Financial Glossary
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N
- A Nasdaq stock symbol specifying that it is the company's third class of preferred shares.
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NAD
- In currencies, this is the abbreviation for the Namibia Dollar.
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NAD (Namibian Dollar)
- The currency abbreviation for the Namibian dollar (NAD), the currency for Namibia. The Namibian dollar is made up of 100 cents and is often presented with the symbol $ or N$ to set it apart from other dollar-denominated currencies.
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Naked Call
- An options strategy in which an investor writes (sells) call options on the open market without owning the underlying security. This stands in contrast to a covered call strategy, where the investor owns the security shares that are eligible to be exercised under the options contract.
This strategy is sometimes referred to as an "uncovered call" or a "short call".
- An options strategy in which an investor writes (sells) call options on the open market without owning the underlying security. This stands in contrast to a covered call strategy, where the investor owns the security shares that are eligible to be exercised under the options contract.
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Naked Option
- An option position where the buyer or seller has no underlying security position.
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Naked Position
- A securities position that is not hedged from market risk. Both the potential gain and the potential risk are greater when a position is naked instead of covered (a covered position is hedged from market risk).
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Naked Put
- A put option whose writer does not have a short position in the stock on which he or she has written the put. Sometimes referred to as an "uncovered put."
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Naked Shorting
- The illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short. But due to various loopholes in the rules and discrepancies between paper and electronic trading systems, naked shorting continues to happen.
While no exact system of measurement exists, most point to the level of trades that fail to deliver from the seller to the buyer within the mandatory three-day stock settlement period as evidence of naked shorting. Naked shorts may represent a major portion of these failed trades.
- The illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short. But due to various loopholes in the rules and discrepancies between paper and electronic trading systems, naked shorting continues to happen.
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Named Beneficiary
- This term refers to any beneficiary named in a will, a trust, an insurance policy, pension plan accounts, IRAs, or any other instrument, to whom benefits are paid. Named beneficiaries are the beneficial owners of the property and will share in the proceeds at the time of disposition. In an annuity policy, for example, the policyholder and the named beneficiary may be the same person.
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Named Perils Insurance Policy
- A home insurance policy that only provides coverage on losses incurred to your property from hazards or events named on the policy. Named peril policies may be purchased as a less expensive alternative to a comprehensive coverage or broad policies, which are policies that tend to offer coverage to most perils.
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Nano Cap
- Small public companies having a market capitalization below $50 million.
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Narrow Basis
- A condition found in futures markets in which the spot price of underlying commodities is close to the futures price of the same contract.
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Narrow Moat
- A slight competitive advantage that one company enjoys over competing firms operating in the same or similar type of industry. A narrow moat is still an advantage for a company, but it is one that only provides a limited amount of economic benefit and will typically last for only a relatively short period of time before competition marginalizes its importance.
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Narrow Money
- A category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. In the United States narrow money is classified as M1 (M0 + demand accounts), while in the U.K. M0 is referenced as narrow money.
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Narrow-Based Weighted Average
- An anti-dilution provision used to ensure that investors are not penalized when companies are undergoing additional financing or issuing new shares. A narrow-based weighted average takes into account only the total number of outstanding preferred shares for determining the new weighted average price for the old shares.
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NASD Rule 2790
- A ruling passed by the National Association of Dealers (NASD), a self-regulating organization, prohibiting certain individuals from performing trades in hot-issue Initial Public Offering (IPO) equity. The rule was enacted in March of 2004, and is designed to help make the IPO market more equitable for all traders and dealers involved.
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Nasdaq
- A computerized system that facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks. Created in 1971, the Nasdaq was the world's first electronic stock market.
Stocks on the Nasdaq are traditionally listed under four or five letter ticker symbols. If the company is a transfer from the New York Stock Exchange, the symbol may be comprised of three letters.
- A computerized system that facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks. Created in 1971, the Nasdaq was the world's first electronic stock market.
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Nasdaq 100 Index
- An index composed of the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange. This index includes companies from a broad range of industries with the exception of those that operate in the financial industry, such as banks and investment companies.
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Nasdaq Composite Index
- A market-capitalization weighted index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks. The index includes all Nasdaq listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debentures.
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NASDAQ Global Market Composite
- An index made up of stocks that represent the Nasdaq Global Market. The NASDAQ Global Market Composite consists of 1,450 stocks that meet Nasdaq's strict financial and liquidity requirements, and corporate governance standards. The Global Market Composite is less exclusive than the Global Select Market Composite.
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NASDAQ Global Select Market Composite
- A market capitalization-weighted index made up of U.S.-based and international stocks that represent the NASDAQ Global Select Market Composite. The NASDAQ Global Select Market Composite consists of 1,200 stocks that meet Nasdaq's strict financial and liquidity requirements and corporate governance standards. The Global Market Select Composite is more exclusive than the Global Market Composite. Every October, the Nasdaq Listing Qualifications Department reviews the Global Market Composite to determine if any of its stocks have become eligible for listing on the Global Select Market.
- A market capitalization-weighted index made up of U.S.-based and international stocks that represent the NASDAQ Global Select Market Composite. The NASDAQ Global Select Market Composite consists of 1,200 stocks that meet Nasdaq's strict financial and liquidity requirements and corporate governance standards. The Global Market Select Composite is more exclusive than the Global Market Composite. Every October, the Nasdaq Listing Qualifications Department reviews the Global Market Composite to determine if any of its stocks have become eligible for listing on the Global Select Market.
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Nasdaq Intermarket
- An electronic marketplace where National Association of Securities Dealer (NASD) members could execute trades, communicate, and receive quotations on stocks listed on the New York Stock Exchange (NYSE) and the American Stock Exchange (Amex). Formerly known as "Nasdaq's third market", Nasdaq Intermarket used Nasdaq's Computer Assisted Execution System (CAES) to connect buy and/or sell orders. Nasdaq announced its intentions to withdraw from the Intermarket Trading system in 2005.
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Nasdaq National Market Securities - Nasdaq-NM
- The Nasdaq National Market consists of over 3000 companies that have a national or international shareholder base, meet stringent financial requirements and agree to specific corporate governance standards.
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NASDAQ OMX 100 Index
- A market-capitalization weighted index made up of the 100 largest companies listed on the NASDAQ OMX group exchanges in the United States and the Nordic countries. This index tracks large growth stocks across a broad range of sectors, with the Nasdaq's emphasis on innovation, technology, growth and globalization.
- A market-capitalization weighted index made up of the 100 largest companies listed on the NASDAQ OMX group exchanges in the United States and the Nordic countries. This index tracks large growth stocks across a broad range of sectors, with the Nasdaq's emphasis on innovation, technology, growth and globalization.
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Nasdaq-100 After Hours Indicator
- An indicator of post-market sentiment and trading activity, calculated by measuring the after-hours price levels of stocks within the Nasdaq 100 and using the same methodology as that used to create the Nasdaq 100 during regular trading sessions.
Because some stocks may not be trading in the after-hours session, their prices will remain at the daily close when calculating the Nasdaq 100 after-hours indicator.
- An indicator of post-market sentiment and trading activity, calculated by measuring the after-hours price levels of stocks within the Nasdaq 100 and using the same methodology as that used to create the Nasdaq 100 during regular trading sessions.
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NASDAQ-100 Equal Weighted Index
- The equal-weighted version of the NASDAQ-100 Index, which consists of 100 of the largest, most actively traded non-financial U.S. companies listed on the Nasdaq. Each of the securities in this market-capitalization based index is initially set at a weight of 1%. The equal weighting means that the index's smaller companies contribute as much as its larger companies.
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Nash Equilibrium
- A concept of game theory where the optimal outcome of a game is one where no player has an incentive to deviate from his or her chosen strategy after considering an opponent's choice. Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies. A game may have multiple Nash equilibria or none at all.
This concept is named after its inventor John Nash and is incorporated in multiple disciplines (ranging from behavioral ecology to economics).
- A concept of game theory where the optimal outcome of a game is one where no player has an incentive to deviate from his or her chosen strategy after considering an opponent's choice. Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies. A game may have multiple Nash equilibria or none at all.
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National Association Of Insurance And Financial Advisors - NAIFA
- A nonprofit group that works on behalf of its members to promote a favorable regulative environment, provide professional education services and ensure ethical professional conduct for insurance and financial advisors.
The NAIFA also provides its members with sales training, networking facilities and other tools to help them succeed and build their practices. In addition, they lobby on Capitol Hill to promote favorable legislation for the insurance and financial advisory industry.
- A nonprofit group that works on behalf of its members to promote a favorable regulative environment, provide professional education services and ensure ethical professional conduct for insurance and financial advisors.
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National Association of Insurance Commissioners - NAIC
- A nationwide organization whose main responsibility is to protect the interests of insurance consumers. Some of the main objectives of the NAIC are to provide support to insurance regulators across the country by promoting competitive markets, the improvement of insurance regulations and equitable treatment of insurance consumers.
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National Association of Investors Corporation - NAIC
- A non-profit organization that is dedicated to providing investing education that allows individuals to earn positive long-term returns. The association is based in Michigan, and is comprised of investing clubs along with individual investors from around the United States.
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National Association Of Mortgage Brokers - NAMB
- An association that represents the interests of mortgage brokers in the United States and promotes professionalism and ethical standards for its members. In addition to mandating that members adhere to a professional code of ethics, NAMB provides mortgage brokers with professional education opportunities and offers rigorous certification programs to recognize members with the highest levels of professional knowledge and education.
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National Association Of Real Estate Investment Trusts - NAREIT
- A trade association that represents U.S. Real Estate Investment Trusts (REITs) and publicly traded real estate companies. In essence, NAREIT works as a lobbyist for both of these groups when dealing with individuals who legislate the two respective industries.
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National Association Of Securities Dealers - NASD
- The NASD was a self-regulatory organization of the securities industry responsible for the operation and regulation of the Nasdaq stock market and over-the-counter markets. It also administrated exams for investment professionals, such as the Series 7 exam.
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National Automated Clearinghouse Association - NACHA
- A non-profit membership association charged with overseeing the Automated Clearing House (ACH) system, which operates the largest electronic payment network in the world.
Most of NACHA's 10,000+ members are depositary institutions and regional payment associations. Through its supervisory and rule-making functions, NACHA provides the legal foundation for electronic payment systems to operate effectively, while working to update technologies and create new payment systems.
- A non-profit membership association charged with overseeing the Automated Clearing House (ACH) system, which operates the largest electronic payment network in the world.
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National Average Wage Index - NAWI
- An index calculated annually by the Social Security Administration (SSA) based on wages subject to federal income taxes and contributions to deferred compensation plans. The National Average Wage Index (NAWI) is used by the SSA in the indexation of retirement and insurance benefits in the United States.
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National Bank
- In the
Internationally, "national bank" is synonymous with "central bank," or a bank controlled by the national government of a country. Central banks set monetary policies within national economies.
- In the
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National Best Bid and Offer - NBBO
- A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
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National Bureau of Economic Research - NBER
- This private, non-profit, non-partisan research organization's main aim is to promote greater understanding of how the economy works. It disseminates economic research among public policymakers, business professionals and the academic community.
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National Commodities And Derivatives Exchange - NCDEX
- India's largest and most recognized commodities exchange, which was established in 2003. The exchange was founded by some of India's leading financial institutions such as ICICI Bank Limited, the National Stock Exchange of India and the National Bank for Agricultural and Rural Development, among others.
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National Credit Union Administration - NCUA
- An agency of the United States federal government that was created to monitor federal credit unions across the country. One of its major responsibilities is running the National Credit Union Share Insurance Fund (NCUSIF), which uses tax dollars to insure the deposits at all federal credit unions.
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National Futures Association - NFA
- An independent self-regulatory non-profit organization that regulates the futures market.
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National Income Accounting
- A term used in economics to refer to the bookkeeping system that a national government uses to measure the level of the country's economic activity in a given time period. National income accounting records the level of activity in accounts such as total revenues earned by domestic corporations, wages paid to foreign and domestic workers, and the amount spent on sales and income taxes by corporations and individuals residing in the country.
