Payroll & Accounting Glossary

Free Online Glossary & Definitions For Accountancy Jargon

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Understanding all the complicated terminology involved in payroll, accounting and Law can be difficult, but we don't think it should be.

In this spirit, we've compiled this handy guide to the most commonly used accounting terms for your reference.

Accounting Terms Beginning With "A"

A Fortiori

(ah-for-she-ory) prep. Derived from Latin, meaning for a still stronger reason; all the more.

A Mensa Et Thoro

Latin, From table and bed, but more commonly translated as “from bed and board.” This phrase designates a divorce which is really akin to a separation granted by a court whereby a husband and wife are not legally obligated to live together, but their marriage has not been dissolved. Neither spouse has the right to remarry

A Posteriori

[Latin, From the effect to the cause.] A posteriori describes a method of reasoning from given, express observations or experiments to reach and formulate general principles from them. This is also called inductive reasoning.

A Priori Assumption

(ah-pree-ory) n. Derived from Latin, meaning an assumption that does not require further proof that it is true. For example: one assumes that the sun will rise every morning. Mental laziness may occur if the a priori assumption is made without questioning the basis that no analysis or study is required.

A Shares

In the USA, the most important class of ordinary shares.


A description of property or a person that is in the best condition.

AAA Rating

AAA is the highest possible rating that may be assigned to an issuer’s bonds by any of the major credit rating agencies. AAA-rated bonds have a high degree of creditworthiness because their issuers are easily able to meet financial commitments and have the lowest risk of default.

Ab Initio

From Latin, meaning from the beginning. Applicable to original documents that do not comprise experimental data.


An ancient device used for performing arithmetic calculations; by sliding beads along rods or within grooves.


To intentionally surrender one’s claim to, right to, or interest in; give up entirely. Used in situations where a tenant has left property in a residence and does not intend to return. The landlord can take over the abandoned residence but must store the property, providing notice to the tenant before selling the possessions that

Abandoned Property

Property whose claim to was intentionally surrendered, or given up entirely by the owner. May also apply to contract rights if one of the parties does not do what is required by the contract. For example: the possessions left by a tenant in a home that they have moved out of, or an inventor’s patent


The act of abandoning something or someone. Abandonment is when an owner gives up all rights to an asset. This term can be used to describe the voluntary non-renewal of a patent or trademark, or the loss of rights to an asset when the owner can no longer be found.


(of something perceived as hostile, threatening, or negative) become less intense or widespread.


Noun: the action of being abated or abating: subsiding or ending.

Law: the removal or reduction of a nuisance.

Abatement Cost

The abatement cost is a cost that is paid by a business when they have been asked to reduce or remove any negative by products or negative nuisances that are created during, at or after the time of production.

Abbreviated Accounts

Shortened but audited financial statement that a qualifying small or medium firm was allowed to file with registrar of companies in the UK.


Abduction is the crime of leading away a person by force or by a wrongful means of persuasion. Abduction is similar to the crime of Kidnapping, without the necessary element of the taking of a person against their will across a state line boundary.


This error message refers to a system crash or other abnormal termination of a computer program, caused by a memory conflict or some other (usually unidentifiable) glitch.


The economic policies advocated by Japanese Prime Minister Shinzo Abe, associated with monetary and fiscal stimulus and economic reforms.

Ability-To-Pay Principle

The ability-to-pay principle envisages that taxation should be levied according to an individual’s ability to pay; that is, individuals with higher incomes should be charged higher taxes. Individuals with higher incomes are charged more taxes not because they use more government goods and services but because they have the ability to pay more. The primary

Abnormal Loss

A loss arising from a manufacturing or chemical progress in excess of normal loss.

Abnormal Losses

Losses arising in business that should have been avoided.

Abolition of Quantitative Restrictions

One of the primary purposes of the original EEC was to encourage free trade between member states. the treaty of Rome provided three strategies by which this was to be accomplished: An abolition of duties on importation and exportation between member states (covered by what are now articles 23-25; a prohibition of discriminatory internal taxation that would encourage consumers to


The spontaneous or artificially induced expulsion of an embryo or fetus. As used in a legal context, usually refers to induced abortion. History English common law generally allowed abortion before the “quickening” of the fetus (i.e., the first recognizable movement of the fetus in the uterus), which occurred between the sixteenth and eighteenth weeks of

Above The Line

The “line” generally refers to gross profit. Above that line on the income statement, typically, are sales and COGS (cost of goods sold) or COS (cost of sales or cost of services). Below the line are operating expenses, interest, and taxes.

Above The Line Deduction

An above the line deduction is a tax deduction allowed by the IRS that is taken into account prior to the calculation of Adjusted Gross Income (AGI), and therefore occurs “above the line.” Since AGI is used to determine a taxpayer’s overall tax liability, an above the line deduction can have more of an impact

Above The Market

An order to buy or sell at a price set higher than the current market price of the security. Examples of above the market orders include: a limit order to sell, a stop order to buy, or a stop-limit order to buy.

Abridged Accounts

Abridged accounts are general purpose financial statements intended for both company members and publication.   


repeal or do away with (a law, right, or formal agreement).


In financial terms, ABS stands for asset-backed securities. ABS are types of securities (i.e debt securities) that are collateralized by a group of assets. When you invest in ABS, your investment is backed by this group of assets. Those assets can be account receivables, leases, or loans. Although mortgage-backed securities (MBS) are not considered an

Absolute Advantage Theory

Absolute advantage theory was introduced by the Scottish economist Adam Smith (1723-1790). Absolute advantage theory asserts that a nation benefits from manufacturing more output than others since it is in the possession of a particular resource or commodity. This particular resource can also be a certain method or knowledge that increases the production efficiency and thus

Absolute Breadth Index

The Absolute Breadth Index (ABI) is a market activity indicator developed by Norman G. Fosback. The ABI is used to determine market volatility levels by showing how much activity, volatility, and change is taking place on the New York Stock Exchange without considering price direction. High ABI readings indicate market activity and change, while low readings

Absolute Income Hypothesis

The Absolute Income Hypothesis wqs proposed by English economist John Maynard Keynes (1883-1946), and has been refined extensively during the 1960s and 1970s, notably by American economist James Tobin (1918-2002). The theory examines the relationship between income and consumption and asserts that the consumption level of a household depends on its not relative but absolute level of income.

Absolute Return

Absolute return measures the actual percentage return of an asset over a specific period of time. Absolute return also refers to an investment strategy that attempts to achieve positive performance under varying market conditions by engaging in long and short positions. Absolute return differs from the relative return in that an absolute return strategy may


in political philosophy, the view that absolute rule is the most desirable, or the least inadequate.


To assimilate or incorporate amounts in an account or group of accounts so that they are absorbed and lose their identity.

Absorbed Overhead

Absorbed overhead is manufacturing overhead that has been applied to products or other cost objects. Overhead is usually applied based on a predetermined overhead allocation rate.


An accounting process used in absorption costing in that the overhead of an organisation is borne by the production of that organisation by the use of absorption rates.

Absorption Account

1. Ledger account absorbed into other accounts in the preparation of a financial statement. 2. Account that shows the amount of overhead borne by (charged against) the volume of production.

Absorption Costing

A method of calculating the cost of a product or enterprise by taking into account indirect expenses (overheads) as well as direct costs.

Absorption Rate

In absorption costing, production may be expressed in a number of different ways; the way chosen to express production will ultimately determine the absorption rate to be used. The seven main methods of measuring production, together with their associated absorption rates, are detailed below. The absorption rate is used in the accounting period to obtain

Absorptive Capacity

A limit to the rate or quantity of scientific or technological information that a firm can absorb. If such limits exist they provide one explanation for firms to develop internal R&D; capacities. R&D; departments can not only conduct development along lines they are already familiar with, but they have formal training and external professional connections

Abstinence Theory Of Interest

Abstinence Theory of Interest asserts that the money used for lending purposes is the money not used for consumption – which means, earning interest by abstaining from spending makes the funds possible and available for borrowers.

Abstract Of Title

In English law, the summary of the deeds, documents, and events under or by virtue of which the owner of an interest in land derives his title thereto. An abstract of title is an epitome of the various instruments and events under and in consequence of which the vendor of an estate derives his title

Abuse Of A Dominant Position

Intentional anti-competitive acts by persons/companies substantially in control of a market, that has had, is having, or is likely to have the effect of preventing or lessening competition.

Abusive Language

Abusive language is defined as the use of language in a way which insults, taunts, or challenges another.

Abusive Tax Shelter

Abusive Tax Shelter is an investment scheme that claims to reduce income tax without changing the value of the user’s income or assets

Accelerated Depreciation

Method that records greater depreciation than straight-line depreciation in the early years and less depreciation than straight-line in the later years of an asset’s holding period.


The action of a lender in demanding early repayment when a borrower defaults on a debt.

Acceleration Clause

The provision in a credit agreement, such as a mortgage, note, bond, or deed of trust, that allows the lender to require immediate payment of all money due if certain conditions occur before the time that payment would otherwise be due. The agreement may call for acceleration whenever there is a default of any important

Accelerator Principle

The accelerator principle defines the growth in output that would induce a continuation in net investment. In other terms, net investment is a function of the alteration in output. The accelerator principle has played an important role in defining the fluctuations in investment, which is an integral part of business cycle theories that are still used today. The accelerator principle often assumes that the

Acceptance Credit

A means by which international trade is financed. Under this arrangement, a bank (or an acceptance House) in the exporter’s country set up an acceptance credit facility (similar to a checking account) on behalf of a credit-worthy importer. The exporter may then draw on this account up to its limit. Also known as acceptance financing.

Acceptance In Ignorance

For a Contract to be valid, the offer it contains must be accepted (see: Acceptance of offer). If I lose my wallet, for example, and post a message in the newspaper that I will pay £100 for its safe return, then anyone who sees the message and returns the wallet is entitled to the reward. I will be

Acceptance Of Offer

In English Law, for an agreement (see: Contract) to be valid, there must be mutuality: an offer and a corresponding acceptance’. The acceptance must be effected by communication to the offerer, either verbally or in writing and or in some cases, by conduct. Under certain circumstances, silence can be accepted as a means of communication. A

Acceptance Of Offer By Post

When an Offer is made with the intention of entering into a contract, the acceptance must be communicated to the offerer, unless the acceptance is by conduct (see: Unilateral contract). Acceptance by post (rather than delivery by hand) is usually acceptable, but there are some legal complexities. In particular, at what point does the law deed the acceptance to

Acceptance Supra Protest

In contracts, is a third person, who, after protest for non-acceptance by the drawee, accepts the bill for the honour of the drawer, or of the particular endorser.


The party that signs accepted on a draft or obligation, agreeing to pay the stated sum at maturity.

Access Provider

A company providing services to enable an organisation or individual to access the Internet.


This term has essentially the same meaning as Accomplice: a person who assists in the perpetration or commission of an offence but is not the direct cause of the Actus Reus. At common law it was possible to be an `accessory after the fact’, that is, to render assistance to offenders after the offence was committed. This

Accident Forgiveness

Accident forgiveness is a feature of an auto insurance policy that protects your driving record from being affected by the insurance company’s rating system for an at-fault accident, thus preventing your insurance premium from going up because of an at-fault accident.

Accident Proneness

The apparent propensity of some individuals to suffer (or cause) more than an average volume of accidents. This is of particular interest in industrial and organisational psychology, which is anxious to analyse the causes of accidents in the workplace in order to reduce their occurrence and their inevitable costs. There is, however, some doubt as

Accidental Death

An accidental death is a death which results from an unusual event which could not be foreseen and was not intended by any person involved. If you have a life insurance policy to cover accidental death the amount of the policy is generally paid to the beneficiary, but the policy will have certain restrictions, such

Accidental Death Benefit

An accidental death benefit is an amount paid to a beneficiary or beneficiaries named in an insurance policy if and only if the insured dies in an accident, or as a result of injuries suffered in an accident. Often, the accidental death benefit is purchased as a rider on the policy. A person might choose

Accommodation Bill

A bill of exchange endorsed by a reputable third party acting as a guarantor, as a favour and without compensation.

Accommodation Party

An Accommodation Party is a person who signs a negotiable instrument or commercial paper or agreement for the purpose of being a surety for another party (known as the accommodated party) to the instrument to help the accommodated party obtain a loan or an extension of credit.

Accommodative Monetary Policy

An accommodative monetary policy is an effort by the U.S. Federal Reserve Board or another central bank to stimulate its nation’s economy. Lower interest rates are the hallmark of an accommodative monetary policy. An interest rate is a cost of borrowing money; when money becomes cheaper through an accommodative monetary policy, it costs businesses and


An accomplice is a person who knowingly, voluntarily, and with common intent unites with another person to perform a criminal action. The person does not have to actually participate in the crime to be considered an accomplice. An accomplice must give assistance, encouragement or fail to perform a legal duty to prevent the criminal action

Account Aggregation

Account Aggregation is the name given to a facility which lets you view various bank account or credit card balances online, on the same screen, with only one login needed. To make it work you need to give the aggregation provider your login details for each account, and then once you log in to the

Account Balance

Account balance is a net figure that refers to the dollar amount of credits and debits at the time the reporting period ends. The term account balance is frequently used to describe a personal bank account balance, as well as other financial accounts. When it comes to banks, an account balance is simply an amount

Account Reconciliation

The reviewing and adjusting of the balance in a personal chequebook to match your bank statement.

Account Statement

An account statement is a document that provides information about a specified account for a given period of time. An account statement may be issued by a bank, a mutual fund, a brokerage firm, or any other financial institution. A bank account statement, for instance, reflects a record of transactions, which includes all the debits


Accountability is the obligation to give an account.

Accountancy Firm

A business partnership (or possibly a limited company) in which the partners are qualified accountants. The firm undertakes work for clients in respect of audit, accounts preparation, tax and similar activities.

Accountancy Profession

The collective body of persons qualified in accounting, and working in accounting-related areas. Usually they are members of a professional body, membership of which is attained by passing examinations.


A practitioner of ACCOUNTING as a profession after having attained a level of financial knowledge. A person whose work is to inspect, keep and adjust accounts.


The process of identifying, measuring and communicating financial information about an entity to permit informed judgements and decisions by users of the information.

Accounting Council

A body established in 2012 to take over certain functions of the former Accounting Standards Board. The main role of the council is to advise its parent body, the Financial Reporting Council (FRD), on matters of accounting and financial reporting policy. The responsibility for issuing Financial Reporting Standards now belongs to the FRC, although the

Accounting Equation

The relationship between assets, liabilities and ownership interest.

Accounting Event

A transaction or change (internal or external) recognised by the accounting recording system.

Accounting Period

Time period for which financial statements are prepared (e.g. month, quarter, year).

Accounting Policies

Accounting methods which have been judged by business enterprises to be most appropriate to their circumstances and adopted by them for the purpose of preparing their financial statements.

Accounting Series Release

In the USA, the former name for a Financial Reporting Release.

Accounting Standards

Definitive statements of best practice issued by a body having suitable authority.

Accounting Standards Board

The authority in the UK which issues definitive statements of best accounting practice.

Accounting Standards Committee

Membership of the Accounting Standards Committee was both part-time and unpaid. In 1990 and as a result of serious doubts concerning the effective of the committee’s effectiveness – the committee was replaced by the Accounting Standards Boards. Within it’s lifetime the ASC issued a total of 25 Statements Of Standard Accounting Practice (SSAPs), a number

Accounting System

An accounting system is the system used to manage the income, expenses, and other financial activities of a business.

Accounting Technician

Another name for a book-keeper.


Financial statements prepared at the end of a period to reflect the profit of loss or the period and financial position at the end of the period.

Accounts Payable

Amounts due for payment to suppliers of goods or services, also described as trade creditors.

Accounts Receivable

Amounts due from customers, also described as a trade debtors.

Accounts Receivable Turnover

Accounts Receivable Turnover is a ratio that indicates the number of times average receivables are turned over during a year. A popular variation of the Accounts Receivable Turnover Ratio is called Days Sales Outstanding.  It is determined by converting the ratio into an average collection period in terms of days. Accounts Receivable Turnover is calculated by

Accredited Personal Financial Planning Specialist

Accredited Personal Financial Planning Specialist is a professional title available to Certified Public Accountants. A certified public accountant can become an accredited personal financial planning specialist by completing a set of personal financial planning (PFP) courses, meeting PFP experience requirements, passing a qualifying exam from the American Institute of Certified Public Accountant’s (AICPA), and being


In accounting, accretion is the change in the price of a bond bought at a discount to the par value of the bond.


The accruals process allows a business to adjust the monthly accounts for payments made in arrears. This process is the reverse of prepayments.

Accrual Accounting

An accounting method that tries to match the recognition of revenues earned with the expenses incurred in generating those revenues. It ignores the timing of the cash flows associated with revenues and expenses.

Accrual Bond

A bond on which interest accrues but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of the bond and is paid at maturity.

Accrual Method

Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs rather than when payment is received or made.

Accruals Basis

The effects of transactions and other events are recognised when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate (see also matching).

Accrued Dividend

An accrued dividend is remuneration owed by a company to its shareholders. Forms of an accrued dividend can be either cash or additional shares of stock. From the declaration date, an accrued dividend is recorded on the company’s balance sheet as a liability, where the accrued dividend remains until the payment date. Between declaration and

Accrued Expenses

Accrued expenses are known liabilities or expenses that have been incurred and that are expected to be paid in the future. Accrued expenses are recorded by companies using an accrual basis accounting method. A small business using cash basis accounting will not need to record accrued expenses. Recording accrued expenses will help a business plan

Accrued Interest

In finance, accrued interest is the interest that has accumulated since the principal investment. For a financial instrument such as a bond, interest is calculated and paid in set intervals.

Accumulated Depreciation

Total depreciation of a non-current (fixed) asset, deducted from original cost to give net book value.

Accumulation Distribution Line

The Accumulation Distribution Line (ADL), also known as Volume Accumulation Distribution Line, is a momentum indicator developed by Marc Chaikin. The Accumulation Distribution Line attempts to gauge supply and demand by calculating whether the stock is being accumulated (bought) or distributed (sold). The indicator is based on the assumption that the higher the volume that accompanies

Accumulation Swing Index

The Accumulation Swing Index is a cumulative total of the Swing Index. The Accumulation Swing Index was developed by Welles Wilder. Wilder noted the following characteristics of the Accumulation Swing Index: It provides a numerical value that quantifies price swings. It defines short-term swing points. It cuts through the maze of high, low, and close prices and indicates


A charge of wrongdoing that is made against a person or other party. In legal terms, refers to being officially charged by a Grand Jury with a crime, or a District Attorney filing charges.


ACH, an abbreviation for Automated Clearing House, is a networked system of over 10,000 financial institutions used to process electronic fund transfers. The ACH network is overseen by NACHA, the Electronic Payments Association, which since 1974 has been running ACH. ACH transactions are used frequently for payroll transactions, direct deposits, bill payment, tax payments and

Acid Test Ratio

The ratio of liquid assets to current liabilities.

Acknowledged Child

A child that is recognised by the parent as their own.


A formal statement or document recognizing the fulfilment or execution of a legal requirement or procedure.


Company that becomes controlled by another.


Company that obtains control of another.


An acquisition takes place where one company – the acquirer – acquires control of another – the acquiree – usually through purchase of shares.

Acquisition Cost

The amount of money expended to obtain title to property, usually relating to fixed assets.

Acquisition Method

Production of consolidated financial statements for an acquisition.

Acquisition Of Beneficial Interests In Land

Situations often arise in which a person, or persons, attempt to claim an equitable interest in property owned by (i.e, registered in the name of) someone else. In this explanation, I refer to such a person as the `claimant’ for brevity; although of course, he might not be the claimant in a court action. Such


to pronounce not guilty of criminal charges


A judgment that a person is not guilty of the crime with which the person has been charged.

Act Of God

A reason for an insurance company not to pay your claim

Act Of Settlement 1700

The Act of Settlement extended the earlier Bill of Rights by providing further separation of the roles of the Crown, House of Commons and the Judiciary, and also by making the monarch’s powers conditional on the approval of Parliament. An important provision that is still in effect in the higher courts provides that judges, once appointed, hold office ‘during good behaviour’;

Act Of Union With Scotland 1707

This Act represented the ratification of the Treaty of Union, and made England, Wales and Scotland one state with the name ‘Great Britain’. The Treaty was the result of negotiation to recombine the governments of England and Scotland after the collapse of the joint monarchy. It provides assurances for the continuation of many Scottish instruments

Acte Claire

Acte claire is a term used in the context to indicate that the answer is obvious. See preliminary reference procedure for discussion.


The property of radiation that enables it to produce photochemical effects

Actio Bone Fidei

An action of good faith or a group of actions where the judge is authorised to take into account equitable considerations.


An action or “legal action” is the process an individual or corporation can take against another party in court to protect their rights. Legal actions can include filing a lawsuit for civil matters, agreeing to mediation or arbitration or filing criminal charges. The most common types of civil legal actions include wrongful death claims for

Action On The Case

Historically much of the law of tort was concerned with Trespass of one form or another. A trespass was, and is, an interference with the rights of another person, either in person, land, or chattels. Trespass could generally only be found where the harm resulted from the direct action of the defendant – a blow, for


Giving sufficient reason to take legal action.

Active Income

Active income is a form of income for which labour services were performed, such as for self-employment or for another entity. This form of income includes wages, salaries, tips, fees, commissions, and any income from self-employment in which services were performed. The opposite of active income is passive income, in which no labour is performed

Activist Shareholders

An activist investor is an individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on the company’s board with the goal of effecting a major change within the company.

Activity Analysis

In activity-based costing, the identification and description of activities in an organisation.

Activity Based Budgeting

Activity-based budgeting is a budgeting method that evaluates business processes in terms of the results they achieve. In activity-based budgeting, companies analyze the full range of activities they perform, assess the impact of those activities on cost and revenue, and adjust their spending decisions to favour those that are the most beneficial. Activity-based budgeting differs

Actual Occupation

In registered conveyancing, the fact that a person is in actual occupation of land that he does not own serves to make his rights stronger against a person to whom the owner wishes to sell the land. His occupation does not, in itself create rights where none existed before (although in cases of adverse possession it can appear


Commodities that can be purchased and used, as opposed to goods traded on a futures contract. (or) Expenses or receipts that have actually occurred, as opposed to targets, budgets, or other projections.

Actuarial Assumptions

An actuarial assumption is an estimate of an uncertain variable input into a financial model, normally for the purposes of calculating premiums or benefits.

Actuarial Method

Actuarial Method is the process of distributing payments made on a debt between the amount provided as fund and also to the finance charge in accordance to which a payment is used first to the appended finance charge.


An actuary makes assessments about the likelihood an event may happen and the associated costs. Actuaries may work for investment firms, where they research pricing and manage investments, particularly how to mitigate risks, and life insurance companies where they are responsible for providing data so the company can create policies and pricing schedules which ensure the insurance company has enough money to cover their claims. They also can work at pension funds, where they are responsible for placing a value on accumulated pension commitments, and management, banking and capital project companies.

Actus Reus

blameworthy act – it is used to denote the event on which a criminal offence is based.

Ad Hoc Committee

An Ad Hoc Committee is a temporary committee formed for a specific task or objective and dissolved after the completion of the task or achievement of the objective.

Ad Litem

Ad Litem, also known as guardian ad litem, is a Latin term used to refer to the appointed person to protect the interests of a minor in a personal injury or divorce case. For example, in a divorce case, the guardian ad litem (GAL) is a court-appointed person to protect the interests of a child

Ad Testificandum

A subpoena ad testificandum is a court summons for one to appear and give verbal testimony for use at a hearing or trial.

Ad Valorem

In proportion to the estimated value of the goods or transaction concerned.

Ad Valorem Tax

An ad valorem tax is a tax based on a calculated percentage of the value of property or goods. The “ad valorem” in ad valorem tax is a Latin term meaning “according to value.” Many local governments derive a majority of their revenue from various ad valorem taxes. Legislatures set the size of the ad

Adaptive Expectations Principle

Adaptive Expectations Principle also referred to as the error learning hypothesis, was first used by the American economist Irving Fisher (1867-1947). However, it became popular during the 1950s in the study of hyperinflation. Adaptive expectations principle holds that the future values of economic variables, such as future interest rates or inflation, can be predicted on

Added To Loan

Added to loan relates to the costs borrowers face when arranging a mortgage. Often these are added to the mortgage amount being borrowed, hence the term. The costs may include items such as mortgage indemnity fees and/or arrangement fees and/or administration fees as examples.


A person who is addicted, especially to a harmful drug.


An addiction is an obsession, either psychological or physiological, to a specific action or a habit-forming substance. Alcohol addiction is one of the most common addictions for adults in the United States. Excessive or prolonged use of alcohol can lead to severe liver damage. Crimes involving alcohol addiction include spousal abuse, child abuse and other

Additional Child Tax Credit

The additional child tax credit is available for individuals whose child tax credit is greater than their federal income tax liability. The additional child tax credit is a refundable tax credit allowing taxpayers, if eligible, to get the non-refundable portion of the child tax credit. For example, if an individual has a non-refundable child tax

Additional Paid-In Capital

Additional Paid-In Capital (APIC) is the value of share capital above its stated par value and on the balance sheet is an accounting item under Shareholders’ Equity.

Additional Security Fee

An additional security fee may be required when the mortgage exceeds a certain percentage of the value of the property (usually 75%). The form of additional security used is normally a Mortgage Indemnity Policy. Occasionally the lender may require a parent to be a guarantor or for other security such as shares or insurance policies


The augmentation by a judge of damages awarded by a jury.


Ademption is the situation, where a property bequeathed to a person at the time of writing of a will, cannot be transferred to him or her upon the death of the will-maker (testator) because it is no longer belongs to the testator’s estate. Ademption may be a result of the destruction, loss, or sale of the bequest in the intervening period.


Adhocism is an organisational philosophy/style characterised by: an aversion to planning, a tendency to respond only to the urgent, as opposed to the important, a focus on ‘fire fighting,’ than on establishing systems and procedures through goal setting and long term planning.


To adjudicate means to hear and settle a case, conflict or dispute through a judicial procedure. The adjudication process is a legally-binding judgment, and the stipulations and demands of the judgment are legally upheld by a local or federal governing body. Adjudication generally is used to resolve disputes over money or non-violent violations. Adjudication is


Adjudication refers to the judgement or decision of a court; especially concerning bankruptcy proceedings.

Adjustable Life Insurance

Adjustable life insurance is a form of life insurance that allows the policyholder to manipulate the coverage plan in various ways. Adjustable life insurance enables the owner to raise or lower the face amount, as well as increase or decrease the insurance premium. As such, the accumulated cash value of the adjustable life insurance policy

Adjustable Rate

An adjustable-rate is an interest rate that fluctuates periodically in relation to an index. Payments linked to an adjustable-rate increase or decrease accordingly. A mortgage loan will often have an adjustable rate, permitting the interest rate to change at specified intervals over the term of the loan. Adjustable rates work to transfer part of the

Adjustable Rate Mortgage

An adjustable-rate mortgage (ARM) is a type of mortgage on which the interest rate is typically changed by a lender after a predetermined initial time period. The term of the adjustable-rate mortgage consists of two phases. During the early phase of the term, the adjustable-rate mortgage has a fixed rate of interest. After that, the

Adjusted Gross Income

In the USA, the difference between the gross income of a taxpayer and the adjustments to income.


An individual whose job it is to assess losses and settle policyholder claims.

Administrative Expenses

Costs of managing and running a business.

Administrative Law

In the UK this term relates to the body of law that regulates the responsibilities of the individual to the apparatus of the state. The term is also used to refer to the law governing the operation of tribunals (see: Tribunal) and quasi-judicial bodies.

Admissibility Of Evidence

In general, any Relevant Evidence is admissible. In criminal cases, in particular, certain metas of evidence are inadmissible, except where there are exceptions in common law or statute. Each of these has its own entry in this glossary. The general exceptions include: ‘hearsay’, that is, spoken or documentary evidence that is a report of someone else’s

Adopted Child

adoption – a legal proceeding that creates a parent-child relation between persons not related by blood; the adopted child is entitled to all privileges belonging to a natural child of the adoptive parents (including the right to inherit)


Under English law (Adoption Act1976; Children Act 1989), an adoption order anulls all rights and responsibilities of a child’s original parents, and vests them in the adopters. The child is then deemed to be the legitimate child of the adopters; he or she has the same rights of inheritance as any natural children the adopters

Advance Corporation Tax

Advance Corporation Tax is the amount of tax paid by a company on the amount of profit distributed as dividend payments. Companies pay their dividends net of this tax. Some institutions, charities and tax-free PEPs are able to reclaim the tax. However, Chancellor Gordon Brown abolished the payment of tax credits for pension schemes and

Advance Decline Index

The Advance-Decline Index is an indicator that represents the total difference between the number of advancing and declining security prices for a given stock exchange. Typically, the advance-decline figures come from the NYSE (or Nasdaq) on a daily basis (see Yahoo advance decline).  When plotted on a chart this indicator is known as the Advance-Decline Line. The Advance/Decline

Advance Decline Ratio

The Advance/Decline Ratio is the ratio of the number of advancing issues to declining issues for a given stock exchange such as the NYSE or Nasdaq. The Advance/Decline Ratio is similar to the Advance/Decline Index in that it displays market breadth. But, where the Advance/Decline Index calculates the difference between the number of advancing and declining

Advance/Decline Line

The Advance/Decline Line is possibly the most popular market breadth indicator. It is a cumulative total of the Advancing-Declining issues for a given stock exchange (usually the NYSE). Note that the number of stocks trading on a particular market varies over time. Thus there is no consistent maximum or high value. When compared to the market

Adverse Credit

Adverse Credit is the term used within the finance industry for a bad credit rating. Having adverse items on your credit file such as defaults, arrears, CCJs etc can make it much more difficult to be approved for loans, credit cards, mortgages or other finance, especially for people who don’t have their own home to

Adverse Possession

Adverse possession arises when a person is able to get an interest in land, perhaps even a Freehold estate, by occupying that land to the exclusion of the original owner. The historical basis of adverse possession is that there has always been a statutory limitation on the time within a person must bring a civil law

Adverse Remortgage

An adverse remortgage or adverse credit remortgage is a mortgage refinance contract to a mortgage borrower with adverse credit. An adverse remortgage allows these borrowers to refinance even with an adverse credit rating. An adverse remortgage borrower can have court judgements, defaults, or mortgage arrears and still obtain refinancing with an adverse remortgage. Adverse remortgage

Advice Note

A document issued by a supplier of goods that advises the customer that the goods have been sent.


A general term for a legal professional who represents a client’s legal interests in the courtroom. This term has no particular standing in English law, but is used in Scotland as the equivalent of ‘barrister’.


A person who makes a voluntary declaration of facts in a written statement and signs it under oath.


A written statement confirmed by oath or affirmation, for use as evidence in court. An affidavit is a voluntary statement or written compilation of the facts of a case under oath. The affidavit relates specifically to the issue to be decided and should be the person’s own account of events. The affidavit can be used in court as evidence.


A person or organisation officially attached to a larger body. In online retail, a website that will steer traffic to an alternative site for a percentage of sales.

Affinity Card

A kind of credit card linked to an organisation other than the issuing bank An affinity card is a kind of credit card which is co-branded by both the issuing bank and another company, charity or organisation, and with some sort of loyalty or rewards program relevant to the co-branding. Affinity cards operate like ordinary credit

Affinity Marketing

Marketing targeted at a specific audience that shares common interests connected to a product. Also, a campaign sponsored through cooperation between different companies.

Affirmation Of Fact

An affirmation of fact is a statement of fact or promise made as part of a bargain.

Affirmative Action

A principle underlying policies in employment and education aimed at ensuring equal opportunities for all.

After-Hours Trading

After-hours trading is stock trading which takes place after the traditional 4:00 p.m. close of the New York markets. While after-hours trading has been available to institutional investors for quite some time, after-hours trading is now permissible for all traders. After-hours trading is conducted via an Electronic Communication Network (an ECN), which electronically matches buyers


The sale of goods, services or securities by another company after the original manufacture or original issue.

Against The Will

The statement that says something was done without a person’s consent. Such as rape, robbery or an assault.

Aged Debtors

Debtors who have owed money to the business for a defined period of time.

Aged Debtors Analysis

A report that analyses amounts owed by customers according to the length of time that those amounts have remained unpaid. For example, all customers who have outstanding invoices that are over a month old.


A relationship between a principal and an agent. In the case of a limited liability company, the shareholder is the principal and the director is the agent.

Agency By Estoppel

The concept of agency by estoppel arises where one person acts in such a way that the other believes that a third person is authorised to act on his behalf and enters into a transaction with the third person, the person whose act induced him to do so, is liable for that agreement as if

Agency Theory

A theoretical model, developed by academics, to explain how the relationship between a principal and an agent may have economic consequences.


An agent is a person appointed by another person, known as the principle, to act on his or her behalf.

Aggravated Burglary

Aggravated burglary is an offence under section 10 of the Theft Act (1968) and is made out when a person commits a Burglary and at the time has with him any firearm, imitation firearm, any offensive weapon or an explosive.

Aggravated Trespass

An offence under s.69 of the Criminal Justice and Public Order Act (1994). A person is guilty of aggravated trespass if he trespasses on another’s land (see: Trespass to land) and carries out any act with the intention of disrupting a lawful activity being carried out on or adjacent to that land.

Aggregate Demand

Aggregate demand is the total demand in an economy for a given length of time. The phrase “aggregate demand” can be also be understood as “aggregate expenditure,” as it is always expressed in terms of expenditure on services and products. The aggregate demand for any economy is expressed in the function: Y = C +

Aggregate Demand Curve

The aggregate demand curve is a concept from neoclassical microeconomics that symbolizes the total demand for goods and services from all participants in an economy. A line sloping downward from left to right represents the aggregate demand curve, and each point on the aggregate demand curve represents a specific level of demand at a specific

Aggregate Supply

Aggregate supply is the total supply in an economy for a given length of time. Aggregate supply is expressed as the relationship between a general price level and the value of production (usually GDP or GNP). Aggregate supply is graphed either to represent the short-run aggregate supply curve (i.e. SRAS) whereas prices increase, companies are

Aggregate Supply Curve

The aggregate supply curve is a concept from economics that symbolizes all of the goods and services an economy produces in a given time period. Either a vertical line (i.e. long-run aggregate supply curve or LRAS) or a line sloping upward from left to right (i.e. short-run aggregate supply curve or SRAS) pictorially represents the


An aggregator is a firm that collates and presents information about an individual’s financial activities and assets.

Aggressive Growth Fund

An aggressive growth fund is a mutual fund whose investment goal is the highest possible appreciation of value. An aggressive growth fund invests in stocks of companies that show great growth potential. Such companies are often small and relatively new. As such, their stock may be quite volatile. An investor who chooses an aggressive growth

Agreed Bid

A takeover bid that is supported by a majority of the shareholders of the target company.

Agreed Cost

Regarding auto insurance, the price agreed to by the claimant’s chosen auto repair shop and the insurance adjuster to complete the work necessary to fix the damage to a vehicle.

Agreed Notice

Under the LRA 2002 an agreed notice is used to protect an interest in land which is not registerable in its own right, and which is recognized by the owner of the registered title. Under the LRA 1925, this was just called a `notice’. A notice does not prove that the interest claimed is a valid one but does

Agreed Value

Concerning vehicle insurance, The Agreed Value is the amount your insurer agrees to pay you in the event your vehicle is written off in a crash.

Agreement Mistake

This kind of mistake in contract occurs where there is no real “meeting of minds” between the contracting parties, and the contract is therefore void or voidable. This may arise because the parties are at cross purposes, or the contract is too vague to be interpreted. There are three important metas of agreement mistake: mistake

Agreement Of Sale

A contract where a seller agrees to sell and a buyer agrees to buy, under specific terms and conditions spelled out in writing and signed by both parties.

Alan Greenspan

Alan Greenspan is a former Chairman of the United States Federal Reserve (the Fed). Alan Greenspan was born on 6th March 1926 in New York, New York. He attained a B.S in Economics (summa cum laude) from New York University in 1948. Greenspan achieved an M.A in economics from the same university in 1950. New

Alcoholic Beverage

Any drink that contains alcohol and includes wine, beer, spirits and liqueurs.


Under UK law, the term ‘alien’ is defined by exclusion: any individual who is neither a British citizen nor a member of any one of several non-citizen ‘privileged’ groups in the UK, is considered an alien. The term ‘alien’ itself is ordinarily used to refer to a foreign national present in the UK. On the

Alimony Payment

An alimony payment is a periodic pre-determined sum awarded to a spouse or former spouse following a separation or divorce. Alimony is an obligation to make payments for support or maintenance; an alimony payment is the actual sum paid to fulfil the obligation.

All Ordinaries

All Ordinaries or “All Ords” is the name for the Australian All Ordinaries index. The All Ordinaries index is Australia’s premier market indicator. The All Ordinaries index is comprised of the 500 largest stocks listed on the ASX (Australian Stock Exchange). The “ordinary” in All Ordinaries index signifies “common” shares. The All Ordinaries Index is

All Paper Deal

An all paper deal is an acquisition where a listed company acquires another company (listed or private) and the shareholders of the target company only receives shares in the acquiring company as payment for their shares in the target company. The opposite of the All Paper Deal is the All-Cash Deal, where the shareholder of


An allegation is an assertion or claim made by one party in a legal proceeding. It is not considered truth but merely a claim by one party which they intend to prove as true. Generally, the party making the allegation has the burden of proof to prove the allegation is true by providing evidence. The


To assign a whole item of cost, or of revenue, to a simple cost centre, account or time period.


In general, allocation means to distribute according to some plan. In investing, allocation is heard most often in “asset allocation.” Large pension funds and individual investors alike aim for an allocation of funds that best achieves their investment objectives, like safety, steady income, and capital appreciation. Asset allocation for the individual investor usually focuses on

Allotment Letter

If you make a successful application for a new share issue, you’ll receive an allotment letter telling you how many shares you’ve actually received (which may well be different from the number you applied for if the issue is oversubscribed). The allotment letter – also known as a share allotment form – will be exchanged

Allotted Shares

Shares distributed by allotment to new shareholders.


Characteristic of a cost that permits its inclusion in a cost-plus type contract, and depends on: its reasonableness its allocability provisions of GAAP. practices appropriate under the circumstances, and the terms of the contract.


A coefficient which measures risk-adjusted performance, factoring in the risk due to the specific security, rather than the overall market. A high value for alpha implies that the stock or mutual fund has performed better than would have been expected given its beta (volatility).

Alternative Dispute Resolution

Procedures for resolving legal conflicts between parties outside of the traditional court setting. ADR includes such processes as arbitration, mediation, and conciliation. The Civil procedure rules envisage an expanded role for ADR, and parties appearing in court have been penalised in costs for failing to take ADR seriously. Alternative Dispute Resolution (ADR) is the name given to

Alternative Investment Market

AIM is the London Stock Exchange’s market for small, young and growing companies. There are special tax breaks designed to encourage investors to put money into AIM stocks. Specifically, if you invest for a year or more, your investment will be treated as a business asset which will mean you’ll face a significantly lower capital

Alternative Minimum Tax

The US Congress introduced alternative minimum tax (AMT) in 1970 to prevent high-income taxpayers from lowering their tax liability through excessive tax loopholes. Form 1040 and 1040A include worksheets that help to determine alternative minimum tax liability. Form 6251 is then used to calculate the tentative minimum tax. Any excess is to be added to

Alternative Motor Vehicle Credit

The Alternative Motor Vehicle Credit was enacted with the Energy Policy Act of 2005. Taxpayers may claim the Alternative Motor Vehicle Credit on form 8910. Many hybrid cars may benefit from the Alternative Motor Vehicle Credit; the Alternative Motor Vehicle Credit applies to qualifying hybrid vehicles that were purchased or put into service on or


A group of people who have graduated from a school or university.


Unclear or uncertain.

Ameliorating Waste

Archaic term for an alteration to land or property that improves it. See Waste for more details.

Amended Return

An amended return is a tax return filed to correct a previous year’s return. The amended return may be filed with the IRS, one’s state revenue department, a city taxing agency, or any of several others. For a federal amended return, one uses Form 1040X to file the amended return. Filing an amended return for

American Depository Receipt

An American Depository Receipt (ADR) is a negotiable, registered certificate representing specific number of corporate stocks in a non-U.S. company. An ADR documents the holder’s beneficial ownership of foreign stock held in trust by a foreign branch or correspondent of an American bank. Introduced in 1927, an ADR provides the American investor with the opportunity

American Option

This is an option that can be exercised on any business day prior to it’s expiry date.


A stock exchange in New York.


Process similar to depreciation, usually applied to intangible fixed assets.

Amortisation Schedule

An amortisation schedule is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.

Amortising Loan

An amortising loan is a loan with scheduled periodic payments that are applied to both principal and interest. An amortised loan payment first pays off the relevant interest expense for the period, after which the remainder of the payment reduces the principal.

Amount Due

Refers to the total sum of money due for the purchase of a good or service that must be paid by the set due date.

Analysis Of Variance

In standard costing and budgetary control this refers to the analysis of variances in order to determine their causes. The total profit variance or production cost variance is analysed into sub-variances to indicate the major reasons for differences between budgeted figures and actual outcomes.


Although the term analyst can be associated with a broad range of definitions, in the financial environment an analyst is an individual that analyzes information and data. An analyst might be a financial analyst, industry analyst, business analyst or systems analyst. A financial analyst is also known as a securities analyst, research analyst, investment analyst

Analytical Auditing

Analytical auditing is simply using analytical procedures whilst auditing to allow the auditor to understand the business, and changes to a clients business.

These analytical procedures are part of the many tools an auditor will use, and can help to highlight areas of concern or areas of growth.

Analytical Review

Analytical review is an auditing procedure that uses ratios to determine whether any significant changes have taken place.


In the financial world, the term angel is short for an angel investor. An angel is an affluent individual who invests his/her personal capital into a business endeavour (usually a start-up) in exchange for equity ownership. Frequently, an angel is a former or current entrepreneur who has become wealthy through the sale of a business.

Angel Investor

An angel investor is a private investor who provides capital for entrepreneurial start-ups or expansion. An angel investor acts alone or as part of a syndicate. An angel investor participates in the equity of the company by buying stocks or convertible debt instruments. The holding period is usually less than ten years. An angel investor

Animus Possidendi

‘Intention to possession’. To establish adverse possession, the squatter must show that he intended to take possession of the land. Although this is a subjective matter, a court will not normally take the squatter’s word that this was his intention — he will have to lead evidence.

Announcement Date

Most commonly, the announcement date is the date on which a company declares dividends. In this usage, announcement date is a synonym for the declaration date. Suppose on the announcement date of May 1 the company’s board declares a quarterly dividend of $.25 on the company’s 500,000 outstanding shares, to be paid on May 31

Annual Fee

Annual Fee – also known as the Annual Management Charge – is a fee paid on an ongoing annual basis by you to the manager of your investment or life insurance /pension policy. These charges vary from company to company and from product to product but usually are in the range of 0.35% to 2%.

Annual Growth Rate

Annual Growth Rate is used to describe the growth of some element of a business (revenue, units delivered, etc.).  The annual growth rate can be expressed in terms of an average or compound. Compound Annual Growth Rate (CAGR) is generally used as it reduces the effect of the volatility of periodic returns that can render an Average Annual

Annual Investment Allowance (AIA)

A tax allowance up to the value of £200,000 each tax year, which can be offset against corporation tax when your company buys assets.

Annual Percentage Rate (APR)

The interest percentage of a loan, including all finance charges and other payments and credits, averaged over the course of a year.

Annual Report

A document produced each year by limited liability companies containing the accounting information required by law. Larger companies also provide information and pictures of the activities of the company.


Annualization is a tool which is used to predict the annual amount of something using only the data from part of the year.


To annualize is to take an item measured for a period other than one year and compute what it would be for a single year. Although it’s possible to annualize numbers for periods longer than one year, usually the items to annualize are for periods of 12 months or less. For example, if managers annualize


A person who receives an annuity.


An income-generating investment whereby, in return for the payment of a single lump sum, the annuitant receives regular amounts of income over a predefined period.

Annuity Certain

An annuity in which payments continue for a specified period irrespective of the life or death of the person covered.

Annuity Prospectus

Legal document that provide specific information about flexible annuity contracts. Must be accessible to every prospective buyer.


Cancellation usually of a bankruptcy.

Answer Over

When you plead again after the defects in your presentation have been pointed out to you by the opposite party.

Antecedent Debt

A legally enforceable obligation, which has been in existence prior to the time in question, to reimburse another with money or property.


To date a document before the date on which it is drawn up.

Anti-Lock Brake System (ABS)

An anti–lock braking system (ABS) is a safety anti-skid braking system used on aircraft and on land vehicles, such as cars, motorcycles, trucks, and buses. ABS operates by preventing the wheels from locking up during braking, thereby maintaining tractive contact with the road surface.

Anti-Theft Device

A range of technologies intended to deter auto theft, such as a car alarm. Equipping vehicles with anti-theft devices often lead to a discount on insurance premiums.

Antitrust Law

Legislation enacted by the federal and various state governments to regulate trade and commerce by preventing unlawful restraints, price-fixing, and monopolies, to promote competition, and to encourage the production of quality goods and services at the lowest prices, with the primary goal of safeguarding public welfare by ensuring that consumer demands will be met by

Antitrust Laws

Antitrust laws are regulations enacted at the state and federal level that constrain businesses from accumulating or exerting excessive market power. Price fixing, restraint of trade, and monopolization of markets are among the business practices prohibited by antitrust laws. Contractual arrangements between buyers and sellers and collusion between competitors qualify as restraint of trade under

Apgar Score

An Apgar Score is the score given to a newborn child by their doctor that measures their pulse, grimace, reflex, irritability, skin colour, respiration and muscle tone. Healthier babies have higher Apgar Scores. There is a broad range of injuries which can occur to a baby during the birthing process including brain damage (leading to


To appeal a judicial decision is to request that a more senior judicial body or court of law review that decision (which, presumably, was taken by a lower court). In England, an appeal may be made on a number of different grounds (e.g. points of fact, points of law, etc.). The nature of this ground may influence the precise route that the appeal will take.

Appellate Court

Technically, any court in which an appeal may be heard. In England, the term is normally used, if at all, with reference to the Court of Appeal. In other common-law jurisdictions (e.g. the United States), use of the term is considerably more widespread.

Application Form

A form that you complete in order to apply for a job, a place on a course, etc. or to get something such as a loan or a licence

Applications Software

Applications software are computer programs that are design for a specific purpose or application. 


The separating of a loss to a proportionate degree among two or more insurers that cover the same loss.


A method of depreciation that values an asset at the beginning of an accounting period and again at the end.

Appraisal Ratio

A ratio used to measure the quality of a fund’s investment picking ability. It compares the fund’s alpha (or the adjusted return of the fund assuming the market return is zero) to the portfolio’s unsystematic risk or residual standard deviation.


A person whose job is to assess the monetary value of something.


An act or instance of appraising something or someone; especially: the valuation of a property by the estimate of an authorised person.


Appreciation is a term used in accounting relating to the increase in the value of an asset. In this sense, it is the reverse of depreciation, which measures the fall in the value of assets over their normal life-time. In times of high inflation, appreciation will be common to all balance sheet assets. Generally, the


The action of taking something for one’s own use, typically without the owner’s permission.

Appropriation Accounts

These show the way that net profit is distributed (usually in the form of cash dividends) between partners in a partnership or between shareholders and reserve funds in a company.


An investment strategy which attempts to profit by exploiting price differences between two or more different markets – the goal being risk-free profit at no cost. The term is mainly applied to trading in financial instruments, such as bonds, stocks, derivatives, commodities and currencies.

Arbitrage Pricing Theory

Arbitrage pricing theory (APT) posits that investors can predict the return on an asset by tracking its performance in relationship with independent macro-economic variables and common risk factors. Variables and risk factors referenced in arbitrage pricing theory models might include GDP, inflation, interest rates, yield spreads, etc. Arbitrage pricing theory presumes the asset being tracked


someone who engages in arbitrage (who purchases securities in one market for immediate resale in another in the hope of profiting from the price differential).


In arbitration, an independent third party considers both sides in a dispute and makes a decision to resolve it. Arbitration is considered a form of alternative dispute resolution (ADR). It allows two parties to bring their legal dispute before an arbiter, or third party. Arbitration is considered a simplified version of a trial where both parties will receive information prior to the hearing. During the arbitration, both parties can hear witness testimony and present evidence. Each party is also allowed to cross-examine witnesses. Then the arbiter hears the evidence and makes a decision, which is generally binding to both parties.


A person to whom the authority to settle or judge a dispute is delegated.

Arithmetic Mean

The arithmetic mean of a set of two or more values is the sum of all the values divided by the number of values. In mathematics and statistics the arithmetic mean is one type of average, or measure of central tendency, but schoolchildren are taught to call the arithmetic mean “the average.” Because the arithmetic


A loan with an interest rate that changes periodically in keeping with a current index, such as one-year treasury bills.

Arm’s Length Transaction

An arm’s length transaction is a transaction, often between two affiliated parties, that’s conducted as if the parties were unrelated. An arm’s length transaction is carried out under free-market conditions in which each party acts in its own self-interest. In the case of buying or selling, an arm’s length transaction ensures outside parties that the

Armed Services

The Constitution authorizes Congress to raise, support, and regulate armed services for the national defense. The president is commander in chief of all the branches of the service and has ultimate control over most military matters. The United States has always been wary of maintaining a strong military force. This care was shown by the

Arms Index

Arms Index is a mathematic market meter designed to communicate the relationship between upward and downward moving stock prices and trading volumes. Arms Index is a technical analysis indicator. Created in the late sixties by Richard Arms, the Arms Index was intended to calculate the relationship between advancing and declining averages. Namely, the Arms Index

Aroon Indicator

The Aroon Indicator, or “Dawn’s Early Light” in Sanskrit, was developed by Tushar Chande in 1995. Chande chose this name because the two up and down indicators are designed to reveal the beginning of a new trend. The Aroon Indicator is used for identifying trends in an underlying security, determining how strong the trend is, and


The arraignment, also called preliminary hearing or initial appearance, is the formal proceeding where the defendant is read their criminal charges. At the arraignment, the defendant must enter a plea which can include not guilty, guilty, no contest or the peremptory plea, which means there are reasons a trial cannot proceed. At the arraignment, the


Arrears highlight the fact that it’s important you keep up-to-date with the monthly repayments on your mortgage. When mortgage payments have not been paid on time and/or not made at the correct amount, borrowers are said to be in arrears. Borrowers with a history of mortgage arrears will find it harder to effect a further


Seize (someone) by legal authority and take into custody. To arrest someone is to apprehend that person, sometimes forcibly, in order to bring him to answer for criminal charges, or else to prevent an imminently certain ‘breach of the peace’. The term ‘arrest’ is morally neutral; anyone intentionally deprived of his liberty is thereby arrested, whether for good reason or bad. As a consequence, while one might argue whether or not an apprehended party was lawfully arrested, it would be very much incorrect to say (assuming an unlawful arrest) that the apprehended party was never arrested at all.

Arrest Procedure

The Police and criminal evidence act 1984 sets out the following principles for an arrest to be lawful. Note that an arrest is unlawful, regardless of the procedure followed, if there is no Power of arrest for the offence in question. s.28 of PACE requires that the arrestee would be told in unequivocal terms (i) that he is under

Arrest Warrant

An order from a court, usually a Magistrates’ Court allowing the police to carry out an arrest.

Arrestable Offence

Significance Of The Term Although now all but obsolete in terms of official usage in English law, ‘arrestable offence’ remains conceptually significant and is still widely used in theoretical discussions about the law. This is due, no doubt, to the intuitive appeal of the term and the various different categories of offence conceptually associated with


malicious burning to destroy property. The criminal act of deliberately setting fire to property.

Articles Of Association

Document setting out the relative rights of shareholders in a limited liability company.


The term ‘articulation’ is used to refer to the impact of transactions on the balance sheet and profit and loss account through application of the accounting equation.

Artificial Person

An entity that is recognised by the law as a legal person.

As Per Advice

As Per Advice are the words written on a bill of exchange to indicate that the drawee has been informed that the bill is being drawn on him or her.


Asbestos refers to a set of six naturally occurring fibrous silicate minerals including chrysotile, crocidolite, amosite, anthophyllite, tremolite, and actinolite. Asbestos was used in commercial and industrial industries for many years but is now strictly regulated because it has been associated with lung cancer, mesothelioma and respiratory health conditions.

Ascending Bottoms

Ascending bottoms refers to a chart pattern in which the lows of the trading range get progressively higher over a given time frame. Ascending bottoms chart patterns can be used to evaluate stocks, commodities, indexes or virtually anything with a price/time chart. Ascending bottoms can be plotted for virtually any time frame: daily, weekly, monthly,

Ascending Triangle

An Ascending Triangle is a bullish continuation chart pattern consisting of two converging lines that resemble a “triangle”. The triangle contains the recent price action. One trend line is drawn horizontally and represents a resistance level that has historically prevented the price from heading higher. The second trend line connects a series of increasing troughs and


acronym of Association of Southeast Asian Nations

Asian Financial Crisis

The Asian financial crisis was a financial crisis of 1997 that crippled the economies of most of Asia. Commonly, known as the IMF crisis, there prevailed a constant fear of worldwide financial contagion due to this crisis. It is known that the initiation of the Asian crisis took place with the financial collapse of the

Ask Price

The ask price is the lowest price at which an investor is willing to sell an asset (e.g. stocks, commodity, etc.) on an exchange or in the over the counter (OTC) market at a given time and for a given volume of such asset. For example, XYZ Corp. may be quoted on the NYSE at


Common law assault involves placing a person in immediate and unlawful apprehension of danger (see: Offences against the person). Assault is also actionable in tort: see Trespass to the person.


The expression of approval or agreement.

Asset Allocation

Asset allocation is the dividing of one’s investment portfolio among different classes of investments. Asset allocation involves choosing among stocks, bonds, cash, and such assets as real estate and precious metals. Investors practice asset allocation to maximize their investment return for the level of risk they are most comfortable with; this frequently (but not always)

Asset Allocation Fund

An asset allocation fund is a single mutual fund that spreads its portfolio across a variety of investments to further diversify and minimize risk for the investor. In an asset allocation fund, the fund manager creates a highly diversified portfolio based on the performance of the holdings in each category. An asset allocation fund is

Asset Cover

The Asset Coverage Ratio measures the ability of a company to cover it’s debt obligations with it’s assets.

Asset Coverage Ratio

Asset Coverage Ratio provides a picture of the financial position of a company by comparing its assets (tangible and monetary) to its existing liabilities. The ratio allows the investors to reasonably predict the future earnings of the company and to assess the risk of insolvency. The Assets Coverage Ratio is generally used as part of a

Asset Depreciation Range

Asset depreciation range refers to a system used to determine the useful life of different classes of assets. Under the asset depreciation range system, all tangible assets were placed in one of over 100 asset classes, which were based on the taxpayer’s particular business and industry. The range of years in an asset depreciation range

Asset Management

Asset management can refer to the primary activity of a financial services company choosing investment opportunities for their clients. The asset management services provided by such a company might feature a mix of traditional investments, such as stocks and bonds, and alternative investment vehicles not available to average investors, such as a hedge fund. Access

Asset Protection

In business and accounting, an asset is anything owned, whether in possession or by right to take possession, by a person or a group acting together, e.g. a company, the value of which can be expressed in monetary terms. An asset is listed on the balance sheet. It has a normal balance of debit. Assets

Asset Turnover

Asset turnover is an efficiency ratio used in financial analysis that shows the sales or revenue volume produced for ever dollar of assets owned. Asset turnover is sales divided by assets, and asset turnover is correctly expressed both as a percentage or as x times. For example, if Tractorco has $40 million of assets and

Asset-Backed Security

An asset-backed security (ABS) is a financial security collateralised by a pool of assets such as loans, leases, credit card debt, royalties or receivables.

Asset/Equity Ratio

The asset/equity ratio indicates the relationship of the total assets of the firm to the part-owned by shareholders (aka, the owner’s equity). This ratio is an indicator of the company’s leverage (debt) used to finance the firm.


Rights or other access to future economic benefits controlled by an entity as a result of past transactions or events.

Assets To Sales Ratio

Calculated by dividing total assets by total sales. Common Usage Assets to sales ratio is a part of the financial statements of a companies performance or can be derived from financial data and calculated there-after. It helps us to understand how efficient the company or industry is at generating sales from assets – in other words, how good

Assets Under Management

An important measure of the size of a fund or group of funds is assets under management. Assets under management equals the market value of portfolio assets owned by investors. Assets under management typically excludes assets of the fund principals. Assets under management is therefore somewhat like the amount of deposits held by a bank.

Assignable Error

An error that has occurred during a trial that can be used and referred to should an appeal be deemed necessary.


An assignor is the party that transfers a property or right (with their associated obligations and rights) to another (the assignee) under an assignment.

Assistance After The Offence

Under s.4 of it is an offence knowingly to carry out any act with the intent to impede the apprehension or prosecution of a person known guilty of an arrestable offence. Although it is, in general, an offence to attempt to commit an offence, it is not an offence to attempt to commit out an

Associated Company

One company exercises significant influence over another, falling short of complete control.


a formal organization of people or groups of people

Association Of British Insurers

This is the trade association to which most UK insurance companies belong. One of its functions is to monitor quality and decide common areas of interest so that minimum standards of customer service can be maintained.

Association Of Private Client Investment Managers & Stockbrokers

The Association of Private Client Investment Managers and Stockbrokers (APCIMS) is a trade association that represents the investment community.

Association Of Southeast Asian Nations

The Association of Southeast Asian Nations is an organization made up of countries located in South Asia who meet annually to discuss the political and economic conditions of the region. The generally accepted abbreviation for the Association of Southeast Asian Nations is ASEAN. The annual meeting held by the Association of Southeast Asian Nations is


psychology A theory that association (of experiences etc) is the basis of consciousness and mental activity

Assumed Duty Of Care

In general, English law does not regard an omission to act (see: Omission) as conferring criminal liability. One of the places where it might do so is where a duty of care exists. Failing to act in a way compatible with that duty of care may constitute the Actus Reus of a criminal offence (see: R v

Assumption Of Risk

An assumption of risk is the risk assumed when engaging in inherently dangerous or risky actions. Claimants who engage in such activities may legally forfeit their right to compensation from a potential injury. Assumption of risk is an available defence for certain types of personal injury claims. To prove the assumption of risk several requirements


Insurance against an eventuality that must occur.

Assured Tenancy

Assured tenancy was the replacement for protected tenancy introduced by the housing act 1988. Don’t be fooled by the name: the `protected’ in `protected tenancy’ and the `assured’ in `assured tenancy’ do not refer to the same person. The main purpose of a protected tenancy under the rent act 1977 was to protect the tenant; the assured tenancy

Asymmetric Information

Asymmetric information signifies a situation in which one party involved in a transaction with another, has more or superior knowledge and information than the other. This is often the case between buyer and seller, where the seller has more knowledge than a buyer. However, the opposite condition can also happen at times. The situation can

At Fault

responsible for an undesirable situation; in the wrong.

At Sight

The words used on a bill of exchange to indicate that payment is due on presentation.

At The Bell

At the bell refers to the traditional opening or closing of a stock exchange. Many stock exchanges, such as the New York Stock Exchange, use an actual bell (hence the term: at the bell) to announce the traditional beginning and ending of the trading day. Some investors use at the bell market orders to indicate

At The Close

An at the close order is either a market order or a limit order which is executed just prior to the close of trading for the day. With an at the close market order, the broker is instructed to buy or sell shares at the best price available just before or at the close of

At The Market

An at the market order is an order to buy or sell shares at the best price currently available. An investor placing an at the market order agrees to accept the best price available at the time the order is placed, with no restrictions. An advantage of an at the market order is that it

At The Money Option

An at-the-money option is an option whose strike price is equal to the market price of its underlying security. For example, if a call option on stock XYZ, Inc. has a strike price of $50 and XYZ stock is currently trading for $50 per share, then this call is trading at-the-money. However, the buyer of

At The Opening Order

An at the opening order is a way for an investor to secure a position at the opening of a trading session. A trader can place a market at the opening order or a limit at the opening order. A market at the opening order is an order to buy or sell a specific number


Attempt is an inchoate offence set out in section 1 of the Criminal Attempts Act 1981. The Actus Reus of an attempt is any act that is `more than merely preparatory’ to the offence. To have the Mens Rea for an attempt, the accused must intend to bring about the consequences for the full offence. For example, to be


As a witness, to attest means to affirm an act or event as true. Documents are legally attested when they are signed by the involved parties in the presence of a witness who also signs the documents.


