sohomghosh/FinRAD_Financial_Readability_Assessment_Dataset

terms stringlengths 1 156	definitions stringlengths 3 4.2k	source stringclasses 15 values	flesch_reading_ease float64 -301.79 121	flesch_kincaid_grade float64 -3.5 55.6	smog_index float64 0 26.5	coleman_liau_index float64 -33.81 51.4	automated_readability_index float64 -6.9 65	dale_chall_readability_score float64 0.1 35.3	linsear_write_formula float64 -0.5 73	gunning_fog float64 0.4 56
DIRTY PRICE	The price of a BOND inclusive of ACCRUED INTEREST. Most SECONDARY MARKET bond transactions are quoted on dirty prices. See also CLEAN PRICE, INVOICE PRICE.	palgrave	71.51	5.3	8.8	10.11	7.4	9.73	4.166667	8.12
DIRTY STOCK	Transferred COMMON STOCK that fails to convey good TITLE to the new buyer as a result of errors or omissions in form or authorization.	palgrave	55.58	11.5	0	9.58	12.4	10.75	13	11.27
DISASTER RECOVERY RISK	The RISK of loss arising from damage to phys- ical infrastructure – which prohibits use of real estate, plant and equipment, technology, and communications – leading to a halt in operations; the disaster may be firm-specific, industry-based, regional, or system-wide. Disaster recov- ery risks can often be covered through specific BUSINESS INTERRUPTION INSURANCE. A subcategory of OPERATIONAL RISK. See also BUSINESS RECOVERY RISK.	palgrave	30.06	13	14.2	15.02	14.1	11.44	11.625	14.57
DISBURSEMENT	Granting of funds by a BANK to a client under a previously established CREDIT facility.	palgrave	47.79	10.3	0	9.97	9	11.75	10.5	14
DISCHARGE	The release of a party from a legally binding CONTRACT or other obligation as a result of satisfactory performance under the terms of the agreement, or as a result of a legal proceeding.	palgrave	37.98	16.2	0	10.05	17.1	10.54	20.5	16.84
DISCOUNT	(1) A reduction in the price of goods or the value of SECURITIES or other ASSETS as a result of SUPPLY and DEMAND or RISK factors. (2) The process of applying a RATE to one or more future CASH FLOWS in order to obtain a PRESENT VALUE, NET PRESENT VALUE, or ENTERPRISE VALUE.	palgrave	34.6	21.6	0	7.04	24.8	11.03	30.5	24.22
DISCOUNT BOND	(1) A BOND that trades at a DISCOUNT to its PAR VALUE.(2)A form of BRADY BOND with an initial discount to par value but a higher INTEREST COUPON than the PAR BOND alternative. (1) See also PREMIUM BOND.	palgrave	49.83	15.8	0	7.15	18	10.92	22	18.36
DISCOUNT CURRENCY	A CURRENCY that trades at a lower value than another currency in the FORWARD market. See also PREMIUM CURRENCY.	palgrave	44.91	9.4	0	8.73	6.4	7.43	6.25	8.01
DISCOUNT FACTOR	A factor that generates the PRESENT VALUE of a CASH FLOW when multiplied by a period’s estimated CASH FLOW. It is computed as:where r is the relevant DISCOUNT RATE or COST OF CAPITAL, t is the time period. Also known as PRESENT VALUE FACTOR.	palgrave	65.01	7.8	12.5	7.59	7.1	8.31	9	12.24
DISCOUNT HOUSE	In the United Kingdom, a FINANCIAL INSTITUTION that is active in MONEY MARKET dealing and which actively discounts BILLS OF EXCHANGE and deals in AT CALL funds.	palgrave	44.07	13.8	0	11.38	15.4	10.24	16.5	15.24
DISCOUNT MARKET	In the United Kingdom, the sector of the MONEY MARKET that includes BANKS, DISCOUNT HOUSES, and BROKERS special- izing in BILLS OF EXCHANGE. The discount market serves to generate short- term secured LIQUIDITY for these specialized institutions.(5) The SPOT RATE of interest. (1,2) See also DISCOUNT.	palgrave	39.67	13.4	0	13.41	16.2	11.3	14	13.55
DISCOUNT SWAP	An OVER-THE-COUNTER NONPAR SWAP where the receiver of FIXED RATES is granted an upfront payment by the FLOATING RATE payer in exchange for accepting a lower ongoing fixed rate inflow. See also PREMIUM SWAP.	palgrave	54.22	9.9	0	11.25	11	10.98	11	11.51
DISCOUNT WINDOW	In the United States, a facility, made available by the FEDERAL RESERVE BANKS, that permits authorized MEMBER BANKS to bor- row short-term funds on an emergency basis in order to balance cash outflows.	palgrave	37.98	16.2	0	11.96	19.2	11.49	20.5	18.05
DISCOUNT YIELD	The effective YIELD of any FIXED INCOME instrument issued on a discount, rather than COUPON-bearing, basis, generally computed as:where Face is FACE VALUE, P is purchase price, and nMAT is the number of days until MATURITY. See also BOND EQUIVALENT YIELD, SIMPLE YIELD, TAXABLE EQUIVALENT YIELD, YIELD TO CALL, YIELD TO MATURITY.where CF is the estimated cash flow, r is the company’s COST OF CAPITAL, g is the estimated, and constant, growth rate.A more refined version assumes that cash flows vary from period to period, and is given as:where CFt is an estimated cash flow generated in time period t.Since estimating cash flows into infinity is challenging a further refinement of the model uses a combination of discounted cash flow estimates over a spe- cific time horizon, along with an estimate of TERMINAL VALUE.+where N is the number of periods over which a cash flow can be reasonably estimated, TV is the estimated terminal value of the company.The model can also be adapted to value a company’s stock based on FREE CASH FLOW TO EQUITY, under the following general formula:where r is the company’s cost of EQUITY.Alternatively, it can be used to value the firm (rather than the stock) under the FREE CASH FLOW TO FIRM formula:where r is the firm’s WEIGHTED AVERAGE COST OF CAPITAL.For both free cash flow methods, the terminal value estimate can also be used after a specific time horizon. See also DIVIDEND DISCOUNT MODEL, EARNINGS-BASED MODEL, FREE CASH FLOW TO EQUITY, FREE CASH FLOW TO FIRM.	palgrave	-13.49	35.9	26.5	11.92	44	11.94	34	37.78
DISCOUNTED PAYBACK PERIOD	The time required to pay back the ori- ginal INVESTMENTS in terms of DISCOUNTED future CASH FLOWS, gener- ally expressed in terms of years. See also PAYBACK PERIOD.	palgrave	65.73	7.6	0	9.45	8.6	12.23	7.5	9.89
DISCRETE BARRIER OPTION	See PARTIAL BARRIER OPTION.	palgrave	33.58	9.6	0	10.15	8.8	15.68	2	11.6
DISCRETIONARY ACCOUNT	A customer BROKERAGE ACCOUNT where the client gives the BROKER authorization to act on his/her behalf in buying and selling SECURITIES. The client may limit the discretion through time and/ or price constraints.	palgrave	54.73	9.7	0	13.16	12.3	10.2	10.25	11.45
DISCRETIONARY ORDER	An ORDER for the purchase or sale of SECURITIES, COMMODITIES, or other financial ASSETS given by a client to a BROKER, where the broker has flexibility to execute a deal at the price and time deemed best.	palgrave	42.38	16.5	0	9.01	18.5	9.74	23.5	20.21
DISCRETIONARY TRUST	A TRUST or INVESTMENT trust where a TRUSTEE or other designated person has the ability to invest the BENEFICIARY’S ASSETS as deemed best, without specific constraints or within certain general param- eters. See also BLIND TRUST.	palgrave	44.75	11.5	0	12.87	12.8	10.23	12	12.76
DISCRIMINATING MONOPOLY	A state where a company with MONOPOLY power charges different prices in different markets, according to the character- istics of each market. This presumes the monopolist can clearly identify thesource of DEMAND in each market and can properly gauge PRICE ELASTICITY; if it can, it may be able to maximize its profitability.	palgrave	36.63	14.6	0	12.77	16.3	10.39	19	17.32
DISECONOMIES OF SCALE	The relative cost increases that a company may experience once excessive expansion within a market segment has occurred. These may relate to duplicative efforts, slower response time, product cannibal- ization, regulatory challenges, and so forth. See also ECONOMIES OF SCALE.	palgrave	41.06	10.8	13	15.07	13.2	12.19	8.666667	13.32
