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F - When the fifth letter of a NASDAQ stock symbol is an
F, the stock is that of a foreign company.
Face Value - Sometimes referred to as "par value"; the maturity value of
a bond as stated on the certificate.
Facility - A stand-by borrowing arrangement that can be used with little
or no advance notice.
Factor - A company or institution that purchases another company’s
accounts receivable and then collects the debt.
Factor Model - An analysis of, and "boiling down" of forces that
influence the rate of return of a security.
Factoring - The act of selling a company’s accounts receivable to
another company or institution for collection.
Fail - When either the seller fails to deliver securities in proper form
or the buyer fails to deliver funds in proper form
Fair Game - An investment with no risk premium.
Fair Market Price - Amount which an asset is sold for that is a
reasonable amount.
Fair Price - Equilibrium price for futures contracts
Fair Value Basis - The difference between the futures price and the spot
price that offers no opportunity for profitable arbitrage at current
carrying costs.
Fair Value of an Option - Price or premium at which both the buyer and
the writer of the option should expect to break even, without
commissions and other trading costs and after an adjustment for risk.
Fair-And-Equitable Test - A plan of reorganization to be approved by the
bankruptcy court.
Fairness Opinion - An assessment of an asset, a security, or a company
prepared by an investment bank or some other presumably unbiased third
party in the event of a takeover proposal, recapitalization or some
other corporate transaction.
Falcon - A covered warrant with the issuer's obligation collateralized
by enough shares to deliver the underlying equity upon exercise of the
warrant.
Fall Down - Referring to general equities, unable to produce as expected
or advertised due to any of a number of factors.
Fallen Angel - A corporate bond whose investment rating has been reduced
as a result of a decline in the credit quality of the issuing
corporation.
Falling Interest RatE Adjustable Rate Mortgage (FIREARM) - Mortgage in
which the rates adjusts downward as interests rates decline, yet do not
adjust upward as interest rates advance.
Fallout Risk - Risk associated with mortgages; risk that either of the
two parties will fail to close.
Fannie Mae - Federal National Mortgage Association (FNMA): A
publicly-traded corporation that purchases conventional mortgages and
mortgages guaranteed by the Federal Housing Administration, Farmers Home
Administration and Veterans Administration.
FASB - Abbreviation for the Financial Accounting Standards Board.
FASB No. 52 - Accounting standard that requires US companies to
translate foreign accounts by the current rate and report the changes
from currency fluctuations in a cumulative translation adjustment
account.
Fast Market - Referring to general equities, Very rapid trading in a
certain security that causes a delay in the electronic updating system.
Fast-Pay/Slow-Pay Bonds - CMO tranches with early and late access to
interest and principal payment streams.
FCIA - Abbreviation for the Foreign Credit Insurance Association.
FDIC - Abbreviation for the Federal Deposit Insurance Corporation
Federal Agency Non- Guaranteed (FANG) - Debt instruments issued by
federal agencies which do not carry a Treasury guarantee.
Federal Agency Securities - Securities issued by US government agencies
or corporations such as Ginnie Mae and the Federal Home Loan Bank Board
Federal Credit Agencies - Agencies set up by the federal government in
order to supply credit to various individuals and institutions.
Federal Deposit Insurance Corporation (FDIC) - The federal institution
that insures bank deposits.
Federal Deposit Insurance Corporation Improvement Act - Act that
endorsed the enforceability of netting agreements as a result of a surge
in claims on deposit insurance funds during the 1980’s.
Federal Financial Institutions Examination Council - An interagency
coordinating body consisting of the Controller of the Currency, the
Chairman of the FDIC, members of the Board of Governors of the Federal
Reserve System, the Office of Thrift Supervision, and the chairman of
the National Credit Union Administration. Together, these five
regulatory agencies have regulatory power over domestic banks as well as
the United States branches of foreign banks.
Federal Financing Bank - A federal institution that provides federal
credit agencies with funds borrowed from the US Treasury.
