doing an activity for personal pleasure instead of for profit. A taxpayer cannot deduct the hobby loss as a business loss. A "hobby loss rule" is used to determine if an activity is a hobby or a business.
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Hockey Stick Bidding
- An anti-competitive bidding practice in which a market participant (or trader) offers an extremely high price for a small portion of a good.
The name derives from the price curve of this practice, which resembles a hockey stick.
- An anti-competitive bidding practice in which a market participant (or trader) offers an extremely high price for a small portion of a good.
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Hodrick-Prescott (HP) Filter
- A data-smoothing technique that is commonly applied to remove short-term fluctuations that are associated with the business cycle, thereby revealing long-term trends.
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Hold
- An analyst's recommendation to neither buy nor sell a security. A company with a hold recommendation generally is expected to perform with the market or at the same pace as comparable companies.
Also known as "neutral" or "market perform".
- An analyst's recommendation to neither buy nor sell a security. A company with a hold recommendation generally is expected to perform with the market or at the same pace as comparable companies.
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Holdco
- An abbreviation for holding company. A holding company is a firm that is established in order to exercise control over one or more other firms. This is accomplished through the acquisition of stock that is sufficient to control or influence voting. The holding company earns money by collecting the dividends from the shares of firms in which it owns a controlling interest.
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Holder Of Record
- The name of the person who is the registered owner of a security.
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Holding Company
- A parent corporation that owns enough voting stock in another corporation to control its board of directors (and, therefore, controls its policies and management).
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Holding Company Depository Receipt - HOLDR
- A financial product created by Merrill Lynch and traded daily on the American Stock Exchange that allows investors to buy and sell a basket of stocks in a particular sector, industry or other classification in a single transaction.
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Holding Period
- The real or expected period of time during which an investment is attributable to a particular investor. In a long position, holding period refers to the time between an asset's purchase and its sale. In a short sale, the holding period is the time between when a short seller initially borrows an asset from a brokerage, and when he or she sells it back - in other words, the length of time for which the short position is held.
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Holding Period Return/Yield
- The total return received from holding an asset or portfolio of assets. Holding period return/yield is calculated as the sum of all income and capital growth divided by the value at the beginning of the period being measured.
- The total return received from holding an asset or portfolio of assets. Holding period return/yield is calculated as the sum of all income and capital growth divided by the value at the beginning of the period being measured.
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Holding The Market
- The practice of placing active or pending orders for a security into a market where the price is dropping rapidly in an attempt to "hold" the price of the security steady, or create a floor in the security. This practice is outlawed in most market instances, except when a broker or other party is mandated to keep the price of a security steady. This is only done in rare cases where there isn't enough market depth to hold the price.
Holding the market is also sometimes used as a slang phrase for owning a general market index such as the S&P 500 or Wilshire Total Market.
- The practice of placing active or pending orders for a security into a market where the price is dropping rapidly in an attempt to "hold" the price of the security steady, or create a floor in the security. This practice is outlawed in most market instances, except when a broker or other party is mandated to keep the price of a security steady. This is only done in rare cases where there isn't enough market depth to hold the price.
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Holdovers
- Checks that are in transit that are delayed during the collection process until the next cycle. In most cases, this is the following business day. Holdover checks are then bundled into cash letters and presented to either a clearinghouse or the paying bank for deposit.
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Holographic Will
- A holographic will is a will that is handwritten and signed by the testator (the person who makes the will). Some states do not recognize holographic wills and those that do require the will to meet certain requirements. The minimal requirements that must be met for a holographic will to be recognized are: a) Proof that the testator actually wrote the will b) Proof that the testator had the mental capacity to write the will, and c) The will must contain the testator's wish to disburse personal property to beneficiaries.
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Home Affordable Modification Program - HAMP
- A loan modification program introduced in 2009 to promote stability in the housing market. The Home Affordable Modification Program (HAMP) was aimed at helping homeowners who were devoting more than 31% their of gross income toward mortgage payments. Eligible homeowners can receive adjustments to the mortgage principal, interest rate or payments in order to get the percentage of income going to payments below 31%.
