3-6-3 Rule   -    Slang used to refer to an "unofficial rule" under which the banking industry once operated, which alludes to it being noncompetitive and simplistic.
The 3-6-3 rule describes how bankers would give 3% interest on depositors' accounts, lend the depositors money at 6% interest and then be playing golf at 3pm. This alludes to how a bank's only form of business is lending out money at a higher rate than what it is paying out to its depositors.

A   -   A Nasdaq stock symbol specifying that the stocks are Class "A" shares of the company.

A/D - Advance/Decline Line   -   A technical indicator that plots changes in the value of the advance-decline index over a certain time period. Each point on the chart is calculated by taking the difference between the number of advancing/declining issues and adding the result to the previous period's value, as shown by the following formula:
A/D Line = (# of Advancing Stocks - # of Declining Stocks) + Previous Period's A/D Line Value

A Priori Probability   -   Probability calculated by logically examining existing information.

A Ton of Money   -   A slang term used to describe a significant amount of money. The amount implied typically depends on the person, company or situation.

A-Credit   -   The highest credit grade available as assigned to a borrower by a lender. Lenders use a credit grading system to qualify borrowers. The higher the borrower's credit grade, the lower the interest rate offered to that borrower on a loan.

A-Share   -   In a family of multi-class mutual funds, this is the class that is usually characterized by a loaded fee structure. Class A mutual fund units will commonly have a front- or rear-end load, to compensate for the sales person's commission. Not all fund companies follow this class structure; however, it is the prominent method of distinction.

A-Shares   -   Shares in mainland China-based companies that trade on Chinese stock exchanges such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange. A-shares are generally only available for purchase by mainland citizens; foreign investment is only allowed through a tightly-regulated structure known as the Qualified Foreign Institutional Investor (QFII) system.

AAA  -  Triple A rating. This is the highest rating given to a bond. It is the least likely bond to default on it's coupons (see bonds / coupons). Ratings agencies such as Standard & Poors and Moody's determine the ratings of a bond issuance.

ABA Transit Number   -   A unique number assigned by the American Bankers Association (ABA) that identifies a specific federal or state chartered bank or savings institution. In order to qualify for an ABA transit number, the financial institution must be eligible to hold an account at a Federal Reserve bank. ABA transit numbers are also known as ABA routing numbers, and are used to identify which bank will facilitate the payment of the check.

Abandonment   -   1. The act of surrendering a claim to, or interest in, a particular asset.
2. The permitted withdrawal from a forward contract that is made for the purchase of deliverable securities.
3. The act of allowing an option to expire unexercised.

Abandonment and Salvage   -   An expression that describes the forfeiture of property and the ensuing claim over that property by a second party. Abandonment and salvage can be added as a clause in an insurance contract; this gives the insurance company the ability to accept the abandoned property. Abandonment must be expressed with intent. The potential financial rewards mean that salvage rights are sometimes legally contested by several parties.

Abandonment Clause   -   A clause in a property insurance contract that, under certain circumstances, permits the property owner to abandon lost or damaged property and still claim a full settlement amount. If the insured party's property cannot be recovered, or the cost to recover or repair it is more than its total value, it can be abandoned and the insured party is entitled to a full settlement amount.

Abandonment Option   -   A clause granting parties the option of withdrawing from the contract before the fulfillment or completion of all contractual duties. This clause adds value by giving the parties the ability to end the obligation if it is unprofitable.
A type of "real option".

Abandonment Value   -   The value of a project or asset if it were immediately liquidated. Also referred to as the liquidation value.

Abatement   -   In general, a decrease in the amount of taxation faced by an individual or company.

Abatement Cost   -   A cost borne by many businesses for the removal and/or reduction of an undesirable item that they have created. Abatement costs are generally incurred when corporations are required to reduce possible nuisances or negative byproducts created during production.

ABC Agreement   -   An agreement made between a purchasing member with a seat on the NYSE and the firm in which he or she works. With the approval of the NYSE, this agreement stipulates that the employee of the firm may:

a) transfer the seat to another employee of the firm
b) retain ownership and purchase a new seat for another individual designated by the firm
c) sell the seat and transfer any gains to the firm.

Abeyance   -   A situation in which the rightful owner of a property, office or title has not yet been decided. Abeyance results when the current owner or holder does not declare a single current beneficiary. Instead, the new owner is determined through the outcome of a particular event at some time in the future. Thus, the ownership of the property, office, or title is left unfilled. Abeyance is derived from the Old French word "abeance", which means a longing or gaping, with future expectation.

Ability to Pay   -   The principle that taxes should vary according to an individual's level of wealth or income.

Abnormal Return   -   A term used to describe the returns generated by a given security or portfolio over a period of time that is different from the expected rate of return. The expected rate of return is the estimated return based on an asset pricing model, using a long run historical average or multiple valuation.

Above Full-Employment Equilibrium   -   A macroeconomic term used to describe the real gross domestic product (GDP) is currently in excess of its long-run average, or some other historical measure. Accordingly, the amount that the current real GDP is greater then the historic average is called an inflationary gap, as this will create inflationary pressures in this particular economy.

Above Par   -   A term used to describe the price of a security when it is trading above its face value. A security usually trades at above par when its income distributions are higher than those of other instruments currently available in the market.
If an investor purchases a security above face value, he or she will incur a capital loss at maturity when it is redeemed for face value.

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

Above Water   -   1. Refers to the condition of a company’s asset when its actual value is higher than the book value used in its financials.
2. Financially referring to a person staying out of economic trouble or a company remaining financially viable.