Federal Funds - Deposits held in reserve for depository institutions at
the Federal Reserve Bank. Funds used by banks to lend to other banks.
Federal Funds Market - Market where banks borrow and lend reserves.
Federal Funds Rate - The interest rate that banks who are lending excess
reserves to other banks charge. This rate is an indicator of the
direction that US interest rates are going.
Federal Home Loan Banks - Banks that regulate and lend funds to saving
and loan associations.
Federal Home Loan Mortgage Corporation (Freddie Mac) - Corporation
chartered by the US government that purchases residential mortgages in
the secondary market and then sells them in the capital markets.
Federal National Mortgage Association (Fannie Mae) - A corporation that
purchases mortgages from lenders and then resells them to investors. It
is a publicly owned and government sponsored.
Federal Open Market Committee (FOMC) - Decision making body for the
growth of money and credit through purchases and sales of U.S.
Government Securities in the open market.
Federal Reserve Board - A group appointed by the President, subject to
approval by Congress, that oversee operations of the Federal Reserve
System.
Federal Reserve System - The central bank of the US which regulates the
monetary policies of the US. The system consists of 12 Federal Reserve
Banks
Federally Related Institutions - Institutions that are part of the
federal government and re exempt form SEC registration requirements.
Their securities are backed by the credit of the US government.
Federation International des Bourses de Valeurs - An international
organization of exchanges that attempts to develop common policies and
practices.
Fedwire - The wire transfer system used by the Federal Reserve System.
Fiat money - Paper money that is non-convertible.
Fiduciary - Entity given control of money or other assets.
Fiduciary Call - A call is purchased and the present value of its
aggregate exercise price is invested in money market instruments which
are placed in an escrow account to cover the cost of exercise.
Fiduciary Put - A put is sold and its aggregate exercise price is
invested in money market instruments which are placed in escrow so that
adequate cash will be prepared in the event of exercise.
Figuring The Tail - Figuring, or calculating, the yield at which future
money markets is purchased when the related future security is created.
Fill - The execution price of an order.
Fill Or Kill Order - Referring to general equities, an order that is
either cancelled or executed within a specified period of time.
Filter - A rule that defines when a security should be sold.
Financial Accounting Standard (FAS) - Statements that provide guidelines
for accounting matters for U.S.- based entities.
Financial Accounting Standards Board (FASB) - Regulatory organization
with primary responsible for establishing financial reporting standards
in the United States.
Financial Analysts - Professionals who analyze various stocks and then
recommend either the purchase, hold, or sell of those stocks.
Financial Assets - Claims of ownership on real assets.
Financial Control - The management of costs and expenses.
Financial Distress - Financial difficulty, including bankruptcy and loan
default.
Financial Distress Costs - Costs associated with financial difficulty
including costs of reorganization and liquidation.
Financial Engineering - Creating new financial products by combining
and/or dividing existing instruments.
Financial Future - A contract involving the delivery of an asset in
exchange for the selling price at a future date.
Financial Institutions Recovery, Reform, and Enforcement Act - An act
that enforced capital requirements on thrift institutions and
regulations regarding swap agreements.
Financial Instrument - Cash, evidence of an ownership interest in an
equity, or a contract with rights or obligations to an entity.
Financial Intermediaries - Institutions that match borrowers, lenders,
and traders.
Financial Lease - A non-cancelable lease that is long-term.
Financial Leverage - Using debt in order to increase the expected return
on equity.
Financial Leverage Clientele - Investors, or clients, who prefer to
invest in company’s that follow a particular financial leverage policy.
Financial Market - A mechanism organized for the creating and exchanging
of assets.
Financial Objectives - Objectives that a company will strive to achieve
during a certain period of its fiscal year.
Financial Plan - A blueprint for the financial future of a firm.
Financial Planning - Evaluating the financial opportunities before a
firm and making decisions in regard to those opportunities.