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National Market System - NMS
- A system with two main functions:
1. To facilitate trading of OTC stocks whose size, profitability, and trading activity meet specific criteria.
2. To post prices for securities on the NYSE and other regional exchanges simultaneously, allowing investors to obtain the best price.
- A system with two main functions:
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National Quotation Bureau - NQB
- A privately-owned company that was established in 1913 to provide investors with information on stocks and bonds traded over the counter (OTC). The company now mainly offers electronic services, including data access, on its website. NQB changed its name to Pink Sheets LLC in 2000 and then to Pink OTC Markets Inc. in 2008. It is considered a non-exclusive securities information provider by the Securities and Exchange Commission (SEC).
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National Registration Database - NRD
- A Canadian database, launched in 2003 to replace the old paper form system, that allows security dealers and investment advisors to file registration forms electronically.
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National Retail Federation - NRF
- A retail trade association with members from all phases of retail suppliers. Members include department stores, specialty, discount, catalog, internet and independent retailers, restaurant chains and grocers, as well as businesses that supply goods and services to retailers. The NRF forms an umbrella over more than 100 other state, national and international retail associations.
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National Savings Rate
- An estimate from the U.S. Commerce Department's Bureau of Economic Analysis (BEA) of the amount of income left over after subtracting consumption costs and expenditures. The National Savings Rate, though it is referred to as a "savings rate," does not actually measure the amount of money Americans are saving or investing for the long-term. National savings include savings left over from personal, business and government.
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National Securities Clearing Corporation - NSCC
- A subsidiary of the DTCC that provides centralized clearing, information, and settlement services to the financial industry.
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National Securities Markets Improvement Act - NSMIA
- Passed by the U.S. Congress in 1996, the NSMIA was an attempt to update and amend previous security acts and create one uniform code that companies and regulators could follow.
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National Stock Exchange
- The first stock exchange in America that was completely electronically automated. All members of the exchange are registered broker-dealers. This exchange created the National Securities Trading System (NSTS), which performs all auction market tasks on an automated basis.
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National Stock Exchange Of India Limited - NSE
- The National Stock Exchange is India's largest financial market. Established in 1992, the NSE has developed into a sophisticated, electronic market, which ranks third in the world for transacted volume. The NSE conducts transactions in the wholesale debt, equity and derivative markets.
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National Treatment
- A concept of international law that declares if a state provides certain rights and privileges to its own citizens, it also should provide equivalent rights and privileges to foreigners who are currently in the country. This concept of equality can be found in bilateral tax treaties and also in most World Trade Organization agreements.
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Nationally Recognized Statistical Ratings Organization - NRSRO
- The formal term to describe credit rating agencies that provide credit ratings that are used by the U.S. government in several regulatory areas. Ratings provided by Nationally Recognized Statistical Ratings Organizations (NRSRO) are used frequently by investors and are used as benchmarks by federal and state agencies. Generally, to be considered an NRSRO, the agency has to be "nationally recognized" in the U.S. and provide reliable and credible ratings. Also taken into consideration is the size of the credit rating agency, operational capability and its credit rating process.
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Natural Capital
- A reference to the stock of natural resources, such as water and oil. Unlike other forms of equity (such as machines and buildings), which can be created on a regular basis, many natural resources are nonrenewable. Natural capital includes many resources that humans and other animals depend on to live and function, which leads to a dilemma between depleting and preserving those resources.
- A reference to the stock of natural resources, such as water and oil. Unlike other forms of equity (such as machines and buildings), which can be created on a regular basis, many natural resources are nonrenewable. Natural capital includes many resources that humans and other animals depend on to live and function, which leads to a dilemma between depleting and preserving those resources.
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Natural Gas ETF
- Exchange-traded funds (ETFs) that invest in natural gas futures and other products in an effort to closely track the price of delivered natural gas at market. Natural gas ETFs are set up as commodity pools, which issue limited partnership interests as opposed to shares. The fund may also invest in heating oil, crude oil and gasoline futures.
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Natural Monopoly
- A type of monopoly that exists as a result of the high fixed or start-up costs of operating a business in a particular industry. Because it is economically sensible to have certain natural monopolies, governments often regulate those in operation, ensuring that consumers get a fair deal.
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Natural Unemployment
- The lowest rate of unemployment that an economy can sustain over the long run. Keynesians believe that a government can lower the rate of unemployment (i.e. employ more people) if it were willing to accept a higher level of inflation (the idea behind the Phillips Curve). However, critics of this say that the effect is temporary and that unemployment would bounce back up but inflation would stay high. Thus, the natural, or equilibrium, rate is the lowest level of unemployment at which inflation remains stable. Also known as the "non-accelerating inflation rate of unemployment" (NAIRU).
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NAV Return
- The change in the net asset value of an exchange-traded fund (ETF) or mutual fund over a given time period. The NAV return of an ETF or mutual fund can be different than the total return that investors realize because these products can trade at a premium or discount to the price of the fund and to the value of the assets held in the portfolio.
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NCUA-Insured Institution
- A finance institution that is a participant of the National Credit Union Administration (NCUA) program. Most NCUA insured institutions are federal and state chartered credit unions and savings banks. Accounts at NCUA-insured institutions are usually insured through the National Credit Union Share Insurance Fund (NCUSIF). Accounts insured in NCUA insured institutions are savings, share drafts (checking), money markets, share certificates (CDs), Individual Retirement Accounts (IRA) and Revocable Trust Accounts. The maximum dollar amount that is insured in a NCUA institution is $250,000 per institution. In other words, a depositor with $1 million can fully insure this amount by depositing $250,000 in four different NCUA institutions.
- A finance institution that is a participant of the National Credit Union Administration (NCUA) program. Most NCUA insured institutions are federal and state chartered credit unions and savings banks. Accounts at NCUA-insured institutions are usually insured through the National Credit Union Share Insurance Fund (NCUSIF). Accounts insured in NCUA insured institutions are savings, share drafts (checking), money markets, share certificates (CDs), Individual Retirement Accounts (IRA) and Revocable Trust Accounts. The maximum dollar amount that is insured in a NCUA institution is $250,000 per institution. In other words, a depositor with $1 million can fully insure this amount by depositing $250,000 in four different NCUA institutions.
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Near Term - NT
- Another word for "short term."
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Nearby Month
- In the context of options and futures, it's the month closest to delivery (futures) or expiration (options).
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Neckline
- A level of support or resistance found on a head and shoulders pattern that is used by traders to determine strategic areas to place orders. Each peak of a regular head and shoulders pattern falls toward a support level, also known as a neckline, before it rises to create the next peak. A move below the neckline (in the case of a head and shoulders top) is used by traders as a signal of a reversal of the current uptrend.
- A level of support or resistance found on a head and shoulders pattern that is used by traders to determine strategic areas to place orders. Each peak of a regular head and shoulders pattern falls toward a support level, also known as a neckline, before it rises to create the next peak. A move below the neckline (in the case of a head and shoulders top) is used by traders as a signal of a reversal of the current uptrend.
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Needs Approach
- A method of calculating how much life insurance is required by an individual/family to cover their needs (i.e. expenses). These include things like funeral expenses, legal fees, estate and gift taxes, business buyout costs, probate fees, medical deductibles, emergency funds, mortgage expenses, rent, debt and loans, college, child care, private schooling and maintenance costs. The needs approach contrasts the human-life approach.
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Negative Amortization
- An increase in the principal balance of a loan caused by making payments that fail to cover the interest due. The remaining amount of interest owed is added to the loan's principal, which ultimately causes the borrower to owe more money.
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Negative Amortization Limit
- A provision in certain loan contracts that limits the amount of negative amortization that can take place. A loan negatively amortizes when scheduled payments are made that are less than the interest charge due on the loan at the time. When a payment is made that is less than the interest charge due, deferred interest is created and added to the loan's principal balance, creating negative amortization. A negative amortization limit states that the principal balance of a loan cannot exceed a certain amount, usually designated as a percentage of the original loan balance.
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Negative Arbitrage
- The opportunity lost when municipal bond issuers assume proceeds from debt offerings and then invest that money for a period of time (ideally in a safe investment vehicle) until the money is used to fund a project, or to repay investors. The lost opportunity occurs when the money is reinvested and the debt issuer earns a rate or return that is lower than what must actually be paid back to the debt holders.
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Negative Butterfly
- A non-parallel yield curve shift in which long- and short-term yields decrease by a greater degree than intermediate rates. This yield curve shift effectively humps the curve, adding to the curvature of the yield curve.
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Negative Carry
- A situation in which the cost of financing a securities or financial futures position exceeds the yield earned.
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Negative Convexity
- When the shape of a bond's yield curve is concave. A bond’s convexity is the rate of change of its duration, and is measured as the second derivative of price with respect to yield.
Most mortgage bonds are negatively convex.
- When the shape of a bond's yield curve is concave. A bond’s convexity is the rate of change of its duration, and is measured as the second derivative of price with respect to yield.
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Negative Covenant
- A bond covenant preventing certain activities, unless agreed to by the bondholders. Negative covenants are written directly into the agreement creating the bond issue, are legally binding on the issuer, and exist to protect the best interests of the bondholders. Also referred to as "restrictive covenant".
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Negative Directional Indicator - -DI
- A component of the average directional index (ADX) that is used to measure the presence of a downtrend. When the -DI is sloping upward, it is a signal that the strength of the downtrend is increasing. This indicator is almost always plotted with the positive directional indicator (+DI).
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Negative Equity
- When the value of an asset falls below the outstanding balance on the loan used to purchase that asset. Negative equity is calculated simply by taking the value of the asset less the balance on the outstanding loan.
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Negative Gearing
- Borrowing money to buy an investment asset without receiving enough income from the investment to cover the interest expenses and other costs inolved in maintaining it. Depending on the investor's home country, the shortfall between income earned and interest due can be deducted from current income taxes. Countries that allow this tax deduction include Canada, Australia and New Zealand.
- Borrowing money to buy an investment asset without receiving enough income from the investment to cover the interest expenses and other costs inolved in maintaining it. Depending on the investor's home country, the shortfall between income earned and interest due can be deducted from current income taxes. Countries that allow this tax deduction include Canada, Australia and New Zealand.
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Negative Goodwill
- A gain occurring when the price paid for an acquisition is less than the fair value of its net assets.
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Negative Growth
- A contraction in a country's economy, as evidenced by a decrease in its gross domestic product (GDP) during any quarter of a given year. Negative growth is typically expressed as a negative percentage. Recurring periods of negative growth are one of the most commonly used measures to determine whether an economy is experiencing a recession or depression.
- A contraction in a country's economy, as evidenced by a decrease in its gross domestic product (GDP) during any quarter of a given year. Negative growth is typically expressed as a negative percentage. Recurring periods of negative growth are one of the most commonly used measures to determine whether an economy is experiencing a recession or depression.
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Negative Income Tax
- A taxation system where income subsidies are given to persons or families that are below the poverty line.
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Negative Obligation
- An obligation of NYSE specialists to remain on the sidelines and refrain from acting as principal when there is sufficient market demand and supply to efficiently match orders.
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Negative Pledge Clause
- A negative covenant in an indenture stating that the corporation will not pledge any of its assets if doing so gives the lenders less security. Also be referred to as a "covenant of equal coverage".
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Negative Points
- A cash rebate paid by lenders to a mortgage broker or the borrower for a mortgage with an interest rate above the lender's par interest rate. When the rebate is paid to the mortgage broker, it is known as a yield spread premium, and is part of the mortgage broker's compensation.
When the rebate is credited to the borrower it can be used to defray loan settlement costs. This is typically known as a no-cost mortgage. The amount credited to the borrower may not exceed loan settlement costs, and may not be used as part of the down payment.
- A cash rebate paid by lenders to a mortgage broker or the borrower for a mortgage with an interest rate above the lender's par interest rate. When the rebate is paid to the mortgage broker, it is known as a yield spread premium, and is part of the mortgage broker's compensation.