DISENFRANCHISE	The process of removing VOTING RIGHTS from a class of COMMON STOCK so that INVESTORS in that class are only entitled to RENT RIGHTS. See also DISENFRANCHISING TRANSACTION.	palgrave	65.73	7.6	0	11.53	9.8	9.41	8	11.31
DISENFRANCHISING TRANSACTION	A financial RESTRUCTURING trans- action, such as a DUAL CLASS RECAPITALIZATION, that removes VOTING RIGHTS from certain COMMON STOCK INVESTORS.	palgrave	25.8	14.6	0	17.52	17.8	13.31	13	14
DISHONOR	The act of refusing to accept or pay a BILL OF EXCHANGE or of failing to honor a CHECK or other financial CONTRACT.	palgrave	65.05	9.9	0	6.22	9.1	7.52	13.5	12.68
DISINFLATION	A decline in the rate of INFLATION, indicating a decline in the rate at which prices of goods and services are rising. See also DEFLATION.	palgrave	67.25	7	0	7.58	6.3	8.05	6.75	9.8
DISINVESTMENT	See DIVESTMENT.	palgrave	35.61	8.8	0	7.1	12.5	11.63	1	20.8
DISPLAYED LIQUIDITY	TRADING VOLUME, particularly in STOCKS, that is visible to the market at large, and which reflects available MARKET DEPTH. Displayed liquidity excludes HIDDEN ORDERS, the hidden portion of RESERVE ORDERS, positions held back in the books of MARKET MAKERS, as well as those residing in DARK POOLS.	palgrave	47.62	12.5	0	12.89	15.4	11.19	14.25	13.66
DISPOSABLE INCOME	The amount of discretionary income left for SAVINGS, INVESTMENT, or consumption once mandatory EXPENSES and TAXES have been paid. Disposable income can be measured at both the household level and the national level.	palgrave	46.27	10.9	0	13.86	13	9.24	11.75	15.08
DISPOSAL VALUE	See RESIDUAL VALUE.	palgrave	34.59	9.2	0	5.35	6.8	9.05	1.5	14.53
DISTRESSED ASSET	An ASSET, generally a SECURITY or real property, that features a sharply reduced value as a result of actual or potential losses	palgrave	23.77	15.4	0	10.39	12.5	12.62	16	17.89
DISTRESSED FUND	See VULTURE FUND.	palgrave	93.81	0.9	0	1.52	3.6	14.31	0.5	1.2
DISTRIBUTABLE PROFITS	See DISTRIBUTABLE RESERVES.	palgrave	59.97	5.6	0	20.83	19.3	14.31	0.5	1.2
DISTRIBUTABLE RESERVES	In the United Kingdom, the amount of money a company has available for distribution to INVESTORS in the form of DIVIDENDS. The maximum amount that is ultimately distributable by PUBLIC LIMITED COMPANIES is governed via the Companies Act, i.e., distrib- utable reserves cannot exceed an amount that causes NET ASSETS to become less than SHARE CAPITAL plus UN. Also known asDISTRIBUTABLE PROFITS.	palgrave	50.46	11.4	13.6	13.05	14.2	10.27	13.666667	12.8
DIVERSIFIABLE RISK	A RISK that is unique to a company, ASSET, or mar- ket, meaning that it can be reduced or eliminated by holding a PORTFOLIO of assets that have little or no CORRELATION.Also known as IDIOSYNCRATIC RISK, NONSYSTEMATIC RISK, UNSYSTEMATIC RISK, SPECIFIC RISK. See also DIVERSIFICATION, NONDIVERSIFIABLE RISK.returns for a given SECURITY can thus be divided into diversifiable and non- diversifiable components:where β2j is the square of the beta of security j, σ2(rm) is the VARIANCE of the market portfolio, and σ2(εj) is the RESIDUAL VARIANCE of security j. See also DIVERSIFIABLE RISK, NONDIVERSIFIABLE RISK, PORTFOLIO DIVERSIFICATION.Additional references: Markowitz (1952); Ross (1976); Sharpe (1971).	palgrave	11.28	20.2	19.3	15.27	23.2	11.62	24.666667	19.93
DIVESTITURE	A CORPORATE FINANCE transaction where a company sells a SUBSIDIARY or a portion of its operations to a third party. A divestiture typ- ically occurs when the company no longer views the ASSETS as essential to its business, prefers to refocus its operations more narrowly, or needs to raise CAPITAL for other purposes. See also DEMERGER.	palgrave	44.03	11.8	15	11.2	11.5	10.49	13.666667	13.91
DIVESTMENT	The process of removing invested CAPITAL from a project, INVESTMENT, or other ASSET as a result of a change in strategy or actual/per- ceived RISK in relation to RETURN. Also known as DISINVESTMENT.	palgrave	46.27	10.9	0	10.55	10.5	11.15	12.25	15.08
DIVIDED COVER	INSURANCE CONTRACTS on the same property and PERIL purchased by the INSURED from two or more INSURERS. In the event of a CLAIM, the total SETTLEMENT will never exceed the amount of the loss, and will be divided on a PRO-RATA basis between insurers. See alsoAPPORTIONMENT, OVERLAPPING INSURANCE, PRIMACY.	palgrave	46.47	10.8	14.1	11.66	11.2	10.25	11.833333	12.23
DIVIDEND	A periodic amount a company pays from its net EARNINGS to COMMON STOCK and/or PREFERRED STOCK INVESTORS; dividend payments are generally discretionary, meaning they can be suspended at will, though in certain instances they are made mandatory through terms of a SECURITIES issue. In most systems the BOARD OF DIRECTORS is responsible for settingdividend policy. Dividends are generally paid in cash (as CASH DIVIDENDS) though in some cases they may be paid in the form of additional SHARES (as STOCK DIVIDENDS). See also DIVIDEND YIELD, PAYOUT RATIO.	palgrave	40.89	13	15.2	12.76	14.5	9.98	15.375	14.7
DIVIDEND COVER	See PAYOUT RATIO.	palgrave	59.97	5.6	0	1.52	3.6	14.31	0.5	1.2
DIVIDEND DISCOUNT MODEL	A quantitative VALUATION measure, based on the DISCOUNTED CASH FLOW framework, that is used to estimate the fair value of a company’s COMMON STOCK based on the discounted value of projected future DIVIDENDS. The price of a firm’s stock can be esti- mated via:where Divi is the projected dividend payable in period i, r is the firm’s DISCOUNT RATE, and n is the number of periods. Note that for stocks that do not currently pay out a dividend, the assumption is made that a dividend will be made starting in some future period.Value can also be estimated through growth and dividend assumptions. No growth and constant dividend:Growth and constant dividend:where g is the dividend growth rate and all other terms are as defined above.Additional levels of precision can be added by assuming that dividends will change in stages as the company progresses through its life cycle (e.g., two-stage growth, three-stage growth). See also DISCOUNTED CASH FLOW VALUATION MODEL, EARNINGS-BASED MODEL.Additional references: Lintner (1956); Miller and Modigliani (1961).	palgrave	37.57	16.3	18	13.12	20.4	10.12	22.666667	17.91
DIVIDEND IN ARREARS	A DIVIDEND that has accumulated for one or more payment periods and is payable to the current holders of CUMULATIVE PREFERRED STOCK. Dividends cannot be paid to COMMON STOCK or NONCUMULATIVE PREFERRED STOCK INVESTORS until the arrears have been made current.	palgrave	42.21	12.5	0	13.29	13.9	9.66	13.25	14.05
DIVIDEND PAYOUT RATIO	The amount of EARNINGS paid out in the form of DIVIDENDS by a company to its INVESTORS, computed as:where Div is the amount of dividends paid in the current period, E is the amount of earnings in the current period.	palgrave	47.8	16.5	0	8.25	19.3	8.78	26	19
DIVIDEND WAIVER	A process where a significant INVESTOR in a company opts not to accept a DIVIDEND payment, allowing the company to retain the cash in its accounts.	palgrave	45.09	13.4	0	9.81	13.7	9.78	18	15.02
DIVIDEND YIELD	The effective YIELD of a share of COMMON STOCK, typ- ically calculated as:where Divi is the DIVIDEND paid in period i and Si is the price of the stock in period i. See also PAYOUT RATIO.	palgrave	61.67	9.1	0	5.97	7.3	9.79	11.5	11.64
DJIA	See DOW JONES INDUSTRIAL AVERAGE.	palgrave	32.56	10	0	10.76	8.4	16.52	3.5	18
DK	Abbreviated form of “don’t know,” meaning one of the parties to a transaction disputes, refutes, or claims not to know, certain details of a trade. A trade that has been “’d” remains unreconciled until one of the parties concedes to a change in details or it is cancelled. Also known as OUT TRADE, QUESTIONED TRADE.	palgrave	69.82	8.1	8.8	9.4	10.1	8.85	10.166667	9.5