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Home Bias
- The tendency for investors to invest in a large amount of domestic equities, despite the purported benefits of diversifying into foreign equities. This bias is believed to have arisen as a result of the extra difficulties associated with investing in foreign equities, such as legal restrictions and additional transaction costs.
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Home Buyers' Plan - HBP
- A program in Canada that allows RRSP holders to withdraw up to $25,000 from their plan to buy or build a home for themselves. The major benefit of the Home Buyer's Plan (HBP) is that you are allowed to withdraw the funds tax free as long as they are used to buy/build your first home.
- A program in Canada that allows RRSP holders to withdraw up to $25,000 from their plan to buy or build a home for themselves. The major benefit of the Home Buyer's Plan (HBP) is that you are allowed to withdraw the funds tax free as long as they are used to buy/build your first home.
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Home Debtor
- An individual who holds a large mortgage with little or no equity in the home. The term "home debtor" is often used to describe those who will likely never be able to pay off their mortgage because of the costs associated with home ownership, such as property taxes, mortgage payments, insurance and necessary repairs.
- An individual who holds a large mortgage with little or no equity in the home. The term "home debtor" is often used to describe those who will likely never be able to pay off their mortgage because of the costs associated with home ownership, such as property taxes, mortgage payments, insurance and necessary repairs.
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Home Equity
- The value of ownership built up in a home or property that represents the current market value of the house less any remaining mortgage payments. This value is built up over time as the property owner pays off the mortgage and the market value of the property appreciates.
- The value of ownership built up in a home or property that represents the current market value of the house less any remaining mortgage payments. This value is built up over time as the property owner pays off the mortgage and the market value of the property appreciates.
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Home Equity Conversion Mortgage - HECM
- A type of Federal Housing Administration (FHA) insured reverse mortgage. Home Equity Conversion Mortgages allow seniors to convert the equity in their home to cash. The amount that may be borrowed is based on the appraised value of the home (subject to FHA limits), and the age of the borrower (borrowers must be at least 62 years old). Money is advanced against the value of the home. Interest accrues on the outstanding loan balance, but no payments must be made until the home is sold or the borrower(s) die, at which point the mortgage must be repaid entirely. Because the home secures the mortgage, no credit check is made on the borrower.
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Home Equity Line Of Credit - HELOC
- A line of credit extended to a homeowner that uses the borrower's home as collateral. Once a maximum loan balance is established, the homeowner may draw on the line of credit at his or her discretion. Interest is charged on a predetermined variable rate, which is usually based on prevailing prime rates.
Once there is a balance owing on the loan, the homeowner can choose the repayment schedule as long as minimum interest payments are made monthly. The term of a HELOC can last anywhere from less than five to more than 20 years, at the end of which all balances must be paid in full.
- A line of credit extended to a homeowner that uses the borrower's home as collateral. Once a maximum loan balance is established, the homeowner may draw on the line of credit at his or her discretion. Interest is charged on a predetermined variable rate, which is usually based on prevailing prime rates.
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Home Modification
- Alterations made to a home to meet the needs of people with physical limitations so they can live independently (to some degree) and safely. Examples of home modifications include removing throw rugs to prevent slips and falls, installing grab bars in the bathroom for stability and so on.
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Home Mortgage
- A loan given by a bank, mortgage company or other financial institution for the purchase of a primary or investment residence. In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the payment has been made and other terms of the mortgage have been met.
A home mortgage will have either a fixed or floating interest rate, which is paid monthly along with a contribution to the principal loan amount. As the homeowner pays down the principal over time, the interest is calculated on a smaller base so that future mortgage payments apply more towards principal reduction as opposed to just paying the interest charges.
- A loan given by a bank, mortgage company or other financial institution for the purchase of a primary or investment residence. In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the payment has been made and other terms of the mortgage have been met.
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Home Mortgage Disclosure Act - HMDA
- A federal act approved in 1975 that requires mortgage lenders to keep records of certain key pieces of information regarding their lending practices. This information includes the number of pre-approvals made, the number of mortgages granted, loan amounts, etc. The primary purposes of the Home Mortgage Disclosure Act (HMDA) are to help authorities monitor discriminatory and predatory lending practices, as well as to ensure government resources are allocated properly.