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Negative Volume Index - NVI
- An index that focuses on days where the volume has significantly decreased from the previous day's trading.
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Negatively Amortizing Loan
- A loan with a payment structure that allows for a scheduled payment to be made where it is less than the interest charge on the loan at the time the scheduled payment is made. When a payment is made which is less than the interest charge at the time, deferred interest is created. The amount of deferred interest created is added to the principal balance of the loan, leading to a situation where the principal owed increases over time instead of decreases.
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Neglected Firm Effect
- The phenomenon of less-known firms producing abnormally high returns on their stocks.
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Negotiable
- 1. Describing the price of a good or security that is not firmly established.
2. Describing a good or security whose ownership is easily transferable from one party to another.
- 1. Describing the price of a good or security that is not firmly established.
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Negotiable Certificate Of Deposit (NCD)
- A certificate of deposit with a minimum face value of $100,000. These are guaranteed by the bank and can usually be sold in a highly liquid secondary market, but they cannot be cashed-in before maturity.
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Negotiable Order of Withdrawal (NOW) Account
- An interest-earning bank account with which the customer is permitted to write drafts against money held on deposit. Also known as a "NOW account".
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Negotiated Dealing System - NDS
- An electronic trading platform, operated by the Reserve Bank of India, used to facilitate the exchange of government securities and other money market instruments. The negotiated dealing system will also be responsible for hosting new issues of government securities.
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Negotiated Market
- A type of secondary market exchange in which the prices of each security are bargained out between buyers and sellers.
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Negotiated Sale
- A method of offering municipal bonds or similar financial instruments in which the issuing entity and a selected underwriter negotiate the terms of the issue, as opposed to having multiple underwriting groups competitively bidding on the issue to establish its terms.
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Negotiated Underwriting
- A process in which both the purchase price and the offering price for a new issue are negotiated between the issuer and a single underwriter.
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Neoclassical Economics
- An approach to economics that relates supply and demand to an individual's rationality and his or her ability to maximize utility or profit. Neoclassical economics also increased the use of mathematical equations in the study of various aspects of the economy. This approach was developed in the late-nineteenth century, based on books by William Stanley Jevons, Carl Menger and Leon Walras.
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Neoclassical Growth Theory
- An economic theory that outlines how a steady economic growth rate will be accomplished with the proper amounts of the three driving forces: labor, capital and technology. The theory states that by varying the amounts of labor and capital in the production function, an equilibrium state can be accomplished. When a new technology becomes available, the labor and capital need to be adjusted to maintain growth equilibrium.
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Nervous Nellie
- An investor who isn't comfortable with investing and the risks associated with it.
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Nest Egg
- A special sum of money saved or invested for one specific future purpose.
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Net Advantage To Leasing - NAL
- The total monetary savings that would result from a person or a business choosing to lease an asset, as opposed to purchase it outright. The benefit of leasing is determined by comparing the net present value of purchasing the asset outright to the net present value of leasing it.
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Net Asset Value - NAV
- A mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both cases, the per-share dollar amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.
In terms of corporate valuations, the calculation: value of assets less liabilities equals net asset value (NAV), or "book value", is used.
- A mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both cases, the per-share dollar amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.
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Net Asset Value Per Share - NAVPS
- An expression for net asset value that represents a fund's (mutual, exchange-traded, and closed-end) or a company's value per share. It is calculated by dividing the total net asset value of the fund or company by the number of shares outstanding.
Also referred to as "book value per share".
Calculated as:
- An expression for net asset value that represents a fund's (mutual, exchange-traded, and closed-end) or a company's value per share. It is calculated by dividing the total net asset value of the fund or company by the number of shares outstanding.
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Net Borrowed Reserves
- A statistic released in weekly Federal Reserve data showing the difference between the amount of money a bank has borrowed from the Fed and the cash reserves the bank holds above the required minimum. Net borrowed reserves is expressed as a negative number. Deposit banks are required to keep a certain amount of cash on hand at all times. If these banks don't have enough cash, they will borrow it from a Federal Reserve bank.
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Net Borrower
- An entity that borrows more than it saves or lends out. A net borrower could be a company, country, government, group or individual. Borrowing can take the form of debt by acquiring goods and/or services under the stipulation of future payments, borrowing funds, or by issuing debt, such as bonds. Net borrowing occurs when the monetary summation of these borrowing activities exceeds the monetary amount of funds and assets lent/saved. Also known as “net debtor”.
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Net Cash
- A company's total cash minus total liabilities when discussing financial statements. Net cash is commonly used in evaluating a company's cash flow. More generally, net cash can refer to the amount of cash remaining after a transaction has been completed and all charges and deductions related to the transaction have been subtracted.
"Net cash" may also be used as short form for "net cash per share", a stock investing term. More commonly, "net cash" will appear with another word, as in "net cash flow", "net cash income" or "net cash stock".
- A company's total cash minus total liabilities when discussing financial statements. Net cash is commonly used in evaluating a company's cash flow. More generally, net cash can refer to the amount of cash remaining after a transaction has been completed and all charges and deductions related to the transaction have been subtracted.
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Net Change
- The difference between the closing price of a security on the day's trading and the previous day's closing price. Net change can be positive or negative and is quoted in terms of dollars. This is what the newspaper stock tables quote.
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Net Current Asset Value Per Share - NCAVPS
- A value created by professor Benjamin Graham in the mid-twentieth century to determine if a company was trading at a fair market price. NCAVPS is calculated by taking a company's current assets and subtracting the total liabilities, and then dividing the result by the total number of shares outstanding.
- A value created by professor Benjamin Graham in the mid-twentieth century to determine if a company was trading at a fair market price. NCAVPS is calculated by taking a company's current assets and subtracting the total liabilities, and then dividing the result by the total number of shares outstanding.
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Net Debt
- A metric that shows a company's overall debt situation by netting the value of a company's liabilities and debts with its cash and other similar liquid assets.
Calculated as:
- A metric that shows a company's overall debt situation by netting the value of a company's liabilities and debts with its cash and other similar liquid assets.
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Net Debt Per Capita
- A measurement of the value of a government's debt expressed in terms of the amount attributable to each citizen under the government's jurisdiction. It is commonly computed using the following formula:
- A measurement of the value of a government's debt expressed in terms of the amount attributable to each citizen under the government's jurisdiction. It is commonly computed using the following formula:
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Net Debt To Assessed Valuation
- In a municipal bond issue, a ratio measuring the value of the municipality's net debt compared to the specified value of the real property being purchased as assessed for tax purposes.
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Net Debt To Estimated Valuation
- A ratio comparing the net value of a municipal bond issue to the estimated market value of the property secured by the debt. This ratio can differ significantly from a municipal bond's net debt to assessed valuation if real-estate prices for the municipality's holdings incur large increases or decreases.
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Net Domestic Product - NDP
- An annual measure of the economic output of a nation that is adjusted to account for depreciation, calculated by subtracting depreciation from the gross domestic product (GDP).
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Net Exporter
- A country or territory whose value of exported goods is higher than its value of imported goods over a given period of time.
A net exporter is the opposite of a net importer.
- A country or territory whose value of exported goods is higher than its value of imported goods over a given period of time.
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Net Exports
- The value of a country's total exports minus the value of its total imports. It is used to calculate a country's aggregate expenditures, or GDP, in an open economy.
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Net Free Reserves
- A statistic released in weekly Federal Reserve data showing the amount of money a bank holds above the required minimum. Deposit banks are required to keep a certain amount of cash on hand at all times. If banks have significantly more cash than stipulated by reserve requirements, they will lend it out.
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Net Importer
- A country or territory whose value of imported goods is higher than its value of exported goods over a given period of time.
A net importer is the opposite of a net exporter.
- A country or territory whose value of imported goods is higher than its value of exported goods over a given period of time.
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Net Income - NI
- 1. A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time. The measure is also used to calculate earnings per share.
Often referred to as "the bottom line" since net income is listed at the bottom of the income statement. In the U.K., net income is known as "profit attributable to shareholders".
2. An individual’s income after deductions, credits and taxes are factored into gross income. Deductions and credits are subtracted from gross income to arrive at taxable income, which is used to calculate income tax. Net income is income tax subtracted from taxable income.
- 1. A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time. The measure is also used to calculate earnings per share.
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Net Income After Taxes - NIAT
- An accounting term, most often found in a company's annual report, that is meant to show the company's definitive "bottom line" for the accounting period. In other words, it shows what the company earned after all its expenses, charge-offs, depreciation and taxes have been subtracted. This calculation is usually shown as both a total dollar amount and a per share calculation.
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Net Interest Cost (NIC)
- A mathematical formula that an issuer of bonds uses to compute the overall interest expense that is associated with their bonds, which they will have to pay. The formula for net interest cost (NIC) is based on the average coupon rate weighted to years of maturity, and is adjusted for any associated discounts or premiums.
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Net Interest Income
- The difference between the revenue that is generated from a bank's assets and the expenses associated with paying out its liabilities. A typical bank's assets consist of all forms of personal and commercial loans, mortgages and securities. The liabilities are, of course, the customer deposits. The excess revenue that is generated from the spread between interest paid out on deposits and interest earned on assets is the net interest income.
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Net Interest Margin
- A performance metric that examines how successful a firm's investment decisions are compared to its debt situations. A negative value denotes that the firm did not make an optimal decision, because interest expenses were greater than the amount of returns generated by investments.
Calculated as:
- A performance metric that examines how successful a firm's investment decisions are compared to its debt situations. A negative value denotes that the firm did not make an optimal decision, because interest expenses were greater than the amount of returns generated by investments.
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Net Interest Margin Securities - NIMS
- A type of security that allows holders to access excess cash flows resulting from securitized mortgage loan pools.
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Net Investment
- A measure of a company's investment in capital, found by subtracting non-cash depreciation from capital expenditures. This measure helps to give a sense of how much money a company is spending on capital items (such as property, plants and equipment), which are used for operations.
Calculated as:
- A measure of a company's investment in capital, found by subtracting non-cash depreciation from capital expenditures. This measure helps to give a sense of how much money a company is spending on capital items (such as property, plants and equipment), which are used for operations.
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Net Investment Income
- Income received from investment assets (before taxes) such as bonds, stocks, mutual funds, loans and other investments (less related expenses). The individual tax rate on net investment income depends on whether it is interest income, dividend income or capital gains.
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Net Lending
- The amount of extra funds that a sector has available to provide for either direct and indirect lending purposes to other similar counter-parts.
Net lending is used as a balancing item in the capital account. It is calculated as follows:
Where:
CT = Capital Transfers
NFS = Non-Financial Assets
- The amount of extra funds that a sector has available to provide for either direct and indirect lending purposes to other similar counter-parts.
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Net Liquid Assets
- A measure that examines a company's net liquid financial assets. The net liquid assets show how much of a company's liquid assets would be left if all current liabilities were paid off.
Calculated as:
- A measure that examines a company's net liquid financial assets. The net liquid assets show how much of a company's liquid assets would be left if all current liabilities were paid off.
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Net Long
- A condition in which an investor has more long positions than short positions in a given asset, market, portfolio or trading strategy. Investors who are net long will benefit when the price of the asset increases.
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Net Loss
- The result that occurs when expenses exceed the income produced.
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Net Margin
- The ratio of net profits to revenues for a company or business segment - typically expressed as a percentage – that shows how much of each dollar earned by the company is translated into profits. Net margins can generally be calculated as:
- The ratio of net profits to revenues for a company or business segment - typically expressed as a percentage – that shows how much of each dollar earned by the company is translated into profits. Net margins can generally be calculated as:
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Net National Product - NNP
- The monetary value of finished goods and services produced by a country's citizens, whether overseas or resident, in the time period being measured (i.e., the gross national product, or GNP) minus the amount of GNP required to purchase new goods to maintain existing stock (i.e., depreciation).
Alternatively, net national product (NNP) can be calculated as total payroll compensation + net indirect tax on current production + operating surpluses.