Absolute Advantage   -   The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Absolute Breadth Index (ABI)   -   A market indicator used to determine volatility levels in the market without factoring in price direction. It is calculated by taking the absolute value of the difference between the number of advancing issues and the number of declining issues. Typically, large numbers suggest volatility is increasing, which is likely to cause significant changes in stock prices in the coming weeks.

Absolute Frequency   -   A statistical term describing the total number of trials or observations within a given interval or frequency bin. The frequency bins can be of any size, but they must be mutually exclusive, exhaustive and the data must be grouped.

Absolute Physical Life   -   The length of time that it takes for an asset takes to become fully depreciated, at which time it provides no additional use. The absolute physical life is often taken into consideration when companies purchase assets. The measure is typically associated with assets that have low risk of becoming technically obsolete.

Absolute Priority   -   A rule that stipulates the order of payment - creditors before shareholders - in the event of liquidation. The absolute priority rule is used in bankruptcies to decide what portion of payment will be received by which participants. Debts to creditors will be paid first and shareholders (partial owners) divide what remains.
Regarding the estate of a deceased person, the absolute priority rule will ensure payment of outstanding debts before the distribution to beneficiaries.
Also known as "liquidation preference".

Absolute Rate   -   The fixed portion of an interest-rate swap, expressed as a percentage rather than as a premium or a discount to a reference rate.

Absolute Return   -   The return that an asset achieves over a certain period of time. This measure looks at the appreciation or depreciation (expressed as a percentage) that an asset - usually a stock or a mutual fund - achieves over a given period of time.
Absolute return differs from relative return because it is concerned with the return of a particular asset and does not compare it to any other measure or benchmark.

Absorbed   -   1. In a general business sense, when a cost is treated as an expense instead of being passed on to the customer in the form of higher prices.
2. In underwriting, when an issue has been completely sold to the public.
3. In mergers, when an acquired firm is folded into the acquiring company.

Absorption Costing   -   A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption costing uses the total direct costs and overhead costs associated with manufacturing a product as the cost base. Generally accepted accounting principles (GAAP) require absorption costing for external reporting.
Absorption costing is also known as "full absorption costing".

Abusive Tax Shelter   -   An investment scheme that claims to reduce income tax without changing the value of the user's income or assets. Abusive tax shelters serve no economic purpose other than lowering the federal or state tax owed when filing. Often, these schemes channel funds through trusts or partnerships to avoid taxation.

Academy of Financial Divorce Practitioners   -   An organization dedicated to the development of financial expertise with respect to divorce. The Academy of Financial Divorce Practitioners trains its members in the financial aspects of divorce, such as alimony, property settlements, child support and retirement assets. Members of the academy, known as certified financial divorce practitioners (CFDPs), supply unbiased financial expertise to facilitate equitable divorce proceedings.

Accelerated Bookbuild   -   A form of offering in the equity capital markets. It involves offering shares in a short time period, with little to no marketing. The bookbuild of the offering is done vey quickly in one or two days. Underwriters may sometimes guarantee a minimum price and proceeds to the firm.

Accelerated Cost Recovery System - ACRS   -   A system of depreciation introduced by the Economic Recovery Tax Act of 1981. ACRS depreciation is based on recovery periods instead of useful life. These periods were predetermined by the IRS.

Accelerated Death Benefit - ADB   -   A benefit that can be attached to a life insurance policy that enables the policy holder to receive cash advances against the death benefit in the case of being diagnosed with a terminal illness. Many individuals who choose the accelerated death benefit have less than one year to live and use the money for treatments and other costs needed to stay alive.

Accelerated Depreciation   -   Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset.

Accelerated Payments   -   A term associated with making additional unscheduled payments on a loan at predetermined, or random intervals. Making additional unscheduled payments reduces the principal balance of the loan, meaning that more principal and less interest is paid off in subsequent payments. Making accelerated payments will lead to the early pay-off of a loan.

Accelerated Vesting   -   A form of vesting that takes place at a faster rate than the initial vesting schedule in a company's stock option plan. This allows the option holder to receive the monetary benefit from the option much sooner. If a company decides to undertake accelerated vesting, then it may expense the costs associated with the stock options sooner.

Acceleration Covenant   -   A clause included in certain debt securities and swap agreements stating that the immediate collection of payment and termination of contract will take place should any number of clauses being violated by the borrower including default or a downgrade of debt.
Also referred to as "Acceleration Clause."

Accelerator Theory   -   An economic theory that suggests that as demand or income increases in an economy, so does the investment made by firms. Furthermore, accelerator theory suggests that when demand levels result in an excess in demand, firms have two choices of how to meet demand.

• Raise prices to cause demand to drop. 
• Increase investment to match demand.

The accelerator theory proposes that most companies choose to increase production thus increase their profits. The theory further explains how this growth attracts more investors, which accelerates growth.

Accident and Health Benefits   -   Fringe benefits provided to employees for sickness, accidental injury, or accidental death. These benefits include payment of hospital and medical expenses as well as income payments.

Accidental Death And Dismemberment Insurance - AD&D   -   A rider attached to a life or health insurance policy. AD&D covers death by accidental means (rather than natural causes) and dismemberment, which includes loss of the use of certain body parts (including limbs or eyesight.) 
These riders are usually written in such a way that the insurer must pay double the amount payable otherwise, or a specific amount of continous income payments, and are sometimes called double indemnity riders. AD&D insurance is often offered by employers as an extra option on group health plans.