Financial Press - The media that reports financial news.
Financial Ratio - Calculation used to show the relationship of one
financial item to another for the purpose of analysis.
Financial Risk - The possibility that an issuer will not be able to meet
financial obligations.
Financial Statements - Written records reflecting a company’s financial
condition. These often include; balance sheet, income statement,
statement of cash flows and statement of shareholder equity.
Financial Times/Actuaries Indices - Referring to listed equity
securities, A share price index for companies in the UK.
Financing Decisions - Decisions made in regard to liabilities and
stockholders’ equity.
Fine Print - Contract provisions which may create problems if both
parties involved are not alert to their contents.
FINEX - The futures and options division of the New York Cotton
Exchange.
Firewall - Barrier designed to prevent losses or risks taken in one part
of a financial institution from weakening other divisions of the
institution.
Firm - A synonym for company; An order that can be executed without
confirmation for a specified period of time.
Firm Commitment - Agreement in which an investment bank commits to
buying an entire issue and takes all responsibility for any unsold
shares.
Firm Market - Referring to general equities, market in which securities
can be bought or sold in decent sizes.
Firm Order - Referring to general equities, an order that does not need
the customer’s confirmation; an order to buy of sell for the proprietary
account of the broker.
Firm Price - A price at which a trader is willing to execute trade for a
limited period of time.
Firm's Net Value Of Debt - Total company value less total company debt.
First Call Date - Earliest date a security may be redeemed by its
issuer.
First Loss Guarantee - A form of credit enhancement in which an investor
can resort to a third party for a stated percentage of any obligation or
a percentage of any losses.
First Notice Day - The first day on which notices of intent to deliver
are authorized.
First-Call - Start of the cash flow cycle for the cash flow window.
First-In-First-Out (FIFO) - Method of valuing the cost of goods sold
that uses the cost of the oldest item in inventory first.
First-Pass Regression - A regression to estimate the betas of securities
portfolios.
Fiscal Agency Agreement - Agreement where the fiscal agent acts as an
agent of the borrower.
Fiscal Policy - The government’s approach to stabilizing the economy
through spending and taxation.
Fiscal Year - Twelve-month period designated as the annual accounting
period for a firm. A firm’s fiscal year often coincides with the
calendar year, but in many cases, does not.
Fisher Effect - The theory stating that nominal interest rates of two or
more nations should equal the required real rate of return to investors
plus compensation for the expected amount of inflation in each country.
Fisher's Separation Theorem - The thought that a company’s choice of
investments does not reflect the attitude of the company’s owner(s)
toward investing
Fitch Sheet - Referring to general equities, Chronological listing of
trades in a specific security that shows the exchange, price, size, and
time of each trade.
Five Cs Of Credit - Five items that are used to determine
creditworthiness: character, collateral, capacity, capital, and
conditions.
Five-Percent Rule - NASD rule that sets a limit of 5% commission for
brokers on most stock transactions. However, there are numerous
exceptions to this rule.
Fixed / Adjustable Rate Preferred Stock (FRAP) - A variation on the
adjustable rate preferred that increases the dividend rate if the
inter-corporate dividend exclusion percentage is lowered in the future.
Fixed Asset - Property held by a firm that is used in the firm’s income
production, for example, real estate and equipment.
Fixed Asset Turnover Ratio - The proportion of sales to fixed assets.
Fixed Charges - Interest on debt.
Fixed Cost - Cost that is fixed for a given period of time.
Fixed Exchange Rate System - The currency exchange rate structure under
the Bretton Woods agreement which called for central bank intervention
to maintain exchange rates within a very narrow band.
Fixed Interest Rate Substitute Transaction (FIRST) - A two tranche
floating rate note structure with one tranche a traditional floater and
the other a reverse floater. The net effect of the offsetting tranches
is to make the issuer a fixed rate payer.
Fixed Price Basis - A securities offering at a fixed price.