DMA	See DIRECT MARKET ACCESS.	palgrave	50.5	7.2	0	7.25	6.5	7.78	1	1.6
DO NOT REDUCE ORDER	An ORDER with a price that is not to be adjusted in case of a STOCK SPLIT or DIVIDEND payout.	palgrave	76.56	7.6	0	3.89	6	7.79	12	12
DOCUMENTARY CREDIT	A commercial LETTER OF CREDIT committing the BANK to pay a named BENEFICIARY, such as a seller of goods, once a con- firming document has been delivered to the buyer; the documentary credit is widely used in international TRADE transactions, where BILLS OF LADING often serve as the evidencing document. Also known as DOCUMENTARY DRAFT.	palgrave	35.1	15.2	0	12.02	16.5	10.46	19.25	17.55
DOCUMENTARY DRAFT	See DOCUMENTARY CREDIT.	palgrave	9.21	12.7	0	13.12	13	14.31	1.5	14.53
DOCUMENTS AGAINST ACCEPTANCE	In international TRADE, a pro- cess where an exporter sends shipping documents with a relevant BILL OF EXCHANGE to a BANK, which releases the goods when the bill has been accepted. See also CASH AGAINST DOCUMENTS.	palgrave	61.67	9.1	0	10.32	10.8	8.92	12	12.76
DOG	A STOCK that performs poorly compared to its peers or the broad market. See also DEAD MONEY.	palgrave	79.77	4.2	0	5.88	3.9	7.77	3.25	3.4
DOG AND PONY SHOW	See ROADSHOW.	palgrave	77.91	2.9	0	1.3	7.8	11.63	0	0.8
DOGS OF THE DOW	In the United States, an INVESTMENT strategy based on purchasing the 10 stocks in the DOW JONES INDUSTRIAL AVERAGE that provide the greatest DIVIDEND YIELD, and holding the stocks during the course of the year.	palgrave	44.41	15.8	0	11.96	19.8	12.14	23.5	20.86
DOLLAR ROLL	A financial transaction involving the sale, and future repur- chase, of MORTGAGE-BACKED SECURITIES for cash. Through the exchange the selling party effectively borrows funds from the purchasing party on a collater- alized basis for a period that normally covers several days to several weeks. The dollar roll is essentially a form of mortgage-backed REPURCHASE AGREEMENT.	palgrave	35.98	12.8	15.5	15.2	14.9	11.43	13.833333	14.59
DOLLARIZATION	A process where a country adopts, either partially or wholly, the US dollar in place of its own CURRENCY.	palgrave	69.11	8.3	0	8.36	9.6	8.73	11.5	11.81
DOUBLE BOTTOM	A TECHNICAL ANALYSIS charting formation that depicts two SUPPORT LEVELS followed by a BREAKOUT. The multiple rebounds are indicative of support and possible strength on the upside. Also known as a W FORMATION. See also DOUBLE TOP.	palgrave	53.58	8.1	10.7	10.76	7.9	10.07	5.375	9.13
DOUBLE DIPPING	An unethical (and sometimes illegal) practice where a BROKER sells COMMISSION-based products through a client’s fee-basedaccount, earning REVENUES from two sources and effectively overcharging the client.	palgrave	28.17	15.8	0	21.59	24	15.25	19	18.09
DOUBLE LEVERAGE	Borrowing at multiple levels within the corporate struc- ture, such as the HOLDING COMPANY and a primary operating SUBSIDIARY. Double leverage is generally considered to be a more accurate reflection of a group’s true indebtedness as it incorporates LIABILITIES from multiple entities. See also STRUCTURAL SUBORDINATION.	palgrave	22.11	14	16.3	16.17	14.4	12.29	13	18.29
DOUBLE RECOVERY	An illegal attempt by an INSURED to file mul- tiple CLAIMS on a single loss event with multiple INSURERS. Double recov- ery violates the principle of INDEMNITY, which states that an INSURANCE CONTRACT cannot result in a profit for the insured.	palgrave	50.67	11.3	0	10.73	12.1	11.59	13.75	15.03
DOUBLE TAXATION	(1) A process where the income of an individual or company is taxed in multiple TAX jurisdictions. In order to avoid or reduce this burden, many countries have tax treaties that allow for an elimination or reduction. (2) The phenomenon where corporate earnings paid in the form of DIVIDENDS are taxed twice, once at the corporate level, and a second time at the INVESTOR level.	palgrave	38.49	16	0	10.34	17.5	9.86	21.25	17.92
DOUBLE TOP	A TECHNICAL ANALYSIS charting formation that depicts two RESISTANCE LEVELS followed by a BREAKOUT. The multiple declines suggest resistance on the upside and possible weakness on the downside. Also known as a REVERSE W FORMATION. See also DOUBLE BOTTOM.	palgrave	44.61	9.5	11.2	12.62	9.4	10.2	5.875	9.05
DOUBLING OPTION	A right granted by INVESTORS to an ISSUER of BONDS that allows the issuer to double the amount of the SINKING FUND provision in order to accelerate repayment and ultimate redemption.	palgrave	40.01	15.4	0	11.56	17.1	11.29	20.5	18.85
DOW THEORY	The study of TECHNICAL ANALYSIS, efficient markets, and market cycles developed by Charles Dow in the early twentieth century. Under Dow theory, market cycles follow a primary trend (a long-term phase of approximately 4 years), which can be impacted by a secondary trend (short- term departures of STOCKS from trend lines) as well as a tertiary trend (short- term fluctuations in stock prices).	palgrave	39.5	15.6	0	12.49	19.1	11.46	21.75	20.22
DOWN AND IN OPTION	A COMPLEX OPTION that creates a stand- ard EUROPEAN OPTION if the price of the UNDERLYING market reference declines through a predefined BARRIER. See also BARRIER OPTION, DOWN AND OUT OPTION, KNOCK-IN OPTION, REVERSE KNOCK-IN OPTION, UP AND IN OPTION, UP AND OUT OPTION.	palgrave	49.15	11.9	0	11.31	13.9	8.68	14	13.35
DOWN AND OUT OPTION	A COMPLEX OPTION that extinguishes a stand- ard EUROPEAN OPTION if the price of the UNDERLYING market reference declines through a predefined BARRIER. If the barrier is not breached the European option remains in effect. See also BARRIER OPTION, DOWN AND IN OPTION, KNOCK-OUT OPTION, REVERSE KNOCK-OUT OPTION, UP AND IN OPTION, UP AND OUT OPTION.	palgrave	44.03	11.8	13	11.72	12.4	8.51	12.333333	11.77
DOWN ROUND	A second, third, or fourth round of VENTURE CAPITAL financing that is done at lower valuation levels than early rounds, suggesting the company may be worth less than initially predicted.	palgrave	32.57	16.2	0	12.89	18.2	9.86	22	18.67
DOWNSIZING	A process where a company reduces its staffing and/or pro- ductive facilities as a means of managing costs more effectively and increasing its operating flexibility. Downsizing tends to occur when a company is becom- ing uncompetitive or during the contraction phase of the BUSINESS CYCLE. See also RIGHTSIZING.	palgrave	38.32	11.9	14.6	13.63	12.5	11.67	12	14.73
DOWNSTREAM	(1) The process of channeling funds from a parent company or holding company to a SUBSIDIARY. This may occur when the parent or holding company can borrow on more favorable terms, or when the subsidiary is restricted in some way from raising funds directly. (2) The segment of the energy industry that is focused on refining, transportation, and marketing/ retailing. See also UPSTREAM.	palgrave	50.16	11.5	15	11.43	13.3	10.19	14.833333	14.75
DOWNTICK	See MINUS TICK.	palgrave	93.81	0.9	0	-2.38	0.5	9.05	0.5	1.2
DPC	See DERIVATIVE PRODUCT COMPANY.	palgrave	-8.73	15.5	0	15.95	13.5	11.73	3	11.6
DPO	See DIRECT PUBLIC OFFERING.	palgrave	33.58	9.6	0	10.15	8.8	7.78	2	11.6
DRAFT	(1) See BANK . (2) See BILL OF EXCHANGE.	palgrave	88.74	2.9	0	-0.81	1.4	7.98	3.5	3.2
DRAG ALONG RIGHTS	Legal rights that allow majority SHAREHOLDERS of a company to force MINORITY INTERESTS to sell their SHARES in the event of a TAKEOVER bid; this is necessary in situations where the acquiring company requires 100% control. Drag along rights must be specifically negotiated in a CORPORATE FINANCE transaction. See also TAG ALONG RIGHTS.	palgrave	45.05	11.4	15	12.87	12.6	10.77	13.166667	15.38