Accidental Death Benefit   -   The payment due to the beneficiary of an accidental death insurance policy, which is often a clause or a rider connected to a life insurance policy.  The accidental death benefit is usually an amount paid in addition to the standard benefit payable if the insured died of natural causes.
Depending on the issuer of the policy, the accidental death benefit may extend up to a year after the initial accident occurred, so long as the accident led to the insured's death.

Accommodation Endorsement   -   A written agreement from one entity to back the credit liability of another. This insurance is made without consideration, and adds strength to the creditworthiness of the insured entity. This would usually be made by a parent company to a subsidiary, and allows the subsidiary to take on the parent's credit standing. An accommodation endorsement is similar to a government guaranteeing a third party's debt with its full faith and credit.

Accommodation Trading   -   A type of trading in which a trader accommodates another by entering into a non-competitive purchase or sale order. An accommodation trade is often executed when two traders are participating in illegal trading.

Accommodative Monetary Policy   -   When a central bank (such as the Federal Reserve) attempts to expand the overall money supply to boost the economy when growth is slowing (as measured by GDP). This is done to encourage more spending from consumers and businesses by making money less expensive to borrow by lowering the interest rate. Furthermore, the Federal Reserve also has the authority to purchase Treasuries on the open market to infuse capital into a weakening economy. 
Also known as an "easy monetary policy".

Accordion Feature   -   A type of option that a company can buy that gives it the right to increase its line of credit or similar type of liability with a lender. Companies typically purchase an accordion feature in anticipation of the need for more working capital for possible expansion opportunities.

Account   -   1. An arrangement by which an organization accepts a customer's financial assets and holds them on behalf of the customer at his or her discretion.
2. A statement summarizing the record of transactions in the form of credits, debits, accruals and adjustments that have occurred and have an affect on an asset, equity, liability or past, present or future revenue.  
3. A relaying of happenings from one party to another.

Account Activity   -   A banking term that refers to any activity that creates a debit or credit in an account. In a bank account, this would include deposits and withdrawals. In a brokerage account, it would include buy and sell transactions, dividends, interest, etc. Account activity can also refer to debits and credits in a company or organization's accounting records.

Account Aggregation   -   A process by which accounts are linked for the purpose of combining fees or to ease access for account holders. One form of account aggregation is householding, whereby all the savings, checking and brokerage accounts of a household are linked. In householded accounts, statements and online summaries display all accounts within the household.

Account Analysis   -   1.  In cost accounting, this is a way for an accountant to analyze and measure the cost behavior of a firm. The process involves examining cost drivers and classifying them as either fixed or variable costs. The cost accountant then uses the company’s data to figure out the estimated variable cost per cost-driver unit or fixed cost per period.
2.  In banking, it is a periodic statement outlining the banking services provided to a firm. The statement is usually provided monthly and involves displaying all pertinent data, including the company’s average daily balance and charges that the company incurs from the bank.

Account Balance   -   The net of debits and credits for an account at the end of a reporting period.

Account Freeze   -   An action taken by a bank or brokerage that prevents any transactions from occurring in the account. Typically, any open transactions will be cancelled, and checks presented on a frozen account will not be honored.
Account freezes can be initiated by either the account holder or a third party.

Account History   -   All activity within an account, usually since inception. In a bank account, the account history includes all transactions initiated by the account holder as well as passive entries (such as interest on balances, which are credited to the account). The account history is also called a "ledger", depending on where the account is held.

Account Hold   -   Deposits that are delayed before being credited to an account, such as deposited checks that are drawn on foreign or out-of-state banks. A hold can also be placed on an entire account if there has been a transaction that must be or has been reported to the authorities as a suspicious transaction under the anti-money laundering regulations, or if there is a suspicion or report of identity theft.

Account Number   -   The primary identifier for ownership of an account, whether a vendor account, a checking or brokerage account, or a loan account. An account number is used whether or not the identifier uses letters or numbers.

Account Reconcilement   -   The process of confirming that two separate records of transactions in an account are equal. This can happen internally with a bank or broker, such as between general ledger entries and individual account records. Reconcilement also occurs when a customer of a bank or broker confirms that his or her personal records match what is reported on periodic statements. Ther term can also refer to balancing the books and records of a business with software programs and data entries.

Account Settlement   -   The summary of business operations and performance for a fiscal period. This statement often includes financial results of the company's main operations along with key performance metrics, which help to give investors and other users an idea of the company's fiscal year operating performance.
Also referred to as "settlement of account".

Accountable Plan   -   A plan for reimbursing employees for business expenses. Under this plan, the reimbursement that the employee receives for the expenses is not included in his/her income. Employees are required to account adequately for expenses with records and return any excess reimbursement within a reasonable period of time.

Accountant   -   A professional person who performs accounting functions.

Accountant Responsibility   -   The ethical responsibility that an accountant has to those who rely on his/her work. An accountant has a responsibility to the company’s management, investors, creditors, outside regulatory bodies, and the integrity of the financial markets.
Accountants are responsible for the validity of the financial statements they work on, and must perform their duties in accordance with all applicable principles, standards and laws.

Accountant's Opinion   -   A statement signed by an independent accountant outlining his or her opinion regarding the quality of information contained in a company's financial reports and records.

Accounting   -   To provide a record such as funds paid or received for a person or business. Accounting summarizes and submits this information in reports and statements. The reports are intended both for the firm itself and for outside parties.

