Money Glossary H
Fifth letter of a
Nasdaq stock symbol specifying that the issue is the second
preferred bond of the company.
House Air Waybill
ISO 3166 country code for HONG KONG.
ISO 4217 currency code for theHong Kong Dollar.
Hong Kong Futures Exchange
Highly leveraged transaction
ISO 3166 country code for HEARD ISLAND AND MCDONALD ISLANDS.
ISO 3166 country code for HONDURAS.
ISO 4217 currency code for the Honduras Lempira.
ISO 3166 country code for CROATIA.
Croatian Kuna currency. (The
ISO 4217 currency code)
ISO 3166 country code for HAITI.
ISO 4217 currency code for the Haiti Gourde.
ISO 3166 country code for HUNGARY.
ISO 4217 currency code for the Hungarian Forint.
margin or difference between the actual
market value of a
security and the value assessed by the lending side of a
The point in the life of a
mortgage-backed security guaranteed or
Government National Mortgage Association, the
Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation when half the principal has
preferred, with a $50
Heavy selling of
speculators who think that the
is overvalued and is about to drop.
The whole-dollar price of a
is referred to as the handle (e.g., if a
security is quoted at 101.10 bid and 101.11 offered, 101 is the
Traders are assumed to know the handle. See:
investor who has a large stake in a company, but does not wish to
play an active role in the management of the corporation.
investor who has a large stake in a corporation and takes an active
role in its management. Antithesis of
index in Hong Kong.
A capital budget that under no circumstances can be violated.
A freely convertible
currency that is not expected to depreciate in value in the
Actual separate payments made by a customer for services, including
research, provided by a brokerage firm. Antithesis of
that allows the user to purchase a
only by surrendering an other bond with similar terms.
The Harmonized Commodity Description and
Commonly known as Harmonized System. It isa a classification system
devised by the Customs Cooperation Council to provide uniformity in
tariff classification, trade statistics, and transport documentation
among cooperating countries.
Often used in risk arbitrage. Antitrust act administered by U.S.
Department of Justice and the FTC that requires an
investor to file a form with the government before he acquires an
economic interest in the lesser amount of $15 million or 15% of the
capitalization of a specific
security. The government has thirty days to respond to the filer.
Author of this glossary. Finance professor at Duke University. Author of
research on international finance, asset allocation, and emerging
technical analysis, a pattern that results where a
price reaches a peak and declines; rises above its former peak and again
declines; and rises a third time but not to the second peak, and then
again declines. The first and third peaks are shoulders, while the
second peak is the formation's head.
Technical analysts generally consider a head and shoulders formation
to be a very
An equities market now dominated by sellers, or oversupply, resulting in
A transaction that reduces the
A clause in a research report or any published document, that attempts
to absolve the writer of responsibility for the accuracy of information
A fund that may employ a variety of techniques to enhance
such as both buying and
according to a valuation model.
Measured by the
R-square in a
rate changes on
options, ratio between the change in an option's
theoretical value and the change in price of the
at a given point in time. For convertibles, percentage of a
convertible bond representing the number of
common shares sold against the shares into which bonds are
convertible. If a
preferred is convertible into 2000 common shares, a 75% hedge ratio
1500 common for every 1000 preferred long (short). See:
options strategy in which an
investor with a
long position in an
buys an out-of-the-money
sells an out-of-the-money
The hedge wrapper defines a
where the stock will be sold at expiration of the
which way the stock moves.
portfolio consisting of a
long position in the
long position in the
option on the stock, so as to be riskless and produce a
that equals the
risk-free interest rate.
investor sells a portion of a stock holding short a tender offer in
the event all
tendered are not accepted. For example,
investor Q has 5000
of XYZ. An acquiring company makes a tender offer of $100 a
when the shares are currently worth $80.
shares after the announcement and the price of the
has approached $100. Company XYZ purchases only 2500 of the original
Investor Q has sold all
at $100 even as the price of the stock drops on a post-news dip.