Attn is an abbreviation for attention.


The Minister responsible for advising the Government on matters of law, bringing significant criminal prosecutions on behalf of the Crown, and authorizing proceedings in certain designated offences (e.g. bribery and public disorder offences). The Attorney-General must be a barrister and is the formal head of the Bar. The Solicitor-General is the Attorney-General’s deputy and has similar responsibilities. Collectively


Attornment in English real property law, is the acknowledgment of a new lord by the tenant on the alienation of land.


A feature of a product that makes it distinct or attractive.


The unpredictable and uncontrollable, but normal, reduction of the workforce due to resignations, retirement, sickness, or death. The Loss of a material or resource due to obsolescence or spoilage. The process of reducing something’s strength or effectiveness through sustained attack or pressure.


An auction is a method of asset sale by competitive bidding. An auction is most useful when the potential price of the asset to be sold is uncertain. Different auction formats exist, varying according to how prices are quoted and bids tendered. The most commonly known of these is the English Auction, which is commonly used for artworks and wine. This auction is also called the ascending price or open-outcry auction. The best-known auction houses, Sotheby’s and Christie’s, were founded in the eighteenth century, but written records of auctions go back to ancient times. Economists specializing in game theory have investigated the theory of bidding strategies for an auction, and how these strategies depend upon the rules and procedures of the auction. In the business arena, these experts are sometimes hired as consultants for important auctions, such as when the Unites States government sold wireless spectrum licenses by auction.

An auction is usually a public sale. Individuals (potential purchasers) invariably inspect the assets for sale before deciding on whether, and if so, how much, they’d like to bid.

Auctions are held for residential and commercial properties, antiques, cars and even second-hand endowment policies.

Following the bidding, the asset is sold to the highest bidder, provided a ‘reserve price’ set by the seller has been achieved.

The purchaser will be asked to sign a binding contract after bidding successfully, so it’s necessary to ensure that any valuations, searches etc. are carried out prior to the sale.

If you’re thinking of buying a property or car at auction, be careful. These sales are populated by professionals who know the ropes. You’re more likely than they to overpay for an asset!

Auction Market

An auction market is a market wherein buyers and sellers both enter simultaneous bids. Unlike a typical auction, an auction market features many buyers and sellers who transact through brokers who bid competitively for the best price. A security’s price for a transaction in an auction market is determined when a buyer’s “bid” price meets

Auction Without Reserve

An advertisement that some item or other will be sold by auction is normally an invitation to treat, not an offer. The bidder makes an offer which the auctioneer can accept or decline. However, if an auction is without reserve, then the auctioneer must sell to the highest bidder, that is, he makes a unilateral offer to


An audit is the independent examination of, and expression of opinion on, financial statements of an entity.

Audit Manager

An employee of an accountancy firm, usually holding an accountancy qualification, given a significant level of responsibility in carrying out an audit assignment and responsible to the partner in charge of the audit.

Audit Manual

A written document that explains the auditing policies and procedures of a firm.


An auditor is an individual qualified at the state level to perform financial and accounting audits. An auditor examines, corrects and verifies the accuracy of financial accounts related to businesses, non-profit organizations and government agencies. The auditor is expected to perform an unbiased evaluation. An auditor can be an internal employee or an external consultant.

Aunt Millie

Aunt Millie is a derogatory term referring to a novice investor implying they are uninformed or unsophisticated. Experienced investors may refer to a simple or straightforward investment as one that may be attractive to Aunt Millie. The term also insinuates this type of investor may not understand the risk of the investment in relation to

Austrian Economics

Austrian economics is a school of economics that preaches strict methodological individualism. Proponents favour laissez-faire views. Praxeology Austrian economists follow a formal approach to theory termed praxeology. The school generally favours an interpretive approach to history. Supporters of the praxeological method are of the belief that economic laws remain valid for all human actions. The interpretive approach


Autarky defines the state of an economy, which is self-reliant and does not participate in trade, or transact with other economies. Autarky refers to a closed economy, which relies on its own resources and is not affected by influences outside the economy. The word autarky is of Greek origin and is often confused with the term

Authorised Guarantee Agreement

An agreement made between a tenant who wishes to assign his lease, and his landlord, to the effect, that the tenant will accept liability for any breach of the covenant of his assignee (see leasehold covenant). AGAs are a creation of the landlord and tenant covenants act 1995, and seek to strike a balance between the protection

Authorised Share Capital

The total value of shares that the company could issue, as distinct from the up and paid up share capital.

Automated Order Entry System

An automated order entry system is a computer system installed by exchanges to route stock and option orders directly to the trading pit. The electronic automated order entry system routes small orders directly to the appropriate specialist on the exchange floor, bypassing floor brokers. Both round and odd lots orders can be entered on such

Automatic Reinvestment Plan

An automatic reinvestment plan is an arrangement whereby a mutual fund automatically reinvests any gains back into the fund. Most investors look upon mutual funds as a long-term investment and an automatic reinvestment plan is a simple way of keeping profits constantly working in the fund. An automatic reinvestment plan makes reinvesting capital gains and

Automatic Resulting Trust

In general, an automatic resulting trust arises when a settlor transfers property to another to be held on trust, but, for some reason or other, the beneficial interest cannot be assigned properly to the beneficiaries. The beneficial interest, therefore ‘rebounds’ or ‘results back’ to the settlor, there is no other object to which it may


Acting reflexively, not under conscious control. In English law, the distinction between automatism and Insanity is drawn on the basis of internal and external factors and is somewhat archaic. Automatism requires an external factor (e.g., a severe head wound). In an archetypal automatism case, Denning LJ classed sleepwalking as a meta of automatism; more recently


Autonomation is a technological innovation that aims to allow machines to work harmoniously with their operators by giving them the ‘human touch.’ Known as Jidoka in Japanese, the approach utilises automatic and semi-automatic processes to reduce the physical and mental load on workers. The concept was introduced by the founder of Toyota Industries Corp, Sakichi


Autonomics refers to the economic conditions currently surrounding the automobile industry, mainly in the United States, but also worldwide. The economics of the automotive industry in the US is starting to change with the current manufacturers in financial turmoil. GM is on the brink of failure, and Chrysler and Ford are struggling. The US automotive industry


Autoregressive is a stochastic process that can be described by a weighted sum of its previous values and a white noise error. An autoregressive process operates under the premise that past values have an effect on current values. Autoregressive Conditional Heteroskedasticity (ARCH) models assume that the variance of the current error term is related to the

Average Cost

Average cost is an economic term that is denoted by the total cost of production divided by the number of units produced. The average cost is also the summation of average variable costs and average fixed costs. Average cost is one of the fundamental components of assessing demand and supply. It significantly affects the supply

Average Daily Volume

Average Daily Volume is the cumulative number of shares traded over a given time period, divided by the number of trading sessions in that period. Time frames for calculating average daily volume can vary though monthly and annual average daily volume are fairly common. Market technicians compare current daily volume to average daily volume to

Average Price Per Share

The average price per share is determined by dividing the cost of acquiring the shares by the number of shares purchased. The average price per share can seem complicated to determine if an investor has purchased different quantities of a stock at different prices. An example of determining an average price per share would be

Average Propensity To Consume

Average propensity to consume (APC) is the proportion of annual income spent on consumption of goods and services. It is essentially nothing more than the average expenses of a household. Calculations And Examples To calculate the percentage of average propensity to consume, consumption (C) is divided by income (Y). The identity that defines average propensity to consume

Average Total Cost

In economics, average cost or unit cost is equal to total cost divided by the number of units of a good produced: It is also equal to the sum of average variable costs and average fixed costs. Average costs may be dependent on the time period considered.

Average True Range

The Average True Range (ATR) measures stock price volatility.  As the volatility (as measured by differences between high, low, and closing prices) of the stock increases, this indicator will increase.  Lower volatility will be reflected by smaller values of the indicator. The ATR was originally introduced by Welles Wilder and is used by many trading

Average Variable Cost

The average variable cost (AVC) is the total variable cost per unit of output. This is found by dividing total variable cost (TVC) by total output (Q).

Award Letter

An award letter is the documentation sent from a college or university to the student that details for how much financial support the student is eligible.

Away From The Market

An Away-from-the-market (AFTM) order is a limit order where the buy limit order is lower or the sell limit order is higher than the current market price.

John Austin

John Austin is widely regarded as the successor to the jurisprudential ideas of Jeremy Bentham. As an early defender of Legal positivism, Austin wrote a great deal about what he considered the incoherence of Natural law jurisprudence, which confused (deliberately or otherwise) the concepts of law ‘as it presently is’ with law ‘as it ought to be’. According to

Accounting Terms Beginning With "B"


B-shares are shares issued domestically by Chinese companies and listed on either the Shanghai or Shenzhen stock exchanges. B-shares are reserved for foreign investors. A B-share’s value is quoted in renminbi but trade is conducted in foreign currency. The first B-shares were issued in 1991. Although they attracted some interest they were always criticised for


Commerce that takes place between businesses, for example, wholesale selling. This is to be distinguished from B2C, or business-to-consumer commerce.


Sales made directly to the end-user, rather than through another business entity.

Baby Bells

Baby bells, or Regional Bell Operating Companies (RBOCs), were essentially the divested local telephone service providers. Baby bells were the product of an antitrust lawsuit of 1982 entered against AT&T, which historically dominated the telephone service market in the United States. Baby bells were the direct result of Sherman Antitrust Law forcing AT&T to split

Baby Boomer

In the United States, a baby boomer refers to anyone born during the high-birth-rate years of the postwar period, generally defined as 1946 through 1964. This 19-year time-span encompasses an extremely diverse population of 76 million. Nevertheless, certain characteristics of the baby boomer can be identified. The baby boomer remembers neither Word War II nor

Back Door Financing

Back door financing is a method used by U.S. government agencies to bypass congressional appropriations (the conventional way of obtaining funds) and borrowing directly from the U.S. Treasury referred to as the “back door”. Back door financing avoids the discipline and controls of the budget process. Back door financing is also used by state government

Back Pay

Back pay is a payment due for work done prior to the current pay period. Back pay may be the result of a missed payment or a payment that was intentionally not made, or back pay may be owed due to a backdated pay increase. Back pay applies to both hourly as well as salaried

Back Taxes

Back taxes are taxes owed for years prior to the current tax year. Back taxes are generally considered past due taxes. Because back taxes are generally treated as late, interest and penalties are often attached and must be paid at the same time that the back taxes are brought up-to-date. Back taxes may be owed

Back Testing

Backtesting is the examination of past performance to predict the future price of an investment. Backtesting can incorporate a variety of indicators (i.e. earnings, inflation, interest rates, breadth, etc.). A simple example of backtesting can be used to determine which years of the presidential cycle are best for stock appreciation? With backtesting, it has been

Back-End Load

A back-end load is a sales charge or a commission paid when an investor sells an investment. A back-end load may also be known as a redemption fee or a deferred sales charge. In England, a back-end load fee is sometimes called an exit charge. A back-end load is often added to a mutual fund


A retailer’s order for a product that is temporarily out of stock with the supplier.

Backup Withholding

Backup withholding is a mechanism that enables the IRS to collect taxes on income and earnings from recipients who lack a taxpayer identification number (TIN). For example, income earned by an employee without a Social Security number would be subject to backup withholding. Form 1099 non-wage payments from brokers or banks to entities without a


Backwardation refers to a situation that can arise in the futures market. It refers to a situation when the price of a futures contract is lower than its spot price. It can also refer to a price that is farther in the future being less than a price that is nearer in the future. If there was

Bad Debt

It is known that a credit customer (debtor) is unable to pay the amount due.

Bad Faith

Bad faith is an intentional and conscious decision to mislead or deceive someone and fail to follow a duty. It differs from a negligent action because it implies the person made the decision willfully. In personal injury, bad faith generally refers to a tort claim against an insurance company claiming the insurance company made an


Bail is money or bond which is given to the court temporarily and allows for the accused to leave jail. The bail or bond, which it is often called, provides assurance to the court that the accused party will return for his or her court appearances. This is an extremely important pre-trial matter which needs

Bail Bond

A bail bond is a contract between the accused and the bail bondsman. The bail bondsman pays the bail for the accused and the accused is then released from jail. The defendant pays a fee to the bail bondsman which the bondsman keeps after the accused is released from jail. If the accused fails to


A person who receives goods under a bailment, that is, in circumstances where the goods enter his possession but where he is under an obligation to return them to the original party at the agreed time.


An arrangement whereby goods are transferred from one person (the bailor) to another (the bailee), but with no transfer of title. A bailment is created when, for example, one leaves his car at a garage for repairs. Note that such an arrangement may give rise to a repairer’s lien if the owner of the car fails to pay the garage


One who bails property; one who places property in the hands of another (called a bailee) for safekeeping.


Action to prevent business failure, usually financial, but based on the nature of the business or collaboration. A bailout can also refer to a public relations “rescue” of a company or organization that has a bad reputation.

Bait And Switch

Bait and switch is a deceptive means of sales where a product is advertised at an attractive price (bait) then the price or product is altered to the advantage of the advertiser (switch). The bait and switch tactic is often fraudulent and illegal, but sometimes a bait and switch can be performed in a more


In accounting, the balance of an account is defined as the sum of all debits and credits to that account. An account balance can be either current, including all such debits and credits or defined for a period ending earlier. For example, the balance due on an invoice reflects the total of all charges accrued

Balance Of Payment

A balance of payment is a systematic, comprehensive and detailed statement on the economic transactions conducted by a country with other countries around the world at a certain period of time. Balance of payments features the current and capital accounts. Current accounts assess the transactions of goods and services, transfers and investment income. Capital accounts assess the financial flows through bonds,

Balance Sheet

A statement of the financial position of an entity showing assets, liabilities and ownership interest.

Balance Transfer

The credit card market-place is highly competitive. You may well find cards in the market that offer rates that are significantly lower than your existing credit card. Indeed, there are several credit cards available that promote interest-free periods as introductory offers. Therefore, if you have an outstanding balance on your existing credit card on which

Balance Transfer Fee

Many cards now charge a percentage of balances transferred onto them Introductory balance transfer offers have been incredibly popular with credit card users over the last 5 years or so since they were introduced to the UK by Egg plc, especially when people discovered that by constantly moving balances from card to card as the introductory periods

Balanced Budget

A balanced budget is a budget in which income equals expenditures. In other words, if a country takes in X dollars in a year and spends exactly that amount, it has a balanced budget. The term ‘balanced budget’ usually applies to the U.S. federal government. For most of the past forty years, the United States

Balanced Fund

A balanced fund is a mutual fund that invests in stocks, bonds, and money market investments (cash). The proportion of investments varies by the balanced fund, but the investment goals are similar: to conserve principal, provide a source of income, and provide a level of long-term growth. Thus, a balanced fund must strive to meet

Balanced Investment Strategy

A balanced investment strategy is an investment approach that tries to balance shorter-term income with long-term growth. A balanced investment strategy achieves this by combining different types of investments on the theory that if one sector falters another portion of the portfolio will prosper. A balanced investment strategy often includes stocks (individual stocks as well

Balloon Loan

A balloon loan is any loan that has one final large payment called the balloon payment due at the end of the loan period. Bullet loan and balloon note are also common terms for the balloon loan. A balloon loan may be short-term or long-term. Before the balloon payment, a balloon loan may have partially


A bank is a financial institution that accepts deposits from the public and creates credit.

Bank Draft

A bank draft is a written order in the form of a check instructing the payment of money from one bank account to another. The bank draft is drawn by one bank against funds that it has deposited in an account at a second bank. The first bank is giving its consent for the second

Bank Facility

An arrangement with a bank to borrow money as required up to an agreed limit.

Bank Holding Company

A bank holding company is a company that owns or control over 25% of a bank. A company that owns or controls more than 25% of a bank holding company is also considered a bank holding company. A bank holding company is regulated pursuant to the Bank Holding Company Act of 1956, as amended. A

Bank Interest Rates

Bank interest rates vary according to a number of reasons. Banks change the rates of interest they offer to customers for two basic reasons. When the Bank of England’s Monetary Policy Committee changes base rate, bank interest rates will usually, though not always, be changed to reflect the increase or decrease in base rate. However,

Bank Of England

The Bank of England ( ) is the UK’s central bank. Originally founded in 1694 by a group of private bankers to raise money for the Crown, it was recognised as the central banknote issuer in the UK in 1844 and was recognised as responsible for interest rate policy in 1870 but it was

Bank Overdraft

You have a bank overdraft when the amount of money withdrawn from a bank account is greater than the amount actually available in the account. This sum of money – the excess withdrawal, is known as an overdraft and the bank account is said to be ‘overdrawn’. An overdraft is a form of short-term borrowing

Bank Reconciliation

This refers to comparing the business’ bank balance with a bank statement to spot differences.

Banking Code

The updated Banking Code and Business Banking Code contain an enhanced promise by banks and building societies to treat customers fairly and reasonably. The Banking Code and Business Banking Code are reviewed every three years. Changes to the codes were made after consultation with consumer groups, HM Treasury, the Financial Services Authority, the Office of


(of a person or organization) declared in law unable to pay outstanding debts.


Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. A declared state of bankruptcy can be requested or initiated by the bankrupt individual or organisation, or it can be requested by creditors in an effort to recoup a portion of what they are owed. However,


Generally archaic, but still widely used, the collective term for barristers as a professional body. This term also refers to the customs and traditions that regulate the barristerial profession. Writers often use ‘the Bar’ as a convenient substitution for ‘barristers’. See also, barrister.

Bar Chart

A bar chart, also known as a bar graph, is a diagram consisting of rectangular bars. The length of each bar in a bar chart is proportional to the numerical value it represents. The bars in a bar chart may be positioned vertically or horizontally. When a bar chart has vertical bars, it is also

Bar Council

The Bar Council (more formally ‘General Council of the Bar’) is the representative and regulatory body for barristers in England. It defines a code of conduct for barristers generally and sets out the requirements for training and qualification of new barristers. Note, however, that the Bar Council does not approve the nomination of new barristers;

Bar Examination

The bar examination is the test which a law school graduate must pass to obtain a license to practice law. It is used to determine if a graduate is qualified to practice law in a specific jurisdiction. The bar is offered several times per year, but most law school graduates wait until they have graduated

Bare Trust

A trust in which the trustee has no personal discretion, but is obliged to give effect to the wishes of the beneficiaries. See also nominee.


Bargain is any purchase or sale of securities between two members of the London Stock Exchange. The term bargain is used interchangeably with the term contract. No special price is implied by the use of the term. Figures showing the turnover of the London Stock Exchange are published detailing the number of bargains. If you want


In criminal and civil law, the act or practice of bringing repeated legal actions solely to harass. Usually, the actions brought lack merit. This practice has been declared a crime in some jurisdictions (e.g. the United States). In England and Wales, however, the offence was abolished in 1967. The term has also fallen into disuse

Barrier To Entry

A barrier to entry (or barriers to entry) is an economic term used to define the conditions that make entry of a firm into a certain market or sector of the economy difficult. Companies find it extremely difficult to establish a base in such a market dominated by a well-established firm. The market then becomes a monopoly of that firm or duopoly


a British or Canadian lawyer who speaks in the higher courts of law on behalf of either the defence or prosecution

Barter System

A barter system calls for the exchange of goods and services for other types of goods and services. This system was prevalent in earlier times when currency was not yet in place. Later, the barter system was replaced by the monetary exchange of goods. In developed countries, this system exists alongside the monetary system. The barter system was used in

Base Interest Rate

The base interest rate is the lowest interest rate that investors will accept for investing in a non-Treasury security. The base interest rate is pegged to the interest rate of the most recently-issued (also known as an on-the-run) Treasury of comparable duration. Since Treasuries represent the lowest-risk investment available, the base interest rate is generally

Base Rate

Base rate, sometimes referred to as repo rate, is the minimum rate at which banks are prepared to lend money – it acts as the benchmark for other interest rates, including personal loans and mortgages. The central bank moves base rates by changing the dealing rates at which it buys bills from the discount houses.

Basic Materials Sector

The Basic Materials Sector consists of companies involved with the discovery, development and processing of raw materials. Industry Components of the Basic Materials Sector The following industries are grouped under the Basic Materials sector. Chemical Manufacturing Chemicals – Plastics & Rubber Containers & Packaging Fabricated Plastic & Rubber Forestry & Wood Products Gold & Silver


Basing refers to a stock that is forming a base with little or no trend. The resulting price pattern is a flat line. Basing usually occurs over a long time period – weeks, months or even years. Basing can occur after a stock price run-up and can also occur after a slow decline in price. Traders generally

Basis Point

Yields on fixed-income securities fluctuate regularly but may change only within hundredths of a percentage point. These small variations are measured in basis points, with the smallest unit being 1 basis point. One basis point equals 0.01% or one-hundredth of 1%. One per cent equals 100 basis points. If the yield on a bond increases

Basis Swap

Battery is a criminal charge resulting from unlawful physical contact against another person. Common types of battery include punching a person, striking them with an object or grabbing someone’s arm. Simple battery results in minor injuries while aggravated battery is more severe. Common types of aggravated battery include hitting someone with a dangerous object, shooting

Battle Of The Forms

Colloquial term for the situation where an Offer and the Acceptance of offer are both on set terms, and those terms are in conflict.


Bears are market participants who expect the market to decline. Bears may expect the broad market averages to decline, or their bearishness may be confined to a specific stock or industry sector. To profit from their forecasts, bears sometimes sell short their markets. Alternately, they may purchase options positions or other derivatives that will gain

Bear Market

A bear market is a market in which prices decline against a background of widespread pessimism (the opposite of bull market). A bear market is generally shorter in duration than a bull market. A bear market signifies a prolonged decline in stock prices that may occur for months or even years. A bear market in

Bear Trap

A bear trap occurs when a declining market reverses direction, catching short-sellers off guard. In a bear trap short-sellers, who have continued selling in anticipation of a further drop in a now-bullish market, are eventually forced to buy back stock at a higher price to cover their positions. A bear trap can also be created


Bearish refers to the investor feeling that a certain security or sector or an entire market is going to fall. A bearish investor expects stocks markets to go down. Hence he treads cautiously. A bear market typically exhibits falling stock prices. Bearish sentiment may prevail in any kind of market including bond market, commodity market

Bearish Abandoned Baby

The bearish abandoned baby is a rarely seen candlestick charting pattern that traders consider reliable at predicting reversals. Three candles comprise the bearish abandoned baby: a long white candle the first day, followed by a Doji candle the second day that gaps above the white candle, followed by a black candle the third day that

Bearish Belt Hold

The Bearish Belt Hold is a candlestick pattern that forms during an upward trend. The 2-day Bearish Belt Hold pattern starts following a stretch of bullish days. Day 1 is bullish but is followed on Day 2 by a bearish candlestick. The opening price, which becomes the high for day 2, is higher than the close of the previous day. The stock price declines throughout the day, resulting in a long bearish candlestick with a short lower shadow and no upper shadow.

Bearish Candlestick Patterns

Bearish candlestick patterns consist of 1, 2, 3 or more candlesticks in a pattern that is associated with a future bearish price move. Used in isolation, bearish candlestick patterns generally do not provide a significant trading advantage. However, they may prove to be a powerful tool when used in conjunction with other indicators. One Candlestick

Bearish Doji Star

The Bearish Doji Star is a double candlestick formation that is viewed by technical analysts as a bearish reversal pattern. The Bearish Doji Star is a candlestick pattern that forms during an upward trend.  This is what happens in the pattern: following a stretch of bullish trades, a long bullish candlestick occurs; the subsequent candlestick is characterized by

Bearish Engulfing Pattern

The bearish engulfing pattern is a relatively simple candlestick charting pattern consisting of one white candle followed by a longer black candle — it is a bearish reversal pattern. The body of the white candle in a bearish engulfing pattern may be of any length. The body of the black candle in a bearish engulfing

Bearish Harami

The bearish harami is a candlestick charting pattern — it is a bearish reversal pattern. A typical bearish harami is characterized by one long candle and a much shorter candle which is completely engulfed by the large candle. Some traders prefer that the large candle engulfs the shadows as well as the body of the


Bears are stockmarket animals who just happen to be pessimists – reckoning that share prices (or any other type of investment) are going to fall. So a City dealer who holds shares in XYZ plc will want to dispose of his holding, before the price falls. In a ‘bear market,’ the general sentiment is that

Before-Tax Income

Before-tax income, also known as pretax income, is the amount of income the company has generated before it pays Federal, state, and local income taxes. Before-tax income is a useful financial indicator because income taxes, while a cost of doing business, is substantially determined by governments and somewhat out of the control of company managements.

Behavioural Economics

Behavioural economics is essentially a combination of economics and psychology. It supplements mainstream economics with a realistic psychological foundation. Behavioural economics is said to augment the explanatory power of economic theory. It is believed to generate the following positive externalities for mainstream economic theory. Generate added theoretical insights Make better predictions Suggest better policy measures An important

Behavioural Finance

Behavioural finance integrates ideas from the fields of individual and social psychology with classical financial theory to understand the performance of markets. Behavioural finance is closely related to behavioural economics. The key idea of behavioural finance is that market participants do not always make decisions rationally. Behavioural finance recognizes several deviations from rationality such as

Beige Book

The Beige Book is a “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” as its formal title states. Besides geographic region, the Beige Book discusses the economy by industry sector. The Beige Book is based on reports from Federal Reserve Bank and Branch directors, as well as interviews with economists, business executives,


In a financial exchange, the sound of the bell indicates the start or close of the market for the trading day. Historically, the bell was always an actual bell, but the term in now also used symbolically to refer to the official start or stop of trading. The opening bell signals the start of market

Bell Curve

Bell curve is statistically a large and random sample which, when measured, will produce a bell curve on a bar chart – the scale measurement being along the x-axis and the total occurrences within the sample up the y-axis. If one took as a sample all the inhabitants of Greater London as a suitably large


someone who assumes leadership of a movement or activity.

Bench Trial

A trial presented before a judge is a bench trial. Civil trials are generally held before a judge unless the defendant or plaintiff requests a jury. In a bench trial, the judge will hear the evidence presented by each party and make a ruling for the case. In a criminal case, defendants may have the

Bench Warrant

A bench warrant is an arrest warrant issued by a judge or court. Bench warrants allow the police to bring a person to court to appear before the judge. Bench warrants are generally used when a person does not comply with a court order. A bench warrant is generally filed if the judge demonstrates a


A benchmark is a security or index against which the performance of other securities is judged. A benchmark is a goal to meet or to beat. Many investors use the S&P 500 Index as a benchmark for the US stock market. Their goal is for their investments to beat this benchmark. If their investments return

Benchmark Interest Rate

The benchmark interest rate is the lowest interest rate that an investor will accept for a non-Treasury investment. The benchmark interest rate is also known as the base interest rate or the threshold interest rate since the benchmark interest rate is the threshold below which investors refuse to invest funds. The benchmark interest rate is

Beneficial Interest

In the law of trusts, a ‘beneficial interest’ in some property (of any type) implies a right to use and enjoy that property (typically) as the possessor of the interest sees fit. Where one person holds the property on trust for another, the latter is ascribed a beneficial interest in that property even though its legal

Beneficial Owner

Under a trust, the person who has equitable title to some asset or property. Note that the beneficial owner is regarded in equity as being the property’s ‘true’ owner, despite the fact that he does not possess legal title to it.

Beneficiaries’ Right Of Occupation

A trust of land governed by the provisions of the Trusts Of Land And Appointment Of Trustees Act 1996 (TOLATA). Since 1997, all new trusts whose property is, or includes, land will be governed by this act, as will any trust for sale created before 1997. A settled land act settlement can continue to exist and


A person who actually benefits from a trust, as compared to an ‘object’ of the trust (see object trust). All trust beneficiaries are, or at least should be, objects; but if the trust is discretionary not all objects will necessarily be beneficiaries (see discretionary trust). In general, anyone who obtains a benefit, typically: (i) from the disposal

Beneficiary Principle

The principle that, for a trust to be valid, there must be some person or persons with standing to enforce the trust in the courts. The beneficiary principle is often invoked to explain why English law does not, on the whole, allow the creation of a private purpose trust. A trust of imperfect obligation is one that is expressed in

Benefit In Kind

A benefit in kind is ‘consideration’ that may be offered by an employer to an employee in lieu of cash. Typically it can be a company car, private medical insurance plan or a cheap loan to assist in paying for travel season tickets. Until the 1999 Budget, employers only had to worry about paying National


Any disposal of the estate made under a will except for Immovable property (essentially buildings and land), which is called a ‘Devise’ or money, which is called a ‘Legacy’.

Bermuda Option

A Bermuda option is a derivative instrument where the holder of the option has the right, but not the obligation, to exercise his option only on certain predefined dates occurring in regular intervals throughout the duration of the contract. The Bermuda option is a hybrid of an American option, where the holder is entitled to

Best Evidence

The best evidence rule allows for the “original” evidence to be produced to prove what the document states. The reason this rule was implemented was that copies could have errors. For example, if someone copied a letter mistakes could have been made in the transcription or details could have been obscured by the handwriting. Copies


The beta (ß) of a stock or portfolio is a number describing the relation of its returns with that of the financial market as a whole. An asset with a beta of 0 means that its price is not at all correlated with the market. A positive beta means that the asset generally follows the market. A negative beta shows that the asset inversely follows the market; the asset generally decreases in value if the market goes up and vice versa.

Beyond A Reasonable Doubt

Beyond a reasonable doubt must be proven by the prosecution in a standard criminal case. It requires the jury to be satisfied to a “moral certainty.” It does not require that all doubt be eliminated, but rather, the evidence is so conclusive that all reasonable doubts are removed from the mind of the ordinary person.


Offer (a certain price) for something, especially at an auction.

Bid-Offer Spread

Firms wishing to take on the responsibilities of market-making are obliged to quote their prices to broker/dealers who then decide whether or not to respond to them. These quotes are two-way prices, the lower of which is known as the bid price (the price at which the holder can sell shares) and the higher is

Bid/Ask Spread

The bid/ask spread is the difference between the price sellers are asking for and the price that buyers are willing to pay. There is a bid/ask spread in virtually any freely-traded market. For example, if the last trade on XYZ Corp. was $10.00, the current ask price might be $10.05 and the bid $9.95. This


Someone who bids, e.g. at an auction

Big Bang

Sometimes described as the biggest deregulation of the London stock market in modern times, ‘Big Bang’ took place in October 1986. At the time: ‘screen-based’ computer trading was widely introduced (within a short time it had superseded floor trading) Big banks rushed to purchase stockbroking firms (sending a lot of old men back to their

Big Bang 2

Big Bang 2, on Monday, October 20, 1997, was the start of a switch from a quote-driven system of trading to an order-driven one. The trading hours of the London Stock Exchange remain unchanged – 8.30 am to 4.30 pm. The electronic order book ( SETS ) cuts out the middleman, in the shape of

Big Board

Big Board is the nickname of the New York Stock Exchange (NYSE). Over 80 percent of U.S. securities are traded on the Big Board, the largest stock market in the world. A significant number of Big Board companies are based outside the U.S. Big Board members ply their trade on the trading floor. These brokers

Big Mac Index

Big Mac index is a financial indicator. It was introduced by Economist magazine in 1986. It involves the concept of ‘purchasing-power-parity’ in economics. Purchasing power parity (PPP) theory states that ultimately exchange rates between nations should attain a level where an identical consumption basket (comprising goods and services) would display same price in concerned nations. In this particular case, a


A statute in draft before it becomes law

Bill Of Attainder

Beginning in the fourteenth century and lasting to the nineteenth, there was a law in England that enabled nobles and royalty to punish citizens without trial. The British Bill of Attainder is perhaps one of the most interesting, creative, albeit potentially tyrannical, pieces of law ever enacted. It is not difficult to see why a king or

Bill Of Exchange

A bill of exchange is a document acknowledging an amount of money owed in consideration for goods received. It is a kind of a written financial document that states the company or the individuals mentioned in the document to pay a certain amount on a particular date. It contains the debtor’s authorized signature. This makes it

Bill Of Rights

The ‘glorious revolution’ of 1688 brought about the downfall of King James II of England (who was also James VII of Scotland); the new monarchs, William and Mary, were obliged in 1689 to accept the terms of the Bill of Rights, which substantially reduced the prerogative powers of the monarchy, and laid the foundation for the principle

Binary Options

Binary options is a financial instrument that allows you to speculate on future market movements of underlying assets. Some regulatory bodies consider binary options to be financial instruments and regulate them as such. Other jurisdictions consider binary options to be a way to bet on the stock market and regulated the instrument as gambling. Both

Binding Authority

The binding authority or binding precedent is the existing law that the judge must evaluate when making a decision in a case. For example, a lower court in the same jurisdiction of a higher court must follow the applicable holding of the higher court. Binding authority follows the doctrine of stare decisis, which means “stand

Black Economy

Black economy is also known as the underground economy in economic terminology. It is basically a type of market where the rules of taxation and trade are not applicable. The black economy is also called underdog, black economy, shadow economy and parallel economy. The range of activities that take place in the black economies at

Black Friday

Black Friday refers to September 24, 1869. On Black Friday, a group of speculators led by James Fist and Jay Gould attempted to corner the gold market. They failed, and the resulting collapse in gold, and then stocks, became known as Black Friday. From this original Black Friday came the practice of labelling market collapses

Black Monday

Black Monday, or October 19, 1987, was the day of the single largest broad decline in the history of US equity markets. The Dow Jones Industrial Average declined by over 22% on Black Monday. Following Black Monday major stock markets experienced similarly substantial declines globally. Black Monday had no apparent catalyst. The leading explanation for

Black Tuesday

Black Tuesday refers to October 29, 1929. Black Tuesday occurred five days after the US stock market crash of Black Thursday. The week of Black Tuesday and its aftermath usually marks the beginning of the Great Depression in the US. On Black Tuesday, the stock market fell by 13% and more than 16 million shares

Black-Scholes Option Pricing Model

The Black-Scholes Option Pricing Model predicts an option’s price given the strike price, expiration date, risk-free rate of return, stock price, and standard deviation of the stock’s return. Wall Street was quick to adopt the Black-Scholes Option Pricing Model in the early 1970s although key assumptions of the Black-Scholes Option Pricing Model are obviously violated


The action, treated as a criminal offense, of demanding payment or another benefit from someone in return for not revealing compromising or damaging information about them.

Blank Media Tax

A blank media tax (or blank media levy) is a government-mandated scheme in which a special tax or levy (additional to any general sales tax) is charged on purchases of recordable media. Such taxes are in place in various countries and the income is typically allocated to the developers of “content”. (A distinction is sometimes

Blanket Insurance

In real estate, coverage for different kinds of property at a specific location or a specific property at different locations. In general, it refers to insurance that covers a number of entities that are not necessarily related.

Blanket Mortgage

A mortgage or trust deed that covers more than one lot or parcel of real property, and often an entire subdivision. As individual lots are sold, a partial re-conveyance or release from the blanket mortgage is usually obtained.

Blemished Defendant

A trendy term for a defendant in a criminal trial who is not of exemplary character, but whose character is nonetheless not sufficiently bad that he cannot benefit from a direction to the jury that his good character should be taken into account (see V ye direction for discussion).

Blow-Off Top

A blow-off top refers to an extremely fast spike up in a stock’s price, followed by an extremely fast and severe drop in price. A blow-off top may be found on an intra-day chart, a daily chart, or even a weekly or monthly chart in some cases. A blow-off top may be found on individual

Blue Chip Stock

Blue-chip stock is equity in the securities of high-quality companies. Blue-chip stock is often also high in public share price. Blue-chip stock is a term named after the blue-coloured highest poker chip denomination. Stock of “blue chips” or “blue-chip stock” demonstrate some combination of high credit rating, strong balance sheet, stable earnings power. A blue-chip

Blue Shield

The Blue Shield concept was developed at the beginning of the twentieth century by employers in lumber and mining camps of the Pacific Northwest to provide medical care by paying monthly fees to medical service bureaus composed of groups of physicians. The first official Blue Shield Plan was founded in California in 1939. In 1948


Blue-collar is a workplace designation that defines an employee who performs manual or technical labour, such as in a factory or trades, in contrast to a white-collar worker, who does non-manual work generally at a desk. Examples of blue-collar work include carpentry, construction, automotive repair, maintenance, mining and agriculture. The blue-collar designation defines a working-class

Boalt Hall

The UC Berkeley School of Law, commonly referred to as Boalt Hall, is one of 14 schools and colleges at the University of California, Berkeley. Boalt Hall is regarded as one of the most elite law schools in the United States. It is consistently ranked both as one of the top 10 law schools and the top

Board Of Directors

Board of directors refers to a group of people that are elected by shareholders of a company who make decisions affecting the company’s business on behalf of the shareholders. The board of directors meets regularly to discuss governance issues, compensation packages and general business activities. The board of directors can make decisions that directly affect

Board Of Governors

A Board of Governors is the collective name given to the individuals who oversee the operation of an institution directly serving the public interest. A Board of Governors serves a function similar to that of a Board of Directors for US corporation. While a Board of Governors presides over Amtrak, the US Postal Service, universities

Board Of Trustees

The Board of Trustees is responsible for overseeing the activities of a nonprofit organization, ranging from huge foundations to small local charities. A Board of Trustees usually has between five and 20 members. Many members of a Board of Trustees hold other, external positions; but the Board of Trustees may also include senior management of


A room in which the members of a board meet regularly.

Boiler Insurance

Boiler insurance is a type of property insurance that pays accidental losses to machinery and equipment. Although it is called boiler insurance it can actually cover just about any device that uses, transmits or generates mechanical or electrical power; of course, certain exclusions apply. Standard property insurance policies normally exclude coverage for losses caused by

Boiler Room

A boiler room is an unflattering term used to describe a place of business where high-pressure telemarketing tactics are used to solicit sales. A boiler room is most often associated with stock brokerage firms. A boiler room may rely on aggressive cold calling to sell risky stocks to willing investors. A boiler room may use


Boilerplate is standard generic verbiage which is repeated verbatim in numerous contracts, agreements, licenses or other documents. Boilerplate material is often inconsequential, non-specific and applies to everyone equally. Boilerplate can be a one-size-fits-all template, a generic fill-in-the-blank form or simply standardized pre-printed text often referencing generalized terms and conditions. With the proliferation of personal computers,

Bollinger Bands

Bollinger Bands are plotted (typically) two standard deviations above and below a simple moving average of the price series. Since standard deviation is a measure of volatility, the Bollinger Bands widen during periods of volatility and contract during calm markets. Calculation of Bollinger Bands Bollinger Bands consist of a moving average and two outer bands.  The moving

Bona Fide Purchaser Without Notice

In full: a ‘bona fide purchaser of a legal interest for value without notice, actual, constructive or imputed’, also known as ‘equity’s darling’. A person who pays money or other valuable consideration for property that has any attached equitable interests (see: Equitable interest land and property), takes the property free of those interests if he can

Bona Vacantia

Ownerless goods. Under English law, the general principle is that any genuinely ownerless property (of whatever type, including land) reverts to the Crown. In practice, courts rarely make the determination that property is ownerless; instead, they employ a number of devices (such as a resulting trust) to ‘find’ an owner where there would otherwise be none.


The name sometimes given to loan finance (more commonly in the USA). A certificate of debt issued by a company or the government. Bonds generally pay a specific rate of interest and pay back the original investment after a specified period of time.

Bond Of Auction

Under Scottish law, the Executor of an estate may be required to bond a certain sum of money, or take out a policy of insurance, to compensate the estate in the event of his errors in handling the job.

Bonus Issue

A bonus issue is also described as a free issue, a scrip issue, a capitalisation issue and a stock dividend. These are new shares issued by a company to its existing shareholders, usually in a mathematical proportion to the number of shares already held. These shares are issued free of charge as an accounting exercise

Book Value

The book value of an asset or group of assets is the price at which they were originally acquired, in many cases equal to purchase price.

Book-To-Bill Ratio

The book-to-bill ratio measures the relationship between orders received and the amount of product shipped and billed. The book-to-bill ratio is widely published for the semiconductor equipment industry, and it is an important indicator of the health of the personal computer industry and the overall technology sector as well. A book-to-bill ratio of above 1


Although the term bookings has multiple meanings, in the financial sense bookings are funds that are expected to be received from customers in the near future based on accepted orders or contracts. Cancellations, amendments and extensions can have a positive or negative impact on bookings. Bookings differ from sales, where money has been received for


A boom refers to a rising financial market. Another term for boom would be a bull market. During a stock market boom, the majority of stocks rise in price and there is often a euphoric feeling about the market. A boom market does not necessarily refer to the stock market as a whole. Individual sectors


Borrowing is the act of receiving something which will be returned in the future. In finance and economics, borrowing generally refers to receiving money. In simple terms, borrowing can be illustrated as the act of receiving a certain amount of money with the intention that the receiver will have to return the same amount of money after a fixed span

Bottom Fisher

A bottom fisher is an investor who attempts to buy stocks at or near their lowest price. A bottom fisher is looking for bargain-priced stocks which the investor believes have nowhere to go but up in price from their current level. A bottom fisher is similar to a market timer insofar as the bottom fisher

Bottom Line

Bottom line is an informal term for net income. It derives from the position of net income on the income statement – it’s the last line, or “bottom line.” The bottom line of net income is the final tally of what the company earned after all expenses have been deducted and all intermediary stages of


Boulwarism was named after General Electric’s former vice president Lemuel Boulware, who pioneered the strategy.

Bound Over

For example, ‘bound over to be of good behaviour and to keep the peace’. If a person is bound over after conviction he or she is released, subject to a recognizance (see: Recognizance). The effect is that the offender’s good behaviour is assured by the threat of forfeit of money.

Bounded Rationality

Bounded rationality is a branch of economic theory about decision making. It was first proposed by behaviourist Herbert Simon in 1957. As per Simon, decision making by economic agents is a type of search process, which is guided by an agent’s aspiration levels. Aspiration level in its turn is that value of a particular goal


A stock market in a non-English-speaking country, especially France.

Breach Of Contract

A breach of contract occurs when a person or company fails to perform or meet the terms of a contract, written or oral. Common breach of contract can include a homeowner failing to pay their mortgage, a celebrity not showing up at an event or a caterer failing to cater an event. Breach of contract is one of the most common types of lawsuits in which the plaintiff seeks specific damages.

To demonstrate a breach of contract you must prove you had a valid contract with another person. This is easy if you have a written contract and both parties have signed it. If the contract is oral you may need additional evidence, which varies from state to state. You must prove you upheld your legal responsibilities under the contract and the other party failed to do their duty under the contract. This can be proven if one party did not perform their duty, makes it clear they have no intention to perform their duty or makes it impossible for the other party to perform their duty. Finally, you must prove you suffered financial loss or were harmed by the breach.

Breach Of The Duty Of Care

To succeed in a claim for negligence, the claimant must establish that he was owed a Duty of care and that the defendant was in breach of that duty. Whether a breach occurred is a question of fact to be established on the evidence, but the standard of care expected is a matter of law. Standard Of

Breach Of The Peace

The term ‘breach of the peace’ frequently occurs in legal documentation, but its meaning is not well defined. A breach of the peace is not merely a disturbance, but a situation where there is an outbreak of violent behaviour or the threat of such behaviour. A breach of the peace need not occur in a

Break-Even Analysis

Break-even analysis is a managerial tool used in business to estimate a fair, competitive and profitable price for products and services. Break-even analysis categorizes costs as a variable (changing with the volume of production) and fixed (unrelated to volume). In break-even analysis, first, break-even point – where total revenue equals total cost – is calculated.

Break-Even Point

The break-even point for any investment is the price at which an investor neither makes nor loses money on that investment. An investor’s break-even point must include the recoupment of all fees, commissions and other expenses associated with the purchase and sale of the investment. When trading options, the break-even point for a call option


A breakout occurs when the price of a stock breaks through a resistance level, often on high volume. The resistance level is usually a price ceiling at which the stock has previously encountered selling. In many cases, but not always, that resistance level is the highest point in a “handle” portion of a base pattern. Technical traders

Breakout Standard Regression Channel

The Breakout Standard Regression Channel is a special case of Linear Regression Channels;  the upper and lower lines are spaced by a specified number of standard deviations above and below the middle linear regression baseline channel. Calculation The Breakout Standard Regression Channel is started using the first ‘n’ points in a chart to construct a baseline channel.

Bridge Loan

A bridge loan is a temporary source of financing intended to last only until more permanent financial arrangements can be made. A bridge loan is usually for a year or less, often much less. The bridge loan is very common in two arenas, start-up finance and real estate. A start-up anticipating receipt of venture capital

Bridging Loans

Bridging loans are short term loans. Bridging loans are often used by purchasers of a property who need funds for a limited period of time. e.g. until they sell their existing home. Major banks and building societies can offer bridging loans. But consider all the risks before you opt for a bridging loan. For example,


A brief is the written legal argument which states the legal reasons and arguments for various petitions and motions before the court to counter the arguments of opposing counsel. In a personal injury claim, the legal brief outlines reasons for the judge to rule in favour of a certain party or why the judge should

British Bankers’ Association

The British Bankers’ Association (BBA) represents the interests of the high street clearing banks.

British Citizenship

We begin with some preliminary but altogether necessary points. First, the law governing British nationality and British citizenship is extremely complex, and the present discussion constitutes merely a simplified summary of the subject. Second, although the terms ‘Britain’ and ‘United Kingdom’ (UK) refer to two distinct objects (a geographical region and a political association, respectively),


In 1898 Guglielmo Marconi, a twenty-four-year-old Italian, began the world’s first commercial radio service. For citizens of the United States, radio—and later television—not only introduced an abundance of entertainment and information, it also raised many legal questions surrounding its implementation and regulation. In radio’s earliest days, stations all broadcast at the same frequency; this posed

Broker (Stockbroker)

Member of a stock exchange who arranges purchase and sale of shares and may also provide an information service giving buy/sell/hold recommendations.

Broker Loan Rate

The broker loan rate, also known as the call money rate, is the interest rate that banks charge a broker for the funds that the broker uses to make margin loans to clients. The broker charges his clients the broker loan rate plus a service charge. The broker loan rate only applies to clients who

Broker Recommendation

A broker recommendation is an opinion given by a broker regarding the merits of a particular stock. A broker recommendation may be issued by an individual analyst or represent a consensus of the entire brokerage. A broker recommendation is typically based on equity research data. Thus, before issuing a broker recommendation, analysts may examine various

Broker’s Report

Bulletin written by a stockbroking firm for circulation to its clients, providing analysis and guidance on companies as potential investments.


A Broker-dealer typically is a securities trading firm which combines the functions of a stockbroker – acting as an agent for investors – with that of a dealer – acting as a principal for its own account. This so-called dual capacity became a feature of the London stock market only after Big Bang in 1986.


A stock broker’s business; charges a fee to act as an intermediary between buyer and seller.

Brokerage House

A brokerage house is a place from which a broker conducts business. The term brokerage house is often referred to as a broker, brokerage, or a brokerage firm. Working through a licensed brokerage house, your broker buys and sells shares of stock for your portfolio as per your instructions. A full-service brokerage house provides a


In markets, a bubble is an extended period of extreme overvaluation. Bubbles occur in stock markets, real estate, commodities and precious metals. There have even been bubbles in the flower market, the most famous example being the Dutch Tulip Mania of the seventeenth century. Bubbles are formed when excessive speculation enters a market. Instead of

Bucket Shop

You may think a bucket shop is simply somewhere you buy cheap airline tickets. It’s originally an American expression for a gambling den and in stockmarket terms, that’s something much less palatable. A bucket shop is also sometimes called a boiler room, ie. a share-broking business run by somebody who isn’t a member of the


A budget is an official statement statement of the state expenditure and estimated revenues during a particular financial year. It acts as a tool for the government in power for implementing its policies and programs.

The budget highlights the expenses needed for the execution of different policies. The budget casts a significant impact on a country’s economy. It ensures aggregate fiscal discipline thereby controls the total expenditure. It also plays a crucial role in the allocation of resources depending on social and economic priorities. It also ensures the effective deliverance of services and undertaking of programs. The central government budget in India is divided into the revenue and capital budget. The revenue budget comprises the revenue receipts of the government while the capital budget takes care of the capital receipts and payments.

Building Societies Association

The Building Societies Association (BSA) is the trade association representing the interests of member societies. But the Building Societies Association has seen its numbers shrink in recent years as names such as Abbey National (now Abbey) and Cheltenham and Gloucester gave up their ‘mutual’ status.

Building Society

A building society is a mutual organisation owned by its members – its savers and borrowers – and not by shareholders. Its traditional purpose has been to lend money to individuals to purchase or remortgage their homes. This money used to come exclusively from individual saving members paid interest on their deposits. Now, an increasing


A bull is an investor who purchases a financial instrument in the expectation that it will increase in value. For an investment such as stocks, a bull expects prices to rise. Equity bull markets, consequently, are marked by persistent upward trends in stock prices. For investments that carry yields, such as bonds, a bull expects

Bullish Abandoned Baby

The bullish abandoned baby is a rarely seen candlestick charting pattern that traders consider reliable at predicting reversals. Three candles comprise the bullish abandoned baby: a long black candle the first day, followed by a Doji candle the second day that gaps below the black candle, followed by a white candle the third day that

Bullish Belt Hold

The bullish belt hold is a candlestick charting pattern that tends to signal the reversal of a downtrend. A single long white candlestick with no lower shadow and a small upper shadow (i.e. white closing Marubozu) characterizes the bullish belt hold pattern. The bullish belt hold occurs following a series of down days when the

Bullish Candlestick Patterns

Bullish candlestick patterns consist of 1, 2, 3 or more candlesticks in a row that are associated with a future bullish price move.  Used in isolation, bullish candlestick patterns generally do not provide a significant trading advantage. However, they may prove to be a powerful tool when used in conjunction with other indicators. One Candlestick Bullish

Bullish Doji Star

The Bullish Doji Star is a double candlestick formation that is viewed as a bullish reversal pattern. The Bullish Doji Star is a candlestick pattern that forms during a downward trend. This is what happens in the pattern: following a stretch of bearish trades, a long bearish candlestick occurs; the subsequent candlestick is characterized by a gap

Bullish Engulfing Pattern

The bullish engulfing pattern is a relatively simple candlestick charting pattern consisting of one black candle followed by a longer white candle — it is a bullish reversal pattern. The body of the black candle in a bullish engulfing pattern may be of any length. The body of the white candle in a bullish engulfing

Bullish Homing Pigeon

The Bullish Homing Pigeon candlestick pattern represents a potential reversal in a downward market. In traditional technical analysis, the Bullish Homing Pigeon candlestick pattern would be recognized as an “inside day”. The Bullish Homing Pigeon candlestick pattern starts with a bearish trend concluding with two bearish candlesticks. The first is a large body candlestick;  this is followed

Burden Of Proof

The burden of proof is the level of proof one party must prove for a disputed assertion. Civil cases have a burden of proof which is described as a “preponderance of the evidence.” In a criminal case, however, the plaintiff (the government) must prove “beyond a reasonable doubt” to get a criminal conviction.

In a criminal case, the burden of proof resides with the state and the state must prove the defendant is guilty. The defendant does not have to prove anything (unless they are claiming insanity, duress or self-defence as their defence), and they are assumed innocent until proven guilty.

In civil law, the burden of proof is on the plaintiff (exceptions exist) and the plaintiff can win their case if they can prove a “preponderance of evidence” in their favour, although some cases such as fraud require a higher level of proof called “clear and convincing evidence.” So for a general civil claim, the jury may find for the plaintiff if they believe there is more than a 50% probability that the defendant was negligent in causing the plaintiff’s injury.


A business is an organisation or economic system where goods and services are exchanged for one another or for money.

Business Combination

A transaction in which one company acquires control of another.

Business Continuity Plan

A business continuity plan is usually a separate document, associated with larger organisations. It sets out a range of procedures for dealing with issues, in the event of a major problem or disaster situation, to minimalise interruption to the business. Such events would include fire, flooding, electrical or gas faults, accidents with hazardous materials, even

Business Cycle

Period (usually 12 months) during which the peaks and troughs of activity of a business form a pattern which is repeated on a regular basis.

Business Day

The business day is defined as any of the days Monday through Friday less holidays, during which most businesses are in operation. Most businesses are closed on the days that are not a business day. By this definition, approximately 252 of the 365 days in a year should be a business day. Not all are,

Business Entity

A business which exists independently of it’s owners.

Business Expenses

Business expenses are the costs a business incurs in the course of producing goods, providing services, or conducting trade. If a business operates at a profit, its business expenses may be tax-deductible. IRS rules specify that business expenses have to be necessary and ordinary to be deductible. Ordinary business expenses are frequent and/or ongoing, such

Business Model

A business model is the way or ways that a company generates revenues and profits. A particular business model can be thought of as the prototypical operational framework repeated in the business plans of several companies of the same type. For instance, magazine publishers generally operate according to the subscription business model. Each business model

Business Plan

A business plan defines a business and its goals. A good business plan is an essential tool for starting and successfully managing a business. The typical business plan has detailed descriptive information and financial data. Non-financial data in a business plan usually includes a statement of purpose and executive summary, a discussion of marketing methods,

Business Valuation

Business Valuation is the process of determining the economic value of a business or company. Business valuation can be used to determine the fair value of a business for a variety of reasons,  including sale value, establishing partner ownership and divorce proceedings. There are a variety of business valuation techniques used for determining a fair price

Buy On Close

An order to purchase a security or currency when the market closes, at a price or exchange rate within the range between the highest and lowest prices or rates at which trades were executed during the closing of the market.

Buy On Opening

A buy on opening order is an order to your broker to buy a stock at the opening bell. A buy on opening order is a market order which means that your buy on opening order will be filled at the best price possible within the opening range of prices. No specific price is guaranteed

Buy Order

A buy order is an order to buy a stock or other asset. It is used to add long positions or cover short positions. Buy orders are submitted to a broker, who first attempts to match it against any outstanding buy orders from its own customers. If the buy order can’t be filled internally, it

Buy To Let

Buy to Let was a term first coined back in 1996 when people started wanting to get on the back of rising property prices. They did this by buying another home in addition to their residential one to rent out – hence the term Buy to Let. Since those days, Buy to Let has undergone

Buyer’s Market

A buyer’s market is any market in which there are more sellers than there are buyers. The laws of supply and demand typically cause prices to drop in a buyer’s market. A buyer’s market can be likened to buying a stock at sale prices. A buyer’s market can refer to the stock market as a

Buying On Margin

When investors engage in buying on margin, they borrow money to purchase securities. The first step in buying on margin is to set up a margin account. Investors can borrow up to half the cost of securities while buying on margin. Because brokerages have different rules for buying on margin, investors must pay close attention


The purchase of a controlling share in a company.


a rule adopted by an organization in order to regulate its own affairs and the behavior of its members


a nonparticipant spectator

Jeremy Bentham

Jeremy Bentham was an extremely forthright and influential 19th-century philosopher, with wide-ranging philosophical interests. In law, his most influential writings argued that the principles of Positivism could, and should, be applied to law. He is therefore regarded as the spiritual father, if not the actual founder, of the doctrine of Legal positivism. Bentham had no time at

Accounting Terms Beginning With "C"


The C-suite: the most important people in world business; the chief executives and heads of finance and information at the 10,000 most successful companies in the world.


C2C is the abbreviation for consumer-to-consumer electronic commerce. C2C is an electronic Internet-facilitated medium that involves transactions between consumers utilizing a third-party. The most common example of C2C is the online auction. In this form of C2C, consumers post items for sale and other consumers bid to purchase them. The third-party facilitating the C2C transaction


A Pool-side hotel room, with our without a bed.


The Cabinet is the collective decision-making body of Her Majesty’s Government in the United Kingdom. It is composed of the Prime Minister and, in recent decades, from eighteen to twenty-four Cabinet Ministers. These ‘Ministers of the Crown’ constitute the most senior level of government officials, and are assigned key executive roles within the Government. They


The right to operate sea, air, or other transport services within a particular territory.

Calendar Year

Calendar year defines the year as designated by the Gregorian calendar in common use as beginning on January 1st and ending on December 31 of that same year. For example, the calendar year 2006 begins on January 1, 2006, and ends at the stroke of midnight on December 31, 2006. A calendar year contains 365


In the textiles industry, Calendering is a finishing process used to smooth, coat, or thin a material.


A call is a type of option contract. A call option gives the call owner the right (but not the obligation) to buy the specified asset at a specific price, or exercise the option. Numerous call options are publicly traded, for various assets, expiration months, and strike prices. A call can be used for hedging

Call Money Market

Call money market refers to the mechanism which allows both dealers and brokers to borrow funds to invest. The funds are used either to provide finance for purchasing securities which can be added to the investment firm’s portfolio or as a resource for covering the margin accounts of the clients of the firm. The call money market offers

Call Option

A call option is an option contract that gives the owner (also called the buyer or holder) the right to buy (or “call”) a fixed amount of an underlying security at a stated price within a specified period of time. The owner of a call option has the right to call the security away from

Call Price

The call price is the price at which an issuer of a security can redeem that security. The call price is set at the time of issuance. The security with a call price can be either a callable bond or a preferred stock. The call price is also called the redemption price. The call price

Call/Put Ratio

The Call/Put Ratio is calculated by dividing the daily or weekly volume of call options by the daily or weekly volume of put options. Typically, large call volume appears at market tops and large put volume at market bottoms. Only CBOE equity options or all CBOE options should be used for this indicator. Call/put ratios

Called Up

The company has called upon the shareholders who first bought the shares, to make their payment in full.


Mutual trust and friendship among people who spend a lot of time together.

Canadian Dollar

The Canadian dollar is the currency of Canada. Canada introduced the Canadian dollar as Canada’s official currency in 1858. CAD is the currency code for the Canadian dollar. C$ is the symbol for the Canadian dollar. Over the years and depending on Canada’s monetary policies, the Canadian dollar has either been floating freely or been


A candlestick is a basic unit in a candlestick chart that visually represents the movement of prices during a specified period of time — typically one trading day. The concept of candlestick charts was developed by Japanese rice traders in the 17th century. In its basic form, a candlestick consists of a rectangular box or

Candlestick Charts

Candlestick charts plot stock price data. Originated by Japanese rice merchants, candlestick charts are used both to identify price patterns and construct trend lines. Candlestick charts use the opening, high, low, and close price data for a specific period, usually days. Pictorially, candlestick charts have a “real body,” a rectangular vertical box that connects the


Cannibalize, is a business strategy, to reduce the volume of sales of any product due to the induction of a new product by the same producer. Cannibalize or cannibalization is a decrease of demand for any existing product, which occurs as any vendor releases a latest and similar product. The concept of cannibalizing can be


The resource of insurance accessible to meet demand.

Capacity Utilisation Rate

The capacity utilisation rate is the value of production capacity which is actually being utilised over a specific period of time. The capacity utilisation rate is measured in percentages and is adjusted to reflect production aptitude of various capital goods and natural resource producers, as well as factories, utilities and the like. Although lower capacity


Capital expense or capital expenditure; the initial costs of a business, in contrast to operational expenditure.


An amount of finance provided to enable a business to acquire assets and sustain it’s operations.

Capital Adequacy Ratio

Capital adequacy ratio (CAR), also known as Capital to Risk (Weighted) Assets Ratio (CRAR) is a measure of bank’s capital against risks. It is calculated as a ratio of a bank’s net capital to its risk factors involved. In other words, Capital adequacy ratio can be determined as a percentage of a risk-weighted against credit coverage of

Capital Allowances

Capital allowances is the practice of allowing a company to get tax relief on tangible capital expenditure by allowing it to be expensed against it’s annual pre-tax income.