Accounting and Auditing Organization for Islamic Financial Institutions - AAOIFI   -   A not-for-profit organization that was established to maintain and promote Shariah standards for Islamic financial institutions, participants and the overall industry. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) was created on February 26, 1990 to ensure that participants conform to the regulations set out in Islamic finance.
The founding and associate members, as well as the regulatory and supervisory authorities of the AAOIFI, define the acceptable standards for various functions. This includes areas such as accounting, governance, ethics, transactions and investment.

Accounting Change   -   A change in accounting principles, accounting estimates, or the reporting entity. A change in an accounting principle is a change in a method used, such as using a different depreciation method or switching from LIFO to FIFO. An example of an accounting estimate change could be the recalculation of machine’s estimated life due to wear and tear. The reporting entity could change due to a merger or a break up of a company.
Accounting changes require full disclosure in the footnotes of the financial statements to describe the justification and financial effects of the change. This allows readers of the statements to analyze the changes appropriately.

Accounting Conservatism   -   A branch of accounting that requires a high degree of verification before making a legal claim to any profit. Accounting conservatism will recognize all probable losses as they are discovered and most expenditures as they are incurred. Revenue will be deferred until it is verified. Having strict revenue-recognition criteria is one of the most common forms of accounting conservatism.

Accounting Control   -   Methods and procedures that are implemented by a firm to help ensure the validity and accuracy of its own financial statements. The accounting controls do not ensure compliance with laws and regulations, but rather are designed to help a company comply.

Accounting Cushion   -   The overstatement of a company’s expense provision, in order to create a cushion for future results. A company can use this to artificially understate income in the current period by overstating liability or allowance accounts. This will give the company the ability to overstate income in a later period. An accounting cushion can be achieved by increasing allowances for bad debts in the current period, without any indication that bad debts will actually rise. This would understate accounts receivable in the current period, and the company could make up for it in the next period by overstating accounts receivable. This is a method of income smoothing, and if discovered an auditor or analyst should adjust these back to their proper levels.

Accounting Cycle   -   The name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. The nine steps of the accounting cycle are: 

1. Collecting and analyzing data from transactions and events.
2. Putting transactions into the general journal.
3. Posting entries to the general ledger.
4. Preparing an unadjusted trial balance.
5. Adjusting entries appropriately.
6. Preparing an adjusted trial balance.
7. Organizing the accounts into the financial statements.
8. Closing the books.
9. Preparing a post-closing trial balance to check the accounts.

Also known as “bookkeeping cycle”.

Accounting Earnings   -   A company's earnings as reported in the income statement.

Accounting Entity   -   A clearly defined economics unit that is accounted for separately. An accounting entity can be either a business or subdivision of a business that engages in economic activities, has economic assets and resources that must be accounted, and is separate from the personal dealings of its owners. Once an accounting entity is determined, transactions within the specific unit are accounted. The entity should not be flexible or regularly changed, in order to insure the accuracy of accounting.
Also known as a “reporting entity”.

Accounting Equation   -   The equation that is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company’s shareholders. Thus, the accounting equation is: Assets = Liabilities + Shareholder Equity. The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity. Any purchase or sale by an accounting equity has an equal effect on both sides of the equation, or offsetting effects on the same side of the equation. The accounting equation is also written as Liabilities = Assets – Shareholder Equity and Shareholder Equity = Assets – Liabilities. 

Accounting Error   -   An error in an accounting item that was not caused intentionally. An accounting error can include discrepancies in dollar figures, or might be an error in using accounting policy incorrectly (i.e., a compliance error).
Accounting error should not be confused with fraud, which is an intentional error in an accounting item, usually to hide or alter data for personal gain.

Accounting Insolvency   -   A situation where the value of a company's liabilities exceeds its assets. Accounting insolvency looks only at the firm's balance sheet, deeming a company "insolvent on the books" when its net worth appears negative.

Accounting Method   -   In terms of taxation, the method by which income and expenses are determined for taxation purposes.

Accounting Noise   -   The distortion that is caused in a company’s financial statements due to accounting rules and regulations that must be followed. Accounting noise makes it difficult for investors to easily ascertain a company’s true financial condition. Accounting noise can make a company's financial reports look better or worse.

Accounting Period   -   1. In general, the time period reflected by a set of financial statements.
2. In terms of taxation, it is the 12-month period a taxpayer uses to determine his or her income tax.

Accounting Policies   -    The specific policies and procedures used by a company to prepare its financial statements. These include any methods, measurement systems and procedures for presenting disclosures. Accounting policies differ from accounting principles in that the principles are the rules and the policies are a company's way of adhering to the rules.

Accounting Profit   -   A company's total earnings, calculated according to Generally Accepted Accounting Principles (GAAP), and includes the explicit costs of doing business, such as depreciation, interest and taxes.

Accounting Rate of return - ARR   -   ARR provides a quick estimate of a project's worth over its useful life. ARR is derived by finding profits before taxes and interest.

Accounting Records   -   All of the documentation and books involved in the preparation of financial statements or records relevant to audits and financial reviews. Accounting records include records of assets and liabilities, monetary transactions, ledgers, journals, and any supporting documents such as checks and invoices.

Accounting Research Bulletins ARB   -   Bulletins containing recommended accounting procedures for the accounting community. The publications are written and issued by the accounting principles board (APB), and were issued by the committee on accounting procedure of the American Institute of Certified Public Accountants (AICPA) prior to 1959. While the recommendations are not binding in themselves, the Securities and Exchange Commission (SEC) usually imposes the recommendations on firms over which it has jurisdiction.

