| M |
|
| M0 |
In the UK, the amount of notes and coins in circulation plus bank and building society deposits. |
| M1 |
(US) The amount of notes and coins in circulation plus demand deposits (checking accounts from which money can be withdrawn on demand). |
| M2 |
In the UK, it includes all M0 items plus a range of other products which can be used to settle debts. In the US, it includes all M1 items plus savings deposits of $100,000 or below. |
| M3 |
(US) It includes all M2 items plus savings deposits over $100,000. |
| M4 |
(UK) It includes all M2 items plus Bank wholesale deposits and Certificates of Deposit. |
| MA process |
Moving-average process. |
| Macaroni defense |
A tactic used by a company as defense against a hostile takeover bid involving the issue of a large number of bonds that must be redeemed at a higher value if the company is taken over. |
| Macaulay duration |
Weighted average maturity. |
| Macroeconomics |
The area of economics that focuses on analysis of broad trends in a country's economy. |
| Main market |
The market for larger companies of the London Stock Exchange, also known as the Official List. The LSE also has a junior market called The Alternative Investment Market (AIM) for smaller, younger companies. |
| Maintenance margin |
The minimum amount of equity that must be maintained in a margin account |
| Maintenance payments |
(UK) Money paid by a divorced person to his/her partner to assist with living expenses. |
| Making a price |
A term used on the London Stock Exchange which refers to the obligation of a market maker to quote a bid price and an offer price on the shares for which he acts as a 'wholesaler'. |
| Maloney Act of 1938 |
US legislation authorizing oversight of securities firms by self regulating organizations. |
| Managed account |
An investment account, managed by the investment department of a bank on behalf of a client. |
| Managed CDO |
A CDO whose collateral is actively managed by a portfolio manager. |
| Managed fund |
A fund managed for a number of investors by an investment company. |
| Managed futures |
Portfolios of forwards or futures managed as an "alternative asset category." |
| Management buy in (MBI) |
The purchase of a company by outside investors who bring with them a new set of managers. |
| Management buy out (MBO) |
The purchase of a company by its managers, often with backing from a venture capitalist. |
| Management charges |
Charges made by the managers of, for example, a mutual fund or unit trust which cover investment management and administration costs. Charges usually take the form of a percentage fee based on the value of the fund. |
| Managerial capitalism |
A condition in which stock holdings in corporations become so fragmented and dispersed that owners lose effective control over those corporations. |
| Mandate |
An official order from an authority to implement an action. |
| Mandatory quote period |
Term used on the London Stock Exchange which refers to the period of time during which market makers in a security are obliged to display their prices. |
| Manhattan Fund |
A hedge fund that defrauded investors during the 1990s. |
| Mapping procedure |
The procedure within a VaR measure that characterizes a portfolio's exposures. |
| Margin |
A deposit lodged with an exchange or clearing house to cover adverse movements in market prices. |
| Margin account |
An account holding funds available for making margin payments. |
| Margin call |
A requirement for increased margin deposits to cover for an adverse shift in prices on futures contracts. |
| Margin of safety |
The term given by Benjamin Graham, 'the father of value investing', to the idea that if you buy shares for less than two thirds of their net asset value, you automatically have a cushion against any deterioration in the company's trading position in the future. |
| Margin securities |
Securities which may be bought or sold on margin. In the US, an approved list of margin securities is published by the Federal Reserve Board. |
| Marginal tax rate |
The additional tax which someone pays on each £1 increase of his or her taxable income. |
| Margrabe option |
An option that grants the right to exchange one asset for another. Essentially, it is a spread option with a strike price equal to zero. |
| Maricopa funds |
Fraudulent hedge funds run by David M. Mobley during the 1990s. |
| Mark, Rebecca |
Enron executive whose ill-advised international acquisitions lost billions of dollars. |
| Market |
A group of buyers and sellers; the term is used to describe a geographical unit, for example Southeast Asia, Eastern Europe; certain organisations and entities such as the reinsurance or the London market, or lines of business, for example the marine market. |
| Market capitalisation |
It is a measurement of corporate or economic size equal to the share price times the number of shares outstanding of company. |
| Market indices |
In the stock market, an index is a device that measures changes in the prices of a basket of stocks, and represents the changes using a single figure. The purpose is to give investors an easy way to see the general direction of stocks in the index. |
| Market Loss Franchise |
Certain catastrophe reinsurance contracts may have a clause requiring that the loss to the whole insurance industry must be of a certain size for the cover to respond. In effect, such covers have a dual trigger – the industry loss and the individual reinsured’s loss. |
| Market maker |