Capital and Interest Mortgage

A Capital and Interest Mortgage is one of the most usual types of mortgage. The monthly repayment made by the borrower includes a repayment of capital borrowed and an amount for the interest charged. At the beginning of the mortgage, most of the payment is used to cover the interest and only a small amount

Capital Appreciation

Capital appreciation is defined as any increase in the market price of a stock. Investors who are long the market derive their trading profits from the capital appreciation of the stocks they hold. Capital appreciation can stem from a number of factors: capital appreciation can result from a company’s actual increase in growth or profits,

Capital Appreciation Fund

A capital appreciation fund is a mutual fund that is structured to gain the maximum amount of growth possible. To achieve this, a capital appreciation fund selects high-growth investments, usually small-cap stocks. A capital appreciation fund tends to be volatile and high-risk. A typical capital appreciation fund is involved in sectors that typically show potential

Capital Asset Pricing Model

The Capital Asset Pricing Model (CAPM), originated in the early to mid-1960s, was built upon the concept of modern portfolio theory and diversification. The capital asset pricing model is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that asset’s non-diversifiable risk.

Capital Controls

Capital controls are a type of restriction imposed by the government of any country on the movement of capital. Capital controls are practised to prevent a country’s capital from moving freely in and out of the economy. Policies are taken to restrict foreign investment in the financial market, foreign direct investment on business or property

Capital Equipment

The assets of a company that are used in the production process, such as machinery. Most often capital equipment refers to long-term assets, but it can include short-term assets as well. Such equipment will not be sold in the normal course of business but will be used, worn out or consumed over time as business

Capital Expenditure

Spending on non-current (fixed) assets of a business.

Capital Flight

Capital flight is described as the movement of money and/or assets from one investment or country to another. This movement is generally in search of increased returns and/or economic or political stability. This phenomena is usually the end result of an economic event that upsets investors and forces them to lose confidence in a specific country or region’s economic

Capital Gain

Capital gains are a profit amount by which the selling price of an asset surpasses the original purchase price of that asset. Examples of assets include bonds, stocks, mutual funds and real estate. Capital gains can be classified into two types: realized capital gain and unrealized capital gain. A realized capital gain is an investment that is already sold at a profit. An unrealized capital gain is that investment which has not yet been sold but would result in a profit after it is sold.

Capital Gains Distribution

A capital gains distribution is a distribution of income from a mutual fund to its shareholders. It occurs when the fund sells shares of its holdings for a profit; after this, it then pays the capital gains distribution to its shareholders. Because the capital gains distribution comes from the assets of the mutual fund, it

Capital Gains Tax

Capital gains are subject to capital gains tax. A capital gain is the profit earned by selling capital assets (stocks, bonds, real estate) for more than the original purchase price. The amount of capital gains tax depends upon whether the asset is sold short-term (less than one year) or long-term (more than one year). An

Capital Goods

In a basic sense, capital goods are goods used for the purpose of producing other goods. Capital goods would include items such as industrial buildings, equipment, and heavy machinery. Capital goods also categorize office buildings, highways, and various government installations. The nominal value of capital goods is commonly known as “book value”. Capital goods may

Capital Loss

The loss incurred when a capital asset (investment or real estate) decreases in value. This loss is not realized until the asset is sold for a price that is lower than the original purchase price.

Capital Market Line

A capital market line (CML) is a line intersecting returns on no-risk investments and returns on the entire market. The difference between the capital market line and the efficient frontier is that the capital market line includes no-risk investments. All portfolios along the capital market line are efficient portfolios. The capital market line is used

Capital Stock

Capital stock is stock authorized for issue by the charter of any company. Capital stock includes both common and preferred stock. An accounting balance sheet item, capital stock represent the original investment amount of a corporation. Capital stock initial contributions remain on corporate ledgers at their original price. Capital stock account as shown on the

Capitalisation Issue

Issue of shares to existing shareholders in proportion to shares already held. Raises no new finance but changes the mix of share capital and reserves.


An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.


The market capitalization (market cap) of a company is the stock price multiplied by the number of shares outstanding. Capitalization represents the theoretical price at which one could purchase the entire company. This is only an estimate, however, as a purchase of that size would almost certainly distort the market price. Stocks are divided into

Capped Rate Mortgages

Capped rate mortgages are a cross between a fixed rate and a variable rate mortgage. The interest rate will never rise above a certain rate within what is known as the capped rate period. If the usual variable mortgage rate is less than the capped rate then the borrower is charged that variable rate. Such

Carrier’s Case

Carrier’s Case (1473) 13 Edw. IV, f. 9, pl. 5 (Star Chamber and Exchequer Chamber) was a landmark English court case in property crime law decided in the Star Chamber (also called Anonymous v. The Sheriff of London). The English court adopted the “breaking bulk” doctrine. If someone transporting merchandise on behalf of someone else (being a bailee) and keeps the property by breaking it open

Carry Trade

A carry trade is a transaction done between a country with a very low-interest rate and one with a higher rate which seeks to exploit this difference and create a profit. For example, a trader could borrow Japanese Yen at almost 0% and then loan it out in Thailand, for example, for 4%. The investor


A cartel is a formal agreement between firms engaged in the production and sale of the same product in order to exact and share monopolistic rents. Usually involving a small number of sellers, the terms of the agreement may include points like total industry output, price-fixing, allocation of territories, allocation of customers, market shares, bid-rigging, division of profits and setting


A case is a legal action filed in court. It can also refer to the evidence and testimony by one party in a lawsuit. It is used to prove the plaintiff or the defendant’s case. A case can be initiated through a complaint, petition, or indictment. If a plaintiff wins a civil case they can

Case Law

Case law is part of common law. It includes judgments, also called precedents, which are followed by all courts in the same jurisdictions. The law is recognized, affirmed, and enforced by the subsequent court. Case law varies from statute laws which are laws enacted by legislatures. Under some conditions, a judge may decide to rule

Case Stated

An appeal in writing, from either a Magistrates’ court or (more typically) the Crown Court, heard by the Divisional Court of the Queen’s Bench Division of the High Court. The lower court must ‘state the case’ for the decision reached, describing both the facts of the case and the legal issues considered. This form of


Cash on hand (such as money held in a cash box or a safe) and deposits in a bank that may be withdrawn on demand.

Cash Asset Ratio

The cash asset ratio – also known as the cash ratio – is a stringent test of a company’s liquidity. The cash asset ratio is computed as cash plus marketable securities, divided by current liabilities. Thus if cash is $50,000, marketable securities are $50,000, and current liabilities are $75,000, the cash asset ratio is (50,000

Cash Back Credit Card

Cashback credit cards offer a straightforward cash reward for using them. These loyalty schemes return a percentage of your spending to you in the form of a cash rebate. The exact percentage on offer varies and most cash back credit cards tempt potential users with an introductory period offering a higher percentage return. Introductory cashback

Cash Back Mortgage

A Cash Back mortgage does what it says on the tin! On completion of the mortgage, your lender will pay a percentage of the amount borrowed ‘back’ to you as a lump sum. The higher the cashback sum paid, the greater and more complex the number of strings likely to be attached to the mortgage.

Cash Basis

Cash basis is an accounting method that recognizes revenue and expense only when cash is paid or received. The cash basis method thus focuses exclusively on the company’s most liquid and tangible asset, namely, cash. The cash basis method is distinguished from the accrual method, which recognizes revenue when earned and expenses when incurred. The

Cash Cards

Cash cards are plastic cards, issued typically by banks and building societies and used for withdrawing cash from Automatic Teller Machines (ATMs) – also known as hole in the wall machines. To withdraw cash, the user needs to input a personal identification number (PIN). Cash cards are often combined with debit or credit cards.

Cash Coverage Ratio

Cash Coverage Ratio measures the ability of the company’s operating cash flow to cover its obligations, including its liabilities or ongoing concern costs. The Cash Coverage Ratio is an important indicator of the liquidity position of a company. It is often used by the banks to decide whether to make or refinance any loan. The Cash Coverage

Cash Cow

A cash cow represents the division of a company that provides a steady and significant cash flow. A cash cow tends to operate in a mature industry with little competition. A cash cow requires minimal ongoing investment and the cash flow that a cash cow provides tends to be used to support other divisions and

Cash Crop

In agriculture, a cash crop is a crop which is sold for money. The term is used to differentiate from crops that are not sold, such as those fed to livestock or grown as food for the producer’s family. In tropical and subtropical areas, coffee, cocoa, sugar, bananas and oranges are common cash crops. In

Cash Dividend

A cash dividend is the distribution of a company’s profits to it’s shareholders. Although every company is unique, dividends are typically paid quarterly, and the amount is determined by the board of directors. Investors seeking the highest possible profits often reinvest their cash dividend back into the company. Many companies avoid giving a cash dividend

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Cash Flow

Revenue or expense streams that change a cash account over a given period. Cash inflows arise from one of three activities: financing, operations and investing. Cash flow can also be negative, if a business spends more money than it takes in during a given period of time.

Cash Flow Projections

Statements of cash expected to flow into the business and cash expected to flow out over a particular period.

Cash Flow Statement

Provides information about changes in financial position.

Cash Machine (ATM)

Cash machines are often referred to as ‘cash dispensers’ or ‘hole in the wall machines’. Cash machines are a cross between a cash till and a computer, which enables users to access their bank accounts and carry out transactions such as withdrawing cash. The first cash machine in the United Kingdom was introduced by Barclays

Cash Out

The term cash out applies to a type of mortgage refinancing where the property owner receives cash by taking on additional debt secured by accumulated equity in the real property, hence the phrase cash out. Low and falling mortgage interest rates encourage cash-out refinance, or refi mortgages. Falling rates make it worthwhile to replace an

Cash Ratio

Cash Ratio (also called Cash Asset Ratio) is the ratio of a company’s cash and cash equivalent assets to its total liabilities. Cash ratio is a refinement of quick ratio and indicates the extent to which readily available funds can pay off current liabilities. Potential creditors use this ratio as a measure of a company’s liquidity and how

Cash Reserves

A company’s cash reserves are the funds available to meet its needs for cash, especially unanticipated needs. What level of cash reserves is sufficient depends on the company. For example, a major airline may need $1.5 billion in cash reserves to fund operations and avoid bankruptcy. Financial analysts use a number of ratios that include

Cash Return On Capital Invested

CROCI, or Cash Return on Capital Invested, compares the cash generated by a company to its equity. This metric is cashflow based as opposed to earnings-based. Cash flow is generally considered more important than earnings as earnings can be manipulated via accounting policies. Cash Return on Capital Invested is also known as Cash Return on

Cash Settlement

A cash settlement is a payment in cash for the value of a stock or commodity underlying an options or futures contract upon exercise or expiration.

Cashier’s Cheque

A cashier’s cheque is issued and certified by a bank on its own account. A purchaser acquires a cashier’s cheque by paying the bank the value of the cashier’s cheque plus any fees. Often, to obtain a cashier’s cheque, the purchaser must have an account with the bank issuing the cashier’s cheque. Basically, the bank

Casualty Insurance

Generally, casualty insurance is a type of indemnity that provides coverage against loss from injury or property loss. Specifically, casualty insurance offers protection against perils associated with legal liability, as well as health and sickness. Casualty insurance is a very broad category and includes almost all types of non-life insurance. Major classes of casualty insurance

Catch-Up Effect

Catch-up effect is a theory that expresses the possibility of poorer economies growing at a quicker pace than richer economies. According to the catch-up effect theory, the national income of economically backward nations generally catches up with the national income of economically advantaged nations. It is seen that developing nations tend to surpass their more


the act of causing something to happen

Causation In Criminal Liability

In criminal law, there are two aspects to causation. Firstly, the prosecution must prove that the acts or ommissions of the defendant was the cause of the consequence both in fact and in law. Factual Causation The factual test for causation is the ‘but for’ test, which is proved if the jury are satisfied that

Causation In Negligence

In a claim for negligence, the claimant must establish not only that he was owed a duty of care, and that the defendant was in breach of that duty, but that the breach was the cause of the injury or loss he suffered. There are two parts to this question of causation: causation in fact, and

Causation In Tort

The issue of causation, that is, whether the claimant’s loss or injury can justly be attributed to the defendant’s wrongful acts, is important in a number of areas of tort law, in particular trespass to the person, and Negligence. See causation in negligence for more details.


The CBOE, or Chicago Board Options Exchange, was founded in 1973 as an exchange devoted entirely to trading options contracts. The growth of the CBOT has paralleled the increasing volume of options trading generally. In the earliest days, the only options contracts traded on the CBOE were on individual stocks. Then Black-Scholes was adopted and

CBOE Gold Index

CBOE Gold Index stands for the Chicago Board Options Exchange (CBOE) Gold Index. The symbol for the CBOE Gold Index is GOX. The CBOE Gold Index tracks the prices of companies (i.e. there were 12 in 2008) involved in the production and mining of gold. The CBOE Gold Index is a price-weighted index, modified using

CBOE Volatility Index

Cboe’s volatility indexes are key measures of market expectations of volatility conveyed by option prices.


The CBOT, or Chicago Board of Trade, is the world’s oldest exchange for trading commodity futures and options. The CBOT was established in 1848 to provide commodities buyers and sellers with a centralized location to negotiate forward contracts. In 1865, the CBOT listed the first exchange-traded derivative in the US. Actually a standardized forward contract,


A County Court Judgment (CCJ) is a type of court order in England, Wales and Northern Ireland that might be registered against you if you fail to repay money you owe.

CDR Counterparty Risk Index

The CDR counterparty risk index is a measure of credit risk associated with purchasing credit derivatives. The CDR counterparty risk index is calculated based on the average credit spread of 5-year credit default swap contracts traded by 15 major international financial institutions. The CDR counterparty risk index was launched in June 2008 by Credit Derivatives

Central Bank

Central bank is a general name given to a nation’s chief monetary authority. Central banks are responsible for a wide range of economic decisions. These may vary from ensuring currency stability, maintaining a low inflationary rate to assisting in full and gainful employment. A number of central banks also issue currency for their specific countries. The commercial entity function as the government’s bank, supervise commercial banks, handle exchange reserves and modulate the credit system. Central banks also perform the crucial role as lender of last resort. Prominent examples of central banks include Reserve Bank of India (RBI) and the United States Federal Reserve System.


An acronym for the Chief Executive Officer, the person who is responsible and accountable for the functioning of a company as a whole. A CEO is also often referred to as the “president” or “director” of a company. A CEO usually reports directly to the company’s board of directors.

Certainty Of Intention

If the existence of a valid express Trust is disputed, a factor that the court will consider is whether there was sufficient certainty of intention; that is, whether the settlor genuinely intended to create a trust (see also three certainties). The party that wishes to assert the existence of the trust must provide evidence of the

Certainty Of Subject Matter

An interesting set of setiusggons, but problematic. Two things: First of all, the first suggestion is probably not going to work because it frustrates the purpose of the trust. One of the things Burroughs is probably going to have to do is make promises against the trust principal to carry out his obligations under the

Certificate of Deposit

A CD, or Certificate of Deposit, is a savings instrument issued by a bank or thrift. The CD pays interest on deposits held for the term of the CD. The interest rate on a CD is usually quoted as an annual percentage yield, or APY and is determined by competitive market forces. CD yields tend

Certified Financial Planner

Certified Financial Planner, or CFP, is a financial professional who is approved by the Certified Financial Planner Board of Standards. A typical Certified Financial Planner is an experienced financial expert whose job it is to advise clients on the matters of income tax planning, retirement planning, and estate planning. A Certified Financial Planner may also

Certified Public Accountant

A designation given to an accountant who has passed a standardised CPA exam and met the government-mandated work experience and educational requirements required to become a Certified Accountant.


Certiorari is a prerogative writ of the superior court to call for the records of an inferior court or body acting in a judicial or quasi-judicial capacity. Different Constitutions enable the Supreme Court and the high courts respectively to issue orders, writs or directions in the nature of habeas corpus, mandamus, quo warranto, prohibition and

Ceteris Paribus

Ceteris paribus is a Latin expression which loosely means “holding other things constant”. Mostly used in economics, this phrase is used by economic analysts to denote the effect of one economic change on another when all other variables, which may affect the latter, remain constant. The use of this phrase in economics is done for simplification of


CFA stands for Chartered Financial Analyst, a professional designation given by the CFA Institute to investment professionals. The CFA designation is geared toward asset valuation and portfolio management, but the range of topics covered in the self-study curriculum also includes ethical and professional standards, financial theory, probability and statistics, microeconomics and macroeconomics, accounting and financial


An acronym for the Chief Financial Officer, who is the head accountant of a company. A CFO manages anything that has to do with the company’s finances.


CFP is short for a certified financial planner, which is a professional designation in the financial planning industry. The CFP designation is administered and regulated by the Certified Financial Planner Board of Standards, Inc. Financial planners that wish to obtain a CFP designation must meet several requirements mandated by the CFP board, including minimum education

Chaikin Oscillator

The Chaikin Oscillator is a volume indicator based upon a moving average of the Accumulation/Distribution Line (ADL). Chaikin Oscillator Calculation The Chaikin Oscillator is created by subtracting one exponential moving average of the Accumulation/Distribution Line (e.g. 10-day average) from another EMA of the same line (e.g. 3-day average). The result is plotted on the chart.

Chain Of Causation

In many claims in tort, or prosecutions in criminal law, the causal relationship between the defendant’s wrongdoing and the victim’s loss or injury is perfectly clear. If A hits B over the head, and B sustains a concussion, there is no real issue of causation. Problems arise in this area when the causal relationship is


The person who chairs the meetings of the board of directors of a company (preferably not the chief executive).

Chairman Of The Board

The highest-ranking position in a corporation; the member of the board of directors who presides over board meetings. However, the chairman of the board may not always have the greatest actual authority; this is reserved for the Chief Executive Officer. Sometimes the title is honorary. In small companies, it is common for one person to hold several titles.


An illegal agreement in which a person with no previous interest in a lawsuit finances it with a view to sharing the disputed property if the suit succeeds.

Changes To The Law On Evidence Of Bad Character

This Act introduces radical reforms to the law of evidence in criminal proceedings, among other things Changes To The Law On Criminal Hearsay In general, the 2003 Act makes few substantive changes to the kinds of evidence that must be excluded because they are Hearsay. However, it makes a number of procedural changes, which have the

Chapter 11

Chapter 11 is a section of the US Bankruptcy Reform Act of 1978. Chapter 11 allows partnerships, corporations, and individuals who are unable to service debts or pay its creditors, to seek judicial relief for re-organization. On Chapter 11 filing, the court imposes a moratorium on foreclosures, repossessions, tax levies and other creditor actions, and

Chapter 13

Chapter 13 is a provision in U.S. bankruptcy law under which people who earn a steady income can create a plan to pay back some or all of their debts. Debtors who use chapter 13 can propose a repayment schedule spanning 3-5 years, depending on their income level. Those who earn less than their state’s

Chapter 7

Chapter 7 is a section of the US Bankruptcy Code under which a company or an individual can declare bankruptcy. A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. Once a Chapter 7 filing is made, the US Bankruptcy Court appoints a trustee. With a Chapter 7 bankruptcy, the trustee takes an inventory


In relation to interest or taxes, describes the reduction in ownership interest reported in the income statement (profit and loss account) due to the cost of interest and tax payable.

Charge Back

When a cardholder cancels a credit or debit card transaction before it has been processed. When a chargeback occurs many banks charge the seller a fee.

Charge Card

A charge card is a physical card that records an account number of a buyer in a retail payment system. In a charge card transaction, the buyer presents the charge card to a merchant, the charge card issuer guarantees the merchant will be paid for the authorized transaction, and the cardholder receives an invoice from

Charge Certificate

A Charge Certificate applies when a property is registered with the HM Land Registry. A Charge Certificate will prove or transfer ownership of land. The Land Registry issues a Charge Certificate to the mortgagee of the property who has registered title. If there is no mortgage on the property, the Land Registry issues a Land

Chargeable Gift

Any item given under a Will which is eligible for taxation.

Charitable Uses Act (1601)

The preamble to this Act, which sets out a long and varied list of endeavours that are properly regarded as charitable, is still seen by the courts as providing a starting point for determining whether an organization is a valid charity or not. See: Scottish burial reform and cremation society v Glasgow corporation (1968), CharitableTrust


Charity involves granting of resources or services for economically underprivileged populace, public bodies, educational institutions or for religious purposes. Charitable organizations and non-profit organizations provide charitable services to targeted groups. Of this non-profit organizations mostly operate in a corporate business framework. Whether an organization is a charitable one or not is determined by the law of

Charity Credit Cards

Charity credit cards are simply ordinary credit cards that promote a particular set of causes or one cause. Together with similar cards, they are known as affinity cards. What this means is that a set donation will be made to the charity or charities when you are issued with the card and for every transaction,

Chart Of Accounts

A list of all of the accounts that are held in which business transactions are classified and recorded.

Chartered Financial Analyst

A Chartered Financial Analyst (CFA) is an investment professional who meets standards of competence and integrity necessary to pass the CFA exam. A Chartered Financial Analyst is said to be a CFA charter holder. To become a Chartered Financial Analyst, three postgraduate level exams focused on portfolio management and asset valuation must be passed. The

Chartered Market Technician

A Chartered Market Technician (CMT) is a professional designation that establishes proficiency in technical analysis of the financial markets.  Membership in the Market Technicians Association (MTA) is required to be a Chartered Market Technician. The CMT designation requires completion of an education program and examination series in technical analysis. The Market Technicians Association (MTA) oversees the program curriculum and administration


A chartist is an investor who attempts to predict market movements through the use of chart patterns. A chartist believes that by studying past market actions, as graphically displayed on a stock market chart, that the future course of the market can be revealed. In this respect, a chartist relies on technical rather than fundamental

Chasing The Market

An investor who is chasing the market purchases securities after a market has already risen or sells securities after a market has already dropped. In other words, investors who are chasing the market tend to buy high and sell low. Investors who take their cue from the actions of other investors often end up chasing


Chattels is one of those funny legal words which means simply ‘the things you own’. The legal definition of chattels is: property of any kind other than freehold land. In practice, it will mean your moveable items such as furniture or personal possessions. If you’re the sort of person who goes out to dinner or

Checking Account

A checking account is an account at a depository institution against which checks may be written to make payments. For the consumer checking account, payment can also often be made via debit card. The bank, thrift, or credit union that maintains the checking account will generally send an account statement each month. Checking account balances

Chicago Board Of Trade

The Chicago Board of Trade (CBOT) is a commodities exchange located in Chicago, IL, and one of the busiest institutions of its kind in the world. Thousands of members trade futures and options on the Chicago Board of Trade (e.g. U.S. Treasuries, grains, livestock, precious metals, etc.). In 1848, a group of local business leaders

Chicago School

The Chicago School is a neoclassical economic school of thought that has its beginnings at the University of Chicago during 1940s. Principal dogmas of Chicago school lay stress on freedom from government control and believes that free markets are the best allocator of economic resources. Chicago school has made an impact on finance by developing

Chief Executive

The director in charge of the day-to-day running of a company.

Chief Operating Officer

A chief operating officer is an executive who is responsible for the day-to-day operations of a company. The chief operating officer reports directly to the chief executive officer (CEO). Companies typically hire a chief operating officer after a certain amount of growth and when the CEO becomes too busy with strategic issues to be involved

Chief Rent

Chief Rent is a small sum of money in rent payable by the owner of a freehold property to the Lord of the Manor (yes, really!). In the past Chief Rent was payable indefinitely but may now be redeemed by a lump sum payment. It’s similar to the ground rent payable by a leaseholder.


A young human being below the age of puberty or below the legal age of majority.

Child And Dependent Care Credit

The child and dependent care credit is a federal income tax credit. The child and dependent care credit is available to a person who is employed or looking for work, who pays someone to care for a child or dependent. If the person seeking the child and dependent care credit is married, his/her spouse must

Child Tax Credit

The Child Tax Credit is a nonrefundable credit offered by the IRS for families with children who meet five IRS qualifying tests. Depending on income levels, the amount of the Child Tax Credit can be up to $1,000 per child. The Child Tax Credit represents a dollar-for-dollar reduction in a taxpayer’s income tax liability. The

Child Tax Credit

A child tax credit is a tax credit based on the number of dependent children in a family. United States In the United States, a taxpayer can claim a $700 per child tax credit if he has a “qualifying child” living with him. According to the Motley Fool, the child must have a Social Security

Chose In Possession

Another term for ‘thing in possession’. See: thing in possession, thing in action, chose in action.


Attrition or turnover of customers of a business or users of a service. In the new economy (which provides unprecedented choice, and instant and global access to products and information) churn rate determines business earnings and growth. A firm has to earn and re-earn every day the loyalty of its customers.

Churn Rate

Churn rate is a measure of customer attrition. The churn rate is defined as the percentage of customers who stopped doing business with a company in a period divided by the average number of customer existing in that period. Churn rate is a useful business metric for any subscription-based or other account driven service, such


In sales, the practice of getting consumers to purchase more than they need to, or unnecessary sales made solely to generate income. Can also refer to the general turnover in a client base.


It is King Henry II (reigned 1154–89) who first instituted the early English custom of having judges ride around the countryside (‘ride circuit’) each year to hear legal cases on appeal. This obviated the need for appellants to travel to London, which made matters more convenient for the opposing parties (long-distance travel at this time

Circuit Breaker

The stock market circuit breaker has the same purpose as the electric switch in most homes: to shut the system down when the load becomes too high, giving it time to cool off and prevent a meltdown. The load limited by the circuit breaker is rapid downward movement of prices. The circuit breaker is supposed

Circuit Judge

Circuit Judges are senior judges in England and Wales who sit in the Crown Court, County Courts and certain specialized sub-divisions of the High Court of Justice, such as the Technology and Construction Court. The modern office of Circuit Judge was created by the Courts Act 1971. Circuit Judges sit below High Court Judges but

Circulating Assets

Assets that turn from cash to goods, and then back to cash again. Examples include purchasing materials to build a product; manufacturing the product (which results in stock); and selling the stock for cash.

Circulating Capital

Circulating capital is referred to that capital, which flows within any organization. Circulating capital can be measured as that stock of value which is used within any production organization. Major components of circulating capital include stocks of raw materials, inventories of finished goods, cash on hand for paying wages and work in progress. [1] The initial use of term

Circumstantial Evidence

Circumstantial evidence or indirect evidence is not based on actual personal knowledge or observation of the facts, but is evidence which is used to draw inferences. It is possible to obtain a conviction with the use of circumstantial evidence if it is backed up by corroborating evidence and other factual information.

For example, a criminal trial may include information from a witness who arrived at a murder scene to see another person holding a bloody knife. Although the person holding the knife could have committed the murder they also could have arrived on the scene after the crime had occurred and simply picked up the knife. It could have been after they picked up the knife that the witness arrived at the scene. The witness may at that time assume the defendant committed the murder, but they did not actually witness the event. Corroborating evidence may be needed from another source such as an eye witness to the crime to prove the person holding the knife actually killed the victim.


Citations can be criminal or civil, although a criminal citation has much more serious ramifications. A criminal citation is used in some jurisdictions for charging someone with a crime without the police making a physical arrest. The citation will generally state the date and time the defendant must appear in court. It will also list

Citation Of Legislation And Case Law

A description the standard procedure for citation of legislation and court cases. Public General Acts of Parliament Because Acts of Parliament are issued annually, each new Act is considered a ‘chapter’ in the annual volume. Hence, to cite an Act fully, the year and chapter number should be provided. Until 1963, the year was expressed

Citizen’s Arrest

The concept of a ‘citizen’s arrest’ is most relevant to people employed in quasi-constabulary roles, such as security guards. In general, private security personnel don’t have any greater powers of arrest than any other private citizen. However, English law recognizes a number of circumstances in which one private citizen may lawfully arrest another. This guide

Civil Case

Civil cases are cases which do not involve criminal crimes. Common civil cases include debt collection, general personal injury cases, medical malpractice cases, birth injury accidents, motorcycle accidents, car accidents and breaches of contracts. In a civil case, the burden of proof is on the plaintiff. For instance, if you have filed a personal injury

Civil Complaint

A civil complaint is the first pleading in a civil case and initiates a civil lawsuit to seek relief for damages. The civil complaint will give notice to the defendant that legal action has begun against them by the plaintiff and will outline the material facts and legal theories of the case. The complaint will

Civil Law

(i) Any legal system in which the full body of law is determined by the apparatus of state and is not derived from the decisions made by the judiciary. Roman law was largely of this sort. The English legal system, in contrast, developed primarily as a system of judicially created ‘common law’. (ii) A branch

Civil Lawsuit

A civil lawsuit is the action a victim or plaintiff can bring against another person or defendant for causing physical or emotional injuries. Civil lawsuits can be initiated regardless of whether the defendant is found criminally responsible or guilty of a crime. Civil cases are brought by the plaintiff (injured party) against the defendant (potentially

Civil Procedure

The methods, procedures, and practices used in civil cases. The judicial system is essentially divided into two types of cases: civil and criminal. A study of civil procedure is a study of the procedures that apply in cases that are not criminal. Generally, criminal trials are used by the government to protect and provide relief

Civil Procedure Act 1997

This act gives effect to the Lord Woolf’s report Access to Justice and establishes a Civil Procedure Rule Committee with power to make rules for all civil legislation (except family proceedings). See: Woolf report, Woolf reforms, Civil procedure rules

Civil Procedure Rules

The Civil Procedure Rules (CPR) were created under the authority of the Civil procedure act (1997), and give effect largely to the recommendations of the Woolf report. The purpose of the rules is to unify the procedures for civil claims in the High Court, the county courts and, in some cases, in the Civil Division of the Court of

Civil Wrong

an infringement of a person’s rights, especially a tort.

Claim Of Right

Enacted in 1989, the Claim of Right has similar provisions to the English Bill of rights, many of which remain in force. See: Constitutional legislation


someone who claims a benefit or right or title

Class A Shares

Class A shares of stock are generally thought of as a preferred tier of classified stock. In many companies, Class A shares have greater voting rights than Class B shares or any other class of shares. One reason for creating this disparity in voting rights between classes of stock is to insulate company management, typically

Class Action Suit

A class-action lawsuit is a claim brought by one party for a group of individuals who have been injured or suffered loss from the same action or grievance. To have a class action lawsuit there must be a group of people with a “well-defined interest” who have similar injuries as each other. The goal of the class action lawsuit is to increase the power of the suit of individuals to fight against the malfeasance of a larger entity.

Common class actions suits included a 2006 class-action suit against Enron by a group of investors who settled their lawsuit for $7.2 billion. Another common class-action suit was filed against Bridgestone/Firestone when their tires led to numerous accidents and injuries. Makers of silicone breast implants were the subject of another huge product liability class action, which eventually settled for $3.4 billion. Fishermen and canners also successfully filed a lawsuit against Exxon for the Valdez oil spill.

Class B Shares

Class B shares are a classification of common stock that may or may not have more voting rights than Class A shares – typically thought to be the preferred class. It is a common misconception that Class B shares carry less weight than Class A, which is not always the case with Class B shares.

Class C Shares

Class C shares are a common class of mutual funds. Class C shares of this type are often referred to as “level-load” shares. In addition to Class C shares, there are also Class A and Class B mutual funds. Class C shares carry neither a back-end or front-end load, yet have higher expense ratios. This

Class Of Objects

The group of people eligible to be considered beneficiaries under a trust. For a fixed trust, the class of objects is identical to the set of designated beneficiaries. Where the trustees are accorded a discretion to select who will benefit under the trust, the class of objects may be wider than the (final) set of beneficiaries. This

Classical Economics

Classical economics is a school of economic thought. It came into prominence with the publication of Wealth of Nations by Adam Smith in 1776. Classical economics evolved with time and was influenced by doctrines like mercantilism, physiocracy, classical liberalism and the industrial revolution. Stalwarts like Adam Smith, John Stuart Mill, David Ricardo, W. Jevons, Alfred Marshall, Jean-Baptiste Say

Clear And Convincing Evidence

Clear and convincing evidence is a standard of proof greater than a preponderance of evidence but lower than the standard of beyond a reasonable doubt (which is required in criminal cases). Under the clear and convincing level of proof, a party must prove it is “substantially more likely than not that it is true.” Most


1. General: Satisfaction of the requirements of a due process. 2. Banking: See check clearing. 3. Futures and options: Procedure through which a clearinghouse acts as a counter-party to every trade and assures financial integrity of each contract. 4. Importing: Release of a shipment after approval of its shipping documents and customs entry, and payment


The economic policies associated with the administration of William Jefferson Clinton, 1993-2001.

Close Corporations

A close corporation is a corporation that possesses the following traits: a small number of shareholders; no ready market for the corporation’s stock; and substantial participation by the majority shareholders in the management of the corporation. Some states have close corporation statutes. This kind of corporation typically has 30 to 50 stockholders and is a

Close Season

Period during which those who are ‘insiders’ to a listed company should not buy or sell shares.

Closed Economy

A closed economy is a self-sustained economic unit with no trading or business relations with any other unit outside it. The term usually refers to a particular nation or an area with a common currency and is used to denote little or no economic exposure to the outside world. Instead of importing and exporting goods, a closed economy

Closed-End Fund

A closed-end fund is legally known as a closed-end management company. A closed-end fund issues a fixed number of shares, usually through a one-time public offering, after which timeshares in the closed-end fund are traded on a stock exchange, and not directly from the fund. A closed-end fund differs from a mutual (open-end) fund, which

Closing Arguments

A closing argument is the summation of a lawyer’s arguments at the conclusion of a trial. The closing argument does not provide new evidence. The plaintiff’s lawyer generally presents their closing arguments first by commenting on the evidence provided and how it proves their case. The defense follows answering questions made by the plaintiff or

Closing Bell

The closing bell is a signal which marks the end of an exchange’s daily trading session. Not all exchanges use an actual bell but all exchanges have a closing bell signal which marks the official end of the trading session. Even though extended trading hours are reducing the importance of the closing bell, the closing

Closing Costs

Most generally, closing costs are associated with the cost of a transaction. However, more commonly closing costs pertain to real estate and constitute a range of fees and expenses paid by both the seller and buyer at the time of the transaction. Closing costs are typically comprised of title insurance premiums, deed recording fees, inspection

Closing Price

The closing price of a stock is the price of the final trade of the trading day. Unfortunately, the final trade of the trading day — and, hence, the closing price — is not as cut-and-dried as it used to be. In the U.S. the closing price of virtually every stock used to be its

Closing The Books

A term used to describe making the final entries, and balancing the profit and loss account at the end of the financial year.

Co-Ownership Of Land

Like anything else that can be owned, land can be owned by more than one person at a time. Strictly speaking, of course, it is an interest in land that is owned, not the land itself. In England and Wales, it is not possible for a private citizen to ‘own’ land as such. When we speak


An obsolete form of co-ownership of land which was automatically assumed when land was inherited by two or more sisters, there being no male heir. Each co-parcenor held an equal share of the title, and had the same rights of possession over the whole estate (we would call this an undivided share these days). Unlike a tenancy in


Literally, ‘making a book’ (or ‘codex’). In law, codification is the process of collecting and restating either the complete law of a distinct legal system (e.g. France’s Napoleonic Code, established in 1804) or else a particular branch of law within that system (e.g. America’s Uniform Commercial Code, first published in 1952, and later enacted, in

Cognitive Functions

Cognitive functions are the ability of the brain to process information. Severe brain injuries from personal injuries can lower the cognitive function of a claimant. Individuals commonly suffer brain injuries and loss of cognitive functions if they have been severely injured in a bike, motorcycle, or car accident. Birthing injuries due to medical malpractice may

Coincident Indicator

A coincident indicator is an economic indicator that measures the current state of the economy of a nation. The coincident indicator is based on employment, demand, or income levels that move up or down directly with the changes in the economy. Economists depend on coincident indicator measurements to assess the current economic performance of the


Revolving Collateral It refers to collateral, which undergoes constant change like inventory or accounts receivable. Accounts receivable of a company is a monetary amount, which is owed by a customer to that company for a good or service that has already been provided. Accounts receivable are recorded as a current asset on a company balance

Collateral Power

A collateral power (or power of appointment) is also known as a ‘mere power’. For further discussion see mere power.

Collateral Security

Collateral security is extra security provided by a borrower to back up his/her intention to repay a loan. Such security is likely to be documentation (deeds) giving right of title to the property, which the lender may take over and sell to repay the loan if the borrower does not keep up the mortgage payments.

Collateral Source Rule

The collateral source rule does not allow a plaintiff to have their benefit from the tortfeasor or from the lawsuit reduced because they receive compensation from another source, such as an insurance company. Under the collateral source rule, if a plaintiff has additional sources of payments such as insurance coverage to pay for their expenses

Collateralized Debt Obligations

Collateralized debt obligations (CDO) are a form of asset-backed security (ABS). Collateralized debt obligations are complex structured investment products that are collateralized by a group of assets (i.e. bonds, business loans, other collateralized debt obligations, etc.). The idea behind collateralized debt obligations is that you can create an investment-grade financial product and create liquidity by

Collateralized Mortgage Obligation

A CMO or Collateralized Mortgage Obligation is a specific kind of mortgage-backed security. CMO is an investment-grade bond. It is a bond, which represents an investor’s claims on a specific cash flow arising out of big home mortgage pools.[Federal Home Loan Mortgage Corporation in USA issues CMO bonds. Other government-sponsored bodies and some private issuers also issue CMOs. Freddie Macs

Collision Insurance

Collision insurance is a coverage that helps pay to repair or replace your car if it’s damaged in an accident with another vehicle or object, such as a traffic light or a tree. If you’re renting or financing your car, collision coverage is typically required by the lender.


Collusion is a kind of non-competitive agreement among business rivals in the same industry. Firms display collusive behaviour to cut down on competition and earn a greater proportion of profits. In other words, firms tend to desist from market fragmentation. Collusive behaviour of firms is mostly seen in an oligopolistic market structure. Collusive behaviour is


Commodity Exchange Inc. (COMEX) was established in 1933 through the merger of four smaller exchanges based in New York: the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Exchange, and the New York Hide Exchange. COMEX shot into prominence when a 1933 ban on Americans holding gold was repealed in

Command Economy

A command economy, also called a planned economy, is directly controlled by the government. The state owns all property and controls all resources including land, labour, and capital in a command economy. Allocations of resources, supply, and price are regulated through central planning. A command economy discourages individualistic profit motives and consumeristic needs. Under such

Command Theory

The classic example of a ‘command theory’ of law is Kelsen’s model of law. See Kelsen.


the activity of buying and selling, especially on a large scale. The exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

Commercial Bank

A commercial bank is a financial intermediary which collects credit from lenders in the form of deposits and lends in the form of loans. A commercial bank holds deposits for individuals and businesses in the form of checking and savings accounts and certificates of deposit of varying maturities while a commercial bank issues loans in

Commercial Hedger

A commercial hedger is a corporation that attempts to stabilize the price of a commodity by taking a position or stake in the commodities market. Since a commercial hedger uses the commodity to produce its own goods, locking in prices is a favourable strategy. A commercial hedger in the commodities market can be both a

Commercial Loan

A commercial loan is a loan borrowed by a company to pay for any of several financial needs. A commercial loan is short term, and it may be renewable once it matures. A commercial loan is used to finance working capital needs; that is, needs for operations and other current requirements of the business. A

Commercial Mortgage

A commercial mortgage is a mortgage which is secured by real estate which is used by a business. Also, the proceeds of a commercial mortgage must be used for business purposes. Many commercial mortgage lenders require a minimum loan size, often half a million dollars or more. A commercial mortgage may be secured by an

Commercial Paper

A method of borrowing money from commercial institutions such as banks.


the act of commercializing something; involving something in commerce


The fee paid for a service, often based on results or on a percentage of the sales or profits.
A committee (often official) dedicated to a specific aspect of business.

Committal Proceedings

The formal process followed by a magistrates’ court when transferring a case to the Crown Court. An offender may be ‘committed for trial’ (i.e. by jury), or ‘committed for sentence’. The latter occurs when either the magistrates have found the accused guilty or the accused has pleaded guilty, but the magistrates themselves are without authority

Committee Of The Whole House

The House of Commons convened for the particular purpose of discussing in detail a new Bill that has passed its Second reading. This is not a debate, as such, and no vote is taken. Its purpose is to allow the proposal of technical and detailed improvements in the Bill. In practice this procedure is used only occasionally;

Committee Stage

After a new Bill has passed its Second reading, it moves to the committee stage, where it is discussed in detail, usually by a Standing committee, but occasionally by a Committee of the whole house. In either case, the purpose is to examine the clauses of the Bill in detail and, if necessary, to propose amendments. In practice, the


A reasonably interchangeable good or material bought and sold freely as an article of commerce. Commodities include agricultural products, fuels, and metals and are traded in bulk on a commodity exchange or spot market.

Commodity Channel Index

The Commodity Channel Index (CCI), first introduced by Donald Lambert, is an oscillator used to help determine when a stock has been overbought and oversold. The Commodity Channel Index usually trends between +/-100. The CCI measures the variances in the price of a given equity compared to the average price of the same equity. A

Commodity Exchange

A commodity exchange is a market organized to allow for the selling and buying of commodities. Commodities, which are hard goods, as opposed to services, may be bought and sold on a commodity exchange in three types of markets: cash, futures and options. Cocoa, corn, crude oil, and gold are a few examples of commodities

Commodity Futures

Commodity futures are futures contracts for the delivery of commodities. The oldest commodity futures market is the Chicago Board of Trade (CBOT), which began trading the first futures contract, a standardized forward agreement, in 1865. All the earliest commodity futures were for agricultural products. Today, commodities futures contracts also exist for natural resources such as

Commodity Futures Trading Commission

The Commodity Futures Trading Commission is an independent federal regulatory agency. The Commodity Futures Trading Act of 1974 established the Commodity Futures Trading Commission to administer the Commodity Exchange Act. The Commodity Futures Trading Commission regulates US commodity futures and option markets and protects market users and the public from fraud, manipulation, and abusive practices.

Commodity Index

A commodity index tracks the price of various types of commodities. A commodity index can track the price of commodities in the spot market or in the futures market. A commodity index is traded like any other indices and allows investors to invest in commodities without purchasing or storing the commodity itself. A commodity index

Common Gap

A Common Gap is a gap in stock price brought about by normal market forces and are considered to be very common. They are represented graphically by a jump or drop from the previous close to the open price on the (daily, weekly, monthly) stock chart. The trading range maintains the gap throughout the trading day. Common

Common Law

Common law is case law which is established by precedent developed by judges through historical decisions. Common law varies from laws established through statutes or regulations issued by the executive branch or the federal or state legislatures. Common laws are case-based reasoning. If a case is similar to another case than any past cases are

Common Law Exceptions To The Hearsay Rule

Although the general principle is that Hearsay evidence is inadmissible to prove the facts it expresses, over the years the courts have developed a number of exceptions. Although the Cja (2003) make some radical changes to the law regarding hearsay, it expressly preserves (s.118) many of these common law exceptions, including the following: A public document or record

Common Law Prescription

Traditionally, to acquire an Easement by Prescription under the common law has required that the easement be exercised ‘since time immemorial’. Since ‘time immemorial’ was, and still is, deemed to extend back to 1189, it was very difficult to establish that the purported easement had been in use continuously since that time. The modern approach is to allow the

Common Market

‘Common market’ is a vague term often carelessly used by writers on in the hope that readers will read it in the same context that they write it. The term has no well-defined meaning. In the early days of the UK’s membership of the EEC, the term ‘The Common Market’ was widely used to denote the

Common Mistake

A common mistake occurs when a contract is formed and appears valid, and yet the situation that obtains in the real world makes the contract meaningless. For example, if two people enter into an agreement to transport goods using a particular ship, and the ship had sunk before the contract was settled, then the contract is

Common Stock

Common stock is a security representing a legal claim to a percentage of a company’s earnings and assets. Holders of common stock have some input into choosing company management, but do not generally have much say in the day to day operations. If the common stock is publicly traded, the company will generally be required


The freehold tenure of part of a multioccupancy building (typically a flat) with shared responsibility for common services.


Communism is a socio-economic structure of government practised in North Korea and Cuba. It is a political and economic philosophy, which believes in the common possession of the means of production and assets. Communism is the principle that advocates that there should be no proletariat in society. Communism attempts to eradicate several problems that are believed to

Community Sentence

Under current Sentencing legislation, a criminal conviction may attract a fine (see: Fine sentencing), a Custodial sentence, or a community sentence. Community sentences are generally felt to be suitable for offences less serious than those for which imprisonment is appropriate. Currently, the following community sentences are recognized. Probation Community service Combination order (i.e., a combination of the above) Action

Companies Act

The Companies Act 1985 as modified by the Companies Act 1989. Legislation to control the activities of limited liability companies.

Companies House

A UK government department that collects and stores information regarding limited companies. Registered businesses must provide a statement at the end of each financial year.


A company is a commercial organization with the primary objective of increasing shareholder’s value. A company can be either public or private.

Company Car

Strictly speaking, a company car is a vehicle owned by an employer or a leasing company and provided to an employee as a perk or as a necessity to do the job. During the 1980’s company cars became increasingly popular because of their kind treatment by the tax system. Essentially, it was tax favourable for


Qualitative characteristic expected in financial statements, comparable within company and between companies.

Comparative Advantage

Comparative advantage refers to an economic unit’s relative ability to produce more goods at a lower price than another unit. Comparative advantage says that while one unit (or nation) may be able to produce fewer of a product that another unit, both can gain by having the less-productive unit focus its resources to producing that which

Comparative Negligence

Comparative Negligence is the process the court uses in certain states to determine who is responsible for an accident and how the compensation will be distributed for property damage or personal injury loss between each of the parties in the case. For instance, if a plaintiff is found at fault 25% for their injuries they

Compellable Witness

Compellable witness In the law of evidence, a person is `compellable’ if he or she can be required to give evidence in court proceedings, even if unwilling. The question of compellability does not arise if a person is willing to give evidence, but that person must still be a Competent Witness for the party who


something (such as money) given or received as payment or reparation (as for a service or loss or injury).


A trendy term broadly meaning ‘authority to make a decision’. A body has competence in a particular area if there is some legal basis for its authority to make decisions in that area. The term is particularly used of courts, and of the institutions of the EU (see competence of the EU). See also: Competent Witness.

Competent Witness

In the law of evidence, a person is ‘competent’ if he or she is legally permitted to give evidence in a court hearing. If a person is competent but unwilling to give evidence, then the question of compellability arises (see compellable witness). However, a non-competent witness is never compellable. The rules on competence (and compellability)


A conflict management style that emphasises assertiveness and minimises cooperation.


Competition in economics is a healthy rivalry that exists between sellers or firms to offer any type of commodity or economic service. Under competition, an economy is assumed to have several firms. These firms continuously strive to hold a greater portion of the market. This phenomenon in economics is termed as competition. Competition was a common occurrence between

Complainant’s Previous Sexual History

Pertaining to the troublesome issues surrounding the eliciting of evidence of a complainant’s previous sexual history in trials for sexual offences, particularly rape. The reason that this area of law is so fraught with difficulties is that rape is a particularly serious crime, and carries a maximum penalty of life imprisonment. Yet in a great many


Qualitative characteristic expected in financial statements.


This is the last stage in the purchase of a property. The legal documentation is finalised and the lender has sent the mortgage funds to the purchaser’s solicitor. Once the purchaser’s solicitor forwards the funds to the seller’s solicitor the property is now owned by the Purchaser.


A composite, or composite index, is an aggregation of components to produce a broad statistical measure. A stock index, for example, is a composite index as it combines individual stock prices to produce one number that represents the market as a whole. The technique used to calculate the composite number varies; a composite may add

Compound Annual Growth Rate

The compound annual growth rate (CAGR) measures the annual change in earnings, an investment, or some other financial amount. The compound annual growth rate assumes the initial amount grows at the same rate every year. The compound annual growth rate also assumes each annual increment compounds during the period measured. For example, suppose an investor

Compound Annual Return

The compound annual return shows the investment return, assuming the investment grew at the same rate every year. For example, suppose an investment grew from $4,000 to $8,000 over four years. The total return is (($8,000-$4,000)/$4,000), or 100%, and the simple annual return is 100%/4, or 25%. The compound annual return, in contrast, compounds the

Compound Growth Rate

The compound growth rate measures the average growth of an amount over time. In other words, the compound growth rate assumes a constant rate of growth, thus smoothing the expansion rate. The advantage of the compound growth rate is that it expresses growth as one number. The downside of the compound growth rate is that

Compound Interest

When interest is applied to capital and accrued up until that particular date. For example, a £1,000 loan with 20% interest will have a balance of £1,200 after the first year, then £1,440 at the end of the second year.

Compounding And Misprision

These are archaic terms for common law offences that are now defined by s.5 of the Criminal law act 1967. ‘Compounding’ is accepting reward for withholding prosection. ‘Misprision’ is failing to report an offence to the police, again for reward. s.5 only applies in respect of arrestable offences, and specifically excluded all other common law

Compulsory Building And Contents Insurance

Some home lenders have in recent years enticed customers with competitive ‘fixed rate’ or ‘low start’ deals. These deals are often sold on the condition that the lender takes out the home lenders own insurance policy. In that way, lenders can profit from the insurance business as compensation for offering what may have been a

Compulsory Insurance

Certain classes of person are required by statute to take out a policy of insurance in respect of the liabilities to others. These include motorists (Road Traffic Act (1988)), and employers (Employers’ Liability (Compulsory Insurance) Act (1969)). There are currently plans to impose compulsory insurance on doctors and dentists, and providers of pension schemes.

Compulsory Registration

The 1925 law of property reforms envisaged a system of a total registration of interests in land (see registered land). However, it was decided that it would be too much of an administrative burden to make registration compulsory over the whole of England and Wales at the same time. Instead, England and Wales were divided

Compulsory Registration Area

An area where it is compulsory to apply for registration of an estate in land with the land registry when a particular event occurs (see Events Triggering FirstRegistration). Since 1st December 1990, the whole of England and Wales has been a compulsory registration area.

Concentric Diversification

A growth strategy in which a company seeks to grow and develop by adding new products to its existing product lines to attract new customers.

Conceptual Framework

A statement of principles providing generally accepted guidance for the development of new reporting practices and for challenging and evaluating the existing practices.


Concessionality is the extent to which the terms of a soft (below market rates) loan reduce a lender’s returns in comparison with a loan of the same amount and duration as the soft loan advanced at full market rates.


Any of various forms of mediation whereby disputes may be settled short of arbitration.

Concurrent Lease

If a person grants a Lease of his land, then grants another lease to another person, what does the second Lessee get? If the second lease is longer than the first, he gets a right to take possession at some point in the future, but what rights does he have before then? Doctrinally a second lease that is

Conditional Fee

A conditional fee arrangement (CFA) is one in which a claimant pays his legal representatives’ fees only in the event of a successful outcome. The lawyer may seek to cover the expenses of lost cases in a number of ways. Here describes the historical background to CFA, the metas of CFA that are currently lawful,

Conditional Insurance

Your mortgage lender may insist on certain insurance products being taken out before granting you a mortgage. Lenders used to stipulate life insurance as a requirement but no longer do so (although you would be well advised to ensure that you have enough to cover the cost of your mortgage rather than leaving your dependants


An admission of misdeeds or faults

Confidence Indicator

A confidence indicator gauges the optimism of a group of participants in an economy or a securities market. Perhaps the best-known confidence indicator is the Consumer Confidence Index, compiled each month by the Conference Board. Another key consumer confidence indicator is the University of Michigan Consumer Sentiment Index. Each confidence indicator measures consumer optimism about

Confidentiality Agreement

A confidentiality agreement, also called nondisclosure agreement, is a contract entered into by two or more individuals, in which all parties agree that certain information is to remain confidential. The most important function of a confidentiality agreement is to protect sensitive commercial, technical, or scientific information. A confidentiality agreement is frequently utilized to protect trade


Confirmation is the term used when a technical analysis indicator(s) is used to “confirm” a predicted future price movement. Interpretation of Confirmation Confirmation is usually required when a particular indicator or candlestick pattern is considered a weak indicator. For example, the Downside Tasuki Gap shown below should be used in conjunction with some form of


Term used in Scotland for the Grant of probate.

Conforming Loan

A conforming loan is a residential mortgage that is eligible for purchase by the Fannie Mae (FNMA) and Freddie Mac (FHLMC). A conforming loan must meet the necessary requirements established by the two quasi-government organizations. The two agencies set limits on the conforming loan size. This dollar value limit on the principal of the conforming

Consensus Ad Idem

“Meeting of minds”. For a contract to be useful the parties must be in agreement about its provisions. In the event of a possible breach of contract, the party alleged to be in breach may wish to claim that the contract did not exist at all, as there was no certainty about the subject of

Consensus Forecast

A consensus forecast aggregates the estimates of security analysts of key market-moving data, particularly a company’s quarterly earnings per share (EPS). Based on analysts’ earnings models, a consensus forecast of a company’s EPS is prepared by services such as the Institutional Brokerage Estimate System (IBES), First Call, and Zacks. The methodology for preparing a consensus

Consensus Recommendation

The consensus recommendation is an average of analyst ratings on a stock. Suppose five security analysts follow Acme stock; two say “buy”, one says “hold”; two say “sell”. To compute a consensus recommendation, each rating is assigned a value, e.g., a buy is a 5; a hold, 3; a sell, 1. The consensus recommendation is


Sometimes used with a stronger meaning of understating assets and overstating liabilities.


Conservatorship is a legal concept in the United States. A person under conservatorship is a “conservatee,” a term that can refer to an adult.


Under English law, for a simple contract (see: Contract) to be valid (whether express or implied, written or oral), there must be ‘consideration’ from the party accepting the offer (see: Acceptance of offer). This requirement is contested by many authorities, and not all jurisdictions require it. Increasingly judges are being encouraged to ‘find’ consideration is cases; this

Consignment Shop

A Consignment shop is a specific type of shop, usually second-hand, that sells used goods on the behalf of the owners of the products.


The person who delivers over or commits merchandise.


The measurement and display of similar transactions and other events is carried out in a consistent way throughout an entity within each accounting period and from one period to the next, and also in a consistent way by different entities.

Consolidate Loans

When a person seeks to consolidate loans, he/she is essentially taking out one loan to pay off many others. Usually, when a debtor is in danger of bankruptcy, he/she will hurry to consolidate loans. Those who consolidate loans often aim for a lower or fixed interest rate. There are many debt consolidation companies that offer

Consolidated Financial Statement

A consolidated financial statement presents the financial position or results of a parent company and its subsidiaries as if it were a single enterprise. Under Generally Accepted Accounting Principles (GAAP), all majority-owned subsidiaries must be consolidated in a consolidated financial statement of the parent company. Preparing a consolidated financial statement for a firm with a

Consolidated Financial Statements

Present financial information about the group as a single reporting entity.


Consolidation is a process that aggregates the total assets, liabilities and results of the parent and its subsidiaries (the group) in the consolidated financial statements.

Consolidation Loan

A consolidation loan is a type of loan that encompasses a number of other liabilities into one loan. The greatest advantage of a consolidation loan is its low rate of interest. For instance, those with outstanding credit card debt face significant interest rate charges and may, therefore, benefit from a relatively low-interest rate consolidation loan


An agreement between two or more persons to engage jointly in an unlawful or criminal act, or an act that is innocent in itself but becomes unlawful when done by the combination of actors. Conspiracy is governed by statute in federal courts and most state courts. Before its Codification in state and federal statutes, the


Where the word ‘constable’ is used in a Statute, and in most case reports, it can refer to any serving police officer of any rank. ‘Constable’ is also a rank within the police service, but that is an administrative matter, not a technical one.

Constant Dollar GDP

Constant dollar GDP is gross domestic product adjusted for price changes. Gross domestic product is the total market value of all goods and services an economy produces. But the actual GDP in a given year – known as current dollar GDP – also reflects either an increase or decrease in the general level of prices

Constant Dollars

Constant dollars are dollars that have been adjusted for the impact of inflation, as opposed to current dollars, which are actual dollars paid or received. Constant dollars can be computed by the formula Constant Dollars = Current Dollars x (Previous Consumer Price Index/Current Consumer Price Index), where the Consumer Price Index (CPI) measures the level


1. A document setting out a state’s basic legal framework and, quite often, limiting and defining the powers of government. See also: written constitution. 2. Of a trust, constitution consists in transferring the trust property’s legal title from the settlor or testator to the trustee. See also: constitution of trusts.

Constitution Of Trusts

Constitution refers to the transfer of legal title. When property is disposed of upon death, a valid will constitutes the trust and legal title vests in the trustees. When making a lifetime disposition, Turner LJ in Milroy v Lord set out three ways of transferring property: Outright transfer of gift Declaration of trust with a

Constitutional Convention

There is no specific Constitutional legislation in the UK legal system, although some legislation and case law is recognized as having constitutional significance. Aside from these legal manifestations of the constitution, there are a large number of conventions by which UK legislators and politicians abide. Failing to do so cannot be actionable in the courts, and

Constitutional Law

The body of law that deals with the organization and function of the apparatus of state.

Constitutional Legislation

The UK constitution does not exist as a separate document, but as a combination of specific items of legislation, case law, and convention. Much UK legislation ha constitutional significance, but of particular importance are Magna Carta, the Petition of right, the Bill of rights and Claim of right, the Act of settlement (1700), the Act of union with Scotland (1707), the Parliament

Construct Validity

Construct validity refers to the degree to which inferences can legitimately be made from the operationalisations in your study to the theoretical constructs on which those operationalisations were based. Like external validity, construct validity is related to generalising.


A person who provides expert advice professionally.

Consumer Confidence

Consumer confidence is an attempt to measure the public’s perception of the state of the economy. Consumer confidence readings are produced by the Conference Board (Consumer Confidence Survey) and the University of Michigan (Consumer Sentiment Survey). Both consumer confidence surveys are conducted by telephone polling several thousand US households on their feelings about the current

Consumer Confidence Index

The Consumer Confidence Index (CCI) gauges the level of optimism of Americans toward the U.S. economy. The Consumer Confidence Index is determined by The Conference Board, a business and research group. Each month it asks U.S. households how they rate business conditions and job availability, as of now and six months from now. It then

Consumer Credit Act

The Consumer Credit Act (CCA) of 1974 applies to most businesses that lend money to consumers or offer goods and services. The Act requires that these businesses obtain a consumer credit license from the Office of Fair Trading (OFT). It also sets down rules for how certain credit and hire agreements should be set out

Consumer Durables

In US macroeconomic statistics, consumer durables are those durable goods produced for purchase by consumers. All durable goods, including consumer durables, are arbitrarily defined as goods designed to provide a benefit for at least three years. The importance of consumer durables to macroeconomic statistics stems from consumers’ spending behaviour. Consumers tend to buy more consumer

Consumer Goods

Consumer goods are goods that be used in order to fulfil human’s needed such as food and clothes.

Consumer Price Index

The Consumer Price Index, also known as the CPI, is released monthly by the US Department of Labor. It measures the price changes in a fixed basket of consumer goods in an attempt to measure economic inflation. A Consumer Price Index reading that excludes volatile food and energy prices (core CPI) is also published monthly.

Consumer Prices

Consumer prices are the amount of money a person is willing to spend for a particular commodity. Consumer price index (CPI) is described as a measure that analyzes weighted average of prices of a basket of consumer services and goods like food and transportation. The consumer price index is computed by admitting price changes for

Consumer Surplus

The consumer surplus theory is based on the assumption that there is a difference between the price the consumer is willing to pay for certain goods or services, called the reserve price and the price they actually pay for them. The theory suggests that along with the product, the customer also receives satisfaction which amounts to more than whatever has been paid;

Consumption Tax

A consumption tax is a charge levied on spending for goods and services. Often a consumption tax will be a percentage of the total price of the purchased goods or services. A consumption tax is distinct from an income tax in that the latter is a percentage charge imposed on an entity’s earnings. Many local


Contagion is the cross-border spread of financial shocks. Such international spillover means that economic or financial troubles that originate in one nation can affect others. Contagion can occur at any time during a business cycle; not just at the trough. Thus, contagion is not necessarily related to a crisis, although this is when contagion is most


Contango refers to a situation that can arise in the futures market. When the price of a futures contract is lower than its spot price, or when a price that is farther in the future than a nearer future price is higher, then it is said to be ‘in contango’. If there was a curve showing the

Contents Insurance

Contents insurance should be considered by all householders whether or not they have a mortgage. Contents insurance covers items such as furniture; carpets, curtains; electrical goods and many policies also cover personal possessions, which may be removed from the home. This is separate to buildings insurance. Most home contents policies cover loss or damage to

Contestable Market

A contestable market is one that has few companies- but all existing companies behave in a competitive manner to deter new entrants. A contestable market may have only one firm behaving in a competitive manner. Prime examples of contestable markets include electricity and gas supply companies, low-cost domestic airlines, and internet service providers.