Accounts Payable - AP   -   An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities.
Accounts payable are often referred to as "payables".
Another common usage of AP refers to a business department or division that is responsible for making payments owed by the company to suppliers and other creditors.

Accounts Payable Turnover Ratio   -   A short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers and dividing it by the average accounts payable amount during the same period.

Accounts Receivable - AR   -    Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short time period, ranging from a few days to a year.
On a public company's balance sheet,  accounts receivable is often recorded as an asset because this represents a legal obligation for the customer to remit cash for its short-term debts.

Accounts Receivable Aging   -   A periodic report that categorizes a company's accounts receivable according to the length of time an invoice has been outstanding. Accounts receivable aging is a critical management tool as well as an analytic tool that helps determine the financial health of a company's customers, and therefore the health of their business.

Accounts Receivable Conversion - ARC   -   A process that allows paper checks received in payment for an account receivable to be electronically scanned and converted into an electronic payment through the Automated Clearing House. ARC saves time and the expense of actually processing the check. Both the vendor and the bank on which the payment was drawn receive only an electronic image of the check.

Accounts Receivable Financing   -   A type of asset-financing arrangement in which a company uses its receivables - which is money owed by customers - as collateral in a financing agreement. The company receives an amount that is equal to a reduced value of the receivables pledged. The age of the receivables have a large effect on the amount a company will receive. The older the receivables, the less the company can expect. Also referred to as "factoring".

Accounts Receivable Insurance   -   A form of credit insurance offered by commercial insurers to businesses. Accounts receivable insurance can take the form of multi-buyer insurance (a pool of receivables) or key buyer insurance.

Accounts Uncollectible   -   Loans, receivables or other debts that have virtually no chance of being paid. An account may become uncollectible for many reasons, including the debtor's bankruptcy, an inability to find the debtor, lack of proper documentation, etc.

Accredited Advisor in Insurance   -   An advanced professional designation earned by insurance producers who complete a course of study and successfully take a series of three national examinations. AAI demonstrates a level of knowledge that is well above that of an insurance producer or agent, and confers on the holder a level of expertise that is very useful when marketing to sophisticated clients.

Accredited Investor   -   A term used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by certain government filings.
Also known as "qualified purchaser".

Accredited Personal Financial Planning Specialist   -   A professional designation for Certified Public Accountants who have completed the required coursework and passed an examination administered by the Certified Financial Planner Board of Standards. The Accredited Personal Financial Planning Specialist designation enables the accountant to offer personal financial-planning services separate from similar services that may be offered as an adjunct to accounting services.

Accreted Value   -   The value, at any given time, of a multi-year instrument that accrues interest but does not pay that interest until maturity. The most well-known applications include zero-coupon bonds or cumulative preferred stock.

Accrued Dividend   -   An accounting term referring to the balance sheet item that accounts for dividends that have been declared but not yet paid to shareholders. Accrued dividends are booked as a liability from the declaration date and remain as such until the dividend payment date.   
Accrued dividends should not be confused with accumulated dividends, which refer to dividends due to holders of cumulative preferred stock

Accrued Expense  -  An accounting expense that is recognised in the the books of accounts before it is paid for. It is a "liability" on the Balance Sheet.

Accrued Income  -  Income that is accounted for in the books of accounts, but not yet received.

Accrued Interest   -   1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, but not yet paid or received. Accrued interest occurs as a result of the difference in timing of cash flows and the measurement of these cash flows.

2. The interest that has accumulated on a bond since the last interest payment up to, but not including, the settlement date.

Accrued Market Discount   -   The gain in the value of a discount bond expected from holding it for any duration until its maturity.`

Accumulated Depreciation   -   The cumulative depreciation of an asset up to a single point in its life. Regardless of the method used to calculate it, the depreciation of an asset during a single period is added to the previous period’s accumulated depreciation to get the current accumulated depreciation.
An asset’s carrying value on the balance sheet is the difference between its purchase price and accumulated depreciation.

Accumulated Earnings and Profit   -   An accounting term applicable to stockholders of closely held businesses. Accumulated earnings and profits are a company's net profits after deducting distributions to the stockholders. This is calculated as of the beginning of the year.

Accumulated Earnings Tax   -   A tax imposed by the federal government upon companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary.

Accumulated Other Comprehensive Income   -   An entry that is generally found in the equity section of a corporation's balance sheet. Accumulated other comprehensive income measures gains and losses of a business that have yet to be realized.

Accumulation   -   1. An individual investor's cash contributions to invest in securities over a period of time in order to build a portfolio of desired value. Dividends and capital gains are also reinvested during this process.

2. An institutional investor's purchase of a large number of shares in a public company over an extended period of time.

3. The retention of company profits in corporate finance for reinvestment in business operations, as opposed to the payout of earnings as dividends to shareholders.

Accumulation Bond   -   A bond issued at an original issue discount (OID). This means that the interest accumulates but is not paid until maturity; there are no semi-annual coupon payments as with most bonds. 
These bonds are also referred to as "accrual bonds."

Accumulation Period   -   1. The phase in an investor's life when he/she builds up his/her savings and the value of his/her investment portfolio with the intention of having a nest egg for retirement.

2. In the context of a deferred annuity, the period of time when the annuitant is making contributions to the annuity and building up the value of his/her annuity account. This is usually followed by the annuitization phase, when guaranteed payments are paid out to the annuitant for a specified period of time (usually the rest of his/her life).

Accumulation Phase   -   1. A period of time when an annuity investor is in the early stages of building up the cash value of the annuity. This is followed by the annuitization phase where payments are paid out to the annuitant.

