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N - When the fifth letter of a NASDAQ stock symbol is an
N, the represented stock is of the firm’s third class of preferred
shares.
Naked - Referring to options, a position subject to limit-less loss: A
term often used when the seller of an option does not posses the
underlying security
Naked Option Strategy - Strategy that includes the use of call and put
orders that are not offset by another option or the underlying security.
Naked Strategies - Strategy of writing and selling an option while not
owning the underlying asset.
Naked Writer - See Uncovered call writing and Uncovered put writing.
NASDAQ - Acronym for the National Association of Securities Dealers
Automatic Quotation System. Although NASDAQ was once simply a quotation
system, today it is a stock exchange as well.
National Association of Securities Dealers - Often abbreviated as NASD,
a non-government organization that makes rules and policies that apply
to nearly every US brokerage firm.
National Association of Securities Dealers Automatic Quotation System -
Usually referred to as NASDAQ, an electronic system that provides price
quotation information to market traders.
National Market System - Referring to over-the-counter trading, a system
used to trade over-the- counter stocks
National Quotation Bureau - Company that publishes "Pink Sheets" which
report bids and asks for unlisted securities.
National Risk Premium - The difference between the expected return on an
asset in its local currency and its national risk-free rate.
National Securities Clearing Corporation (NSCC) - The clearing house for
all clearing corporations in the securities industry.
Nationalization - When a government takes control of a private company.
Nationally Recognized Statistical-Rating Organization - Credit rating
agency whose work is certified by the Securities and Exchange Commission
as a credible source in regulation of portfolio debt quality.
Natural - Referring to general equities, for real, actual.
Natural Currency - The currency used an issuer uses counting purposes.
Natural Hedge - The shift from natural currency to an alternative
currency area to offset undesirable cash flow exposures.
Near Month - The next futures or options contract due to expire.
Nearby - The next or closest active trading month of a market.
Nearby Futures Contract - As opposed to the most distant futures
contract, the futures contract (in a group of futures contracts) with
the closest settlement date.
Negative Amortization - A loan with a repayment schedule such that the
outstanding principal amount increases due to the fact that the monthly
payments do not cover the amount needed to amortize the loan and the
unpaid interest is then added to the outstanding principal amount.
Negative Carry - The net cost of carrying a position when the cost of
funds is more than the return on the securities.
Negative Convexity - A characteristic of bonds where the price
appreciation is less than the price depreciation.
Negative Covenant - A rule prohibiting certain actions, often used in
reference to bonds.
Negative Duration - Condition where the price of a mortgage backed
security changes in the same direction as interest rates.
Negative Good Will - The excess of book net asset value over market
value.
Negative Pledge Clause - A bond rule that requires the borrower to grant
holders a lien equal to any liens that might be granted in the future to
other unsecured holders or lenders.
Neglected Firm Effect - The inclination for companies that have not been
in the spotlight of analysts attention to perform better than those that
have.
Negotiability - Transferability of ownership of a financial instrument
at will between and among persons.
Negotiable Order Of Withdrawal - A demand deposit, or checking account
that can be withdrawn upon demand, that pays interest.
Negotiated Certificate Of Deposit - A Certificate of Deposit (CD) that
is in a large denomination and cannot be cashed in before it reaches
maturity.
Negotiated Markets - A market in which orders are negotiated and
transacted separately between buyer and seller.
Negotiated Offering - A securities offering for which the terms have
been negotiated.
Negotiated Sale - A transaction in which the terms are negotiated
between the issuer and the underwriter as opposed to through competitive
bidding.
Net / Gross Ratio (NGR) - The ratio of net replacement value to gross
replacement value for credit risk positions.
Net Adjusted Present Value - The present value with the initial cost of
investment deducted.
Net Advantage Of Refunding - The net value of savings from a refunding.
Net Advantage To Leasing - The net value of agreeing to a leasing
contract as opposed to borrowing the funds needed to buy a particular
asset.
Net Advantage To Merging - The net value of the difference in
post-merger and pre-merger market value less the merger costs.