- The monetary value of finished goods and services produced by a country's citizens, whether overseas or resident, in the time period being measured (i.e., the gross national product, or GNP) minus the amount of GNP required to purchase new goods to maintain existing stock (i.e., depreciation).
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Net Operating Income - NOI
- A company's operating income after operating expenses are deducted, but before income taxes and interest are deducted. If this is a positive value, it is referred to as net operating income, while a negative value is called a net operating loss (NOL).
- A company's operating income after operating expenses are deducted, but before income taxes and interest are deducted. If this is a positive value, it is referred to as net operating income, while a negative value is called a net operating loss (NOL).
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Net Operating Loss - NOL
- A period in which a company's allowable tax deductions are greater than its taxable income, resulting in a negative taxable income. This generally occurs when a company has incurred more expenses than revenues during the period.
The net operating loss for the company can generally be used to recover past tax payments or reduce future tax payments. The reasoning behind this is that because corporations are required to pay taxes when it earns money, it deserves some form of tax relief when it loses money.
- A period in which a company's allowable tax deductions are greater than its taxable income, resulting in a negative taxable income. This generally occurs when a company has incurred more expenses than revenues during the period.
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Net Operating Profit After Tax - NOPAT
- A company's potential cash earnings if its capitalization were unleveraged (that is, if it had no debt). NOPAT is frequently used in economic value added (EVA) calculations.
Calculated as:
NOPAT = Operating Income x (1 - Tax Rate)
- A company's potential cash earnings if its capitalization were unleveraged (that is, if it had no debt). NOPAT is frequently used in economic value added (EVA) calculations.
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Net Operating Profit Less Adjusted Taxes - NOPLAT
- Total operating profits for a firm with adjustments made for taxes.
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Net Option Premium
- The net amount an investor or trader will pay for selling one option, and purchasing another. The combination can include any number of puts and calls and their respective position in each.
The net option premium can either be positive, which represents a net cash outflow, or a negative number, which represents a net cash inflow.
- The net amount an investor or trader will pay for selling one option, and purchasing another. The combination can include any number of puts and calls and their respective position in each.
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Net Present Value - NPV
- The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project.
NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield.
Formula:
In addition to the formula, net present value can often be calculated using tables, and spreadsheets such as Microsoft Excel.
- The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project.
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Net Present Value Rule
- A rule stating that an investment should be accepted if its net present value is greater than zero and rejected otherwise. According to the theory of net present value (NPV), participating in a positive NPV project will increase firm or shareholder wealth.
- A rule stating that an investment should be accepted if its net present value is greater than zero and rejected otherwise. According to the theory of net present value (NPV), participating in a positive NPV project will increase firm or shareholder wealth.
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Net Proceeds
- The amount received after all costs are deducted from the sale of a piece of property or security.
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Net Realizable Value - NRV
- The value of an asset that can be realized by a company or entity upon the sale of the asset, less a reasonable prediction of the costs associated with either the eventual sale or the disposal of the asset in question.
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Net Receivables
- A company's accounts receivable (money owed to the company) minus bad debts.
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Net Revenue Pledge
A provision in a municipal bond issue that requires the issuing municipality to use net revenues (revenues left after expenses) from the project being financed to pay first the debt service costs of the issue.
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Net Sales
- The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed. The sales number reported on a company's financial statements is a net sales number, reflecting these deductions.
- The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed. The sales number reported on a company's financial statements is a net sales number, reflecting these deductions.
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Net Short
- A condition in which an investor has more short positions than long positions in a given asset, market, portfolio or trading strategy. Investors who are net short will benefit when the price of the underlying asset decreases.
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Net Tangible Assets
- Calculated as the total assets of a company, minus any intangible assets such as goodwill, patents and trademarks, less all liabilities and the par value of preferred stock. Also known as "net asset value" or "book value".
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Net Unrealized Appreciation - NUA
The difference in value between the average cost basis of shares and the current market value of the shares held in a tax-deferred account.
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Net Volume
- A security's uptick volume minus its downtick volume over a specified period. An indicator very similar to money flow.
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Net Worth
- The amount by which assets exceed liabilities. This term can be applied to companies and individuals.
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Net-Net
- A value investing technique in which a company is valued solely on its net current assets. The net-net investing method focuses on current assets, taking cash and cash equivalents at full value, reducing accounts receivable for doubtful accounts, and reducing inventories to liquidation values. Total liabilities are then deducted from the adjusted current assets to get the company's net-net value. This method was introduced by Benjamin Graham
- A value investing technique in which a company is valued solely on its net current assets. The net-net investing method focuses on current assets, taking cash and cash equivalents at full value, reducing accounts receivable for doubtful accounts, and reducing inventories to liquidation values. Total liabilities are then deducted from the adjusted current assets to get the company's net-net value. This method was introduced by Benjamin Graham
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Netback
- A summary of all the costs associated with bringing one unit of oil to the marketplace, and all of the revenues from the sale of all the products generated from that same unit. The netback is calculated by taking all of the revenues from the oil, less all costs associated with getting the oil to a market. These costs can include, but are not limited to, importing, transportation, production and refining costs, and royalty fees.
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Netfile
- Open February to September, this service is one of the electronic filing options available to Canadians, to transmit their tax returns to the Canada Revenue Agency (CRA). Using software approved by the CRA, filers prepare their tax returns, and then upload them on the CRA's website using a code provided to them in their annual tax package.
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Netscaped
- A slang term referring to an instance in which a company gets hurt materially or put out of business as a result of head-to-head competition with Microsoft. Microsoft's size, resources and expertise mean there is always a risk that the company will steal market share. Many competitors have tried to beat the software giant and ended up suffering serious damage.
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Netting
- 1. Settling mutual obligations at the net value of a contract as opposed to its gross dollar value.
2. Reducing the transfer of funds between subsidiaries to a net amount.
- 1. Settling mutual obligations at the net value of a contract as opposed to its gross dollar value.
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Neural Network
- A series of algorithms that attempt to identify underlying relationships in a set of data by using a process that mimics the way the human brain operates. Neural networks have the ability to adapt to changing input so that the network produces the best possible result without the need to redesign the output criteria.
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Neutral
- 1) A term that describes an option on a security or market that is neither bullish nor bearish.
2) A term that describes a person who is non-biased in the case of a dispute, such as an arbitrator.
- 1) A term that describes an option on a security or market that is neither bullish nor bearish.
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Neutrality Of Money
- An economic theory that states that changes in the aggregate money supply only affect nominal variables, rather than real variables; therefore, an increase in the money supply would increase all prices and wages proportionately, but have no effect on real economic output (GDP), unemployment levels, or real prices (prices measured against a base index). The neutrality of money is based on the idea that changing the money supply will not change the aggregate supply and demand of goods, technology or services. It was a cornerstone of classical economic thought, but modern-day evidence suggests that neutrality of money does not fully apply in financial markets.
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Nevada Corporation
- A business incorporated in the state of Nevada, which is known to be business-friendly through its tax and corporate law statutes. Companies that incorporate in Nevada have several distinct advantages, including no state income tax, no franchise taxes, no personal income taxes and no succession taxes.
Another unique advantage of Nevada Corporations is that company officers and directors are well-protected against lawsuits arising from lawful business pursuits.
- A business incorporated in the state of Nevada, which is known to be business-friendly through its tax and corporate law statutes. Companies that incorporate in Nevada have several distinct advantages, including no state income tax, no franchise taxes, no personal income taxes and no succession taxes.
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New Economy
- A buzzword describing new, high-growth industries that are on the cutting edge of technology and are the driving force of economic growth. The new economy is commonly believed to have started in the late 1990s, as high tech tools, such as the internet, and increasingly powerful computers, began penetrating the consumer and business marketplace.
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New Fund Offer - NFO
- A security offering in which investors may purchase units of a closed-end mutual fund. A new fund offer occurs when a mutual fund is launched, allowing the firm to raise capital for purchasing securities.
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New Growth Theory
- An economic growth theory that posits humans' desires and unlimited wants foster ever-increasing productivity and economic growth. The new growth theory argues that real GDP per person will perpetually increase because of people's pursuit of profits. As competition lowers the profit in one area, people have to constantly seek better ways to do things or invent new products in order to garner a higher profit. This main idea is one of the central tenets of the theory.
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New Home Sales
- An economic indicator that measures sales of newly built homes. Released by the U.S. Department of Commerce's Census Bureau, it includes both quantity and price statistics. It is considered to be a lagging indicator of demand in the market and to affect mortgage rates.
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New Indications
- A term used by medical companies and professionals to signify that a procedure or drug has been recognized to be advisable or necessary. New indications refer to new applications of an existing prevention, diagnosis or treatment of a disease. It is a positive report provided by credible professionals through established testing techniques. The next step is usually clinical trials before official approval by the country's regulatory association.
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New Issue
- A reference to a security that has been registered, issued and is being sold on a market to the public for the first time. New issues are sometimes referred to as primary shares or new offerings. The term does not necessarily refer to newly issued stocks, although initial public offerings are the most commonly known new issues. Securities that can be newly issued include both debt and equity.
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New Keynesian Economics
- The modern macroeconomic school of thought that evolved from classical Keynesian economics. This revised theory differs from classical Keynesian thinking in terms of how quickly prices and wages adjust. New Keynesian advocates maintain that prices and wages are "sticky", meaning that they adjust more slowly to short-term economic fluctuations.
This in turn explains such economic factors as involuntary unemployment and the impact of federal monetary policies.
- The modern macroeconomic school of thought that evolved from classical Keynesian economics. This revised theory differs from classical Keynesian thinking in terms of how quickly prices and wages adjust. New Keynesian advocates maintain that prices and wages are "sticky", meaning that they adjust more slowly to short-term economic fluctuations.
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New Paradigm
- In the investing world, a totally new way of doing things that has a huge effect on business.
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New York Board Of Trade - NYBOT
- A commodities exchange in New York that trades futures and options on sugar, cotton, coffee, cocoa and orange juice, in addition to interest rates, currency and indexes.
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New York Dollar
- The buying power of a U.S. dollar in the city of New York. The New York dollar is calculated by subtracting the additional cost of living in New York, and then adding back the additional income residents tend to command as a result. Once calculated, the remaining amount is a rough estimate of what your dollar is worth in this very expensive city.
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New York Mercantile Exchange - NYMEX
- The world's largest physical commodity futures exchange. Trading is conducted through two divisions: the NYMEX Division, which is home to the energy, platinum and palladium markets, and the COMEX Division, where metals like gold, silver and copper and the FTSE 100 index options are traded. The NYMEX uses an outcry trading system during the day and an electronic trading system after hours.
You'll hear the NYMEX referred to as "The Merc".
- The world's largest physical commodity futures exchange. Trading is conducted through two divisions: the NYMEX Division, which is home to the energy, platinum and palladium markets, and the COMEX Division, where metals like gold, silver and copper and the FTSE 100 index options are traded. The NYMEX uses an outcry trading system during the day and an electronic trading system after hours.
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New York Stock Exchange - NYSE
- A stock exchange based in New York City, which is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities. Formerly run as a private organization, the NYSE became a public entity in 2005 following the acquisition of electronic trading exchange Archipelago. The parent company of the New York Stock Exchange is now called NYSE Euronext, following a merger with the European exchange in 2007.
Also known as the "Big Board", the NYSE relied for many years on floor trading only, using the open outcry system. Today, more than half of all NYSE trades are conducted electronically, although floor traders are still used to set pricing and deal in high volume institutional trading.
- A stock exchange based in New York City, which is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities. Formerly run as a private organization, the NYSE became a public entity in 2005 following the acquisition of electronic trading exchange Archipelago. The parent company of the New York Stock Exchange is now called NYSE Euronext, following a merger with the European exchange in 2007.
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New Zealand Stock Exchange (NZE) .NZ
- The securities market in New Zealand. The New Zealand Stock Exchange (NZX), based in Wellington, consists of the New Zealand Alternative Market, the New Zealand Stock Market and the New Zealand Debt Market. Together their purpose is to offer secure, liquid investments and opportunities to grow capital to individuals and companies alike.