DRAGNET CLAUSE	See CROSS COLLATERAL AGREEMENT.	palgrave	33.58	9.6	0	15.95	13.5	11.73	2	11.6
DRAGON	A public BOND issued simultaneously in various Asian centers by a non-Asian company, denominated in a local Asian currency or US dollars. The dragon is effectively a regional form of the GLOBAL BOND.	palgrave	37.81	12.1	0	11.08	10.7	11.63	11.75	13.87
DRAWDOWN	(1) A performance measure applied to HEDGE FUNDS, indi- cating the degree to which losses have reduced INVESTOR CAPITAL. (2) Reduction in capital within an investor’s BROKER account as a result of losses.(3)The disbursement and use of funds by a BORROWER under a REVOLVING CREDIT FACILITY or other financing arrangement. (3) See also FLEXIBLE DRAWDOWN.	palgrave	-1.28	27.1	0	13.54	31.6	14.12	38.5	28.55
DRAWEE	A party that is instructed to pay under a BILL OF EXCHANGE or CHECK, as indicated by the DRAWER. In the case of a bill, the drawee may choose to have it accepted, or GUARANTEED, by an ACCEPTOR in exchange for a fee. See also DRAWER.	palgrave	72.87	6.9	10.5	4.81	5.4	6.8	8.333333	10.47
DRAWER	The person that issues a CHECK or executes a BILL OF EXCHANGE, requiring the DRAWEE to pay upon presentation and acceptance.	palgrave	50.16	11.5	0	10.91	12.4	9.19	14.5	16.02
DROP LOCK	A mechanism where the INTEREST RATE on a FLOATING RATE NOTE or BOND is fixed once rates fall below a predefined level. The drop lock allows the ISSUER to lock in a lower rate of funding. See also NOTE, SPREAD LOCK.	palgrave	74.49	6.3	8.8	6.2	5.4	8.55	6.833333	8.41
DROP LOCK NOTE	A FLOATING RATE NOTE or BOND that converts into a fixed COUPON obligation when a reference INTEREST RATE is breached on the downside. See also DROP LOCK.	palgrave	74.69	6.2	0	8.98	7.5	10.15	7.25	9.84
DROPDOWN	A clause in a REINSURANCE CONTRACT that requires the REINSURER to provide coverage to an underlying INSURED if the INSURER cannot fulfill its obligations under the policy CEDED. A dropdown is most common in a FACULTATIVE REINSURANCE agreement where individual pol- icies are analyzed and accepted.	palgrave	31.21	14.6	0	14.39	15.9	12.67	17.5	18.77
DRY POWDER	(1) Excess cash reserves held by a company to meet future obligations or to capitalize on potential ACQUISITIONS or CAPITAL INVESTMENTS. (2) Cash held by INVESTORS that can be allocated to attract- ive INVESTMENT opportunities.	palgrave	10.57	20.5	0	14.11	22	12.59	27.5	23.14
DTCC	See DEPOSITORY TRUST AND CLEARING CORPORATION.	palgrave	6.17	13.9	0	17.85	13.7	11.83	4	15.73
DUAL CLASS STOCK	The COMMON STOCK of a CORPORATION that comes in two forms, one with enhanced VOTING RIGHTS and one with normal vot- ing rights. The two classes may also carry different DIVIDEND rights. See alsoCONTROL STOCK, DUAL CLASS RECAPITALIZATION.	palgrave	58.58	8.2	10.5	11.47	9.7	10.5	7	9.29
DUAL CURRENCY BOND	A BOND that pays INTEREST in one CURRENCY and PRINCIPAL redemption in a second currency. The FOREIGN EXCHANGE RATES associated with the COUPON and principal CASH FLOWS may be spe- cified at the time of issuance, or they may be based on prevailing SPOT RATES at the time the coupons and principal are paid. A company may choose to issue a dual currency bond to HEDGE any FOREIGN EXCHANGE flows from its operations, or take a speculative view on currencies in order to obtain a lower COST OF CAPITAL. Also known as FOREIGN CURRENCY BOND.	palgrave	55.78	11.4	14.6	9.52	12.3	8.97	15.875	13.31
DUAL LISTED COMPANY	Two PUBLIC COMPANIES that are constituted separately, retain separate identities, feature individual EXCHANGE listings but combine their business operations for purposes of creating goods and ser- vices. See also PUBLIC LIMITED COMPANY.	palgrave	12.94	15.4	0	18.67	16.8	11.83	13.5	17.65
DUAL LISTED COMPANY ARBITRAGE	An ARBITRAGE strategy that seeks to exploit discrepancies between the SHARE prices of the constituent compan- ies. An INVESTOR seeks to profit by purchasing the STOCK of the underval- ued company and arranging a SHORT SALE of the overvalued company, with an expectation that the two will converge to a theoretical PARITY value over time.	palgrave	35.1	15.2	0	12.31	16.6	10.74	19.75	18.27
DUAL PURPOSE FUND	A MUTUAL FUND or UNIT TRUST that issues two separate types of SECURITIES, including income shares, which are entitled only to the DIVIDEND flows from the underlying securities, and capital shares, which are entitled only to any resulting capital gains.	palgrave	13.96	21.3	0	13.47	23.7	11.15	32	23
DUAL TRIGGER	An INSURANCE mechanism that provides the INSURED with a payout only if two separate TRIGGER events occur. One trigger is oftenMULTIPLE TRIGGER PRODUCT, TRIPLE TRIGGER.	palgrave	41.87	10.5	0	14.31	11.8	11.2	7.25	9.8
DUE DATE	The maturity date indicated on a BILL OF EXCHANGE.	palgrave	45.42	9.2	0	7.39	5.1	7.59	5.5	12.49
DUMMY DIRECTOR	A DIRECTOR serving on the BOARD of a com- pany who votes in favor of actions directed by a person who is not a director. Also known as ACCOMMODATION DIRECTOR.	palgrave	56.25	9.1	0	6.49	6.3	8.59	9	10
DUOPOLY	A market that only features two sellers of goods or services, sug- gesting the sellers have a considerable degree of influence in setting prices. See also DUOPSONY, MONOPOLY, OLIGOPOLY.	palgrave	48.3	10.1	0	12.35	11.3	10.89	8.25	11.32
DUOPSONY	A market that only features two buyers of goods or services, sug- gesting the buyers have an ability to influence the prices paid to suppliers. See also DUOPOLY, MONOPSONY, OLIGOPSONY.	palgrave	56.25	9.1	0	10.95	10.4	10.7	8.5	11.33
DUPONT FORMULA	A financial performance which separates the trad- itional RETURN ON EQUITY (ROE) ratio into its constituent parts to provide further insight into performance and trends. Under this framework a company can isolate the effects of net profit margin, ASSET TURNOVER, and LEVERAGE. The Dupont formula is based on the fundamental ROE ratio:⎝⇒ = ⎛ Inc ⎞ ⎛ Sales⎞ ⎛ TA⎞ ROE ⎜ Sales⎟ ⎜ TA ⎟ ⎜ Eq ⎟where Inc is net income, Sales is a measure of sales or turnover, TA is total assets, Eq is total equity.	palgrave	50.2	13.5	13	9.12	14.9	10.83	17.833333	14.45
DURABLE GOOD	An ASSET that has a life span of at least three years, e.g., appliances, electronics, automobiles. Durable goods form part of the PERSONAL CONSUMPTION component of GROSS DOMESTIC PRODUCT (and GROSS NATIONAL PRODUCT). See also CAPITAL GOOD, NON.1 ⎡1C+2C+++where C is semiannual coupon interest, y is the semiannual yield, n is the number of semiannual periods, and M is the maturity value of the bond (gen- erally PAR VALUE).Extensions of the duration formula include Macaulay’s duration, computed as:(1 + y)and MODIFIED DURATION, calculated as:(1 + y)See also DELTA, CONVEXITY.	palgrave	25.12	17	19.6	13.59	19.5	13.06	23.166667	20.8
DUTCH AUCTION	An AUCTION MARKET technique used in certain mar- ketplaces where the price of a SECURITY or ASSET being sold is lowered until a BID is obtained; the remaining orders are then filled at the same price. See also ENGLISH AUCTION.	palgrave	59.64	9.9	0	9.28	10.6	8.97	11	10
DUTY	A TAX imposed by a government authority on a specific good or ser- vice. See also STAMP .	palgrave	62.85	6.6	0	4.2	2.8	8.7	5	8.11
DUTY OF LOYALTY	A legal requirement in certain systems where the BOARD OF DIRECTORS and EXECUTIVE MANAGEMENT must ensure that any action taken is done in good faith and with the best interests of SHAREHOLDERS in mind. A breach of duty of loyalty can lead to legal action by shareholders. See also DUTY OF CARE.	palgrave	62.38	8.9	12.5	9.22	9.2	8.14	11.333333	12.3
DVP	See DELIVERY VERSUS PAYMENT.	palgrave	33.58	9.6	0	11.6	10	11.73	2	11.6