Contingency Fee

A contingency fee is a payment method used to hire a lawyer by paying the lawyer a percentage of the compensation awarded after the claimant wins the personal injury case. The contingency fee allows claimants in a personal injury case to avoid paying a retainer fee to a lawyer to hire them to help them

Contingent Fee

Subtly different from a Contingency fee arrangement, a contingent fee arrangement is one in which the claimant’s legal representative makes no charge in the event of an unsuccessful outcome. In the jargon of Conditional fee arrangements, the usual term is ‘conditional normal fee’.

Contingent Interest

A person has a ‘contingent interest’ in some property if there is a possibility that a real interest in that property will come to him at some point in the future. If, for example, person A makes a Will leaving his house to whichever of my children marries first, then the children have contingent interests.

Contingent Liabilities

Obligations that are not recognised in the balance sheet because they depend upon some future event happening.

Continuation Pattern

A Continuation Pattern is a technical analysis term that suggests a trend has exhibited a temporary diversion in behaviour but is about to continue on its existing trend. There are several candlestick formations that signal a continuation pattern. Among them are Falling Three Methods, Rising Three Methods, Downside Tasuki Gap and Upside Tasuki Gap.

Contra Proferentum

Construed against the person making the statement. For example, in an Exclusion clause, the benefit of any doubt in the meaning of the clause is to the benefit of the party that would be disadvantaged by it.

Contract By Deed

Also called a ‘speciality contract’. This meta of contract takes the form of a deed (see: Deed), and therefore imposes greater legal obligations on the signatories than a simple contract. For example, in most cases claims for Damages against a contract by deed can be entered up to 12 years from the date of coming into effect;

Contract Note

Your contract note is evidence that you’ve bought or sold shares. It remains an important document. However, with the shortening of the stockmarket’s trading account under “rolling settlement” and given the increasing use of online share dealing, you will no longer receive physical share certificates. Certainly, if your funds are being held by a stockbroker

Contract Of Record

A Contract of Record is the most formal of the metas of contract (see: Contract) recognised by UK law. Contracts of Record are usually made between individuals and the courts, and include recognisances (see: Recognizance) and court judgements. Some writers consider Contracts of Record by the quasi-contracts (see: Quasi-contract).

Contract Race

A situation which is peculiar to England & Wales, in which a seller has received and accepted two or more offers on the property and will sell to whoever is ready to exchange contracts first. Such situations were common in the feverish housing market of the mid-1980s. Changes being considered by both main political parties

Contract Size

Contract size is the deliverable amount on a contract. The quantity of goods or commodities deliverable on any future, forward or option contract is, then, the contract size. IMM contract size for the British pound is 62,500 British pound sterling, IMM contract size for the euro is 125,000 euros, and IMM contract size for the

Contract Under Seal

Archaic term for an agreement made by Deed. See also Covenant.


A project owner or other entity that enters into a contract with a contractor/vendor and receives specified goods and/or services under the terms of the contract.


An agreement between a number of parties, binding them to carry out certain actions or forebear from certain actions and intending to have legal consequences. A contract is formed under the principle of Consensus ad idem, that is, all parties are in agreement as to the particulars of the contract. A contract can involve multiple


A person who opposes or rejects popular opinion, especially in stock exchange dealing.

Contributory Negligence

Contributory negligence is a common law doctrine which states if a person’s injury or loss is caused by their own negligence they are not entitled to receive compensation for their loss. Only five states continue to use their doctrine to determine damages in an injury claim. Most states have replaced the system of contributory negligence,


The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Controlling Interest

Controlling interest is simply an ownership status where a corporation or an individual owns fifty per cent or more of a company’s voting shares. One of the ways in which controlling interest may be achieved is by paying a control premium, which in effect grants enough ownership to set policies, direct operations, and makes a

Conventional Mortgage

A conventional mortgage is a fully amortizing mortgage. The conventional mortgage can have either a fixed or a variable rate. The term conventional mortgage also implies that the loan is not insured by a government agency, such as the FHA or VA. Such loans are called FHA loans and VA loans, respectively. The terms conventional

Conversion Balances

This refers to transferring bookkeeping records between accounting software programs. It involves taking closing balances from the previous software and entering it into the new software as opening balances.

Convertible Bond

A convertible bond is a debt instrument that holders can convert into a fixed number of shares at a specified price before maturity. For example, if the par value of the convertible bond was $100 and the specified price was $50, the holder could get two shares for every convertible bond. This equity option makes

Convertible Loan

Loan finance for a business that is later converted into share capital.


Convexity is a measure of the curvature, or the degree of the curve, in the relationship between bond prices and bond yields. Convexity demonstrates how the duration of a bond changes as the interest rate changes.


An attorney who passes transfer of immovable property from one party to another.

Conveyancing Fee

Conveyancing fee is the fee charged by a solicitor or licensed conveyancer after the legal paperwork for transferring a property has been completed. It should be remembered that as well as this fee, stamp duty, land registry fees and legal disbursement fees also required to be paid.

Conveyancing Protocol

There is, in principle, no reason why parties who wish to buy and sell real property should do so in a way that is markedly different from any other form of sale and purchase. There are, to be sure, certain formality requirements. In particular, the transfer of ownership must be formalized in a Deed, and the new


A formal declaration that someone is guilty of a criminal offense, made by the verdict of a jury or the decision of a judge in a court of law.


COO, or Chief Operating Officer, is a member of upper-level management who is responsible for the company’s day-to-day operations. The functions of a COO may be construed as those of a hands-on executive. Thus, while the job of a Chief Executive Officer (CEO) is of a more general and strategic nature, a COO is charged

Cooking The Books

Cooking the books is an unethical practice of misrepresenting company’s financial standing. When cooking the books, corporations typically manipulate their accounting records and financial statements. Cooking the books is fraudulent and illegal, and is mainly done for the purpose of inflating profits, achieving preset budgets, and receiving sizeable bonuses. Methods employed for cooking the books

Cooling Off Period

A cooling-off period is defined as the period of time you’re allowed, after signing an agreement, to cancel it without incurring a financial penalty. Legislation regarding cooling-off periods is complex. Indeed, there are five main pieces of legislation consumers can call upon if they wish to back out of contracts they’ve entered into. It should

Coppock Curve

The Coppock Curve, also known as the Coppock Indicator, is a long-term price momentum indicator used to spot major bottoms in the stock market. The Coppock Curve was created by E.S.C. Coppock and first published in Barron’s Magazine on October 15, 1962. Coppock was an economist and founder of Trendex Research in San Antonio, Texas. The Episcopal


Legal protection enacted by governments, giving original creators exclusive rights to their work, for a limited amount of time.

Cornering The Market

Cornering the market occurs when an investor or group of investors purchases enough stock or a sufficient quantity of a commodity that they can unduly influence the stock or commodity’s price. Cornering the market is illegal. Probably one of the most famous historical examples of an attempt at cornering the market occurred several years ago


The person who presides over a coroners court. Because of the role this court plays determining the cause of death, coroners are often medical practitioners, with little legal training; this situation is likely to be changed by legislation proposed recently. The role of the coroner (still called the ‘crowner’ in some parts of the country) is

Coroners’ Court

The court formally charged with determining the place and cause of death, and the identity of the deceased, when a death occurs in violent, suspicious or ‘unnatural’ circumstances (see: Court system of England).

Corporate Finance

Corporate finance is an important sub-division of finance. It deals with various financial decisions made by corporations. It also looks at various resources that are used to make financial decisions. The basic aim of corporate finance is to generate the maximum possible value and reduce the financial risks taken by a firm. Corporate finance is

Corporate Governance

The system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies.

Corporate Recovery Department

Part of an accountancy firm which specialises in assisting companies to recover from financial problems.

Corporate Social Responsibility

Companies integrate social and environmental concerns in their business operations and in their interactions with stakeholders.

Corporate Stock

Corporate stock is the capital or monetary fund that a company raises through the sale of shares. Shares of corporate stock define an ownership entitlement, called an equity position, and represent a proportional claim on a company’s assets and future earnings. Ownership is determined by the number of shares of corporate stock a person owns


Artificial entities that are created by state statute, and that are treated much like individuals under the law, having legally enforceable rights, the ability to acquire debt and payout profits, the ability to hold and transfer property, the ability to enter into contracts, the requirement to pay taxes, and the ability to sue and be

Corporation Tax

Tax payable by companies, based on the taxable profits of the period.


In statistics, correlation is an assessment of the extent of the linear relationship between two variables. A correlation coefficient is the index of the extent of the linear relationship. The most common correlation coefficient is the Pearson product-moment correlation, defined as the covariance of the two variables divided by the product of their standard deviations.

Correlation Coefficient

A correlation coefficient is a numerical, descriptive measure of the strength of the linear relationship between two variables. Values for the correlation coefficient range between -1 and +1, with a correlation coefficient of +1 indicating that the two variables have a perfect, upward-sloping (+) linear relationship and a correlation coefficient of -1 showing that the

Corroborating Evidence

Corroborating evidence is evidence which is supplementary evidence that confirms or strengthens initial evidence such as testimony. For example, if Sue saw James drive his automobile into another car which is green and another witness stated that when he examined James’ car there was green paint on the fender, the testimony of the witness corroborates


Cost is referred to as the value of money that has the power to produce any commodity or service. Cost is exhaustible in nature; once cost is given up for any good or service, it cannot be used anymore. Cost can be explained as a certain amount of money, which is used as an input and is exhausted in order to acquire any good or service.

Cost Basis

Cost basis reflects the true cost of purchasing a financial asset held over an extended period of time. The longer a stock or other asset is held, the higher the probability that the original purchase price will need to be revised in order to reflect adjustments such as future purchases, stock splits, and dividend payments.

Cost Management
Cost Of Capital

Cost of capital is described as the opportunity cost of a specific investment. Cost of capital includes the cost of equity and cost of debt. It is the rate of return that a company is capable of earning at the equivalent level of risk as to the chosen investment. In other words, the cost of capital is an expected return that the capital supplier contrives to earn

Cost Of Equity

The cost of equity is the minimum rate of return that a business or organization must offer investors or owners to offset their wait for a return on investment and for assuming some level of risk. There are conflicting approaches to estimating the cost of equity and cost of equity percentages. The traditional formula for

Cost Of Goods Manufactured

The cost of goods manufactured is a calculation of the production costs of the goods that were completed during an accounting period.

Cost Of Goods Sold

Materials, labour and other costs directly related to the goods or services provided.

Cost-Of-Living Adjustment

COLA, or cost-of-living adjustment, is an act of adjusting wages to create economic balance for the changes in the cost of living. A COLA is measured by the Consumer Price Index (CPI or cost-of-living index), which calculates the changes in consumer prices. A COLA takes into account many components, such as the cost of transportation,

Cost-Of-Living Index

A cost-of-living index measures the changes in prices consumers pay for a fixed basket of goods and services over time. While the Bureau of Labor Statistics states that its monthly Consumer Price Index is not a complete cost-of-living measure, the CPI is usually considered a cost-of-living index; indeed, CPI and cost-of-living index are often used

Cost/Benefit Analysis

Cost-benefit analysis is essentially a system of economic accounting, which owes its origin to a French engineer, Jules Dupuit. Noted economist Alfred Marshall also formulated some key concepts of CBA. It was, however, the Federal Navigation Act of 1936, which gave an impetus towards the development of practical models of CBA. It was not until the

Cottage Industry

A cottage industry is a system of production which takes place in private homes rather than in a factory, with the tools and other means of production individually owned. Often products produced by a cottage industry are hand-made and/or unique in some distinctive way. Cottage industry products are often identified with an area or even

Council Of Economic Advisers

The Council of Economic Advisers is a panel that provides the President of the United States with advice on matters of international and domestic economic policy. Congress established the Council of Economic Advisers with the passage of the Employment Act of 1946. Three economists (i.e. a chairman and two members) comprise the Council of Economic

Council of Mortgage Lenders

The departure of building societies from the ‘mutual club’ and the increasing role of banks and other specialist lenders in providing home loans led to the formation of the Council of Mortgage Lenders (CML). It acts as a representative body for its members. The CML’s work is administered by the staff of the Building Societies

Council Tax

This replaced the Community Charge (unpopularly known as the poll tax) on April 1, 1993. One bill is sent to individual domestic properties each year – the amount payable depending on the valuation banding of the property, how many people are resident and any benefits or reductions the payer or other residents may be entitled


A general term for an Advocate, that is, someone who is representing a party to a court hearing. The term is commonly used as a linguistic shorthand for Barrister, although I can’t see any reason in principle why it should be used of a solicitor advocate as well.


Contrary to or tending to counteract the fluctuations in an economic cycle.

Counterparty Risk

Counterparty risk refers to the risk of default of one party in a particular transaction. Credit ratings can be used to evaluate counterparty risk. For example, a party with a AAA credit rating represents a lower counterparty risk than a party with a B credit rating. The lower the counterparty risk, the lower a particular

County Court

In the UK, the county courts here the majority of civil cases, particularly the less serious ones (see: Court system of England). There are currently 226 county courts in England, administered by the Court Service (see: Court service). Some county courts are empowered to deal with uncontested divorce cases (contested cases are heard in the Family


Rate of interest payable on a loan.

Court Of Appeals

The Court of Appeals is the highest court in the state and is also called the Supreme Court in some states and at the federal level. It generally has the discretion to decide which cases to hear. However, the Court of Appeals is mandated by law to hear death penalty cases, legislative redistricting cases and certifications of questions of law.

In a civil case, either side may appeal the verdict in the case. If a criminal is found guilty they have the right to file an appeal, but the government may not appeal the verdict if the defendant is found not guilty. The parties in a criminal case, however, can both appeal the sentencing which was given after a guilty verdict.

To win an appeal the appellant or litigant must be able to prove the trial court made legal errors which affected their case. The Appeals Court is only reviewing evidence and facts on record which were established during the trial, they do not hear witnesses or review more evidence.

Court Of First Instance

The court originally set up to deal with matters arising from the internal administration of the EU (so-called ‘staff cases’), but which now has essentially the same jurisdiction as the ECJ. The only important actions over which it does not have jurisdiction are those bought by one member state against another for failure to comply with obligations

Court Service

The UK body responsible for the administration and running of the Court of Appeal (see: Court of Appeal), all Divisions of the High Court (see: High Court), Crown Court (see: Crown court), county courts (see: County Court), and the judicial tribunals (see: Tribunal). More information is available on the Court Service Web site]]. The Court Service is an agency

Court System Of England

In the UK, all but the most serious or difficult civil and criminal cases are handled by separate court systems: civil cases by tribunals and county courts, criminal cases by magistrates’ courts and Crown Court centres. In England and Wales, more serious cases, and some appeals, are handled by the High Court. Appeals from the


A signed written agreement between two or more parties (nations) to perform some action.

Coverdell Education Savings Account

Formerly called the education IRA, the Coverdell education savings account is an investment plan used for funding a child’s college education. The maximum amount one may contribute to a Coverdell education savings account changes over time, and there are several rules one must follow to avoid penalties. For example, any funds in the Coverdell education

Covered Call

A covered call is a short call option which is backed — or covered — by sufficient pre-purchased shares of the underlying stock. An investor’s risk is limited when selling (or writing) a covered called since the investor already owns sufficient stock to cover the option if the covered call is exercised. By selling a

Covered Option

A covered option is either a put or a call option which is covered (backed) by sufficient shares of the underlying security. An option is a covered option if sufficient shares are already owned to “cover” the option if it is exercised. The opposite of a covered option is a naked option. The advantage of

Covered Put

A covered put is a put option which is sold by an investor and which is covered (backed) by a corresponding number of short shares of the underlying security. A covered put may also be covered by deposited cash or cash equivalent equal to the exercise price of the covered put. Since a covered put


A CPA, the common acronym for Certified Public Accountant, is an accountant licensed by a state board to engage in public accounting. The requirements to become a CPA vary by state, but each CPA candidate must pass the Uniform CPA Examination and fulfil certain experience requirements. After gaining certification, a CPA is required to take


CPI is the common abbreviation for the Consumer Price Index, which measures the change in prices urban Americans pay for a fixed basket of goods and services. The CPI encompasses over 80,000 consumer items in a wide range of categories, like apparel, medical care, and transportation. Besides the overall “headline” CPI, a “core” CPI is

Crash Of 1929

The Crash of 1929 took place from September through November 1929, when the Dow shed over one-third of its value from its high of 381 on 9/3/29. The Crash of 1929 officially began on Black Thursday, October 24, when $9 billion in market losses occurred and 11 speculators threw themselves out their skyscraper windows. The

Crash Of 1987

The Crash of 1987, Black Monday, took place on October 19, 1987. During the Crash of 1987, the Dow lost 22% of its value in one day. Shareholders could not reach their brokers, brokers could not supply prices and computers were overloaded. The Crash of 1987 dwarfed the infamous Black Thursday of 1929. However, unlike

Creative Destruction

Renowned economist Joseph Schumpeter coined a term ‘creative destruction’ in his work titled ‘Capitalism, Socialism and Democracy’ published in 1942. It essentially refers to that ‘industrial mutation’ process, which continuously changes a nation’s economic structure; involving annihilation of old ones and the creation of new ones. Destruction occurs with the purpose of a new creation.


Credit denotes the borrowing of money by one party from another which is returned at a specified time in the future. A contractual agreement is drafted that determines the amount of money to be credited to the borrower and the date on which the amount is to be repaid. The amount credited is determined according to the capacity of the

Credit (Bookkeeping System)

Entries in the credit column of a ledger account represent increases in liabilities, increases in ownership interest, revenue, or decreases in assets.

Credit (Terms Of Business)

The supplier agrees to allow the customer to make payment some time after the delivery of the goods or services. Typical trade credit periods range from 30 to 60 days but each agreement is different.

Credit Card

A credit card is the small plastic card issued to the borrower. the credit card issuer agrees to lend the buyer money (at a significant interest rate) for the purchase and promises to pay the seller. The credit card issuer typically provides a 25-day grace period during which credit card interest charges do not accrue.

Credit Card Fraud

Credit card fraud cost the banking industry £504.8 million in 2004 but the introduction of chip & PIN knocked that figure sharply lower in 2005. While the ultimate financial cost of credit card fraud is usually carried by the banks, the impact on you in time, inconvenience and frustration can be considerable. There are different

Credit Card Protection

When you take out a credit card or loan of any kind, you will normally be offered Payment Protection Insurance (PPI). This credit card protection will pay your debt if your circumstances change and you are unable to repay it. For example, it could come in handy if you are made redundant, suffer a serious

Credit Crunch

A credit crunch happens when banks are reluctant to loan money to individuals and businesses. In a credit crunch situation, it becomes increasingly difficult for companies to obtain funding. When and if lenders do offer loans during a credit crunch, they do so at relatively higher interest rates, which can be prohibitively expensive. Several situations

Credit Default Swap

A Credit Default Swap or CDS is actually a swap contract. For this, the buyer of this type of swap is provided with protection when making numerous payments to the seller, who is also protected. In exchange for making this swap, the seller is given a payoff if for some reason the bond or loan were to default. The easiest way to think of the Credit Default Swap or CDS is that this bilateral contract is set up between the buyer and seller so both parties are protected.

Credit Derivative

A Credit Derivative is a contract to transfer the risk of the total return on a credit asset falling below an agreed level, without transfer of the underlying asset. This is usually achieved by transferring risk on a credit reference asset. Early forms of credit derivative were financial guarantees. Some common forms of credit derivatives

Credit File

A record of your financial history Your credit file is a record of your financial activity and is maintained by a credit reference agency. It contains details of all the applications for credit that you’ve made and the decisions that were made. If you miss payments or go into arrears, this will be noted on your file,

Credit History

Credit history is generally a temporal record of repaying debt. Additionally, credit history is an indication of one’s creditworthiness and is measured by a FICO score developed by Fair Isaac Company. The FICO score ranges from 350 to 850, quantifying the probability of debt repayment. Credit history is reflected by a credit report, which is

Credit Limit

A credit limit is the explicit borrowing ceiling set by a lender for a particular customer. The credit facility having a credit limit can take many forms, both secured and unsecured. The line of credit, letter of credit, and credit card all have a credit limit. An example of secured debt would be the home

Credit Note

A document sent to a customer of a business cancelling the customer’s debt to the business, usually because the customer has returned defective goods or has received inadequate service.

Credit Purchase

A business entity takes delivery of goods or services and is allowed to make payment at a later date.

Credit Rating

A credit rating refers to the capability of companies to repay their debt obligations (i.e. creditworthiness) and to the riskiness of certain investment products (i.e. bonds, debt securities, etc.). Lenders look at a credit rating to evaluate the likelihood of default by the borrowing party (i.e. counterparty risk). Credit ratings are assigned by credit rating

Credit Report

A credit report is a detailed synopsis of information collected about an individual by one of the major credit bureaus. A credit report contains identifying information, nature and payment history of current and past accounts, employment history, a credit score, and other pertinent information such as arrests, lawsuits, and judgements. Anyone who applies for a

Credit Risk

Credit risk is the risk of loss due to a counterparty defaulting on a contract, or more generally the risk of loss due to some “credit event”. Traditionally this applied to bonds where debt holders were concerned that the counterparty to whom they’ve made a loan might default on payment (coupon or principal). For that

Credit Sale

A business entity sells goods or services and allows the customer to make payment at a later date.

Credit Score

A credit score is a value computed by a credit reporting agency, or credit bureau, and based upon information about a person collected by the agency. The credit score is sold by subscription to banks and other companies, who use the credit score when making credit decisions. Three major credit bureaus compute their own credit

Credit Scoring

Credit scoring is a system employed by lenders to calculate the statistical probability that a loan they grant to you will be repaid. Different lenders have slightly different rules for assessing risk. Each lender works out the characteristics of ‘good’ and ‘bad’ customers, based on their past experience and credit score. Credit scoring allows lenders

Credit Spread

A credit spread is an option strategy implemented by the simultaneous purchase and sale of two options where the proceeds of the option sold exceed the cost of the option purchased. To set up a credit spread, the investor looks for options of the same security with different strike prices and with the same expiration

Credit Union

A credit union is a member-owned and controlled, financial cooperative that is entirely operated by and for its members. When an individual deposits money into a credit union, he/she becomes a member of the credit union and has partial ownership of that credit union. A credit union consists of individuals with a common affiliation, such


A person or organisation to whom money is owed by the entity.

Criminal Culpability

In general, for a criminal conviction to succeed, there needs to be a demonstration of culpability. On the whole, the accused will culpable if at the time of the offence he or she was not exempt from liability; for example, the perpetrator may be exempt if below the age of criminal consent (see: Exemption from criminal

Criminal Law

Criminal law or penal law is the group of laws which outlines the processes and penalties for crimes committed against the public authority and run counter to the public interest. They also establish the processes for the police, courts and other parts of the legal system to operate. Common cases of criminal law including felonies

Criminal Procedure

The framework of laws and rules that govern the administration of justice in cases involving an individual who has been accused of a crime, beginning with the initial investigation of the crime and concluding either with the unconditional release of the accused by virtue of acquittal (a judgment of not guilty) or by the imposition

Criminal Trial Procedure

This article describes the procedures by which criminal cases are assigned to either the magistrates’ court or to the Crown Court, and in outline the processes of trial and sentencing that follow from this determination. Note that at the time of writing (November 2002) these procedures are under review, and substantial changes are anticipated. Step

Critical Event

The point in the business cycle at which revenue may be recognised.


A close friend who accompanies his buddies in their activities

Cross Default Clause

A cross-default clause is common stipulation under loan agreements in which a bank has a right to deny access to balances in any or all loan accounts to a borrower (with several loans at the same bank) even if only one loan goes into default. In fact, a bank can apply all available balance(s) in


Questioning of a Witness by the side other than the one which called that witness. In general, counsel may ask any question of a witness during cross-examination that is relevant to the case. Deliberate attempts to damage the credibility of the witness are allowed. However, there are certain restrictions. In sexual offences, the defence is not allowed

Cross-Examination As To Bad Character

This article describes the situations in which the defendant in a criminal trial can be cross-examinated about his bad character, which may include previous criminal convictions, among other things. Character may also be an issue in cross-examination of other witnesses, but the rules are somewhat different. The prosecution may also wish to adduce original evidence

Crowding Out

Crowding out effect is an economic concept. It explains how a rise in the rate of interest, due to increased government borrowing (in money market) drives away or ‘crowds out’ private investment (from the lending market). Government’s ability to crowding out private investment is primarily due to its high credit rating and its ability to pay market demanded interest rate. [Government can fund


Crowdsourcing is the use of large numbers of users, or a ‘crowd’, to achieve an organizational outcome. The term was first coined in 2006 in a Wired magazine article, written by Jeff Howe. Taking a job that is normally carried out by an employee, an internal team, or a contractor, and asking a community to help solve the problem


The term ‘the Crown’ is used in three slightly different ways in UK legal documentation; it can mean: the person of the monarch, as a private individual, or the office of the monarcy, or the corporation of the Crown, which includes the ministers of the Government and their Departments, and the Civil Service. Until the

Crown Court

In the UK, the Crown Court hears the more serious criminal cases, and cases referred from the magistrate’s courts (see: Court system of England). The Crown Court is administered by the Court Service (see: Court service).

Crown Prosecution Service

The organization in the UK responsibilities for prosecuting breaches of criminal law (see: Metas of law). The Service is Headed by the Director of Public Prosecutions, who reports to the Attorney-General (see: Attorney-general).


CSO is an abbreviation for Chief Security Officer. A CSO is the top executive of a corporation responsible for securing a company’s information and data both in physical and digital form. The CSO management position is most often found in technology companies. In recent years, the role of a CSO has increased due to the


Corporate social responsibility (CSR) is a recognition by businesses that they must look after their social, environmental, ethical and philanthropic relationships. The World Business Council for Sustainable Development, in its publication “Making Good Business Sense”, defines corporate social responsibility as follows: “Corporate social responsibility is the continuing commitment by business to behave ethically and contribute

Culpa Lata

From culpa lata dolo aequiparetur: a concealed fault is equivalent to a deceit. This term appears occasionally in law reports, either with or without its loose translation ‘Gross negligence’.

Cumulative Dividend

A cumulative dividend is a dividend that, if the company doesn’t pay it when it is due, must be paid in future periods. For example, suppose a company issues preferred shares with a purchase price of $100 and a cumulative dividend of 5% per year, or $5. If it is unable to pay the $5

Cumulative Total Return

The cumulative total return on an investment is the total profit — including dividends, interest and capital gains — received on an investment over a period of time. The period of time necessary to figure the cumulative total return on an investment can vary. The cumulative total return on an investment is often expressed as

Cup And Handle

A cup and handle is a technical analysis charting formation that signals a stock or security is setting up for a possible breakout to the upside. The cup and handle pattern, also called cup with handle, was first introduced in 1988 by William O’Neil. Mr O’Neil describes the cup and handle as a bowl-shaped trading

Currency Board

A currency board is a kind of monetary authority of a country. Its basic function is to issue of notes and coins. Currency board traces back its origin to ‘English Bank Act’ of 1844. It was primarily used in colonies. Even after decolonization, many independent nations opted for currency boards. A country’s currency board can

Currency Pair

In FOREX markets, a currency pair is a price quote showing how much an investor will need of one currency to buy one unit of another currency. A currency pair is shown as a ratio of currency symbols. For example, in the EUR/USD currency pair, EUR is the base currency and the USD is the

Currency Peg

Currency peg is a term used to define the control of the value of a currency by relating it to another currency. US dollar is the most common currency against which other currencies are pegged. A pegged exchange rate is more commonly known as a fixed exchange rate. Pegged exchange rate relates to the value

Current Account

Current account and capital account together form primary components of the balance of payments. These balances are obtained as a sum total of the balance of trade, net factor income, and net transfer payments. When calculating current account, government, as well as private payments, are taken into account. Current account, along with net capital outflow,

Current Asset

An asset that is expected to be converted into cash within the trading cycle.

Current Dollars

Current dollars (also known as “nominal dollars”) are dollars in the year they were actually received or paid, unadjusted for price changes. For many years the US economy has experienced inflation, so amounts expressed in current dollars misrepresent their actual purchasing power. For example, someone earning $20,000 in 1955 in current dollars – the dollars

Current Liability

Debt, loan, trade credit or other obligation due for payment within one year.

Current Market Value

The current market value of a stock is its most recent trade. Since the current market value of a stock can change rapidly during the trading day, it is often convenient to use end-of-day settlement prices to determine current market value, especially of a portfolio of stocks. The current market value of an individual stock

Current Ratio

The current ratio is a balance-sheet financial performance measure of company liquidity. The current ratio is calculated by dividing current assets by current liabilities. A current ratio of more than 1.0 means that a company’s short term assets exceed its short term liabilities. For example, if Tractorco has current assets of $12 million and current

Current Value

A method of valuing assets and liabilities which takes account of changing prices, as an alternative to historical cost.

Current Yield

Current yield is equal to a bond’s annual interest payment divided by its current market price. A bond with a 5% coupon purchased at $900 has a current yield of 5.56%. (Current yield equals $50 annual interest divided by $900 market price.) So an investor who pays $900 for a bond with a 5% coupon


Curtesy tenure is the legal term denoting the life interest which a widower may claim in the lands of his deceased wife, under certain conditions. The tenure relates only to those lands of which his wife was in her lifetime actually seised and not therefore to an estate of inheritance


CUSIP is an abbreviation for Committee on Uniform Securities Identification Procedures of the American Bankers Association. CUSIP numbers are designated and assigned by the CUSIP service bureau, operated by Standard and Poor’s. The CUSIP, or CUSIP number, is an alphanumeric identifier, comprising nine characters, for every class of traded financial instrument in the United States,

Custodial Sentence

Under current Sentencing legislation, a criminal conviction may attract a fine (see: Fine sentencing), a Community sentence, or a custodial sentence. A custodial sentence is a term of imprisonment or ‘detention at Her Majesty’s pleasure’. Under the Powers of criminal courts sentencing act (2000), a custodial sentence may only be imposed if such a sentence is mandatory (e.g., the mandatory


Custom is one of the most fruitful sources of law.  Custom is to society what law is to the state. Each is the expression and realization, to the measure of men’s insight and ability, or the principles of right and justice.  When the state takes up its function of administering justice, it accepts, as true


In sales, commerce and economics, a customer is the recipient of a good, service, product or an idea – obtained from a seller, vendor, or supplier via a financial transaction or exchange for money or some other valuable consideration.

Customers’ Collection Period

Average number of days credit taken by customers.

Cut-Off Procedures

Procedures applied to the accounting records at the end of an accounting period to ensure that all transactions for the period are recorded and any transactions not relevant to the period are excluded.


Crime committed using a computer and the internet to steal a person’s identity or sell contraband or stalk victims or disrupt operations with malevolent programs.


Cyberslacking is a term used to describe the increased use of the internet on company computers by employees for their personal use or entertainment.


Stealing of financial and/or personal information through the use of computers for making its fraudulent or other illegal use.


A cycle is a recurring pattern, usually wavelike. In business, there are a few common patterns like this, such as the business cycle and the credit cycle. The business cycle is the boom and bust pattern of the market economy. The credit cycle is the expansion then subsequent contraction of credit. The credit cycle is


Occurring in cycles; recurrent.

Cyclical Stock

A cyclical stock is one whose profits are highly correlated with the business cycle. When the economy is in expansion, a cyclical stock has increased profits. Conversely, when the economy slows, so do the prospects for a cyclical stock. A cyclical stock may be found in sectors such as automobile, travel, or manufacturing. The common

Cyclical Unemployment

Cyclical unemployment is when workers lose their jobs because of downturns in the business cycle.

Voided Check

Accounting Terms Beginning With "D"


D-Mark or Deutsche Mark (DM) was Germany’s official currency until the euro became the currency of choice in 1999. D-Mark was replaced by the euro in circulation from that year. However, Deutsche Mark was accepted as legal payment of purchases made inside Germany until February 28, 2002. History D-Mark came into circulation from June 21, 1948, during

Daily High

The daily high is the highest price paid for a stock or a commodity during a trading day. Prior to the advent of pre-market trading and after-hours trading, the daily high for a stock was easy to determine. Today, however, a stock’s daily high can be open to question. Does the daily high refer only

Daily Low

The daily low is the lowest price paid for an equity during a given trading day. On the surface, it would appear that determining the daily low for a stock would be a simple matter. However, as stock trading evolves the precise determination of a stock’s daily low is not as certain as it once

Daily Trading Limit

The maximum amount, set by the exchange, that the price of a stock, commodity or futures/options contract can rise or fall in a single day. In some cases, trading in an asset is automatically suspended when the daily limit is reached.

Daisy Chain

A situation in the stock market when dealers buy and sell to each other so that investors will think that there is a lot of trading in the market. This will encourage investors to invest and prices to rise

Daisy Chaining

Daisy chaining is an illegal practice undertaken by brokers and investors to artificially inflate stock prices for personal gain. Daisy chining entails forging false transactions in order to simulate a dynamic, high-interest environment with respect to a specific security. Once such a condition is achieved, the increasing volume and growth of the stock induced by


A sum of money paid in compensation for loss or injury.

Dark Cloud Cover

Dark cloud cover is a candlestick charting pattern that can signal the top of an uptrend — it is a bearish reversal pattern. A long white candle the first day followed the second day by a long black candle that opens above the white candle’s closing price and closes within the body of the white

Date Of Maturity

The date on which an insurer will pay the face amount of a policy to the policy owner if the insured is still alive.

Date Of Record

The date of record is the date that determines which shareholders receive dividend payments. On the day a company declares dividends (the declaration date), it decides on both a date of record and date of payment. An investor must be listed as the “holder of record” in the firm’s stock ledger on the date of

DAX 100

DAX 100 is the abbreviation for Deutscher Aktienindex 100, a German price-weighted index of that country’s top 100 stocks. The DAX 100 includes names such as Bayer, Commerzbank, BMW, and Schering. The Dax 100 is part of the German Stock Exchange Index family. The German Stock Exchange publishes a DAX 100 price index (HKDX). The

Day Trader

A day trader is a market participant who generally closes out all trading positions before the market closes for the day. The growth of online discount brokerage in the late 1990s made possible the amateur day trader. The professional day trader, in contrast, probably trades for a living. The professional day trader can often avoid


In radio and TV broadcasting, fairly standard divisions (based on audience composition) of a 24-hour day for scheduling commercials.

De Bene Esse

Good for the present. A decision de bene esse is one that should stand for the time being, or until some later decision upsets it.

Dead Cat Bounce

A dead cat bounce is any sharp rise in prices after a severe decline. In order to have a true dead cat bounce prices must decline again following the bounce in prices. Investors who are fooled by a dead cat bounce and mistakenly believe that a market has turned around may buy into a still-declining


A dealer is an individual or entity that buys and sells a particular good and holds an inventory in that good. In contrast to an agent, the dealer always acts as the principal in a transaction, whereas the agent represents a client. The dealer has a natural niche in the trade in any high-priced good,

Death Benefit

Death benefit is the sum amount paid by the insurance company to the policyholder upon death. In and of itself, the death benefit constitutes the face value of the life insurance policy as per the original contract. Depending on a type of policy, the death benefit may be accompanied by dividends, as well as other

Death Put

A death put, sometimes called a survivor’s option, is a feature of certain fixed income or debt instruments that allow for the estate of a deceased investor to “put back” or redeem that instrument without penalty. Certain certificates of deposits that otherwise charge a penalty for early withdrawal of principal wave this penalty in the


A written acknowledgement of a debt – a name used for loan financing taken up by a company.


An entry recording an amount owed, listed on the left-hand side or column of an account.

Debit Card

A debit card is a plastic card that resembles a credit card. Using a debit card a customer can withdraw funds on deposit in the customer’s account using an ATM (automated teller machine.) A debit card draws directly on funds in the consumer’s bank account (i.e. checking account). Most businesses that accept credit cards will


A form of liability that represents money borrowed from banks or other institutions, or any money owed to another party. Simply put, debt is when you owe someone money. For most people, this means the balances they owe on credit cards, personal loans, mortgages, and overdrafts.

Consumer debt is running at an all time high, with easy access to credit causing many people to run up potentially dangerous levels of unsecured borrowing, while record house prices mean that the average mortgage size is getting larger and larger.

Since the credit crunch of 2008, more and more people are finding their debts are becoming unsupportable as the ability to take out new credit to pay for old dries up, and cash-strapped banks hike the interest rates on credit cards and so on.

If you’re struggling under sever debt problems, then you have a few which we’ll explain in further depth elsewhere: debt consolidation, debt management, IVA or bankruptcy.

All except consolidation will involve at least some damage to your credit file, but when matters come to head and a budget simply doesn’t balance, all are potentially viable solutions.

Debt Capital

Debt capital is funds supplied by lenders that is part of a firm’s capital structure. Debt capital usually refers to long-term capital, specifically bonds, rather than short-term loans to be paid off within one year. If the short-term debt is continually rolled over, however, it can be considered relatively permanent and thus debt capital. Debt

Debt Consolidation

Borrowers with a number of different loans – usually which are unsecured (not secured on the property) – may find that they can replace these loans with a single loan secured on the property. This can often reduce the borrower’s monthly outgoings by paying only one loan which is secured on the property, sometimes over a longer-term.

Debt Consolidation Program

A debt consolidation program is a program in which several of a person’s debts or loans are combined into one large loan. With a debt consolidation program, a new loan is created. People participate in a debt consolidation program for a variety of reasons, the most common of which is to pay a lowered interest

Debt Counselling

Are you having difficulty managing your money? You may be considering loan consolidation, taking out one loan to cover all your existing repayments. Be careful you don’t end up even deeper in debt! The interest rates and fees charged by consolidation loan providers can be much higher than those available from high street lenders. Such

Debt Financing

Debt financing refers to the borrowing of funds in order to finance a purchase, acquisition or expansion. Debt financing applies to both individuals as well as to businesses and corporations. For businesses and corporations debt financing often involves the selling of notes, bonds, mortgages or other debt instruments. The individuals and financial institutions which provide

Debt Forgiveness

Debt forgiveness refers to partial or complete forgiveness of debt. More commonly used term is debt relief. Debt forgiveness is frequently used to refer to Third World debt. Debt could be owed by organizations, individuals or by countries. In the 1990s a large number of NGOs and other organizations came together under the aegis of

Debt Instrument

A debt instrument is a contractural or written assurance to repay a debt. A debt instrument can be a promissory note, a bill of exchange, a bond or other such instrument. A debt instrument may also be referred to as an instrument of indebtedness. In most cases, a debt instrument can be sold, traded, or

Debt Limit

A debt limit is the maximum amount of debt which a government is allowed to take on. A governmental debt limit may be changed — either up or down — through legislative or voter action. A debt limit is sometimes referred to as a debt ceiling. While a debt limit is often used to refer

Debt Market

The debt market is the market for trading debt securities. The debt market thus involves corporate bonds, government bonds, municipal bonds, negotiable certificates of deposit, and various money market investments. The debt market also includes individual loans bought from lenders and often packaged together in large amounts. The debt market includes the primary market, where

Debt Ratio

For a company, the debt ratio indicates the relationship between capital supplied by outsiders and capital supplied by shareholders. Often the debt ratio is computed as total debt (both current and long-term) divided by total assets. Thus if a company has $50,000 in debt and assets of $100,000, its debt ratio is 50%. The debt

Debt Relief

Debt relief is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. Debt relief for heavily indebted and underdeveloped developing countries was the subject in the 1990s of a campaign by a broad coalition of development NGOs, Christian organisations and others, under the

Debt Security

A debt security is a written agreement to repay a loan, usually with interest, within a given time frame. A debt security may also be referred to as a debt instrument. Issuing a debt security is one way that governments, corporations and even individuals raise capital. A debt security is generally backed by some form

Debt Service

Debt service refers to the series of payments of principal and interest on a loan or other obligation. Debt service payments are usually structured in regular intervals: monthly, semi-annually, or annually, although it is possible to structure debt service payments on virtually any time schedule. Debt service can apply to the payment of individual debts,

Debt Service Coverage

The debt service coverage ratio calculates the amount of cash available to meet debt obligations. The debt service coverage ratio is used in both corporate and real estate finance. Excluding tax considerations, in corporate finance, Debt service coverage ratio = [Net Income + Depreciation/Amortization + Interest Expense]/[Interest Expense + Principal Payments]. For real estate loans,

Debt Service Coverage Ratio

The Debt Service Coverage Ratio (DSCR) is a benchmark used to measure a company’s cash producing ability to cover its debt payments, providing a useful indicator of financial strength. Debt Service Coverage Ratio is also known as the Interest Coverage Ratio and Debt Service Ratio. The Debt Service Coverage Ratio measures how effectively a company’s operations-generated

Debt To Equity Ratio

Debt-to-Equity Ratio is a measure of financial leverage, indicating what proportion of equity and debt a company is using to finance its assets. A high ratio implies that a company has been aggressive in financing its growth through debt and may be high risk for investors.

Debt To Total Assets Ratio

Debt-to-total-assets is a leverage ratio that defines the (total) amount of debt relative to assets.

Debt/Asset Ratio

The debt/asset ratio measures the ratio of the company’s assets that is financed by non-owners. The debt/asset ratio is computed by dividing total liabilities by total assets. To focus solely on the more permanent capital of the term, the debt/asset ratio can also be calculated by dividing long-term liabilities (obligations not due for one year

Debt/Equity Ratio

A comparison between the company’s total assets and its short- and long-term debts. This ratio is often used to measures a company’s ability to borrow and repay money, or its future prospects.


An owner of a financial obligation of another party.


A person or organisation that owes money to the entity. Someone who has the obligation of paying a debt.

Declaration Date

The declaration date is one of three key dates associated with company dividends. It is on the declaration date that the firm incurs a legal obligation to pay dividends. For example, on November 1 (the declaration date) the company declares a quarterly dividend of $2 on its 500,000 outstanding shares, to be paid November 30


Separating a ‘consolidated’ (usually containerised) shipment into its original constituent shipments, for delivery to their respective consignees. Also known as degroupage.


Purchases that are claimed as business expenses are described as deductible; they reduce business profits but reduce the amount of income tax owed.


An amount or part taken away from a total, especially an expense that you do not have to pay taxes on, or the process of taking away an amount or part.


A legal document intended to bind its signatory to strong legal obligations, such as a transfer of land or execution of certain metas of contract (see: Contract by deed). A deed has historically been associated with a certain degree of ceremony, particularly the requirement that it be ‘signed, sealed, and delivered’. In recent years this ceremony

Deep Discount Bond

A loan issued at a relatively low price compared to its nominal value.

Deep Discount Broker

A deep discount broker is a financial professional who executes stock trades at highly nominal commission fees. The services of a deep discount broker are extremely limited. A deep discount broker will typically go no further than implementing basic securities and option trades. Thus, a deep discount broker may not be a viable alternative for

Deep In The Money

A deep in the money option is one that is presently very profitable. An option is commonly said to be deep in the money when the exercise (strike) price of the option is extremely favorable relative to the current market price of the underlying security. The more profitable the position, the further deep in the

Deep Out Of The Money

A deep out of the money option is presently worthless. An option is said to be deep out of the money when the exercise (strike) price of the option is extremely unfavourable relative to the current market price of the underlying security. The greater the gap, the further deep out of the money the option


Defamation is the Tort of causing damage to a person’s reputation or standing. While modern society recognizes reputation as something of value and seeks to protect it through the law of defamation, it has also to be accepted that freedom of speech is also important, particularly in the political arena. Consequently, there is a tension between

Defamation And Freedom Of Speech

English law has long recognized that a person’s good reputation is something that merits protection, and that compensation should be paid by someone who impugns that reputation. A person who is a victim of an attack on his reputation can be financially damaged, particularly if the imputation concerns his professional competence. However, in most cases,


Default in economics can be referred to as a condition that arises when any debtor is unable to pay back the debt in accordance with the legal obligations of the debt contract. Any organization or individual can be termed as a defaulter if it is unable to pay a scheduled sum of money or desecrated a credit agreement. Condition of default can arise in any kind of debt contract like bonds, loans, mortgages and promissory notes.

Default Judgment

A default judgment is awarded if a defendant in a lawsuit fails to respond to a complaint within a specified timeframe, generally 30 days. For instance, if the petition or complaint asked for a response within 30 days on the 31 days if the defendant did not respond the plaintiff could ask for a default

Default Risk

Default risk is the risk born by a creditor that a debtor will default. Default risk is also called credit risk or financial risk. Creditors are compensated for lending to debtors with higher levels of default risk by the potential for higher rates of return. Consider the corporate bond as a form of debt with

Defective Title

An owner’s Title to land or goods can be ‘defective’ (that is, less than perfect) in at least four ways. He may not be the owner at all. Of course, the reason why a person seeks to sell something he does not own might be because he is a villain. However, a person may be dispossessed


An individual, company, or institution sued or accused in a court of law. The term defendant is the name for the person who is being sued in a civil case or charged with a crime in criminal prosecution. In arbitration the term defendant and respondent are synonymous. The defendant does not have to prove their case; this must be done by the plaintiff.

An individual becomes a defendant in a tort case after a plaintiff files a complaint with the court and notifies the defendant. Cases may be decided against a defendant if they refuse to answer the complaint, in which case the court will make a default judgment against them, or they take the case to court and lose.

Civil cases may allow for both parties in the complaint to receive compensation for their losses under some systems of compensation allocation. For instance, some states allow compensation to be awarded using a comparative negligence system which determines both parties level of negligence and divides the compensation accordingly.

Defensive Investment Strategy

Defensive investment strategy is an investment approach to allocating a portfolio as to reduce the risk. In other words, a defensive investment strategy outlines a way to preserve principal and minimize volatility associated with the ups and downs of the market. Employing a defensive investment strategy necessitates investing primarily in bonds and other highly liquid

Defensive Stock

A defensive stock is one whose profits are minimally impacted by economic downturns. A defensive stock may be found in sectors such as utilities, food, and consumer staples. The common thread is companies providing non-discretionary goods and services necessary for everyday life. A defensive stock may use its more predictable earnings to pay a regular

Deferred Annuity

A deferred annuity is a contract that delays annuity payments, unlike a regular annuity, until a certain period of time which has been selected by the investor. A deferred annuity typically has two main stages. The first stage of a deferred annuity is an accumulation stage, where the investor puts money into the account. The

Deferred Asset

An asset whose benefit is delayed beyond the period expected for a current asset, but which does not meet the definition of a fixed asset.

Deferred Compensation

Deferred compensation is the portion of an employee’s income that is paid out at a date later than when the income was actually earned. Broadly, there are two types of deferred compensation plans: qualified and non-qualified. Non-qualified deferred compensation plans include salary reduction arrangements, bonus deferral plans, supplemental executive retirement plans, and excess benefit plans.

Deferred Income

Revenue, such as a government grant, is received in advance of performing the related activity. The deferred income is held in the balance sheet as a type of liability until performance is achieved and is then released to the income statement.

Deferred Revenue

Deferred revenue is a liability that is created when monies are received by a company for goods and services not yet provided. Revenue will be recognized, and the deferred revenue liability eliminated when the services are performed. Deferred revenue stems from the accounting concept of revenue recognition, under which revenues are recognized only when the

Deferred Stock

Deferred stock is one or more shares of stock that does not pay dividends until a specified date or event occurs, such as a company reaching certain profitability levels. Deferred stock is typically held in a lock deferred stock compensation account until the expiration date. Shareholders of deferred stock do not have any rights to

Deferred Tax

Deferred tax represents a company’s liability for taxes owed that is postponed to future periods. Deferred tax is primarily the result of tax law that allows firms to write off expenses faster than they are recognized and thus create a deferred tax liability. For example, under tax law companies can often depreciate fixed assets at

Deferred Taxation

The obligation to pay tax is deferred (postponed) under tax law beyond the normal date of payment.


Deficit is an economic condition in which spending exceeds income. One example of a deficit would be a situation, in which a nation’s imports exceed its exports, creating a trade deficit. Another example is a company’s losses surpassing its profits. In such an event an organization is said to have a budget deficit. A prolonged

Deficit Spending

Deficit spending represents an overload of government expenditures over government revenue, creating a shortfall or deficit that needs to be financed. Deficit spending may be reflective of excessive buying of goods and services and establishing costly government programs. Deficit spending may also be the result of transferring grants to individuals and corporations. Acute deficit spending

Defined Benefit Plan

A defined benefit plan is a type of qualified retirement plan, meaning it receives favourable tax treatment. A defined benefit plan is employer-sponsored, and the employer can deduct contributions made to the defined benefit plan. The employer contributes to the defined benefit plan based on a specific formula indicating the exact benefit an employee can

Defined Contribution Plan

A defined contribution plan is a type of qualified retirement plan, meaning it receives favourable tax treatment. A defined contribution plan requires the employer, on behalf of the employee, to make a specified, fixed contribution to the plan. The total dollar contribution made to the defined contribution plan is based on a percentage of the


Deflation is a broad decline in prices. Deflation occurs when the prevailing demand cannot absorb the supply of goods. Companies attempt to stimulate demand by cutting prices, which in turn may lead to cost-cutting wage reductions. The reduction in purchasing power further reduces demand. During periods of deflation, cash is often considered ‘king’ as goods


A deflator is used to convert current dollars into dollars that are adjusted for price changes. Because price levels change over time, direct comparisons of output, wages, and other dollar-denominated measures are often meaningless. To usefully compare a salary of $50,000 in 1965 with a salary of $100,000 in 2005, a deflator must be used.

Delayed Opening

A delayed opening is the intentional postponement of the opening of trading in a specific security. A delayed opening is a relatively rare event and is only triggered by extraordinary circumstances. Major news about a company (positive or negative) which causes a significant imbalance between buy and sell orders prior to the open of trade

Delegated Legislation

While Parliament is the primary legislating body, it is widely recognized that it does not have time to issue all legislation in the form of a statute (see: Statute). Instead, statutes will grant delegated powers to other people or bodies (typically ministers) to supply the detailed legislation. The most important forms of delegated legislation are:


Deleveraging is the unwinding of debt. Companies use leveraging (i.e. borrowing) to accelerate their growth or return, however, when a company is concerned about defaulting on its obligations or concerned about rampant losses, it can use deleveraging to lower its risk of default and mitigate its losses. By deleveraging its balance sheet, a company sells


(typically of a young person or that person’s behaviour) showing or characterized by a tendency to commit crime, particularly minor crime.


A public company is said to delist if it ceases trading of its shares on a public exchange. A company can delist voluntarily for a few reasons. For example, some public companies delist upon going private in a leveraged buyout, or LBO. A company can also desist its shares because another firm is acquiring it.

Delivery Month

The specified month within which a futures contract matures and is settled by delivery of the underlying asset is referred to as the delivery month. Every futures contract has a specified delivery month. For example, delivery month dates for wheat contracts are in March, May, July, September and December. Delivery may occur anytime during the

Delta Hedging

Delta hedging is the process of setting or keeping the delta of a portfolio of financial instruments zero, or as close to zero as possible – where delta is the sensitivity of the value of a derivative to changes in the price of its underlying instrument. Mathematically, delta is the partial derivative of the portfolio’s


Demand is an economic measure, which expresses a desire, as well as the ability to pay for goods and services. In and of itself, demand is neither a physical need nor emotional desire. Rather, demand can be understood as willingness to trade things of value, such as goods, money, and labour, for variable amounts of

Demand Curve

The demand curve is a graphic representation of the demand schedule and performance. The demand curve is drafted on the Production Possibility Frontier (PPF) with price on the vertical axis and quantity on the horizontal axis. The demand curve normally slopes downward from left to right. In doing so, the demand curve reflects incremental changes

Demand Deposit

A demand deposit is a type of financial account that allows the account holder to withdraw funds on demand. This means that demand deposit balance withdrawals can be made without previous notice. In this respect, a demand deposit is very different from a term deposit, which carries certain temporal access restrictions. Demand deposit accounts are

Demand Elasticity

Demand elasticity, also known as price elasticity of demand, is a concept economists use to measure price sensitivity. In principle, demand elasticity is an economic term defined as the percentage change in quantity demanded, divided by the percentage change in price. Demand elasticity can be expressed graphically through a simplified linear demand curve. On this

Demand Forecasting

Demand forecasting is an activity a company does internally when it sets its sales budget. The demand forecast influences all upstream commitments and decisions. Forecasting is important and fundamental to any business. It is the act of looking ahead and anticipating the future. Forecasting provides lead time to do the following: Respond to new situations (avoid


In general, land retained by the estate owner, and not granted out to tenants. The term usually referred to the land of a feudal overlord which he retained for his own personal use. These days the concept is only legally relevant where it refers to demesne land of the crown.

Demesne Land Of The Crown

Land belonging to the Crown by virtue of the fact that it has never been granted to anyone else, or has reverted to the Crown by Escheat. This land is neither Freehold nor Leasehold, but an entirely different kind of land ownership from that of private individuals. Conventionally, most of the foreshore is considered to be Crown demesne land.

Demographic Factors

These are factors that are used to define the characteristics of a person or a population.


Data that portrays specific characteristics of a group of people (e.g., sex, race, age, geographic location). Used as a noun, it means a set of people who are grouped because of their similarity in one or more aspects.


A charge required as compensation for the delay of a ship or freight car or other cargo beyond its scheduled time of departure.


The word denomination has three distinct but closely related uses in a financial context. First, in a given currency, the denomination of legal tender specifies the face value of a given coin or note. In the US, there are four different common coins: the penny ($0.01), nickel ($0.05), dime ($0.10), and quarter ($0.25), and each


Reducing the obligations on a contract.

Department Of Housing And Urban Development

The Department of Housing and Urban Development, (HUD), established in 1965, is a ministry of the US government. The Department of Housing and Urban Development strives to make homeownership affordable. The Department of Housing and Urban Development regulates Ginnie Mae, Fannie Mae and Freddie Mac. State and local governments, and non-profit organizations get funds from


The term dependent generally describes a person who is financially sustained by someone else. Most commonly, the word dependent applies to children who are supported by their parents. A dependent may also rely upon financial help derived from grandparents, older siblings, or legal guardians. One spouse that is financially born by the other is likewise


Deposit has two distinct meanings. Meaning one is applied to funds provided as security or collateral for expected delivery of a good. For instance, in a real estate acquisition, a deposit is provided in advance of closing. The exact timing and amount varies depending upon the part of the country. A real estate purchase deposit

Deposit Slip

A slip of paper that accompanies cash or cheque payment. It details the amount of the deposit, the bank account the funds should be paid into, and the date of deposit.

Depositary Receipt

Depositary Receipt (DR) was created in 1927 to aid US investor who wished to invest in non-US corporations. A depositary receipt is a negotiable certificate of ownership of shares in a foreign company traded in the USA through a US depository bank. Each depositary receipt represents a specific multiple or fraction of the underlying shares


A deposition is part of the pre-trial investigation where each party has the right to take an oral statement from a witness under oath before the trial. The deposition is done by opposing legal counsel so they can discover evidence prior to the trial. Information gathered at the deposition can be presented later in court.

Depreciable Amount

Cost of a non-current (fixed) asset minus residual value.

Depreciable Property

Depreciable property is any property other than land a property owner may depreciate for tax purposes. Tangible property such as buildings, equipment furniture, machinery, and vehicles is depreciable property, and some forms of intangible property such as copyrights, computer software, and patents are depreciable property. Depreciation enables the property owner to recover the cost of


Depreciation is an economic term that refers to the decline in the value of assets through the passage of time. This is in account of the wear and tear, depletion, obsolescence and other factors that occur through the usage of the asset. The depreciation cost of the asset is spread over the period of time during which it is used. The depreciation cost is a non-cash expense which reduces the company’s reported earnings although the free cash flow of the company increases.

Depreciation is a process of accounting, where the expense of the asset is adjusted against the income generated by the owner of the asset. For example, the company with equipment of $1 million and a life of 10 years would expend $ 100,000 as its depreciation cost every year. This cost will be matched with the income generated by the equipment in the 10 years it serves the owner.

Depreciation also refers to the fall in the value of a currency when compared with the other currencies. For example, the US dollar depreciates as against the Indian rupee. In such a case, to obtain goods and services valued to the original amount of Indian rupee prior to the depreciation, the purchasers would have to pay more US dollars.

Depreciation And Amortization

Depreciation and amortization are accounting transactions that record the loss in value of long-term assets. Here’s an example of depreciation and amortization: A company buys a new machine for $5,000 that it expects to use 5 years and then discard. It then records depreciation of $1,000 each year of the machine’s five-year “useful life.” (“Depreciation”

Depressed Market

A depressed market occurs when supply overtakes demand, resulting in weak and lower prices. The depressed market has more sellers than buyers and is often referred to as a “buyer’s market.” Although some companies struggle in a depressed market, many blue chips companies do remarkably well under depressive and volatile market conditions. There are many


In economics, a severe and prolonged recession is sometimes called a depression. Unlike a recession, no standard definition of a depression exists. (A recession is often defined as two consecutive quarters of declining GDP, though the NBER is the official arbiter of what constitutes a recession.) Like a recession, a depression is characterized by increased


The act of removing an item from the financial statements because the item no longer satisfies the conditions for recognition.


Deregulation is an act by which the government regulation of a particular industry is reduced or eliminated in order to create and foster a more efficient marketplace. Deregulation is usually enacted to weaken government influence and forge greater competition. By this token, deregulation also creates an economic environment favourable to upstart companies that were unable


A derivative, or derivative security, is an asset whose price is based on the value of an underlying asset. A derivative can come in several forms such as options, futures, and swaps. An option contract is a derivative that gives the owner the right, but not the obligation, to buy or sell the underlying at

Derivative Security

A derivative security is an asset whose price is based on the value of some other underlying asset. An option is one type of derivative security. The futures contract is another type of derivative security. The swap is yet a third major type of derivative security. An option contract is a right (not the obligation)

Derogation From Grant

It is a general principle of law that if person A grants an interest in land to person B, he must not then act in such a way as to make that grant worthless. A good example is Harmer v Jumbil (1921), in which the Landlord was held to have granted a worthless Lease, by making it impossible

Descending Bottoms

Descending bottoms refers to a succession of lower lows in a stock’s trading range. One of the easiest ways to see descending bottoms is on a stock chart, with the chart depicting lower lows over time. Descending bottoms can be tracked for virtually any time frame, from hourly, to daily, to weekly, to monthly or

Descending Tops

Descending tops are a series of trades with each high lower than the one preceding it. Descending tops are most clearly seen on a chart which records an equity’s trading range. Descending tops can be charted for virtually any time frame, from minute-to-minute charts to daily charts and all the way through yearly charts —

Descending Triangle

A Descending Triangle is a bearish chart pattern used in technical analysis. The pattern usually forms during a downtrend as a continuation pattern, or as a reversal pattern at the end of an uptrend. The descending triangle is determined by drawing one descending trend line that connects a series of lower highs and a second horizontal trend line

Descent And Distribution

The area of law that pertains to the transfer of real property or personal property of a decedent who failed to leave a will or make a valid will and the rights and liabilities of heirs, next of kin, and distributees who are entitled to a share of the property. Origin of the Law The


A decrease in the quality and range of the practical knowledge of individuals, organisations, or societies due to attrition, automation, computerisation, downsizing, a lack of learning opportunities, or neglect.


In tort law, detinue is an action to recover for the wrongful taking of personal property.