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NFA Compliance Rule 2-43b
- A 2009 rule implemented by the U.S. forex industry's self-regulatory organization, the National Futures Association (NFA), regarding forex trading by U.S. regulated forex companies. It prohibits hedging by requiring multiple positions held in the same currency pair to be offset on a first-in, first-out (FIFO) basis. It also prohibits price adjustments to executed customer orders except to resolve a complaint in the customer's favor or in the case of certain straight-through processing transactions, and these changes must be reviewed, approved and documented by the NFA.
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NGN
- In currencies, this is the abbreviation for the Nigerian Naira.
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NGN (Nigerian Naira)
- The currency abbreviation for the Nigerian naira (NGN), the currency for Nigeria. The Nigerian naira is made up of 100 kobo and is often presented with a symbol that looks like the capital latin letter "N" with two horizontal slashes through the middle.
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Niche Banks
- Banks that cater to and serve the needs of a certain demographic segment of the population. Niche banks typically target a specific market or type of customer, and tailor a bank's advertising, product mix and operations to this target market's preferences.
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Nick Leeson
- A former manager with England’s Barings Bank, Leeson became a rogue trader while heading up the company’s Singapore division in the early 1990s. After originally earning massive profits for Barings via several unauthorized trades in 1992, Leeson eventually lost over $1 billion in company capital while hiding the losses in a little-used errors account that was hidden from his superiors. Most of the rogue trades occurred in the futures market, where his losses multiplied quickly in the final weeks before he fled his office.
- A former manager with England’s Barings Bank, Leeson became a rogue trader while heading up the company’s Singapore division in the early 1990s. After originally earning massive profits for Barings via several unauthorized trades in 1992, Leeson eventually lost over $1 billion in company capital while hiding the losses in a little-used errors account that was hidden from his superiors. Most of the rogue trades occurred in the futures market, where his losses multiplied quickly in the final weeks before he fled his office.
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Nifty 50
- The 50 stocks that were most favored by institutional investors in the 1960s and 1970s. Companies in this group were usually characterized by consistent earnings growth and high P/E ratios.
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Nigerian Scam
- A scam where the sender requests help in facilitating the transfer of a substantial sum of money, generally in the form of an email. In return, the sender offers a commission, usually in the range of several million dollars. The scammers then request that money be sent to pay for some of the costs associated with the transfer. If money is sent to the scammers, they will either disappear immediately or try to get more money with claims of continued problems with the transfer.
Also known as "advance fee fraud" and the "419 fraud."
- A scam where the sender requests help in facilitating the transfer of a substantial sum of money, generally in the form of an email. In return, the sender offers a commission, usually in the range of several million dollars. The scammers then request that money be sent to pay for some of the costs associated with the transfer. If money is sent to the scammers, they will either disappear immediately or try to get more money with claims of continued problems with the transfer.
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Nikkei
- Short for Japan's Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-weighted index comprised of Japan's top 225 blue-chip companies on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the U.S. In fact, it was called the Nikkei Dow Jones Stock Average from 1975 to 1985.
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Nil-Paid
- Security that is tradeable but originally posed no cost to the seller. For example, a renounceable right being sold by the original owner to another investor is considered nil-paid. A right is an opportunity to purchase more shares, usually at discount, given to shareholders by a corporation. The shareholders receive these rights at no cost, and if the rights are renounceable, the shareholders can choose to sell them on the market.
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Nine-Bond Rule
- The NYSE requirement that all orders for nine bonds or less be sent to the floor for one hour, in which time a market is sought. The rule doesn't apply if the customer directs the broker to go to the OTC market. Also known as "Rule 396".
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NINJA Loan
- A slang term for a loan extended to a borrower with "no income, no job and no assets". Whereas most lenders require the borrower to show a stable stream of income or sufficient collateral, a NINJA loan ignores the verification process.
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NIO
- In currencies, this is the abbreviation for the Nicaraguan Cordoba.
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NIO (Nicaraguan Cordoba)
- The currency abbreviation for the Nicaraguan córdoba (NIO), the currency for Nicaragua. The Nicaraguan córdoba is made up of 100 centavos (or cents) and is often presented with the symbol C$. The córdoba was named after Francisco Hernández de Córdoba, the founder of Nicaragua.
The current córdoba is also known as the "córdoba oro".
- The currency abbreviation for the Nicaraguan córdoba (NIO), the currency for Nicaragua. The Nicaraguan córdoba is made up of 100 centavos (or cents) and is often presented with the symbol C$. The córdoba was named after Francisco Hernández de Córdoba, the founder of Nicaragua.
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Nixon Shock
- A term used to describe the actions taken by former U.S. President Richard Nixon in 1971 that eventually led to the collapse of the Bretton Woods system. The policies imposed and the actions taken by President Nixon included imposing a 90-day wage and price freeze in America, a 10% import surcharge and, most notably, closing the gold window, effectively making the U.S. dollar inconvertible to gold.
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NMF
- An abbreviation for "no meaningful figure". You'll often see this when comparing financial data among companies where a certain ratio or figure isn't applicable.
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No Cash-Out Refinance
- The refinancing of an existing mortgage for an amount equal to or less than the existing outstanding loan balance plus an additional loan settlement cost. It is done primarily to lower the interest rate charge on the loan and/or to change the term of the mortgage.
A no cash-out refinance is also known as a 'rate and term refinance'.
- The refinancing of an existing mortgage for an amount equal to or less than the existing outstanding loan balance plus an additional loan settlement cost. It is done primarily to lower the interest rate charge on the loan and/or to change the term of the mortgage.
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No Documentation Mortgage - No Doc
- A type of reduced-documentation-required mortgage program in which income and assets aren't disclosed on the loan application and employment isn't verified. However, a credit check is typically required as lenders are counting on the fact that the borrower has a good credit history. No Doc mortgages usually fall into the Alt-A classification, and will tend to carry a higher interest rate charge, as well as require a higher down-payment compared to a prime mortgage.
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No Income / No Asset Mortgage - NINA
- A type of reduced documentation mortgage program in which no income and no assets are disclosed on the loan application, but employment is verified. NINA loans usually fall into the Alt-A classification, and may carry a higher interest rate than a prime mortgage.
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No Quote
- A designation indicating that no market makers are making an inside market at this time.
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No Transaction Fee Mutual Fund
- A mutual fund that is offered to investors by a brokerage firm without any form of commission charged for the transaction. This structure is advantageous to the investor because it allows him or her to purchase the mutual fund without incurring an up-front commission fee on the trade. For investors with a small amount of investment capital, this can be a significant advantage.
Also referred to as an "NTF mutual fund".
- A mutual fund that is offered to investors by a brokerage firm without any form of commission charged for the transaction. This structure is advantageous to the investor because it allows him or her to purchase the mutual fund without incurring an up-front commission fee on the trade. For investors with a small amount of investment capital, this can be a significant advantage.
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No-Cost Mortgage
- A mortgage refinancing situation in which the lender pays the borrower's loan settlement costs and then extends a new mortgage loan. A lender does this in exchange for charging the borrower a higher interest rate. When the lender then sells this mortgage into the secondary mortgage market, the price it will receive for the mortgage is based on the interest rate on the mortgage.
A mortgage broker would do the same based on the size of the rebate they might receive from a lender.
- A mortgage refinancing situation in which the lender pays the borrower's loan settlement costs and then extends a new mortgage loan. A lender does this in exchange for charging the borrower a higher interest rate. When the lender then sells this mortgage into the secondary mortgage market, the price it will receive for the mortgage is based on the interest rate on the mortgage.
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No-Fee Mortgage
- A mortgage in which a mortgagee does not charge the mortgagor any fees for the applications, appraisals, underwriting, processing, private mortgage insurance and other third-party closing costs typically associated with mortgages. The total cost savings associated with the lack of fees is typically 3-5%
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No-Load Fund
- A mutual fund in which shares are sold without a commission or sales charge. The reason for this is that the shares are distributed directly by the investment company, instead of going through a secondary party. This is the opposite of a load fund, which charges a commission at the time of the fund's purchase, at the time of its sale, or as a "level-load" for as long as the investor holds the fund.
- A mutual fund in which shares are sold without a commission or sales charge. The reason for this is that the shares are distributed directly by the investment company, instead of going through a secondary party. This is the opposite of a load fund, which charges a commission at the time of the fund's purchase, at the time of its sale, or as a "level-load" for as long as the investor holds the fund.
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No-Par Value Stock
- Stock that is issued without the specification of a par value indicated in the company's articles of incorporation or on the stock certificate itself.
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No-Ratio Mortgage
- A mortgage program in which a borrower's income isn't used or reported in qualifying the borrower for the mortgage under the standard debt-to-income ratio requirements. The loan is usually made based on the borrower's down payment, credit score or assets.
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Noise
- Price and volume fluctuations in the market that can confuse one's interpretation of market direction. Used in the context of equities, it is stock market activity caused by program trading, dividend payments or other phenomena that is not reflective of overall market sentiment. Also known as "market noise".
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Noise Trader
- The term used to describe an investor who makes decisions regarding buy and sell trades without the use of fundamental data. These investors generally have poor timing, follow trends, and over-react to good and bad news.
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Noise Trader Risk
- A form of market risk associated with the investment decisions of noise traders. The higher the volatility in market price for a particular security, the greater the associated noise trader risk
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NOK
- In currencies, this is the abbreviation for the Norwegian Krone.
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Nominal
- An unadjusted rate, value or change in value. This type of measure often reflects the current situation, such as the current price of a car, and doesn't make adjustments to reflect factors such as seasonality or inflation, which provide a more accurate measure in real terms.
- An unadjusted rate, value or change in value. This type of measure often reflects the current situation, such as the current price of a car, and doesn't make adjustments to reflect factors such as seasonality or inflation, which provide a more accurate measure in real terms.
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Nominal Effective Exchange Rate - NEER
- The unadjusted weighted average value of a country's currency relative to all major currencies being traded within an index or pool of currencies. The weights are determined by the importance a home country places on all other currencies traded within the pool, as measured by the balance of trade.
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Nominal GDP
- A gross domestic product (GDP) figure that has not been adjusted for inflation.
Also known as "current dollar GDP" or "chained dollar GDP".
- A gross domestic product (GDP) figure that has not been adjusted for inflation.
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Nominal Quotation
- A quote generated by a futures exchange or broker for contracts that have not traded for a specific period of time.
Also referred to as a "nominal quote" or "nominal price".
- A quote generated by a futures exchange or broker for contracts that have not traded for a specific period of time.
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Nominal Value
- The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates.
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Nominal Yield
- The interest rate stated on the face of a bond, which represents the percentage of interest to be paid by the issuer on the face value of the bond.
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Nominal Yield Spread
- The spread, expressed in percent or basis points, that when added to the yield at one point on the Treasury yield curve equals the discount factor that will make a security's cash flows equal to its current market price.
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Nominalism
- The principle of keeping the amount of a debt obligation fixed despite fluctuations in the money's purchasing power or exchange rate.
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Nominated Advisor - NOMAD
- A company that has been approved as a nominated advisor for the Alternative Investment Market (AIM), by the London Stock Exchange. Individuals are not permitted to becoming nominated advisors, and there are certain criteria that must be met by a company before it is approved for membership.
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Nomination Committee
- A committee that acts under the corporate governance area of an organization. A nomination committees is focused on evaluating the board of directors of its respective firm and on examining the skills and characteristics that are needed in board candidates. Nomination committees may also have other duties, which vary from company from company.
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Nominee
- A person or firm into whose name securities or other properties are transferred in order to facilitate transactions, while leaving the customer as the actual owner.
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Nominee Dividend
- A dividend that a person receives on behalf of someone else. If you pass the dividends on to another person, then you must file a Form 1099-DIV to get a dividend adjustment and thereby reduce your taxable dividend interest.
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Nominee Interest
- Interest that a person receives on behalf of someone else. If you pass the interest on to another person, then you must file a Form 1099-INT to get an interest adjustment and thereby reduce your taxable interest.