DIRTY PRICE

The price of a BOND inclusive of ACCRUED INTEREST. Most SECONDARY MARKET bond transactions are quoted on dirty prices. See also CLEAN PRICE, INVOICE PRICE.

palgrave

0

71.51

5.3

8.8

10.11

7.4

9.73

4.166667

8.12

DIRTY STOCK

Transferred COMMON STOCK that fails to convey good TITLE to the new buyer as a result of errors or omissions in form or authorization.

palgrave

0

55.58

11.5

0

9.58

12.4

10.75

13

11.27

DISASTER RECOVERY RISK

The RISK of loss arising from damage to phys- ical infrastructure – which prohibits use of real estate, plant and equipment, technology, and communications – leading to a halt in operations; the disaster may be firm-specific, industry-based, regional, or system-wide. Disaster recov- ery risks can often be covered through specific BUSINESS INTERRUPTION INSURANCE. A subcategory of OPERATIONAL RISK. See also BUSINESS RECOVERY RISK.

palgrave

0

30.06

13

14.2

15.02

14.1

11.44

11.625

14.57

DISBURSEMENT

Granting of funds by a BANK to a client under a previously established CREDIT facility.

palgrave

0

47.79

10.3

0

9.97

9

11.75

10.5

14

DISCHARGE

The release of a party from a legally binding CONTRACT or other obligation as a result of satisfactory performance under the terms of the agreement, or as a result of a legal proceeding.

palgrave

0

37.98

16.2

0

10.05

17.1

10.54

20.5

16.84

DISCOUNT

(1) A reduction in the price of goods or the value of SECURITIES or other ASSETS as a result of SUPPLY and DEMAND or RISK factors. (2) The process of applying a RATE to one or more future CASH FLOWS in order to obtain a PRESENT VALUE, NET PRESENT VALUE, or ENTERPRISE VALUE.

palgrave

0

34.6

21.6

0

7.04

24.8

11.03

30.5

24.22

DISCOUNT BOND

(1) A BOND that trades at a DISCOUNT to its PAR VALUE.(2)A form of BRADY BOND with an initial discount to par value but a higher INTEREST COUPON than the PAR BOND alternative. (1) See also PREMIUM BOND.

palgrave

0

49.83

15.8

0

7.15

18

10.92

22

18.36

DISCOUNT CURRENCY

A CURRENCY that trades at a lower value than another currency in the FORWARD market. See also PREMIUM CURRENCY.

palgrave

0

44.91

9.4

0

8.73

6.4

7.43

6.25

8.01

DISCOUNT FACTOR

A factor that generates the PRESENT VALUE of a CASH FLOW when multiplied by a period’s estimated CASH FLOW. It is computed as:where r is the relevant DISCOUNT RATE or COST OF CAPITAL, t is the time period. Also known as PRESENT VALUE FACTOR.

palgrave

0

65.01

7.8

12.5

7.59

7.1

8.31

9

12.24

DISCOUNT HOUSE

In the United Kingdom, a FINANCIAL INSTITUTION that is active in MONEY MARKET dealing and which actively discounts BILLS OF EXCHANGE and deals in AT CALL funds.

palgrave

0

44.07

13.8

0

11.38

15.4

10.24

16.5

15.24

DISCOUNT MARKET

In the United Kingdom, the sector of the MONEY MARKET that includes BANKS, DISCOUNT HOUSES, and BROKERS special- izing in BILLS OF EXCHANGE. The discount market serves to generate short- term secured LIQUIDITY for these specialized institutions.(5) The SPOT RATE of interest. (1,2) See also DISCOUNT.

palgrave

0

39.67

13.4

0

13.41

16.2

11.3

14

13.55

DISCOUNT SWAP

An OVER-THE-COUNTER NONPAR SWAP where the receiver of FIXED RATES is granted an upfront payment by the FLOATING RATE payer in exchange for accepting a lower ongoing fixed rate inflow. See also PREMIUM SWAP.

palgrave

0

54.22

9.9

0

11.25

11

10.98

11

11.51

DISCOUNT WINDOW

In the United States, a facility, made available by the FEDERAL RESERVE BANKS, that permits authorized MEMBER BANKS to bor- row short-term funds on an emergency basis in order to balance cash outflows.

palgrave

0

37.98

16.2

0

11.96

19.2

11.49

20.5

18.05

DISCOUNT YIELD

The effective YIELD of any FIXED INCOME instrument issued on a discount, rather than COUPON-bearing, basis, generally computed as:where Face is FACE VALUE, P is purchase price, and nMAT is the number of days until MATURITY. See also BOND EQUIVALENT YIELD, SIMPLE YIELD, TAXABLE EQUIVALENT YIELD, YIELD TO CALL, YIELD TO MATURITY.where CF is the estimated cash flow, r is the company’s COST OF CAPITAL, g is the estimated, and constant, growth rate.A more refined version assumes that cash flows vary from period to period, and is given as:where CFt is an estimated cash flow generated in time period t.Since estimating cash flows into infinity is challenging a further refinement of the model uses a combination of discounted cash flow estimates over a spe- cific time horizon, along with an estimate of TERMINAL VALUE.+where N is the number of periods over which a cash flow can be reasonably estimated, TV is the estimated terminal value of the company.The model can also be adapted to value a company’s stock based on FREE CASH FLOW TO EQUITY, under the following general formula:where r is the company’s cost of EQUITY.Alternatively, it can be used to value the firm (rather than the stock) under the FREE CASH FLOW TO FIRM formula:where r is the firm’s WEIGHTED AVERAGE COST OF CAPITAL.For both free cash flow methods, the terminal value estimate can also be used after a specific time horizon. See also DIVIDEND DISCOUNT MODEL, EARNINGS-BASED MODEL, FREE CASH FLOW TO EQUITY, FREE CASH FLOW TO FIRM.

palgrave

0

-13.49

35.9

26.5

11.92

44

11.94

34

37.78

DISCOUNTED PAYBACK PERIOD

The time required to pay back the ori- ginal INVESTMENTS in terms of DISCOUNTED future CASH FLOWS, gener- ally expressed in terms of years. See also PAYBACK PERIOD.

palgrave

0

65.73

7.6

0

9.45

8.6

12.23

7.5

9.89

DISCRETE BARRIER OPTION

See PARTIAL BARRIER OPTION.

palgrave

0

33.58

9.6

0

10.15

8.8

15.68

2

11.6

DISCRETIONARY ACCOUNT

A customer BROKERAGE ACCOUNT where the client gives the BROKER authorization to act on his/her behalf in buying and selling SECURITIES. The client may limit the discretion through time and/ or price constraints.

palgrave

0

54.73

9.7

0

13.16

12.3

10.2

10.25

11.45

DISCRETIONARY ORDER

An ORDER for the purchase or sale of SECURITIES, COMMODITIES, or other financial ASSETS given by a client to a BROKER, where the broker has flexibility to execute a deal at the price and time deemed best.

palgrave

0

42.38

16.5

0

9.01

18.5

9.74

23.5

20.21

DISCRETIONARY TRUST

A TRUST or INVESTMENT trust where a TRUSTEE or other designated person has the ability to invest the BENEFICIARY’S ASSETS as deemed best, without specific constraints or within certain general param- eters. See also BLIND TRUST.

palgrave

0

44.75

11.5

0

12.87

12.8

10.23

12

12.76

DISCRIMINATING MONOPOLY

A state where a company with MONOPOLY power charges different prices in different markets, according to the character- istics of each market. This presumes the monopolist can clearly identify thesource of DEMAND in each market and can properly gauge PRICE ELASTICITY; if it can, it may be able to maximize its profitability.

palgrave

0

36.63

14.6

0

12.77

16.3

10.39

19

17.32

DISECONOMIES OF SCALE

The relative cost increases that a company may experience once excessive expansion within a market segment has occurred. These may relate to duplicative efforts, slower response time, product cannibal- ization, regulatory challenges, and so forth. See also ECONOMIES OF SCALE.

palgrave

0

41.06

10.8

13

15.07

13.2

12.19

8.666667

13.32

DISENFRANCHISE

The process of removing VOTING RIGHTS from a class of COMMON STOCK so that INVESTORS in that class are only entitled to RENT RIGHTS. See also DISENFRANCHISING TRANSACTION.

palgrave

0

65.73

7.6

0

11.53

9.8

9.41

8

11.31

DISENFRANCHISING TRANSACTION

A financial RESTRUCTURING trans- action, such as a DUAL CLASS RECAPITALIZATION, that removes VOTING RIGHTS from certain COMMON STOCK INVESTORS.

palgrave

0

25.8

14.6

0

17.52

17.8

13.31

13

14

DISHONOR

The act of refusing to accept or pay a BILL OF EXCHANGE or of failing to honor a CHECK or other financial CONTRACT.