Devaluation is lowering of the exchange value of a particular currency. Devaluation is also understood as lessening of the value of a particular good or service. This is done by bringing down the amount of gold that is available against a particular currency. Devaluation is also defined as a significant drop in a currency’s value


Devanning is the act of unloading cargo from a container.

Devils Horns

The devil’s horn effect, closely related to the halo effect, is a form of cognitive bias that causes one’s perception of another to be unduly influenced by a single negative trait.


One who receives a gift of real property through a will. Also known as a distributee.


When the Labour Government came to power 1997, it diligently implemented its manifesto commitment to devolve a measure of self-government to Scotland and Wales. In doing so, it claimed that the process of devolution would not upset the UK constitution, and the sovereignty of the Westminster parliament would be retained. But is this right? Or


DIAMONDS are Exchange-Traded Funds (ETFs) trading on the American Stock Exchange (AMEX). DIAMONDS represent units of beneficial ownership in the DIAMONDS Trust, a unit investment trust holding a portfolio of the 30 stocks that comprise the Dow Jones Industrial Average (Dow or DJIA). DIAMONDS closely track (before expenses) the DJIA. Their value approximates 1/100 the


A division or contrast between two things that are or are represented as being opposed or entirely different.

Difference On Consolidation

Difference between fair value of the payment for a subsidiary and the fair value of net assets acquired, more commonly called goodwill.


Product differentiation can be described as a marketing process that displays the deviation between products. This is done to make products more appealing to a particular target market. Differentiated product makes a competitive advantage for the seller as customers perceive the product as superior to its peers. Product differentiation also makes a product unique. Product differentiation can be

Digital Money

Digital money is money transmitted in electronic form to pay for good and services, typically over the Internet or through other electronic media. A vendor accepting digital money contacts the issuing bank upon receipt of a buyer’s payment authorization. The vendor then receives the funds’ transfer and fulfils the order of goods or services. Digital

Digital Option

A digital option is a type of exotic options which offers a fixed payout if the underlying instrument price exceeds a pre-specified strike price (i.e. digital call option). If the digital option is a put, the lump-sum cash payment will occur if the underlying instrument price drops below the pre-specified strike price (i.e. digital put

Diluted Earnings Per Share

Diluted earnings per share is earnings per share that fully reflects the impact the firm’s dilutive securities (eg, convertible bonds) may have on earnings per share. Diluted earnings per share is distinguished from basic earnings per share, both of which are computed by dividing net income by the weighted average number of outstanding shares. But

Diluted Share

Diluted share is a term used in reporting earnings per share, as in “earnings per diluted share.” Under Statement of Financial Accounting Standards 128, a company that has a complex capital structure (ie, it has securities that have the potential of becoming common shares) must report earnings on both a “basic” (non-dilutive) and diluted share


Dilution is the reduction of fractional ownership of each of a company’s existing shareholders by the issuance of additional shares. A common method of dilution is the conversion to common stock of other securities, such as convertible bonds or preferred stock. Dilution also occurs when new shares are issued because the company sells more shares

Diminished Responsibility

The defence of diminished responsibility is a special defence (only available to a charge of murder) and partial defence (if successful, it reduces the conviction to manslaughter). This defence is widely used because murder has a mandatory life sentence. To succeed, the defendant must show that, on the balance of probabilities, the elements of diminished

Diminishing Return

Diminishing return, or the law of diminishing return, is an economic tenet, which provides that adding additional units of productivity beyond a certain threshold will incrementally regress production returns. The law of diminishing return is a product of Europe at the turn of the eighteenth century, where it was put forth toward free trade and


A dip in the market is a decline in prices, generally considered a temporary downturn. An individual stock or commodity can have a dip in prices, a sector can have a dip in prices, or the broader market can experience a temporary dip in prices. Some investors see a market dip as a buying opportunity.

Diplock Court

A Crown Court convened with no jury, named after Lord Diplock who championed the idea. The rationale for the use of such courts is that there are some criminal cases in which no jury will serve reliably, because the likelihood of intimidation is too high. They have generally been used only in Northern Ireland, for

Direct Applicability

A provision of EU law is ‘directly applicable’ if it becomes part of the national law of member states without further administrative measures in the member states. The related concept of ‘direct effect’ indicates that certain provisions of EU law create rights and duties that can be relied on by individuals in national courts. ‘Direct

Direct Deposit

Direct deposit is a program in which a payment is deposited directly into a savings, checking, or brokerage account. With direct deposit the named recipient of a payment never sees or handles a check; instead, once a direct deposit account has been established, funds are electronically transferred directly into the specified account. A direct deposit

Direct Effect

EU legislation is said to have ‘direct effect’ when its provisions can be relied on in national courts. That is, directly effective provisions create rights and duties between individuals, which they can enforce in the courts of member states. There is a related concept sometimes mistaken for this, ‘direct applicability’, which states that certain provisions

Direct Evidence

Direct evidence is evidence gathered from a witness who actually saw or heard the event in question. Direct evidence differs from circumstantial evidence which requires inference or presumption. Direct evidence is very good for a case because it does not ask a jury to develop opinions based on circumstantial evidence but can provide evidence beyond a reasonable doubt.

Common types of direct evidence include DNA, photos of the crime in progress, eye witness testimony and fingerprints. There is some debate within the legal community about whether or not any evidence can actually be called “direct evidence.” Legal experts generally depend on both direct evidence and circumstantial evidence to prove their case. Direct evidence, however, is not always necessary to win a case; cases can also be won with circumstantial evidence alone.

Direct Method (Of Operating Cash Flow)

Presents cash inflows and cash outflows.

Direct Purchase Program

A direct purchase program allows an investor to buy stock directly from a company, without using a broker. In order for a company to offer a direct purchase program, it must register its intent with the SEC, which means that not every company offers a direct purchase program to the public. Using a direct purchase

Direct Stock Purchase Plan

A direct stock purchase plan (DSP) is a company-sponsored program in which the company sells shares of its stock directly to investors. Brokers are not involved in a direct stock purchase plan. The chief advantage of a direct stock purchase plan is that an investor avoids (or significantly reduces) commissions. Investors of limited means can

Direct Tax

Direct tax in economics refers to that type of taxes that are levied directly on any organization or an individual. Direct tax though in a colloquial sense refers to that type of taxes that are paid directly to the government by any individual. Direct tax in economic terms and colloquial terms do not always match. In a

Direct Taxation

Direct taxation is one point tax imposed by the government on income earned, wealth accumulated or gift received. Incidence of direct tax cannot be transferred and is borne by the recipient directly. Income earned can be by an individual or an organization. Direct tax rates may vary from one state to another, and also from

Directed Verdict

A directed verdict is a verdict that a judge has taken from the jury or ordered the jury to find without deliberation. A directed verdict is done when the prosecution or the defence lawyer does not have the ability to prove their case sufficiently and the evidence is very weak either in favour of the

Direction To Acquit

A trial judge may ‘direct the jury to acquit’ on a matter of law. For example, if the prosecution has not satisfied the evidential burden (see: Evidential burden), the jury is unnecessary. It is not the jury’s job to rule on points of law, but on points of fact. If there are not enough facts,

Directional Movement Index

The Directional Movement Index (DMI) is an indicator developed by J. Welles Wilder for identifying when a definable trend is present in an instrument. That is, the DMI tells whether an instrument is trending or not.


A document issued by the European Union requiring all Member States to adapt their national law to be consistent with the Directive.

Director Of Public Prosecutions

The head of the Crown Prosecution Service (see: Crown Prosecution Service). The Director must be a lawyer of at least 10 years’ standing.


Person(s) appointed by shareholders of a limited liability company to manage the affairs of the company.

Disability Insurance

Disability insurance is an insurance policy that pays supplemental income benefits in the event that the insured person (policyholder) becomes incapable of working his or her job. The incapacity that necessitates disability insurance may be illness, accident, or another trigger; the policy spells out what constitutes a trigger. Benefits from a disability insurance policy will


The act of denying or contradicting a previous statement. Can also mean the refusal to abide by a formerly enacted contract or agreement.

Discharge Of Contract

A Contract is deemed to be discharged, that is, completed and no longer binding, in the following circumstances. Performance. That is, all parties have satisfied the requirements of the contract to the satisfaction of the other parties. The overwhelming majority of contracts are discharged this way. However, it not always clear when a contract has been performed,


(law) a voluntary repudiation of a person’s legal claim to something.


the action of making new or secret information known.


Discontinued in a financial context is usually associated with discontinued operations. When companies dispose of operations that can be identified as a specific, separate segment of their business, these activities are considered discontinued operations. GAAP provides for separate disclosure of discontinued operations, which warns investors that these activities will no longer be part of the


A discount is a difference between the price paid for an asset and the specified list price of a good or face value of an instrument. For instance, a bank holding a defaulted mortgage may settle the obligation at a significant discount by accepting less than the principal owed from an investor who is buying

Discount Broker

A discount broker is a stockbroker offering low commission rates. The low rates offered by a discount broker are primarily achieved through automation of trading and customer service. A discount broker will often have access to alternate quotation services, allowing trades to execute without incurring exchange fees. A discount broker may also specialize in high-volume

Discount Loan

A discount loan is a loan that does not require the payment of interest or any other charges; rather, a discount loan deducts the interest and/or other charges from the face amount of the loan when it is given out. That way, the person taking out the discount loan receives less. For example, a discount

Discount Rate

The term discount rate is used in several different contexts: mathematical discount rate, monetary policy, and project valuation. Mathematical Discount Rate Discount rate normally refers to the interest rate, though in fact, a discount rate is slightly different from the interest rate, in terms of how it is calculated. This is because the discount rate

Discount Received

A supplier of goods or services allows a business to deduct an amount called a discount, for prompt payment of an invoiced amount. The discount is often expressed a percentage of the invoiced amount.

Discounted Cash Flow Analysis

Discounted cash flow analysis is a valuation tool analysts use to evaluate the attractiveness of investment opportunities. Discounted cash flow analysis projects the cash flows an investment will generate in future years, then applies a discount rate to the cash flow stream to derive a present value for the investment. The company’s weighted average cost

Discounted Cashflow

Discounted cash flow (DCF) is a valuation technique employed to judge the attractiveness of an opportunity for investment. DCF analysis utilizes free cash flow projections and then discounts them to reach a current value. This value is applied to appraise investment potential. Discounting is made generally by using a weighted average cost of capital method.


Discovery is the legal method used to gather information from both parties during a legal proceeding. Discovery has five parts including disclosure, interrogatories, admissions of facts, request for production and depositions. During discovery, the courts will allow the request of information which is “reasonably calculated to lead to the discovery of admissible evidence”. Consider also

Discretion To Admit Hearsay

Until recently the criminal courts have had very little discretion to admit Hearsay evidence. If the evidence is not of a meta that is expressly allowed by one of the common law or statutory exceptions to the rule excluding hearsay, it is inadmissible. Of course, the courts have always asserted a right to exclude hearsay evidence that

Discretion To Admit Hearsay

Until recently the criminal courts have had very little discretion to admit Hearsay evidence. If the evidence is not of a meta that is expressly allowed by one of the common law or statutory exceptions to the rule excluding hearsay, it is inadmissible. Of course, the courts have always asserted a right to exclude hearsay evidence that

Discretionary Fiscal Policy

In macroeconomics, a discretionary fiscal policy is an economic policy based on the ad hoc judgment of policymakers as opposed to a policy set by predetermined rules.

Discretionary Trust

A form of trust, usually express, where there is some discretion to be exercised by the trustee(s) in the allocation of benefits of the trust. Unlike in a fixed trust, the beneficiaries of the discretionary trust have no identifiable equitable interest in the trust property until the discretion of the trustee is actually exercised. See also: fixed


A participant in a discussion.

Diseconomies Of Scale

Diseconomies of scale are the opposite of economies of scale. At a certain point, more inputs, for example, overcrowding of a hotel, could create lower returns. The chart on the right shows where diseconomies of scale result due to bureaucracy, non-value-added services, strategic inertia, and more.


The action of spoiling the appearance of something or someone; defacement.


the quality of being dishonest


Disinflation occurs when the overall rate of inflation decreases over a given time period. With inflation being an increase in the general level of prices, disinflation means that the rate of that increase has slowed. In other words, during disinflation, the prices of goods and services are still increasing, but they are increasing at a


A medium which permits the consumer to purchase goods and services directly from the producer. This enables the consumer to cut costs as the middleman is eliminated from the supply chain. Online shopping is an example of a disintermediary because it allows manufacturers and consumers to interact directly with each other.


Dismissal is the termination of a lawsuit which can be done with prejudice, which does not allow the case to be brought to the court a second time, or without prejudice, which does allow the case to be brought to court again in the future. In a civil case, it is easier for a plaintiff

Displaced Homemaker

A homemaker is a person who maintains the upkeep of his or her residence, especially one who is not employed outside the home. A displaced homemaker describes someone who has been out of the paid workforce for years, usually raising a family and managing a household and its chores, without pay, during those years. The homemaker becomes

Disposable Income

Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings. Restated, consumption expenditure plus savings equals disposable income after accounting for transfers


Is the termination of a corporation’s legal existence. Dissolution may be caused many ways including, failure to file annual reports, failure to pay certain taxes, bankruptcy, or voluntary dissolution of the corporation by the shareholders and directors.


The ancient right to recover losses incurred by the Unlawful behaviour of another person by seizing his goods. See Distraint.

Distress Sale

A distress sale occurs when, despite non-favourable selling conditions, an asset is forced to be sold quickly due to extraneous conditions. For example, the sale of a foreclosed home is a distress sale. Other examples of a distress sale include the sale of stocks, futures contracts, or other investment products. In any of those cases,

Distressed Security

A distressed security is a security belonging to a company that is under financial distress, such as bankruptcy, restructuring, liquidation, etc. in order to be able to pay debts (avoid insolvency). One strategy for dealing with a distressed security is to purchase the distressed security at a discount price and hold onto it until it


Distribution is a broader concept to deal with. In business and economics distribution is used in a singular perspective. In business, distribution is referred to as a process that makes available to the consumer a product or service for use. Distribution is one of the major aspects of the marketing process. A good after being manufactured needs

Distributive Fairness

The situation where employees receive what they assume they deserve from their work.

District Judge

This term is used to unify two categories of legal professional, both of which require similar qualifications and experience of the post-holder. These are what used to be known as a ‘stipendiary Magistrate’, and a Registrar of the court. Where the distinction is significant, it is conventional to write ‘District Judge (magistrates’ court)’ for the former.


Divergence occurs when the trend of price doesn’t follow the trend of its indicator. Traders make transaction decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators, such as the On-Balance-Volume, are moving in opposite directions. Bullish divergence:  the indicator is making a new high while the


In financial economics, diversification is the concept of minimizing risk by purchasing both a wide range and a large number of securities. Diversification reduces variability. Example The table below shows that many stocks have more variation than the markets they are in. This is why the market portfolios, comprised of many stocks, does not reflect the average variability

Diversified Investment Company

A diversified investment company is an investment fund that adheres to a diversification strategy by investing in a wide array of securities and companies. A diversified investment company is different from other investment companies in the way of its regulated investment structure. According to the Investment Company Act legislated in 1940, a diversified investment company


To divest is to liquidate, or sell off, one’s investment in a company or government body. Many people who divest do so for political or ethical reasons, such as perceived government oppression of a minority population. Other reasons to divest are anti-trust violations, poor performance, or changes in a company’s leadership. Individuals, businesses, and government


An order to an offending party to rid itself of property; it has the purpose of depriving the defendant of the gains of wrongful behaviour.


The sale or other disposal of some kind of asset.


Amount paid to a shareholder, usually in the form of cash, as a reward for investment in the company. The amount of dividend paid is proportionate to the number of shares held.

Dividend Clawback

A dividend clawback is an incentive for investors to keep investment development plans on schedule. Dividend clawback means a promise by investors to return dividends as equity to the investment if any cash deficiencies occur. A dividend clawback pays for any investment shortfall from project cost overruns. For example, if 20 investors received $20 million

Dividend Cover

Earnings per share divided by dividend per share.

Dividend Payout Ratio

The dividend payout ratio is the percentage of a company’s annual earnings paid out as cash dividends. Dividend payout ratios vary by industry and are affected by market conditions and tax law. Moreover, both a low dividend payout ratio and a high dividend payout ratio can have good or bad implications. A low dividend payout

Dividend Rate

The dividend rate is the amount of dividends per share a company pays to stockholders over a period of time. If the board of directors of XYZ Company declares a quarterly dividend of 22 cents per common share, the quarterly dividend rate is $.22. Some companies pay quarterly dividends based on a stated annual dividend

Dividend Reinvestment Plan

Under a dividend reinvestment plan (also known as a DRIP or a DRP), investors receive stock dividends in the form of additional shares in a company rather than as a cash payment. Investors who participate in a dividend reinvestment plan receive quarterly notification of new shares purchased. A dividend reinvestment plan is a convenient way

Dividend Yield

Dividend per share divided by current market price.

Dividends Payable

Dividends payable is a liability of the firm for the cash dividends owed to shareholders. Suppose a company’s board of directors on August 1 declares a quarterly dividend of $1 for each of the firm’s 500,000 outstanding common shares, which is payable on August 25 to shareholders of record on August 15. On August 1,


Divisor is shorthand for the Dow Divisor. The popular Dow Jones Industrial Average is a price-weighted average of 30 stocks. Initially, simply dividing the sum of its 30 stock prices by 30 (in other words, applying a divisor of 30), was sufficient to compute the DJIA. Given stock splits, mergers, etc., the calculation became much


Divorce is the dissolution of the contract of marriage in which both partners are still alive. In contrast, a marriage is automatically dissolved when one partner dies, or is presumed dead (see: Presumption of death). The person seeking divorce is referred to in court proceedings as the ‘petitioner’, the other party the ‘respondent’. Of course, in


The DJIA (Dow Jones Industrial Average), also known as the Dow, is the oldest continuing US market index and most widely quoted stock market indicator. The DJIA is a price-weighted average, meaning a $70 stock has more impact on the DJIA than a $30 stock. The DJIA is composed up of 30 large, well-known, industrial

Doctrine Of Avoidable Consequences

The doctrine of avoidable consequences is the legal principle that requires the injured party to minimize their damages. For instance, a person who suffered an injury due to a medical malpractice case should take reasonable efforts to get medical care and find a cure for their condition. If there has been a breach of contract

Doctrine Of Common Employment

The case of Priestly v Fowler (1837) established that an employer could not be vicariously liable to his own employees, for the torts of other employees. This principle became known as the doctrine of common employment, and survived until it was abolished by the law reform personal injuries act (1948).

Doctrine Of Notice

To have ‘notice’ of something is to be aware that it exists. In land and property law the concept of notice is usually associated with an Encumbrance on Title. For example, if property X is held on Trust for beneficiary B, then B’s interest is an encumbrance, and something a purchaser of X would rather be free of. The historical

Dogs Of The Dow

Dogs of the Dow is a popular investment strategy. The basic approach of Dogs of the Dow is to select ten of the 30 Dow Jones Industrial Average (DJIA) stocks that have the highest dividend yield. These are “Dogs of the Dow” because the relatively high dividend yield is suggestive of a company that is

Doing Business As

If the name in use in the course of operation for a business differs from the legal name of the entity, that business is said to be “doing business as” whatever name it has chosen to use. The flexible “doing business as” technique has several applications. A legal entity can be created in advance without


A doji is a type of candlestick where the day’s opening price and closing prices are the same or nearly the same. A basic doji candlestick shape resembles a plus sign. Other possible doji shapes include a cross, inverted cross, or “T.” By itself, a doji represents market indecision about the direction of a stock


A dollar is a unit of currency in a number of countries. United States of America, Canada, Australia, Jamaica, Singapore, Azerbaijan, Hong Kong, The Bahamas, and Antigua are some countries where a currency is called the dollar, although this may or may not be same as US dollar. The currency of the United States and

Dollar Cost Averaging

Dollar-cost averaging is a long-term investment strategy in which a fixed dollar amount is added to an investment on a regular schedule, regardless of the market price of the security. Dollar-cost averaging is also called a constant dollar plan. Since an investment’s share price fluctuates, by following a dollar-cost averaging strategy, more shares are bought


Dollarization occurs when a country consciously adopts United States dollar as its preferred currency. The US dollar can be used in isolation or form a parallel coinage with local currency. Forms of Dollarization Full dollarization is generally implemented by countries at the transitional economic growth phase- especially those suffering from high inflation. Dollarization may, however,


(law) the residence where you have your permanent home or principal establishment and to where, whenever you are absent, you intend to return; every person is compelled to have one and only one domicile at a time

Dominant Tenement

The land or property whose owner is able to enforce a Servitude over another property. For example, if the owner of land X has a right of access (an Easement) over then land of Y, then X’s land is the ‘dominant tenement’ in this relationship, and Y’s is ‘servient’. The term does not denote a master-servant relationship in


the recipient of funds or other benefits

Dormant Bank Accounts

When there is no activity in a bank account for a period of a year or more, and the bank can’t get in touch with the account holder, then the account will be made dormant. This means that no statements or other material will be sent out to the account holder’s last known address as a


Dot-com is an epithet for an Internet-based company. A dot-com gets its name from its dot com (.com) domain name server extension. Although today there are many more DNS extensions, the term dot-com has come to symbolize all web-based ventures. Dot-com firms were the product of the increasing availability of PCs combined with the emergence

Double Bottom

A double bottom is a chart pattern created when a stock makes a low, rebounds, then retests the same low and rebounds once again. A double bottom chart pattern resembles a “W”. A double bottom chart pattern has great significance for a chartist or technical analyst. To a technical analyst, the double bottom formation implies

Double Taxation

Double taxation is the levying of tax by two or more jurisdictions on the same income, asset, or financial transaction.

Double Top

Double top is a term used by technical analysts to describe a chart pattern which looks like a capital letter “M”. In a double top, a stock rises to a point, then falls, then rises again to the same level as the first peak, and then drops once again. The two high points (the double

Double Witching Hour

Double witching hour refers to the final hour of the stock market trading session where two classes of options or futures expire. The two classes that expire during the double witching hour may be stock options, index options and index futures. The double witching hour occurs on the third Friday of each month, except for

Doubtful Debts

Amounts due from credit customers where there is concern that the customer may be unable to pay.


The term “Dow” is usually used to mean the Dow Jones Industrial Average, an index of thirty blue-chip stocks that serves as the most widely used measure of the U.S. stock market. The term carries much weight in the stock market due to its popularity as a market index. To calculate the Dow, the trading

Dow Dividend Theory

The Dow dividend theory is a popular but simple investing strategy. There are several variations of the Dow dividend theory, but put simply, you find the 10 stocks of the 30-stock Dow Jones Industrial Average with the highest yield (dividend/price) and invest equally in each. The Dow dividend theory also requires that you repeat this

Dow Jones Asian Titans 50 Index

The Dow Jones Asian Titans 50 Index is an equity index reflecting the pulse of the Asia/Pacific markets. The Dow Jones Asian Titans 50 Index represents 25 companies from Japan and 25 companies from the other Asia/Pacific countries. The Dow Jones Asian Titans 50 Index was introduced in December 2000. The base value of the

Dow Jones Averages

The Dow Jones Averages refer to three price-weighted stock market indexes maintained by the editors of the Wall Street Journal. The first of the Dow Jones Averages to be created was the Dow Jones Transportation Average. It was formulated by Charles Dow in 1884. The Dow Jones Transportation Average, which was originally comprised primarily of

Dow Jones BRIC 50 Brazil Subindex

The Dow Jones BRIC 50 Brazil Subindex is a global float-adjusted market capitalization-weighted index. The Dow Jones BRIC 50 Brazil Subindex is one of the four subindexes used in the Dow Jones BRIC 50 Index. A pool of Brazilian companies selected from the Dow Jones Wilshire Global Total Market Index is used to construct the

Dow Jones CBOT Treasury Index

The Dow Jones CBOT Treasury Index is a fixed-income index. The Dow Jones CBOT Treasury Index measures the performance of three Treasury futures contracts traded on CBOT. The Dow Jones CBOT Treasury Index is a benchmark for longer-term fixed-income markets. The Dow Jones CBOT Treasury Index includes the price of the front-month future contracts for

Dow Jones Composite Average

The Dow Jones Composite Average is a combination of the Dow Jones Industrial Average, Dow Jones Transportation Average, and Dow Jones Utility Average. The Dow Jones Composite Average includes a total of 65 companies (30 Industrial, 20 Transportation, 15 Utility). The Dow Jones Composite Average is intended to be a broad market index but unlike

Dow Jones Composite Index

The Dow Jones Composite Index is a stock market index comprised of the constituents of the Dow Jones Industrial Average, the Dow Jones Transportation Average, and the Dow Jones Utility Average. The Dow Jones Composite Index is weighted by stock price and quoted in points. To calculate the Dow Jones Composite Index, first the stock

Dow Jones EURO STOXX 50

The Dow Jones EURO STOXX 50 Index is an equity index representing 50 blue-chip companies within the eurozone. The Dow Jones EURO STOXX 50 Index represents about 60% of the Dow Jones EURO STOXX Total Market Index’s free-float market capitalization. The Dow Jones EURO STOXX 50 Index is a free-float market capitalization-weighted index. The weight

Dow Jones Global Titans 50 Index

The Dow Jones Global Titans 50 Index is a worldwide equity index. The Dow Jones Global Titans 50 Index represents 50 multinationals with headquarters all over the world. At its inception on December 31, 1991, the Dow Jones Global Titans 50 Index was set at a base value of 100. The Dow Jones Global Titans

Dow Jones Industrial Average

The Dow Jones Industrial Average is one of the, if not the, most popular of US stock market indices. The Dow Jones Industrial Average is also referred to as the Dow. Back in 1884, Charles Dow developed his first stock market average with 11 stocks, mostly railroad companies. On May 26, 1896, Charles Dow published

Dow Jones STOXX 600 Real Estate Cap Index

The Dow Jones STOXX 600 Real Estate Cap Index is a real estate index representing 600 companies involved in real estate investment services either directly or indirectly. All companies included in the Dow Jones STOXX 600 Real Estate Cap Index are selected from companies included in the Dow Jones STOXX Global 1800 Index. Dow Jones

Dow Jones STOXX Americas 600 Real Estate Cap Index

The Dow Jones STOXX Americas 600 Real Estate Cap Index is a real estate index representing the Americas region. Companies included in the Dow Jones STOXX Americas 600 Real Estate Cap Index must be involved in real estate investment services. In particular, Dow Jones STOXX Americas 600 Real Estate Cap Index companies must all be

Dow Jones STOXX Americas 600 REITS Index

The Dow Jones STOXX Americas 600 REITs Index is a Real Estate Investment Trusts index representing 600 REITs in the Americas region. All companies included in the Dow Jones STOXX Americas 600 REITs Index are selected from companies included in the Dow Jones STOXX Global 1800 Index. Dow Jones STOXX Americas 600 REITs Index companies

Dow Jones STOXX Asia/Pacific 600 Real Estate Cap

The Dow Jones STOXX Asia/Pacific 600 Real Estate Cap Index is a real estate index representing the Asia/Pacific region. Companies included in the Dow Jones STOXX Asia/Pacific 600 Real Estate Cap Index must be involved in real estate investment services. In particular, Dow Jones STOXX Asia/Pacific 600 Real Estate Cap Index companies must all be

Dow Jones Transportation Average

The Dow Jones Transportation Average is the oldest of all four Dow Jones averages. The Dow Jones Transportation Average was created back in 1884 when Charles Dow created the first Dow Jones stock index. Primarily made of railroad companies, the first Dow Jones stock index then evolved into the Dow Jones Transportation Average. The Dow

Dow Jones Utility Average

The Dow Jones Utility Average was created after the Dow Jones Transportation Average and the Dow Jones Industrial Average. The Dow Jones Utility Average started in 1929. The Dow Jones Utility Average includes 15 utility stocks. Dow Jones Utility Average stocks are selected at the discretion of the editors of the Wall Street Journal (WSJ).

Down Payment

A down payment is the amount paid in advance of delivery of the purchased good or service, usually to demonstrate good faith. A down payment can be associated with any kind of purchase. In real estate, the term down payment takes on a slightly different meaning. The good faith down payment in the usual sense


A downgrade is a reduction in the rating awarded a debt or equity security. A major credit agency downgrades the debt of a company or governmental entity when its financial situation deteriorates. The downgrade tells investors they are less certain to receive the interest payments and return of capital they are due. The downgrade usually


In business jargon, the downside is the risk of an unfavorable outcome to a particular activity. In an investment context, the downside is generally understood to be the risk of price of decline, sometimes called downside risk. Sophisticated means of quantifying the downside to an investment portfolio have been constructed. For instance Value at Risk

Downside Protection

Downside protection is a cushion against the potential loss resulting from a price decline in a security or market. The challenge associated with downside protection is that downside protection needs to be balanced with upside potential for high returns. For this reason (among other more complicated ones), some investors do not believe in downside protection.

Downside Risk

Downside risk includes both the likelihood and extent to which a stock’s price may decline. Analysts use various measures to assess the downside risk of a stock. For example, stocks that are selling at the low end of their historical price-earnings ratio would appear to have relatively limited downside risk, because investors will perceive the

Downside Tasuki Gap

The Downside Tasuki Gap candlestick pattern is a continuation pattern which signals the continuation of a previous downward trend. The Downside Tasuki Gap starts with a bearish long body followed by another bearish body that has gapped below the first one. The third day of the Downside Tasuki Gap is bullish and opens within the body of the second day,


Downsizing is a cutback in a company’s operations and usually implies a reduction in its employee headcount as well. Downsizing results from many factors, including increased global competition, new technologies, and weaker labour unions; it takes various forms and has various outcomes. Some firms use downsizing as part of a long-term effort to transform their


A downtick is a transaction that occurs at a lower price than the previous trade for a given security. A downtick is sometimes called a minus tick. The opposite of a downtick is an uptick. A zero downtick is not actually a downtick, but is a trade that occurs at the same price as the


A downward trend, tendency, or movement.


A decline in profitability or business activity.


To restrict development in a given area. For example, a zoning board may allow only single-family housing units to be built in a certain neighbourhood, thus restricting the commercial development and allowed construction of apartment complexes.

Dragonfly Doji

A dragonfly doji is a variation on the doji candlestick with a long lower shadow and no upper shadow, such that it resembles a capital “T.” The trading pattern that creates a dragonfly doji proceeds with the price of a security opening at the high of the day, selling off to a low, and then

Dram Shop Act

The Dram Shop Act holds retail businesses liable for damages or loss caused by serving alcohol to intoxicated patrons. The law was passed to create an incentive for owners of alcohol establishments to develop responsible service policies and to properly train employees to refuse alcohol sales to intoxicated patrons. Dram shop laws vary by state.


A drawee is the entity that is expected to accept and pay a bill of exchange (check, draft, letter of credit, etc.) on presentation or on a certain date (called due date or maturity date).


Cash taken for personal use, in sole trader or partnership business, treated as a reduction of ownership interest.

Dressing Up A Portfolio

Dressing up a portfolio refers to the practice of some portfolio managers of selling weak stocks and purchasing strong stocks near the end of a reporting period to improve the portfolio’s appearance. Dressing up a portfolio enables managers to present an impressive-looking portfolio in quarterly or annual fund reports. Another term for dressing up a


DRIP is the acronym for Dividend Reinvestment Plan. In a DRIP, any dividends paid out by a stock are automatically used to purchase more of the stock. DRIPs are generally administered by the company itself. Bypassing brokers allows DRIP participants to buy stock without paying commissions. To increase participation in DRIPS, companies sometimes offer a

Dual Life Insurance

Dual life insurance is a unique form of life insurance that provides coverage for two people, instead of one. Most often, dual life insurance is purchased by married couples and used for estate planning. The key difference between dual life insurance and regular life insurance is that dual life insurance is designed to benefit the

Due Diligence

Due diligence is a formal investigation into any proposed investment. That investment can be a security, private equity capitalization, acquisition, merger, or any other contract. The term “due diligence” finds its roots in Section 11 of the U.S. Securities Act of 1933. Although the Act does not mention “due diligence,” it stipulates that as long

Due Process

Due process is a judicial constitutional guarantee that no judgment can be rendered in the absence of a just legal proceeding. Due process is warranted by the United States Constitution. The Fifth Amendment to the Constitution states that “no person shall . . . be deprived of life, liberty, or property, without due process of


Alternatively known as predatory pricing, dumping denotes the practice in which the sellers price their products at a lower cost to eliminate the surplus and gain market. In international trade, the manufactures export their product at a lower price than its cost in the domestic market. At times the price is lower than the production cost of the


Packing material such as boards, blocks, planks, metal or plastic bracing, used in supporting and securing packages for shipping and handling.


A duopoly is a market condition in which two companies producing a similar type of product have control over the market. This is similar to monopolies in which only one company controls the market and oligopolies in which multiple companies are allowed to trade in the market. The duopoly theory looks at the interplay of two companies in a market: each firm’s prices and

Durable Goods

In US macroeconomic statistics, durable goods are arbitrarily defined as goods expected to last at least three years. Other goods are called non-durable goods. Durable goods are often subcategorized. Durable goods made for the consumer are called consumer durables. The emphasis on durable goods and consumer durables in economic statistics is founded in purchasing behaviour.

Durable Goods Orders

The durable goods orders report is issued monthly by the Department of Commerce and measures the dollar volume of new orders, shipments, and unfilled orders of durable goods. Durable goods orders give a reading on the country’s future manufacturing activity. Durable goods orders include those manufactured items with a normal life expectancy of three years


There are three defences which can be described as duress: Duress by threat. The threat must be of death or serious personal injury. The defence is not available to threats against property. The accused must have had a reasonable belief in the threat and his decision to commit the crime in response must be reasonable.

Duress of Circumstances

Duress of circumstances is a recognition in English Law that sometimes it is necessary to commit a crime in order to avoid a greater evil In August of 2009, Dr Sherif Abdel-Fattah was issued with a ticket after he was caught breaking the speed limit in a bid to reach a woman who was severely bleeding. If

Dutch Auction

A Dutch auction started in Netherlands’ farms, is a descending price auction for multiple identical items. A true Dutch auction starts with a prohibitive price and is bid lower. Early winners in a strict Dutch auction pay more and later winners pay less till the Dutch auction ends. A more familiar variant of Dutch auction


In international trade, a customs duty, or tariff, is a tax on the import or export of specific goods. An import duty designed to shield domestic industry from foreign competition is called a protective duty, or protective tariff. In contrast, a revenue duty is simply designed to raise government revenue. Every duty is a trade barrier, and some economic theories state that the result of all trade barriers is a general lessening of aggregate economic welfare. The World Trade Organization was founded in 1994 with a mission of reducing all trade barriers, including the import duty. In law, fiduciary duty refers to standards of conduct above and beyond normal arms-length business conduct in dimensions such as loyalty, care, and disclosure. Fiduciary duty is important in multiple areas of law including agency, trust, and corporate governance.

Duty Of Care

It is clear that the law of Negligence cannot make every individual responsible for harm that befalls any other individual, even where there is some causal relationship between the acts of one person and the injury or loss to another. If, for example, I book the last seat on a flight from A to B,

Duty Virtute Officii

A duty owed by a trustee to the beneficiaries of a trust, one arising out of his office as trustee. An example would be a trustee’s obligation, in the case of a discretionary trust, to distribute income from the trust amongst its beneficiaries. The term ‘virtute officii’ implies that the duty will pass to a

Dying Declaration

Under common law, a statement made by a person who has been mortally wounded may be admissible in Evidence during trial for his murder or manslaughter, even if it is Hearsay. That is, if X told Y that he, X, was stabbed by Z, then Y might be able to adduce evidence of X’s statement in court. Evidence

Dynamic Momentum Index

An indicator used in technical analysis that determines the overbought and oversold conditions of a particular asset. This indicator is very similar to the relative strength index (RSI). The main difference between the two is that the RSI uses a fixed number of time periods (usually 14), while the dynamic momentum index uses different time periods as volatility changes.

Ronald Dworkin

Ronald Dworkin was HLA Hart’s successor to the Chair of Jurisprudence at Oxford, and one of his most determined critics. According to Dworkin, the whole of Legal positivism rests on an unsteady foundation – the notion that there is a rule that can unambiguously classify rules into ‘law’ and ‘non-law’. Hart called this foundational principle

The Law Of Defamation

The law of defamation protects a person’s interest in maintaining his or her good name and reputation. Defamation can take the form of either libel or slander. The tort of defamation involves injury to one’s good name and reputation. Defamation can take one of two forms: libel or slander. Libel is defamation that is written

Accounting Terms Beginning With "E"

EAFE Index

The EAFE Index measures the overall performance of equities in Europe, Australia, and the Far East. Created in 1969, the EAFE Index is widely recognized as one of the primary measures of international stock market performance for U.S. investors. As of July 31, 2002, the EAFE Index included 1,021 securities in 21 countries, representing the

Early Retirement

Early retirement occurs when an individual retires before the required or generally accepted age, usually 65 or 67. Early retirement is possible for those who have saved up a large enough nest egg or who have come into a large sum of money. Early retirement is among the most common reasons for investing. Those who

Early Withdrawal Penalty

An early withdrawal penalty is a fine levied on funds removed from an investment before they are allowed to be removed, according to the agreement signed. For example, cashing in a one-year certificate of deposit after six months will result in an early withdrawal penalty equivalent to a few month’s interest. The purpose of an


designate (funds or resources) for a particular purpose.

Earned Income

Earned income is wages, salary, tips, fees or other compensation generated as a result of the active performance of labour or a service. Earned income is payment for work or service already completed. Earned income also includes profits from your own business or trade which you have materially participated in producing. Earned income ceases if

Earned Income Tax Credit

The earned income tax credit (EITC) is a tax refund program geared toward low-income workers. The earned income tax credit offers non-wastable tax credits. These earned income tax credit refunds come in a form of prepackaged payments made toward tax liabilities. Earned income tax credit qualifications, which determine the size of the earned income tax


In everyday speech, earnings is often used interchangeably with income and profits to mean some positive financial increase. In investing, however, earnings are more likely to describe what is leftover in a given accounting period after all revenues and gains, and all expenses and losses, have been totalled. Thus earnings per share means net income

Earnings Before Interest

Earnings before interest and pretax operating income and pretax operating profit are the same. Earnings before interest is revenue less after-tax operating expenses. Earnings before interest can be calculated by subtracting cost of sales and selling, general and administrative expenses and taxes from sales. Earnings before interest and taxes, or EBIT, measures a company’s earning

Earnings Before Interest And Taxes

Earnings before interest and taxes (EBIT) is an indicator of financial performance. Earnings before interest and taxes can be computed as Gross Revenue – (Cost of Goods Sold + Selling, General, and Administrative Expense). Some analysts focus on earnings before interest and taxes rather than actual earnings. They argue that, since interest-rate levels and tax

Earnings Estimate

An earnings estimate is an estimate of a company’s future financial performance. They are based on historical financial performance, guidance offered by company management, and economic forecasting models. An earnings estimate is used to help determine the future valuation of a stock or industry. Institutional Brokers’ Estimate System (IBES), First Call, and Zack’s collect an

Earnings For Ordinary Shareholders

Profit after deducting interest charges and taxation and after deducting preference dividends (but before deducting extraordinary items).

Earnings Growth

Earnings growth is a key indicator for measuring a company’s success and the driving force behind stock price appreciation. Put simply, earnings growth is the percentage gain in net income over time. Thus if a company earns $1.00 in the second quarter of year 1 and $1.15 in the second quarter of year 2, earnings

Earnings Multiple

The earnings multiple of a stock, also called the price/earnings (P/E) ratio, is the share price divided by the earnings per share. The earnings multiple is often based on the prior twelve months of earnings data. However, the earnings multiple can also be based on the estimated future earnings. A $40 stock with $2 in

Earnings Per Share

The portion of a company’s profit allocated to each outstanding share of common stock.
Calculated as earnings for ordinary shareholders divided by the number of shares which have been issued by the company.

Earnings Report

An earnings report is an official document published by a publicly-traded company itemizing earnings, expenses and net profit. An earnings report can also be called an income statement or a profit and loss statement. Depending on the company, an earnings report may be published quarterly or yearly and must be distributed to all stockholders of

Earnings Retention Ratio

Earnings Retention Ratio measures the percentage of earnings retained after dividends have been paid out to the shareholders. Other names for the Earnings Retention Ratio are Plowback Ratio, Retention Rate and Retention Ratio. The philosophy behind the Earnings Retention Ratio is that the more earnings the company retains, the more capital it has available for growing

Earnings Surprise

An earnings surprise occurs any time a stock’s earnings do not match anticipated earnings. If the stock’s earnings are higher than the market expected then the earnings surprise is positive — and if earnings are less than the market was looking for then the earnings surprise is negative. A positive earnings surprise often results in

Earnings Yield

The earnings yield is earnings per share divided by the stock price. In the earnings yield computation, trailing 12-month earnings is typically used. For example, if earnings per share for the past four quarters is $3 and the stock price is $30, the earnings yield is 10%. The earnings yield is the reciprocal of the

Easement Of Access

An Easement that takes the form of a right to get access to one’s land by passing over land belonging to someone else. Where such an easement is not expressly granted in the conveyance, it may be implied as an easement of necessity.

Easement Of Necessity

An Easement that is implied into the conveyance of a piece of land, without which the land conveyed would essentially be worthless. Easements of necessity frequently take the form of an easement of access — if I sell a piece of land that is surrounded on all sides by land that I still own, I can hardly expect the


An abbreviation for “earnings before interest and tax.” Net income before income tax expense and interest expense is deducted.


EBITDA or “earnings before interest taxes depreciation and amortization” is a commonly used measure of cash flow. EBITDA can be calculated “top-down” by adding back DDA or depreciation and amortization deducted as sales costs to operating income before interest and taxes. EBITDA can also be calculated “bottom-up” by adding interest and DDA back to pretax


The ECB, or European Central Bank, is the central bank of the Eurozone states that use the Euro as their common currency. The main goal of the ECB is to promote price stability within the Eurozone. The ECB focuses on controlling inflation via interest rate policy. Critics of the ECB have suggested that this is


the application of mathematics and statistics to the study of economic and financial data.

Economic Cycle

The economic cycle is the periodic fluctuation of the economy between periods of growth and contraction. The major phases of the economic cycle are expansion, prosperity, contraction and recession. Governments and central banks often intervene to smooth the peaks and valleys of the economic cycle. For example, the Federal reserve may restrict the money supply

Economic History

Economic history is studying the evolution of economic processes and related phenomena over a certain length of time. There are several processes that are used in studying economic history like combining statistical and historical methods. At times economic theories are applied to historical situations in order to study economic history. Economic history is inclusive of subjects

Economic Principles

Economic principles are guiding rules of the discipline of economics. There are several areas that come under the domain of economic principles like economic decisions, working of economy, and popular interaction. There are certain economic principles that govern economic decision-making processes of people. The principle of trade-off, for example, states that people have to give up

Economic Rent

Economic rent is a measure of money received by owners of factors of production for its use. Land, labour and capital are primary factors of production. Economic rent is minimum monetary compensation that has to be offered to an owner of a factor of production, for use of that asset. For instance, with labour, economic

Economic Sanctions

Economic sanctions are imposed on a country by another country or a group of countries for varied reasons. Sanctions can relate to trade barriers, tariffs, import or export quotas, and import duties. A country on which economic sanctions have been imposed usually retaliates by imposing counter economic sanctions. For instance, in 2002 the US imposed import tariffs on steel that provoked

Economic Statistics

For traders involved with the foreign exchange and stock market, forecasters of currency exchanges, and even economic policymakers around the globe, something they work with daily is economic statistics. To most people, these numbers and facts mean little but to professionals such as this, economic statistics are a vital part of doing their job. In

Economic System

An economic system is an arrangement that necessitates the production, distribution and consumption of goods and services between members in a specific society. People and institutions make up the basic structure of an economic system with their relationships to productive resources like property making up the whole. The problems of economics like apportioning of limited productive resources can be tackled


the branch of social science that deals with the production and distribution and consumption of goods and services and their management.

Economies Of Scale

Economies of scale refer to the efficiency gained in a production process as the rate of production is increased. By sharing the costs of production; operating costs, and cost per unit produced, are decreased over time. It can be defined as a state when the number of goods or services produced goes up by a sizable margin but that

Economies Of Scope

Economies of scope refer to the ability to produce a multitude of products or product models in a single, flexible facility, cheaper than in various different facilities. This could be done in part by highly-flexible and versatile programmable automation which would facilitate inexpensive and quick product-to-product changes. In economies of scope, economies are created by


An expert in the science of economics.


The economy is defined as the sum of all consumption and production activities and their inter-relationships. We normally talk about an economy in terms of one geographic region, most often a country such as the United States, but also at a city level (the New York economy), a state or province-level (the Illinois economy), or at a supra-national level, such as the economy of

Economy Of High Wages

The economy of high wages is the concept that higher wages will directly lead to higher productivity. The theory suggests that wages are positively associated with the marginal product or productivity of the worker. The theory should be subject to the law of diminishing returns. When the salary of a low wage earner is increased, they

Economy Of Scale

Economy of scale (or economies of scale) fundamentally constitutes the increase in production output by way of improving production efficiency. In a fixed cost environment, economy of scale is indicative of lower-than-average cost per unit. Thus, for instance, having achieved economy of scale, the largest automobile maker may be able to produce a given car


An entrepreneur operating an environmentally sustainable business.


EDGAR stands for the Electronic Data Gathering, Analysis, and Retrieval System of the Securities and Exchange Commission (SEC). Since 1996, all U.S. companies have been required to make most of their SEC filings through EDGAR. The EDGAR filings can be accessed for free to anyone visiting the SEC’s website ( EDGAR filings are also available

Education IRA

The education IRA is a savings plan for certain expenses of higher education, such as a university or technical college education. It is not an individual retirement account and is not used for retirement. The amount that may be contributed to an Education IRA may change from year to year, due to acts of Congress.

Education Law

The body of state and federal constitutional provisions; local, state, and federal statutes; court opinions; and government regulations that provide the legal framework for educational institutions. The laws that control public education can be divided into two categories: those written exclusively for schools and those pertaining to society in general. Federal statutes regarding the education

Effective Annual Interest Rate

An effective annual interest rate is used to determine the interest rate on an annual basis after accounting for the effects of compounding. A 10% annual rate compounded yearly would imply a 10% effective annual interest rate. A 10% annual rate compounded monthly would imply a 10.47% effective annual interest rate. The effective annual interest

Effective Debt

Effective debt is the net sum total of a business concern’s (or individual entity’s) outstanding debt. Effective debt includes items like bond issues, loans and leases payments to name a few. It provides an accurate measurement of the total debt load of a company, to investors. Bad debt is a serious financial problem for business houses. Cash flow

Effective Interest Rate

The rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument.

Effective Tax Rate

The effective tax rate for an individual is usually the ratio of taxes to adjusted gross income. The effective tax rate thus measures the average rate of taxation for all income. Here’s an example of an effective tax rate: assume a taxpayer pays 5% on the first $10,000 ($500) in income and 10% on the


Economic efficiency refers to a situation where no further improvement can be made to existing production, without adversely affecting other entities. In such a scenario, an increase in output is impossible without increasing the quantity of inputs. Also, when economic efficiency is achieved, production per-unit cost is at its minimum value. These three factors taken together actually point to a situation where a

Efficiency Wages

Efficiency wages refer to wages paid out by employers that exceed market-clearing wage. In some markets, it has been found that wages are influenced by factors other than demand and supply. Higher wages are paid out by employers in order to increase productivity and efficiency. Increase in labour productivity offsets extra expenses incurred by the employer in paying out higher wages. Efficiency wages also

Efficient Frontier

The efficient frontier is the curve along all market securities which delivers the highest returns for the lowest risk. Any investment below the dotted line in the image (right) will deliver lower returns for the same amount of risk and is therefore not ideal. Investing on the right (upper) side of the frontier means using leverage, and of course, means higher risk.

Efficient Market Theory

Developed by University of Chicago professor Eugen Fama in the 1960s, the efficient market theory states that, at any given time, all available information is fully reflected in securities’ prices. The efficient market theory implies that no investor can consistently outperform the market since every stock is appropriately priced based on available information. The efficient

Efficient Markets Hypothesis

Share prices in a stock market react immediately to the announcement of new information.

Ejusdem generis

‘Things of the same meta’. A principle of Statutory interpretation that guides the interpretation of passages like ‘tents, caravans and similar dwellings’. For example, ‘cats, dogs, and other pets’ probably excludes lions (as not being pets), but it is less clear whether ‘cats, dogs, and other animals’ would include lions. It may be necessary to infer this

Elasticity Of Demand

The elasticity of demand, also known as price elasticity of demand is a variation of demand. It can be categorized as unitary, elastic and inelastic. It is defined as how much the demand for a particular commodity change with a change of its price. Examples Elasticity In elastic demand, when the price changes the quantity demanded is highly

Elder-Ray Index

The Elder-Ray Index is a technical indicator developed by Alexander Elder. It measures the amount of buying and selling pressure in the market. The Elder-Ray Index consists of two separate indicators known as “bull power” and “bear power”. These figures allow a trader to determine the position of the price relative to a certain exponential

Electronic Funds Transfer

Electronic funds transfer, or EFT, is a system for transferring money from one bank to another. In electronic funds transfer, there is no paper money involved. With electronic funds transfer, dollar amounts are transferred via the Automated Clearing House network, a system connecting all financial institutions in the United States. Funds can be transferred via

Eligible Survivor

The eligible survivor can be both a lawful spouse who is eligible for benefits or a dependent child. The conditions to be an eligible survivor depend on the benefits awarded. The term is most frequently used to describe the survivor who is eligible to receive Social Security Administration (SSA) benefits. According to the SSA, to

Elliott Wave Theory

Elliott Wave Theory was developed by Ralph Nelson Elliott in the nineteen twenties. Initially, Elliott Wave Theory was drawn from social science trends, such as mass psychology that was prevalent at that time. Like many other formulations, the purpose of the Elliott Wave Theory was to create an organizing principle that would explain and predict


In international commerce, an embargo is a government-mandated sanction that restricts trade with a foreign county. An embargo can restrict imports, or exports, or both. The rationale for an embargo is political punishment of a country. For instance, the 1973 oil crisis affecting the United States resulted from OPEC’s embargo on oil sales to the

Emerging Market

Emerging markets is a term that is used to illustrate the process of rapid economic growth. The process of rapid industrialization is depicted by the term emerging markets. Emerging markets are synonymous to emerging economies. To be more specific, Emerging markets are termed as Emerging Market Economy (EME). Emerging Market Economy (EME) was invented in the year

Eminent Domain

Eminent domain is a constitutional provision, through which the government may exercise its power to seize private property for public use without the proprietor’s consent. Eminent domain exists in many countries, including the U.S. In the United States eminent domain is secured by the Fifth Amendment to the constitution. Under eminent domain, the government is

Emotional Distress

Emotional distress refers to mental anguish and suffering including fear, indignity and shock. Damages for emotional distress may be recovered under some conditions in a personal injury claim but generally must be accompanied by physical injuries. Emotional distress may, under some conditions, be recovered without physical injury but a claimant would have to prove intentional

Empirical Probability

In probability theory, the empirical probability is an estimated probability based upon previous evidence or experimental results. As such, the empirical probability is sometimes referred to as experimental probability, and we can distinguish it from probabilities calculated from a clearly-defined sample space. The empirical probability, relative frequency, or experimental probability of an event is the ratio of the number of outcomes in

Employee Stock Ownership Plan

Employee stock ownership plan (ESOP), also known as a stock purchase plan, is a program designed to promote purchasing of company stock by the employees. The distribution of stock through an employee stock ownership plan is facilitated by the employee stock ownership trust, which represents actual accounts through which stock is bought and sold. An

Employee Stock Purchase Plan

An Employee Stock Purchase Plan gives an employee the opportunity to purchase stock in the company where they work. Many companies offer an Employee Stock Purchase Plan and encourage employee participation. An Employee Stock Purchase Plan may be part of a qualified retirement plan or simply be a benefit offered by the company. The share

Employer’s Liability

An employer can be held liable for harm that befalls his employees at common law, and under various statutory provisions. This overview considers the common law provisions and the way in which these provisions are modified by statute. In addition, an employee may have a remedy against his employer for breach of the employer’s statutory

Employment Cost Index

The Employment Cost Index, or ECI, is a quantitative measure of the proliferation of wages and other employee compensation. The Employment Cost Index is an average figure calculated in units of one hour of labour. In addition to reflecting current employee wages, the Employment Cost Index also provides data on other forms of compensation, such


An encumbrance on the Title to land or property is any interest — legal or equitable — that detracts from the owner’s ability to enjoy the land or property without hindrance. Encumbrances range from a long Lease made out of the property, to an Easement preventing the obstruction of light to other buildings. A prospective purchaser will be interested


Endogenous is a term mainly used in the application of economic theories. Any variable is termed as endogenous if it originates due to factors within organization. In other words, endogenous variables have explicit causes within model. In order to understand the concept of endogenous variables, a small example can be referred to. Supposing a model of


International financial reporting standards approved for use in Member States of the European Union through a formal process of endorsement.


An endorsee is a person or firm to whom a negotiable instrument (bill of exchange, bill of lading, delivery order, or another document of title) is transferred by endorsement. Also called a transferee or payee, the endorsee becomes a holder-in-due-course upon delivery of the endorsed document.


Engagement is a measure of how actively a customer is using a digital service, normally a website. The more time a user spends on a site, and the more often they come back, the more engaged they are said to be. Traditional advertising has tended to focus on reach and frequency, that is getting to as many people as often as possible. Online

Engel’s Law

Engel’s law a significant aspect of economics literature and is mainly used in consumer behaviour theories. Engel’s Law defined by Ernst Engel states that as incomes increases, the proportion of income spent on consumption reduces. Engel’s Law can be identified as a fundamental principle of income and consumption theory. Engel’s Law states that as income rises, the percentage of income spent on consumption rises slower as compared


Enron or Enron Creditors Recovery Corporation was an energy company headquartered in Houston, Texas, USA. Enron was recognized as a preeminent American energy company. It had approximately 22,000 employees and was a leader in providing electricity, natural gas, and other energy services. Initially, Enron started off as a firm responsible for transmission and distribution of electricity and gas throughout the United


An entail (or ‘fee tail’) is an obsolete form of Freehold estate; it would be granted out of an estate by the Fee simple owner, and would subsist for the duration of the lineage of the grantee. In the event that the lineage came to an end, there was usually a Reversion to the fee simple owner. In the mediaeval and


A business activity or a commercial project.

Enterprise Value

Enterprise Value (EV), also called Total Enterprise Value (TEV), is used as a more accurate alternative to market capitalization. It represents the entire cost of a company if someone were to acquire it. Enterprise Value includes a number of important factors such as preferred stock, debt, and cash reserves that are excluded from simple market

Enterprise Zone

Enterprise zone is a specially designated area within which businesses are granted numerous advantages. Enterprise zone is commonly associated with such business incentives as income tax credits, equipment tax refunds, and property tax credits. At its core, the enterprise zone is a means of targeting a specific geographic area for economic revitalization. Creating an enterprise


Entitlements are government benefits provided by law to eligible individuals. Entitlements are typically for citizens only. In the US, major entitlements include the Medicaid, Medicare, and Social Security programs. As the name implies, entitlements tend to become politically difficult to change, as recipients come to feel entitled to what they have been receiving. Without changes,


A self-motivated individual who forms, runs, and takes all the risks of starting a business.

Entry Price

The value of entering into acquisition of an asset or liability, usually replacement cost.

Environmental Law

An amalgam of state and federal statutes, regulations, and common-law principles covering air pollution, water pollution, hazardous waste, the wilderness, and endangered wildlife. Almost every aspect of life in the United States is touched by environmental law. Drinking water must meet state and federal quality standards before it may be consumed by the public. Car


EONIA stands for the Euro OverNight Index Average.


EPS is earnings per share, the net income a company makes in a given period for each outstanding share. EPS is perhaps the key measure of a company’s financial success because it reflects both the company’s bottom line (the numerator) and the ownership interests (the denominator) over which earnings must be spread. EPS is also

Equal Protection

The constitutional guarantee that no person or class of persons shall be denied the same protection of the laws that is enjoyed by other persons or other classes in like circumstances in their lives, liberty, property, and pursuit of happiness. We hold these truths to be self-evident, that all men are created equal, that they


Equilibrium occurs when a balance between supply and demand is realized. Equilibrium in economics is referred to as a state of stability. In this state, the economic forces are in balanced form and there is no influence of external forces. Equilibrium is a state in which the economic variables do not change and there is an absence of externalities. Types


Tangible property (other than land or buildings) that is used in the operations of a business. Examples of equipment include devices, machines, tools, and vehicles.


Equities is another name for shares or stocks. To have equity in an asset is to own a piece of it; equities is used more broadly to mean ownership interests in companies. Equities are distinguished from bonds, which represent loans to the issuer. Holders of equities may or may not receive dividends of varying size,

Equities Analyst

A professional who investigates and writes reports on ordinary share investments in companies (usually for the benefit of investors in shares).


A description applied to the ordinary share capital of an entity.

Equity Accounting

Reports in the balance sheet the parent or group’s share of the investment in the share capital and reserves of an associated company.

Equity Interest

Equity interest is the ownership share of a shareholder in a business. For example, having a 25% equity interest in a company means that the shareholder owns a 25% stake in the business. An equity interest does not necessarily mean that a shareholder is entitled to a proportionate share of the income generated by an investee.

Equity Line Of Credit

Equity line of credit, also known as home equity line of credit, or HELOC, is a type of credit extension, that allows borrowing against home equity over a period of time. In other terms, equity line of credit can be looked at a deed of trust, backed by a borrower’s home. The total equity line

Equity Loan Rates

Equity loan rates are the interest rates charged on equity loans. An equity loan is a mortgage placed on residential or commercial real estate in exchange for cash. Home equity loans either have fixed equity loan rates or variable equity loan rates. Equity loan rates are generally tax-deductible. A home equity loan calculator can be

Equity Market

Equity market, or stock market, is a system through which company shares are traded. The equity market offers investors an opportunity to participate in a company’s success through an increase in its stock price. With enhanced opportunity, however, the equity market usually carries greater risk than debt markets. The U.S. equity market focuses on the

Equity Multiplier

Equity Multiplier is a ratio that indicates a company’s ability to use its debt for financing its assets. It is also referred to as the Leverage Ratio and the Financial Leverage Ratio. The Equity Multiplier ratio is calculated as total assets divided by the common stockholder’s equity. A company’s assets equal the sum of debt and

Equity Of Redemption

An old-fashioned term for the total package of rights that a Mortgagor has to redeem his Mortgage against the Mortgagee. See rights of mortgagor for more details.

Equity Portfolio

A collection of equity shares.

Equity REIT

An equity REIT is a company which owns a portfolio of income-producing real estate. REIT is an abbreviation of Real Estate Investment Trust. An equity REIT is one type of REIT; there are also mortgage REITs which own mortgages secured by properties. Congress passed legislation in the 1960s that helped create the modern equity REIT.

Equity Risk Premium

All securities are subject to market risks. Equities or stocks earn profits over definite time periods. Most of these securities earn a risk-free interest or generate a minimum assured income. Additional return equity gives over and above this minimum sum is termed ‘equity risk premium’. Equity risk premium in effect compensates relatively higher risk investors take when they invest in public securities or stocks. When higher

Equity Shares

Shares in a company which participate in sharing dividends and in sharing any surplus on winding up, after all liabilities have been met.

Equity Swap

An equity swap, a branch of derivative security, is a swap in which at least one party pays the return on a stock or stock index. where a set of future cash flows are exchanged between two counterparties. One of these cash flow streams will typically be based on an interest bearing reference asset. The

Equivalent Taxable Yield

The equivalent taxable yield is used by investors to compare the yield of a taxable bond (i.e. government bond or corporate bond) with that of a tax-free bond (i.e. municipal bond). When computing the equivalent taxable yield, an investor wants to determine the minimum yield required in order to receive the same return with both


A chart that compares price and volume and plots them together as one piece of data. The height of each bar represents the high and low for each period and the width represents the volume relative to the total shares traded over the time period being analyzed.