2. The period of time when an investor builds up the value of their investment through savings.

Accumulation Plan   -   1. A general financial strategy in which an investor attempts to build the value of his or her portfolio to a desired size.

2. In the context of mutual funds, a formal arrangement in which an investor contributes a specified amount of money to the fund on a periodic basis. By doing so, the investor accumulates a larger and larger investment in the fund through his or her contributions and the increase in value of the fund's portfolio. 

Accumulation Unit   -   1) In the case of a variable annuity, a measurement of the value invested in the account during the accumulation period of the contract. The more funds you contribute to your annuity account, the more accumulation units you will build.

2) In the case of a unit trust, a type of investment structure where the trust's income is directly reinvested into the trust, instead of being paid out as cash to the investor.

Accumulation/Distribution   -   A momentum indicator that attempts to gauge supply and demand by determining whether investors are generally "accumulating" (buying) or "distributing" (selling) a certain stock by identifying divergences between stock price and volume flow. It is calculated using the following formula:

Acc/Dist = ((Close – Low) – (High – Close)) / (High – Low) * Period's volume

Accumulative Swing Index - ASI   -   A indicator used by traders to gauge a security's long-term trend by comparing bars which contain its opening, closing, high and low prices throughout a specific period of time. When the ASI is positive, it suggests that the long-term trend will be higher, and when the ASI is negative, it suggests that the long-term trend will be lower.
The ASI is often cited as being developed by Welles Wilder.

Acid-Test Ratio   -   A stringent test that indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets.

Calculated by:

Acquired Fund Fees And Expense - AFFE   -   A line item in a fund-of-funds' prospectus that shows the operating expenses of the underlying funds. This became a requirement as of January 2007 and this information is found beneath the "Fees and Expenses" heading.

Acquiree   -   The company that is being acquired or purchased in a merger or acquisition. The acquiree is also known as the “target firm”.
Usually the acquiree will see a short-term movement in the price of its shares to resemble the price per share that was paid by the acquirer. This can be a positive or negative amount.

Acquirer   -   1. The firm which is purchasing a company in an acquisition. The acquirer is also known as a bidder.

2. A financial institution or merchant bank (a merchant acquirer) which is contacted to authorize a credit card or debit purchase. The acquirer will either approve or decline the debit or credit card purchase amount. If approved the acquirer will then settle the transaction by placing the funds into the seller's account.

Acquisition Indigestion   -   A slang term describing an acquisition or merger in which the companies involved have trouble integrating with one another. Acquisition indigestion may also describe a situation in which the purchasing company has difficulty making the most of a takeover.

Across the Board   -   A market-wide directional movement, or a market condition in which most stocks and sectors are moving in the same direction. These movements are usually caused by market-wide events.

Active Box   -   This refers to the physical location in a brokerage where securities are kept.

Active Investing   -   An investment strategy involving ongoing buying and selling actions by the investor. Active investors purchase investments and continuously monitor their activity in order to exploit profitable conditions.

Active Management   -   The use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund's portfolio. Active managers rely on analytical research, forecasts, and their own judgment and experience in making investment decisions on what securities to buy, hold and sell. The opposite of active management is called passive management, better known as "indexing".

Activity Based Budgeting (ABB)   -   A method of budgeting in which the activities that incur costs in every functional area of an organization are recorded and their relationships are defined and analyzed. Activities are then tied to strategic goals, after which the costs of the activities needed are used to create the budget.
Activity based budgeting stands in contrast to traditional, cost-based budgeting practices in which a prior period's budget is simply adjusted to account for inflation or revenue growth. As such, ABB provides opportunities to align activities with objectives, streamline costs and improve business practices.  

Adding to a Loser   -   The action of a trader/investor increasing a position in an asset when its price is heading in the direction that's opposite to what the investor/trader desires. This is generally not a wise investment decision because unless the asset begins to move in the desired direction, the investor's losses will increase.

ADR  -  American Depository Receipt. A negotiable certificate issued by a US Bank representing a specified number of shares in a foreign stock, that is traded on a US exchange. These shares are denominated in US Dollars.

ADS  -  American Depository Share. These are the individual shares issued as part od an ADR (above)

Advance/Decline Index   -   A technical analysis tool that represents the total difference between the number of advancing and declining security prices. This index is considered one of the best indicators of market movements as a whole. Stock indexes such as the Dow Jones Industrial Average only tell us the strength of 30 stocks, whereas the advance/decline index can provide much more insight into the movements of the market.
 = (Advances - Declines) + Prior Advance/Decline Index Value

AED  -  United Arab Emirates Dirham. The currency used in the United Arab Emirates. The Dirham is made up of 100 Fuloos (1 Fil - <singular>)

AFA  -  Afghanistan Afghani. The unit of currency in Afghanistan. The Afghani is made up of 100 Puls.

Affirmative Obligation   -   An obligation of NYSE specialists to enter the market on a particular security (either by posting or bidding and ask) when there is not sufficient market demand and supply to efficiently match orders.

Affluenza   -   A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses". Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements. People said to be affected by affluenza typically find that the very economic success they have been so vigorously chasing ends up leaving them feeling unfulfilled, and wishing for yet more wealth.

After-Hours Market Close   -   The last transaction and final price of a security that is traded in the after-hours market. The after-hours market is generally more volatile than the regular market, but it can give investors an idea of what to expect at the start of trading the next day.
Also referred to as "after-hours close".

After-Hours Trading (AHT)   -   Trading after regular trading hours on the major exchanges.
Also known as the "after-hours market".