Net Asset Value - Value of a fund’s investments: calculated once per day
by deducting the fund’s liabilities from the portfolio’s total assets
and then dividing that amount by the number of outstanding shares.
Net Assets - The amount of total assets less total liabilities.
Net Book Value - The current book value of an asset or liability which
is the original book value with any accounting adjustments made.
Net Capital Requirement - A requirement of brokers to maintain a maximum
indebtedness to cash/assets ratio of 15 to 1. This is an SEC
requirement.
Net Cash Balance - The beginning cash balance with adjustments made to
account for any cash receipts and/or disbursements.
Net Change - The change in price measured as the difference between a
day’s last trade price and that of the previous day.
Net Commission - Term in the United Kingdom for a principal trade with
no commission payable.
Net Earnings - Another name for net income; the amount of a company’s
income after all expenses have been paid.
Net Errors And Omissions - Account used to record statistical
discrepancies that may arise.
Net Financing Cost - Often referred to as the cost of carry, the
difference between the cost of financing an assets’ purchase and the
cash yield of that asset.
Net Float - The sum when adding the collection float to the disbursement
float.
Net Income - A firm’s total earnings; revenues adjusted for costs (such
as costs of doing business, interest, depreciation, taxes, etc.); also
called net earnings.
Net Investment - Total investment less depreciation.
Net Lease - A lease contract that stipulates that the lessee will be
responsible for all costs associated with the upkeep of the asset.
Net Loss - A firm’s total earnings after all expenses have been met if
the total is a negative amount; opposite of Net Profit.
Net Margin Requirement - The margin required after any option premium
received by the investor is deducted from the stated option margin
requirement.
Net Operating Losses - Losses as a result of company operations, used as
a tax advantage.
Net Operating Margin - A measurement of the proportion of net operating
income to net sales.
Net Operating Profit After Tax (NOPAT) - The cash earnings a company
would generate if its capitalization were unleveraged.
Net Parity - The opposite of gross parity.
Net Period - A period of time between the end of a discount period and
the date that a payment is due.
Net Position - The value of a position less the initial cost of setting
it up.
Net Present Value - Value of the expected future cash flow less the
cost.
Net Present Value Of Future Investments - Value of the total sum
expected to result from a company’s future investments.
Net Present Value Of Growth Opportunities - The value of the new
investment opportunities a company presently has.
Net Present Value Rule - A rule stating that an investment with a
positive net present value is a good one. Conversely, an investment with
a negative net present value is not one worthy of pursuing.
Net Profit - A firm’s total earnings after all expenses have been met if
the total is a positive amount; opposite of Net Loss.
Net Profit Margin - Net income divided by sales dollars.
Net Replacement Value (NRV) - The net cost of exchanging the net present
value of a contract or contracts after payment for enforceable netting
agreements in place.
Net Sales Transaction - Referring to over-the-counter trading, a
securities transaction where the quoted price includes any commissions
or fees.
Net Salvage Value - Amount of cash flow left after taxes for the
termination of a project.
Net Settlement - A procedure for swap payment exchanges in which one
party with a net amount owed makes a payment of the net amount to the
other party.
Net Trade - A commission-free trade with one of the parties acting as a
principal.
Net Working Capital - A company’s current assets less its current
liabilities.
Net Worth - Term often used to describe an entity’s net assets; common
stockholder’s equity consisting of common stock, surplus, and retained
earnings.
Net Worth Ratio - Equity capital divided by total capitalization.
Net Yield - A foreign investor’s dividend yield minus the stock's net
withholding tax.
Netting - The act of reducing the dollar amount of fund transfers to a
net amount.
Netting Agreement - Contractual offset of payables against receivables
between two parties to reduce credit exposure.
Netting Out - To clear an amount as profit.
Neutral Hedge - A hedge (investment strategy used in order to reduce
risk) that is expected to yield a dollar-neutral result regardless of
price changes.