Fixed-Annuities - Annuity contracts where the issuer pays a fixed dollar
amount per period.
Fixed-Charge Coverage Ratio - Measure of a company’s ability to meet its
fixed-charge obligations.
Fixed-Dates - The periods for which Euros are traded.
Fixed-Dollar Obligations - Bonds where the coupon rate is set as a fixed
percentage of the par value.
Fixed-Dollar Security - A debt security that can be redeemed at a fixed
price or according to a schedule of fixed values.
Fixed-Exchange Rate - A rate where a country’s currency value is tied to
that of another country, a commodity (such as gold), or a basket of
commodities.
Fixed-Fixed Currency Swap - Both parties to the swap are fixed rate
payers in their respective currencies.
Fixed-Floating Swap - A basic interest rate swap agreement of fixed rate
for floating rate in the same currency.
Fixed-Income Equivalent - A convertible security that trades as if it
were a straight security because of the fact that the optioned common
stock is trading so far below the conversion price. Sometimes called a
"busted" convertible.
Fixed-Income Instruments - Assets that pay a fixed dollar amount, such
as preferred stock or bonds.
Fixed-Income Market - The market for trading assets that pay a fixed
dollar amount.
Fixed-Price Tender Offer - An offer to purchase a stated number of
shares at a fixed price, generally above the current market price.
Fixed-Rate Loan - A loan where the rate the borrower pays is fixed for
the life of the loan.
Fixed-Rate Payer - The party who pays a fixed rate in an interest rate
swap, in exchange for a floating rate payment.
Fixing - Setting a price for a future period based on the relationship
of market prices and contractual terms.
Flat - Referring to general equities, a horizontal price movement
usually due to low activity.
Flat Benefit Formula - Formula used to determine a plan participant’s
benefits by multiplying months of service by a flat monthly benefit.
Flat Price - The price of a bond not including accrued interest.
Flat Trades - Trades involving bonds in default where the price quoted
includes both principal and unpaid interest, or any security that trades
without accrued interest.
Flattening Of The Yield Curve - When the yield curve changes due to a
decrease in the spread between the yield on a long-term and short-term
Treasury bond.
Flex Options - Exchange traded equity or index options, where the
investor can specify within certain limits the terms of the options,
such as exercise price, expiration date, exercise type, and settlement
calculation.
Flight To Quality - The tendency for investors to migrate toward
government bonds during times of economic uncertainty.
Flip Bond - The bond that pays a below market floating rate but allows
the holder to 'flip' the bond and receive fixed on some or all future
coupon payment dates.
Flip-Flop Note - Note allowing for a switch between two different types
of debt.
Flipside - Referring to general equities, the opposite. For example,
sell is the flipside of buy.
Float - Referring to general equities, the number of shares that are
outstanding and available for public trading.
Floater - Bond with a floating rate.
Floating - The distribution of a new or secondary issue through a public
offering.
FLOating Auction Tax Exempts (FLOATs) - A synthetic tax exempt
(municipal) floating rate note. .
Floating Exchange Rate - When the currency value of a nation is
determined by trading in the foreign exchange market, free from
constraint by central bank intervention.
Floating Lien - A general lean against assets.
Floating Rate ENhanced Debt Security (FRENDS) - Securitized note backed
by a leveraged buyout loan participation issued by a bank.
Floating Rate Rating- Sensitive Note - A type of floating rate note in
which the quarterly reset is based on a variable spread over the
reference index rate. The spread increases if the issuer's debt rating
declines.
Floating Supply - The amount of securities believed to be available for
immediate purchase.
Floating-Rate Contract - Guaranteed investment contract where the credit
rating is tied to a variable interest rate benchmark.
Floating-Rate Note - Note with an interest rate that varies with
short-term interest rates.
Floating-Rate Payer - The party in an interest rate swap that pays a
rate based on a reference rate.
Floating-Rate Preferred - Preferred stock that pays dividends that vary
with short-term interest rates.
