Moneyterms: D-H

Dark fibre: Fibre optic cable that has been laid but is not currently used.…
Dark pool: A trading venue in which large orders can be placed without making them visible to the market.…
Data revenues: The revenue generated from carrying data rather than voice telecommunications traffic. Data revenues are likely to have different margins and growth prospects from voice.…
Dawn raid: The purchase of a large shareholding in a target company in a very short time, prior to the announcement of a takeover bid.…
Days convention: An assumption made to simplify the calculation of accrued interest by rounding the number of days in a year or month.…
Day trading: Actively trading securities during the trading day but closing all positions by the end of the day. Very risky, potentially very profitable.…
DCF valuation: The calculation of the present value of a stream of future cash flows taking into account both risk and the time expected to elapse before the cash is received.…
Dead cat bounce: A recovery in the price of a security that does not indicate any sustained recovery or a significant re-rating, but rather a slight recovery from very low levels.…
Deal comps: The use of comparisons of the valuations at which deals, such as takeovers, have occurred, in valuing a company.…
Debenture: A debt instrument very similar to a bond.…
Debt covenant: An agreement between a company and its creditors that it should that the company should operate within certain limits, typically on debt levels, asset sales or gearing.…
Debt/equity ratio: A measure of the indebtedness of a company. Usually one of: long term debt ÷equity, total debt ÷equity or net debt ÷equity.…
Debtor days: (Trade debtors ÷ sales) × 365. The average time debtors take to pay.…
Debt service cover ratio: The ratio of cash flow to loan repayments and interest.…
Debt service ratio: One of a number of ratios of cash flow to debt repayments.…
De-equitisation: The subsitution of debt for equity.…
Defensive: A defensive business is one whose profits are not particularly sensitive to economic conditions.…
Defensive patent: A patent that is registered with the intention of providing a defence against other patent holders, rather than being enforced against others.…
Deferred income: Income received during an accounting period for goods and services not yet supplied.…
Deferred shares: Shares that have lesser rights than ordinary shares in receiving dividends or repayments of capital.…
Deferred tax: A balance sheet line to record accrue between the periods in which events occur and the periods in which they are taxable.…
Deflation: Negative inflation. Most likely in particular industries or during recessions.…
Delivery vs payment: Making payment for securities only on delivery, to minimise the risk to which securities market participants are exposed.…
Delta: The delta of a derivative is the rate of change in the price of a derivative with the price of the underlying.…
Delta hedging: The delta of a derivative can be used to hedge a holding of the derivative with a position in the underlying security or vice-versa.…
Dematerialised securities: Securities that can be held without ownership of paper certificates: ownership is recorded in a depositary.…
Demerger: Spinning off business into a completely separate company. Usually done by distributing shares in the new company to existing company.…
Depletion: The allocation of cost to the profit and loss account, spread out over several years according the the measured usage of the asset in each year.…
Depositary system (Central Depositary/CDS): A system that records ownership in securities that are traded without using paper certificates for holdings.…
Deposit multiplier: The multiple of the increase in the monetary base by which the money supply increases.…
Depreciation: The allocation of the cost of an asset to the profit and lost account by allocating part of the cost to each year of its estimated useful life.…
Depression: A depression is a severe sustained recession. There is no clear dividing line between a recession and a depression.…
Derivatives: A security, the value of which depends on the value of another security. Used to either hedge risks or for speculative investments.…
Diluted EPS: An EPS number that takes account of shares to be issued in the future, as well as those currently issued.…
Direct cost: A cost directly linked to the manufacture of a product.…
Directors dealing: Dealing in a companies securities by directors. Subject to special disclosure rules.…
Dirty price: The dirty price of a bond is the actual amount paid to buy a bond. Unlike the clean price it is not adjusted for accrued interest.…
Disclosure: The revealing of information to investors. The extent of disclosure in important to investors.…
Discount broking: A low cost stock broking service that does not include any advice or portfolio management but simply buying and selling securities.…