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Non-Accredited Investor
An investor who does not meet the net worth requirements for an accredited investor under the Securities & Exchange Commission's Regulation D. A non-accredited individual investor is one who has a net worth of less than $1 million (including spouse) and who earned less than $200,000 annually ($300,000 with spouse) in the last two years.
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Non-Amortizing Loan
- A type of loan in which payments on the principal are not made, while interest payments or minimum payments are made regularly. As a result, the value of principal does not decrease at all over the life of the loan. The principal is then paid as a lump sum at the maturity of the loan.
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Non-Assessable Stock
- A class of stock in which the issuing company is not allowed to impose levies on its shareholders for additional funds for further investment. Non-assessable stocks typically have the words "fully paid and non-assessable" printed on the stock certificate.
These are the opposite of assessable stocks.
- A class of stock in which the issuing company is not allowed to impose levies on its shareholders for additional funds for further investment. Non-assessable stocks typically have the words "fully paid and non-assessable" printed on the stock certificate.
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Non-Banking Financial Company - NBFC
- Non-banking financial companies, or NBFCs, are financial institutions that provide banking services, but do not hold a banking license. These institutions are not allowed to take deposits from the public. Nonetheless, all operations of these institutions are still covered under banking regulations.
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Non-Borrowed Reserves
- A measure of the reserves in the banking system. Non-borrowed reserves represent the numerical difference between total reserves minus funds that have been borrowed from the Fed discount window.
The first element of this equation consists of the total reserves held at deposit at the Fed by member banks plus the composite cash in their vaults. The second element is money borrowed by banks through the Fed discount window.
- A measure of the reserves in the banking system. Non-borrowed reserves represent the numerical difference between total reserves minus funds that have been borrowed from the Fed discount window.
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Non-Capped Fund
- A mutual fund with no limit on the annual operating expenses charged to shareholders. In a non-capped fund, the charges will always cover the cost of doing business, as no ceiling has been placed on the fees.
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Non-Cash Charge
- A charge off, made by a company against earnings, that does not require an initial outlay of cash.
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Non-Client Order
- An order on an exchange made by a participant firm or on behalf of a partner, officer, director or employee of the participant firm. Where a participant firm is a firm that is entitled to trade on the exchange, it also known as a member firm. While these orders are allowed, priority must be given to client orders for the same securities.
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Non-Compete Agreement
- An agreement between two parties, typically an employee and employer, where the employee agrees not to use information learned during employment in subsequent business efforts for a set period of time. Employers usually insist on non-compete agreements because of the possibility of an employee, upon termination or resignation, working for a competitor or starting a business, and gaining competitive advantage by abusing confidential information about their former employer's trade secrets or sensitive information such as customer/client lists, business practices, upcoming products and marketing plans.
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Non-Competitive Tender
- One of the two bid processes for buying debt issuances. Non-competitive tender is for small investors, while competitive tender is for large institutional investors. The price that a non-competitive bidder receives is the average bid price of all competitive bids.
Also known as a "non-competitive bid".
- One of the two bid processes for buying debt issuances. Non-competitive tender is for small investors, while competitive tender is for large institutional investors. The price that a non-competitive bidder receives is the average bid price of all competitive bids.
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Non-Contestability Clause
1. A provision in a person's will designed to stop beneficiaries from contesting the will. The provision states that if beneficiaries try to contest the will, their potential inheritances will be effectively redistributed to other beneficiaries.
2. A provision in a life insurance policy designed to stop life insurance companies from refusing to pay out a claim to individuals because of fraud or error.
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Non-Controlling Interest
- An ownership stake in a corporation where the held position gives the investor no influence on how the company is run. The majority of investor positions are deemed to be a non-controlling interest because their ownership stake is so insignificant relative to the total number of outstanding shares. For smaller companies, any position that holds less than 50% of the outstanding voting shares is deemed to be a non-controlling interest.
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Non-Deliverable Forward - NDF
- A cash-settled, short-term forward contract on a thinly traded or non-convertible foreign currency, where the profit or loss at the time at the settlement date is calculated by taking the difference between the agreed upon exchange rate and the spot rate at the time of settlement, for an agreed upon notional amount of funds.
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Non-Deliverable Swap - NDS
- A swap that is similar to a non-deliverable forward, with the only difference being that settlement for both parties is done through a major currency. Non-deliverable swaps are used when the swap includes a major currency, such as the U.S. dollar, and a restricted currency, such as the Philippine peso or South Korean won.
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Non-Directed Order
- A customer order where specific instructions are not given, by the customer to the broker, pertaining to its routing destination.
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Non-Disclosure Agreement - NDA
- A legal contract between two or more parties that signifies a confidential relationship exists between the parties involved. The confidential relationship often will refer to information that is to be shared between the parties but should not be made available to the general public.
Also referred to as a 'confidentiality agreement'.
- A legal contract between two or more parties that signifies a confidential relationship exists between the parties involved. The confidential relationship often will refer to information that is to be shared between the parties but should not be made available to the general public.
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Non-Equity Option
- A term for option contracts whose underlying securities are instruments other than equities.
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Non-Farm Payroll
- A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number of paid U.S. workers of any business, excluding the following employees:
- general government employees
- private household employees
- employees of nonprofit organizations that provide assistance to individuals
- farm employees
This monthly report also includes estimates on the average work week and the average weekly earnings of all non-farm employees.
- A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number of paid U.S. workers of any business, excluding the following employees:
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Non-Financial Asset
- An asset with a physical value such as land, property or some type of object.
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Non-Fluctuating
- The characteristic of constancy in a security or measurement's value, rate of change or other metric.
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Non-GAAP Earnings
- An alternative earnings measure of the performance of a company. Many companies report non-GAAP earnings in addition to the required GAAP earnings, stating that the alternate figure more accurately reflects their company's performance. Some common examples of non-GAAP earnings measures are cash earnings, operating earnings, EBITDA and pro-forma income.
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Non-Interest-Bearing Current Liability - NIBCL
- A category of debt entered on the liabilities side of a balance sheet under current liabilities. While a NIBCL is debt, representing a sum of money that the company owes and must pay within one year, it does not require interest payments.
- A category of debt entered on the liabilities side of a balance sheet under current liabilities. While a NIBCL is debt, representing a sum of money that the company owes and must pay within one year, it does not require interest payments.
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Non-Marginable Securities
- Securities that cannot be purchased on margin at a particular brokerage or financial institution. Some classes of securities, such as recent initial public offerings (IPOs), over-the-counter bulletin board stocks, and penny stocks, are non-marginable by decree of the Federal Reserve Board. Other securities, such as stocks with share prices under $5 or with extremely high betas, may be excluded at the discretion of the broker itself.
Non-marginable securities must be 100% funded by the investor's own cash, and holdings in non-marginable securities do not add to the investor's margin buying power.
- Securities that cannot be purchased on margin at a particular brokerage or financial institution. Some classes of securities, such as recent initial public offerings (IPOs), over-the-counter bulletin board stocks, and penny stocks, are non-marginable by decree of the Federal Reserve Board. Other securities, such as stocks with share prices under $5 or with extremely high betas, may be excluded at the discretion of the broker itself.
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Non-Marketable Security
- Any type of security that is difficult to buy or a sell because it does not trade on a normal market or exchange. These types of securities trade over the counter (OTC) or in a private transaction. Finding a party with which to transact business is often difficult; in some cases, these securities can't be resold due to regulations surrounding the security.
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Non-Negotiable
- 1. A term relating to the price of a good or security which is firmly established and cannot be adjusted.
2. A term relating to a good or security whose ownership is not easily transferable from one party to another.
- 1. A term relating to the price of a good or security which is firmly established and cannot be adjusted.
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Non-Objecting Beneficial Owner - NOBO
- A beneficial owner who gives permission to a financial intermediary to release the owner's name and address to the company(ies) or issuer(s) in which they have bought securities. Companies and issuers request this personal information so they can contact the shareholder regarding important shareholder communications (such as proxies, circulars for rights offerings and annual/quarterly reports).
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Non-Open Market
- Describes an agreement to purchase or sell shares made directly with the company. Non-open market transactions, as the name suggests, don't take place on a market exchange like most purchase and sale transactions, but instead are private transactions. While these transactions occur outside of the traditional market, they still need to be filed with the SEC. These transactions can be referred to as non-open market acquisition or disposition.
- Describes an agreement to purchase or sell shares made directly with the company. Non-open market transactions, as the name suggests, don't take place on a market exchange like most purchase and sale transactions, but instead are private transactions. While these transactions occur outside of the traditional market, they still need to be filed with the SEC. These transactions can be referred to as non-open market acquisition or disposition.
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Non-Operating Asset
- Classes of assets that are not essential to the ongoing operations of a business, but may still generate income or provide a return on investment. These assets will be listed on the balance sheet along with operating assets, and may or may not be broken out separately.
Non-operating assets are held by companies for several reasons. It could be an asset related to a closed portion of the business, and might be sold in the future. Non-operating assets can also be used to diversify operational risks (for example by owning some real estate or patents) or simply used as a cash investment.
Also known as "redundant assets".
- Classes of assets that are not essential to the ongoing operations of a business, but may still generate income or provide a return on investment. These assets will be listed on the balance sheet along with operating assets, and may or may not be broken out separately.
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Non-Operating Cash Flows
- Cash flows (inflows and outflows) that are not related to the day-to-day, ongoing operations of a business. Non-operating cash flows include borrowings, the issuance or purchase of stock, asset sales, dividend payments, and other investment activity. On most company balance sheets, total cash flows will be broken down into operating cash flows, investing cash flows, and financing cash flows, with the latter two making up non-operating cash flows.
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Non-Operating Expense
- An expense incurred by activities not relating to the core operations of the business. Accountants may remove non-operating expenses or revenues in order to examine the performance of the business, ignoring effects of financing or irrelevant issues.
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Non-Operating Income
- The portion of an organization's income that is derived from activities not related to its core operations. Non-operating income would include such items as dividend income, profits (and losses) from investments, gains (or losses) incurred due to foreign exchange, asset write-downs and other non-operating revenues and expenses.
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Non-Owner Occupied
- A classification used in mortgage origination, risk-based pricing and housing statistics for one to four-unit investment properties. The property is not occupied by the owner. The term non-owner occupied is not typically used for multi-family rental properties, such as apartment buildings.
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Non-Performing Asset (NPA)
- A classification used by financial institutions that refer to loans that are in jeopardy of default. Once the borrower has failed to make interest or principal payments for 90 days the loan is considered to be a non-performing asset.
Also known as “non-performing loan”.
- A classification used by financial institutions that refer to loans that are in jeopardy of default. Once the borrower has failed to make interest or principal payments for 90 days the loan is considered to be a non-performing asset.
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Non-Performing Loan (NPL)
- Loans that are in default or close to being in default.
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Non-Publicly Offered Mutual Fund
- Mutual funds that are not offered for sale to the general public. Non-publicly offered mutual funds are usually registered via private placement, not as securities, and investors who buy them must meet suitability requirements for income and net worth.
These funds should not be confused with closed-end funds, which have a limited number of shares but are usually offered to the public at large.
- Mutual funds that are not offered for sale to the general public. Non-publicly offered mutual funds are usually registered via private placement, not as securities, and investors who buy them must meet suitability requirements for income and net worth.
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Non-Purpose Loan
- A type of loan that uses an investment portfolio as loan collateral and the proceeds of which can not be used to purchase, carry or trade securities. This type of loan allows investors access to funds without having to sell their investments. Regulations require financial institutions to disclose whether a loan is a non-purpose or purpose loan, and borrowers are required to indicate the purpose of the loan.
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Non-Qualified Deferred Compensation - NQDC
- Compensation that has been earned by an employee, but not yet received from the employer. Because the ownership of the compensation - which may be monetary or otherwise - has not been transferred to the employee, it is not yet part of the employee's earned income and is not counted as taxable income.
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Non-Qualified Distribution
- 1) A distribution from a Roth IRA that occurs before the Roth IRA owner meets certain requirements (see definition for qualified distributions).
2) A distribution from an education savings account that exceeds the amount used for qualified education expenses.