A market maker is a dealer on the London Stock Exchange who acts as a wholesaler (i.e. quotes buy and sell prices to brokers) for the shares in which he is registered to trade as a principal. |
| Market maker to market maker |
A term used by the London Stock Exchange to denote that a transaction was between two market makers registered in the security in question. |
| Market neutral |
Balanced long and short positions which result in no net exposure to broad market moves. |
| Market neutral strategy |
Speculative trading strategy that seeks to exploit relative mispricings between instruments while avoiding systematic risk. |
| Market not held order |
A market order in which the floor trader has the discretion to execute the order when he/she feels it is best. |
| Market order |
An order to buy or sell securities or commodities at the best price with immediate effect. |
| Market portfolio |
A theoretical portfolio which comprises every security available to investors in a given market |
| Market price |
A security's last reported sale price (if on an exchange) or its current bid and ask prices (if Over-the-Counter). |
| Market price of risk |
This relates to the extra return, or risk premium that investors demand if they are to purchase a risky asset. |
| Market risk |
Risk that the value of an investment will decrease due to moves in market factors. |
| Market Supervision and Surveillance Department |
The department of the London Stock Exchange which ensures that trading in listed companies takes place in an orderly and fair manner. |
| Market timing |
Asset allocation where investments in particular markets are increased when the investor expects that market to outperform other markets or the overall market. |
| Market value |
In relation to a listed security, the middle market quotation for that security as derived from the Daily Official List on the relevant date. |
| Market value CDO |
A CDO whose payments to investors are contingent on the adequacy of the market value of its collateral. |
| Market-book ratio |
The market price of a share of a share divided by the book value per share. |
| Market-if-touched (MIT) |
An order that becomes a market order when a particular price is reached. A sell MIT is placed above the market; a buy MIT is placed below the market. |
| Market-on-close (MOC) |
An order to buy or sell at the end of the trading session at a price within the closing range of prices. |
| Market-on-opening (MOO) |
An order to buy or sell at the beginning of the trading session at a price within the opening range of prices. |
| Marking to market |
Pricing an asset at today's market value. |
| Markowitz, Harry |
1990 Nobel Prize winner who launched the field of portfolio theory. |
| Mark-to-market |
An accounting process by which the price of securities held in an account are valued each day to reflect the closing price, or market quote if the last sale is outside of the market quote. |
| Mark-to-market exposure |
Credit exposure calculated from instruments' current market values. |
| Mark-to-market mode |
A mode of analysis for a portfolio credit risk model. |
| Mark-to-model |
Use of financial models to ascribe a market value to an asset. |
| Married put strategy |
The simultaneous purchase of stock and put options representing an equivalent number of shares. |
| Martingale |
A type of stochastic process with zero drift. |
| Martingale measure |
A probability measure under which all asset prices relative to a given numeraire are martingales. |
| Master Certificate |
A master reinsurance certificate contains a general outline of the terms and conditions upon which specific risks will be covered. |
| Master fund |
A fund that allows investors to choose a number of different wholesale or retail pooled funds operated by a variety of funds managers. |
| Matador |
A foreign bond issued in Spain. |
| Matched bargain |
A system of share trading which relies on matching sale orders with corresponding orders to buy. |
| Maturity |
The date the borrower must pay back the money he or she borrowed through the issue of a bond. |
| Maturity Date |
The date on which the principal amount of a note, draft, acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop. It is also the termination or due date on which an instalment loan must be paid in full. |
| Maxi ISA |
(UK) An Individual Savings Account in which investors can shelter up to £3,000 of cash and £4,000 of stocks and shares. |
| Maximum Aggregate Amount |
The maximum liability of the reinsurer any one reinsurance period under an excess of loss contract, derived from the number of reinstatements and the occurrence limit. |
| Maximum Cash Deficit |
Limit for any credit amount credited from the reinsurer to any reinsured. |
| Maximum likely exposure |
A metric for potential credit exposure. |
| Maximum option |
A form of rainbow option. |
| Mean |
Expected value. |
| Mean reversion |
A tendency for a stochastic process to remain near, or return over time to a long-run average. |
| Mean vector |
The vector of the expected values of the components of a random vector. |
| Means test |
An evaluation of a person's income and assets to establish if he/she qualifies for state benefits. |
| Medical insurance |
See: 'private medical insurance' (UK) and 'health insurance' (US) |
| Medium term bond |
A bond with a maturity between 2 and 10 years. Often known as 'mediums'. |
| Medium-term note (MTN) |
1) A note that usually matures in five to 10 years. 2) A corporate note continuously offered by a company to investors through a dealer. Investors can choose from differing maturities, ranging from nine months to 30 years. |