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Home Office Expense
- Expenses incurred from the operation of a business or the performance of employment-related activities within your residence. To be able to deduct home office expenses, an individual must spend at least half his or her time working at home.
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Home-Equity Loan
- A consumer loan secured by a second mortgage, allowing home owners to borrow against their equity in the home. The loan is based on the difference between the homeowner's equity and the home's current market value. The mortgage also provides collateral for an asset-backed security issued by the lender and sometimes tax deductible interest payments for the borrower.
Also known as "equity loan" or "second mortgage".
- A consumer loan secured by a second mortgage, allowing home owners to borrow against their equity in the home. The loan is based on the difference between the homeowner's equity and the home's current market value. The mortgage also provides collateral for an asset-backed security issued by the lender and sometimes tax deductible interest payments for the borrower.
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Homemade Dividends
- A form of investment income that comes from the sale of a portion of shares held by a shareholder. This differs from dividends that shareholders receive from a company according to the number of shares the shareholder has.
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Homemade Leverage
- A substitution of risks that investors may undergo in order to move from overpriced shares in highly levered firms to those in unlevered firms by borrowing in personal accounts.
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Homeowner Affordability And Stability Plan - HASP
- A program rolled out in 2009 in an attempt to stabilize the U.S. economy. The Homeowner Affordability and Stability Plan (HASP) has three parts: refinancing options for stable homeowners, financial aid for seriously delinquent homeowners and support for Fannie Mae and Freddie Mac. The HASP was expected to benefit several million American families.
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Homeowners Insurance
- A form of property insurance designed to protect an individual's home against damages to the house itself, or to possessions in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.
In the U.S. there are seven forms of homeowners insurance that have become standardized in the industry; they range in name from HO-1 through HO-8 and offer various levels of protection depending on the needs of the homeowner.
Also known as "homeowner's/homeowners' insurance".
- A form of property insurance designed to protect an individual's home against damages to the house itself, or to possessions in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.
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Homeowners Protection Act
- A law designed to reduce the unnecessary payment of private mortgage insurance (PMI) by homeowners who are no longer required to pay it. The Homeowners Protection Act mandates that lenders disclose certain information about PMI. The law also stipulates that PMI must be automatically terminated for homeowners who accumulate the required amount of equity in their homes.
- A law designed to reduce the unnecessary payment of private mortgage insurance (PMI) by homeowners who are no longer required to pay it. The Homeowners Protection Act mandates that lenders disclose certain information about PMI. The law also stipulates that PMI must be automatically terminated for homeowners who accumulate the required amount of equity in their homes.
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Homestead Exemption
- Laws designed to protect the value of a home from property taxes and creditors following the death of a homeowner spouse. A homestead exemption can be found in state statutes and constitutional provisions across the U.S. and is an automatic benefit in some states. In states where the homestead protection is not automatic, homeowners must file a claim which must be re-filed when moving primary residences.
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Homo Economicus
- The rational human being that many economists use when deriving, explaining, and verifying their theories and models.
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Homoskedastic
- A statistics term indicating that the variance of the errors over the sample are similar. This type of error structure is most often assumed in statistics, but is not always the case when regression is done. If the variance of the errors around the line of best fit varies much, it will not show a pattern or tendency.
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Honcho
- A slang term describing the leader or person in charge of an organization.
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Honesty Bond
- A bond posted by an organization or professional insuring the honesty and integrity of the bond issuer and/or its employees. An honesty bond insures the policy holder against theft, fraud and other dishonest acts by employees.
Also known as a "fidelity bond" or a "commercial blanket bond".
- A bond posted by an organization or professional insuring the honesty and integrity of the bond issuer and/or its employees. An honesty bond insures the policy holder against theft, fraud and other dishonest acts by employees.