- 1) A distribution from a Roth IRA that occurs before the Roth IRA owner meets certain requirements (see definition for qualified distributions).
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Non-Qualified Plan
- Any type of tax-deferred, employer-sponsored retirement plan that falls outside of employee retirement income security act (ERISA) guidelines. Non-qualified plans are designed to meet specialized retirement needs for key executives and other select employees. These plans also are exempt from the discriminatory and top-heavy testing that qualified plans are subject to.
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Non-Qualified Stock Option - NSO
- A type of employee stock option where you pay ordinary income tax on the difference between the grant price and the price at which you exercise the option.
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Non-Qualifying Investment
- An investment that does not qualify for any level of tax-deferred or tax-exempt status. Investments of this sort are made with after-tax money. They are purchased and held in tax-deferred accounts, plans or trusts. Returns from these investments are taxed on an annual basis.
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Non-Recourse Debt
- A type of loan that is secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral, but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount. This is one instance where the borrower does not have personal liability for the loan.
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Non-Recourse Expense
- An accounting term that sometimes refers to the cost of absorbing losses on defaulted non-recourse debt. In other words, when a borrower fails to repay a non-recourse loan, the lender's only possible recourse is to seize any pledged collateral and sell it. The loss that results between what the asset is sold for and what is actually owed is written off as a non-recourse expense, but there can be variations in the name of this line item.
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Non-Recourse Finance
- A loan where the lending bank is only entitled to repayment from the profits of the project the loan is funding, not from other assets of the borrower.
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Non-Refundable Tax Credit
- A tax credit that can't reduce the amount of tax owed to less than zero. If the credit were able to reduce the amount of tax owed to less than zero, the taxpayer would be entitled to a payment from the government.
Also referred to as a "wastable tax credit."
- A tax credit that can't reduce the amount of tax owed to less than zero. If the credit were able to reduce the amount of tax owed to less than zero, the taxpayer would be entitled to a payment from the government.
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Non-Registered Account (Canada)
- A type of investment account that allows Canadian citizens to save money for the long term. Non-registered accounts only tax the capital gains realized inside the account at 50% of the accountholder's top marginal tax rate. And unlike RRSPs, non-registered accounts have no contribution limits.
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Non-Renounceable Rights
- An offer issued by a corporation to shareholders to purchase more shares of the corporation (usually at a discount). Unlike a renounceable right, a non-renounceable right is not transferable, and therefore cannot be bought or sold.
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Non-REO Foreclosure
- A real estate property that has been foreclosed successfully. A non-REO (real estate owned) foreclosure has a purchaser that is willing to pay the amount owed to the bank for the property, or less if the bank is willing.
A non-REO foreclosure is different from an REO foreclosure, where a buyer could not be found and the lender takes possession, because the property never becomes real-estate owned (i.e., lender owned).
- A real estate property that has been foreclosed successfully. A non-REO (real estate owned) foreclosure has a purchaser that is willing to pay the amount owed to the bank for the property, or less if the bank is willing.
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Non-Resident
- An individual who mainly resides in one region or jurisdiction but has interests in another region. In the region where he or she does not mainly reside, he or she will be classified by government authorities as a non-resident. The classification itself will be determined in each region based on set circumstances such as the amount of time spent within the region during the calendar year. This classification is focused on where the person resides and does not focus on citizenship.
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Non-Resident Alien
- A non-U.S. citizen who doesn't pass the green card test or the substantial presence test. If a non-citizen currently has a green card or has had a green card in the past calender year, he or she would pass the green card test and would be classified as a resident alien. If the individual has resided in the U.S. for more than 31 days in the current year and has resided in the U.S. for more than 183 days over a three-year period, including the current year, he or she would pass the substantial presence test and also be classified as a resident alien.
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Non-Sampling Error
- A statistical error caused by human error to which a specific statistical analysis is exposed. These errors can include, but are not limited to, data entry errors, biased questions in a questionnaire, biased processing/decision making, inappropriate analysis conclusions and false information provided by respondents.
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Non-Spouse Beneficiary Rollover
- A retirement plan asset rollover performed in the event of the death of the account holder, where the recipient is not the spouse of the deceased. The most common practice for a non-spouse beneficiary rollover, is that the recipient receives the balance in a one-time lump sum payment, subjecting them to full immediate taxation.
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Nonbank Banks
- Financial institutions that are not considered full-scale banks because they do not offer both lending and depositing services. Nonbank banks can engage in credit card operations or other lending services, provided they do not also accept deposits.
The Bank Holding Company Act of 1956 prohibits nonbank companies from owning banks as subsidiaries, but they may own other nonbank banks.
- Financial institutions that are not considered full-scale banks because they do not offer both lending and depositing services. Nonbank banks can engage in credit card operations or other lending services, provided they do not also accept deposits.
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Noncallable
- Securities that cannot be called by the issuer prior to maturity.
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Noncommercial Trader
- A classification used by the Commodity Futures Trading Commission (CFTC) to identify traders that use the futures market for speculative purposes.
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Nonconforming Mortgage
- A mortgage that does not meet the guidelines of Government Sponsored Enterprises (GSE) such as Fannie Mae and Freddie Mac, and therefore cannot be sold to Fannie Mae or Freddie Mac. GSE guidelines consist of a maximum loan amount, suitable properties, down payment requirements and credit requirements, among other things.
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Nonconvertible Currency
- Any currency that is used primarily for domestic transactions and is not openly traded on a forex market. This usually is a result of government restrictions, which prevent it from being exchanged for foreign currencies.
Also known as a "blocked currency".
- Any currency that is used primarily for domestic transactions and is not openly traded on a forex market. This usually is a result of government restrictions, which prevent it from being exchanged for foreign currencies.
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Noncumulative
- A type of preferred stock that does not pay the holder any unpaid or omitted dividends. If the corporation chooses to not pay dividends in a given year, the investor does not have the right to claim any of those forgone dividends in the future.
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Nondischargeable Debt
- A type of debt that cannot be eliminated through bankruptcy proceeding. Such debts include, but are not limited to, student loans, most federal, state and local taxes, money borrowed on a credit card to pay those taxes, and child support and alimony.
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Nondiscrimination Rule
- A clause found in qualified retirement plans stating that all employees of a company must be eligible for the same benefits, regardless of position within the company. The rule keeps plans from being discriminatory toward highly-compensated employees and company executives. Nondiscrimination rules are required for a plan to be considered qualified under the Employee Retirement Income Security Act (ERISA).
- A clause found in qualified retirement plans stating that all employees of a company must be eligible for the same benefits, regardless of position within the company. The rule keeps plans from being discriminatory toward highly-compensated employees and company executives. Nondiscrimination rules are required for a plan to be considered qualified under the Employee Retirement Income Security Act (ERISA).
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Nonelective Contribution
- A type of contribution an employer chooses to make to each of his or her eligible employee's employer-sponsored retirement plan. The contribution is not based on salary reduction contributions made by the employee.
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Nonforfeiture Clause
- A clause in an insurance policy that allows for the insured to receive all or a portion of the benefits or a partial refund on the premiums paid if the insured misses premium payments, causing the policy to lapse. The nonforfeiture clause may only be in effect for a limited period of time, and may only kick in after the policy has been active for several years.
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Nonissuer Transaction
- A tranasction not directly or indirectly executed for the benefit of the issuer. Nonissuer transactions refer to any disposition of a security that does not confer a benefit to the issuer (company).
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Nonparametric Statistics
- A statistical method wherein the data is not required to fit a normal distribution. Nonparametric statistics uses data that is often ordinal, meaning it does not rely on numbers, but rather a ranking or order of sorts. For example, a survey conveying consumer preferences ranging from like to dislike would be considered ordinal data.
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Nonpassive Income And Losses
- Any income or losses that cannot be classified as passive. Nonpassive income includes any type of active income, such as wages, business income or investment income. Nonpassive losses include losses incurred in the active management of a business. Nonpassive income and losses are usually declarable and deductible in the year incurred.
- Any income or losses that cannot be classified as passive. Nonpassive income includes any type of active income, such as wages, business income or investment income. Nonpassive losses include losses incurred in the active management of a business. Nonpassive income and losses are usually declarable and deductible in the year incurred.
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Nonperforming Asset
- A debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for an extended period of time. The nonperforming asset is therefore not yielding any income to the lender in the form of principal and interest payments.
- A debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for an extended period of time. The nonperforming asset is therefore not yielding any income to the lender in the form of principal and interest payments.
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Nonperiodic Distribution
- A type of employee retirement-plan distribution that is not considered a periodic distribution. Periodic distributions would include monthly payments, while nonperiodic payments would be one-time lump-sum payments.
Nonperiodic distributions that are paid directly to the employee will be subject to a 10% withholding tax unless the beneficiary elects to have no taxes withheld.
- A type of employee retirement-plan distribution that is not considered a periodic distribution. Periodic distributions would include monthly payments, while nonperiodic payments would be one-time lump-sum payments.
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Nonprofit Organization
- An association that is given tax-free status. Donations to a nonprofit organization are often tax deductible as well.
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Nonrecurring Charge
- An expense occurring only once on a company's financial statement.
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Nonrenewable Resource
- A resource of economic value that cannot be readily replaced by natural means on a level equal to its consumption. Most fossil fuels, such as oil, natural gas and coal are considered nonrenewable resources in that their use is not sustainable because their formation takes billions of years.
- A resource of economic value that cannot be readily replaced by natural means on a level equal to its consumption. Most fossil fuels, such as oil, natural gas and coal are considered nonrenewable resources in that their use is not sustainable because their formation takes billions of years.
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Nontariff Barrier
- A form of restrictive trade where barriers to trade are set up and take a form other than a tariff. Nontariff barriers include quotas, levies, embargoes, sanctions and other restrictions, and are frequently used by large and developed economies.
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Nontaxable Dividends
- Dividends from a mutual fund or some other regulated investment company that are not taxed. Taxes are not paid out because the fund invests in municipal and other tax exempt investments.
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Nontraditional Mortgages
- A broad term describing mortgages that do not take the traditional form. A traditional mortgage would require a relatively high initial down payment of about 25% and 25-year payment schedule with an interest rate that is compounded on a monthly basis. Nontraditional mortgages include interest-only mortgages, payment option adjustable rate mortgages (ARMs) and subprime mortgages.
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Noon Average Rate Contract - NARC
- A type of currency forward contract that refers to the Bank of Canada's average noon rate for foreign exchange as a benchmark. The contract's negotiated exchange rate is compared to the noon rate and the two parties settle the difference in cash. NARCs usually refer to the USD/CAD exchange rate.
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Noon Rate
- A term used by the Bank of Canada to describe the foreign exchange rate between the U.S. dollar and the Canadian dollar. The rate is released by 12:45pm EST by the Bank of Canada on any given day, and is based on the trading that takes place from 11:59am to 12:01pm on that day.
The noon rate is often used by companies as a benchmark for translating financial statements.
- A term used by the Bank of Canada to describe the foreign exchange rate between the U.S. dollar and the Canadian dollar. The rate is released by 12:45pm EST by the Bank of Canada on any given day, and is based on the trading that takes place from 11:59am to 12:01pm on that day.
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Normal Distribution
- A probability distribution that plots all of its values in a symmetrical fashion and most of the results are situated around the probability's mean. Values are equally likely to plot either above or below the mean. Grouping takes place at values that are close to the mean and then tails off symmetrically away from the mean.
Also known as a "Gaussian distribution" or "bell curve".
- A probability distribution that plots all of its values in a symmetrical fashion and most of the results are situated around the probability's mean. Values are equally likely to plot either above or below the mean. Grouping takes place at values that are close to the mean and then tails off symmetrically away from the mean.
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Normal Good
- An economic term used to describe the quantity demanded for a particular good or service as a result of a change in the given level of income. A normal good is one that experiences an increase in demand as the real income of an individual or economy increases.
Another way to define a normal good is by calculating its income elasticity of demand. If this coefficient is positive and lower than 1, the good is considered to be a normal good.