After The Bell   -   After the close of the stock market.

Agency Cross   -   A trade that has only one agent acting for the buyer and seller.
Also known as Dual Agency.

Agflation   -   An increase in the price of food that occurs as a result of increased demand from human consumption and use as an alternative energy resource. While the competitive nature of retail supermarkets allows some of the effects of agflation to be absorbed, the price increases that agflation causes are largely passed on to the end consumer. The term is derived from a combination of the words "agriculture" and "inflation".

AGM  -  Annual General Meeting. Mandatory yearly meeting in which the Board of Directors discuss the financial results of the company. Shareholders can attend this meeting. Shareholders with voting rights can vote on various motions that may come up, for example voting in the auditors etc.

Air Pocket Stock   -   A stock that experiences a sudden drop, similar to a plane hitting an air pocket. Air pocket stocks are usually the result of investors reacting to negative news.

Alan Greenspan  -  Former Chairman of the Federal Reserve Bank of America. Ben Bernanke has succeeded him in this role.

Algorithm   -   A set of rules for accomplishing a task in a certain number of steps. One common example is a recipe, which is an algorithm for preparing a meal. Algorithms are essential for computers to process information. As such, they have become central to our daily lives, whether ordering a book online, making an airline reservation or using a search engine.

ALL  -  Albanian Lek. The unit of currency in Albania. the Lek is made up of 100 qindarka. (Note that the qindarka is no longer issued. In 1992 the new "lek valuta" was introduced).

Alligator Property   -   In real estate, when the cost of mortgage payments, property taxes, insurance and maintenance on a rental property is greater than the income it brings in. If this situation is not corrected, it will eat up all of the owner's profit, leaving him or her with negative cash flow.

Alligator Spread   -   An unprofitable spread regardless of favorable market movements and due to large commissions charged upon the transactions. An alligator spread is usually used in the options market to describe a collection of put and call options that may not be profitable.

Allocation Notice   -   An official notification from an options clearing firm to the writer of an option that the current option holder has exercised and, therefore, the writer must produce the underlying security. This may require the option's writer to purchase or sell securities on the open market to fulfill the contractual obligation.
Allocation notice can also refer to how a broker or advisor would inform a client who has shown interest in an IPO whether his or her requested allocation of IPO shares is available in full, or if only a fraction of the requested total is available for purchase.

Alpha  -  In simple terms Alpha is the return a fund or stock makes in excess of what was expected based on a benchmark. For example, lets say Company ABC had a return of 10%, whereas the index in which it is a member had an overall return of 9%, then Company ABC had a positive Alpha of 1 percentage point.

Alternative Energy ETF   -   An exchange-traded fund that invests in companies engaged in industries serving alternative energy production and research. Some companies found within alternative energy ETFs may only receive a portion of their revenues from alternative energy goods and services, while other (typically smaller) companies are wholly engaged in alternative or clean energy production. The underlying group of securities used to passively invest assets within these funds varies widely depending on the issuer. Some include many stocks while others have a narrower focus and are thus less diversified.

Alternative Investment   -   An investment that is not one of the three traditional asset types (stocks, bonds and cash). Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of their complex nature, limited regulations and relative lack of liquidity. Alternative investments include hedge funds, managed futures, real estate, commodities and derivatives contracts.

Alternative Order   -   A combination order whereby two separate orders are entered on the same security. The execution of one order cancels the other.

Alternative Trading System (ATS)   -   A trading system that is not regulated as an exchange, but is a venue for matching the buy and sell orders of its subscribers. Alternative trading systems are gaining popularity around the world and account for much of the liquidity found in publicly traded issues.
Regulation ATS was introduced by the SEC in 1998 and is designed to protect investors and resolve any concerns arising from this type of trading system. Regulation ATS requires stricter record keeping and demands more intensive reporting on issues such as transparency once the system reaches more than 5% of the trading volume for any given security.

AMEX  -  American Stock Exchange. The 3rd largest stock exchange by trading volume in the US. Deals mainly in small cap stocks, ETF's and derivatives.

And Interest   -   A slang phrase used when quoting the price of a fixed-income instrument with accruing interest. When revealing the sale price of a bond, a broker or salesman will often express the value as the clean price "and interest".
Also written as "and-interest".

Andrew's Pitchfork   -   A technical indicator that uses three parallel trendlines to identify possible levels of support and resistance. The trendlines are created by placing three points at the end of identified trends. This is usually achieved by placing the points in three consecutive peaks or troughs. Once the points have been placed, a straight line is drawn from the first point that intersects the midpoint of the other two.
Also known as "median line studies".

Angel Bond   -   A slang term for investment-grade bonds. An angel bond pays a lower interest rate due to the higher credit rating of the issuing company. This is the opposite of fallen angels, which are bonds that have a 'junk' rating, and are more risky.

Angelina Jolie Stock Index   -   An index made up of a selection of stocks from companies associated with actress Angela Jolie. Seen as one of the world's most influential celebrities, some analysts believe that companies connected with Jolie will outperform their competition.

Ankle Biter   -   Stock issues with a market capitalization of less than $500 million.
Also known as "small cap" stocks.

Annual Report  -  This is a report of a Companys performance over the prior year. It contains Financial information such as a Balance Sheet and Profit/Loss Statement. Other sections of the report may include the following: Letter to Shareholders; Financial Highlights with supporting graphics; Management discussion; Notes to Financial Statements; Auditors's Report; Corporate Information etc.

Anonymous Trading   -   Visible bids and offers on the market without the identity of the bidder and seller being revealed.