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Hong Kong Exchanges and Clearing Limited (HKEx)
- A publicly-traded holding company created in 2000 through the merger of The Hong Kong Stock Exchange, the Hong Kong Futures Exchange and the Hong Kong Securities Clearing Company. The merger was designed to increase China's competitiveness in the global market. HKEx trades in stocks, bonds, warrants, mutual funds, ETFs and equity-linked instruments.
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Hong Kong Interbank Offer Rate - HIBOR
- An interest rate stated in Hong Kong dollars on the lending and borrowing between banks in the Hong Kong interbank market. The terms of the deposits vary from overnight to one year. The U.K. version, the London Interbank Offer Rate (LIBOR), is similar to the HIBOR. More than anything else, the HIBOR is a reference rate for lenders and borrowers that participate directly or indirectly in the Asian economy.
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Hong Kong Stock Exchange (HKG) .HK
- One of the world's largest securities markets by market capitalization, the Hong Kong Stock Exchange traces its origins to the founding of China's first formal securities market, the Association of Stockbrokers in Hong Kong, in 1891. A second market opened in 1921, and in 1947 the two merged to form the Hong Kong Stock Exchange.
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Honorarium
- A voluntary payment that is given to a person for services for which fees are not legally or traditionally required. Honoraria are typically used to help cover costs for volunteers or guest speakers.
- A voluntary payment that is given to a person for services for which fees are not legally or traditionally required. Honoraria are typically used to help cover costs for volunteers or guest speakers.
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Hook Reversal
- A short-term candlestick pattern, occurring in either an uptrend or a downtrend, that is used to predict a reversal in the trend's direction. The pattern is identified when a candlestick has a higher low and a lower high compared to the previous day's candlestick. This pattern is unique because the difference in size between the first and second bar's body is small, compared to that seen in other types of engulfing patterns.
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Horizontal Analysis
- A procedure in fundamental analysis in which an analyst compares ratios or line items in a company's financial statements over a certain period of time. The analyst will use his or her discretion when choosing a particular timeline; however, the decision is often based on the investing time horizon under consideration.
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Horizontal Channel
- Using trendlines to connect variable pivot highs and lows shows price contained between the upper line of resistance and lower line of support. This is price range or sideways trend. This horizontal channel or sideways trend is also a rectangle pattern (dotted lines show the pattern). Buying and selling pressure is equal and the prevailing direction of price sideways. This happens in periods of price consolidation.
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Horizontal Equity
- The theory stating that people in the same income bracket should be taxed at the same rate.
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Horizontal Integration
- When a company expands its business into different products that are similar to current lines.
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Horizontal Market
- A market diversified so that the products created are able to meet the needs of more than one industry.
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Horizontal Merger
- A merger occurring between companies producing similar goods or offering similar services.
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Horizontal Spread
- An options strategy involving the simultaneous purchase and sale of two options of the same type, having the same strike price, but different expiration dates.
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Hostile Takeover
- A takeover attempt that is strongly resisted by the target firm.
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Hot IPO
- An initial public offering that appeals to many investors and for which there is great demand. Hot IPOs are often oversubscribed - meaning market demand far exceeds the supply of shares - which results in the stock price surging as soon as it is offered on the market.
- An initial public offering that appeals to many investors and for which there is great demand. Hot IPOs are often oversubscribed - meaning market demand far exceeds the supply of shares - which results in the stock price surging as soon as it is offered on the market.
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Hot Issue
- An issue that sells at a premium over the public offering price on the first day of trading.
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Hot Money
- Money that flows regularly between financial markets in search for the highest short term interest rates possible.
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Hot Waitress Economic Index
- An index that indicates the state of the economy by measuring the number of attractive people working as waiters/waitresses. According to the hot waitress index, the higher the number of good looking servers, the weaker the current state of the economy. It is assumed that attractive individuals do not tend to have trouble finding high-paying jobs during good economics times. During poor economic times, these jobs will be more difficult to find and therefore more attractive people will be forced to work in lower paying jobs such as being waiters/waitresses.