Neutral Hedge Ratio - The ratio in point change between an option
premium and it’s underlying.
Neutral Period - Referring the Euromarket, any period of time in which
Eurodollars are sold that does not start or end on either a Friday or a
day just prior to a holiday.
New Issue Swap - Swap structure that lowers an issuer's borrowing cost
structure to a more suitable structure.
New Money - Amount by which the par (or face) value of a security being
offered exceeds the par value of those that are maturing.
New York Mercantile Exchange - An exchange for futures and commodities
contracts.
New York Stock Exchange - A composite index consisting of four separate
indices; industrial, utility, transportation, and finance; The oldest
and largest stock exchange in the US, the NYSE is based on the close of
market on December 31, 1965 at a level of 50.00.
New-Issues Market - Market for the selling of new securities issues to
investors.
Newton-Raphson Method - A process used to estimate the implied
volatility of an option.
Next Day Settlement - A transaction that calls for the contract to be
settled the day after the trade is executed.
Next Futures Contract - When a group of futures contracts are purchased,
the contract with the second closest settlement date.
Nexus - A union or collection of items.
Nikkei Stock Average - An index of 225 stocks of the Tokyo Stock
Exchange. The Nikkei Stock Average is the Japanese equivalent to the
US’s Dow Jones Industrial Average. It relies on the price-weighted
average of 225 stocks on the exchange, and is an indicator of market
performance.
Nikkei-linked Bond (NLB) - An equity index-linked bond based on the
Nikkei-225 stock average.
NM - An abbreviation for "Not Meaningful".
No Arbitrage Hypothesis - The belief that there is never a riskless
profit in the purchase and sale of assets simultaneously.
No Book - Referring to listed equity securities, not much, if any of a
stock is being currently offered or bid for.
No Load Mutual Fund - An open-end investment company who’s shares are
sold without a sales charge.
No Rebate Cash-Out Option - An Up-and-Out Call or a Down-and-Out Put
where the seller's obligation is canceled if the out strike is breached.
No- Arbitrage Condition - A condition on option and underlying price
relationships that eliminates the possibility of riskless profit.
No-Load Fund - A mutual fund that does not deduct a sales charge from
the net asset value of shares is said to be "no load", however, a true
no load fund will have neither a sales charge nor a distribution fee.
No-Regrets Options - Another name for lookback options.
Noise - Fluctuations in price and volume that add confusion to attempts
at interpreting market direction; market activity caused by dividend
rolls or other events that do not necessarily reflect investor
sentiment.
Nominal - In name only.
Nominal Annual Rate - Another term for the annual percentage rate; a
periodic rate multiplied by the number of periods in a year.
Nominal Exchange Rate - Foreign exchange quotation as opposed to the
real exchange rate adjusted for fluctuations in purchasing power.
Nominal Interest Rate - Interest rate without an inflation adjustment.
Nominal Price - Futures price quotations for a period in which no
trading actually took place.
Nominal Quotation - Referring to general equities, prices given for
informational purposes only, not as an invitation to trade. Nominal
quotations are specified as such by the letters FYI (for your
information) or FVO (for valuation only).
Nominal Yield - Another term for coupon rate: the interest rate stated
on a bond.
Non Deliverable Forward (NDF) - A foreign currency forward contract on a
thinly traded currency.
Non-Accelerating-Inflation Rate of Unemployment - Minimum rate of
unemployment attainable without increasing the inflation rate.
Non-Amortizing Instrument - A note without reduction in notional
principal or repayment of actual principal prior to maturity.
Non-Call Life (NCL) Bonds - Bonds not callable for redemption under
circumstances in the indenture.
Non-Clearing Member - An exchange member who does not carry positions or
clear trades directly with an exchange clearing house.
Non-Cumulative - Often referring to convertible securities, a type of
preferred stock that does not allow for the accrual of unpaid dividends.
Non-Cumulative Preferred Stock - A preferred stock where holders forego
dividend payments if the company misses a dividend payment because they
do not accrue.