Antitrust   -   The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade.

AON  -  Angolan Novo Kwanza. The primary currency in Angola from 1990 - 1995. (No sub unit)

APR  -  Annual Percentage Rate. the annual rate of interest charged on a loan, or made by investing. This is expressed in percentage number.

Arbitrageur   -   A type of investor who attempts to profit from price inefficiencies in the market by making simultaneous trades that offset each other and captures risk-free profits. An arbitrageur would, for example, seek out price discrepancies between stocks listed on more than one exchange, buy the undervalued shares on one exchange while short selling the same number of overvalued shares on another exchange, thus capturing risk-free profits as the prices on the two exchanges converge. (see Wall Street Jobs section)

Asprin Count Theory   -   A market theory that states stock prices and aspirin production are inversely related. The Aspirin count theory is a lagging indicator and actually hasn’t been formally tested, so it is more a humorous hypothesis than a theory.

Asset  -  A resource with Economic Value. A balance sheet item representing what a company owns.

Asset Stripper   -   An individual or company, which purchases a corporation with the intention of dividing that corporation up into its parts and selling these parts for profit. An asset stripper will determine if the value of a company is worth more as a whole or as separate assets. Usually the asset stripper sells some assets off immediately then sells the functioning portion of the business later.

Assimilation   -   The absorption of stock by the public from a new issue.

Asymmetric Information   -   A situation in which one party in a transaction has more or superior information compared to another. This often happens in transactions where the seller knows more than the buyer, although the reverse can happen as well. Potentially, this could be a harmful situation because one party can take advantage of the other party’s lack of knowledge.

AUD  -  Australian Dollar. The unit of currency used in Australia. (All Currencies are notated as a 3 letter code).

Aunt Millie   -   A slang term for an uneducated or unsophisticated investor. The term is considered a derogatory remark in the financial sector, often used to refer to poor investment choices.

Aussie   -   Slang term to refer to the Australian Dollar.

Australian Stock Exchange (ASX)   -   The stock exchange headquartered in Sydney, Australia.

Australian Stock Price Riskless Indexed Note (ASPIRIN)   -   A zero-coupon bond with a return linked to the Australian all-ordinaries stock index. The bond has a four-year maturity and is repayable at face value, with a yield derived from the index's percentage increase over a predetermined level.
Also known as an "All-Ordinaries Share Price Riskless Indexed Note".

Austrian School   -   An economic school of thought that originated in Vienna during the late 19th century with the works of Carl Menger. The Austrian school is set apart by its belief that the workings of the broad economy are the sum of smaller individual decisions and actions, unlike the Chicago school and other theories that look to surmise the future from historical abstracts, often using broad statistical aggregates.
Also known as the "Vienna school" and the "psychological school".

AUTEX   -   AUTEX is an electronic platform from Thomson Financial that allows potential buyers or sellers of a large block of shares to identify other large traders on the bid and ask side of a particular stock. By showing "trade advertisements" in a stock issue, the interface presents indicators of interest among traders who wish to get a feel for the market liquidity before executing a large trade.

Authority Bond   -   A debt security issued by an authority, such as a corporate or government agency, for purposes of financing the operations of a revenue-generating public business. Investors in authority bonds have a claim to the business's revenues, which serve as the bond's yield.

Authorization Code   -   A generic term that refers to a code or password that identifies the user as authorized to purchase, sell or transfer items, or to enter information into a security-protected space. For example, an authorization code would be required for a vendor to process a credit card transaction on behalf of a customer paying for goods.

Authorized Forex Dealer   -   Any type of financial institution that has received authorization from a relevant regulatory body to act as a dealer involved with the trading of foreign currencies. Dealing with authorized forex dealers ensure that your transactions are being executed in a legal and just way.

Authorized Investment   -   Dictated by state laws or by trust instruments designed to restrict the kinds and amounts of investments allowed within a trust. In most cases, an authorized investment list prevents aggressive or speculative investments and insures that the trust is conservatively managed. It is the responsibility of the trustee, or fiduciary, to comply with the list of authorized investments for the trust account involved.

Authorized Participant   -   An entity chosen by an exchange-traded fund's (ETF) sponsor to undertake the responsibility of obtaining the underlying assets needed to create an ETF. Authorized participants are typically large institutional organizations, such as market makers or specialists.

Authorized Stock   -   The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation. This figure is usually listed in the capital accounts section of the balance sheet.
Also known as "authorized shares" or "authorized capital stock".

Automatic Stabilizer   -   An economic policy or program that increases or decreases automatically to offset the current economic trend without government assistance.

Avalize   -   The act of having a third party (usually a bank or lending institution) guarantee the obligations of a buyer to a seller per the terms of a contract such as a promissory note or purchase agreement. The bank, by "avalizing" the document (usually "by aval" will be written on the document itself), acts as a cosigner with the buyer in the transaction.

Average Annual Yield   -   The average yield on an investment or a portfolio that results from adding all interest, dividends or other income generated from the investment, divided by the average of the investments for the year. The average annual yield is a particularly useful tool for floating-rate investments, in which the fund's balance and/or the interest rate change frequently.

Average Down   -   The process of buying additional shares in a company at lower prices than you originally purchased. This brings the average price you've paid for all your shares down.

Average Cost Method   -   A costing method by which the value of a pool of assets or expenses is assumed to be equal to the average cost of the assets or expenses in the pool.

Away From the Market   -   When the bid on an order is lower (or the ask price is higher) than the current market price for the security.