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Hotelling's Theory
- This theory proposes that owners of non-renewable resources will only produce a supply of their product if it will yield more than instruments available to them in the markets - specifically bonds and other interest-bearing securities. This theory assumes that markets are efficient and that the owners of the non-renewable resources are motivated by profit. Hotelling's theory is used by economists to attempt to predict the price of oil and other nonrenewable resources, based on prevailing interest rates.
- This theory proposes that owners of non-renewable resources will only produce a supply of their product if it will yield more than instruments available to them in the markets - specifically bonds and other interest-bearing securities. This theory assumes that markets are efficient and that the owners of the non-renewable resources are motivated by profit. Hotelling's theory is used by economists to attempt to predict the price of oil and other nonrenewable resources, based on prevailing interest rates.
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Hounding Analysts
- A slang phrase that refers to the relentless phone calls that some hedge fund managers make to analysts in an attempt to persuade the analysts to change their rating on a stock.
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House Call
- A brokerage house notification that the customer's equity in a margin account has fallen below the maintenance requirement level. If the client fails to immediately deliver the required margin by depositing more funds or securities into the account, his or her position will be liquidated. Also known as a "margin call".
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House Excess
- A term used by brokerage houses to describe the amount you are in excess of the minimum margin requirements, based upon the last days closing prices of your portfolio.
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House Maintenance Requirement
- The minimum amount of equity that an account holder must maintain in a margin account, as determined by the brokerage firm. The house maintenance requirement will often be higher than the maintenance margin set out by the Federal Reserve's Regulation T, which stipulates that an equity level of at least 25% must be maintained, and it can also be different for different account holders within the firm.
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House Poor
- A situation that describes a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance and utilities. House poor individuals are short of cash for discretionary items and tend to have trouble meeting other financial obligations like vehicle payments.
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Household Expenses
- A per person breakdown of general living expenses. It includes the amount paid for lodging, food consumed within the home, utilities paid and other expenses. The sum of all the expenses is then divided by the number of family members residing in the house in order to find each member's part of the total expense.
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Household Income
- The combined gross income of all the members of a household who are 15 years old and older. Individuals do not have to be related in any way to be considered members of the same household. Alternatively, household income is the combined income of all members of a household who jointly apply for credit. Household income is an important risk measure used by lenders for underwriting loans.
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Housing And Economic Recovery Act (HERA)
- This act was created to address the subprime mortgage crisis of 2008. The Housing and Economic Recovery Act (HERA) allowed the Federal Housing Administration (FHA) to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime borrowers. In order to participate, lenders were required to write down the balances on principal loans up to 90% of their current appraised value.
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Housing Authority Bonds
- A short-term or long-term bond issued by state or local governments to help finance the construction or rehabilitation of affordable rental housing. Under certain programs, the proceeds from Housing Authority bonds may also be used to help low-income individuals and families purchase a home. The interest received by investors in these bonds is generally exempt from federal, state, and local income taxes.
- A short-term or long-term bond issued by state or local governments to help finance the construction or rehabilitation of affordable rental housing. Under certain programs, the proceeds from Housing Authority bonds may also be used to help low-income individuals and families purchase a home. The interest received by investors in these bonds is generally exempt from federal, state, and local income taxes.
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Housing Bonds
- Bonds that are secured by mortgage re-payments on homes or rental properties.
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Housing Bubble
- A run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand (a shift to the right in the demand curve), in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, believing that profits can be made through short-term buying and selling. This further drives demand. At some point, demand decreases (a shift to the left in the demand curve), or stagnates at the same time supply increases, resulting in a sharp drop in prices - and the bubble bursts.
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Housing Expense Ratio
- A ratio comparing housing expenses to before-tax income that is used by lenders to qualify borrowers for a mortgage. The housing expense measure includes mortgage principal, interest payments, property taxes, hazard insurance, mortgage insurance and association fees. The limit is generally 28%.
It is sometimes referred to as the "front ratio".
- A ratio comparing housing expenses to before-tax income that is used by lenders to qualify borrowers for a mortgage. The housing expense measure includes mortgage principal, interest payments, property taxes, hazard insurance, mortgage insurance and association fees. The limit is generally 28%.