Floor - A feature of a debt contract that puts a minimum on the interest
rate of a floating rate instrument.
Floor Broker - Referring to listed equity securities, person employed by
a member firm whom acts as agent on the floor for clients.
Floor Picture - Referring to listed equity securities, the trading
situation for a stock.
Floor Planning - Agreement where a finance company buys inventory and
holds it in trust for the user.
Floor Rate - The strike rate of a floor contract.
Floor Ticket - Referring the listed equity securities, A summary of the
details of an order, document that gives the floor broker information
needed to execute the transaction.
Floor Trader - An exchange member who trades only for his/her own
account.
Floor/Ceiling Swap - A swap with an interest rate collar which
constrains the floating rate payment between floor and ceiling rates.
Floored Put - A put position with a maximum payout limited by the terms
of the contract.
Floorlet - One of the interim period floors in a multiple period floor
agreement.
Floortion - An option on a floor in which the holder he holder has the
right to buy a floor at a contractual strike price for a prespecified
premium at expiration.
Flow-Through Basis - An income statement account used to show investment
credit in the year of acquiring an asset as opposed to spreading it over
the life of the asset.
Flow-Through Method - Method of reporting depreciation for shareholder’s
reports.
Flower Bond - Bond issued by the government that is acceptable at par in
payment of federal estate taxes if owned prior to the person’s death.
Flush-out Provision - A feature of a warrant to purchase common stock
that allows the issuer to reduce the specified exercise price of the
warrant to encourage early exercise of the warrants.
Focus List - Referring to general equities, a list published by
investment banks of buy and sell recommendations.
Focused Range Accumulation Note - A range accumulation note for
investors who have more confidence in their ability to predict
short-term rates rather than long-term rates.
Footsie - Referring to international equities, financial index in
London.
Force Majeure Clause - A contract provision that excuses one or both
parties from part or all of their obligations in the event of war,
natural disaster, or some other event outside the parties' control.
Force Majeure Risk - Possibility that a project will be negatively
affected by a significant interruption due to circumstances beyond the
control of the project sponsor.
Forced Conversion - Often referring to convertible securities, when a
convertible security is called in by the issuer, often when the
underlying stock is selling well above the conversion price.
Foreign Banking Market - The market for loans provided by domestic banks
to foreigners for use outside of the country.
Foreign Bond Market - A portion of the domestic bond market representing
issues floated by foreign companies or governments.
Foreign Credit Insurance Association (FCIA) - A union of US insurance
companies that provides trade credit insurance to US exporters.
Foreign Currency - Currency or money of a foreign country.
Foreign Currency Bond - A debt instrument with a coupon paid in a
different currency than the proceeds of issuance. The principal payment
at maturity will be in the same currency as the coupon or converted to
the currency of issuance at the spot rate of exchange at maturity.
Foreign Currency Forward Contract - Often referring to international
equities, contract obligating the parties to exchange given quantities
of currencies at a specified exchange rate.
Foreign Currency Futures Contract - Refers to international equities, a
contract between two parties to exchange currencies at a specified rate.
Foreign Currency Option - Option that gives the right to buy or sell an
amount of foreign currency at a specified price within a certain time
period.
Foreign Currency Translation - Translating foreign currency accounts of
the subsidiaries of a domestic company in order to consolidate them with
the reports of the domestic parent company.
Foreign Direct Investment - Corporate investment involving the
acquisition of assets abroad while maintaining control of operations at
the parent corporation.
Foreign Equity Market - Part of the domestic equity market that involves
issued floated by foreign companies.
Foreign Exchange - Currency from another country.
Foreign Exchange Controls - Controls imposed by a government on the sale
of foreign currencies.
Foreign Exchange Dealer - Person or company that buys foreign exchange
and then sells it, profiting from the difference in the selling prices.
Foreign Exchange Markets (FX, Forex) - Cash, forward, futures, and
options markets in currencies.