Non-Detachable Warrants - Warrants that cannot be traded separated from
their carrier bond.
Non-Financial Services - Services offered by a company that are not of a
financial nature.
Non-Insured Plans - An employee benefit pension plan that is not
guaranteed by a life insurance product.
Non-Par Swap - A swap with one or both of the equivalent securities
underlying the swap payments selling at a discount or premium.
Non-Qualifying Stock Option - An employee stock option plan that does
not meet the Internal Revenue Service’s criteria to be considered a
Qualifying Stock Options plan.
Non-Reproducible Asset - An asset that is both tangible and unique,
meaning it can not be reproduced.
Non-Sticky Jump (NSJ) Bond - A collateralized mortgage obligation whose
principal paydown is changed by the occurrence of one or more trigger
conditions.
Non-Systematic Risk - An element of price risk that can be largely
eliminated by diversification within an asset class because price
fluctuations are not perfectly correlated.
Non-Tradables - A classification of goods and services that are both
produced and consumed domestically and are not close to being
substitutes for imported/exported goods and services.
Noncash Charge - A cost that does not directly involve cash flow. Two
examples of noncash charges are amortization and depreciation.
Nondiversifiability Of Human Capital - The difficulty that exists in
diversifying an asset referred to as "human capital". Human capital is
the expertise and unique abilities of individuals.
Nondiversifiable Risk - A risk that can not be lessened or eliminated by
diversification.
Nonmarketed Claims - Claims of ownership that can not be easily traded
in the markets, such as government claims.
Nonmember Firm - Referring to listed equity securities, a brokerage firm
that is not a member of an organized exchange such as the New York Stock
Exchange.
Nonrecourse - Without recourse.
Nonredeemable - Can not be redeemed, as contractually stated.
Nonrefundable - Can not be refunded, as contractually stated.
Nonsystematic Risk - Often referred to as diversifiable risk, a
non-market level risk that can be eliminated by diversification.
Noon Average Rate Contracts (NARCs) - Average rate options or forwards
in currency markets with the rate calculated from the average rate
prevailing each day at noon in the primary market for the instrument.
Normal Backwardation Theory - A theory that states that the futures
price will be bid down to a level that is lower than the expected spot
price.
Normal Portfolio - A standard portfolio that includes the securities
that a money manager would normally use. This portfolio serves as a
standard, or benchmark to use in the selection of securities.
Normal Probability Distribution - An analytical probability distribution
curve for a continuous random variable that has no skewness; a bell
curve.
Normal Random Variable - A random variable that possesses a normal
probability distribution.
Normalizing Method - The practice of using different depreciation
methods in order to change net income for both tax savings purposes and
the purpose of reporting final net income to shareholders.
Not Held Order - Often refers to international equities, an order in
which the customer has given the trader (or broker) the authority to
execute the order with his/her best judgement keeping the customer’s
best interest in mind.
Note - A written obligation to pay a specified amount to the another
entity on a specified date. Notes are often short-term, meaning they
will mature in one year or less.
Note Agreement - An agreement made in regard to privately placed debt.
Note Issuance Facility - An agreement stating that a group of banks is
willing to accept short-term notes from borrowers. The banks will then
resell the notes in the Eurocurrency market.
Note Over Bond (NOB) Spread - A spread created by buying the 30-year
bond contract on the Chicago Board of Trade and selling the 10-year
United States Treasury note futures contract.
Notes To The Financial Statements - Comments that follow financial
statements in annual reports.
Notice Day - Day on which notices of intent to deliver are issued.
Notification Date - Day on which an option must be either exercised or
it will expire.
Notional Bond - A bond with theoretical values as the basis for a bond
futures contract.
Notional Principal Amount - Referring to interest rate swaps, the agreed
upon principal on which the swap (exchange) is based.
Notional Principal Contract - Any swap, forward rate agreement, cap,
floor, or option contract whose value is based on a face amount.
Novation - Defeasance that cancels a firm’s debt.
NYSE - Abbreviation for the New York Stock Exchange. |