palgrave

0

65.05

9.9

0

6.22

9.1

7.52

13.5

12.68

DISINFLATION

A decline in the rate of INFLATION, indicating a decline in the rate at which prices of goods and services are rising. See also DEFLATION.

palgrave

0

67.25

7

0

7.58

6.3

8.05

6.75

9.8

DISINVESTMENT

See DIVESTMENT.

palgrave

0

35.61

8.8

0

7.1

12.5

11.63

1

20.8

DISPLAYED LIQUIDITY

TRADING VOLUME, particularly in STOCKS, that is visible to the market at large, and which reflects available MARKET DEPTH. Displayed liquidity excludes HIDDEN ORDERS, the hidden portion of RESERVE ORDERS, positions held back in the books of MARKET MAKERS, as well as those residing in DARK POOLS.

palgrave

0

47.62

12.5

0

12.89

15.4

11.19

14.25

13.66

DISPOSABLE INCOME

The amount of discretionary income left for SAVINGS, INVESTMENT, or consumption once mandatory EXPENSES and TAXES have been paid. Disposable income can be measured at both the household level and the national level.

palgrave

0

46.27

10.9

0

13.86

13

9.24

11.75

15.08

DISPOSAL VALUE

See RESIDUAL VALUE.

palgrave

0

34.59

9.2

0

5.35

6.8

9.05

1.5

14.53

DISTRESSED ASSET

An ASSET, generally a SECURITY or real property, that features a sharply reduced value as a result of actual or potential losses

palgrave

0

23.77

15.4

0

10.39

12.5

12.62

16

17.89

DISTRESSED FUND

See VULTURE FUND.

palgrave

0

93.81

0.9

0

1.52

3.6

14.31

0.5

1.2

DISTRIBUTABLE PROFITS

See DISTRIBUTABLE RESERVES.

palgrave

0

59.97

5.6

0

20.83

19.3

14.31

0.5

1.2

DISTRIBUTABLE RESERVES

In the United Kingdom, the amount of money a company has available for distribution to INVESTORS in the form of DIVIDENDS. The maximum amount that is ultimately distributable by PUBLIC LIMITED COMPANIES is governed via the Companies Act, i.e., distrib- utable reserves cannot exceed an amount that causes NET ASSETS to become less than SHARE CAPITAL plus UN. Also known asDISTRIBUTABLE PROFITS.

palgrave

0

50.46

11.4

13.6

13.05

14.2

10.27

13.666667

12.8

DIVERSIFIABLE RISK

A RISK that is unique to a company, ASSET, or mar- ket, meaning that it can be reduced or eliminated by holding a PORTFOLIO of assets that have little or no CORRELATION.Also known as IDIOSYNCRATIC RISK, NONSYSTEMATIC RISK, UNSYSTEMATIC RISK, SPECIFIC RISK. See also DIVERSIFICATION, NONDIVERSIFIABLE RISK.returns for a given SECURITY can thus be divided into diversifiable and non- diversifiable components:where β2j is the square of the beta of security j, σ2(rm) is the VARIANCE of the market portfolio, and σ2(εj) is the RESIDUAL VARIANCE of security j. See also DIVERSIFIABLE RISK, NONDIVERSIFIABLE RISK, PORTFOLIO DIVERSIFICATION.Additional references: Markowitz (1952); Ross (1976); Sharpe (1971).

palgrave

0

11.28

20.2

19.3

15.27

23.2

11.62

24.666667

19.93

DIVESTITURE

A CORPORATE FINANCE transaction where a company sells a SUBSIDIARY or a portion of its operations to a third party. A divestiture typ- ically occurs when the company no longer views the ASSETS as essential to its business, prefers to refocus its operations more narrowly, or needs to raise CAPITAL for other purposes. See also DEMERGER.

palgrave

0

44.03

11.8

15

11.2

11.5

10.49

13.666667

13.91

DIVESTMENT

The process of removing invested CAPITAL from a project, INVESTMENT, or other ASSET as a result of a change in strategy or actual/per- ceived RISK in relation to RETURN. Also known as DISINVESTMENT.

palgrave

0

46.27

10.9

0

10.55

10.5

11.15

12.25

15.08

DIVIDED COVER

INSURANCE CONTRACTS on the same property and PERIL purchased by the INSURED from two or more INSURERS. In the event of a CLAIM, the total SETTLEMENT will never exceed the amount of the loss, and will be divided on a PRO-RATA basis between insurers. See alsoAPPORTIONMENT, OVERLAPPING INSURANCE, PRIMACY.

palgrave

0

46.47

10.8

14.1

11.66

11.2

10.25

11.833333

12.23

DIVIDEND

A periodic amount a company pays from its net EARNINGS to COMMON STOCK and/or PREFERRED STOCK INVESTORS; dividend payments are generally discretionary, meaning they can be suspended at will, though in certain instances they are made mandatory through terms of a SECURITIES issue. In most systems the BOARD OF DIRECTORS is responsible for settingdividend policy. Dividends are generally paid in cash (as CASH DIVIDENDS) though in some cases they may be paid in the form of additional SHARES (as STOCK DIVIDENDS). See also DIVIDEND YIELD, PAYOUT RATIO.

palgrave

0

40.89

13

15.2

12.76

14.5

9.98

15.375

14.7

DIVIDEND COVER

See PAYOUT RATIO.

palgrave

0

59.97

5.6

0

1.52

3.6

14.31

0.5

1.2

DIVIDEND DISCOUNT MODEL

A quantitative VALUATION measure, based on the DISCOUNTED CASH FLOW framework, that is used to estimate the fair value of a company’s COMMON STOCK based on the discounted value of projected future DIVIDENDS. The price of a firm’s stock can be esti- mated via:where Divi is the projected dividend payable in period i, r is the firm’s DISCOUNT RATE, and n is the number of periods. Note that for stocks that do not currently pay out a dividend, the assumption is made that a dividend will be made starting in some future period.Value can also be estimated through growth and dividend assumptions. No growth and constant dividend:Growth and constant dividend:where g is the dividend growth rate and all other terms are as defined above.Additional levels of precision can be added by assuming that dividends will change in stages as the company progresses through its life cycle (e.g., two-stage growth, three-stage growth). See also DISCOUNTED CASH FLOW VALUATION MODEL, EARNINGS-BASED MODEL.Additional references: Lintner (1956); Miller and Modigliani (1961).

palgrave

0

37.57

16.3

18

13.12

20.4

10.12

22.666667

17.91

DIVIDEND IN ARREARS

A DIVIDEND that has accumulated for one or more payment periods and is payable to the current holders of CUMULATIVE PREFERRED STOCK. Dividends cannot be paid to COMMON STOCK or NONCUMULATIVE PREFERRED STOCK INVESTORS until the arrears have been made current.

palgrave

0

42.21

12.5

0

13.29

13.9

9.66

13.25

14.05

DIVIDEND PAYOUT RATIO

The amount of EARNINGS paid out in the form of DIVIDENDS by a company to its INVESTORS, computed as:where Div is the amount of dividends paid in the current period, E is the amount of earnings in the current period.

palgrave

0

47.8

16.5

0

8.25

19.3

8.78

26

19

DIVIDEND WAIVER

A process where a significant INVESTOR in a company opts not to accept a DIVIDEND payment, allowing the company to retain the cash in its accounts.

palgrave

0

45.09

13.4

0

9.81

13.7

9.78

18

15.02

DIVIDEND YIELD

The effective YIELD of a share of COMMON STOCK, typ- ically calculated as:where Divi is the DIVIDEND paid in period i and Si is the price of the stock in period i. See also PAYOUT RATIO.

palgrave

0

61.67

9.1

0

5.97

7.3

9.79

11.5

11.64

DJIA

See DOW JONES INDUSTRIAL AVERAGE.

palgrave

0

32.56

10

0

10.76

8.4

16.52

3.5

18

DK

Abbreviated form of “don’t know,” meaning one of the parties to a transaction disputes, refutes, or claims not to know, certain details of a trade. A trade that has been “’d” remains unreconciled until one of the parties concedes to a change in details or it is cancelled. Also known as OUT TRADE, QUESTIONED TRADE.

palgrave

0

69.82

8.1

8.8

9.4

10.1

8.85

10.166667

9.5

DMA

See DIRECT MARKET ACCESS.

palgrave

0

50.5

7.2

0

7.25

6.5

7.78

1

1.6

DO NOT REDUCE ORDER

An ORDER with a price that is not to be adjusted in case of a STOCK SPLIT or DIVIDEND payout.