- An economic term used to describe the quantity demanded for a particular good or service as a result of a change in the given level of income. A normal good is one that experiences an increase in demand as the real income of an individual or economy increases.
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Normal Market Size
- A share classification structure based on the number of shares outstanding. This determines the number of shares that a market maker can trade at the quoted price.
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Normal Profit
- When economic profit is equal to zero; this occurs when the difference between total revenue and total cost (explicit and implicit costs) equals zero. Normal profit is different than accounting profit because opportunity cost is taken into consideration.
Normal profit is the minimum level of profit needed for a company to remain competitive in the market.
Also known as "economic profit".
- When economic profit is equal to zero; this occurs when the difference between total revenue and total cost (explicit and implicit costs) equals zero. Normal profit is different than accounting profit because opportunity cost is taken into consideration.
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Normal Yield Curve
- A yield curve in which short-term debt instruments have a lower yield than long-term debt instruments of the same credit quality. This gives the yield curve an upward slope. This is the most often seen yield curve shape.
Sometimes referred to as "positive yield curve".
- A yield curve in which short-term debt instruments have a lower yield than long-term debt instruments of the same credit quality. This gives the yield curve an upward slope. This is the most often seen yield curve shape.
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Normal-Course Issuer Bid-NCIB
- The action of a company buying back its own outstanding shares from the markets so it can cancel them.
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Normalized Earnings
- 1. Earnings adjusted for cyclical ups and downs in the economy.
2. On the balance sheet, earnings adjusted to remove unusual or one-time influences.
- 1. Earnings adjusted for cyclical ups and downs in the economy.
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Normative Economics
- A perspective on economics that incorporates subjectivity within its analyses. It is the study or presentation of "what ought to be" rather than what actually is. Normative economics deals heavily in value judgments and theoretical scenarios. It is the opposite of positive economics.
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North American Free Trade Agreement - NAFTA
- A trade agreement between Canada, the United States and Mexico that encourages free trade between these North American countries.
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North American Industry Classification System - NAICS
- A new business classification system developed through a partnership between the United States, Canada and Mexico. This system allows statistics to be compared for all business activity across North America. All companies are separated into industries defined by businesses that use similar production processes.
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North American Loan Credit Default Swap Index - LCDX
- A specialized index of loan-only credit default swaps (CDS) covering 100 individual companies that have unsecured debt trading in the broad secondary markets. The LCDX is traded over the counter and is managed by a consortium of large investment banks, which provide liquidity and assist in pricing the individual credit default swaps.
The index begins with a fixed coupon rate (225 bps); trading moves the price and changes the yield, much like a standard bond. The index rolls every six months. Buyers of the index pay the coupon rate (and purchase the protection against credit events), while sellers receive the coupon and sell the protection. What is being protected is a "credit event" at the company, such as defaulting on a loan or declaring bankruptcy.
If a credit event occurs in one of the underlying companies, the protection is paid out via physical delivery of the debt or through a cash settlement between the two parties. The underlying company is then removed, and a new one is placed in the index to return it to 100 members.
- A specialized index of loan-only credit default swaps (CDS) covering 100 individual companies that have unsecured debt trading in the broad secondary markets. The LCDX is traded over the counter and is managed by a consortium of large investment banks, which provide liquidity and assist in pricing the individual credit default swaps.
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North American Securities Administrators Association - NASAA
- A voluntary organization, established in 1919, of securities regulators whose aim is to protect investors who buy securities or investment advice by educating the public, investigating violations of state and provincial law and filing enforcement actions. Membership includes securities regulators from all 50 U.S. states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.
- A voluntary organization, established in 1919, of securities regulators whose aim is to protect investors who buy securities or investment advice by educating the public, investigating violations of state and provincial law and filing enforcement actions. Membership includes securities regulators from all 50 U.S. states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.
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North Sea Brent Crude
- A type of oil that is sourced from the North Sea. This type of oil is used as a benchmark to price European, African and Middle Eastern oil that is exported to the West.
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Nostro Account
- An account that a bank holds with a foreign bank.
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Not-Held Order
- A market or limit order that gives the broker or floor trader both time and price discretion to attempt to get the best possible price.
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Notarize
- The act of officially certifying a legal document by a notary public. The purpose of having a legal document notarized is to ensure the authenticity of the signatures that appear on the document. Once notarized, a document will have much more legal credibility and will stand up much better in court if it is ever challenged.
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Notary
- Also called a "notary public," this state-appointed official witnesses important document signings and verifies the identities of the signers to help deter fraud and identity theft. A notarized document will contain the seal and signature of the notary who witnessed the signing and will have more legal weight than a document that is not notarized. Document signings where consumers are likely to need the services of a notary include real estate deeds, affidavits, wills, trusts and powers of attorney.
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Notching
- When rating agencies reduce their ratings on structured financial collateral based on ratings from another agency without rating the collateral themselves. Notching arises when collateral, such as mortgage backed securities (MBS), and other asset backed securities (ABS) are included within investment vehicles that are rated, such as collateralized debt obligations (CDOs).
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Note
- A debt security, usually maturing in one to 10 years.
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Note Against Bond Spread - NOB
- A spread within futures contracts created by offsetting positions in 30-year treasury bond futures with positions in 10-year treasury note contracts.
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Note Auction
- A formal bidding process that is scheduled on a regular basis by the U.S. Treasury. Currently there are 17 authorized securities dealers (primary dealers) that are obligated to bid on each issue. All Treasury notes are originally issued in this manner.
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Note Issuance Facility - NIF
- A syndicate of commercial banks that have agreed to purchase any short to medium-term notes that a borrower is unable to sell in the eurocurrency market.
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Notes To The Financial Statements
- Additional information provided in a company's financial statements. Notes to the financial statements report the details and additional information that are left out of the main reporting documents, such as the balance sheet and income statement. This is done mainly for the sake of clarity because these notes can be quite long, and if they were included, they would cloud the data reported in the financial statements.
Also known as the "footnotes".
- Additional information provided in a company's financial statements. Notes to the financial statements report the details and additional information that are left out of the main reporting documents, such as the balance sheet and income statement. This is done mainly for the sake of clarity because these notes can be quite long, and if they were included, they would cloud the data reported in the financial statements.
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Notice Filing
- Information an investment advisor registered with the Securities Exchange Commission may be required by law to submit to state securities authorities. Notice filings include a copy of the ADV form and other modifications that must be filed. This helps protect a consumer by ensuring the expertise of an advisor is valid and authentic.
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Notice Of Assessment - NOA
- An annual statement sent by revenue authorities to taxpayers detailing the amount of income tax they owe. It includes the amount of their tax refund, tax credit and income tax already paid.
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Notice Of Default
- A public notice filed with a court stating that a mortgage borrower is behind in payments. This is one of the first steps toward foreclosure, and if the borrower does not pay, the next step is for the lender to file a notice of sale for the property. However, if the borrower catches up on his or her payments, the foreclosure process can be halted.
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Notice Of Seizure
- A letter or written notice from the Internal Revenue Service (IRS) informing the recipient that authorization has been given to liquidate his or her assets in order to cover the income taxes due.
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Notional Principal Amount
- In an interest rate swap, the predetermined dollar amount on which the exchanged interest payments are based.
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Notional Value
- The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets because a very small amount of invested money can control a large position (and have a large consequence for the trader).
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Nova/Ursa Ratio
- A sentiment indicator based on the Nova and Ursa funds from the Rydex Fund Group. The Nova fund is bullish with a target beta of 1.5. Whereas, the Ursa fund is bearish with a target beta of -1.0. This ratio can be used as a proxy for the direction of market sentiment. More specifically, a high value represents a bullish sentiment and a low value represents a bearish sentiment.
Calculated as:
- A sentiment indicator based on the Nova and Ursa funds from the Rydex Fund Group. The Nova fund is bullish with a target beta of 1.5. Whereas, the Ursa fund is bearish with a target beta of -1.0. This ratio can be used as a proxy for the direction of market sentiment. More specifically, a high value represents a bullish sentiment and a low value represents a bearish sentiment.
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Novation
- 1.The act of replacing one participating member of a contract with another.
2. The exchange of new debts or obligations for older existing ones.
- 1.The act of replacing one participating member of a contract with another.
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NPR
- In currencies, this is the abbreviation for the Nepal Rupee.
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NR6 Form
- A Canada Revenue Service form that must be submitted by non-residents who have received rent from real property or timber royalties in
- A Canada Revenue Service form that must be submitted by non-residents who have received rent from real property or timber royalties in
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Null Hypothesis
- A type of hypothesis used in statistics that proposes that no statistical significance exists in a set of given observations. The null hypothesis attempts to show that no variation exists between variables, or that a single variable is no different than zero. It is presumed to be true until statistical evidence nullifies it for an alternative hypothesis.
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Numeraire
- An economic term that represents a unit of account. In French, the term means "money", "coinage" or "face value". A numeraire is usually applied to a single good, which becomes the base good. All similar goods are then valued and priced against the base good. This comparison makes it possible to identify which goods are worth more than others.
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Numismatics
- The study of the physical embodiment of various payment media (i.e. currencies). The study of numismatics as it applies to coins, is often in the research of the production and use of the coins to determine their rarity. Numismatics has many subfields, including but not limited to:
- Notaphily - the study of paper money (i.e. bank notes)
- Exonumia - the study of coin like items such as medals used in place of currency
- Scripophily - the study of securities (i.e. stocks and bonds)
- The study of the physical embodiment of various payment media (i.e. currencies). The study of numismatics as it applies to coins, is often in the research of the production and use of the coins to determine their rarity. Numismatics has many subfields, including but not limited to:
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Nuncupative Will
- A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will is considered a "deathbed" will, meaning that it is a safety for people struck with a terminal illness and robbed of the ability or time to draft a proper written will.
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NY Empire State Index
- A seasonally-adjusted index that tracks the results of the Empire State Manufacturing Survey. The survey is distributed to roughly 175 manufacturing executives and asks questions intended to gauge both the current sentiment of the executives and their six-month outlook on the sector.
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NYSE Amex Composite Index
- An index made up of stocks that represent the NYSE Amex equities market. The NYSE Amex Composite Index is a market capitalization-weighted index, so the weight of each stock depends on the price of the shares and how many are outstanding.
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NYSE Amex Equities
- An American stock exchange owned by NYSE Euronext. The NYSE Amex is located in New York City and handles about 10% of all securities traded in the U.S. It deals in products such as ETFs, cash equities, structured products, and close-end funds and with the acquisition of Amex, NYSE Euronext became the third largest U.S. options marketplace.
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NYSE Arca
- A securities exchange in the U.S. on which stocks and options are traded. The NYSE Arca, previously known as the ArcaEx or Archipelago Exchange, is owned by NYSE Euronext, which merged with Archipelago Holdings in a reverse merger in 2006.
- A securities exchange in the U.S. on which stocks and options are traded. The NYSE Arca, previously known as the ArcaEx or Archipelago Exchange, is owned by NYSE Euronext, which merged with Archipelago Holdings in a reverse merger in 2006.
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NYSE Composite Index
- Measures all common stocks listed on the New York Stock Exchange and four subgroup indexes: industrial, transportation, utility and finance. The index tracks the change in the market value of NYSE common stocks, and is adjusted to eliminate the effects of new listings and delistings. The market value of each stock is calculated by multiplying its price per share by the number of shares listed.
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NZD
- In the currency market, this is the abbreviation for the New Zealand dollar.
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NZD/USD (New Zealand Dollar/U.S. Dollar)
- The abbreviation for the New Zealand dollar and U.S. dollar (NZD/USD) currency pair or cross. The currency pair tells the reader how many U.S. dollars (the quote currency) are needed to purchase one New Zealand dollar (the base currency).
Trading the NZD/USD currency pair is also known as trading the "Kiwi".
- The abbreviation for the New Zealand dollar and U.S. dollar (NZD/USD) currency pair or cross. The currency pair tells the reader how many U.S. dollars (the quote currency) are needed to purchase one New Zealand dollar (the base currency).
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