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H - When the fifth letter of a NASDAQ stock symbol is an
H, the represented item is the second preferred bond of the company.
H-H Page - Quotron display page showing new listed inquiries and/or
orders received after the block call.
Haircut - Term meaning the discount of the price of a security.
Handle - The whole-dollar price of an offer or bid.
Hard Call Protection - A period during which a bond cannot be called by
the issuer under any circumstances.
Hard Capital Rationing - A limit of the amount of a firm’s capital that
can be spent in a particular category. This limit allows for no
exceptions.
Hard Currency - A convertible currency that will not depreciate in value
in the foreseeable future.
Hard Dollars - Referring to general equities, payments made by a
customer to a brokerage firm for services such as research.
Harmful Warrant - A warrant removed from its carrier bond that bears the
right to buy an instrument other than an indentured bond.
Harmless Warrant - A security that entitles the holder to buy an amount
of stock at some future date at a specified price, only by surrendering
an existing bond with similar terms.
Hart-Scott-Rodino Act - Often referring to risk arbitrage, an antitrust
act requiring an investor to file a form before acquiring an economic
interest in the lesser of $15 million or 15% in a specific security
Hazard - A risk or source of risk.
Head And Shoulders - In technical securities analysis, a price chart
pattern that resembles the outline of a person’ s head and shoulders.
Heath-Jarrow-Morton (HJM) Model - Model used to evaluate interest rate
options.
Heaven and Hell Bond - Bond with principal redemption related to the
change in the spot exchange rate from issuance to maturity.
Heavy - Referring to general equities, a security that is in over-supply
in the market leading to falling prices.
Hedge - A strategy used in order to reduce an investment risk involving
investing in a security in contrast to one’s primary objective.
Hedge Account - An account in which a risk reduction position is
carried.
Hedge Accounting - Accounting application used to match related gains
and losses and to avoid altering financial reports.
Hedge Clause - A statement that appears on a securities research report
or market letter which may disclaim responsibility for losses the user
of the report may sustain as a result of errors or omissions in the
report.
Hedge Fund - A fund used to enhance returns including the buying,
selling, and shorting of stocks.
Hedge Ratio (Delta) - A measure of the volatility of a portfolio to be
hedged and the return of the volatility of the hedging instrument.
Hedged Inverse Floating Rate Note - Inverse floating rate note based on
a foreign rate and a domestic currency swap to hedge direct currency
exposure.
Hedged Portfolio - Portfolio which includes both the long positions in a
stock and the long position in the put option, in order to reduce risk.
Hedged Swap - An unmatched swap usually in a dealer's inventory, where
the dealer has undertaken transactions to offset interest rate or other
risks of the position.
Hedgilator - Someone who is a hedges in terms of a market move in one
direction and speculates in terms of a move in the opposite direction.
Hedging - Investment strategy used in order to reduce the risk in a
portfolio, involving the use of call options, put options, futures, and
short selling.
Hedging Instrument - An instrument which can offset some type of risk.
Held At The Opening - Referring to listed equity securities, situation
when a security is not open for trading because a regulator has
disallowed trading on it until some situation is corrected.
Held for Risk Management (HRM) Derivative - A free-standing derivative
position which is part of an enterprise's hedging activities.
Hell-Or-High-Water Contract - An agreement obligating the purchaser of a
project’s output to pay regardless of whether or not a product is ever
offered for sale.
Helsinki Exchanges (HEX) - Securities exchange in Helsinki.
Herstatt Risk - Referring to foreign exchange trading, the risk that one
party will deliver foreign exchange but the other party will fail to
deliver.
Hidden Orders - Occurs on a computerized market system when a
participant places a bid or offer for a larger amount than she is
willing to expose to view.
High Coupon Swap - A swap where a fixed rate payment is at a premium as
compared to the market.
High Flyer - Referring to general equities, a stock that is high prices
and highly speculative.
High Price - The 52-week high price, the highest price of a stock over
the past 52 weeks.
High-Coupon Bond Refunding - Refunding a high coupon bond with a bond
that has a lower coupon.
High-Low Floater - A yield enhancement method for investors who
anticipate a minimal rise in floating rates over the life of the
agreement.