Foreign Exchange Risk - Risk that an investment return could suffer due
to an adverse movement in the exchange rates.
Foreign Exchange Swap - Exchanging stipulated amounts of one currency
for another.
Foreign Interest Payment Security (FIPS) - A reverse dual currency bond
with a periodic put back to the issuer at par. Coupons are in the
currency of the issuer and the put is at par in the currency of the
investor.
Foreign Market - Market for trading securities of entities that are
domiciled outside of the country.
Foreign Market Beta - A measure of foreign market risk derived from the
capital asset pricing model.
Foreign Property Rule - A Canadian law that limits the percentage of a
pension fund that may be invested in foreign assets (20 percent).
Foreign Sales Corporation - A type of corporation designed to provide a
tax incentive for exporting US produced goods.
Foreign Stock Index Options, Warrants, and Futures - These
exchange-traded contracts traded in the United States that provide
exposure to foreign stock indexes. The index level is priced and settled
in U.S. dollars.
Foreign Tax Credit - Tax credit against domestic income tax given
because of foreign taxes paid.
Formula Basis - Common stock in which the SEC has declared the
registration statement effective on the basis of price formula.
Forty-eight Hour Rule - Requirement that all pool information in a
"to-be- announced" transaction be communicated to the seller 48 hours
prior to the agreed upon trade date.
Forward Band - A zero cost interest rate collar.
Forward Cap - An interest rate cap with a deferred start date.
Forward Contract - A transaction in which delivery of a commodity is
deferred until after the contract is made, the price is determined at
the trade date, but delivery is made in the future.
Forward Cover - Offsetting a future cash flow with the purchase or sale
of forward foreign currency.
Forward Currency Swap - A currency swap with a forward start on terms
agreed upon in advance. Used to hedge or lock in some combination of
interest rates and currency rates relative to an expected change in
financing or operations.
Forward Delivery - Delivery, or exchange of ownership of goods, on a
specified date in the future with a price agreed upon on the trade date.
Forward Differential - Difference between spot ad forward rates.
Forward Discount - Difference when the currency’s forward price is lower
than its spot price.
Forward Exchange Agreement (FXA) - A contract whose value at maturity is
based on the spread between a forward currency exchange rate on the
start date and the spot rate at settlement.
Forward Exchange Rate - Exchange rate fixed for exchanging currency at a
future date.
Forward Forward Contract - Referring to Eurocurrencies, an agreement
that stipulates that a deposit of fixed maturity is agreed to at a fixed
price for delivery in the future.
Forward Interest Rate - Interest fixed in the present for a lone to be
made in the future.
Forward Intrinsic Value - The intrinsic value of an option plus the fair
value basis on the forward underlying the option contract.
Forward Looking Multiple - A price-to-earnings ratio based on expected
earnings rather than on past earnings.
Forward Market - Market where participants agree to trade a commodity,
security, or foreign exchange for a fixed price with a future delivery.
Forward Outright Rate - The rate used in an outright forward contract.
Forward Point Agreement - A currency swap agreement under which one
party pays fixed forward points set at the time of agreement and the
other party pays floating forward points based on relative interest
rates in the two currencies at a series of future dates.
Forward Points - A number added to or subtracted from the spot currency
exchange rate to calculate a forward price.
Forward Premium - When the forward price of a security is higher than
its spot price.
Forward Rate - Projection of future interest rates.
Forward Rate Agreement - Agreement where a loan will be made at a future
date at an interest rate that is fixed today.
Forward Rate Bias - The tendency of forward exchange rates to
over-estimate changes in spot exchange rates.
Forward Rate Bracket - A contingent forward contract by which the
investor can take advantage of favorable price moves to the upper end of
the contract range while remaining protected against moves below the
lower end of the contract range.
Forward Sale - Agreement to sell loans at a specified price and future
time in order to hedge price risk.
Forward Spread - The difference between any two forward rates or prices.