| Member bank |
A bank which is a member of the Federal Reserve System. |
| Member firm |
A broker/dealer in which at least one of the general partners (if a partnership) or officers (if a corporation) is a member of an exchange, a self-regulatory organization, or a clearing corporation. |
| Memorandum of association |
(UK) The details which a company, when formed, must submit to the Registrar of Companies together with its articles of association. They include company name, registered office, objectives, authorised share capital and a statement of limited liability. |
| Memorandum of wishes (letter of wishes) |
A memorandum or letter addressed to the executors of a will by the testator (feminine testatrix) specifying additional wishes to be carried out. |
| Merchant bank |
A bank which offers a range of services to corporate clients. |
| Merger |
The process by which two companies become one. |
| Merger arbitrage |
Speculative trading strategy designed to exploit relative mispricings between the stocks of a firm and another it intends to merge with or acquire. |
| Merton (1973) option pricing formula |
A pricing formula for European options on stocks or stock indexes that have a known dividend yield. |
| Merton model |
Alternative name for the asset value model of credit risk. |
| Metallgesellschaft Debacle |
In 1993, a US subsidiary of Germany’s Metallgesellschaft lost USD 1.3 billion unwinding failed hedges of long-dated oil and fuel contracts. |
| Method of least squares |
Any of several techniques for fitting a curve to data to minimize the sum of squared differences between the curve and data points. |
| Metric |
An interpretation of the measurements obtained from a measure. |
| Microeconomics |
The study of the behavior of economic units such as companies, industries, or households. |
| Mid cap |
It refers to companies with market capitalisations of £500 million or as much as £3 billion. |
| Mid price |
The average of the bid price and offer price of a security. |
| Mid-offer price |
Average of the bid and ask prices. |
| Mid-Tail Business |
Any class of business which has a run-off period of more than three but less than ten years. |
| Milken, Michael |
The "junk bond king" of the 1980s. |
| Mini ISA |
(UK) An Individual Savings Account in which pay up to £3,000 of cash. |
| Minimum |
The smallest element of a real set. |
| Minimum funding requirement (MFR) |
A rule introduced in the wake of the Maxwell pensions scandal which was intended to ensure that company pensions funds always have enough assets to pay out their liabilities. The legislation uses the yield from long term gilts as the yardstick by which a pensions fund's liabilities are measured. |
| Minimum lending rate |
The minimum rate of interest at which the Bank of England was willing to lend to the money markets. Discontinued in 1981. |
| Minimum maintenance |
(US) The minimum amount of equity which must be kept in a margin account as specified by the New York Stock Exchange, the National Association of Securities Dealers and brokerage firms. |
| Minimum option |
A form of rainbow option. |
| Minimum Payment |
The minimum monthly payment of principal and interest contractually required to be paid. |
| Minimum Premium |
Frequently used in excess of loss treaty reinsurance where a provision can be found that the final adjusted premium may not be less than a stated amount. |
| Minimum price fluctuation |
Smallest increment of market price movement possible in a given futures or options contract. |
| Minimum quote size |
A London Stock Exchange term which refers to the minimum number of shares in which market makers must display prices on the SEAQ for those securities for which they are registered. |
| Min-max option |
Either a minimum option or a maximum option. |
| Mississippi Scheme |
A French stock bubble that burst spectacularly in 1720. |
| Mobley, David M. |
Manager of the fraudulent Maricopa hedge funds. |
| Model risk |
Model risk arises when the model’s assumptions do not exactly correspond to reality. |
| Modern portfolio theory |
A body of theory relating to how investors optimize portfolio selections. |
| Modified duration |
A modification of Macaulay duration. |
| Monetary policy |
The control of the money supply and interest rates by a government in order to achieve its economic objectives. |
| Money broker |
A type of agent who arranges short-term loans between banks and borrowers such as institutions. |
| Money Flow Index (MFI) |
A volume indicator that tracks the flow of money into or out of a market. |
| Money laundering |
See: 'laundering' |
| Money market |
A market in which money and other liquid assets such as bills of exchange and Treasury bills can be lent and borrowed in order to satisfy the short-term (from overnight to several months) cash flow requirements of banks and other institutions. |
| Money Market Funds |
Mutual funds investing solely in money market instruments. |
| Money purchase scheme (defined contributions scheme) |
A pension scheme in which the benefits will be dependent on contributions to, and growth of, the fund and the fund manager's costs. |
| Money supply |
The total amount of money in an economy at a given time. |
| Money transmission |
The process of transferring funds and making payments. |
| Monte Carlo method |
Any numerical method that employs statistical sampling to solve problems. |
| Monte Carlo transformation |
For a VaR measure, a transformation procedure that employs the Monte Carlo method with pseudo randomly generated realizations. |