Slang for a
A strategy designed to reduce investment
futures contracts. A hedge can help lock in
Its purpose is to reduce the
volatility of a
portfolio by reducing the risk of loss.
particular sources of consumption
beyond the usual mean-variance
Used for listed equity securities. Not open for
specialists or regulators are not allowing
to occur until imbalances dissipate or news is disseminated.
that must be
executed without hesitation (Hit
the bid or
take the offer in line) or if the
can be bought or sold at that price (held
limit order) in sufficient quantity.
contract that obligates a purchaser of a project's output to make
cash payments to the project in all events, even if no product is
offered for sale.
The Helsinki Exchanges (HEX Ltd., Helsinki Securities and Derivatives
Exchange and Clearing House) was formed at the beginning of 1998
following the merger of the Helsinki Stock Exchange Ltd. and SOM Ltd.,
the Securities and Derivatives Exchange, and the Clearing House.
A theory that
prices move in the same direction as the hemlines of women's dresses.
For example, short skirts (1920s and 1960s) are symbolic of
and long skirts (1930s and 1940s) are symbolic of
of loss in
trading that one party will deliver foreign exchange but the
counterparty financial institution will fail to complete its end of
the contract. This is also referred to as settlement risk.
Quotron display page that shows new listed
received after the
Hong Kong Interbank Offer Rate, the annualized offer rate banks pay to
attain Hong Kong three-month deposits in denominated dollars.
A sales charge that is not explicitly disclosed or is buried in the fine
print of a
mutual fund prospectus or life insurance policy and therefore is not
assets owned by a company, that are not accurately reflected in its
price at a particular time.
Replace a high-coupon
bond with a new, lower-coupon bond.
The maximum amount of
outstanding loans for a particular customer on a bank's record.
High current income mutual
mutual fund whose primary goal is to produce a high level of income
by making higher-risk
investments in instruments such as
High-priced and highly speculative
that moves up and down sharply over a short period. Generally glamorous
in nature due to the
capital gains potential associated with them; also used to describe
any high-priced stock. Antithesis of
Credit quality of AAA or AA.
with Triple-A or Double-A
in Standard & Poor's, or Moody's rating system.
The highest (intraday) price of a
over the past 52 weeks, adjusted for any
with a long-term, high-premium,
common stock conversion feature. It also
interest rate. This type of
investment vehicle is aimed at
investors who want to be able to convert into
of companies operating in high-technology fields.
High withholding tax
Interest income that is subject to a foreign gross
withholding tax of 5% or more. Specified in US tax code.
In the context of hedge funds, a style of management that focuses on low
rated fixed income securities.
Japanese term for a
investment banking firm's letter indicating that the firm is highly
confident it will be able to arrange financing for a
to a highly
that have hit an all-time high for the current 52-week time period.
Describes the accounting cost carried in the books for a current cost of
An accounting technique that values an
balance sheet purposes at the price paid for the asset at the time
An accounting term that refers to the
exchange rate in effect at the time an
liability is acquired.
of price over which a
security or a
since listing on a
Fluctuations estimated from a historical time series.
A measure of a
over a specific period of time, e.g., 1 year, 2 year, 5 year, or year to
who agrees to sell at the
price quoted by another dealer is said to "hit" that bid. Antithesis of
take the offer.
Used in the context of general equities. See:
To maintain ownership of a
security over a long period of time. "Hold" is also a recommendation
analyst who is not positive enough on a
to recommend a buy, but not negative enough on the stock to recommend a
The purchaser of an option.
The date on which holders of record in a firm's
ledger are designated as the recipients of either
dividends or stock rights. Also called
date of record.
A corporation that owns enough
stock in another firm to control management and operations by
influencing or electing its board of directors.
The illegal practice of maintaining and/or placing a sufficient number
orders to create price support for a
commodity in an amount to of stabilize a downward
Length of time a
security is held.
Rate of return on an investment over a given period.
annual rate of return actually realized on an
investment in a
The tendency of
investors to over invest in their own county's
capital gain in a
in a short period of time.