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Housing Market Index
- An index of over 300 home builders, which shows the demand for new homes. The index runs from 0-100, so a rating of 50 would mean that demand for new homes was average.
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Housing Starts
- The number of residential building construction projects that have begun during any particular month.
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Housing Unit
- A house, apartment, mobile home, trailer, group of rooms, or single room occupied or intended for occupancy as separate living quarters. Separate living quarters are classified as a place where the occupants do not live and eat with any other person in the structure.
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HTG
- The currency abbreviation or currency symbol for the Haitian Gourde (HTG), the currency for Haiti. The Haitian Gourde is made up of 100 centimes and is often presented with the symbol (G). Despite changes in currency valuation, five gourdes is still sometimes referred to as a "Haitian dollar", and prices are often quoted in this informal denomination.
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HTG (Haitian Gourde)
- The currency abbreviation or currency symbol for the Haitian gourde (HTG), the currency for Haiti. The Haitian gourde is made up of 100 centimes and is often represented with the symbol G. Despite changes in currency valuation, five gourdes is still sometimes referred to as a "Haitian dollar", and prices are often quoted in this informal denomination.
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Hub And Spoke Structure
- An investment structure in which several investment vehicles, while each remaining individually managed, pool their assets together by contributing to one central investment vehicle. The smaller investment vehicles are referred to as the "spokes" and the central investment vehicle is referred to as the "hub".
This is also called a "master-feeder structure".
- An investment structure in which several investment vehicles, while each remaining individually managed, pool their assets together by contributing to one central investment vehicle. The smaller investment vehicles are referred to as the "spokes" and the central investment vehicle is referred to as the "hub".
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Hubris
- The characteristic of excessive confidence or arrogance, which leads a person to believe that he or she may do no wrong. The overwhelming pride caused by hubris is often considered a flaw in character.
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HUD-1 Form
- A form used by a settlement or closing agent itemizing all charges imposed on a borrower and seller in a real estate transaction. This form gives a picture of the closing transaction, and provides each party with a complete list of incoming and outgoing funds. "Buyers" are referred to as "borrowers" on this form even if no loan is involved.
The HUD-1 is also known as a "closing sheet" or "settlement form".
- A form used by a settlement or closing agent itemizing all charges imposed on a borrower and seller in a real estate transaction. This form gives a picture of the closing transaction, and provides each party with a complete list of incoming and outgoing funds. "Buyers" are referred to as "borrowers" on this form even if no loan is involved.
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HUF
- The currency abbreviation or currency symbol for the Hungarian Forint (HUF), the currency for Hungary. The Forint is made up of 100 filler and is often presented with the symbol (Ft). The Forint gets its name from gold coins called fiorino d'oro that were minted in the city of Florence in the middle ages.
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HUF (Hungarian Forint)
- The currency abbreviation or currency symbol for the Hungarian forint (HUF), the currency for Hungary. The forint is made up of 100 filler and is often presented with the symbol Ft. The forint gets its name from gold coins called fiorino d'oro, which were minted in the city of Florence in the middle ages.
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Human Capital
- A measure of the economic value of an employee's skill set. This measure builds on the basic production input of labor measure where all labor is thought to be equal. The concept of human capital recognizes that not all labor is equal and that the quality of employees can be improved by investing in them. The education, experience and abilities of an employee have an economic value for employers and for the economy as a whole.
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Human Resources (HR)
- The company department charged with finding, screening, recruiting and training job applicants, as well as administering employee-benefit programs.
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Human-Life Approach
- A method of calculating the amount of life insurance a family will need based on the financial loss the family would incur if the insured person were to pass away today. It is usually calculated by taking into account a number of factors including but not limited to the insured individual's age, gender, planned retirement age, occupation, annual wage, employment benefits, as well as the personal and financial information of the spouse and/or dependent children.
Since the value of a human life has economic value only in its relation to other lives such as a spouse or dependent children, this method is typically only used for families with working family members. The human-life approach contrasts the needs approach.