| Monte Carlo VaR |
A category of VaR measures that employ a Monte Carlo transformation. |
| Monthly compounding |
Compounding based on monthly crediting of interest. |
| Monthly Payment |
The principal and interest paid on a monthly basis during the life of a loan. |
| Moral hazard |
Prospect that a party insulated from risk has not entered into the contract in good faith, has provided misleading information about its assets, liabilities or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles. |
| Mortality model |
A type of default model. |
| Mortgage |
A loan to finance the purchase of property, usually with specified payment periods and interest rates. |
| Mortgage agreement in principle |
An expression of a mortgage lender's willingness to enter into an agreement subject to other conditions being met such as credit checks and a satisfactory property valuation. |
| Mortgage backed bond |
An obligation that is secured by a pool of mortgages. |
| Mortgage backed security |
A security interest in mortgage collateral. |
| Mortgage backed security |
(US) A security backed by one or more mortgages. |
| Mortgage bond |
A corporate bond collateralized with assets such as a power plant or factory. |
| Mortgage broker |
A person or company engaged in the arrangement of mortgages for buyers. |
| Mortgage indemnity |
It allows a mortgage lender to recover the costs incurred from a repossession by pursuing the former owner for the difference between what the property was sold for and what the former owner still owes under the mortgage. |
| Mortgage Insurance |
A policy that allows mortgage lenders to recover part of their financial losses from an insurance company if a borrower fails to repay the loan. |
| Mortgage interest relief at source (MIRAS) |
The mechanism by which income tax relief was extended to a borrower on the interest paid on the first £30,000 of a mortgage on their main home. The amount of relief available on MIRAS was gradually scaled down to 10% and ended altogether from 6th April 2000. |
| Mortgage Investor |
Any person or institution that invests in mortgages. |
| Mortgage Life Insurance |
A type of term life insurance. The amount of coverage decreases as the mortgage balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically paid by the insurer. |
| Mortgage pass-through |
A securitized pool of mortgages. |
| Mortgage protection |
(UK) Term assurance which covers the repayment of a mortgage in the event of the death of the mortgagor during the period of the loan. |
| Mortgage Protection Insurance |
This covers the loan repayments made by borrowers in the event that they are unable to meet them, for example, through illness or redundancy. |
| Mortgagee |
A company or institution such as a bank or building society which makes loans secured by property and the land on which it is built. |
| Mortgagor |
A person or company who takes out a loan and offers a property and the land on which it is built as security. |
| Motor insurance |
(UK) The insurance of motor vehicles covering damage or loss and liabilities for injuries to other people as well as damage to property. |
| Motor Insurers' Bureau (MIB) |
(UK) An organisation formed in 1946 which compensates victims of road accidents caused by uninsured or untraceable drivers. |
| Moving average |
A simple moving average is calculated by adding together the closing prices of a financial instrument over a certain number of days and then dividing the sum by the number of days involved. |
| Moving Average Convergence/Divergence (MACD) |
A technical analysis indicator developed in the 1960s by Gerald Appel which uses moving averages to indicate buy and sell opportunities. |
| Moving-average process (MA Process) |
A type of stochastic process that can be described by a weighted sum of a white noise error and the white noise error from previous periods. |
| MPT |
Modern portfolio theory. |
| MSCI Index |
Abbreviation for Morgan Stanley Capital International Index. The MSCI consists of a number of country indexes focusing on equity markets. |
| MTN |
Medium-term note. |
| Multi Line |
See 'Combined Lines'. |
| Multiasset option |
A multifactor option. |
| Multicollinear |
A covariance matrix is muticollinear if it is 'almost' singular. |
| Multifactor option |
Any option linked to multiple underliers. |
| Multilateral netting |
Netting of obligations between three or more parties. |
| Multinormal distribution |
It belongs to the large family of elliptical distributions which has recently gained a lot of attention in financial mathematics. Elliptical distributions are often used, particularly in risk management. |
| Multivariate normal distribution |
A specific probability distribution, which can be thought of as a generalization to higher dimensions of the one-dimensional normal distribution. |
| Multi-Year Reinsurance |
Reinsurance where the period of the contract is two or more years. |
| Muni |
Municipal security. |
| Municipal bond |
Bond issued by a state, city, or local government. Municipalities issue bonds to raise capital for their day-to-day activities and for specific projects that they might be undertaking (usually pertaining to development of local infrastructure such as roads, sewerage, hospitals etc). Interest on municipal bonds are generally exempt from federal tax. |
| Municipal bond |
A type of municipal security. |
| Municipal bond insurance |
(US) An insurance policy which guarantees a mutual bond in the case of default; issued by private insurers. |
| Municipal note |