Forward Spread Agreement - A forward rate agreement which settles at the
index rate at the time of settlement plus or minus an agreed spread.
Forward Start Agreement - A risk management agreement whose effective
life does not start until a future date set by agreement.
Forward Swap - A swap agreement with the period beginning at a future
date.
Forward Volatility Agreement - A contract which settles based on the
difference between the contractual volatility level determined on the
trade date and an implied or actual volatility determined on or near the
settlement date.
Forward Yield Curve - Used to price many interest rate derivative
instruments, the forward curve shows the implied forward interest rate
for each period covered by the yield curve.
Forward-Based Derivatives Contract - An instrument that can be analyzed
as a portfolio of forwards.
Fourchette Option - Option payout structures subject to spread or range.
Fourth Market - Market for trading large exchange-listed securities
without the services of a broker.
Fractional Exposure - An estimate of an institution's maximum potential
mark to the market risk to a specific counterparty between the
calculation date and the maturity of all open contracts.
Franchise Factor - Impact of above-market return investments on a
company's price/earnings multiple.
Franchise Value - The present value of an enterprise's upcoming new
investments, reflecting the application of a franchise factor that
expresses the enterprise's ability to earn an above market rate of
return.
Fraption - An option on a forward rate agreement.
Freddie Mac (Federal Home Loan Mortgage Corporation) - Corporation
chartered by the US government that purchases residential mortgages in
the secondary market and then sells them in the capital markets.
Free Cash Flows - Cash not needed for operations or reinvestment by a
firm.
Free Collar - A zero net premium cost collar or with the premium on the
cap and the floor offsetting one another.
Free Delivery - Referring to general equities, procedure in the
securities market where purchased securities are delivered to the buying
customer’s bank without the requirement of immediate payment.
Free Exchange - rate system operating in the absence of government
intervention.
Free Of Tax to Residents Abroad (FOTRA) - United Kingdom securities
which are exempt from withholding taxes to holders of non-United Kingdom
residency.
Free Reserves - Excess Fed reserves less member bank borrowings.
Free Rider - Investor who follows the actions of, or mimics, another
investor.
Free To Trade - Referring to general equities, trader free from any
internal or external restrictions on trading.
Free-Standing Derivative - A basic derivatives contract, such as a
future, forward, swap or option.
Freeriding - Act of rapid buying and selling of a security by a broker
without putting up funds for the purchase; Illegal withholding of part
of a new securities offering by an underwriter for the purpose of
selling it later at a higher price.
Frequency - The periodic schedule of rate or price readings used to
determine the payoff of an average rate or price option.
Frequency Distribution - An organization, or distribution of data that
shows how often certain values occur.
Fresh Picture - Referring to listed equity securities, new "look" to a
stock or market following recent news or activity.
Fresh Signal - Referring to general equities, information that leads one
to believe that a stock will move either up or down.
Friction Costs - Costs associated with a transaction including things
such as time, money, effort, etc.
Frictions - Difficulties involved in making a transaction.
Frogs - Floating rate notes with coupons reset quarterly or semiannually
to the coupon on the current 30-year Treasury bond.
Front Contract or Front Month Contract - The next futures contract due
to expire.
Front Ending - Referring to general equities, trading a small part of a
large order in an effort to disadvantage the opposing side when the
larger part of the order is sold with a stock price that is moved
against their first, smaller order.
Front Fee - Fee initially paid by the buyer upon entering a split-fee
option contract.
Front Running - Referring to general equities, the act of attempting to
buy or sell securities ahead of an anticipated reaction to news or
publicity.
Front Spread - An option spread with a net premium loss because the long
option is further in the money, closer to the money, or has a longer
life than the short option.
Front Stub Period - The first interim period in the life of a swap.
Front-End Load - A fee or sales charge that is deducted from the
purchase price of mutual fund shares immediately, as opposed to no-load
and back-end loads.