- A method of calculating the amount of life insurance a family will need based on the financial loss the family would incur if the insured person were to pass away today. It is usually calculated by taking into account a number of factors including but not limited to the insured individual's age, gender, planned retirement age, occupation, annual wage, employment benefits, as well as the personal and financial information of the spouse and/or dependent children.
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Humped Yield Curve
- A relatively rare type of yield curve that results when the interest rates on medium-term fixed income securities are higher than the rates of both long and short-term instruments. Humped yield curves are also known as bell-shaped curves.
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Hundred Weight - Cwt
- A unit of weight measurement created by U.S. merchants in the late 1800s. A hundred weight is equal to exactly 100 pounds.
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Hurdle Rate
- The minimum amount of return that a person requires before they will make an investment in something.
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Hybrid Annuity
- An insurance contract that allows buyers to allocate funds to both fixed and variable annuity components. Most hybrid annuities allow the investor to choose the amount of assets to allocate to the more conservative, fixed return investments, which offer a lower but guaranteed rate of return, and what amount to allocate toward more volatile variable annuity investments, which offer the potential for higher returns.
- An insurance contract that allows buyers to allocate funds to both fixed and variable annuity components. Most hybrid annuities allow the investor to choose the amount of assets to allocate to the more conservative, fixed return investments, which offer a lower but guaranteed rate of return, and what amount to allocate toward more volatile variable annuity investments, which offer the potential for higher returns.
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Hybrid ARM
- An adjustable-rate mortgage blends the characteristics of a fixed-rate mortgage and an adjustable-rate mortgage. This type of mortgage will have an initial fixed interest rate period followed by an adjustable rate period. After the fixed interest rate expires, the interest rate starts to adjust based on an index plus a margin. The date at which the mortgage changes from the fixed rate to the adjustable rate is referred to as the reset date.
Also known as "fixed period ARMs".
- An adjustable-rate mortgage blends the characteristics of a fixed-rate mortgage and an adjustable-rate mortgage. This type of mortgage will have an initial fixed interest rate period followed by an adjustable rate period. After the fixed interest rate expires, the interest rate starts to adjust based on an index plus a margin. The date at which the mortgage changes from the fixed rate to the adjustable rate is referred to as the reset date.
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Hybrid Fund
- A category of mutual fund that is characterized by portfolio that is made up of a mix of stocks and bonds, which can vary proportionally over time or remain fixed. Morningstar separates hybrid funds into domestic hybrid and international hybrid categories.
- A category of mutual fund that is characterized by portfolio that is made up of a mix of stocks and bonds, which can vary proportionally over time or remain fixed. Morningstar separates hybrid funds into domestic hybrid and international hybrid categories.
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Hybrid Market
- A securities exchange that facilitates trading through a blend of an automated electronic trading platform and a traditional floor broker system. Hybrid markets give brokers a choice between participating in the exchange through the traditional floor broker system, or the faster automated electronic exchange system.
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Hybrid Security
- A security that combines two or more different financial instruments. Hybrid securities generally combine both debt and equity characteristics. The most common example is a convertible bond that has features of an ordinary bond, but is heavily influenced by the price movements of the stock into which it is convertible.
Often referred to as "hybrids".
- A security that combines two or more different financial instruments. Hybrid securities generally combine both debt and equity characteristics. The most common example is a convertible bond that has features of an ordinary bond, but is heavily influenced by the price movements of the stock into which it is convertible.
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Hyperinflation
- Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless.
- Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless.
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Hypermarket
- A retail store that combines a department store and a grocery supermarket. Often a vary large establishment, hypermarkets offer a large variety of products such as appliances, clothing and groceries.
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HyperText Markup Language - HTML
- The authoring language used in the creation of documents for the World Wide Web.
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Hypothecation
- When a person pledges a mortgage as collateral for a loan, it refers to the right that a banker has to liquidate goods if you fail to service a loan. The term also applies to securities in a margin account used as collateral for money loaned from a brokerage.
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Hypothesis Testing
- A process by which an analyst tests a statistical hypothesis. The methodology employed by the analyst depends on the nature of the data used, and the goals of the analysis. The goal is to either accept or reject the null hypothesis.
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