palgrave

0

76.56

7.6

0

3.89

6

7.79

12

DOCUMENTARY CREDIT

A commercial LETTER OF CREDIT committing the BANK to pay a named BENEFICIARY, such as a seller of goods, once a con- firming document has been delivered to the buyer; the documentary credit is widely used in international TRADE transactions, where BILLS OF LADING often serve as the evidencing document. Also known as DOCUMENTARY DRAFT.

palgrave

0

35.1

15.2

0

12.02

16.5

10.46

19.25

17.55

DOCUMENTARY DRAFT

See DOCUMENTARY CREDIT.

palgrave

0

9.21

12.7

0

13.12

13

14.31

1.5

14.53

DOCUMENTS AGAINST ACCEPTANCE

In international TRADE, a pro- cess where an exporter sends shipping documents with a relevant BILL OF EXCHANGE to a BANK, which releases the goods when the bill has been accepted. See also CASH AGAINST DOCUMENTS.

palgrave

0

61.67

9.1

0

10.32

10.8

8.92

12

12.76

DOG

A STOCK that performs poorly compared to its peers or the broad market. See also DEAD MONEY.

palgrave

0

79.77

4.2

0

5.88

3.9

7.77

3.25

3.4

DOG AND PONY SHOW

See ROADSHOW.

palgrave

0

77.91

2.9

0

1.3

7.8

11.63

0

0.8

DOGS OF THE DOW

In the United States, an INVESTMENT strategy based on purchasing the 10 stocks in the DOW JONES INDUSTRIAL AVERAGE that provide the greatest DIVIDEND YIELD, and holding the stocks during the course of the year.

palgrave

0

44.41

15.8

0

11.96

19.8

12.14

23.5

20.86

DOLLAR ROLL

A financial transaction involving the sale, and future repur- chase, of MORTGAGE-BACKED SECURITIES for cash. Through the exchange the selling party effectively borrows funds from the purchasing party on a collater- alized basis for a period that normally covers several days to several weeks. The dollar roll is essentially a form of mortgage-backed REPURCHASE AGREEMENT.

palgrave

0

35.98

12.8

15.5

15.2

14.9

11.43

13.833333

14.59

DOLLARIZATION

A process where a country adopts, either partially or wholly, the US dollar in place of its own CURRENCY.

palgrave

0

69.11

8.3

0

8.36

9.6

8.73

11.5

11.81

DOUBLE BOTTOM

A TECHNICAL ANALYSIS charting formation that depicts two SUPPORT LEVELS followed by a BREAKOUT. The multiple rebounds are indicative of support and possible strength on the upside. Also known as a W FORMATION. See also DOUBLE TOP.

palgrave

0

53.58

8.1

10.7

10.76

7.9

10.07

5.375

9.13

DOUBLE DIPPING

An unethical (and sometimes illegal) practice where a BROKER sells COMMISSION-based products through a client’s fee-basedaccount, earning REVENUES from two sources and effectively overcharging the client.

palgrave

0

28.17

15.8

0

21.59

24

15.25

19

18.09

DOUBLE LEVERAGE

Borrowing at multiple levels within the corporate struc- ture, such as the HOLDING COMPANY and a primary operating SUBSIDIARY. Double leverage is generally considered to be a more accurate reflection of a group’s true indebtedness as it incorporates LIABILITIES from multiple entities. See also STRUCTURAL SUBORDINATION.

palgrave

0

22.11

14

16.3

16.17

14.4

12.29

13

18.29

DOUBLE RECOVERY

An illegal attempt by an INSURED to file mul- tiple CLAIMS on a single loss event with multiple INSURERS. Double recov- ery violates the principle of INDEMNITY, which states that an INSURANCE CONTRACT cannot result in a profit for the insured.

palgrave

0

50.67

11.3

0

10.73

12.1

11.59

13.75

15.03

DOUBLE TAXATION

(1) A process where the income of an individual or company is taxed in multiple TAX jurisdictions. In order to avoid or reduce this burden, many countries have tax treaties that allow for an elimination or reduction. (2) The phenomenon where corporate earnings paid in the form of DIVIDENDS are taxed twice, once at the corporate level, and a second time at the INVESTOR level.

palgrave

0

38.49

16

0

10.34

17.5

9.86

21.25

17.92

DOUBLE TOP

A TECHNICAL ANALYSIS charting formation that depicts two RESISTANCE LEVELS followed by a BREAKOUT. The multiple declines suggest resistance on the upside and possible weakness on the downside. Also known as a REVERSE W FORMATION. See also DOUBLE BOTTOM.

palgrave

0

44.61

9.5

11.2

12.62

9.4

10.2

5.875

9.05

DOUBLING OPTION

A right granted by INVESTORS to an ISSUER of BONDS that allows the issuer to double the amount of the SINKING FUND provision in order to accelerate repayment and ultimate redemption.

palgrave

0

40.01

15.4

0

11.56

17.1

11.29

20.5

18.85

DOW THEORY

The study of TECHNICAL ANALYSIS, efficient markets, and market cycles developed by Charles Dow in the early twentieth century. Under Dow theory, market cycles follow a primary trend (a long-term phase of approximately 4 years), which can be impacted by a secondary trend (short- term departures of STOCKS from trend lines) as well as a tertiary trend (short- term fluctuations in stock prices).

palgrave

0

39.5

15.6

0

12.49

19.1

11.46

21.75

20.22

DOWN AND IN OPTION

A COMPLEX OPTION that creates a stand- ard EUROPEAN OPTION if the price of the UNDERLYING market reference declines through a predefined BARRIER. See also BARRIER OPTION, DOWN AND OUT OPTION, KNOCK-IN OPTION, REVERSE KNOCK-IN OPTION, UP AND IN OPTION, UP AND OUT OPTION.

palgrave

0

49.15

11.9

0

11.31

13.9

8.68

14

13.35

DOWN AND OUT OPTION

A COMPLEX OPTION that extinguishes a stand- ard EUROPEAN OPTION if the price of the UNDERLYING market reference declines through a predefined BARRIER. If the barrier is not breached the European option remains in effect. See also BARRIER OPTION, DOWN AND IN OPTION, KNOCK-OUT OPTION, REVERSE KNOCK-OUT OPTION, UP AND IN OPTION, UP AND OUT OPTION.

palgrave

0

44.03

11.8

13

11.72

12.4

8.51

12.333333

11.77

DOWN ROUND

A second, third, or fourth round of VENTURE CAPITAL financing that is done at lower valuation levels than early rounds, suggesting the company may be worth less than initially predicted.

palgrave

0

32.57

16.2

0

12.89

18.2

9.86

22

18.67

DOWNSIZING

A process where a company reduces its staffing and/or pro- ductive facilities as a means of managing costs more effectively and increasing its operating flexibility. Downsizing tends to occur when a company is becom- ing uncompetitive or during the contraction phase of the BUSINESS CYCLE. See also RIGHTSIZING.

palgrave

0

38.32

11.9

14.6

13.63

12.5

11.67

12

14.73

DOWNSTREAM

(1) The process of channeling funds from a parent company or holding company to a SUBSIDIARY. This may occur when the parent or holding company can borrow on more favorable terms, or when the subsidiary is restricted in some way from raising funds directly. (2) The segment of the energy industry that is focused on refining, transportation, and marketing/ retailing. See also UPSTREAM.

palgrave

0

50.16

11.5

15

11.43

13.3

10.19

14.833333

14.75

DOWNTICK

See MINUS TICK.

palgrave

0

93.81

0.9

0

-2.38

0.5

9.05

0.5

1.2

DPC

See DERIVATIVE PRODUCT COMPANY.

palgrave

0

-8.73

15.5

0

15.95

13.5

11.73

3

11.6

DPO

See DIRECT PUBLIC OFFERING.

palgrave

0

33.58

9.6

0

10.15

8.8

7.78

2

11.6

DRAFT

(1) See BANK . (2) See BILL OF EXCHANGE.

palgrave

0

88.74

2.9

0

-0.81

1.4

7.98

3.5

3.2

DRAG ALONG RIGHTS

Legal rights that allow majority SHAREHOLDERS of a company to force MINORITY INTERESTS to sell their SHARES in the event of a TAKEOVER bid; this is necessary in situations where the acquiring company requires 100% control. Drag along rights must be specifically negotiated in a CORPORATE FINANCE transaction. See also TAG ALONG RIGHTS.

palgrave

0

45.05

11.4

15

12.87

12.6

10.77

13.166667

15.38

DRAGNET CLAUSE

See CROSS COLLATERAL AGREEMENT.

palgrave

0

33.58

9.6

0

15.95

13.5

11.73

2

11.6

DRAGON

A public BOND issued simultaneously in various Asian centers by a non-Asian company, denominated in a local Asian currency or US dollars. The dragon is effectively a regional form of the GLOBAL BOND.