High-Low Option - A call option contract with a payout equal to the
difference between the high and the low price during a period.
Higher of Proceeds or Market - An accounting policy for issuers which
values assets at historic cost or market value, whatever is higher.
Highly Leveraged Transaction - Loan made by a bank to a highly leveraged
firm.
Hindsight Currency Option - An option giving the buyer the right to buy
a currency at its low point or to sell a currency at its high point
within the option period.
Historical Cost - Cost used in accounting for an item that is carried in
the books for a current cost.
Historical Exchange Rate - Term used in accounting for the exchange rate
that was in effect at the time when an asset or liability was acquired.
Historical Volatility - Change in the underlying's price, rate, or
return during a designated period in the past.
Hit the Bid - Term used when a seller places market orders intending to
sell to the highest bidder no matter what the price.
HKFE - Abbreviation for the Hong Kong Futures Exchange.
Ho-Lee Model - An interest rate options model that assumes correlation
of rates along the yield curve.
Hockey Stick Payoff Pattern - The conventional return pattern of an
option strategy valued at expiration.
Holder - The purchaser of an option.
Holder Of Record Date - Date on which stockholders are designated as the
recipients of dividends/stock rights.
Holding Company - A firm whose business approach is to hold interest in
other, often unrelated firms.
Holding Cost - Annualized expenses associated with maintaining an
ongoing position in a security or market.
Holding Period - The length of time that a security is held by an
individual.
Holding Period Return - The rate of return over a specific period of
time.
Home Equity Loan (HEL) - A loan secured by a second-mortgage on the
borrower's residence.
Home Run - Referring to general equities, a large capital gain in a
short period of time in a stock.
Homemade Dividend - Situation when shares of stock are sold to get cash
that would be similar to receiving a cash dividend.
Homemade Leverage - Approach stating that when individuals borrow on the
same terms as a firm, they can get the same affects of corporate
leverage on their own.
Homogeneity - The degree to which two or more items are the same.
Homogeneous - Highly similar.
Homogenous Expectations Assumption - An assumption that investors have
the same expectations in regard to the inputs that are used to derive
efficient portfolios.
Hong Kong Futures Exchange - Exchange in Hong Kong operating futures and
options markets.
Horizon Analysis - Analysis utilizing total return to assess performance
over the specified horizon.
Horizon Return - Return over a given horizon.
Horizontal Acquisition - A merger between two firms that produce similar
goods and/or services.
Horizontal Analysis - An analysis of each expense item of a given year
divided by the same item in a "base" year.
Horizontal Merger - A merger involving two or more companies in the same
industry, a merger of two or more competitors.
Horizontal Spread - Purchase and sale of two options that are identical
with the exception of their exercise date.
Host Bond - A bond originally issued with detachable warrants.
Host Security - A security to which a warrant is attached.
Hot - Referring to general equities, a security that is active and has a
positive outlook.
Hot Money - Money that is moved across national borders because of
interest rate differences.
Hull-White Option Model - An interest rate option valuation model that
is distinguished by its use of mean reversion in the rate generation
process.
Human Capital - "Capital" in the capabilities of people (employees).
Hung Convertible - A convertible bond or preferred stock issue whose
conversion cannot be forced by the issuer, usually because it is selling
below parity or because it has call protection clauses.
Hurdle Rate - The return that must be met in capital budgeting in order
to make a profit.
Hybrid - A grouping of two or more different kinds of risk management
instruments.
Hybrid Debt - Any combination of a debt instrument and an equity,
currency, or commodity forward, option, or swap.
Hybrid Instrument Rules - Regulations which exempts certain instruments
that have some characteristics of a security and some characteristics of
a future from regulation under the Commodities Exchange Act. The most
important common thread in these rules is that the futures-linked value
must be less than 50% of the value of the hybrid instrument.
Hybrid Instruments Transaction Service (HITS) - A service offered by the
Chicago Board of Trade Clearing Corporation, for non-standardized
instruments.
Hybrid Security - Convertible security trading with the characteristics
of a fixed income security and a common stock instrument because its
optioned common stock is trading in the mid-range.
Hypothecation - Deposit of collateral to secure a loan. |