An error in printing or writing.


Escrow is a contractual arrangement in which a third party receives and disburses money or property for the primary transacting parties, most generally, used with plentiful terms that conduct the rightful actions that follow.

Escrow Account

An escrow account is an account designated to hold escrow funds. The escrow accounts purpose is to keep funds held under an escrow agreement segregated from any other account of the escrow agent. The escrow agent has a fiduciary responsibility to disburse the funds in the escrow account according to the agreement. An escrow account

Established Customary Standard Of Care

Established Customary Standard of Care, see also Duty, is the level of care and skill that the average doctor would provide to a patient who sought medical care. Personal injury claims are often brought against medical doctors who breached their duty by not providing this level of care. Negligence in the most general sense is

Estate In Land

An ‘estate in land’ is an interest in land that is endowed with certain rights and obligations, and carries a right to occupy or receive the benefit of the land. As well as estates in land, there are non-proprietary interests in land, such as licences (see: Licence). There are also proprietary interests that fall short of

Estate Planning

Estate planning is a process of planning for efficient handling of the estate in the event of the owner’s death. Estate planning includes administration, disposition, and distribution of an individual’s property and assets. Another facet of estate planning is establishing trusts and various other fiduciary relationships. Perhaps the most well-known aspect of estate planning is

Estate Tax

The estate tax is simply a tax on assets charged by the government at one’s death, less liabilities. The total credit amount of the estate tax is applicable to the sum of the property transferred at death. When a death occurs, the estate tax is levied based on the fair market value of one’s property.

Estimated Tax

Estimated tax is tax that a self-employed individual or a company must estimate and pay to the Internal Revenue Service. For non-self-employed people, taxes are withheld by the employer and then paid to the IRS each pay period. For the self-employed, such regularity is not required, though they must pay their estimated tax themselves. To

Estoppel By Representation

A form of Estoppel in which one party acts to his detriment on a misrepresentation of fact by another. It does not refer to misrepresentations of points of law, not to promises of future action (see: Promissory estoppel).


ETF stands for Exchange Traded Fund. An ETF is registered with the SEC as an investment company, and it shares trade on a stock exchange intraday like any other public company. The ETF is like a mutual fund, however, in that its assets consist of a basket of stocks deposited by institutional investors. The American

Ethical Investing

Ethical investing, also known as Socially Responsible Investment (SRI), is a practice of making investment decisions based on various moral, ethical, or religious principles. Ethical investing is an alternative investment strategy undertaken by both individuals and institutions. Individual ethical investing is not guided by any specific code other than a personal value judgment. Intuitions, on


A philosophical concept that determines the definition of “right” and “wrong”, especially when applied to interactions between people.


The EU, or European Union, is an inter-governmental, supranational organization of European states. Although the roots of the EU go back to predecessor organizations dating from the 1950s, the EU was established by treaty on February 7th, 1992, in Maastricht, Netherlands. The EU has several institutions, including the European Parliament, the European Commission, and the

EU Legislation

Primary EU legislation consists of treaties, together with their articles and provisions. The main forms of secondary EU legislation are regulations, directives and decisions. In addition, there are non-binding recommendations and opinions, which are merely hortatory or persuasive. As primary legislation, the collection of EU treaties over the years are effectively the constitutional law of


EURIBOR stands for the Euro Interbank Offered Rate. EURIBOR is one of the reference rates for interbank lending within the Eurozone (i.e. the Euro OverNight Index Average, EOINIA, is the other one). EURIBOR is an interest rate for term loans (i.e. 1 week to 12 months) within the eurozone and does not include overnight loans


The Euro (€) is the currency of 12 countries of the European Union: Germany, France, Italy, Belgium, Greece, Ireland, Luxembourg, the Netherlands, Spain, Austria, Portugal and Finland. A few other countries, like Monaco and Montenegro, have adopted the Euro as either its official or de facto currency. The only major European country that is not

Eurobond Market

A market in which bonds are issued in the capital market of one country to a non-resident borrower from another country.


Eurodollars are large US Dollar deposits that are made in foreign bank accounts. Eurodollars can also be deposited within the US in an International Banking Facility by non-US residents and companies. Eurodollars emerged after World War II. Initially, Europe was the main market for eurodollars, hence the prefix “euro” in eurodollars. Although the market for

European Community

The European Community is a confederation of European nations which serves to enhance their economic, political, and social ties. The idea of a European Community extends back hundreds of years; but the modern history of the European Community dates to the founding of the European Coal and Steel Community in 1952, which included France, Germany,

European Option

A European option is an option that can only be exercised during a short period of time before its expiration date. A European option contrasts with an American option, in that an American option can be exercised anytime on or before expiration. This makes the European option less flexible than its American counterpart, which is

European Union

The politico-legal entity formed by the Treaty of Maastricht 1992, which extended the existing European Communities into a new ‘three-pillar’ structure. The first pillar encompasses the former European Communities, now renamed the ‘European Community’. The EC includes and is dominated by, the European Economic Community (EEC). The second pillar is a set of agreements on establishing a common foreign and

European-Style Option

A European-style option is an option that may be exercised only at expiration, or maturity. The European-style option is less difficult to price than otherwise identical American-style option because the later, unlike the European-style option, can be exercised before maturity. Consequently, the corresponding American option may have no analytic formula even when one exists for


EV/EBITDA Ratio is a very commonly used metric for estimating business valuation of companies.  This valuation metric compares the value of a company, inclusive of debt and other liabilities, to the actual cash earnings exclusive of the non-cash expenses. It measures the price (in the form of enterprise value) an investor pays for the benefit of

Evening Star

An evening star is a candlestick trading pattern that traders consider a reliable signal of a bearish reversal. A long white candle, followed by a very short candle that gaps above the white candle (i.e. 1st gap), followed by a long black candle that gaps below the short candle (i.e. 2nd gap), characterizes the evening


to provide evidence for; to stand as proof of; to show by one’s behavior, attitude, or external attributes

Evidence In Chief Of Bad Character

In a criminal trial, it is often the case that the prosecution wishes to impugn the character of the defendant by, for example, drawing the jury’s attention to his or her previous criminal convictions (see evidence of bad character). There have been a number of striking cases in which the defendant was acquitted when he or

Evolutionary Economics

Evolutionary economics is a school of economic thought motivated by evolutionary biology. This economic stream of thought emphasizes competition, growth, resource constraints and composite mutualities. The principal difference between evolutionary economics and conventional economics is that it does not accept distinguishing features of either decision-maker or option of objects as a given. Foundations Evolutionary economics is founded on

Ex Post Facto

Ex post facto laws or laws “after the fact” are expressly forbidden by the United States Constitution in Article 1, Section 9, Clause 3. Under this clause, a person cannot be convicted and punished for a crime if the action was legal at the time it was performed but has since been made illegal. For


Ex-dividend means a stock is trading without the rights to a declared dividend. When a company declares a dividend, it also sets a record date: only shareholders of record on that date receive the dividend. Once the record date is set, stock exchanges or the National Association of Securities Dealers sets an ex-dividend date, which

Ex-Dividend Date

The ex-dividend date is the date on which sellers rather than buyers of a stock have a right to a declared dividend. When a company declares a dividend, it sets a date of record that determines which shareholders receive the dividend. After the record date is set, the stock exchanges or the National Association of

Excess Return

Excess Return is described as the amount of money that is the surplus of the risk-free rate of return encompassing a particular period of time. It also denotes the deviation between actual wealth and anticipated wealth at the end of that particular period. Excess return is thus calculated by: Excess return (N)= actual wealth – anticipated

Excess Returns

Excess returns are generally defined as the returns provided by a given portfolio minus the returns provided by a risk-free asset. Excess returns are those in excess of the riskless asset. Excess returns are associated with the Capital Asset Pricing Model which postulates that riskier investments must offer higher returns to compensate investors for added

Exchange Rate

An exchange rate is a price or ratio at which one nation’s currency can be converted into that of another. Simply put, the exchange rate is how much of one denomination it takes to pay for another. The exchange rate for every currency is different. That means that the exchange rate between the U.S. dollar

Exchange Rate Risk

Exchange rate risk is the risk that a position will become less valuable as a result of foreign exchange rate fluctuation. Exchange rate risk is also called currency risk. Companies that do business internationally face considerable exchange rate risk given the time it may take for an order to be filled and the receivable paid.

Exchange Traded Fund

An exchange-traded fund (ETF) is a pool of stocks or commodities trading as a single stock on a stock exchange. Hence the name exchange-traded fund. Unlike mutual funds, an exchange-traded fund may be bought on margin, sold short, traded intraday, or in any other way traded like a stock. As with stocks, investing in an

Exchange Traded Notes

Exchange-Traded Notes (ETN) are considered senior, unsecured debt securities. There is no coupon payment and no protection of the principal invested. Exchange-Traded Notes (ETN) track the returns of a particular market index, minus fees. Exchange-Traded Notes (ETN) are traded on market exchanges (i.e: NYSE, AMEX). There are Exchange Traded Notes (ETN) that track indices for

Exclusion Clause

In a Contract, an exclusion clause is a term that seeks to limit the liability of one or other party, in the event of there being some problem with the performance of the contract. The term ‘limitation clause’ is often used for a clause that limits, rather than excludes, liability; the distinction is not a technical

Exclusionary Rule

The exclusionary rule is derived from the Fourth Amendment which states that no person “shall be compelled in any criminal case to be a witness against himself” and that no person “shall be deprived of life, liberty or property without due process of law.” The exclusionary rule does not allow evidence to be used in

Exemplary Damages

Exemplary damages or punitive damages are compensation given in a personal injury case. They are damages which are greater than the loss suffered by the plaintiff and are used to punish the victim, not provide monetary compensation. The goal of exemplary damages is to warn other individuals and deter them from similar future actions. Generally,

Exempt Income

Exempt income is any income that is not subject to taxation by federal, state or local taxing authorities. Examples of exempt income include welfare benefits, Social Security benefits, nontaxable pensions and certain life insurance benefits. Income from city and county municipal bonds are also a common form of exempt income. Expenses incurred to gain exempt

Exemption From Criminal Liability

A person is automatically exempt from criminal liability if he or she: is under 10 years of age, or is classified as insane A person may be shown to be exempt from criminal liability if he or she: is under 14 years of age, and has not developed a sufficiently advanced understanding of right and

Exercise Price

The exercise price, or strike price, is the price at which the owner can exercise an option. A call entitles the holder to buy the underlying asset at the exercise price, and a put entitles the owner to sell the underlying at the exercise price. If the market price is significantly above the exercise price,

Exhaustion Gap

Exhaustion Gap is a technical term describing that the stock’s price opens up on a gap from the prior day’s high close marking the end of a bullish trend. An Exhaustion Gap occurs at the end of a strong upward movement in stock price. The gap is filled in after a period of time. Exhaustion Gap Interpretation


Eximbills is an integrated trade finance system for use in banks and financial institutions, designed to automate the range of Trade Finance activity as well as the communication needs. It is made by China Systems. Eximbills Client/Server: Programmed in C, uses Foxpro and SQL as its data sources. It is used worldwide in a lot

Exit Value

A method of valuing assets and liabilities based on selling prices, as an alternative to historical cost.


Exogenous is a change produced or caused by factors external to the economic model and come from outside the model. Exogenous change is unexplained by the model. Examples of exogenous may be cited in the demand and supply model where variations in consumer preferences and tastes cannot be explained by the economic model. Alternatively, exogenous changes are those that involve


Expandability refers to the ability of a computer system to accommodate enhancements to its capacity or capabilities. From a hardware point of view, expandability may include extra or bigger hard disks, more memory, or a faster-dedicated graphics chip. From a software point of view, it may include the ability to support more network users, a

Expected Returns

Expected returns are an estimation of a particular investment’s value. This estimation includes the payment of dividends if any and price changes. Expected returns are computed from a probability distribution curve encompassing all probable rates of return. If a specific asset is considered risky, the risk-free rate of return plus risk premium is termed the


The action of spending funds.

Expenditure Tax

Expenditure tax is a tax, which is assessed on expenditure or amount spent. It is also known as a consumption tax. Tax is defined as a fee, which is charged and collected by a country’s government on a commodity, activity or income. Taxation is primarily for the financing of government expenditure. It is argued by some economists that an expenditure tax is complex and


An expense is caused by a transaction or event arising during the ordinary activities of the business which causes a decrease in the ownership interest.

Expense Ratio

The expense ratio measures the percentage of a mutual fund’s assets dedicated to running the fund. If the expense ratio is 1%, then each year the total money in the fund is reduced by 1% to pay expenses. The expense ratio comprises administrative costs, like record-keeping and mailing; the 12b-1 distribution fee, used for marketing,

Expert Witness

An expert witness is the person who has the knowledge or competence to offer an opinion in court on a specific topic including information of a legal, scientific or medical nature. The expert witness may also perform other tasks for a litigator over the course of the case including testifying at the deposition and trial,

Expiration Date

In derivatives markets, the expiration date is the date that a security with a finite life, such as a futures or option contract, expires. With a futures contract, either cash settlement or physical delivery occurs after the expiration date. With an options contract, if the option is not exercised by the end of the day

Explanatory Variable

An explanatory variable (also known as an independent variable), is a variable that can be manipulated so as to analyse the effect on another (or the dependent variable).

Exponential Moving Average

An exponential moving average is a more complicated form of a simple moving average, which calculates the average price of a security over a specific period of time. The exponential moving average gives more weight to the latest (most recent) price data and gives less weight to the older, more historical data. For example, in

Export Credit

Export credit is a type of credit, which an importer opens in an exporter’s country for financing exports. Export Credit Insurance It is an insurance, which grants protection to an exporter for the failure of payment on part of its foreign customer. However, this kind of insurance coverage excludes cases of product disputes. Credit insurance enables a seller to

Extenuating Circumstances

Extenuating circumstances also called mitigating factors are conditions which lower the culpability of the offender when they commit the crime and may be used to mitigate or lower the punishment. Extenuating factors are generally considered in the penalty or sentencing phase of the trial. Extenuating circumstances will not excuse or justify the criminal conduct of

External Reporting

Reporting financial information to those users with a valid claim to receive it, but who are not allowed access to the day-to-day records of the business.

External Users (Of Financial Statements)

Users of financial statements who have a valid interest but are not permitted access to the day-to-day records of the company.


Economist Arthur Pigou introduced the concept of externality in 1918 publication of ‘The Economics of Welfare’. As per economic theory, an externality is said to have arisen when an economic agent via his actions imposes either a cost or a benefit on other economic agents. In simple words, an externality is the consequence of an action by an economic agent, which is being

Extraordinary Item

In financial accounting, an extraordinary item is a non-recurring event that materially affects the financial results of the entity for the reporting period. GAAP requires that any extraordinary item be explained in the notes to the financial statements. An extraordinary item can have either a favourable or unfavourable impact on financial performance. Examples of an

Accounting Terms Beginning With "F"

Face Value

Face value is the nominal, or stated, amount of security. The face value of a bond is the amount the issuer agrees to pay upon maturity. Face value is also the amount upon which interest payments are determined. For example, a bond with a face value of $1,000 and an interest rate of 6% will


A factor is a characteristic that has been shown to contribute to market outperformance.


This means receiving funds instantly without having to wait for payment from a customer. A factoring company pays a percentage of the invoice to the business being paid, as much as 95%, and takes a cut of the cost.

Factors Of Production

Factors of production refer to inputs, which are used for the production of output (mainly goods and services) on a commercially viable scale. Production refers to methods, which are employed for the transformation of inputs (both tangible and intangible ones) into outputs (commodities and services). Tangible inputs include raw materials and semi-finished goods. Intangible inputs

Factory Prices

Factory prices refer to prices charged for commodities that are picked up at a factory. Factory-gate price is essentially the manufacturer’s pricing of goods produced. This price is not inclusive of transportation costs. Increase of factory gate prices gives an indication of the inflation level in an economy. Factory normally refers to a building or plant where commodities are manufactured on

Failure To Diagnose

Failure to diagnose may be used as a reason to file a medical malpractice case and can be considered a breach of the doctor’s duty to provide prompt and adequate medical care. To win a medical malpractice case for a failure to diagnose a claimant must prove the established standards of medical practice were not

Fair Market Value

The fair market value of a stock or similar commodity is the price which an informed buyer would be willing to pay, and a seller would be willing to sell. Hypothetically, fair market value is determined by open-market consensus between buyers and sellers who each have full knowledge of the property being sold. In reality,

Fair Trade

Fair trade relates to a social movement that empowers producers in developing countries to earn their due by exporting goods to developed nations. Some export items that form a part of fair trade include sugar, handicrafts, coffee, tea, cotton, honey, and cocoa. Fairtrade promotes sustainability and ensures a living wage for producers and a minimum price for farmers’ commodities. Fairtrade practices

Fair Value

The amount at which an asset or liability could be exchanged in an arm’s-length transaction between a willing buyer and a willing seller.

Faithful Presentation

Qualitative characteristic, information represents what it purports to represent.

Falling Three Methods

The falling three methods is a bearish candlestick charting pattern that displays a short term interruption of a downtrend, but not a reversal — it’s a continuation pattern. A long black candlestick, followed by three consecutive short white (or mixed colour) candlesticks, followed by another long black candlestick that closes at a new low, characterizes

Family Of Funds

A family of funds refers to a group of mutual funds that are offered, managed and/or distributed by the same investment company, even though each fund in the family of funds may have a different objective. For example, one fund in a family of funds may be a growth fund, while another fund in that

Fannie Mae

Fannie Mae, or the Federal National Mortgage Association, is one of the primary purchasers of eligible home loans from issuers. Fannie Mae securitizes these loans into mortgage-backed securities, and sells the securities to investors. Congress created Fannie Mae in 1938 to establish a secondary market for government-backed mortgages. Fannie Mae became a private company in

Fat-Tailed Distribution

A fat-tailed distribution is a probability distribution that has the property, along with the heavy-tailed distributions, that they exhibit extremely large skewness or kurtosis. This comparison is often made relative to the ubiquitous normal distribution, which itself is an example of an exceptionally thin tail distribution, or to the exponential distribution. Fat tail distributions have


The FDIC, or Federal Deposit Insurance Corporation, is an independent agency of the US federal government created to preserve and promote public confidence in the US banking system. The FDIC was created by Congress in 1933 as part of the Glass-Steagall Act. The primary activity of the FDIC is to insure deposits against loss due

Fed Chairman

The Fed Chairman is the Chairman of the Board of Governors of the Federal Reserve System, or Fed, the US central bank. As such, the Fed Chairman is the one highly public figure of the Fed. The business press report and try to interpret every spoken word of the Fed Chairman in the belief that

Fed Funds Rate

The Federal Reserve Board has the power to influence the money supply with the purchase and sale of government securities. This is known as open-market operations and is specified by the Federal Open Market Committee (FOMC). The fed funds rate is the rate of interest that bank members charge each other for overnight loans to

Federal Funds

Federal Funds transactions redistribute bank reserves. Federal funds are reserve balances at Federal Reserve Banks that can be transferred between depository institutions within the same business day. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions, and transactions in the federal funds market enable depository institutions with

Federal Home Loan Mortgage Corporation

The Federal Home Loan Mortgage Corporation (FHLMC) is a public company (NYSE:FRE) chartered by congress in 1970 to stabilize mortgage markets and expand access to home financing. Along with Fannie Mae, the Federal Home Loan Mortgage Corporation is one of the principal creators of the secondary mortgage market. Like Fannie Mae, the Federal Home Loan

Federal Housing Administration

The Federal Housing Administration, or FHA, is an agency of the US Department of Housing and Urban Development (HUD) that provides mortgage insurance, mostly for single-family homes. Congress created the Federal Housing Administration in 1934 as a way to increase homeownership by making mortgages more accessible to low-income families. Today the Federal Housing Administration serves

Federal National Mortgage Association

The Federal National Mortgage Association, or Fannie Mae, is one of the primary purchasers of eligible home loans from issuers. The Federal National Mortgage Association securitizes these loans into mortgage-backed securities and sells the securities to investors. Congress created the Federal National Mortgage Association in 1938 to establish a secondary market for government-backed mortgages. The

Federal Open Market Committee

The Federal Open Market Committee, or FOMC, is an arm of the Federal Reserve System, the US central bank. The Fed has three main monetary policy tools, one of which are open market operations. The Federal Open Market Committee sets the short-term objectives of these open market operations. The Federal Open Market Committee can aim

Federal Reserve Bank

The Federal Reserve Bank is a federal entity that performs the operations of a central bank. Along with twelve other branches located across the United States, the Federal Reserve Bank makes up the Federal Reserve System. The Federal Reserve Bank branches can be found in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis,

Federal Reserve Board

The Federal Reserve Board is the Board of Governors of the Federal Reserve System, or Fed, the US central bank. The Federal Reserve Board sets the Fed’s monetary policy. Implementation of most Federal Reserve Board monetary policy objectives occurs in the form of open market operations conducted by the Federal Open Market Committee, or FOMC,

Federal Reserve Discount Rate

The Federal Reserve discount rate is the interest rate charged by the Federal Reserve (the Fed) when commercial banks and other depository institutions borrow short-term or “overnight” funds from their regional Federal Reserve Bank’s lending facility (a.k.a. the discount window). The Federal Reserve discount rate is set by the boards of directors of each Federal

Federal Reserve Requirement

The federal reserve requirement is the amount of liquid assets that Federal Reserve System banks must hold. The federal reserve requirement demands that these assets be held in cash or on deposit with the Federal Reserve System. The federal reserve requirement is usually a percentage of bank’s demand and time deposits. Within legal limits, the

Federal Reserve System

The Fed, also known as the Federal Reserve System is the central bank of the US. The Federal Reserve Act was signed on December 23, 1913, by US President Wilson. The Chairman is Ben Bernanke. The Federal Reserve System is comprised of twelve Federal Reserve Banks. Each of these banks represents its own district. They


The process in which the effect or output of an action is ‘returned’ (fed-back) to modify the next action. Feedback is essential to the working and survival of all regulatory mechanisms found throughout living and non-living nature, and in man-made systems such as education system and economy. As a two-way flow, feedback is inherent to

FHA Loan

An FHA loan is a loan insured by the FHA or Federal Housing Administration. An FHA loan is one type of government loan along with the VA loan, and others. An FHA loan has a mortgage principal limit set by the FHA that depends upon property location. Like any other mortgage, the risk of default

Fiat Money

Fiat money is currency that cannot be redeemed for a commodity with intrinsic economic value. Fiat money only has value by government fiat or decree. Thus, fiat money holds its worth only as long as users believe they will be able to exchange it for goods or services. Most currencies in the world today are

Fibonacci Fan

The Fibonacci Fan is a charting technique consisting of a trend line plus three diagonal lines that use Fibonacci ratios (38.2%, 50%, 61.8%) to help identify key levels of support and resistance. Calculation The first trend line is drawn between the lowest low and highest high during the plotting period. The other three trend lines are drawn

Fibonacci Time Zones

An indicator used by technical traders to identify periods in which the price of an asset will experience a significant amount of movement. This charting technique consists of a series of vertical lines that correspond to the sequence of numbers known as Fibonacci numbers (1, 2, 3, 5, 8, 13, 21, 34, etc.). Once a trader chooses a starting position

FICO Score

A FICO score is a credit score derived from the credit model developed by Fair Isaac Corporation. The FICO score is the best-known credit score in the United States, and a version of the FICO score calculated by all three of the major credit bureaus from reported information. A higher FICO score indicates better credit,


Involving trust, especially with regard to the relationship between a trustee and a beneficiary.

Fill The Gap

Fill the Gap is a term used when the stock price gaps up or gaps down at the market opening and it is expected that the stock price will retrace until it overlaps the previous period’s closing price.


The concept of finance depicts the interrelation of time, capital, and risk. Finance plays a vital role in every aspect of business. Right from production to distribution, finance is needed everywhere. Thus a correlation exists between finance and the economy. Finance types Personal Finance Personal finance is associated with the monetary behaviour of any individual

Finance Charge

A finance charge is any charge levied for the use of credit. For example, credit cards carry a finance charge, calculated as a percentage of the amount borrowed. A finance charge is levied periodically, often once a month. The finance charge is prorated, based on the annual percentage rate of the account. Automobile loans, home

Finance Company

A finance company is an organization that originates loans for both businesses and consumers. Much like a bank, a typical finance company acts as a lending entity by extending credit. However, the main difference between a bank and a finance company is that, unlike a bank, a finance company does not accept deposits from the

Financial Accounting

A term usually applied to external reporting by a business where that reporting is presented in financial terms.

Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board (FASB) has had primary responsibility for establishing financial accounting and reporting standards for the private sector in the United States. The pronouncements of the Financial Accounting Standards Board are considered authoritative by both the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA).

Financial Adaptability

This refers to the ability of a company to respond to unexpected needs or opportunities.

Financial Aid

Financial aid refers to funding intended to help students pay tuition or other costs, such as room and board, for education at a college, university, or private school. General governmental funding for public education is not called financial aid, which refers to awards to specific individual students. A scholarship is sometimes used as a synonym

Financial Analyst

A financial analyst is a finance professional who studies and reports on the financial performance of corporations, industries, and securities. A financial analyst is typically employed by a financial institution. Although the tasks of a financial analyst range in depth and scope, duties commonly associated with a financial analyst occupation comprise of monitoring given securities

Financial Center

Financial center includes a few cities that have considerable influence on the global economy. Trade, financial transactions, investment, and government transactions carried out in financial centres impact the global economy. A city can become a financial center if it has access to capital, a strong regulatory government, and significantly large talent pool. Once a city gains a stronghold over the

Financial Crisis

A financial crisis is a period punctuated by financial volatility in stock markets, financial institutions, and currencies. Asian Financial Crisis This occurred in 1997 and 1998. Thailand and Indonesia were the countries that were hit hardest, but contigation spread throughout Asia, affecting every country there. US Financial Crisis In late 2008, the US started falling

Financial Gearing

Ratio of loan finance to equity capital and reserves.

Financial Information

Information which may be reported in money terms.

Financial Instrument

A Financial instrument is defined as a virtual or written document stating a legal agreement that has a monetary value. Financial instruments are broadly categorized as a debt-based financial instrument and equity-based financial instrument. An equity-based financial instrument represents ownership of the asset. A debt-based financial instrument, on the other hand, is an index of the loan taken by

Financial Intermediary

A financial intermediary can be referred to as institution or individual that bring together investors and firms requiring funds. More commonly, a financial intermediary is referred to as a financial institution. Examples of a financial intermediary include insurance firms, chartered banks, mutual funds, credit union, and investment dealers. A financial intermediary, for instance, a bank,

Financial Markets

Financial markets can be referred to as a set up where various types of financial instruments can be traded. Major financial instruments that are traded include securities such as bonds and stocks. Financial markets are under a constant process of innovation and improved liquidity of this market has let it evolve significantly. Variations in financial markets Financial markets operate with several other submarkets. Together

Financial Meltdown

Financial meltdown means a total collapse of the finance sector represented by investment banks, commercial banks, and non-banking financial institutes. The finance sector or financial market includes money market, equities market, bond market, real estate market, spot or cash market, commodities market, derivatives market, OTC (over the counter) market, and foreign exchange market. As each of these markets is inter-related with

Financial Planner

A financial planner is a professional who analyses individual financial and economic circumstances and devises a plan to accomplish financial goals and objectives. Those working in the capacity of a financial planner may have diverse backgrounds and training. Thus, depending on their experience, accountants, securities brokers, bankers, and attorneys may be included in the financial

Financial Reporting Standard

Title of an accounting standard issued by the UK Accounting Standards Board as a definitive statement of best practice (issued from 1990 onwards – predecessor documents are Statements of Standard Accounting Practice, many of which remain valid).

Financial Risk

Exists where a company has loan finance, especially long-term loan finance where the company cannot relinquish its commitment. The risk relates to being unable to meet payments of interest or repayment of capital as they fall due.

Financial Services Authority

The FSA is the Financial Services Authority, the regulator which oversees much of the UK financial services industry including investments, insurance, and mortgages. The FSA has the power to impose fines for breaking the regulations, and in serious cases it can also withdraw authorisation from wrongdoers, effectively closing the company down. In 2013 the FSA will be

Financial Statements

Documents presenting accounting information which is expected to have a useful purpose.

Financial System

The financial system of any country is an arrangement of financial organization and financial laws in such a way that leads to the development of the economy. Like any other system in a country, the financial system takes care of the financial health of any country. Any decision regarding finances is passed through this system.

Financial Viability

The ability to survive on an ongoing basis.


Financier (IPA: /ˌfi năn ˈsjei/) is an elegant term for a person who handles large sums of money, usually involving money lending, financing projects, large-scale investing, or large-scale money management. The term is French and derives from finance, which means payment. The term financier has upscale and haughty connotations, and the image portrayed by the

Financing Activities

Activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.


Firms are recognized as significant factors of production used in economics. A firm is also referred to as a business entity that produces goods in an economy. A firm can be known as a lawfully acknowledged organizational entity, which is set up in an economy to produce goods and services for consumers. A firm can be governed owned or can have private enterprise. There are mainly 4 types of ownership

First-Mover Advantage

First-mover advantage can be referred to as an advantage that can be gained by any company which is first to capture a segment of the market. First-mover advantage is not necessarily gained by any company which is first in terms of starting a business in any sector, but any significant company which makes the first attempt at


Direct experience that is derived from personal knowledge or which comes straight from its original source. Many experts believe that the most valuable and educational type of business or investment experience is that which is gained from firsthand observation and personal practice.

Fiscal Neutrality

Fiscal neutrality is the impact of fiscal measures on an economy. Desirable fiscal neutrality implies normal functioning of economic forces even after the introduction of new taxes or tax structures. The introduction of new taxes ideally should not destabilize normal economic activity. Any fiscal measure creates distortions in an economy, even negligibly. For instance, sales tax has a negative effect


A fiscalist is someone who believes that fiscal policy is vital in economic regulation. A fiscalist, as opposed to a monetarist, is in favour of affecting the economy through fiscal policy.

Fixed Asset

An asset that is held by an enterprise for use in the production or supply of goods or services, for rental to others, or for administrative purposes on a continuing basis in the reporting entity’s activities.

Fixed Assets Usage

Revenue divided by net book value of fixed assets.

Fixed Capital

Finance provided to support the acquisition of fixed assets.

Fixed Charge Coverage Ratio

Fixed Charge Coverage Ratio sheds light on a company’s ability to satisfy fixed financing expenses such as interest and leases. Fixed Charge Coverage Ratio is calculated by summing up Earnings before interest and Taxes (EBIT) and fixed charges which are divided by fixed charges before tax and interest. EBIT, taxes and the interest expenses are

Fixed Cost

One which is not affected by changes in the level of output over a defined period of time.

Fixed Costs

Fixed costs refer to the costs that do not change despite changes in production or amount of goods sold. These include insurance, property tax, interest expenses, and rent. These costs remain fixed regardless of changes in production. Such type of cost is very common in short-run production. The determination of the difference in the variable

Fixed Income

Fixed income refers to any type of investment that yields a regular (fixed) payment. For example, if you borrow money and have to pay interest once a month, you have issued a fixed income security. When a company does this, it is called a bond (although ‘preferred stock’ is also sometimes considered to be fixed

Fixed-Rate Mortgage

A fixed-rate mortgage, or FRM, has a fixed interest rate over the duration of the loan. In contrast, the mortgage with a changing interest rate is called an adjustable-rate mortgage, or ARM. The ARM will generally have a lower interest rate than a similar fixed-rate mortgage because the fixed-rate mortgage lacks interest rate risk. The

Flat Tax

A flat tax system has a fixed tax rate regardless of level of income. The primary advantage of a flat tax is simplicity. Not only are flat tax computations and payments very straightforward, but in theory, the economy also benefits from a minimum of distorted incentives driven by tax deductions in a flat tax regime.

Flat Yield Curve

A flat yield curve has a small spread between short and long-term rates. The flat yield curve implies that the long-term rate is higher. If the short-term rate is higher, the yield curve is called an inverted yield curve rather than a flat yield curve. An arbitrary definition of a flat yield curve is a

Flea Market

A flea market is a type of street market that provides space for vendors to sell previously-owned merchandise. This type of market is often seasonal.

Flexible Loan

Flexible loans act as drawing accounts on which you may write cheques. Your bank will agree on a credit limit for your flexible loan against which you may borrow and, thereafter, may have as much or as little of the money as you want whenever you want it. Unlike other online loans, with flexible loans,

Flexible Spending Account

A flexible spending account is a monetary employee benefit that may be offered by an employer for a specific purpose. Flexible spending account dollars are in essence a portion of pre-tax employee compensation that can be set aside for eligible use. In order to qualify for a tax-free flexible spending account, an employee must meet

Flight To Quality

Flight to quality refers to investors moving investments into low-risk securities during times of economic or political uncertainty. Flight to quality can be caused by anything from a war to a change of fiscal policy to a recession. A flight to quality may include moving investments into blue-chip stocks or out of low-rated bonds and


A technique for scheduling broadcast commercials


Float, also referred to as free float, is a number of outstanding shares of stock available for trading by the public. Float, however, does not include restricted shares. This means that shares owned by company officers, management, and various other insiders are not considered part of float. For example, if a company maintains two million


Floatation of a company is comparable to setting a boat to sail for the first time. Term ‘float’ can be referred to as the number of shares sold by a joint-stock company through its initial public offering. These shares are issued by a company when going public for the first time. Bond issues are also

Floating Charge

Security taken by lender which floats over all the assets and crystallises over particular assets if the security is required.

Floating Exchange Rate

The floating exchange rate is the currency exchange rate ascertained by free-market forces. An ideal floating exchange rate will be independent of any government control. Value of currency is set through the foreign exchange market where it is influenced by demand and supply vis-a-vis other currencies. A currency that employs a floating exchange rate is known as a floating


A willingness to accept direction and guidance from the leaders of an organisation.


Estimate of future performance and position based on stated assumptions and usually including a quantified amount.

Forecast Oscillator

The Forecast Oscillator compares the actual price to the Time Series Forecast and calculates a percentage between -100% and +100%. The Forecast Oscillator is calculated as follows:  Forecast Oscillator =    (Close-today-Time Series Forecast-before)/Close-today*100 The Time Series Forecast indicator in this formula is evaluated at some period in the past. Forecast Oscillator Interpretation If this oscillator stays above the zero


Forecasting is a method of projecting the financial performance of a company in the future. These forecasts are based on a number of assumptions. Milton Friedman a noted economist argued that economic models must never be judged on the validity of their assumptions but rather on their prediction’s accuracy. Forecasting has become a regular economic activity

Foreign Direct Investment

FDI (foreign direct investment) refers to investments made by a company in another country to create a business entity or production facility, for example, to construct a factory or manufacturing plant. It is different from indirect investments such as portfolio investments, in which money is passively invested. In the current scheme of things, direct investment has

Foreign Exchange

Foreign exchange relates to the trading of currencies between two different nations. It includes money instruments like notes, checks, and paper currency. The foreign exchange rate between the currencies of any two nations has to be calculated on an accurate and timely basis in order to facilitate global commerce transactions. Banks, central banks, multinational organizations,

Foreign Exchange Rate

A foreign exchange rate is the price of one currency in terms of another. For example, suppose the foreign exchange rate for the Japanese yen vis-à-vis the U.S. dollar is ¥100 = $1. If the foreign exchange rate changes to, say, ¥110 = $1, the yen is now weaker and the dollar stronger, since it


The ”’foreign exchange market”’ is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the credit market.

Form 10-K

Form 10-K is an audited annual regulatory filing containing financial statements and management discussion of factors that may impact financial performance. Every company with publicly traded stock or debt must file Form 10-K at the end of each fiscal year. For each of the first three fiscal quarters, form 10-K is replaced by the similar,

Form 10-Q

Form 10-Q is a quarterly regulatory filing. Form 10-Q contains financial statements and management discussion of factors that may impact financial performance. Every company with publicly traded stock or debt must file form 10-Q for each of the first three fiscal quarters. The annual form 10-K replaces form 10-Q in the fourth quarter. Form 10-Q

Form 1098

Form 1098 is an IRS tax form filed by entities (individuals or businesses) to report mortgage interest amounts received during the tax year in the course of doing business. Form 1098 must be provided to taxpayers by mortgage lenders if a minimum amount of mortgage interest (set by the IRS) is received by the lender

Form 8889

Form 8889 is a Health Savings Account (HSA) related IRS form. A taxpayer must file Form 8889 in any of the following cases: Case 1: you must file Form 8889 if you made a contribution to your HSA account. Case 2: you must file Form 8889 if your employer or somebody else made a contribution


The extent to which work roles are structured in an organisation and the activities of the employees are governed by rules and procedures.


A list of items which may appear in a financial statement, setting out the order in which they are to appear.

Fortune 500

The Fortune 500 is a prestigious list of companies published every year by Fortune magazine. The Fortune 500 list ranks US companies by gross revenues. Fortune 500 companies must be US companies and publicly held. The gross revenues used to rank the Fortune 500 companies is the company’s gross revenue for its previous fiscal year.

Forward Exchange Contract

An agreement to buy foreign currency at a fixed future date and at an agreed price.

Forward PE

Forward PE means forward price-to-earnings ratio. Forward PE is also called estimated PE. Forward PE divides a stock’s current price by its estimated future earnings per share. Forward PEs are calculated using consensus earnings estimates for the next four quarters. A forward PE evaluates the current stock price against what is expected to happen to

Fractional Share

A fractional share is a fraction of a share or less than one whole share. A fractional share can occur if a company splits its stock, merges with another company in a stock swap or stock buyout or pays a stock dividend. Although most companies allow fractional share holdings to exist in their dividend reinvestment

Fractional Unemployment

Fractional unemployment is the portion of unemployment linked with a country’s normal state of economy. Fractional unemployment includes job search as its constituents. In this type of unemployment, employment is available but is not utilized by job seekers for the absence of proper information or lack of mobility. Unemployment Rate The unemployment rate is the percentage of the entire


intentional deception resulting in injury to another person


Freakonomics was originally the name of a book written by Steven D. Levitt and Stephen J. Dubner in 2005. It has since become a wider phenomenon that describes a philosophical and research-based approach to economics. Freakonomics looks at everyday events and uses economic analysis to understand why certain things happen. They suggest that at root,

Free Trade

Free trade is a legal arrangement or a policy implemented by the nation according to which the market model is set up. According to the terms of free trade, the goods or services traded between or within countries are not impeded by restrictions imposed by the government. These restrictions may include taxes and tariffs as


Freepost is a postal service provided by various postal administrations, whereby a person sends mail without affixing postage, and the recipient pays the postage when collecting the mail.

Front-End Load

A front-end load is a sales charge or commission that an investment levies on shares bought. Mutual funds and insurance policies are best known for charging them. The counterpart to the front-end load is the back-end load, which is charged when shares are sold. A front-end load compensates those who do the buying and selling


The FTSE Group (pronounced “footsie”) computes tens of thousands of indices of market performance daily. The most famous stock index of the FTSE Group is the FTSE 100, first calculated in 1984, which consists of the 100 largest companies by market capitalization on the London Stock Exchange. The composition of the FTSE 100 is reviewed

Fuel Poverty

A household in Fuel Poverty is usually defined as one that needs to spend 10% or more of net income on fuel costs. This can mean that a choice has to be made between adequate heating and other necessities such as food or paying other bills. It was traditionally the elderly who were most affected by fuel

Fuel Taxes

Bung taxes are enforced on sales of fuel. Fuel taxes imposed on different types of fuel are not uniform. Maximum taxes are imposed on products that are used to power automobiles. Lower taxes are seen on fuels that are employed in domestic use like heating oil and agricultural machines. Governments treat fuel taxes as a source

Full Cost Accounting

Full cost accounting (FCA) generally refers to the process of collecting and presenting information (costs as well as advantages) for each proposed alternative when a decision is necessary. Costs and advantages may be considered in terms of environmental, economic and social impacts. Full cost accounting information may be used by decision-makers. Full-cost accounting is sometimes

Full-Service Brokerage

A full-service brokerage offers investment research, tax advice, and retirement planning in addition to providing trading services to clients. The transaction fee for a trade is on average several times higher with the full-service brokerage than with a discount broker, but the higher fee is necessary to pay a commission to the individual stockbroker working

Fully Invested

Being fully invested means that all assets of a trading account are working in the market with no cash reserve in the account. An investor or fund manager who is fully invested is demonstrating considerable confidence in the direction and the strength of the market. An investor who has margined (borrowed) funds invested can be

Fully Paid

Shares on which the amount of share capital has been paid in full to the company.

Fully Valued

A stock that is fully valued is priced at a level that an investor feels reflects its true intrinsic value. If a stock is widely perceived by the market as being fully valued then it is unlikely that its price will change substantially unless its perceived value alters. Different investors can value a stock differently,

Fund Family

A fund family is a set of related funds, usually mutual funds, with a common brand. One minor advantage of investing in multiple funds in the same fund family is being able to receive a common statement for all. A potentially more meaningful advantage might be the ability to reallocate investment dollars between different fund

Fund Manager

A finance professional who manages a collection (portfolio) of investments, usually for an insurance company, a pension fund business or a professional fund management business which invests money on behalf of clients.

Fund Of Funds

A fund of funds is an investment vehicle that invests entirely in other funds. An early and still typical type of fund of funds is the fund of funds that invests in many mutual funds, just as the mutual fund invests in many individual stocks. A fund of funds may be described in a way

Fundamental Analysis

Fundamental analysis attempts to find the actual value of a stock — ie, its ability to generate future cash flows — to make investment decisions. Fundamental analysis thus focuses on a company’s financial results. Specifically, fundamental analysis emphasizes forecasts of a company’s earnings and revenue growth rates, valuation ratios like price to earnings, and financial


a commodity that is freely interchangeable with another in satisfying an obligation

Future Medical

Under personal injury law, you may be entitled to past and future medical expense reimbursements if you win your personal injury case and prove another person’s negligence caused your loss. Future medical can also refer to on-going medical care for a work-related injury and can be factored into your workers’ compensation payment. Talk to a

Future Value

Future value, often expressed as FV is a financial term, which describes how much a given amount of money will be worth after interest has accrued. Future value is referred to as the expected value of the present sum of money in future. Future value is a measurement that tells the amount of money that can be received for any present investment in

Futures Contract

The futures contract is a type of forward agreement, an agreement to buy or sell an asset at a pre-arranged future time and price. The futures contract is standardized for trade on an exchange, such as the Chicago Mercantile Exchange. Standardization of the futures contract specifies a quantity of the asset, the delivery month, the

Futures Market

The futures market can be referred to as a type of auction market where the participating parties can trade commodities or futures contracts. A futures contract refers to a contract to purchase definite quantities of a commodity or financial instrument at a specified rate and the delivery date is fixed at a specified time in future. The density

Futures Option

A futures option is an option on a futures contract. The futures option is common for both commodity futures such as wheat and coffee contracts and financial futures such as Japanese Yen and S&P 500 Index contracts. The key difference between a futures option and an option on a futures contract’s underlying asset is delivery

Accounting Terms Beginning With "G"


Generally Accepted Accounting Principles


A gain is an increase in the value of an investment or asset. A gain is typically expressed in monetary terms (e.g. a gain of $10 or a percentage gain). A gain is typically calculated by taking the current market value or sales price and subtracting the original purchase price (i.e. basis). The difference is

Gains And Losses

This typically refers to losses due to foreign currency transactions. The fluctuation of exchange rates between the time a payment is made and when the bank converts the currency may result in a gain or loss.

Game Theory

Game theory is a mathematical approach that includes strategic decisions of market agents to predict the probable market situation. To explain in simple terms, game theory is a strategic attempt to study human behaviour, in which an individual’s decision to make choices is depended on choices of others. Basic Elements of Game Theory Great mathematician

Gartley Pattern

In technical analysis, it is a complex price pattern based on Fibonacci numbers/ratios. It is used to determine buy and sell signals by measuring price retracements of a stock’s up and down movement in stock price.


The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.


In economics, GDP means Gross Domestic Product. GDP is defined as the value of all goods and services produced within the geographic territory of an economy in a given interval, such as a year. GDP is distinguished from GNP, or Gross National Product, which is defined as the value of goods and services produced in

GDP Implicit Price Deflator

The GDP implicit price deflator measures the level of price change in the U.S. economy. The GDP implicit price deflator is computed by dividing the current dollar GDP by constant dollar GDP. The numerator of the GDP implicit price deflator is thus nominal GDP in a given year, unadjusted for price changes. The denominator of


Gearing appraises the extent to which a specific company is funded by debt. It is a general financial term that compares between borrowed funds and the amount of liquidity held by the company owner. Gearing demonstrates the point to which activities of a company are funded by owner’s funds compared to funds given by creditors.

Gearing Effect

A substantial gearing effect means that a one penny rise or fall in the price of a warrant will represent a much bigger percentage profit or loss for the holder than if he held the actual shares.

General Ledger

General Ledger (GL) is a complete record of the financial transactions over the life of a company.

General Obligation Bond

A general obligation bond is a municipal bond backed by the taxing and revenue power of the issuing municipality. For this reason, a general obligation bond is sometimes referred to as a full-faith-and-credit bond. Because a general obligation bond is backed by the taxing power of a municipality, it is generally considered to be of

General Purpose Financial Statements

Documents containing accounting information which would be expected to be of interest to a wide range of user groups. For a limited liability company there would be: a balance sheet, a profit and loss account, a statement of recognised gains and losses and a cash flow statement.

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) are the rules and practices under which financial statements are prepared. There is no single resource for Generally Accepted Accounting Principles. Generally Accepted Accounting Principles comprise an enormous set of documents and procedures developed over many years from numerous sources. Generally Accepted Accounting Principles includes pronouncements of the Financial Accounting

Generational Accounting

Generational accounting is a kind of accounting method. It studies how the present fiscal policies of a country affect its coming generations. Pioneers in the field of generational accounting include names like Laurence Kotlikoff, Jagadeesh Gokhalea and Alan Auerbach. It analyzes government spending components and tax programs with a view to determine whether benefit accruing to present generation is

Giffen Goods

The term Giffen goods refer to the inferior goods which experience a rise in demand when prices rise and a fall in demand when the prices decrease. However, the term inferior does not always refer to quality. Giffen goods are characterized by decreased demand when consumers are capable of paying for higher-priced goods. A theoretical concept, Giffen goods are named after its

Gift Economy

Gift economy is a social theory that describes giving of services and goods without any expressed desire for returning the favour. Gift economies are generally found in cultures that stress on intangible or social rewards for generosity and commonality. Gifts can also be circulated within a specific community. It is a type of reciprocal altruism.

Gift Tax

The gift tax is a US tax levied on gifts above a certain value. The donor, not the recipient, pays the gift tax. The amount of the gift tax is based on the total amount of all gifts given to an individual recipient in one year. The annual exclusion is the cutoff point below which


Gilts, sometimes referred to as British Government bonds, are a way for the Government to raise money from large financial institutions like pension funds and from private investors like you and me. The money is needed by the Government because the Treasury so often finds that its outgoings (to pay for things such as road

Gini Coefficient

Gini coefficient refers to the variance in poverty and wealth in any given country. On a scale of 0 to 1, the lower the Gini coefficient, the more evenly distributed the wealth. Gini coefficient or Gini index is an economic measure of inequality in income distribution. Gini coefficient is specified as a ratio between 0 and 1.

Ginnie Mae

Ginnie Mae stands for the Government National Mortgage Association. Ginnie Mae is a self-financed and wholly-owned government corporation created in 1968. Ginnie Mae is part of the Department of Housing and Urban Development (i.e. HUD). Ginnie Mae guarantees timely payment of principal and interest on certain mortgage-backed securities (i.e. MBS). In particular, Ginnie Mae guarantees

Glass-Steagall Act

The Glass-Steagall Act is a landmark bill in Federal banking and securities law. Passed in 1933, in the middle of the Great Depression, the Glass-Steagall Act was aimed at restoring confidence in the banking system. Notably, the Glass-Steagall Act established the Federal Deposit Insurance Corporation, which insures customer deposits. But the Glass-Steagall Act is probably

Global Depositary Receipt

Global Depositary Receipts are negotiable certificates which prove ownership of a company’s shares. They are marketed internationally, mainly to financial institutions. GDRs allow purchasers to gain exposure to companies which are listed on foreign markets without having to purchase the shares directly in the market in which they are listed.

Global Economy

Global economy is the ability of businesses to market their services and products all over the world. The global economy has supported the growth of many companies to transform themselves into multinational firms. An example of a global economy is the incidence of developed countries like the United States outsourcing their routine operations to developing

Global Public Goods

Global public goods include all kinds of goods, consumption of which does not result in its non-availability for other entities. In some cases, the consumption of global public goods cannot be stopped. These types of goods are available in many countries, consumed by many people and is available for use across generations. Status of some goods can change


The worldwide movement toward economic, financial, trade, and communications integration.

Globalization Polarization

Globalization polarization (known as globalisation polarisation in British English) is the phenomenon of production being moved from what was once a lower-cost production centre or country, back to the home country, which was the original producer, while globalization, as it is traditionally known, continues. The first half of this theory has been referred to as de-globalization and

Going Concern Basis

The assumption that the business will continue operating into the foreseeable future.

Gold Bullion

Gold bullion refers to a bulk quantity of gold. Gold bullion is traded in commodity markets in the form of ingots, bars, or coins. Unlike money, gold bullion is valued by its purity and its mass. Gold bullion must be at least 99.5% pure. Purchasing gold bullion offers an investor a way to invest directly

Gold Standard

The gold standard is referred to as an obligation taken by several partaking countries, in which they fix prices of their domestic currencies in terms of a particular amount of gold. In the gold standard, national currency along with other forms of money including bank deposits and notes are without restraint changed into gold at

Golden Cross

Golden Cross is a long term chart signal which suggests an upcoming stock or market uptrend. Golden Cross is a crossover involving a security’s short-term moving average (such as 15-day moving average) breaking above its long-term moving average (such as 50-day moving average) or resistance level.

Golden Handcuffs

Golden handcuffs are various incentives offered to key executives to make sure they don’t leave the company. Golden handcuffs can take several forms. For example, golden handcuffs may entail deferred compensation, under which pay for past services are postponed to some future date. Golden handcuffs can also involve stock options, which the executive cannot exercise

Golden Parachute

A golden parachute is an employment agreement that guarantees a key executive of a company lucrative – even excessive – compensation in the event the firm is taken over. The benefits a golden parachute may provide include a huge, one-time cash bonus, stock options, and pension. More than a few people view a golden parachute

Golden Rule

The golden rule offers a guideline on how to operate a fiscal policy. According to Golden rule, a government, over an economic cycle, should utilize borrowings to solely make investments. Investment will eventually benefit future generations. Borrowings should not be used for current spending. For daily spending that offers benefits to today’s taxpayers, taxpayer money can be utilized. The core idea behind

Goldilocks Economy

The term Goldilocks economy refers to an economy that’s not too hot, not too cold. In other words, a Goldilocks Economy is “just right.” The term Goldilocks economy was first used in late 1989 to describe the U.S. economy as it entered the 1990s. In the perfect Goldilocks economy, the economy is growing slowly enough

Goldman Sachs Commodity Index

The Goldman Sachs Commodity Index, now known as the S&P GSCI, is a diversified, production-weighted index that tracks the price fluctuation of commodities. The Goldman Sachs Commodity Index was first published in 1991 but historical values prior to this date have been calculated using a base value of 100 as of January 2, 1970. In

Gone Away Information Network

Credit reference agencies are members of GAIN, a network through which lenders share information on customers with debts who have moved home without telling their lenders of a forwarding address. The information may include both the address the customer moved from and any address the customer has since been recorded as living at. If you

Good Til Cancelled

A good til cancelled order is an order to buy or sell a security that remains in effect until the good til cancelled order is either executed by a broker or cancelled. A good til cancelled order is not necessarily perpetual (some plans do offer this option, though); brokers usually set a limit of 30,

Goods And Services

Goods and services is a general term used to describe outputs of businesses. It is often used as a descriptor when making broad references to economic outputs of products. See operations for a micro-level description of how inputs are converted into outputs. The term is used to describe a combination of both physical products (goods) and less-tangible, often


Goodwill on acquisition is the difference between the fair value of the amount paid for an investment in a subsidiary and the fair value of the net assets acquired.


A government is an organized ruling structure for a political group. Governments are necessary to institute policy, rules, law, regulations, and mediation in communities. Governments are necessary to establish physical security for its people (through military and defence organizations). Governments also seek to ensure economic stability and livelihoods for their people via commerce, trade and/or government subsidy. Governments can be on national, regional or

Government Debt

Government debt (“public debt”, “national debt”) is money owed by the government, at any level (central government, the federal government, national government, municipal government, local government, regional government). It’s possible to consider this an indirect debt of the taxpayers. Government debt can be divided into internal debt, owed to lenders within the country, and external

Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act is a federal banking and securities law passed by Congress on November 12, 1999. The Gramm-Leach-Bliley Act is also referred to as the Financial Services Modernization Act of 1999. Indeed, the Gramm-Leach-Bliley Act has significantly changed the operations and business model of the banking industry defined by the Bank Holding Company Act

Grand Jury

A grand jury has the legal authority to investigate potential criminal actions and to determine if criminal charges should be filed. The “grand jury” in the United States is composed of 23 citizens. The grand jury does not decide guilt or innocence but rather decides if charges or an indictment should be brought against a


The eligible recipient of an easement, grant, or right, such as the one who is a beneficiary of a trust established by a grantor.


The level of detail considered in a decision-making process or model.

Gravestone Doji

A gravestone doji is a variation on the doji candlestick with a long upper shadow and no lower shadow, such that it resembles an inverted “T.” The trading pattern that creates a gravestone doji proceeds with the price of a security opening at the low of the day, rising to a high, and then selling

Great Depression

The Great Depression was the longest and most severe business slump in U.S. history. The Great Depression began with the Stock Market Crash in 1929 and didn’t fully end until the U.S. entered World War II in 1941. The causes of the Great Depression are hotly debated. But excessive stock market speculation, restrictive trade practices,

Greater Fool Theory

The greater fool theory says there’s always someone – an even greater fool – that will overpay for a stock that is already overpriced. The greater fool theory may be used as a general investment strategy during an overheated bull market. More frequently, the greater fool theory applies to highly speculative equities, with ritzy names


Greenwash is the act of giving your company, product or service a veneer of being environmentally friendly. It is an amalgam of whitewash, the act of hiding something unpleasant with a shiny PR-friendly exterior, and green, meaning anything that is either good for the natural world or less harmful than current polluting alternatives. Greenwashing has become a mainstream activity in the

Gresham’s Law

Gresham’s Law is a law used in monetary economics generated by English businessman Sir Thomas Gresham that states, “Bad money drives good money out of circulation”. In order to understand Gresham’s Law, one must have clear ideas on “bad money” and “good money”. “Bad money” is referred to as money that possesses considerable dissimilarity between its commodity value and its market value. Market value is generally

Grey Market

Grey market comprises trading in shares outside a recognised market but has come to mean trading in shares ahead of their issue on the stock market nowadays. Unofficial trading was commonplace in privatisation stocks ahead of their actual listing and commencement of official trading, for example.


Before making deductions.

Gross Margin

Sales minus cost of sales before deducting administration and selling expenses (another name for gross profit). Usually applied when discussing a particular line of activity.

Gross Margin Ratio

Gross profit as a percentage of sales.

Gross Negligence

Gross negligence is “an act or omission of an individual which was done maliciously, wantonly, oppressively, or in a completely reckless or callous manner, indifferent to the rights of others and safety of others.” A recent example of gross negligence can be found in the case against Michael Jackson’s doctor, Dr. Murray. The court argued

Gross Profit

Sales minus cost of sales before deducting administration and selling expenses (see also gross margin).

Gross Spread

Gross spread refers to the fees that an underwriter receives in exchange for helping an issuer raise debt or equity capital. Typically, the gross spread for an IPO is 7%, while the gross spread on a debt offering may range from under 1% to 5%+. For example, if a Company sells $100 million of shares in


An Economic entity formed by parent and one or more subsidiaries.


In an economic context, growth refers to an overall increase in economic activity. Often, growth is used to measure an increase in GDP, trade, or overall financial power or capacity. Economic growth has been defined in economics as an increase in an economy’s potential to generate goods and services. It is measured on the basis of two

Growth And Income Fund

A growth and income fund is a mutual fund structured to provide both growth in value and current income payments. A growth and income fund will likely choose small-cap stocks for growth and large-cap stocks for income. Bonds are sometimes included heavily in a growth and income fund as well. The risk level of a

Growth Fund

A growth fund is a portfolio of securities whose investment goal is to grow in value over time. A growth fund invests primarily or fully in stocks, as stocks have the potential to appreciate greatly. It is common for the companies in a growth fund to avoid paying dividends to their shareholders; they are more


A GRPI model includes measurable Goals, well-defined Roles and lists of what team members will fill what roles, a list of processes to achieve project sub-goals, and a plan for Interpersonal interactions that will facilitate problem-solving goal achievement.

Guaranteed Income Bond

A guaranteed income bond is a single premium insurance bond which pays a fixed amount of income annually and returns the original sum invested at the end of a specified period. Beware of bonds which offer high returns but may set performance benchmarks for the return of your capital – if these targets are not


a person who cares for persons or property

Accounting Terms Beginning With "H"

Habeas Corpus

Habeas Corpus is a writ of command that a person held for a crime must be presented before a judge. It literally means “you have the body.” An individual who is being held can petition the court for the writ to force the court to bring them before a judge to determine if the government

Harami Cross

A harami cross is a candlestick charting pattern that can signal the reversal of a bullish or bearish trend — it’s a reversal pattern. Two candles comprise a harami cross. The first is a long candle, the second is a doji that is completely engulfed by the body of the first candle. If the first

Hard Currency

Hard currency is a widely accepted form of payment received against goods and services offered or sold. In the foreign exchange market, hard currency is expected to remain extremely liquid. Another important criterion of hard currency is that it must stable in short run. Hard currency ideally should be accepted in most parts of the globe and should originate from

Haurlan Index

A technical analysis indicator, developed by P.N. Haurlan, that is used to detect market breadth. There are three components of the Haurlan index: Short Term: a 3-day exponential moving average is taken of the net NYSE advances over declines. Intermediate-Term: same, using a 20-day exponential moving average. Long Term: same, using a 200-day exponential moving


Hawala can be referred to as international financial networks unregulated by government or any administering authority. They exist all over the globe and utilized mainly by individuals to channelize cash. Cash can be transferred to domestic as well as international destinations. A majority of hawala brokers are based in Africa, Asia and the Middle East. Hawala Method

Head And Shoulders Pattern

A head and shoulders pattern is a technical analysis charting pattern that signals the reversal of an uptrend — it’s a bearish reversal signal. Three peaks, with the middle peak the highest, and two valleys that touch a support level characterize a head and shoulders pattern. The support level of the head and shoulders pattern

Health Economics

Health economics is a type of economics that deals with issues relating to the apportioning of health and health care. It is differentiated from other branches of economics by factors like asymmetric information, intervention by the government, non-compliant uncertainty, and other externalities. The uncertainty factor is part of health care including financial concerns and patient outcomes. Health

Health Insurance

Health insurance is a type of indemnity that provides financial protection against instances of injury or sickness by covering healthcare costs. There are many types of health insurance, offering different healthcare plans. Health insurance may offer hospital expense coverage, surgery expense coverage, as well as disability income insurance. Likewise, health insurance can help cover the

Health Maintenance Organization

A health maintenance organization, or HMO, is a public or private organization that provides comprehensive medical care, based on a prepaid contract agreement. A health maintenance organization can be considered a form of health insurance, designed to deliver a broad range of services for a fixed payment. Once the health maintenance organization contract is signed


A hearing or court hearing is a gathering in a courtroom with the specific purpose of holding some type of legal procedure. There are many types of hearings, and the structure and process will vary based on the focus and whether the case is criminal or civil in nature. In a civil hearing, the participants


Hearsay is a statement made by a witness who does not have first-hand knowledge of the incident in question. Hearsay is usually not admissible as evidence in court under the hearsay rule. An example of hearsay could include testimony from a witness that someone told them another person was driving the car at the time

Hedge Fund

The term hedge funds refer to the monetary capital collected from investors and then the proceeds from these funds are used to buy bonds and stocks. Hedge funds decrease the portfolio risk that arises from movements in broad markets as they take short and long positions in assets. A hedge fund is capable of taking short positions in


The act of one who hedges (in various senses).