Frozen Index Fund - A fixed portfolio of stocks that does not change in
composition as a result of a portfolio manager's decision or as a result
of component companies being merged or liquidated in taxable
transactions. The dividends on this fund are taxed as ordinary income
instead of capital gains.
Fugit - Expected time to exercise an American style option.
Fulcrum Point - Point where an instrument's value at maturity reaches a
maximum rate or price.
Full Coupon Bond - A bond that has a coupon equal to the going market
rate.
Full Faith And Credit Obligations - Security pledges for large municipal
bond issuers that have diverse funding sources.
Full Investment Note (FIN) - An equity-linked note which reflects the
performance of the stocks in a mutual fund portfolio and extends that
performance to the fund's cash reserves.
Full Price - A bond price that includes accrued interest.
Full Service Lease - Equipment rental lease that stipulates that the
lessor will maintain and insure the leased equipment.
Fully Diluted - The number of common shares outstanding, including all
securities that could be converted into common shares, for example;
warrants, stock options, convertible bonds and preferred stock.
Fully Modified Pass-Throughs - Pass-throughs that guarantee timely
payment of principal and interest.
Fully Valued - Referring to general equities, When a stock price has
reached a level at which the underlying firm’s fundamental earning power
has been fully recognized.
Functional Currency - The currency of the primary economic environment
in which an affiliate generates and expends cash.
Functional Regulation - Regulation of products, markets and market
participants based on what the product or market does.
Fund Family - A grouping of mutual funds marketed and/or managed under a
common brand name or management company.
Fundamental Analysis - Considered the opposite of technical analysis,
analysis that looks for misvalued securities through analysis of a
company’s business potential.
Fundamental Beta - Result of a model used to predict a security’s risk
by using market related data, financial data, and price data.
Fundamental Descriptors - Ratios other than market variables, which rely
on financial data.
Fundamental Financial Instruments - Identified as unconditional
receivables, forward exchanges, and equity instruments.
Funded Debt - Debt that will mature in more than a year.
Funding - Issuing a security to obtain a channel of payment.
Funding Cost - The security issuer's cost of obtaining means of payment
necessary to support its operations.
Funding Ratio - The ratio of assets to liabilities.
Funding Ratio Return (FRR) - The percentage change in the funding ratio
over a period of time.
Funding Risk - The chance for unforeseeable costs losses due to a
disparity between asset returns and liability costs.
Funds - Cash or cash equivalents used to settle a transaction.
Funds From Operations - Term used by investment trusts. Earnings with
depreciation and amortization added back; cash flow from trust
operations.
Fungibility - The standardization and interchangeability of derivative
contracts which allows either party to an opening transaction to close
out a position in an identical contract.
Future Value - An amount of cash in the future that is equal in value to
a sum specified in the present.
Futures - Referring to derivative securities, a security based on the
future price of a commodity or other security.
Futures and Options Funds (FOFs) - Unit trusts offered in the United
Kingdom which enable investors to make limited use of derivative
instruments.
Futures Commission Merchant - An agent who handles orders for the
purchase or sale of futures contracts.
Futures Contract - A contract where the buyer agrees to make a
transaction on a future date, an agreement to buy or sell a specified
number of shares of a specified stock in a designated future month at a
price agreed upon in the present.
Futures Contract Multiple - A constant than is multiplied by the futures
price to figure the dollar value of a stock index futures contract.
Futures Contract on Individual Stock - A simple, single stock futures
contract which is appealing to investors because of the low margin
requirements and the ability to avoid transfer and dividend withholding
taxes.
Futures Market - Market where contracts for the future delivery of a
commodity or security are traded.
Futures Option - Option on a futures contract.
Futures Price - The agreed upon price of a futures contract.
Futures-style Options - A proposed contract to replace many traditional
options-style rules on futures contracts. Unlike traditional options,
the buyer of a futures-style option does not prepay the premium. Buyers
and sellers post margin as in a futures contract, and the option premium
is marked to the market daily. |