Notes issued by state and municipal governments to meet short term financing needs. They are not a source of permanent financing. Notes usually have maturities of less than one year, however they may have longer maturities. |
| Municipal note |
A type of municipal security. |
| Municipal security |
A debt security issued by a local government or its agencies in the US. |
| Mutual Fund |
An investment company that enables investors to pool their funds to invest in a managed portfolio of securities. |
| Mutual fund custodian |
(US) A commercial bank or trust company that safeguards securities held by a mutual fund. |
| Mutual savings bank |
(US) A savings bank which is owned by its depositors. |
| Myners Report |
A report produced in March 2001 by Paul Myners recommending a voluntary code of practice for the pension fund industry. |
| N |
|
| Naked |
An uncovered position such as the position of a writer of an option which is not covered by an opposite position in the underlying instrument (for example shares, commodities). |
| Narrow market |
A market with few bid and ask offers. |
| Narrow money |
Another name for M1 in the US and M0 in the UK. |
| NASD |
National Association of Securities Dealers |
| National Association of Investors Corporation (NAIC) |
Not-for-profit organization created to assist investors in creating or joining investment clubs and educate the public about investing |
| National Association of Securities Dealers (NASD) |
The association which owns and operates NASDAQ. |
| National Credit Union Administration |
(US) An independent federal agency which supervises federal credit unions and insures members' deposits. |
| National debt |
The total debt accumulated by a government through the issue of government bonds, Treasury bills and Treasury notes. |
| National Futures Association (NFA) |
(US) A registered futures association in the US authorized by the CFTC in 1982 that requires membership for FCMs, their agents and associates, CTAs, and CPOs. |
| National Insurance (NI) |
(UK) A form of taxation, payable by employees, employers and the self employed, which is notionally to fund state benefits including pensions, sickness, unemployment and maternity. There are currently four categories of contributions: Class 1, Class 2, Class 3 and Class 4. |
| National Insurance contributions |
An additional form of tax paid by most employers, employees, self employed (and some unemployed) people. For the employed it is deducted from income by the employer on a scale related to income levels. The employed pay part flat rate, part income related. The self employed and the unemployed may pay a flat rate voluntary contribution to keep their benefits entitlement up to date. |
| National Insurance Pension (State Pension) |
(UK) Regular income from the state paid to retired people who have made contributions during their life. |
| National Savings |
(UK ) A variety of savings schemes for the general public backed by the government. |
| National Savings Bank |
(UK) The savings bank operated by the government's Department of National Savings. |
| National Savings Certificates |
See: 'National Savings' |
| National Savings Stock Register |
(UK) A register of government stocks (gilts) which can be purchased by the public through the Post Office at favourable rates of commission for moderate purchases and sales. |
| National Securities Clearing Corporation (NSCC) |
(US) An organisation that facilitates trade processing, clearance, delivery and settlement of equities, and corporate and municipal bonds. NSCC is owned equally by the New York and American Stock Exchanges and the National Association of Securities Dealers. |
| National Securities Markets Improvement Act |
1996 law that liberalized regulatory limitations on the activities of hedge funds. |
| Near month |
The nearest delivery months of a futures or options market. |
| Nearbys |
See: 'near month' |
| Negative equity |
A term used to refer to when the value of an asset used to secure a loan is less than the outstanding balance on the loan. |
| Negative Equity |
When the amount owned on an asset is larger than the asset's current value. |
| Negative gearing |
Borrowing money to acquire assets whose payments exceed the income generated by these assets. |
| Negative semidefinite matrix |
A square matrix, all of whose eigenvalues are real and nonpositive. |
| Negotiable instrument |
An instrument, such as a cheque or a bill of exchange, which can be transferred by one person to another by the first signing his name on the back of the instrument. |
| Net |
The return on investments, such as savings accounts and fixed interest securities, after deduction of tax. |
| Net asset backing |
Total shareholders' funds in a company divided by the number of shares on issue. |
| Net asset value (NAV) |
(US) The total assets of a company less all its liabilities including loan capital, and preference shares. NAV is usually expressed on a per share basis. |
| Net assets |
The total assets of a company (current assets plus fixed assets) less its current liabilities. |
| Net book value (NBV) |
The net value of an asset. Equal to its original cost (its book value) minus depreciation and amortization. |
| Net cash flow |
It measures a company's financial health; equals cash receipts minus cash payments over a given period of time. |
| Net income |
Net profit attributable to ordinary shareholders after the deduction of all other charges. |
| Net Line |
The amount of insurance the primary company carries on a risk after deducting reinsurance from its 'gross' line. |
| Net Loss |