Henry Paulson

Henry “Hank” Paulson, Jr., was nominated United States Treasury Secretary by US President George W. Bush on June 19th, 2006. He is the 74th secretary of the treasury. Subsequently, Paulson was unanimously confirmed to the position by the US Senate on 28th June 2006 and sworn in by Supreme Court chief justice John Roberts on 10th

Herfindahl-Hirschman Index

Herfindahl-Hirschman Index (HHI) is described as a measure of market concentration. This index is computed by squaring the market share of each business firm or company competing in the market and then summing numbers that are generated. Herfindahl-Hirschman Index number may range from near 0 to 10,000. A decrease in HHI indicates a loss of market share while an increase indicates the

Hidden Load

A hidden load is a charge that an investor pays without realizing it. The charge from a hidden load may be buried in the fine print or otherwise unapparent. One example of a hidden load is an insurance policy sales charge that isn’t explicitly disclosed. Another common example of a hidden load is a 12b-1,


Having a structure consisting of multiple levels. A hierarchical business structure would mean that the chain of command looks like a pyramid, with a large base of workers, who are directly supervised by the smaller level above them, who are in turn supervised by the level above them, continuing on to the top ranking officer

High-Ratio Mortgage

A high-ratio mortgage is one with a high LTV or loan-value ratio. Today, the high-ratio mortgage is defined as any mortgage for over 80% of the (appraised) value of the property. Historically, some lenders defined the high-ration mortgage limit more conservatively, at only 75%. Typically, the lender will require that any residential high-ratio mortgage be

High-Tech Stock

A high-tech stock is a publicly-traded stock of companies in the technology and electronics sectors. High-tech stock corporations are typically involved in developing and producing computer technology, semiconductor and silicon chip production, as well as new media technology, such as Internet-related equipment. Other areas of high-tech stock companies’ association may include developing cutting edge electronics

Highlights Statement

A page at the start of the annual report setting out key measures of performance during the reporting period.


Hippo stands for the highest-paid person’s opinion. This is an ironic way of saying that decisions in companies are not always rational or sound. Often it is the most senior manager (ie highest-paid person), who will dictate the final decision, based on their own gut feel or possibly based on their own whims and preferences.

Hire Purchase

This refers to when equipment used by the business is paid off through a finance company. At the end of the lease period the company can pay a final fee to own it or start payments for a new piece of equipment.


A histogram is a graph that shows how many times an event occurs across various groups of data or classes. A histogram can give an approximate idea of the frequency distribution of the given data. To construct a histogram, the classes are usually plotted against the x-axis and the frequencies are shown on the y-axis.


Line-chart based on a histogram, it is drawn by joining the mid-points of the blocks at their apexes with a straight line. The extreme points of the line are joined to the horizontal (‘X’) axis (where the mid-point of the respective next class would have been) to result into a polygon. In a very large

Historical Cost

Method of valuing assets and liabilities based on their original cost without adjustment for changing prices.

Historical Data

Historical data is information about a company’s past, such as its revenues, earnings, and stock price action. In a sense, all data is historical data, since only what has occurred can be recorded. Therein lies the problem of historical data and stock prices, which are determined by expectations of a company’s future cash flows, not

Historical Trading Range

The historical trading range is the lowest and highest price at which a security has been sold. For example, say Company A went public in 1993 at a price of $24 per share. If its lowest price since then was $19 and its highest price $27, its historical trading range is $19 to $27. For

Hit And Run

A hit and run is an accident where a vehicle collides with another vehicle, object or person and leaves the scene of the accident without providing the information to the injured party or giving adequate identification. A hit and run is a felony if the driver causes injury. If not, it is considered a misdemeanour.

HM Revenue And Customs (HMRC)

The UK government’s tax-gathering organisation (previously called the Inland Revenue).

Holder Of Record

The holder of record is the name which appears on a company’s records as the registered owner of stock. The holder of record can be an individual or a business entity. The holder of record is not necessarily the individual who controls the stock (this is often true when the holder of record is a

Home Equity

Home equity is the difference between a home’s value and any debt outstanding, such as a mortgage, for which the home is pledged as collateral. Because interest in title to the property is superior collateral, lenders readily grant credit against home equity. After the mortgage itself, the home equity loan and home equity line of

Home Equity Debt

Home equity debt is a loan that is secured by the borrower’s home equity (the home’s fair market value less the amount of money still owed on the home). Broadly, there are two types of home equity debt: a home equity loan and a home equity line of credit. There are important differences between these

Home Equity Line Of Credit

A home equity line of credit is a credit line against an owner’s home equity. Based on credit-worthiness, lenders may approve up to 80% of the appraised value of the home minus any mortgage owed, as a home equity line of credit at variable interest rates. A large initial draw is allowed from the home

Home Equity Loan

A home equity loan is a broad term for credit extended to a homeowner secured by equity in residential real property. The home equity loan can be an open-ended, revolving line of credit. Such a home equity loan would more precisely be called a home equity line of credit, or HELOC. A home equity loan

Home Equity Loan Rate

A home equity loan rate is the interest rate on a home equity loan, which is a loan that is secured by the borrower’s equity in his home. A home equity loan rate should not be confused with its cousin, the home equity line of credit (HELOC) rate. A home equity loan rate is usually

Home Equity Loans

Home equity loans are a type of loan that is secured by the equity of the borrower’s principal residence. Home equity loans can be structured with a line of credit (i.e. Home Equity Line of Credit – HELOC) or with a one-time cash payment (i.e. Fixed Rate Home Equity Loan or second mortgage). Some reasons

Home Loan Refinancing

Home loan refinancing is the process of paying off a mortgage with the proceeds from a new mortgage on the same home. Broadly, there are two types of home loan refinancing: rate-and-term home loan refinancing and cash-out home loan refinancing. Rate-and-term home loan refinancing is geared toward securing more favorable terms on a new loan

Homeowner’s Insurance

Homeowner’s insurance is a type of insurance policy that indemnifies a homeowner against various losses. A homeowner’s insurance policy can cover only named perils, such as a hurricane, or fire, or earthquake, or all perils. In a flood-prone area, for example, it may be difficult for the homeowner to get homeowner’s insurance coverage against flooding.

Horizontal Integration

Horizontal integration refers to the acquisition of added businesses, which are at the same value chain level. In simple words, horizontal integration refers to that situation where an existing business enterprise undergoes expansion via foraying into products, which toe the existent product line. For instance, a vendor of hot dogs is said to undertake a horizontal integration

Hospital Malpractice

Hospital malpractice occurs when a patient is injured because a medical professional at the hospital failed to follow their duty and did not perform their job according to the standards of care set forth for their medical field. Hospital malpractice can be due to an intentional act or negligence which causes injury to a patient.

Hostile Witness

A hostile witness (also known as an adverse witness or unfavourable witness) is someone whose testimony is considered unfavourable to the party who called them to testify. A hostile witness may be asked leading questions and may be cross-examined by the party who called them to the stand after the questioning attorney asks the judge

Hot Money

The capital which is frequently transferred between financial institutions in an attempt to maximize interest or capital gain.


A house mark was originally a mark of property, later also used as a family or clan emblem, incised on the facade of a building, on animals, in signet and similar in the farmer and burgher culture of Germany and Scandinavia.

HUI Index

The HUI Index represents the symbol of the AMEX Gold BUGS Index. BUGS stands for Basket of Un-hedged Gold Stocks which means that companies included in the HUI Index limit any hedging of their gold positions to one and a half years. To the contrary, another major gold index, the XAU Index, does include companies

Human Capital

Human capital, in its economic application, refers chiefly to the store of knowledge and skill substantiated in the population of the economy of a particular territory. The term refers to the individuals who by virtue of their education, training and experience form an important part of the production machinery, thus contributing to the economy of the country. Supporters The

Human Development Index

The Human Development Index was developed by Mahbub ul Haq, a Pakistani economist, and Sir Richard Jolly in 1990. Gustav Ranis of Yale University and Lord Meghnad Desai of London School of Economics also provided their expertise for the development of Human Development Index. It is used to measure human development and takes into account factors like life expectancy, educational

Hung Jury

A hung jury refers to a jury who cannot reach a verdict. In a civil case, this means that a jury was unable to find for the plaintiff or for the defendant. In most criminal cases a jury’s decision must be unanimous. If the jury cannot reach a verdict the judge will generally order the


Short for heating, ventilation, and air conditioning. The system is used to provide heating and cooling services to buildings. HVAC systems have become the required industry standard for construction of new buildings. Before the creation of this system, the three elements were usually split between three or more devices.

Hyip Investment

An HYIP investment is a High Yield Income Program. The allure of an HYIP investment is an unbelievably high return in a very short time span on a relatively low investment with little or no work involved. Very often an HYIP investment claims to return a percentage of your investment in as little as 1


In economics, ”’hyperinflation”’ is very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as they usually switch to more stable foreign currencies, often the US Dollar. Prices typically remain stable in terms of other relatively stable currencies. Among famous examples of hyperinflation is one that occurred in Germany from January 1922 to November 1923. As per estimates, average price levels went up by a factor of 20 billion. Price levels kept on increasing twice once in 28 hours.


A collateralising arrangement in which neither the possession nor the title but only the right to sell an asset or property passes on to the creditor or lender (called a grantee). An arrangement where the grantee has the possession and right to sell, but not the title, is called pledging.


Hysteresis is a system in which output is not dependent on inputs added to it. This is unlike a deterministic system where output at a particular time is dependent on the number of inputs used by it. In hysteresis, the output cannot be predicted without analyzing past inputs. A system that follows hysteresis is path-dependent.

Accounting Terms Beginning With "I"


International Accounting Standard, issued by the IASB’s predecessor body.


International Accounting Standards Board, an independent body that sets accounting standards accepted as a basis for accounting in many countries, including all Member States of the European Union.

IASB System

The accounting standards and guidance issued by the IASB.

Ichimoku Kinko Hyo

A technical indicator that is used to gauge momentum along with future areas of support and resistance. The Ichimoku indicator is comprised of five lines called the tenkan-sen, kijun-sen, senkou span A, senkou span B and chickou span. This indicator was developed so that a trader can gauge an asset’s trend, momentum and support and resistance


An offer to buy goods under specified terms and conditions; for example, for misuse.


International Financial Reporting Standard, issued by the IASB.


a United Nations agency to promote trade by increasing the exchange stability of the major currencies


A situation or an object that bares such little importance (or relevance) that it will have no serious impact on the outcome or results of a situation.

Immediate Family

Someone’s spouse, parents and grandparents, children and grandchildren, brothers and sisters, mother in law and father in law, brothers in law and sisters in law, daughters in law and sons in law. Adopted, half, and step members are also included in the immediate family. See also, first-degree relative.


the state of not being susceptible


A reduction in the carrying value of an asset, beyond the expected depreciation, which must be reflected by reducing the amount recorded in the balance sheet.

Impairment Review

Testing assets for evidence of any impairment.

Impairment Test

Test that the business can expect to recover the carrying value of the intangible asset, through either using it or selling.

Implied Volatility

The implied volatility of an asset is an estimate of volatility, or rate of price change, for the asset. In mathematical finance, volatility is defined as the annualized standard deviation of daily price changes. Thus, past volatility is known from historical data. Implied volatility can be interpreted as the market expectation of future volatility. The


A change in, or addition to, a non-current (fixed) asset that extends its useful life or increases the expected future benefit. Contrast with repair which restores the existing useful life or existing expected future benefit.

Impulse Wave Pattern

A term used in the Elliott wave theory to describe the strong move in a stock’s price coinciding with the main direction of the underlying trend.

In Escrow

An item of value is in escrow when that item is transferred to a third party (an escrow agent) for delivery to the grantee only upon the fulfilment of pre-specified conditions (after transference the item is no longer in escrow). Items commonly held in escrow include money, property, a deed, or a bond. ‘In escrow’

In The Black

In the black means to be profitable. The term in the black comes from the tradition of showing positive numbers in black, and negative numbers in red. In the black is often used when a company has moved from net loss to net profit, or vice versa. Thus a stock analyst might write “After spilling

In The Red

In the red means to record a deficit or to be losing money. The term in the red comes from the traditional practice of showing negative numbers in red ink. In the red can be compared to in the black, which means to be profitable. In the red is often used when a company has


not deserving to be admitted


Income is the revenue earned by any individual. The flow of money to any factor of production is termed as income. Income is generated by the sale of commodities or services. Returns to labour, enterprise, capital, and land are termed as wage, profit, interest, and rent respectively. Thus, the sum of wage, profit, interest and

Income Effect

Change in demand is a summation of income effect and substitution effect of a price change. In very general terms, a change in the price of a commodity is reflected by a change in its demand. Under normal circumstances, demand for a product is inversely proportional to its price, i.e., demand for a product or service increases with a fall in its price and vice versa. A

Income Fund

An income fund is a mutual fund structured to provide maximum income. To achieve this goal, an income fund selects investments that typically provide dividends or interest. These investments include bonds, especially high-yield bonds; and preferred stocks, which guarantee dividends. Blue-chip stocks often provide income as well, since they are the stocks of large companies

Income Property

Income property is real estate held as part of an investment portfolio because of its particular cash flow characteristics. Income property is usually considered a conservative real estate investment, much like a bond, because it produces a steady stream of income. An established, leased multifamily dwelling is the classic example of an income property. The

Income Statement

Financial statement presenting revenues, expenses, and profit. Also called profit and loss account.

Income Tax

Income tax is tax levied against personal income or a business entity’s net profits. In the United States, the Federal government, most of the 50 states, and some municipalities, such as New York City, levy income tax on individuals. The US federal government first levied an income tax in 1861, to pay for the American

Incorporation Date

date of. The date on which a company comes into existence.


The person or entity that prepares, files and signs the articles of incorporation; everything necessary for incorporation. This could entail raising funds and bringing in the people who will be investing. This preparatory work also includes preparing and filing the required documents.


An incubator is an organization that helps a start-up business grow. The incubator typically provides office space and access to shared office equipment and resources. Other incubator services for start-ups may include financial and technical expertise, fundraising assistance, and any other service that might be of use to the typical target start-up. The incubator can


Protection from future loss, either by repayment or a promise to not require repayment.


An index is a hypothetical basket of securities or economic variables designed to track changes over time. The most common type of index tends to be the stock index such as the Dow Jones Industrial Average and the S&P 500 Index. Each index has its own methodology for calculating the effect of individual index components.

Index Fund

An index fund is a portfolio of assets with allocation rules that remain fixed regardless of market conditions, commonly for the purpose of approximating the performance of some market index, such as the Russell 2000 Index. The index fund does not have to be linked to an existing index. Typically, an index fund is either


Indexation is an economic process by which income, unemployment benefits, and wages are raised to ease out the effects of inflation. This is done to keep the purchasing power of consumers constant in spite of a rise in the price level. Alternatively, indexation also refers to the inflating cost of an asset by an ‘inflation factor’ notified by government authorities. This inflation factor is termed cost inflation index, which allows keeping asset

Indicated Dividend

The indicated dividend is the estimated cash dividends a stock will pay in the next four quarters, based on what it paid in the most recent period. Stock tables commonly include the indicated dividend to tell investors the annual cash return they can expect from payouts of earnings; the indicated dividend can then be compared

Indicated Yield

The indicated yield is the indicated dividend for a share of stock divided by the stock price. Since the indicated dividend is a projection of dividends for the next twelve months, the indicated yield estimates the annual return from cash dividends a stockholder can reasonably expect. Because the stock’s total return comprises capital appreciation along


Indicators are used by market timers to try and divine future market action. There are three primary varieties of indicators; technical, market and economic. Technical indicators are mathematical or graphical representations of recent market activity. Most technical indicators are based solely on movements in price, but some also incorporate trading volume into the calculation. Because


a formal document written for a prosecuting attorney charging a person with some offense

Indifference Curve

The term indifference curve refers to a line or graph that showcases all the possible combinations of two bundles of goods between which a consumer remains indifferent. It is a line denoting the consumption of various combinations of two products that offer the same satisfaction or utility to the consumer. Utility, as defined by Geanakoplis, is an instrument

Indirect Method (Of Operating Cash Flow)

Calculates operating cash flow by adjusting operating profit for non-cash items and for changes in working capital.

Indirect Tax

Indirect tax consists of taxes like sales tax and value-added tax. Unlike a direct tax, in case of indirect taxes taxpayer can transfer own tax burden to another person. Retailers pass on indirect taxes to customers in the form of augmented prices. Tax money collected is then forwarded to the government, while filing tax returns. Indirect taxes can be

Individual Investor

An individual investor is a person who manages his/her own money in order to achieve personal financial goals. Therefore, an individual investor needs to know the stock market thoroughly, inside and out. An individual investor studies financial news, earnings reports, and so on, in order to make the most informed decisions regarding personal investing. Most

Individual Retirement Account

An IRA – Individual Retirement Account – is a tax-sheltered investment account available to US taxpayers. Contributions to an IRA are allowed to compound free of taxes until they are withdrawn. IRA contributions may also be tax-deductible. Funds withdrawn from an IRA are taxed as normal income at the rate in effect at the time

Individual Tax Return

An individual tax return is a tax return filed by an individual person rather than a business entity. An individual tax return is used to determine a person’s personal income tax liability. Broadly, there are three individual tax return forms: the 1040, the 1040A, and the 1040EZ. The appropriate individual tax return form depends on


Production methods that incur high fixed costs in order to produce the first unit of goods, may not be divisible below the economies of scale they need to achieve in order to produce the goods, which would make those methods unavailable to smaller producers. Some commodities may be indivisible if their minimum size or quantity

Industrial Organization

Industrial organization (or industrial organisation in British English) is an important part of the academic discipline known as economics. It is basically used for studying strategic behaviour of business establishments. There are other important areas in the industrial organization like market interaction and structure. Competition among various business establishments is also an integral part of industrial organization. Industrial


Several manufacturing enterprises together constitute an industry. Industry is the backbone of several developed and developing economies of the world. Industry is a collection of productive firms. Industry can be of several types depending on the products that are manufactured. Industry Size And Growth Industry also undergoes different stages of development like a business. Major stages

Inefficient Market

An inefficient market is one in which assets are underpriced or overpriced by market participants. According to the efficient market hypothesis (EMH), the difference between an inefficient market and an efficient one comes down to whether participants are rational investors having good information readily available. The less quality information and the slower it is spread,


Inelastic is an economic term that is used to identify a situation where demand and supply of a specific good (or service) remain unchanged even if the price of that good (or service) alters. If changes in price do not affect supply and demand of a good in any manner, it is regarded as perfectly inelastic. A life-saving drug makes

Inertia Indicator

The Inertia Indicator is used to determine the prevailing price trend. Calculation The Inertia Indicator is constructed by first calculating the Relative Volatility Index and then smoothing the index by the Linear Regression Indicator.  This indicator takes three parameters. The first two parameters are the standard deviation and smoothing Exponential Moving Average periods for the Relativity Volatility Index calculation. The third parameter


a general and progressive increase in prices

Inflation Rate

The cost of borrowing money, shown as a percentage. Interest rates can be fixed (you pay the same percentage throughout the life of the loan) or variable.

Inflation Targeting

Inflation targeting is a policy followed by central banks that involve completing predetermined, public economic targets for the annual rate of inflation. The central bank aims to contain inflation in a particular target range. This is generally achieved by tweaking interest rates. The underlying concept is that since inflation is affected by growth in money supply, an increase or

Inflation-Indexed Security

An inflation-indexed security is a stock or bond whose return is promised to be higher than the rate of inflation. A company or government body will issue an inflation-indexed security (generally a bond) to attract investors who want their earnings to survive the corrosive effects of inflation. The US Treasury issues several types of inflation-indexed


Information overload (also known as infobesity, infoxication, information anxiety, and information explosion) is the difficulty in understanding an issue and effectively making decisions when one has too much information about that issue. Infoglut refers specifically to masses of continuously increasing information, which are so poorly catalogued or organised (or not organised at all) that it


Data that is: Timely and accurate, specific and organised for a purpose, presented within a context that gives it meaning and relevance, and can lead to an increase in understanding and decrease in uncertainty. Information is valuable because it can affect behaviour, a decision, or an outcome. For example, if a manager is told his/her

Inheritance Tax

Inheritance tax is the tax imposed on the heirs of the estate upon the transfer of assets from the deceased person. Inheritance tax is also known as the estate tax. That is because the inheritance tax applies to anything of value, including real estate, jewellery, collectable items, and alike. The inheritance tax is also pertinent


An individual’s action that begins a process, often done without direct managerial influence. For example, an employee might take the initiative to come up with a new product or service that the company could offer.


The Family Law Act of 1996 regulates the two main types of injunctions which focus on domestic violence and the regulation of the family home and who should be living there. Non-molestation order This is an order that prevents one of the parties in a relationship from using or threatening violent behaviour against the other


to cause injuries or bodily harm to


The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Inside Day

An inside day is a day in which a stock’s price range falls inside the range of the previous day. In other words, an inside day occurs if a stock’s high is lower than the previous day’s high, and the stock’s low is higher than the previous day’s low. Technical analysts tend to believe that


An Insider is an individual who is purview to corporate information that has not been made public. Any material information not disclosed to the public is known as insider information. By this virtue, any member of company personnel with access to material non-public information may be deemed an insider. Thus, an example of an insider

Insider Information

Information gained by someone inside, or close to, a listed company which could confer a financial advantage if used to buy or sell shares. It is illegal for a person who is in possession of inside information to buy or sell shares on the basis of that information.

Insider Trading

Insider trading is illegal trading done by insiders on the basis of classified insider information. Insider trading prevention is regarded as a primary activity of securities regulatory authorities. This is particularly true of US financial markets. The basic purpose of an ideal securities market is the proper allocation of capital resources in an economy. It is expected that securities markets will


A state where an individual or organisation can no longer meet financial obligations with lender(s) when their debts come due.

Institutional Brokerage

An institutional brokerage is an investment brokerage house or brokerage firm which has institutions as its clients. An institutional brokerage always serves institutions and may or may not serve retail clients. A retail brokerage may, similar to an institutional brokerage, confine itself only to retail clients who are individual customers. An institution is any client

Institutional Economics

Institutional economics is a branch of economics, which hinges on the study of the role of man-made institutions on the economic behaviour of economic agents. Presently a discipline of mainstream economics has emerged by name of new institutional economics. This economic discipline concerns itself with the study of institutions in the reduction of transaction costs. Heterodox institutional

Institutional Investor

An organisation whose business includes regular investment in shares of companies, examples being an insurance company, a pension fund, a charity, an investment trust, a unit trust, a merchant bank.

Institutional Shares

Institutional shares are a class of shares made available by mutual funds only to institutional investors. The owners of institutional shares must, then by definition of institutional shares, be in the business of holding and investing money and are companies such as banks, pension funds, insurance companies and investment funds. Institutional shares tend to carry

Insurance Adjuster

Insurance adjusters work for insurance companies and are sent to review filed claims. There are different types of insurance adjusters such as medical and car insurance adjusters. The goal of the adjuster is to interview witnesses, review records, review police reports and talk to the claimant in order to determine who is at fault and

Insurance Agent

An insurance agent is an individual approved by the state to sell insurance products. An insurance agent is principally a sales professional also referred to as “producer”. An insurance agent is likely to sell one or a number of insurance products, such as life, property and casualty, health, disability, or long term care. Insurance policies

Insurance Broker

A person who acts as the liaison between the customer and the insurance company. The separating of a loss to a proportionate degree among two or more insurers that cover the same loss.

Insurance Claim

An insurance claim is an official request submitted to the insurance company demanding payment as per the terms of the policy. The terms of the insurance contract dictate the insurance claim amount. In many cases, before an insurance claim is processed, an investigation is conducted. This type of work is routinely performed by insurance claim

Insurance Examiner

An insurance examiner is a professional charged with inspecting and examining insurance companies on behalf of the state. An insurance examiner is assigned to review various facets of compliance with state insurance codes, as well as look at various other insurance company practices. Thus common duties of an insurance examiner comprise reviewing insurance company records,

Insurance Policy

An insurance policy is essentially a contract between the insurer and the insured. The primary purpose of any insurance policy is to reduce financial losses resulted from various accidents or death by redistributing the risk among large numbers of people, also known as risk pooling. Specifically, the insurer agrees to pay the insured a specified

Insurance Premium

An insurance premium is simply an amount of money paid for insurance coverage. An insurance premium is an intrinsic part of a contract between a policy holder and an insurance company. Thus, as long as the policyholder continues to make insurance premium payments, the insurer must guarantee adequate protection. Insurance premium may vary depending on

Insured Mortgage

An insured mortgage is a mortgage with an insurance policy that insures the lender against the default of the borrower. In the US, the insured mortgage is generally for residential property. In lieu of having an insured mortgage, the lender will usually demand a more exacting appraisal, a higher LTV, and other measures for these


Without shape or form, cannot be touched.


Adherence to a set of professional values, where a person (or corporation) tells the truth, keeps their promises, and treats others fairly.

Intellectual Property

Creative works such as designs, logos, slogans, music, writing, and ideas that have commercial value.


Intention is the purpose or design with which an act is done.  It is the fore-knowledge of the act, coupled with the desire to do it, such fore-knowledge and desire being the cause of the act.  Intention may not necessarily involve expectation.  Intention is the foresight of a desired issue, however improbable, and not eh

Intentional Infliction Of Emotional Distress

Intentional infliction of emotional distress can rise to the level of a tort if the defendant acted in a reckless or intentional manner, their behaviour was outrageous and extreme, and their conduct is the proximate cause of the plaintiff’s emotional distress. To prove a personal injury claim for intentional infliction of emotional distress you will

Inter-Connected Stock Exchange

The Inter-Connected Stock Exchange is a major stock exchange of India. It provides a number of useful services to its members like trading, risk management, clearing, surveillance, and settlement for example. There are 841 trading members of Inter-connected Stock Exchange of India and they are present at 131 cities of 25 states in India. There

Interbank Market

The interbank market refers to the market where banks make loans to each other. A bank in need of additional funds to meet its liquidity requirements, for example, will take out a loan from another bank in the interbank market. On the flip side, a bank with excess funds can participate in the interbank market


A term used to describe activities that are conducted between two or more business units and/or affiliates of the same parent company.

Interest (On Loans)

The percentage return on capital required by the lender (usually expressed as a percentage per annum).

Interest Deduction

An interest deduction is any deduction of interest payments that one can take on one’s IRS 1040 form as a way to lower one’s taxable income for the year. Not any interest payment qualifies as an interest deduction. Some examples of the qualifying interest deduction are interest paid on home mortgages, student loans, and various

Interest-Only Loan

An interest-only loan is any loan that is non-amortizing, at least initially, meaning that payments cover only interest, not a principal reduction. The most common type of interest-only loan is an interest-only mortgage. An interest-only loan makes sense for some home buyers, but not others. A good candidate for an interest-only loan is the commission-only

Interim Reports

Financial statements issued in the period between annual reports, usually half-yearly or quarterly.


A notation made between the lines, especially in a handwritten document.

Internal Reporting

Reporting financial information to those users inside a business, at various levels of management, at a level of detail appropriate to the recipient.

Internal Revenue Service

The Internal Revenue Service is the branch of the US federal government that is charged with the assessment and collection of taxes. The Internal Revenue Service performs a number of closely related functions, such as the resolution of tax disputes, taxpayer return preparation assistance, and publication of extensive statistics. The Internal Revenue Service needs over

International Fund

An international fund is a mutual fund that invests in stocks and/or bonds of foreign companies. Some invest in only one country or region of the world, while others are not limited. Investors choose an international fund largely because of the potential for the growth of foreign markets. Growth in areas such as Latin America

International Trade

International trade is defined as trade between two or more partners from different countries (an exporter and an importer). Early international trade consisted mostly of barter transactions. International trade is also a branch of economics. Traditionally, international trade is justified in economics by comparative advantage theory. New developments include in patterns of international trade: the


A written question which is formally put to one party in a case by another party and which must be answered.

Intraday Intensity Index

A volume based indicator that depicts the flow of funds for a security according to where it closes in its high and low range.


Intrapreneurship involves creating or discovering new ideas or opportunities for the purpose of creating value, where this activity involves creating a new and self-financing organisation within or under the auspices of an existing company. An intrapreneur is a person who practises intrapreneurship. According to this definition, a corporate manager who starts a new initiative for

Intrinsic Value

The actual value of a security, as opposed to its market or book value, is the intrinsic value of the security. Intrinsic value may differ from market value because of brand names, patents and other intangibles that are difficult for investors to quantify. There are various approaches but no standard formula for calculating the intrinsic


Stocks of goods held for manufacture or for resale.

Inverse Head And Shoulders

An inverse head and shoulders is a technical analysis charting pattern that signals the reversal of a downtrend — it’s a bullish reversal signal. Three valleys, with the middle valley being the lowest, and two peaks that touch a resistance level characterize an inverse head and shoulders pattern. This resistance level of the head and

Inverse Relationship

An Inverse relationship refers to a type of correlation that exists between two different numbers. In the instance of an inverse relationship when one number has a value that rises, then the other will correspondingly fall in the value of the first number.

Inverted Hammer

The bullish Inverted Hammer candlestick is a one-day bullish reversal pattern. In a downtrend, the open is lower, then it trades higher, but closes near its open, therefore looking like an inverted lollipop. Note that in an uptrend, the same pattern is called a Shooting Star. In a market characterized by a downtrend, bulls are able to rally

Inverted Yield Curve

An inverted yield curve is one where the most long-term rate is not the highest. A completely inverted yield curve has the short-term rate highest; a humped or partially inverted yield curve has some intermediate rate highest. The term inverted yield curve can mean either case. Since the 1960s the inverted yield curve has been


The act of investing; laying out money or capital in an enterprise with the expectation of profit.

Investing Activities

The acquisition and disposal of long-term assets and other investments not included in cash equivalents.


In finance and business, an investment is an asset purchased for profit, whether via income, or capital appreciation, or some combination. The entity making the investment is an investor. The opposite of making an investment, or selling the asset, is divestment. Investment has a connotation of a long-term holding period, in contrast to speculation, which is the purchase of assets seeking profit from short-term price movements. In practice, no precise definition distinguishes between investment and speculation. The expected return on investment, or expected ROI, is a measure of the attractiveness of an investment, whether anticipated or realized. In economics, investment represents capital expenditure by companies in an economy or economic model. In this context, investment is distinct from consumer expenditure, government expenditure, and net exports.

Investment Adviser

An investment adviser is someone who recommends the best ways in which to invest capital. An investment adviser may work closely with an investor, or an investment adviser may publish an investor adviser newsletter in which the same investment advice is given to multiple investors. If an investment adviser is associated with the brokerage house

Investment Bank

An investment bank is an institution that performs a variety of financial services for corporations, individuals, and the government. The primary function of an investment bank is to raise capital for growing companies and the government by issuing equity and debt securities. In essence, the role of an investment bank is to operate as an agent between companies in need of funding and the public markets. The chief difference between an investment bank and retail bank is that an investment bank does not accept deposits or originate loans. An investment bank also offers advisory and strategic services related to mergers, acquisitions, and corporate restructuring. Today, a typical investment bank may offer risk management and broker-dealer services as well. An investment bank is also known as an underwriter.

Investment Club

An investment club is a membership organization for investors. A typical investment club is usually oriented toward helping beginning investors gain knowledge and experience. The investment club is often focused on a particular asset class, such as stocks or real estate. Investment club members share resources, investment ideas, and other knowledge of interest. The leaders

Investment Company

An investment company is a firm whose business is to invest in securities. An investment company is also known as a mutual fund, investment fund, or investment trust. An investment company pools together funds from individual investors and purchases securities, according to the investment objectives stated in its charter. To take part in the investment

Investment Newsletter

An investment newsletter is a publication designed to help investors make informed investment decisions. An investment newsletter can be a hard-copy publication, a faxed publication, or, as is more common today, an investment newsletter is emailed or made available online. In the majority of cases, an investment newsletter is designed to help an investor profit

Investment Philosophy

An investment philosophy is a general approach that directs the decisions related to the investing of capital. An investment philosophy embodies a certain style or a set of core principles undertaken by an investor. Choosing an investment philosophy is an important task. An investment philosophy may be indicative of various personal and professional attributes. Thus

Investment Property

Real property owned by an entity for other than its own use is an investment property. In other words, investment property is real estate held for portfolio purposes. Significant features of the US tax code make investment property a tax-advantaged asset class. Most notably, under the IRS section 1031 exchange provisions, the taxable gain on

Investment Return

Investment return is the change in value of the investment over a given period of time and is normally expressed as a per cent. For example, “the stock in IBM had an investment return of 5% for the year”. Investment return is measured in many different ways for different purposes. After-tax investment return is a

Investment Strategy

An investment strategy is an investment approach taken to effectively allocate funds and assets for the purpose of reaching optimal returns. A given investment strategy can utilize a number of investment instruments. An investment strategy may encompass real estate, stocks, bonds, commodities, as well as cash and currency. When outlining an investment strategy, individual investors

Investment Theory

As per investment theory, investment is an alteration in capital stock during a certain period. Investment theory also states that investment is a flow term unlike capital, which is a stock term. This implies that capital is calculated taking into account only a certain point of time, but the investment is calculated over a long period of time.

Investor Sentiment

Investor sentiment is a general term that provides an indication of how investors are positioned in the market. Interpretation of Investor sentiment The predictive capability of investor sentiment is thought to be highest when extreme values are reached.  For example, when a high proportion of investors express a bearish (negative) sentiment, some analysts consider it to be


Persons or organisations which have provided money to a business in exchange for a share of ownership.

Invisible Hand

Adam Smith coined the phrase invisible hand in his 1776 magnum opus, The Wealth of Nations. Usually stated more fully as the invisible hand of self-interest, the phrase was a way to describe an important idea. Smith argued that in the capitalist system an invisible hand, self-interest, leads market participants to produce the goods and


An itemized bill for services rendered or products ordered. Also used as a verb to describe the act of billing.

Inward Investment

Inward investment is referred to as inoculation of money from any external sources. The main purpose of such an inoculation is to promote any company product or purchase any capital good. This process is familiar with any kind of branch of a corporation in order to establish or expand its existence in a province. Here external sources can be transnational corporations


IPO is an acronym for Initial Public Offering. An IPO is the first sale of shares in a company to the public. Once an IPO occurs, a company will be listed on a major stock exchange, and shares will begin to trade immediately. The IPO market goes in cycles depending upon the appetite of investors

IRA Rollover

An IRA rollover is a lump-sum distribution deposited from an existing retirement plan into an individual retirement account. The existing retirement plan is frequently a 401k, but it may be any other type of plan. To be eligible for tax-deferral, an IRA rollover must meet certain requirements: 1) the IRA rollover funds must be placed


A form of contractual agreement that cannot be altered, withdrawn or terminated. The irrevocable nature of the commitment allows each party to advance under certain assumptions. The opposite of revocable.

Irrevocable Trust

An irrevocable trust is a trust that once established, cannot be revoked, terminated, or changed in any way. This means that upon transferring assets into an irrevocable trust, the grantor can reserve no right to amend or abolish irrevocable trust proceeds. Furthermore, the grantor of an irrevocable trust is not permitted to make withdrawals from

IS/LM Curve

The IS/LM curve is a graphical model which explains the relationship between the interest rate and income or output. It is a Keynesian construct. It is also known as the Hicks-Hansen IS-LM Model. It establishes much of the foundations for modern macroeconomics. The IS/LM model takes into consideration the various economic players in a market: producers, consumers, and government. It then reconciles

Island Reversal

An occurrence in technical analysis where a stock price will gap up/down, trade higher than this price, and then gap down/up below the initial price.

Itemized Deduction

An itemized deduction is a deduction listed separately against a taxpayer’s adjusted gross income on his tax return. An itemized deduction allows the taxpayer to reduce his taxable income when he purchases an item or service that qualifies for a deduction. The effect of an itemized deduction is to reduce the amount of income on

Accounting Terms Beginning With "J"

J Curve

J curve refers to the shape of a graph used in the fields of macroeconomics and finance to illustrate a turnaround. In macroeconomics, the J curve is typically used to show how the depreciation of a country’s currency tends to impact such a country’s trade deficit. First, the depreciation has a negative impact on the

J. M. Keynes

J. M. Keynes is a notable figure in the world of economics. Twentieth-century economics had seen a revolution with a major contribution from John Maynard Keynes. He has made a significant contribution to the subject of economics. Today he finds a significant place in the economists’ Hall of Fame. Quick Past Of J. M. Keynes Born on

January Barometer

The January Barometer is a theory that states that if the S&P 500 is up in the month of January, the stock market will be up for the remainder of the year as well. In other words, the January Barometer uses the first month of the year as a forecasting tool for the entire year.

Japan Inc.

Japan Inc. is a term that emphasizes Japan’s traditional, highly centralized economic system. A primary feature of Japan Inc. was the key role of Japan’s MITI, which guided Japan’s development in the postwar years. Another major characteristic of Japan Inc. were the keiretsu that accounted for the overwhelming share of Japanese economic activity. The term

Japanese Candlesticks

Japanese Candlesticks first appeared in the mid-1850s, based on charting methods developed in the 1700s by a legendary Japanese rice trader named Homma.  It is likely this was the first application of technical analysis.  While this early version of technical analysis was different from the US version initiated by Charles Dow around 1900, many of the

Jarrow Turnbull Model

The Jarrow Turnbull Model is a model used to analyze credit pricing through the examination of interest rates. The Jarrow Turnbull Model uses multi-factor and dynamic interest rates analysis and incorporates correlations between interest and default rates. It follows that the Jarrow Turnbull Model attempts to identify a pattern between the fluctuations in these interest

Jekyll And Hyde

The term “Jekyll and Hyde” is a metaphor for internal conflict, instability, deception, or multiple identities. Derived from the Robert Louis Stevenson novel “Strange Case of Dr Jekyll and Mr Hyde,” Jekyll and Hyde is used as either an adjective or a noun. In the world of finance, Jekyll and Hyde can describe a variety

Jennifer Lopez – J. Lo

Jennifer Lopez – J. Lo is a slang term used in technical analysis for a particular pattern of movement in a stock price. In a Jennifer Lopez – J. Lo, the stock price drops in a smooth arc before rising again; in other words, a rounding bottom. The term Jennifer Lopez – J. Lo was

Jensen Index

The Jensen index is an index that compares the performance of investment managers by allowing for portfolio risk. The Jensen index uses the capital asset pricing model (CAPM) as its basis for determining whether or not a money manager outperformed a market index. The CAPM determines the required rate of return, and the Jensen index


JIC, which stands for “just in case,” is a strategy used in inventory management. With the JIC strategy, companies seek to remove or reduce the chance that products will sell out and thus leave inventory empty. Instead of producing products after orders have come in, which is the JIT (just in time) strategy, the JIC


JIT, or “just in time,” is a strategy used in inventory management. With the JIT strategy, companies aim to decrease waste and inventory costs by receiving goods only when they are needed to produce products. JIT inventory management thus increases efficiency and is used by companies that prefer to keep low inventory levels. JIT is


A jitney is a fraudulent investment practice in which two investors or two brokers trade shares of a security back and forth to give others a false impression of high trading activity. The effect of a jitney is that the price of the security will rise. Brokers may practice a jitney for the sake of


JMD is the three-character currency abbreviation for the Jamaican Dollar based on the ISO-4217 standard codes. JMD is the official currency of Jamaica. The common usage symbol for the JMD is J$. The Bank of Jamaica is the government institution that issues the JMD. The JMD divides into smaller units known as Jamaican cents. The

Job And Growth Tax Relief Act Of 2003

The Job and Growth Tax Relief Act of 2003 was a US tax relief package introduced by the Bush administration to stimulate economic growth. Key provisions of the Job and Growth Tax Relief Act of 2003 reduced maximum tax rates on dividends and capital gains to 15 per cent through 2008. The Job and Growth

Job Hunting Expenses

Job-hunting expenses (expenses incurred in finding a new job) are often tax-deductible. Several conditions must be met for job-hunting expenses to be deductible. First, the new job must be in the same field as the last job. Second, job-hunting expenses aren’t deductible if there is a lengthy break between leaving the last job and beginning

Job Lot

A job lot refers to a particular contract that deals with smaller trading units than those outlined in a regular contract. This helps to create a market where smaller investors can participate along with the larger traders. A job lot is most commonly associated with the trading of commodity futures. A job lot should not

Job Openings And Labor Turnover Survey

The Job Openings and Labor Turnover Survey is a government report on US employment conditions. Although less well known than the Employment Situation release, the Job Openings and Labor Turnover Survey provides data useful for business cycle analysis and economic planning. Each month the Bureau of Labor Statistics collects data from 16,000 nonagricultural establishments to

Job Specialisation

The process of focusing one’s occupational concentration on a specific area of expertise. An increase in job specialisation among employees can make them less flexible since it tends to reduce their ability to perform other types of work within the business that fall outside their particular speciality.

Jobs Growth

Jobs growth is the number of jobs added to the U.S. economy each month. Jobs growth is based on the number of payroll jobs as reported by the Bureau of Labor Statistics’s (BLS) establishment survey, also known as the payroll survey. Strong jobs growth (of, say, 200,000 jobs) is an indication of healthy labour markets


JOD is the three-character currency abbreviation for the Jordanian Dinar based on the ISO-4217 standard codes. JOD is the official currency of the Hashemite Kingdom of Jordan. The common usage symbol for the JOD is JD. The Central Bank of Jordan is the government institution that issues the JOD. The JOD divides into smaller units


Joint is a term that refers to two things being connected and is commonly used in the financial world. Joint ownership describes the ownership by two of more parties. Similarly, joint tenancy is a form of joint ownership where two or more parties or individuals share equal rights in and control of a property. Joint

Joint Account

A joint account is opened by two or more owners. The advantage of a joint account is that each owner is able to invest, deposit or withdraw money individually. If one of the owners of a joint account is a minor, that person is allowed independent transactions only after attaining the age of maturity. Another

Joint And Several Liability

A legal expression meaning all people jointly are liable and/or each person individually is liable for repayment of a debt or obligation. Thus, each individual who signed the obligation could be required to repay the entire obligation.

Joint And Several Liability (In A Partnership)

The partnership liabilities are shared jointly but each person is responsible for the whole of the partnership.

Joint And Survivor Annuity

A joint and survivor annuity is a type of insurance policy taken out on two or more people. Unlike many other annuities, a joint and survivor annuity makes payments to all surviving beneficiaries even if one of the original beneficiaries should die. Since a joint and survivor annuity makes payments to all beneficiaries until the

Joint Bond

Joint bond, or a “joint-and-several bond” is a bond guaranteed by the issuer and another party. A joint bond is most often used by a subsidiary to gain access to a parent company guarantee on a bond. For example, if Tractorco’s software subsidiary wanted to issue a bond but did not have enough revenue, they

Joint Life Annuity

A joint-life annuity is an insurance policy or contract that pays a predetermined periodic benefit throughout the joint lifetime of two individuals. Typically, a joint-life annuity is relevant to married couples, with the joint-life annuity terminating upon the first death. Retirees often purchase joint-life annuity policies to help them better budget their money and savings

Joint Mortgage

A joint mortgage is simply a mortgage with more than one mortgagor. The person with the highest income is typically considered the primary borrower in a joint mortgage, though both (or all) of the mortgagors are equally liable for the debt on the property, even if someone moves out. How much you can borrow with

Joint Return

A joint return is an IRS tax return that is filed by both members of a married couple. In a joint return, income and deductions are combined, and the standard deduction is twice that of an individual. With a joint return, only one return is filed. To be eligible to file a joint return, the

Joint Stock Company

A joint-stock company is a unique entity that resembles a corporation and a partnership, having features of both. Like a corporation, a joint-stock company is made up of shareholders. Under the umbrella of a joint-stock company, all shareholders have unlimited liability, yet the company’s stock is fully transferable. The capital of a joint-stock company is

Joint Supply

Joint supply can be referred to as any product that can produce more than one thing at a time. One simple example can be a cow, which not only produces milk, but several goods can be made from its skin. If in an economy such thing happens that farmers start increasing their number of cows, in response to an increase in demand of

Joint Tax Return

A joint tax return is one tax return filed by a married couple on which the couple’s income and deductions are reported together (neither spouse files his/her own tax return in the case of a joint tax return). A joint tax return is the type filed when a couple is filing under the status married

Joint Tenancy With Right Of Survivorship

In a joint tenancy with right of survivorship, each party owns an ‘undivided interest’ in the account. If one party of a joint tenancy with right of survivorship should perish, the other becomes the sole owner. This joint tenancy with right of survivorship transfer avoids probate but estate taxes may apply depending on the total

Joint Tenants In Common

Joint tenants in common is a way for two or more people to share ownership of real or personal property. The main difference between property held as joint tenants in common and property held as joint tenants with right of survivorship (or JTWROS) is the treatment of that property upon the death of one of

Joint Venture

A partnership between two or more business entities who agree to share the investment, liability, and profit in a specific project.

Joint Will

A joint will is a type of legal agreement, in which property is distributed according to a will without the right to survivorship. According to a joint will agreement, the distribution of assets is predetermined by a joint will regardless of who dies first. A joint will is common among married couples, though legally a


JOLTS is the Job Openings and Labor Turnover Survey produced by the U.S. Bureau of Labor Statistics. Although less well known than the so-called unemployment report, JOLTS provides useful information about the state of U.S. labor markets. Since its introduction in 2001-2002, JOLTS has helped economists and business planners gauge the availability of unfilled jobs.

Jonestown Defense

Jonestown defense refers to an extreme defensive tactic used by a company desperately avoiding a hostile takeover. The management of the target corporation will employ the Jonestown defense though strategies that are so extreme, they may even result in the destruction of the target company. A company employing the Jonestown defense is so concerned with

Joseph Effect

The idea that movements in a time series tend to be part of larger trends and cycles more often than they are completely random. The Joseph Effect is quantified by the Hurst component, where movements fall between a Hurst range of 0 to 1. The term was coined by Benoit Mandelbrot.


A journal is used to enter business transactions into an accounting system. Traditionally, a typical journal entry includes the date of the transaction, the name(s) of the account(s) affected, the amounts to be debited and credited, and the reason for the transaction. In a very small company, a single journal, called the general journal, may


Journalising is the act of recording the debit and credit aspects of a business transaction in a journal, alongside an explanation of the transaction (known as Narration).


JPY is the three-character currency abbreviation for the Japanese Yen based on the ISO-4217 standard codes. JPY is the official currency of Japan. The common usage symbol for the JPY is ¥. The Bank of Japan or the NIPPON GINKO is the government institution that issues the JPY. The JPY does not divide into smaller


JTWROS, an acronym meaning joint tenants with right of survivorship, is a legal way to hold real property in which two or more people share ownership. All tenants have equal rights to the property. When property is held in JTWROS and one of the joint tenants dies the ownership of the property passes directly to


a public official authorized to decide questions brought before a court of justice

Judgement Lien

A judgement lien is a court-ordered lien on a debtor’s property, granted to a creditor to compensate for unpaid debts. A judgement lien typically arises after a lawsuit: a plaintiff who is awarded a monetary amount becomes a “creditor,” and the defendant who must pay that amount becomes the “debtor.” The judgement of this monetary


A judgment is the verdict in a civil case. The judge writes the judgment, and it specifies the awards and compensation given by the responsible party to the injured party. Judgments are remunerative and punitive. If the responsible party fails to pay the compensation outlined in the judgment they may have their wages garnished and

Judgment Notwithstanding The Verdict

A judgment notwithstanding the verdict is a rare motion which is used to ask the judge for a judgment which is contrary to the jury’s verdict because the jury’s verdict is deemed unreasonable. This judgment is made after the court decides no reasonable jury could reach the verdict the jury reached. This can occur if

Judicial Foreclosure

A judicial foreclosure occurs when a lender involves the courts to get a foreclosure on a mortgage or deed of trust. Following a judicial foreclosure is the forced sale or auction of the property so that the debt may be repaid. A judicial foreclosure occurs in lieu of a power of sale: if the deed

Judicial Review

Judicial review is the process where the courts can review the actions of other branches of the Federal Government and declare their actions unconstitutional. Examples of issues which can be reviewed include laws, treaties, policies or executive orders relevant to cases before the court. The Supreme Court of the United States spends much, if not

Jumbo CD

A jumbo CD, or certificate of deposit, is a CD having a minimum denomination of $100,000. Individuals and institutions alike can use the CD as a low-risk way to earn interest income. The depository institution may offer a better rate for the jumbo CD than it does for a standard CD for the same term,

Jumbo Loan

A jumbo loan is a mortgage with a principal balance that exceeds the lending limitations established by Freddie Mac and Fannie Mae, the purchasers and guarantors of the secondary mortgage market. The cutoff principal amount above which any loan is considered a jumbo loan is set each year. The jumbo loan is often called a


Junior is a term that signifies that which is younger or lower in rank or position and is commonly used in the financial world. A junior is subordinate to all other claims, rights or interests. Junior is usually the opposite of senior. A junior lien or junior mortgage, for instance, is one that takes a

Junior Capital Pool

A junior capital pool (JCP) is a type of corporate structure which allows a company to issue stock to the public without specifying how the funds will be used. The purpose of a junior capital pool is to provide an easy way for start-up companies to raise capital from the public. Under a junior capital

Junior Debt

Junior debt is a debt (such as a bond) that is lower in repayment priority than other debts in the event of the issuer’s default. Junior debt is usually unsecured, meaning that there is no collateral behind it. In the event that the issuing company goes out of business, the junior debt will likely not

Junior Equity

Junior equity is equity that ranks lower than some other equity; more specifically, junior equity is called common stock. Junior equity is called “junior” for any of several purposes. Junior equity ranks behind preferred stock in its claim on company dividends; the latter are promised and guaranteed, while the former depends on either the profits

Junior Mortgage

A junior mortgage is a mortgage that is subordinated to some other mortgage or lien. Subordinated debt such as a junior mortgage is paid after unsubordinated, or senior, debt. The junior mortgage is sometimes called a second mortgage. The senior mortgage is called the first mortgage. It is possible for a property to have more

Junior Refunding

Junior refunding refers to a refinancing of government or corporate debt. In a junior refunding the holders of bonds that are maturing in less than five years exchange those bonds for longer-term bonds. By exchanging short-term bonds for longer-term bonds, a junior refunding allows the government or corporation to postpone making principal payments on the

Junior Security

A junior security is a security that ranks below other securities in terms of its claim on a company’s assets or income. In other words, “junior security” is a term used to rank securities’ claim to repayment. If a company goes out of business, the assets and income are distributed according to securities’ rankings, with

Junk Bond

A junk bond is any bond that is rated below investment grade (BB or lower) by Moody’s or Standard & Poor’s due to the high risk of default. A junk bond is also referred to as a high yield bond. Prior to 1977, every junk bond was a previously investment-grade bond for a company that


(law) the right and power to interpret and apply the law


Jurisprudence is derived from a Latin phrase, juris prudentia, meaning “knowledge of the law.” It is the study of law including legal philosophy and science. Under this definition, there are numerous branches which study whether laws should or should not exist and the appropriate penalties for violating the law. Legal scholars and those wishing to


a body of citizens sworn to give a true verdict according to the evidence presented in a court of law

Just In Case

Just-in-case or JIC is an inventory management strategy where companies hold large amounts of inventory on hand. Just-in-case is used to try to minimize the possibility that a product will run out of stock. Historical usage is one approach used in just-in-case inventory management. A company that uses just-in-case typically incurs high costs for holding

Just Title

Just title is any title that is free of claims or legal questions by someone else. Such claims can take the form of liens by the IRS, a bank, or a guarantor. Just title is also called “clear title,” “good title,” “perfect title,” and “free and clear.” A property with just title is considered marketable


Just-in-time is an inventory system where raw materials are delivered right before they are needed on the assembly line, and finished goods are manufactured just before they are shipped to customers. Just-in-time improves return on investment by substantially reducing overhead cost, limiting quality inspections, and eliminating obsolete inventory. Just-in-time does generate substantial risk, however: under

Accounting Terms Beginning With "K"

Kagi Chart

Kagi Chart is a type of chart developed by the Japanese in the 1870s. A Kagi Chart uses a series of vertical lines to illustrate general levels of supply and demand for certain assets. Thick lines are drawn when the price of the underlying asset breaks above the previous high price and is interpreted as an increase in demand


Kangaroos are Australian stocks. They are so-named because of the famous jumping mammal that lives Down Under. More specifically, kangaroos are the stocks on the All Ordinaries index, which includes more than 300 of the largest and/or most active companies on the Australian Stock Exchange. The capitalization of kangaroos on the All Ordinaries index makes

Keepwell Agreement

A keepwell agreement is a contract between a parent company and one of its subsidiaries which guarantees that the parent company will provide all necessary financing to the subsidiary for a pre-determined period of time. The idea behind a keepwell agreement is to make the subsidiary company appear more creditworthy in the eyes of banks


A set of Japanese companies with interlocking business relationships and shareholdings.

Keltner Channel

The Keltner channel is a market analysis indicator that measures the movement of stocks in relation to a central moving average line, as well as upper and lower channel lines. The Keltner channel indicator is primarily used by savvy investors to predict market trends. There are two bands on a Keltner channel, which are drawn

Keogh Plan

A Keogh plan is a retirement plan for self-employed individuals and unincorporated businesses, and their employees. A Keogh plan is a qualified retirement plan, meaning that it qualifies for tax benefits–in the case of the Keogh plan, tax deferral until age 59½. The individual is required to take distributions from the Keogh plan at age


KES is the three-character currency abbreviation for the Kenya Shilling based on the ISO-4217 standard codes. KES is the official currency of the Republic of Kenya. The Kenyan shilling replaced the East African shilling in 1966. The Central Bank of Kenya is the government institution that issues the KES. The KES divides into smaller units

Key Performance Indicators

Quantified measures of factors that help to measure the performance of the business effectively.

Key Person Insurance

Key person insurance, also known as key man life insurance, key woman life insurance, and business life insurance, is a life insurance policy purchased by a company on the life of an employee. A company usually buys key person insurance on those employees whose death could have significant adverse effects on company business. The concept

Key Rate Duration

Key rate duration measures portfolio sensitivity or security sensitivity. Key rate duration is the sensitivity of a portfolio’s (or security’s) value in relation to a 1% change in yield for a given maturity. Duration is the value of a 1% change (100 basis points) in yield for a given maturity. Key rate duration is a

Keynesian Economics

Of, or pertaining to an economic theory based on the ideas of John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money, published in 1936 in response to the Great Depression of the 1930s, and extensively extended by a large body of followers before and after his death in 1946.


KHR is the three-character currency abbreviation for the Cambodian Riel based on the ISO-4217 standard codes. KHR is the official currency of the Kingdom of Cambodia. The National Bank of Cambodia is the government institution that issues the KHR. The KHR divides into smaller units called sen. One hundred sen make one Cambodian Riel. The


A commercial bribe paid by a seller to a purchasing agent in order to induce the agent to enter into the transaction.


Generically, a kicker is a condition that causes some kind of increase or augmentation. In investing, kicker is most often used in terms of an equity kicker for some form of debt. Debt without an equity kicker does offer investors the advantage of guaranteed payments, but no opportunity to participate in the success of the

Kicking The Tires

Kicking the Tires is a slang term referring to the research an investor will perform before making an investment. Kicking the Tires typically involves grassroots research such as calling and visiting the company at hand. Kicking the Tires can also involve questioning a financial broker or advisor about the company and engaging in other similar

Kiddie Tax

A special tax on the investment gains and unearned income of minor children is popularly known as the kiddie tax. The kiddie tax was adopted to close a loophole in the tax law that allowed the shifting of income-earning assets to minor children to avoid tax liability. The kiddie tax rule allows $750 of investment


A kill is defined as a cancellation of an order that has already been placed but not yet executed. This term is typically associated with a “fill or kill” command, which is an order given to a broker that requires immediate action or it must be cancelled, a kill. A fill or kill order is

Killer Application

The classic example of a killer application is VisiCalc, a spreadsheet program that became very popular among financial analysts in the early 1980s, thus creating an enormous demand for the Apple II computer on which it ran. In this traditional sense, a killer application is a computer program that is so useful and compelling that

Killer Bee

A killer bee is a party who helps a company avoid a hostile takeover by another company. A killer bee is usually an investment banker. The killer bee devises strategies to make the company less attractive or much more difficult to acquire. Often, the killer bee will revise the company’s charter; in so doing, the


Kiting, or “floating,” is a banking term that refers the illegal practice of drawing and depositing two checks at two separate banks in hopes of taking advantage of the time it takes for the checks to clear. This means that there is a time period in kiting where the bank that cashed the check doesn’t


The process in which individually separate but related items are grouped, packaged and supplied together as one unit. For example, in ordering a PC online, a customer may select memory, drives, peripherals, and software from several alternatives. The supplier then creates a customised kit that is assembled and shipped as one unit.


The Kiwi is the common term used for the New Zealand Dollar. It derives its name from New Zealand’s national icon, a flightless bird called a kiwi, which is pictured on one side of the country’s $1 coin. The Kiwi is the official currency of New Zealand and is used also in the Cook Islands,


A corrupt and dishonest government characterised by greed.

Klinger Oscillator

The Klinger Oscillator is a market analysis indicator that that measures trends of money flows based on volume. Three types of data are derived from the Klinger Oscillator: the high/low price range, volume and accumulation/distribution. The Klinger Oscillator can pinpoint short-term fluctuations, yet is accurate enough to track the long-term flow of money moving in


KMF is the three-character currency abbreviation for the Comoros Franc based on the ISO-4217 standard codes. KMF is the official currency of the Union of the Comoros. The common usage symbol for the KMF is CF. The Banque Centrale des Comores is the government institution that issues the KMF. The KMF divides into smaller units

Knock-In Option

A knock-in option or “trigger” option is a type of barrier option that is latent and only begins to function as a normal option once a certain price level is reached before expiration. A knock-in option might not knock in at all. A knock-in option is typically a currency or commodity option. For a knock-in

Know Your Client

Know your client, or “KYC”, are the ethical and practise guidelines for investment advisors to make detailed assessments about their clients’ risk tolerance. Know your client rules are also called suitability rules because they are concerned with the suitability of securities investment for each specific customer. Similar to KYC for brokers, know your client for

Know Your Customer

Know your customer, or “KYC” refers to guidelines of securities regulators that require each broker to know your customer. Know your customer rules are also called suitability rules because they are concerned with the suitability of securities investment for each specific customer. Know your customer rules make it unethical and against regulations for brokers to

Knowledge-Based Economy

A knowledge-based economy is one that relies on information and intellectual power as opposed to labour and physical production. A Knowledge-based economy is an economy established on producing, appraising, and dealing of knowledge. In a knowledge-based economy, orthodox economic concepts like economies of scale and scarcity of resources do not apply. Labour costs also noticeably decrease. Knowledge is regarded

Kondratiev Wave

Russian economist Nikolai Kondratiev theorized that capitalist economies move in a large cycle he called a Kondratiev wave. Each Kondratiev Wave lasts 50 to 60 years. A Kondratiev wave consists of a period of strong growth followed by slowing growth. Kondratiev wave theory is based on 19th-century price data that also included wages, interest rates

Korean Composite Stock Price Indexes

The Korean Composite Stock Price Indexes refers to several indicators that measure the performance of Korean stocks. As Korea has become a global economic power over the past 25 years, the Korean Composite Stock Price Indexes have achieved greater recognition among investors. The most commonly quoted of the Korean Composite Stock Price Indexes is the


KOSPI is the Korea Composite Stock Price Index (or Indexes). As such, KOSPI refers to a variety of indicators that are used to measure the performance of stocks on the Korea Stock Exchange (KSE). The KOSPI itself is best known and refers to a weighted (by capitalization) index of about 700 Korean equities. From its


In currencies, KPW is the abbreviation for the North Korean Won. The KPW is issued by the Central Bank of the Democratic People’s Republic of Korea. KPW is a derivative or cognate of the Chinese yuan and Japanese yen. In 1945, the KPW became the currency of North Korea replacing the Korean yen. KPW bills


A krugerrand is a gold coin minted by the Republic of South Africa. A krugerrand contains one ounce of twenty-two-carat gold. It is legal tender and is valued at the current market price of gold. The krugerrand is named after Paul Kruger, an early president of South Africa, and was first sold in 1967. The


KRW is the three-character currency abbreviation for the South Korean Won based on the ISO-4217 standard codes. KRW is the official currency of the Republic of Korea. The common usage symbol for the KRW is W or W. The Bank of Korea is the government institution that issues the KRW. The KRW does not divide


The sharpness of the peak of a frequency-distribution curve. In probability theory and statistics, kurtosis is a measure of the “tailedness” of the probability distribution of a real-valued random variable.