Sale of some
to get cash in an amount similar to that of a
Idea that as long as individuals borrow (or lend) on the same terms as
the firm, they can duplicate the effects of corporate
leverage on their own. Thus, if levered firms are priced too high,
investors will simply borrow on personal accounts to
in unlevered firms.
A credit line offered by mortgage lenders allowing a homeowner a
second mortgage that uses the
present in the customer's
insurance policy protecting a homeowner against damage or loss to
The degree to which items are similar.
Exhibiting a high degree of
An assumption of
portfolio construction that investors have the same expectations
with respect to the inputs that are used to derive efficient portfolios:
Established in 1976, the Hong Kong Futures Exchange (H.K.F.E.) operates
futures and options markets in index, stock, interest rate, and foreign
An analysis of
using total return to assess performance over some investment horizon.
immunization strategy that cash-matches over the next few years and
duration-matches the rest.
return over a given horizon.
between two companies producing similar goods or services.
The process of dividing each expense item of a given year by the same
expense item in the base year. It allows assessment of changes in the
relative importance of expense items over time and the behavior of
expense items as sales change.
involving two or more firms in the same industry that are both at the
same stage in the production cycle; that is, two or more competitors.
price movement within a narrow price
over an extended period of time which creates the appearance of a
relatively straight line on a graph of the
The simultaneous purchase and sale of two
that differ only in their expiration dates.
to finance construction of a hospital by a municipal or state agency.
The security to which a
takeover of a company against the wishes of the current management
and the board of directors by an acquiring company or raider.
Used in the context of general equities.
usually with positive price implications.
Money that moves across country borders in response to
interest rate differences and that moves away when the interest rate
Firms that conduct business as
securities or in the
investment banking field are characterized as houses.
A type of
at a brokerage firm that is given a high level of priority and is
handled by the main office or an executive, rather than a traditional
An air waybill issued by an
air freight consolidator.
Notification by a brokerage house that a customer's
margin account is below the minimum maintenance level. The client
must provide more cash or
account will be
investment banking firm whose business it is to underwrite
securities to the public.
The internal rules of a brokerage house that govern the minimum amount
that must be present in a customer's
People who are short on cash because most of their money is tied up in
their homes are "house poor."
Internal rules of
firm that govern the handling of its customers'
by a local housing authority to finance housing projects.
"What is your market in a particular stock?" See:
An arrogance due to excessive pride and an insolence toward others. A
classic character flaw of a trader or investor.
by Hulbert Financial Digest (of Alexandria, Virginia) of how well the
recommendations of various
investment advisory newsletters have performed.
The unique capabilities and expertise of individuals.
Informal name for the Full Employment and Balanced Growth Act of 1978,
from the names of the act's original sponsors.
Used to describe the
position of an
have dropped in value below their original purchase price.
A term used to describe a
selling off a big
position in a
required return in
capital budgeting. For example, if a project has an expected
rate of return higher than the hurdle rate, the project may be
A measure of the bias in
fractional Brownian motion. H=0.50 for Brownian motion. 0.50<H<1.00
for persistent, or trend-reinforcing series. 0<H<0.50 for an
system. The inverse of the Hurst exponent is equal to alpha, the
characteristic exponent for
Stable Paretian distributions. The
fractal dimension of a time series, D, is equivalent to 2-H.
A package of two or more different kinds of
instruments that are usually interactive.
A type of insurance company investment that combines the benefits of
both a fixed annuity and a
convertible security whose optioned
common stock is
in a middle range, causing the convertible security to trade with the
characteristics of both a fixed income security and a
In banking, refers to the commitment of property to secure a
securities, refers to the commitment of
securities to serve as
loans at the
Used to characterize a lagging effect. Firms may fail to enter
that appear attractive, or firms that are once invested in a market may
persist in operating at a loss. The effect is characteristic of
investments with high entry and exit costs along with high uncertainty.