The amount of loss sustained by a reinsured after deducting all recoveries, salvage and reinsurance. |
| Net present value (NPV) |
The present value of an investment's future net cash flows minus the initial investment. |
| Net profit |
It is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. |
| Net profit after tax |
The net profits of a company after taxation. |
| Net profit before tax (pre-tax profit) |
The net profits of a company before taxation. |
| Net relevant earnings |
(UK) A person's pensionable income plus taxable benefits in kind, less any allowable business expenses but before deduction of personal allowances. |
| Net Retention |
The amount of liability which the reinsured/reinsurer retains for its own account after co-insurance, pro-rata or facultative reinsurance. |
| Net return |
The remainder left after operational expenses and interest payments are deducted from gross income |
| Net tangible assets |
Net assets less intangible assets such as goodwill. |
| Net Worth |
Assets value minus liabilities. |
| Net yield |
The yield on a security after the deduction of tax. |
| Netting |
The offsetting of cash flows or other obligations against each other. |
| Neuer Market |
Germany's junior stock market, equivalent to the LSE's AIM and TechMARK. |
| New issue |
The issue by a company of new shares, enlarging its share capital and often the number of shareholders on its register. Also used to refer to an Initial Public Offering (IPO). |
| New York Mercantile Exchange (NYMEX) |
Following the merger with the Commodity Exchange (COMEX) in 1994, the exchange operates two divisions - the NYMEX which deals in futures and options on a number of products including crude oil, heating oil and platinum and the COMEX which deals in futures and options on copper, gold and silver. |
| New York Stock Exchange (NYSE) |
The world's largest stock exchange with well over 3,000 companies listed and a market capitalisation of trillions of dollars. |
| Next Payment Amount |
The minimum amount required to avoid additional late fees on upcoming payments. |
| Next Payment Date |
The due date on which payment must be made. |
| Nexus of contracts theory of the firm |
The contracts theory of the firm. |
| Nikkei 225 |
An index of the average value of the shares of 225 Japanese companies which reflects share price movement on the Tokyo Stock Exchange. |
| Nikkei Index |
Japanese share price index that covers the top 225 shares listed on the Tokyo Stock Exchange. |
| Nil paid |
A new issue of shares where no payment has yet been made. |
| Nil paid shares |
A company's newly issued shares which can normally be transferred on a renounceable document. |
| No arbitrage condition |
A condition where prices in the market offer no opportunities for arbitrage. |
| No Claims Discount/Bonus |
Discount given to insureds who have not made a claim on their policies. |
| No load fund |
(US) A mutual fund where investors deal directly with the investment company rather than through a broker. |
| No par value (NPV) |
The shares of a company which carry no nominal value or par value. |
| Noise |
Stock price movements that cannot be explained by changes in the underlying economic or financial fundamentals. |
| No-Load Fund |
A mutual fund that does not charge a fee for buying or selling its shares. |
| Nominal account |
An account kept in a ledger which itemises revenue and expenditure such as sales and operating costs. |
| Nominal income |
(US) Income which does not take into account changes in the purchasing power of the dollar. |
| Nominal ledger |
A ledger which contains the nominal accounts and real accounts of a company. |
| Nominal par value |
A par value significantly below the intended issuance price of a security. |
| Nominal value |
The price of a security when originally issued. This bears no relation to the market price. |
| Nominal yield |
A bond's yield calculated as annual coupon divided by par value. |
| Nominated adviser (NOMAD) |
An exchange-approved adviser which helps companies to list on the Alternative Investment Market (AIM), and which continues to advise them after flotation. |
| Nominated Broker (NOMBRO) |
The broking firm for companies listed on the Alternative Investment Market which brings buyer and sellers of the company's shares together. |
| Nominee |
A person or company nominated by another to hold shares on his behalf. The most common use of nominee accounts is where execution-only brokers act as nominees for their clients. |
| Nominee account |
An account in which the named holder holds assets on behalf of another (the beneficiary). In the stock market, the most common use of nominee accounts is where execution-only brokers act as nominees for their clients. |
| Nominee company |
A company formed by a bank or other organisation which operates nominee accounts. |
| Non contributory pension plan |
A pension plan in which an employee does not make contributions. The plan is funded totally by the employer. |
| Non forfeiture clause |
A clause in a life insurance policy which states the conditions under which the policy may remain in force if the premium is not paid. |
| Non qualifying life policy |
(UK ) A life assurance policy which does not satisfy the requirements of the Inland Revenue and does not qualify for certain tax relief. |
| Non taxpayer |
Someone whose income falls below their annual personal tax allowance. |
| Non-Admitted Reinsurance |
US-term. A reinsurance company which is not licensed to operate in that jurisdiction. |
| Non-Concurrent |
