GLOSSARY

List of Financial Terms in alphabetical order:

[ A ][ B ][ C ][ D ][ E ][ F ][ G ][ H ][ I ][ J ][ K ][ L ][ M ][ N ][ O ][ P ][ Q ][ R ][ S ][ T ][ U ][ V ][ W ][ X ][ Y ][ Z ]

Data Marts Databases representing a portion of data pulled from an institution’s data warehouse(s). Data marts are typically used by individual line units to feed their business applications without the risk of corrupting the data warehouse. Data marts can also be customized to provide optimal performance for the line unit.

Data Mining The process of using database applications to look for hidden patterns that reveal valid and potentially useful information in different groups of data. For example, a company may engage in this process to search for buying patterns in their customer base.

Data Warehouses See Data Warehousing.

Data Warehousing Combining of databases across an entire enterprise to present a coherent picture of business conditions to support management decision-making.

DAX See Deutsche Aktienindex

Day Trading The process of selling and buying stocks on a very short-term basis, usually completing the transaction within the same day. Brokerage houses offer quotes, other financial information and computer terminals for a fee for investors who wish to participate in day trading.

Dealer An individual or institution that purchases and sells financial instruments that it owns for its own account. Typically dealers interact with dealers at other institutions and do not conduct trades directly with individual or corporate customers.

Debenture Term used to describe an unsecured bond or note, i.e., a general unsecured obligation of a company (can typically have long terms over 15 years). Investors who hold these securities are often compensated for the risk by receiving a higher interest rate than on secured bonds or by the ability to convert the security into common stock.

Debit Balance Total amount owed to a brokerage firm based on loans, commissions and fees.

Debit Card A payment card issued by banks and other financial institutions that allows the cardholder to use the card as an alternative to cash or check payments for purchases and services. The amount is debited against (deducted from) the holder's account. In the case of on-line debit cards, the debit to the account occurs immediately. With off-line debit cards, it may take up to three days for the debit to the account to be recorded. The cardholder can also use the card to withdraw cash from their account.

Debit Spread A conservative strategy used in selling options. The investor buys a call (option to buy a stock at a certain price for a certain time) and sells a call with a strike price that is higher than the current market value of the underlying security. This creates a spread in the account and limits the risk and the reward on the options purchase.

Debt Security A tradable security that represents borrowed funds (e.g., bond, bill, note or commercial paper) and an obligation to repay those funds.

Deferred Annuity An annuity contract whose income payments are postponed until a future date. (Also called a Deferred Payment Annuity).

Defined Benefit Plan A type of pension plan where the employer determines the pension benefit (usually based on the employee's years of service and final salary with the employer).

Defined Benefit Plans See Defined Benefit Plan.

Defined Contribution Plan A category of savings plan that allows employers and employees to make tax deferred contributions on a periodic basis. Examples of these include profit sharing plans and 401k plans.

Defined Contribution Plans See Defined Contribution Plan.

Delinquent Loan A loan for which payment is overdue (usually defined as 30 days or more overdue).

Delinquent Loans See Delinquent Loan.

Demand Deposit A type of account that pays funds on demand (e.g., a checking or current account) by checks, cash withdrawals or electronic fund transfers.

Demutualization The conversion of a mutual company or institution into a stockholder based company. This membership change affects the company's ability to raise capital and merge or acquire other companies.

Depository Clearinghouses that store physical securities under a specific agreement. Accounts at the depository are credited and debited as securities are purchased and sold but the physical securities are never moved. Can also refer to a correspondent bank holding deposits for another bank for clearing services and/or required reserves.

Depository Institutions Institutions that obtain the majority of their funding by accepting deposits. Examples include credit unions, savings and loans and banks.

Depository Transfer Check A preprinted check that does not require a signature and is often used by corporations as a method of processing incoming funds through a concentration account at another bank.