palgrave

0

37.81

12.1

0

11.08

10.7

11.63

11.75

13.87

DRAWDOWN

(1) A performance measure applied to HEDGE FUNDS, indi- cating the degree to which losses have reduced INVESTOR CAPITAL. (2) Reduction in capital within an investor’s BROKER account as a result of losses.(3)The disbursement and use of funds by a BORROWER under a REVOLVING CREDIT FACILITY or other financing arrangement. (3) See also FLEXIBLE DRAWDOWN.

palgrave

0

-1.28

27.1

0

13.54

31.6

14.12

38.5

28.55

DRAWEE

A party that is instructed to pay under a BILL OF EXCHANGE or CHECK, as indicated by the DRAWER. In the case of a bill, the drawee may choose to have it accepted, or GUARANTEED, by an ACCEPTOR in exchange for a fee. See also DRAWER.

palgrave

0

72.87

6.9

10.5

4.81

5.4

6.8

8.333333

10.47

DRAWER

The person that issues a CHECK or executes a BILL OF EXCHANGE, requiring the DRAWEE to pay upon presentation and acceptance.

palgrave

0

50.16

11.5

0

10.91

12.4

9.19

14.5

16.02

DROP LOCK

A mechanism where the INTEREST RATE on a FLOATING RATE NOTE or BOND is fixed once rates fall below a predefined level. The drop lock allows the ISSUER to lock in a lower rate of funding. See also NOTE, SPREAD LOCK.

palgrave

0

74.49

6.3

8.8

6.2

5.4

8.55

6.833333

8.41

DROP LOCK NOTE

A FLOATING RATE NOTE or BOND that converts into a fixed COUPON obligation when a reference INTEREST RATE is breached on the downside. See also DROP LOCK.

palgrave

0

74.69

6.2

0

8.98

7.5

10.15

7.25

9.84

DROPDOWN

A clause in a REINSURANCE CONTRACT that requires the REINSURER to provide coverage to an underlying INSURED if the INSURER cannot fulfill its obligations under the policy CEDED. A dropdown is most common in a FACULTATIVE REINSURANCE agreement where individual pol- icies are analyzed and accepted.

palgrave

0

31.21

14.6

0

14.39

15.9

12.67

17.5

18.77

DRY POWDER

(1) Excess cash reserves held by a company to meet future obligations or to capitalize on potential ACQUISITIONS or CAPITAL INVESTMENTS. (2) Cash held by INVESTORS that can be allocated to attract- ive INVESTMENT opportunities.

palgrave

0

10.57

20.5

0

14.11

22

12.59

27.5

23.14

DTCC

See DEPOSITORY TRUST AND CLEARING CORPORATION.

palgrave

0

6.17

13.9

0

17.85

13.7

11.83

4

15.73

DUAL CLASS STOCK

The COMMON STOCK of a CORPORATION that comes in two forms, one with enhanced VOTING RIGHTS and one with normal vot- ing rights. The two classes may also carry different DIVIDEND rights. See alsoCONTROL STOCK, DUAL CLASS RECAPITALIZATION.

palgrave

0

58.58

8.2

10.5

11.47

9.7

10.5

7

9.29

DUAL CURRENCY BOND

A BOND that pays INTEREST in one CURRENCY and PRINCIPAL redemption in a second currency. The FOREIGN EXCHANGE RATES associated with the COUPON and principal CASH FLOWS may be spe- cified at the time of issuance, or they may be based on prevailing SPOT RATES at the time the coupons and principal are paid. A company may choose to issue a dual currency bond to HEDGE any FOREIGN EXCHANGE flows from its operations, or take a speculative view on currencies in order to obtain a lower COST OF CAPITAL. Also known as FOREIGN CURRENCY BOND.

palgrave

0

55.78

11.4

14.6

9.52

12.3

8.97

15.875

13.31

DUAL LISTED COMPANY

Two PUBLIC COMPANIES that are constituted separately, retain separate identities, feature individual EXCHANGE listings but combine their business operations for purposes of creating goods and ser- vices. See also PUBLIC LIMITED COMPANY.

palgrave

0

12.94

15.4

0

18.67

16.8

11.83

13.5

17.65

DUAL LISTED COMPANY ARBITRAGE

An ARBITRAGE strategy that seeks to exploit discrepancies between the SHARE prices of the constituent compan- ies. An INVESTOR seeks to profit by purchasing the STOCK of the underval- ued company and arranging a SHORT SALE of the overvalued company, with an expectation that the two will converge to a theoretical PARITY value over time.

palgrave

0

35.1

15.2

0

12.31

16.6

10.74

19.75

18.27

DUAL PURPOSE FUND

A MUTUAL FUND or UNIT TRUST that issues two separate types of SECURITIES, including income shares, which are entitled only to the DIVIDEND flows from the underlying securities, and capital shares, which are entitled only to any resulting capital gains.

palgrave

0

13.96

21.3

0

13.47

23.7

11.15

32

23

DUAL TRIGGER

An INSURANCE mechanism that provides the INSURED with a payout only if two separate TRIGGER events occur. One trigger is oftenMULTIPLE TRIGGER PRODUCT, TRIPLE TRIGGER.

palgrave

0

41.87

10.5

0

14.31

11.8

11.2

7.25

9.8

DUE DATE

The maturity date indicated on a BILL OF EXCHANGE.

palgrave

0

45.42

9.2

0

7.39

5.1

7.59

5.5

12.49

DUMMY DIRECTOR

A DIRECTOR serving on the BOARD of a com- pany who votes in favor of actions directed by a person who is not a director. Also known as ACCOMMODATION DIRECTOR.

palgrave

0

56.25

9.1

0

6.49

6.3

8.59

9

10

DUOPOLY

A market that only features two sellers of goods or services, sug- gesting the sellers have a considerable degree of influence in setting prices. See also DUOPSONY, MONOPOLY, OLIGOPOLY.

palgrave

0

48.3

10.1

0

12.35

11.3

10.89

8.25

11.32

DUOPSONY

A market that only features two buyers of goods or services, sug- gesting the buyers have an ability to influence the prices paid to suppliers. See also DUOPOLY, MONOPSONY, OLIGOPSONY.

palgrave

0

56.25

9.1

0

10.95

10.4

10.7

8.5

11.33

DUPONT FORMULA

A financial performance which separates the trad- itional RETURN ON EQUITY (ROE) ratio into its constituent parts to provide further insight into performance and trends. Under this framework a company can isolate the effects of net profit margin, ASSET TURNOVER, and LEVERAGE. The Dupont formula is based on the fundamental ROE ratio:⎝⇒ = ⎛ Inc ⎞ ⎛ Sales⎞ ⎛ TA⎞ ROE ⎜ Sales⎟ ⎜ TA ⎟ ⎜ Eq ⎟where Inc is net income, Sales is a measure of sales or turnover, TA is total assets, Eq is total equity.

palgrave

0

50.2

13.5

13

9.12

14.9

10.83

17.833333

14.45

DURABLE GOOD

An ASSET that has a life span of at least three years, e.g., appliances, electronics, automobiles. Durable goods form part of the PERSONAL CONSUMPTION component of GROSS DOMESTIC PRODUCT (and GROSS NATIONAL PRODUCT). See also CAPITAL GOOD, NON.1 ⎡1C+2C+++where C is semiannual coupon interest, y is the semiannual yield, n is the number of semiannual periods, and M is the maturity value of the bond (gen- erally PAR VALUE).Extensions of the duration formula include Macaulay’s duration, computed as:(1 + y)and MODIFIED DURATION, calculated as:(1 + y)See also DELTA, CONVEXITY.

palgrave

0

25.12

17

19.6

13.59

19.5

13.06

23.166667

20.8

DUTCH AUCTION

An AUCTION MARKET technique used in certain mar- ketplaces where the price of a SECURITY or ASSET being sold is lowered until a BID is obtained; the remaining orders are then filled at the same price. See also ENGLISH AUCTION.

palgrave

0

59.64

9.9

0

9.28

10.6

8.97

11

10

DUTY

A TAX imposed by a government authority on a specific good or ser- vice. See also STAMP .

palgrave

0

62.85

6.6

0

4.2

2.8

8.7

5

8.11

DUTY OF LOYALTY

A legal requirement in certain systems where the BOARD OF DIRECTORS and EXECUTIVE MANAGEMENT must ensure that any action taken is done in good faith and with the best interests of SHAREHOLDERS in mind. A breach of duty of loyalty can lead to legal action by shareholders. See also DUTY OF CARE.

palgrave

0

62.38

8.9

12.5

9.22

9.2

8.14

11.333333

12.3

DVP

See DELIVERY VERSUS PAYMENT.

palgrave

0

33.58

9.6

0

11.6

10

11.73

2

11.6