Reinsurance contract where the terms and conditions are different to those of the original policy/policies. |
| Non-cumulative preferred stock |
Preferred stock for which missed dividends are forfeited. |
| Non-linear derivative |
A derivative instrument whose payoff diagram is non-linear. |
| Non-Proportional Reinsurance |
A form of reinsurance where the reinsurer makes loss payments to the reinsured only when the reinsured's loss exceeds a pre-determined limit. |
| Non-regular way |
A trade made with stated conditions, such as a cash sale, which may have delivery and settlement terms that are different from the standard procedures. |
| Non-risk trade |
A term used by the London Stock Exchange to denote that a transaction was specifically for SEATS based segments only (i.e. SEQ1, AIM, SEAT). |
| Non-singular random vector |
A random vector with non-singular covariance matrix |
| Non-systematic risk |
These are firm-specific risk factors that can be eliminated by diversification. |
| Non-Traditional Reinsurance |
Types of Reinsurance under which the amount of risk transferred is more limited than under Traditional Risk Reinsurance. The limitations on risk transfer take the form of an aggregate dollar amount or loss ratio limits according to the reinsurance coverage in effect. Premiums for nontraditional reinsurance instruments are usually larger than those for traditional reinsurance instruments. |
| Normal market size (NMS) |
(UK) When shares are traded on the London Stock Exchange, the market makers have to quote a bid price and offer price at which they will deal. But the prices they quote, which are disseminated to brokers via the SEAQ system, only have to be honoured up to a certain size of order. |
| Normal trading unit |
The normal size of a securities order. A normal trading unit for shares is 100. |
| Normalised earnings |
Earnings a given company should generate for its volume of sales on the basis of the normative margin of the company’s sector. |
| Not negotiable |
Words written on a bill of exchange or cheque which should prevent encashment following theft. |
| Note |
A debt instrument whereby the issuer promises repayment on or before a specified date. |
| Notice of assignment |
Document signed by Lessee and Lender, acknowledging that another party has taken an assignment of the rental payments. It also notifies Lessee that payments will be made directly to the assignor/lender. |
| Notice of delivery |
Notice to a futures exchange of intent to close a short futures position by delivery. |
| Notional amount |
The quantity of an underlier to which a derivative instrument applies. |
| Notional limit |
A risk limit based upon notional amount as a crude exposure metric. |
| Nouveau Marche |
(FR) France's junior market for smaller companies. |
| NTR |
Shortcut for 'not trading related'; part of the standard terminology used on bulletin boards. |
| Numeraire |
Any unit of account used in financial engineering. |
| Numerical method |
A methodology for constructing numerical solutions. |
| Numerical solution |
An approximation that can be evaluated in a finite number of standard operations. |
| NYMEX |
The division of the New York Mercantile Exchange which deals in crude oil, heating oil and platinum futures and options. |
| O |
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| OAS |
Option-adjusted spread. |
| Obligatory Reinsurance |
When the reinsurer is obliged to accept an entire category of risk as opposed to facultative reinsurance, which covers only a particular policy or risk. |
| Obligor |
An individual or company that owes debt to another individual or company. |
| OCC |
Office of the Comptroller of the Currency. |
| Occupational pension scheme |
A pension scheme generated by a company or organisation for the benefit of its employees. In 'contributory' schemes both the employer and employee contribute to a fund which grows free of tax during the savings period. In 'non-contributory' schemes, only the employer contributes. |
| Occupational Pensions Regulatory Authority (OPRA) |
(UK) The Authority set up under the Pensions Act 1995 to make occupational pensions more secure. |
| Occurrence |
The term is used to describe the trigger of coverage. Per occurrence cover permits all losses arising out of one event to be aggregated together. |
| Occurrence Limit |
A provision in property Per Risk Reinsurance contracts that limits the reinsurer's liability for all risks involved in one occurrence. |
| Odd lot |
(US) The trading of securities at lots less than 100, which is less than the normal trading unit. |
| Ofex |
The UK's independent public market, dedicated to smaller companies, and based on a quote-driven trading platform. |
| Off-balance sheet financing |
Financing that does not appear on a firm's balance sheet. |
| Offer |
In the stock market, offer means that a seller is willing to sell a share at a given price. In contract law instead, an offer is one half of the contract equation, the other being 'acceptance'. |
| Offer for sale |
One of the ways a company can float its shares on a stock exchange is to issue a prospectus announcing its intention to issue new shares, set a price for them, and invite the public to apply for them at the advertised price. The alternative route is to issue shares and 'place' them in the hands of a number of institutions who then release them on to the secondary market. |
| Offer price |
(US ) The price at which securities are offered for sale. |
| Offer-only warrant |
A warrant is offer-only if the holder is unable to sell it back to the issuer. |