Depository Trust Company (DTC) A national repository through which members electronically transfer and store stocks and bonds. It is privately owned by members of the financial services community and is a member of the Federal Reserve System.

Derivatives Financial instruments whose value depends upon the characteristics and value of another underlying instrument, typically an option or futures contract. Income is provided through changes in the value of the underlying instrument(s).

Deutsche Aktienindex (DAX) Index of the largest 30 German companies listed on the Frankfurt Stock Exchange.

Digital Signature An electronic legal signature that customers can use in place of a regular pen and paper signature when sending documents through the Internet. The digital signature must have three parts: authentication, no repudiation and data integrity (the documents being signed are unalterable). The technology is currently under development. The use of digital signatures has been legalized in the U.S. by the Electronic Signatures in Global and National Commerce Act of 2000.

Direct Debit A payment system where the payer provides authorization for a payee to take a predetermined amount of funds from a specified account on a regular basis. (e.g., to pay electric bill or make insurance payments.)

Direct Disbursement The distribution, or crediting, of borrowed funds directly into the borrower's account.

Direct Loan A loan between a bank and its customer that does not involve a third party, such as a broker.

Direct Premiums Total premiums, net of return premiums, on policies issued to provide the primary insurance on a given risk.

Direct Selling Process in the insurance industry of marketing insurance products to the consumer, bypassing the use of agents or brokers. Techniques include direct mail and telemarketing.

Discount Describes the difference between the price (lower) paid for a security and the security's face amount (or maturity value) when it was issued. If you hear a bond being quoted at 98, then it is most likely being quoted a discount of 2 off the maturity value of 100. An option is said to be trading at a discount if it is selling for less than its intrinsic value. A futures contract is considered to be trading at a discount when it is trading for less than the price of the underlying security.

Discount Broker Brokerage firm/broker that charges a lower commission on the buying and selling of financial instruments than a full-commission broker. A discount broker typically has limited research capabilities and does not give investment advice to its clients.

Discount Rate In U.S. banking, this is rate that the Federal Reserve charges member banks for advances.

Discount Window Federal Reserve mechanism for making direct loans to financial institutions with deficiencies in their reserve accounts. The institutions borrow funds at the discount rate, which is established by the Federal Reserve Bank. Regular borrowing at the discount window is discouraged as this is an indication of a bank's inability to effectively manage its asset/liability position.

Disintermediation Term used originally to describes the process whereby customers did not include the often-used intermediary, the bank to complete a transaction. Customers withdrew funds from traditional bank savings and checking accounts and placed them in alternative accounts outside the banking industry (i.e., investment accounts at brokerage firms). In other words, this term refers to the outflow of deposit funds from banks into other types of financial institutions or investments (mutual funds, the stock markets). Disintermediation also may refer to the frequent occurrence in which banks' traditional corporate customers go directly to the bond market rather than borrowing from domestic banks.

Dividend Earnings paid out to the shareholders of a corporation.

Draft A signed, written order by which one party (drawer) asks another party to pay a specific amount to a third party. This unconditional demand for payment is also called a Bill of Exchange.

Drawee Party to whom a check or draft is written, also called the payee.

Drawor Party who writes a check or draft based on the funds in their account (payor).

DTC See Depository Trust Company

Due Diligence Investigation that is performed prior to underwriting a loan or an investment (acquisition) that considers all aspects that may affect the financial performance of that investment. Many times due diligence is performed by a buying firm before it purchases a firm being sold to gain an understanding of the true value of the assets of that firm.

Dutch Auction A type of auction where the price of a security is gradually reduced until a bid is offered and the item is sold. U.S. Treasury bills are sold in this way.

[ A ][ B ][ C ][ D ][ E ][ F ][ G ][ H ][ I ][ J ][ K ][ L ][ M ][ N ][ O ][ P ][ Q ][ R ][ S ][ T ][ U ][ V ][ W ][ X ][ Y ][ Z ]

<Go Back