Accounting Terms Beginning With "L"

Labour Economics

Labour economics studies economic principles, drivers, and trends in the labor market. This includes employment, unemployment, recessions, and depressions. Labour economics is the branch of economics that seeks to understand the economic conduct of employees and employers with respect to varying profits, wages, working conditions, and prices. The subject of labour economics includes elements of politics, society,

Labour Force

In macroeconomic statistics, the labour force is the sum of all employed and unemployed adults. The Bureau of Labor Statistics estimates the approximate size of the labour force regularly. Each individual age 16 or above is categorized as being employed, unemployed, or not in the labour force, according to current and recent guidelines. The most

Labour Relations

Labour relations can refer broadly to any dealings between management and workers about employment conditions. Most commonly, however, labour relations refers to dealings between management and a workforce that is already unionized or has the potential to become unionized. Labour relations is thus crucial to industries like autos and airlines with heavily unionized workforces. In

Laffer Curve

The Laffer Curve is a mathematical shape that shows the relationship between tax rates and the revenue governments collect from those taxes. The Laffer Curve is shaped like an upside-down U. The Laffer Curve is not fixed, however. The Laffer Curve shows that as tax rates rise, tax revenues increase. They reach a critical high

Lagging Indicator

A lagging indicator is an economic statistic that changes after macroeconomic conditions have already changed. The lagging indicator is contrasted with the coincident indicator which changes with economic conditions, and the leading indicator, which changes in advance of expected economic trends. Statistical time series analysis is used to categorize a macroeconomic variable as a lagging


Literally, laissez-faire is French for “let it be.” More usefully, laissez-faire is a philosophy that favours the government keeping its hands off the economy. In other words, supporters of laissez-faire believe only free market forces should determine prices, production, wages, and other key elements of the economy. At the opposing pole of laissez-faire economics are

Land Value Tax

Land Value Taxation (LVT) is the policy of raising state revenues by charging each landholder a portion of the assessed site-only value of the unimproved land. The tax is often said to be justified for economic reasons because if it is implemented properly, it should not distort market mechanisms or otherwise damage the economy the


The termination of an insurance policy due to the fact that a renewal premium is not paid by the conclusion of the grace period.


the act of taking something from someone unlawfully

Large Cap

Large-cap is short for large market capitalization, which typically defined as meaning publicly traded companies with a market capitalization of around $10 billion or more. This cutoff for large-cap companies changes over time and is not authoritatively defined. The purpose of the large-cap definition is to separate the very largest public companies from all others.

Large-Cap Stock

A large-cap stock is the stock of a company having a market capitalization over $10 billion (although the criteria for what makes a large-cap stock tends to vary). Large-cap stock is often called blue-chip stock; it is the stock of the largest companies, such as IBM, Microsoft, and 3M. Large-cap stock tends not to have

Lasting Power Of Attorney

A Lasting Power of Attorney (LPA) is a legal document which gives somebody else the authority to take control of the financial affairs of another person or to make decisions regarding the health and welfare of that person if they do not have the capacity to do so themselves. So, essentially, it is giving somebody

Law Of Large Numbers

The law of large numbers is a law of probability theory. The mathematical definition of the law of large numbers is that a random sample approaches the expected value of the population as the sample grows. For example, flip a coin ten times and it might come up heads every time. The law of large

Law of One Price

The law of one price is an economic concept that states that the price of an identical asset or commodity will have the same price globally, regardless of location, when certain factors are considered.

Lead Investor

A lead investor is the primary provider of risk capital for a financial venture. A lead investor may be an individual or the lead investor may be a group of investors or a consortium of banks or other financial institutions, depending on the size of the project. In the case of the underwriting of a

Lead Underwriter

The investment banking firm that puts together the syndicate of firms sponsoring a public offering of securities is referred to as the lead underwriter or lead manager. A lead underwriter is always chosen for stock offerings. Bond issues also sometimes rely on the services of a lead underwriter. The responsibilities of the lead underwriter include

Leading Indicator

A leading indicator is a statistic that predicts trends in the economy or a particular industry. For example, the number of building permits issued is a leading indicator for the housing sector, because permits must be obtained before building begins. A move in a leading indicator for one time period is often not meaningful; but

Leading Question

Leading questions are questions asked in a court case which can evoke a specific response from the witness. Such questions cannot be asked of the plaintiffs or defendants own witnesses and are viewed as a breach of ethics and professionalism. Leading questions may be asked only of hostile witnesses and on cross-examination. In the simplest


LEAPS, or Long-Term Equity Anticipation Securities, are equity or index options that have a long-term expiration date. LEAPS can have expiration dates as much as two years and eight months into the future whereas ordinary options stock options have an expiration date in under one year. As a result, LEAPS options are much more difficult


An agreement by which an owner of real property gives the right of possession to another for a specified period of time and payment.


The individual who appears on a lease and is responsible for the terms present in that agreement. There may be more than one leasee on a lease. The leasee must pay any fees that are agreed upon. If the leasor brings about a complaint against the leasee, the leasee would be considered the defendant.


Acquiring the use of an asset through a rental agreement.


One that transfers property (such as a house or a car) by a contract.


Books that contain all the details of financial accounts. There are three types of ledgers: the general ledger, the accounts receivable ledger, and the accounts payable ledger.

Legal Fiction

Legal fiction is the assumption that something may be true even though it may not be true, but its presumption is used to help come to an equitable resolution to a legal situation. A common example of legal fiction today is the notion of corporate “personhood.” Because it is impossible to sue the partners of

Legal Form

Representing a transaction to reflect it’s legal status, which might not be the same as it’s economic form.

Legal Monopoly

A legal monopoly is a monopoly that has been specifically sanctioned by law. For instance, the US Post Office has a legal monopoly on the right to put letters into mailboxes. The most common type of legal monopoly is a natural monopoly. Ideas about what constitutes a natural monopoly are prone to shift over time

Legal Realism

A view of nature of law that legal rules are based on judicial decisions given in the interest of larger society and public policy, and not on any dogma or supernatural authority. It defines ‘legal rights’ and ‘legal duties’ as whatever the courts say they are. If carried too far, however, this view results in

Legal Rights

Gone are the days when food, clothing and shelter provided for all the needs of man. Today, one can clearly see the emergence of what is called the welfare state, where man needs many other things. Amongst others, what he needs are rights, rights which are recognized and enforced by the Courts of law. In

Legal Tender

In law, legal tender is a payment that by statute must be accepted in payment of a debt. In the US, federal law declares that all US currency coins and notes are legal tender. Even the $1,000 note, which has been withdrawn from circulation for many years, is still considered legal tender. The meaning of

Legal Theory

The primary purpose of the legal theory is to define law. There have been several theories of law. These different theories often look at law from various points of view. According to the Natural law theory, There are objective principles, which depend on the essential nature of the universe, and which can be discovered by

Legislative Risk

Legislative risk is the potential of sustaining a loss on an investment as a result of government action. Legislative risk typically implies an amendment, inaction or abolition of one or more laws that may directly impact a given investment. Commonly, legislative risk applies to tax or investment law. Legislative risk may also be eminent in

Lehman Brothers

Lehman Brothers Holdings Inc. was an international financial services firm headquartered in New York City that had blockbuster earnings, little to no debt and had the strength to gobble up several weak companies. The company mainly dealt in private equity, private banking, investment banking, investment management, equity and fixed-income sales, and trading and research. Lehman Brothers was a main

Lender Of Last Resort

A lender of last resort is a financial institution, such as a nation’s central bank, that provides economic relief by bankrolling failing financial infrastructures.

A lender of last resort does so by making loans to banks and other qualified institutions. The purpose of the lender of last resort is to alleviate a situation in which banks face immense withdrawals caused by panic and fear of the unknown. As such, the lender of last resort offers protection to individuals and provides an economic boost to banks at times of grave financial instability. In the United States, the Federal Reserve acts as the lender of last resort. Conditions that call for functions of the lender of last resort can arise from any economically destabilizing occurrences. Thus, a lender of last resort may step in times of war, natural disasters, economic depression, etc.


Lending is a broad concept to define. In simple terms, lending is the act of giving out money with the intention that it will be returned after a fixed span of time. The act of lending is mainly carried out by several financial institutions. Banks were the most reliable source for lending money. Now, there

Letter Of Credit

A letter of credit is a document a buyer requests from their bank stating that payment to a seller will be made, in order to reassure the seller that they will not be left empty-handed. The seller receives this letter of credit from the buyer’s bank. A letter of credit authorizes the seller to draw

Letter Of Intent

A letter of intent is a document written by one company and sent to another indicating a desire and ability to do business. The issuance of a letter of intent often precedes formal negotiations of a merger or acquisition and can potentially impact the share price of both the letter of intent issuer and recipient.

Letter Of Renunciation

A letter of renunciation is a form in the style of a letter signed by the holder named on an allotment letter who wishes to renounce his/her right to the shares specified in the allotment. The letter of renunciation is addressed to the company’s directors and tells them of the named holder’s wish to renounce

Letters Of Administration

Letters of administration are legal documents issued by a probate court which allows someone the right to administer the estate of another person who has died. Letters of Administration are required if the deceased did not name an executor for their estate (intestate). Letters of Administration are also used if an executor is unable to

Level I Quotes

Level I quotes real-time (non-delayed live) quotes of the best bid and ask prices for any individual Nasdaq or OTCBB stock. Level I quotes are what most investors get from their broker. You do not need special registration to use Level I quotes, and Level I quotes are what you see when you use most

Level II Quotes

Level II quotes are everything included in Level I quotes for real-time quotes of the bid and ask prices for each individual market maker for a given NASDAQ or OTCBB stock. Level II quotes additionally let investors identify the market maker offering the lowest bid-ask spread for the stock. Level II quotes provide investors with

Level III Quotes

Level III quotes are everything included in Level I quotes and Level II quotes plus the ability to enter or change quotes, execute orders, and send out confirmations of trades. Only NASD member firms who are also market makers have Level III quotes capability. NASDAQ restricts Level III quotes access to its registered member brokerages

Level Premium Insurance

Level premium insurance is a type of life insurance policy with premiums that remain the same throughout the life of the level premium insurance policy. Level premium insurance shouldn’t be confused with level term insurance, which refers to insurance with a benefit that remains the same throughout the term. Most whole life insurance policies are

Level Term Insurance

Level term insurance is a type of term life insurance policy that pays a pre-determined death benefit with a face value that remains the same throughout the term of the level term insurance policy. For example, a 10-year, $250,000 level term insurance policy would pay $250,000 upon the policyholder’s death anytime during the 10-year term.


Alternative term for gearing, commonly used in the USA.

Leveraged Buyout

Leveraged buyout (LBO) is a corporate financing method. It is another name for cash flow lending. It refers to the acquisition of a company via a substantial amount of debt (borrowed capital) raised through bonds or loans. Assets of the company being acquired and also that of acquiring one is often pledged as collateral for loans taken. Leveraged buyout enables


Obligations of an entity to transfer economic benefits as a result of past transactions or events.


the state of being legally obliged and responsible

Liability Insurance

Liability insurance is a form of protection against claims of loss or injury, for which a policy owner might be otherwise responsible. In other terms, liability insurance indemnifies acts that are legally deemed negligent and may result in various damages. Liability insurance is often a mandatory form of insurance coverage for many professionals. As such,

Liability Risk

Liability risk is the risk assessed from the purchase, use of goods or ownership by a company. It also can be a threat to the company if there is a breach of standards due to operations or a neglect action. Companies attempt to limit their liability risk but assume that some risk is inherent with


Libel is false or malicious content which defames a person. By its definition libel is published, written or broadcasted. Personal injury claims may be filed for libel if a person can prove they have suffered loss or have lost their reputation and are unable to work in their profession. The amount of compensation which is rewarded will depend on the laws in the state, the details of the case and proof of the harm suffered. Consider, however, it can be very difficult to prove financial loss.

Common types of libel may include accusing someone for a crime they did not commit or claiming a person has a contagious disease. Because it is tough to win a libel case it’s important to talk to a personal injury lawyer. The injury lawyer can review your case and determine if your case is worth pursuing. Remember, it is not enough that someone published information which may be harmful to you it is important that you can prove some type of loss.

Liberal Economics

Liberal economics is just another name for laissez-faire capitalism, which involves a free play of market forces. Liberalization is the name of that economic policy, which promotes liberal economics by restricting government role to maintenance of an efficient market economy framework. Privatization and deregulation are important components of liberalization. Nowadays, liberalization is a buzzword in many emerging economies, which aim to attain seamless integration with global financial systems for furthering


Liberalization is described as a reduction in trade practices that thwart the free movement of goods and services from one country to another. Liberalization includes the abolition of tariff-like surcharges, export subsidies and duties. Non-tariff barriers like quotas and licensing regulations are also abolished. Greater private participation is a characteristic of countries with liberalized economies.


LIBOR stands for London Inter-Bank Offered Rate. It’s the rate of interest at which banks offer to lend money to one another in the so-called wholesale money markets in the City of London. Money can be borrowed overnight or for a period in excess of five years.

The most often quoted rate is for three-month money. ‘3 month LIBOR’ tends to be used as a yardstick for lenders involved in high-value transactions. They tend to quote rates as ‘points above LIBOR’. So if 3 months LIBOR were (say) six per cent, a bank may choose to lend to another bank at (say) 6 and a quarter per cent. e.g. a quarter per cent above 3 month LIBOR.

Lending to individuals tends to be based on the base rate which is set by the Bank of England. Base rates tend to be less volatile.

The LIBOR rates are set each day at 11 am by leading banks, but rates fluctuate throughout the trading session according to sentiment about the outlook for base interest rates.


the right to take another’s property if an obligation is not discharged

Life Annuity

A life annuity is an annuity that pays out periodic income for as long as the annuitant (the beneficiary of the life annuity) is alive. A life annuity is sold by an insurance company; its payout is in the form of a predetermined amount that lasts until the death of the annuitant. A life annuity

Life Expectancy

Life expectancy is the statistical prediction of how long someone is expected to live. Life expectancy may be calculated in a civil action to help determine loss of wages and other types of compensation. Life expectancy is a key factor when the courts are calculating the loss of earning capacity and how much the injured

Life Insurance

Life insurance is a contract, according to which an insurance company assures a payment of a death benefit in the event of a policy holder’s death. As per the life insurance contract, the life insurance policy owner must, in turn, make premium payments in order to receive sustained protection. The general premise of life insurance

Life Insurance Quote

A life insurance quote is the estimated cost of a life insurance policy based on information supplied by an applicant to an insurance company. To obtain a life insurance quote, an applicant is required to provide his/her age, gender and state whether they use tobacco. Mortality tables calculated by actuaries are used when calculating a

Life-Cycle Hypothesis

Life-cycle hypothesis analyzes the consumption pattern of individuals. Irving Fisher, Roy Harrod, Franco Modigliani, and Alberto Ando developed Life-cycle hypothesis. Different from Keynesian consumption function, Life-cycle hypothesis, suggests that individuals desire and try to maintain a constant standard of living throughout their lifetime. Since after a certain age, individuals may retire from active work, they have to ensure

Limit Down

Limit down refers to the maximum amount that a futures contract price is allowed to drop on a single trading day. Different markets react differently if the limit down price is reached. One may completely close the trading of contracts on that particular day that limit down is reached. Another market might allow trading to

Limit Order

In trading, a limit order is an order to buy or sell securities for a fixed price or better. For example, an investor can place a limit order to sell shares of company ABC for $100 or more, even if the stock is currently trading for under $95. Such a limit order would be called

Limit Price

The price specified in a limit order is called the limit price. Limit orders instruct the broker to execute a buy or sell order only at the limit price or better. A buy limit order will not be executed above the limit price. Conversely, a sell limit order will not be executed below the limit

Limited Jurisdiction

Limited jurisdiction determines what courts have authority over certain cases. For example, cases involving bankruptcy, probate and family law are heard only by certain courts with proper jurisdiction over those cases. In the United States, most courts have limited jurisdiction to hear certain cases, set precedent or establish case law. Federal courts such as the

Limited Liability

A phrase used to indicate that those having liability in respect of some amount due may be able to invoke some agreed limit on that liability.

Limited Liability Company

Company where the liability of the owners is limited to the amount of capital they have agreed to contribute.

Limited Liability Partnership

A limited liability partnership is a form of joint corporate organization. A limited liability partnership provides that losses resulting from liability are limited to the capital invested. Therefore, in a limited liability partnership, each partner’s liabilities may only amount to the extent of his or her investment in a given business venture. That means that

Limited Partnership

A business organization where the individual partners have varying degrees of input and control over decisions, profit-sharing, and risk, usually related to the amount of money each partner has invested.

Limited Tort Option

Some states allow drivers to purchase motor vehicle insurance with a limited tort option. Under this restriction, the insured can only seek monetary damages for economic loss, including medical bills. This means that if you are injured due to the negligence of another driver you may not be able to file a personal injury lawsuit

Line Of Credit

Financing offered to businesses by banks or other financial providers to help the business with short-term financial needs. This term is often used in the real estate business, as well.

Linear Regression

In statistics, linear regression is a technique for estimating the value of the dependent variable from a set of one or more independent variables. As the name linear regression implies, the dependent variable is assumed to have a linear relationship with any independent variables. The mechanics of performing a simple linear regression can be handled

Linear Regression Channels

Linear Regression Channels represent a method for computing a mean line which forms the best fit to a given set of data points and two parallel lines above and below the mean line which provide resistance and support respectively. Multiple regression channels are drawn because the high or low price may break the trend of

Linear Regression Indicator

The Linear Regression Indicator is used for trend identification and trend following in a similar fashion to moving averages. The Linear Regression Indicator plots the endpoints of a whole series of linear regression lines drawn on consecutive days. The advantage of the Linear Regression Indicator over a normal moving average is that it has less lag

Linear Regression Slope

The Linear Regression Slope is the slope of the linear regression trendline. The Linear Regression Slope is the slope of the Linear Regression Trendline. The Linear Regression Slope requires one input parameter which is the number of days to use for the regression line fit. The Linear Regression Slope shows price trends:  positive values indicate increasing prices while


Linehaul refers to the movement of cargo between two major cities or ports, especially those more than about 1,500 kilometres or 1,000 miles apart.

Liquidated Damages

Liquidated damages are a payment agreed to by the parties of a contract to satisfy portions of the agreement which were not performed. In some cases liquidated damages may be the forfeiture of a deposit or a down payment, or liquidated damages may be a percentage of the value of the contract, based on the


Liquidation refers to a business whose assets are converted to money in order to pay off debt. Liquidation (also known as winding-up) is one of the forms of “insolvency” in the English Courts and is used when the other methods of corporate recovery have failed. There are two forms of Liquidation – compulsory (or Court

Liquidation Value

The liquidation value of a company is an estimate of the value of a company’s assets if all assets were sold for cash. There are two types of liquidation value. Distressed liquidation value is the “fire sale” scenario, when all assets are sold with urgency nearly simultaneously, perhaps to dealers who specialize in selling assets


The extent to which a business has access to cash or items which can readily be exchanged for cash.

Liquidity Preference

The Concept of liquidity preference was introduced by John Maynard Keynes. It was he who argued that interest earned from savings cannot be treated as a reward for holding wealth. Wealth could also be held in the form of cash kept with oneself, and since no interest can be earned from that money, Keynes suggested that savings interest cannot be counted as a

Liquidity Ratio

A liquidity ratio measures a company’s ability to pay its bills. The denominator of a liquidity ratio is the company’s current liabilities, i.e., obligations that the company must meet soon, usually within one year. The numerator of a liquidity ratio is part or all of current assets. Perhaps the most common liquidity ratio is the

Liquidity Trap

A liquidity trap is a theory which occurs when the demand for money is so huge that people do not want to hold anything but money. One is better off holding cash to take advantage of an interest rate that will increase. A liquidity trap is said to occur when the interest rate is very low, then investors can buy the bonds. This is a theory from Keynes. This

Listed Company

A company whose shares are listed by the Stock Exchange as being available for buying and selling under the rules and safeguards of the Exchange.

Listing Requirements

Rules imposed by the Stock Exchange on companies whose shares are listed for buying and selling.

Listing Rules

Issued by the UK Listing Authority of the Financial Services Authority to regulate companies listed on the UK Stock Exchange. Includes rules on accounting information in annual reports.


The litigant can be either the plaintiff or the defendant in a legal dispute who brings an action against another person. The word litigant is derived from a Latin word, litigare, which means “to dispute.” It is possible to have a number of claimants and defendants involved in a lawsuit, and litigants can be either


a legal proceeding in a court; a judicial contest to determine and enforce legal rights

Living Trust

A living trust (also called a grantor trust, or revocable trust, or an inter vivos trust) is an agreement in which the person who established the trust, known as the grantor, transfers the estate to a designated trustee for subsequent management. A living trust is a revocable arrangement, whereby all rights to income and principal

Load Fund

A load fund is a mutual fund that charges a sales commission in addition to its net asset value (NAV). This sales charge is the “load” part of a load fund. The sales charge of a load fund is a percentage of the net amount invested, typically somewhere between 4 and 8 percent, but may

Load-Adjusted Return

A load-adjusted return is the investment return on a mutual fund adjusted for loads and certain other charges, such as 12b-1 fees (advertising/marketing fees). A load is a sales charge levied on shares purchased or on shares sold. A fund with a load-adjusted return is called a load fund. The load-adjusted return is calculated for


In economics, loan is defined as an act of providing property, money, or any other form of material good to another entity. A loan is provided in anticipation that it would be paid back in principal along with a certain amount of interest. There are a couple of broad categories of loans – they may

Loan Covenants

A Loan Covenant is an agreement made by the company with a lender of long-term finance, protecting the loan by imposing conditions on the company, usually to restrict further borrowing.

Loan Notes

A method of borrowing from commercial institutions such as banks.

Loan Stock

Loan finance traded on a stock exchange. Loan stock is shares in a business that have been pledged as collateral for a loan. This type of collateral is most valuable for a lender when the shares are publicly traded on a stock exchange and are unrestricted so that the shares can be easily sold for cash.

Loan-Value Ratio

In real estate finance, the loan-value ratio is simply the ratio of the value of debt to the appraised value of the property. The loan-value ratio is more often called LTV, for loan to value ratio. For example if a property is appraised at $1,000,000, a loan-value ratio of 70% implies mortgage debt for $700,000.

Lock In

Lock-in, or vendor lock-in, results in customer dependency on a particular vendor for the availability of specific products (goods or services). In a lock-in situation, switching over to a different vendor would mean a significant increase in costs. Lock-in prevents a market barrier to entry. This may lead to antitrust action against the producer enjoying a monopoly. Examples of

Logarithmic Price Scale

A type of scale used on a chart that is plotted in such a way that two equivalent per cent changes are represented by the same vertical distance on the scale, regardless of what the price of the asset is when the change occurs. The distance between the numbers on the scale decreases as the

London Stock Exchange

London Stock Exchange (LSE) set up in 1801 is based in London, UK. It is among the world’s largest and oldest stock exchanges. A stock exchange is essentially a trading platform where buyers and sellers can meet for conducting securities transactions. Securities include items like shares, bonds, derivatives, and mutual fund. A host of companies belonging to diverse

Long Bond

In the US, is the thirty-year Treasury bond is often called the long bond. The US Treasury stopped issuing the long bond in 2001, a decision that was criticized by many bond market participants. The long bond was the most heavily traded, and therefore the most important benchmark of long-term interest rates. In 2005 the

Long Day

A Long Day is a candlestick with a long real body, relative to other candlesticks on a stock chart. A Long Day candlestick represents a large price move from open to close, where the length of the candle body is long. The Long Day candlestick can occur in a number of different contexts and by itself, it

Long Position

A long position in the stock market means that an investor has purchased a stock with the expectation that its price will rise. A long position is sometimes referred to as being “long the market.” Investors who are “bullish” about the market will take a long position, expecting higher prices in the future. The vast

Long Put

A long put is a relatively straightforward options strategy. In a long put, a bearish investor buys a put option, waits for the value of the underlying security to fall below the strike price less the premium, and profits upon exercising the option. If the underlying security fails to fall below the strike price, the

Long Shadow

Long Shadow candlesticks have one long shadow and one short shadow. If the Long Shadow is the upper shadow then buyers dominated during the first part of the session bidding prices higher. Then the buying activity stalled and the price retreated. This pattern is often referred to as a Tall Shadow. Conversely, if the Long

Long-Legged Doji

The Long-Legged Doji is a specific Doji candlestick that often signals the reversal (or end) of a trend. The Long-Legged Doji has long upper and lower shadows with the Open and Close price in the middle of the day’s trading range. The Long-Legged Doji is typically drawn in black or the color of the previous candlestick. The Long-legged

Long-Term Liabilities

Money lent to a business for a fixed period, giving that business a commitment to pay interest for the period specified and to repay the loan at the end of the period Also called non-current liabilities information in the financial statements should show the commercial substance of the situation.

Look-Ahead Bias

Look-ahead bias is the use of information outside the time frame of the simulation period. For example, survivorship bias can be one type of look-ahead bias in a decade long study that excludes bankrupt companies. Look-ahead bias corrections can neutralize results that extrapolate back-tested historical portfolio results. If, for example, current quarterly earnings were not

Lookback Option

A lookback option is a type of exotic option that allows an investor to look back over the period to maturity and determine the ideal execution strategy for the lookback option. There are two primary types of lookback options: fixed and floating. In the case of a fixed lookback option, the investor is allowed to

Loss Leader

In marketing, a loss leader is an item priced not for profit, but to attract customers. If effective, the loss leader stimulates sales of other goods. In a retail context, the purpose of a loss leader is to drive traffic into the store, in the hope that once the customer is there, additional goods besides

Loss of Consortium

Loss of consortium in legal proceedings most often refers to decreased or limited sexual activity between spouses as the result of a personal injury. But, loss of consortium also refers to diminished care, companionship and/or affection as well regardless of whether or not sexual activity has decreased. Loss of consortium may be claimed in either

Lump Of Labour Fallacy

The lump of labour fallacy in economics is referred to as a concept that states that an increase in the amount of productivity of each worker decreases the number of available jobs in any society. The lump of labour fallacy exists in the United States but had vanished in due course, which has again resumed with few

Lump-Sum Tax

A lump-sum tax is a tax which remains fixed in amount irrespective of changes in tax situations. The lump-sum tax falls in the category of regressive tax. Regressive tax can be said a type of tax which decreases with an increase in taxable objects. A lump-sum tax is used in several economic theories as it has an

Lurking Variable

Luxuries in economics refer to the utility that a consumer derives from luxury goods. Thus, it is necessary to understand the concept of luxury goods first in order to understand the concept of luxuries. In economics, luxury goods are that type of goods for which amount of demand increases in a proportional manner with an increase in income. In simpler terms, a rise in

Luxury Tax

A luxury tax is a tax on luxury goods. The luxury tax can be levied on any luxury item, with boats and cars being common targets. In the US, Congress established a luxury tax called the luxury auto excise tax in 1990. This luxury tax was levied on certain passenger vehicles priced above a certain


A malignant tumor that arises in the lymph nodes or in other lymphoid tissue

The Long Tail

The Long Tail refers to a frequency distribution in which a large percentage of the points fall in the fringes of the curve. Made popular by Wired writer Chris Anderson, in an internet environment, The Long Tail seeks to capitalize on commerce outside of the mainstream. The contention is that combined, there is more business yet less competition in these peripherals than in the bulk

Accounting Terms Beginning With "M"


In the US, M1 is a narrow measure of the money supply. M1 is defined as all currency in circulation plus checking account deposits and other checkable deposits in banks, credit unions, and other depository institutions. Savings deposits, time deposits, and most other deposits at financial institutions are not included in M1. The deposits included


In the US, M2 is a broad measure of the money supply. M2 is the sum of M1 (i.e. currency in circulation plus checking account deposits and other checkable deposits in banks, credit unions, and other depository institutions) and other deposits not included in M1. Those deposits included in M2 (but not in M1) are


In the US, M3 is a very broad measure of the money supply. M3 was published by the Federal Reserve Board until March 2006. M3 is the sum of M2 (savings deposits – MMDAs, small time deposits, and retail MMMFs, M1 (i.e. currency in circulation plus checking account deposits and other checkable deposits in banks,


MACD, which stands for Moving Average Convergence Divergence, is a technical indicator designed to compare price fluctuations of stocks and futures. Specifically, MACD derives data by calculating the relationship between two exponential moving price averages. By plotting 12 and 26-day exponential moving averages, and then contrasting the two, MACD helps forecast market momentum on what’s


of, or relating to Machiavelli or the principles of conduct he recommended. cunning, scheming, and unscrupulous, especially in politics.


Macroeconomics is the study of ‘big picture’ economics that relates to countries, regions or organisations as a whole, rather than individuals or families. It analyzes economic principles as related to unemployment, inflation, industry, and government.

Maintenance Fee

In the financial sense, a maintenance fee is a fixed charge that covers the operating expenses of a brokerage account. Usually, the maintenance fee is charged annually. Some brokers, especially full-service brokers, may impose the maintenance fee as an alternative to charging a per-trade fee on each transaction. Sometimes, a fund may have a maintenance

Majority Ownership

Majority ownership is ownership of 50% or more of another company’s shares, or sufficient holdings that gives one company control of another company’s activities. When a (parent) company has majority ownership of a (subsidiary) company, the subsidiary must be consolidated on the parent company’s financial statements. In other words, if there is majority ownership of

Majority Shareholder

In corporate governance, a majority shareholder is a shareholder that has a majority of the shares of a company. The majority shareholder exerts complete control over the company by being able to replace the board of directors and the management. A simple majority of 50% ownership usually confers majority shareholder status. A majority shareholder can


wrongful conduct by a public official

Malicious Prosecution

Malicious prosecution occurs when one party files an untrue or baseless legal complaint against another without probable cause. Common types of malicious prosecution include a malicious tort, improper civil suit or improper criminal allegation. To prove malicious prosecution in a lawsuit the victim generally has to prove the police officer or government agent initiated the

Managed Account

A managed account is an investment account that is managed by a third party who has the authority to buy and sell without prior approval from the holder. A managed account is similar to a discretionary account, but the difference is that a discretionary account is typically opened out of convenience for clients who are

Managed Care

An agreement among an insurer and specific suppliers to give health care at a reduction to members of an insured group.


Collective term for those persons responsible for the day-to-day running of a business.

Management Accounting

Reporting accounting information within a business, for management use only.


A Mandator is a person, group, or organisation who issues a mandate to a mandatary.


homicide without malice aforethought


Profit, seen as the ‘margin’ between revenue and expense. A set financial boundary for pricing or yield, or the amount required as security on a loan.

Margin Account

A margin account allows a trader or investor to buy stocks either with cash or with borrowed funds. Funds for a margin account are borrowed from the broker or brokerage firm handing the investor’s transactions. When an investor purchases stock with funds from the margin account, the stocks purchased are the collateral for the loan.

Margin Agreement

A margin agreement is a securities customer agreement signed by an investor who wants to borrow money against securities he or she already owns and purchase new securities with the loan. A margin agreement is almost always preceded by a cash account at the same broker. A margin agreement specified that the customer grants a

Margin Call

A margin call is the demand by a brokerage that an investor contribute additional cash to a margin account. The margin call may be mandated by Federal Reserve rules, such as Regulation T, although the NASD, the exchange, or even an individual brokerage may have tighter margin requirements that could trigger a margin call sooner.

Margin Loan

A margin loan is a loan made by a broker to an investor for the purpose of buying securities. The margin loan may be used for any purpose, but it is usually used to buy stocks, bonds, or other securities. A margin loan is secured by the client’s collateral; this collateral is a portfolio of

Margin Rate

Margin rate has multiple financial meanings. The margin rate is the interest charged by a broker or agent for buying securities on margin (purchasing securities with borrowed money). The margin rate is a fee above and beyond a broker’s call rate. A margin rate can vary and is dependent on a margin customer’s account balance.


Marginal in economics has two interpretations: additional, and subsistence. Marginal revenue, marginal cost, marginal product and marginal utility are terms used often in economics. Marginal distribution and marginal probability are terms associated with statistical studies. Marginal Product Production of a commodity is multiple functions of a number of inputs like land, capital, labour, availability of raw materials, tastes and preferences of consumers. In microeconomics, in the short run, the

Marginal Product Of Labour

The marginal product of labor (or marginal product of labour in British English) is the additional value a new employee in a company adds. It is a function of the number of people a firm employs. A company with more capital and capacity will hire more employees. This is assuming they are hired in a competitive system, and being

Marginal Rate Of Substitution

The rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility.

Marginal Tax Rate

The marginal tax rate is the rate of tax applicable to each additional dollar of income. In other terms, the marginal tax rate indicates the changes in tax rates as they relate to the changes in taxable income. The marginal tax rate can be expressed mathematically in the following way: marginal tax rate = Δ(tax

Marginal Value

The value gained from either consuming or producing one additional unit of a product or service.


the social process of becoming or being made marginal (especially as a group within the larger society)


The market is categorized into different sections depending upon the population. Consumers form the most important aspect of the market. There are different types of customers. For a better understanding of a particular market, it becomes absolutely essential to make a detailed study of its customers. This analysis is known as market segmentation. There are

Market Bottom

Market Bottom is a term that refers to the overall general market making a low point and then turning around for a period of improvement.

Market Capitalization

Total currency market value of a joint-stock company’s outstanding shares is termed as market capitalization (MCAP), which is a product of the current market price of a share and number of outstanding shares. To investors, market capitalization figure is an indication of the size of a company. This value is given more importance than total assets or sales figures. Market capitalization is also termed ‘market cap’.

Market Correction

A market correction is a decline in price following an extended rise in price. Unlike a market crash, a correction involves a relatively small percentage decline that occurs gradually rather than precipitously. After a correction, markets often consolidate in a narrow trading range before moving upwards. In bull markets, corrections are viewed as a healthy

Market Economy

A market economy (also known as a free market economy or free economy) is an arrangement of resource allocation that is founded solely on the interplay of market forces like demand and supply. Based on the principles and mechanisms of a market economy several models were developed to understand and analyze the economic system. There is no intervention of any superior power, including

Market Failure

Market failure refers to the state when markets that function freely, devoid of any kind of state intervention, struggle to provide an optimum allotment of resources. This results in economic inefficiency. As a consequence of market failure social and economic development of a particular region is hindered. Another cause behind the failure of markets is

Market Interaction

Market interaction in economics refers to the interaction between market forces of supply and demand. The market is an economic system, which determines the price and quantity of a good supplied. A market consists of buyers and sellers of a commodity. Manufactures, retailers, distributors and end-users all constitute a market’s participant matrix. Market interaction and price are interrelated concepts. In

Market Maker

A market maker is a company, or an individual, which provides market liquidity buying and selling securities. A market maker quotes both a buy and a sell price in a financial instrument, hoping to make a profit on the bid-offer spread, or turn. The U.S. Securities and Exchange Commission defines a ‘“market maker’” as a firm that stands

Market Order

A Market Order is an order that an investor makes through a broker or brokerage service to buy or sell an investment immediately at the best available current price. A market order is the default option and is likely to be executed because it does not contain restrictions on the buy/sell price or the time frame in

Market Portfolio

Market portfolio is a hypothetical construct employed in Modern Portfolio Theory. It is a non-existent portfolio that comprises every security available to investors in a specific market. Securities in a market portfolio are in quantities proportional to their market values. The aggregate of stocks nearest to the hypothetical market portfolio are stock indexes like the

Market Position

The relative ranking of a brand, product, or company, as reflected by sales and customer recognition.

Market Research

Research covers the search for and retrieval of information for a specific purpose. Research has many categories, from medical research to literary research. Types of business research Businesses engage primarily in four types of research: Marketing research – Marketing research (also called “consumer research”) comprises a form of applied sociological study which concentrates on understanding

Market Return

The return on the overall theoretical market portfolio which includes all assets and having the portfolio weighted for value.

Market Risk Premium

Market Risk Premium is the difference between the expected return on a market portfolio and the risk-free rate. Market Risk Premium is also called equity premium, market premium and risk premium. The Market Risk Premium can be the historical differential return of the market over treasury bonds; the expected market risk premium (expected differential return) of the market

Market Share

Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a company’s sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as

Market Value

The price that a home will get on the market, based on comparisons to similar homes that have sold recently in the area.

Market Value (Of A Share)

The price for which a share could be transferred between a willing buyer and a willing seller.

Market Versus Quote

Market Versus Quote (MVQ) is a comparison between the last price at which a security traded and the current bid/ask prices.


Marketing can be described as a process through which services and products are inaugurated in the marketplace. Marketing activities include advertising and selling products. Product delivery is also included as a part of a marketing plan. Marketing Ps Marketing tries to influence consumers’ decision to buy goods and services. The marketing mix consists of 4

Marketing Communications

All communication or media tools that a company employs to correspond with customers and prospective customers. Sometimes abbreviated to “MarComm”.

Marking To Market

Valuing a marketable asset at it’s current market price.


When a business increases the price of an item before it is sold. For example: if a Fridge was bought for £600 and is sold for £800, the markup is £200.


Refers to a stochastic process in which the expected value of an observation (which is conditional on all previous observations) at any stage is equal to the last of the previous observations. Named after the harness that keeps a horse’s head in a fixed position with its rows of teeth more or less parallel to


A type of candlestick charting formation that appears when a security’s price does not trade outside the range of the opening and closing prices.

Mass Index

The Mass Index serves as an indicator of upcoming price reversals by quantifying the difference between the high and low prices of a stock over time. The mass index represents an n period sum of a ratio of an Exponential Moving Average of High-Low price divided by an Exponential Moving Average of the first average. The input

Mass Marketing

The use of any medium to sell to a wide variety of consumers at once.

Master And Servant

Master and Servant is the relation which arises out of the contract of hiring, a relation whereby a person calls in the assistance of others, where his own skill and labour are not sufficient to carry out his own business or purpose. Every person suffering himself to be hired as a skilled artisan warrants that


Expenses are matched against revenues in the period they are incurred (see also accruals basis).


Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements.


A matrix is a tool used to compare two types of data. They are compared along a y-axis (vertical) and an x-axis (horizontal). A matrix can be valuable in expressing contingent data and the relationship between two variables.


The date on which a liability is due for repayment.

Maturity Profile Of Debt

The timing of loan repayments by a company in the future.

Maximal Medical Improvement

Maximum Medical Improvement, or MMI, refers to the point in medical treatment beyond which an individual is not expected to get any better, even with additional medical care. Treatment including medications, physical therapy, or assistive devices may still be needed, but they will not improve the health and functioning of the patient. Maximum medical improvement

Maximum Likelihood

Maximum likelihood, also called the maximum likelihood method, is the procedure of finding the value of one or more parameters for a given statistic which makes the known likelihood distribution a maximum.

McClellan Oscillator

The McClellan Oscillator is a market breadth indicator that shows overbought and oversold trends in the NYSE stock exchange. When the McClellan Oscillator is positive it indicates money is coming into the market and negative values indicate money is leaving the market. The McClellan Oscillator is calculated as the difference between a fast and a slow Exponential

McClellan Summation Index

The McClellan Summation Index is a long-term version of the McClellan Oscillator, an NYSE market breadth indicator. The McClellan Summation Index is more suited to major trends. McClellan Summation Index Calculation The McClellan Summation Index is the ongoing sum of the daily McClellan Oscillator. The two parameters for the oscillator are the slow and fast Exponential Moving

Mean Reversion

Mean reversion is a mathematical theory used in stock investing. This theory suggests that prices and returns ultimately move back towards average or mean. This average or mean can be the historical average of return or price. It can be even any other applicable average like a country’s economic growth or an industry’s average return. In general terms,

Mechanical Investing

Mechanical Investing is the act of buying and selling stocks according to a screen based on predetermined criteria, usually with the help of technical indicators such as relative strength or momentum. This method allows traders to enter transactions without emotion and backtest their strategies by using historical data from any time period.

Median Line Studies

Median Line Studies, also known as Andrews’ Pitchfork, is a line study that uses three parallel trendlines to identify possible levels of support and resistance.  Median Line Studies was developed by Dr Alan Andrews.

Median Price

The Median Price is an indicator which, when used in conjunction with its Exponential Moving Average, provides potential buy/sell points on a stock price chart. Median Price Calculation The Median Price line is calculated as the average of each day’s high and low prices. An Exponential Moving Average of the Median Plot is used to smooth the


A nonbinding process in which a third party attempts to settle a problem between two other parties.
a negotiation to resolve differences that is conducted by some impartial party


a negotiator who acts as a link between parties

Medical Lien

A medical lien allows a doctor or health care provider to recover their interest for services through a lien against a personal injury settlement. The amount that can be recovered by way of a medical lien will be limited to the cost of the treatment or the service provided. Some hospitals or doctors are unwilling

Medical Malpractice

Medical malpractice is the area of law which refers to any injury from the negligence of a health care professional which causes injury or death to a patient. To prove medical malpractice you would have to prove the doctor was negligent in their “duty” towards you and did not treat you in a fashion which

Medical Negligence

Medical negligence can be any type of failure by a doctor or medical professional which fails to meet the standard of care for duties relating to the medical profession. To prove medical negligence the patient will have to pass the three-part test: the doctor owed a duty of care to the patient, the duty of


Medium-term refers to the time to hold an asset. It may be as low as 1 year and could extend to 10 years. This term is usually employed when referring to bonds. Investors holding a stock for an approximate period of 1 year may be termed medium-term investors. The Medium-term in technical analysis means a

Memorandum (For A Company)

Document setting out main objects of the company and it’s powers to act.

Mens Rea

The State of Mind of the Person Committing the Crime In Britain and other common law jurisdictions, there is a saying that, “an act does not make a person guilty unless the mind be also guilty.” In other words, simply doing something will not, in general, make a person a criminal unless their intent was

Mental Anguish

In a personal injury claim, a claimant can be awarded compensation for mental anguish or suffering even if the claimant did not suffer physical injury. Mental anguish is distinguished from pain and suffering because it is the mental response to a physical trauma or event. Common types of mental anguish could include terror, shock, apprehension,

Menu Costs

Menu Costs are costs incurred to change prices. It is the cost of modifying price lists, brochures, menus and other materials when there are price changes in an economy. To avoid this transaction cost, companies do not change their prices with economic pressure- leading to price stickiness. A company thus exist in minor disequilibrium. This is done as costs of publicity


Mercantilism is an economic theory promoting an idea that a nation should export more goods than it imports. A nation should also sell goods at higher prices and purchase at lower prices. Economic capital or assets comprise of bullion (gold and silver) reserved by a state and is increased by positive balance (exports minus imports) of trade with other countries. According to mercantilism, a nation’s government should promote these

Merchant Cash Advance

A merchant cash advance provider is a lender who gives business loans to small business owners. They can borrow against their business if they are willing to give up a small percentage of their business revenue until the loan is fulfilled. This may be accomplished by giving a percentage of their credit card sales to


Two organisations agree to work together in a situation where neither can be regarded as having acquired the other.

Mergers And Acquisitions

Mergers and acquisitions are common in today’s corporate finance world. However, strictly speaking, mergers and acquisitions are distinctly different concepts. Mergers In comparison, a merger occurs when two firms mostly of the same size agree in principle to act as a single new company, instead of remaining separately operated and owned. This type of merger is specifically called ‘merger


a form of carcinoma of the mesothelium lining lungs or abdomen or heart; usually associated with exposure to asbestos dust


A system for collecting and organising information or ideas in a group collaboration environment. A metaplan strategy typically involves collecting ideas or information on cards, grouping the cards according to shared characteristics, and using a voting system to rank individual ideas or groups of ideas.


The engineering of microscopic devices


Microfinance is the practice of giving or receiving small loans. Such loans are often only hundreds or thousands of dollars and are given with a view to allow the recipient to develop a financially-sustainable enterprise, which can continue on its own after the loan has been paid back. Microfinance is most common in developing countries such as Bangladesh, India, Brazil, and


Micropayments are a proposed means for generating revenue while providing online content. In the early days of the World Wide Web, content would usually be made available for free by organisations such as universities. With the phenomenal growth of the Internet people soon began to seek various means of earning money from content. Advertising is

Minimum Wage

Minimum wage is the lowest hourly rate of payment that an employer can pay to employees. Concerned regulatory authorities of a nation normally set this minimum wage limit. In the US, it is as per instructions mandated by federal law. In the UK, concerned wage council of industries set respective minimum wages. Thus in simple

Minority Interest

The ownership interest in a company held by persons other than the parent company and it’s subsidiary undertakings. Also called a non-controlling interest.

Miranda Warning

Miranda warning is the warning which must be given to a suspect who is in custody and is going to be interrogated. The Miranda Warning was instituted as a result of the Miranda v. Arizona ruling by the U.S. Supreme Court. Many suspects mistakenly believe they must be read their Miranda Warnings at the time


MIRR – modified investment rate of return is a financial tool that is used to determine the attractiveness of an investment.  MIRR is used in capital budgeting as a tool to rank investments of equal size.


a crime less serious than a felony


An incorrect diagnosis of an illness or other problem.

Misery Index

Renowned economist Arthur Okun formulated the misery index in the 1960s. (He was an adviser to US President Lyndon Johnson). The misery index is the sum of the inflation rate and unemployment rate. Economists state that both rising rates of unemployment and inflation create social costs for an economy. They are directly linked to rising misery index values and indicate a


Mistake means misconception, error. Mistake is where a man intending to do a lawful act does, by reason of ignorance of fact, something which is unlawful. A mistake, remediable in equity, is defined to be an act which would not have been done, or an omission which would not have occurred, but from ignorance, forgetfulness, inadvertence,


a trial that is invalid or inconclusive

Mitigating Circumstances

To mitigate means to “become less harsh or hostile, to alleviate or mollify.” Mitigating circumstances are factors which may partially explain or excuse a defendant’s behaviour. Mitigating circumstances do not excuse the culpability of the defendant but may allow the jury to view their actions as less egregious and allow the court to reduce the

Mitigation Of Damages

After a tort, the theory of mitigation of damages requires the victim to take reasonable steps to minimize their loss. For example, the victim should get proper medical care for their injuries. If a plaintiff fails to get proper medical care or remedy the injury the court could decide they will not be fully compensated

Mixed Economy

The characteristics of a market economy and command economy combine to form a mixed economy. It incorporates elements of both socialism and capitalism. In a mixed economy, state-owned enterprises and privately owned enterprises co-exist. The economic activities in such an economic system are controlled neither by the business entities that comprise market forces nor by the government. In a mixed economy, both these


While MJSD (March, June, September and December) represents the most important reporting months, other combinations are equally as valid. JAJO (January, April, July and October) and FMAN (February, May, August and November) are also commonly used but the vast majority of domestic companies use the MJSD reporting cycle.


The term mobility in economics can have completely different connotations and implications depending upon the context in which it is used. Mobility can refer to intergenerational mobility as also to the mobility of factors of production to name a few. In the backdrop of the present rise in inequality in the US, issue of degree and amount

Modern Portfolio Theory

Modern portfolio theory suggests methods by which an investor can try and optimize his or her investment returns. It also helps in analyzing the risk factor associated with an asset. Concepts like Markowitz diversification, capital asset pricing model, efficient frontier, Capital market line, and Securities market line form an integral part of modern portfolio theory. According to this theory, returns offered by an asset is treated


The quality or condition of being modern.

Momentum Indicator

The Momentum Indicator is a simple trend indicator consisting of the ratio today’s close price to the close ‘n’ periods ago, displayed as a percentage. Momentum Indicator Calculation Momentum Indicator = 100 * (Close[0] / Close[n]) where: Close[0] is today’s closing price Close[n] is the closing price n periods ago Application of Momentum Indicator Buy signals are indicated when

Momentum Oscillator

A momentum oscillator is a technical analysis tool that measures the speed and strength of a price movement by comparing later prices to earlier ones. It is calculated as a percentage of the latest price compared to the price a number of periods ago. It is usually displayed as a line on a chart with a vertical

Momo Play

Momo Play is a slang term used to describe an investment purely as a momentum play, not worrying about the company’s fundamentals.


Monetarism is an economic concept that states money supply as a primary factor on which rate of inflation depends. It plays a vital role in calculating national income and in monetary economics. Monetarism as a concept was popularized by economist, Milton Friedman. Friedman claimed that excessive money supply leads to an inflationary situation. He advocated the use of monetary policies by the central bank in order to

Monetary Neutrality

According to the theory of monetary neutrality, a change in the stock of money does not affect real variables. Hence real variables like employment, GDP, and consumption does not undergo a change whenever printing of money is increased. But nominal variables do get affected by any change in the stock of money. Thus when money supply increases, it leads

Monetary Reform

Monetary reform is accounting reform that reaches more deeply into banking central bank, money supply and monetary policy. It affects how money is created and destroyed, and what constitutes a reliable measure of economic growth and measures of national income. In the United States, the Federal Reserve and Department of the Treasury are responsible for


In general, money is anything that is used as a means of payment. In common usage, money is usually used to refer to notes that are printed or coins that are minted by a national government (or supranational entity in the case of the European Union), and which can be used to buy or sell goods.

Money Illusion

Money illusion refers to perception about changes made to nominal prices, as opposed to real prices. John Maynard Keynes first talked about it, and later on, in 1928, Irving Fisher wrote a book titled Money Illusion. Some economists are of the view that people tend to act rationally when it comes to money and take into account only real prices. But several

Money Management

“Management” (from old French, “ménagement”=”the art of conducting, directing”, from Latin “manum agere”=”lead by the hand”) characterises the process of leading and directing all or part of an organization, often a business one, through the deployment and manipulation of resources (human, financial, material, intellectual or intangible). One can also think of management functionally: as the

Money Market

Money market refers to that section of the financial market where financial instruments with short maturities and high liquidity are dealt with. Money markets are used for borrowing and lending purposes for a limited period of time. Money markets are considered safe for investing money because of the high liquidity of securities. They attain maturity within

Money Supply

Money Supply is defined as the total quantity of coins, bills, credit, liquid instruments and loans in the economy of a country. The money supply is categorized into different sections based on the size and kind of account in which it has been kept. These include MO, M1, M2 and M3. According to economists, money supply plays


A monopoly is an economic condition in which a company, organization, or person has enough power over a certain product, service, or even industry, that they set the terms for others’ accessibility to that product or service. A monopoly is defined as the complete control over a market by a particular firm or individual. Such control plays an important role in determining the conditions


A monopsony, like a monopoly, signifies complete control over a particular market. However, a monopsony is different from a monopoly. In a monopoly, it is the sellers who have complete control over the market, but in a monopsony, the control of the market lies with a single buyer. Such a buyer is called a monopsonist. This buyer

Moral Hazard

Moral hazard can be referred to as a social offence in economics. The situation of moral hazard arises when any business party or economic agent provides wrong information about its assets, liabilities or credit capacity in order to mislead associated organization. Moral hazard can arise when there is a breach of contract or any party takes unusual risks in order to desperately

Morgan Stanley

Morgan Stanley is a global financial services firm with its headquarters located in New York City, United States of America. The company’s client list includes a number of top-notch corporations, financial institutions, high net worth individuals and country governments. Morgan Stanley presently has approximately $736 billion in assets under management. The firm operates through more


A nickname for reorganisation in a monopolistic fashion derived from the great financier JP (John Piermont) Morgan, who was able to convince European backers to invest in industries in the U.S. which he was able to acquire and make them into monopolies. He helped monopolise the steel, railroad, banking and electrical industries.

Morning Doji Star

The Morning Doji Star candlestick formation is a three-day bullish reversal pattern. The Morning Doji Star candlestick pattern starts during a downtrend. The downtrend continues with a large-bodied candlestick. The second day opens lower, trades in a small range, then closes at its open forming a Doji. The third day closes above the midpoint of the

Morning Star

The Morning Star candlestick formation is a bullish reversal pattern. The Morning Star continues a downtrend with a long candlestick body day followed by a gap-down small body day. The third day opens up with the open near the low for the day.  The third day closes above the midpoint of the first day. The Morning Star


A legal agreement that conveys the conditional right of ownership on an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as security for a loan.

Mortgage Broker

A person or company who negotiates mortgages for another person or company in order to receive a commission.

Mortgage Insurance

Insurance written by an independent mortgage insurance company that protects the mortgage lender against loss experienced by a mortgage default.

Mortgage-Backed Security

A mortgage-backed security (MBS) is an investment, which is secured by a single or a collection of mortgages. The owner earns undivided interest on this set of mortgages or a single mortgage as the case may be. Earnings from these mortgages are used to pay the interest and principal amount to investors. Income thus generated is termed


Motions are verbal or written requests made before, during or after a trial to the court so the court can issue an order. The two most common pre-trial motions are the Motions to Dismiss and Motions for Summary Judgment. The motion to dismiss asks the court to dismiss the case against the defendant because the

Moving Average

Moving Average (MA) is an indicator frequently used in technical analysis showing a running average value of a security’s price. Moving averages are generally used to smooth the stock price,  measure momentum and define areas of possible support and resistance. Some trading systems use two moving averages, with buy or sell signals triggered at crossover

Moving Average Convergence Divergence

A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

Moving Average Envelope

Moving Average Envelopes are percentage-based envelopes set above and below a moving average. The moving average, which forms the base for this indicator, can be a simple or exponential moving average. Each envelope is then set the same percentage above or below the moving average. This creates parallel bands that follow price action. Application of Moving

Moving Average Ribbon

Moving Average Ribbon is a technique used in technical analysis to identify changing trends. It is created by placing a large number of moving averages onto the same chart. When all the averages are moving in the same direction, the trend is said to be strong. Reversals are confirmed when the averages crossover and head in the opposite direction.


Relating to multiple areas of study.


Multisourcing is a form of outsourcing via multiple coordinated vendors.


The unlawful premeditated killing of one human being by another.

Mutual Fund

Mutual funds are a type of investment in several financial instruments. It is referred to as a type of investment which is used to pool money and put in stocks, bonds, securities and other short-term money market tools. A Mutual fund involves a fund manager, who trades the pooled money and also analyzes capital gains or losses. These capital gains and losses are provided to the investors in the form of dividends.

From the year 1940, it is known that there were three types of investment companies in the United States. One is the open-end funds, which were also known as mutual funds; secondly unit investment trusts (UITs) and lastly closed-end funds. Apart from United States, the term mutual fund is used all over the world. For rest of the world mutual funds represent a general term for various types of united investment mediums which includes unit trusts, open-ended investment companies (OEICs), unitized insurance funds, and undertakings for collective investments in transferable securities (UCITS).

The initiation of mutual fund took place in March 21 in year 1924 when Massachusetts Investors Trust presently known as MFS Investment Management was founded. In the year 1925, MIT involved 200 shareholders and a total investment of $392,000 in assets. The growth of mutual funds was however ceased due to stock market crash, which took place in the year 1929. In order to make the mutual fund survive in the financial market several laws were passed. Securities Act of 1933 and the Securities Exchange Act of 1934 were the major acts that were passed to promote mutual funds.

These laws involve a registration process for certain amount of fund with the Securities and Exchange Commission (SEC) and in return provides potential investors details about the funds and securities. All these efforts lead to the proper operation of mutual funds and statistics say there were approximately 270 funds with $48 billion in assets by the end of the 1960’s. First Index Investment Trust was the first retail index fund formed in 1976. Index Investment Trust, lead by John Bogle also contributed to recognizing numerous explanation of the mutual fund industry in his thesis at Princeton University in the year 1951. Index Investment Trust is now known as the Vanguard 500 Index Fund and is recognized as one of the world’s largest mutual funds that include more than $100 billion investment in assets.

Accounting Terms Beginning With "N"


NAFTA is an acronym for the North American Free Trade Agreement.

Naked Option

A naked option is an option contract that creates potentially significant exposure because the option writer does not have an offsetting position. For instance, if an investor sells a call option for a stock without owning shares of that stock, the call is said to be a naked option. If the call option is exercised,

Naked Shorting

Naked shorting refers to the practice of selling stocks that the seller does not own. Short Selling Short selling or ‘shorting’ is the practice of ‘borrowing’ stock to sell and then buying it back at a later date. This is a common practice for bearish investors who believe that a stock price is about to go down. This strategy can be used


NAREIT stands for the National Association of Real Estate Investment Trusts, a trade organization focused on REITs. For investors, NAREIT publishes information and performance data related to REITs. This NAREIT data can also be useful to other real estate investors as a proxy for the current attractiveness of specific real estate sectors. Much of this


As the world’s largest electronic stock market, Nasdaq executes hundreds of millions of transactions daily. Nasdaq has a history of listing emerging companies that might not otherwise have access to capital markets. The Nasdaq Stock Market began in 1968 as an electronic quotation service established by the National Association of Securities Dealers (NASD). In 1971

Nasdaq 100 Index

The Nasdaq 100 Index is an index representing the top 100 non-financial companies trading on the Nasdaq Stock Market (Nasdaq). The Nasdaq 100 Index symbol is NDX. At its inception in January 1985, the Nasdaq 100 Index was set at a value of 250. This base value of the Nasdaq 100 Index was changed in

Nasdaq Composite Index

Launched in 1971, the NASDAQ Composite Index is based on more than 4,000 domestic and international securities listed on the NASDAQ. Technology and Internet stocks predominate the NASDAQ Composite Index; others include financial, consumer, biotech, and industrial companies. This makes the NASDAQ Composite Index one of the major market indices. The NASDAQ Composite is a

Nash Equilibrium

Nash equilibrium, propounded by John Nash, is essentially a collection of game theory strategies which involves at least two individuals or players wherein no individual can make improvements on his or her payoff by making changes in strategy. Here each player’s strategy is an optimal response based on the expected strategy of other individuals or

National Income

National income is defined by the economist J. M. Keynes as “the money value of all goods and services produced in a country during a year.” Macroeconomics, Tenth Edition, defines national income as, “Total payments to factors of production; net national product minus indirect taxes.” The different sectors of the economy produce a wide range of goods and products

National Insurance

National Insurance is a back door tax by the Treasury. The money collected from income earners is used to pay for most social security benefits. There are four types of National Insurance (NI) contributions. Who pays what? Class 1 Employers and employees (with earnings above the lower limit) pay this. The amount they pay is

National Stock Exchange

A national stock exchange is a type of domestic market that allows buyers, sellers and brokers to trade stocks. National Stock Exchange of India (NSE) is renowned as the world’s third-largest stock exchange. It is the largest one in India. Ideally located in the commercial capital of India, Mumbai, the National Stock exchange was supported


The state of being a citizen of a particular country.

Natural Law

Natural law is that law which is above all man-made law, a law that is universally applicable. Natural law has existed in some form or another since ancient times. While people throughout history have understood and posited natural laws in different ways, all-natural laws share three factors in common: these laws are eternal immutable discoverable

Natural Resources

Natural resources are naturally occurring features or characteristics of the environment. Natural resources often have significant commercial value. For example, mineral deposits and stocks of edible fish support entire industries. An important legal distinction can be drawn between natural resources that are a feature of real property and those that are not. Examples of natural


NAV (Net Asset Value) is a financial entity’s assets minus its liabilities. For funds and trusts, NAV is typically quoted on a per-share or per-unit basis; NAV is calculated as the portfolio value minus any debts, divided by th