| Office of the Comptroller of the Currency |
Established by the National Currency Act of 1863, it serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. |
| Office of Thrift Supervision (OTS) |
(US) An agency of the US Treasury Department responsible for overseeing the savings and loans industry. |
| Official List |
(UK) The main exchange of the London Stock Exchange whose members tend to be the larger quoted or listed companies. |
| Offset |
Liquidating a purchase of futures or options through the sale of an equal number of contracts of the same delivery month. |
| Offset Clause |
A contractual accounting provision under which the reinsured and reinsurer agree that debits and credits between the parties may be set off against each other. |
| Offshore funds |
Funds based outside the tax system of the country where the intended investor is residing. |
| Off-the-run |
Refers to US Treasury securities that were not recently auctioned. |
| OID |
Original issue discount. |
| Old Lady of Threadneedle Street |
A traditional name for the Bank of England, located in Threadneedle Street, London. |
| Ombudsman |
(UK) An independent organisation which investigates the complaints of individuals against companies or public authorities. |
| Omnibus account |
(US) An account carried by one Futures Commission Merchant (FCM) with another. |
| On-balance sheet financing |
Financing that appears on a firm's balance sheet. |
| On-balance volume indicator (OBV) |
The weighted sum of volume used to quantify buying or selling pressure to either confirm the current price trend or warn of a possible reversal. |
| One cancels other (OCO) |
A qualifier used when multiple orders are entered and the execution of one order cancels a second or alternate order. |
| On-the-run |
The most recently issued (and typically the most liquid) US government bond in a particular maturity range. |
| OPAS |
(UK) Occupational Pensions Advisory Service, a voluntary independent organisation. |
| Open Cover |
Marine insurance term. When there are regular sending of goods, it is usual to arrange an open cover to avoid issuing separate policies for each shipment. |
| Open end fund |
A mutual fund, unit trust or open ended investment company (OEIC) which does not have a fixed amount of capital, but is 'open ended'. Therefore the fund managers can issue new units and cancel old ones in accordance with supply and demand of investors. |
| Open interest |
The net amount of outstanding open positions, either long or short, in a given futures or options contract. |
| Open interest |
The number of futures contracts outstanding. |
| Open offer |
An open offer, also known as an entitlement issue, is an offer made by a quoted company to its shareholders inviting them to buy new shares in the company at a set price, which is normally lower than the current market price. |
| Open outcry |
A public auction system used for futures trading on the floors of futures exchanges where communication is by shouting and hand signals between traders. Nowadays many commodity futures and some stock exchanges, that used to run an open outcry method of trading, are now computerised. |
| Open-ended mortgage bond |
A mortgage bond whose claim on collateral can be diluted by subsequent bond issuances. |
| Opening Automated Report Service (OARS) |
It receives, stores, and continuously tabulates market orders up to a specified size routed through the common message switch. It matches buy and sell interest in each stock, calculates imbalances, and reports them to specialists. |
| Opening sale |
A transaction where the seller of an option becomes the writer. |
| Operating cash flow |
The cash generated from the operations of a company, generally defined as revenues less all operating expenses, but calculated through a series of adjustments to net income. |
| Operating costs |
Also known as overheads, these are the costs which are additional to the direct costs of manufacturing or of providing services. |
| Operating margin |
The turnover of a company minus direct costs and overheads. |
| Operating profit |
A company's profit after deducting its operating costs from gross profit. |
| Operations risk |
Risk associated with the day-to-day operation of a firm. |
| Opportunity cost |
It is the cost of something in terms of an opportunity forgone (and the benefits which could be received from that opportunity), or the most valuable forgone alternative (or highest-valued option forgone), i.e. the second best alternative. |
| Option |
An option takes the form of a contract that gives its holder the right but not the obligation to buy or sell a fixed number of shares (or other instrument) at a fixed price on or before a given date. |
| Option holder |
The party to whom an option grants rights, usually the purchaser. |
| Option issuer |
Option writer |
| Option premium |
The 'price' of the option, paid by the buyer. |
| Option pricing theory |
The body of financial theory used by financial engineers to value options and other derivative instruments. |
| Option series |
A specific option defined by its underlying stock, exercise price, expiry date and type. |
| Option spread |
A position combining two or more options on a single underlier. |
| Option to redeem |
Some stocks, in particular loan notes, give their holders the right to convert the stock into cash at particular times during the stock's life. In the case of loan notes, the opportunity will often occur at the time the interest payments are made which may be half-yearly or quarterly. |
| Option valuation |
Any procedure for ass |