Discounted cash flow: The calculation of the present value of a stream of future cash flows, taking into account both risk and the time expected to elapse before the cash is received.…
Discount rate: The rate used to calculate the present value of future cash flows in a discounted cash flow calculation.…
Discount window: A collateralised lending facility run by a central bank, lending to banks in order to ensure their short term liquidity.…
Discrete Time Financial Models: Financial models that treat time as changing in discrete jumps rather than continuously.…
Discretionary broking: A stock broking service where the broker manages a portfolio and the client need have no involvement in buying and selling securities.…
Diseconomies of scale: Costs that rise faster than an increase in output; negative economies of scale.…
Disintermediation: The removal of intermediaries from a process, supply chain or market. The commonest financial example is the issue of bonds to replace bank borrowing.…
Disruptive technology: A new technology, that radically transforms markets, creates wholly new markets or destroys existing markets for other technologies.…
Distributable reserves: The amount of equity that a company may pay out as dividends.…
Diversifiable risk: Risk that is specific to a particular security or sector so its impact on a diversified portfolio is limited.…
Diversification: The reduction of risk achieved by buying a portfolio of securities whose returns are not correlated.…
Dividend cover: How many times over an year's dividend could have been paid out of the year's profits.…
Dividend discount model: A financial model that values shares at the discounted value of future dividend payments. This is theoretically the most correct way of valuing shares.…
Dividend irrelevance: The theory that divided payments are irrelevant when valuing a company.…
Dividend per share: Dividends over an year for each share held; total dividend ÷number of shares in issue.…
Dividend policy: A company's usual practice when deciding how big a dividend payment to make.…
Dividend yield: Total dividends paid per share over the course of a year ÷ share price.…
Divisia money supply index: A weighted index measure of money supply.…
Dogs of the Dow: An investment strategy that picks the highest yield stocks in the Dow Jones Industrial Average.…
Dominance: A strategy dominates another if it is guaranteed to lead to a better results.…
Dominant trading strategy: A portfolio that costs the same as another one, but which is always guaranteed to out-perform the other.…
Double entry: A bookkeeping system which records each transaction as equal debits and credits.…
Double witching: A period of volatility caused by the expiry of two classes of derivatives on the same underlying.…
Dow Jones Averages: The most widely followed index of US markets.…
Downstream: In the oil and gas industries; refining and distribution as opposed to upstream exploration and production.…
DPS: Dividend per share; total dividend ÷number of shares in issue.…
DRIP: A dividend reinvestment plan allows shareholders to cheaply re-invest dividends in buying more shares.…
Drug pipeline: The drugs a pharmaceutical company is developing testing. This includes completely new drugs, variants of old drugs and new applications of old drugs.…
Dry natural gas: The remainder of natural gas after the removal of both liquefiable hydrocarbons and most of the non-hydrocarbon gases.…
Dual listing: A way in which a group can have equal listings on two markets, by using a separate holding company for each market.…
Due diligence: The checks that are carried out before a major transaction: by bidders before a takeover offer, by underwriters before an IPO.…
Dumb money effect: The tendency of investments popular with private investors to under-perform.…
Duopoly: A market dominated by two suppliers to the extent that they jointly control prices.…
Duration: The duration is a measure of the average time it takes a bondholder to get their money (both principal and interest).…
Dutch disease: The damaging effects of inflows money into a country as a result of exports of natural resources, and similar sources.…
DVP: Making payment for securities only on delivery, to minimise the risk to which securities market participants are exposed.…
Dynamic hedge: A hedge that needs to be adjusted as the price (and sometimes other characteristics) of the portfolio or security it is hedging changes.…
Dynamic provisioning: The adjustment of bank's provisions for loans for the economic cycle.…
Earnings accretive: Acquisitions are said to be earnings accretive if they increase EPS.…
Earnings dilutive: Acquisitions are said to be earnings dilutive if they are expected to decrease the acquiring company's EPS.…
Earnings enhancing: Acquisitions are said to be earnings enhancing if they increase EPS.…
Earnings yield: EPS ÷ share price.…
EBIT: Earnings before Interest and Tax. A profit measure closely related to operating profit.…
EBITA: Earnings before Interest, Tax and Amortisation.…
EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation.…
EBITDA margin: EBITDA as a percentage of sales.…
ECN: An electronic trading venue that is not an exchange.…
Econometrics: A branch of statistics that deals with the time series data common in economics and finance.…
Economies of scale: Anything that helps save costs if the scale of operations increases.…
EEV: A standardised calculation of embedded value and related numbers.…
Effective gearing: The ratio of the fractional change in the price of a derivative to the fractional change in the price of the underlying.…
Efficient frontier: A graph showing the best possible return against lowest possible risk.…
Efficient markets: A market in which securities prices reflect all available information.…
Efficient portfolio: A portfolio that provides the best expected returns for a given level of risk, or, equivalently, the lowest risk possible for a given level of expected returns.…
EGM: A meeting of shareholders other than the AGM.…
Electronic point of sale: Systems that handle both cash and card transactions. They also often connect to networks making sales information instantly available.…
Embedded computer: A computer that is incorporated into another device.…
Embedded option: An option that is part of another security. It does not trade by itself, but it does affect the value of the security of which forms a part.…
Embedded value: This is an estimate of the economic worth of a life insurance business. In essence, it is the present value of distributable earnings which is made up of two components.…
Emerging markets: Investment markets in developing economies.…
Enhanced indexing: A combination of index tracking with active investment.…
Enterprise resource planning: The integration of diverse business systems; usually a reference to the software used to achieve this.…
Enterprise value: The value of a company's business rather than the company; the answer the the question "how much would it cost to buy full ownership free of debt?".…
EPIC code: A memorable code used to identify UK listed securities. Now called TIDMs.…
EPOS: Systems that handle both cash and card transactions. They also often connect to networks making sales information instantly available.…
EPS: Earnings per share. Net profit divided by the number of shares in issue.…
Equity: The stake a businesses owners have in it; assets minus liabilities.…
Equity cure: The injection of equity finance to cover a shortfall that would otherwise breach a debt covenant.…
Equity risk premium: The difference between the expected rate of return of the stock market and the risk free rate of return; the amount of extra return investors demand for taking the extra risk of equity investment.…
ERP: The integration of diverse business systems; usually a reference to the software used to achieve this.…
ETF: An investment fund, units of which can be bought and sold on a stock exchange. Often used by tracker funds.…
Ethical drug: A drug that may only be sold by a pharmacist when authorised by a written prescription from a medical practitioner.…
Ethical investing: Investing restricted according to ethical criteria. Ethical investors may use specialist research or invest in ethical funds to ensure their ethical standards are adhered to.…
Eurobonds: Bonds issued in a currency other than the issuer’s home currency. Usually outside the issuer’s home country as bearer bonds.…
Eurocurrency: Bank deposits in a country other than the issuer of the currency.…
Eurodollar: US dollar bank deposits outside the US.…
European embedded value: A standardised calculation of embedded value and related numbers.…
European option: An option that can be exercised only at a pre-determined price on the expiry date.…
EV: The value of a company's business rather than the company; the answer the the question "how much would it cost to buy full ownership free of debt?".…
EVA (Economic value added): The excess of actual returns over the minimum required by the suppliers of capital. Useful as a tool for evaluating management performance than for rather than for valuation.…
EV/EBIT: Enterprise value divided by earnings before interest and tax.…
EV/EBITA: Enterprise value divided by earnings before interest, tax and amortisation.…
EV/EBITDA: Enterprise value divided by earnings before interest tax depreciation and amortisation.…
EV/sales: Enterprise value ÷ sales.…
Exceptional items: Unusual costs or revenues whose exclusion from profits better shows underlying performance.…
Excess return: The amount by which the return on an investment is greater than the risk free rate of return.…
Exchange market size: The Minimum size of transactions up to which market maker quotes must be good for.…
Exchange rate risk: The risk that the value of an investment will be affected by changes in currency exchange rates.…
Exchange rate transaction effects: The accounting loss or gain resulting from the change in exchange rates between the recording and settlement of a transaction.…
Exchange rate translation effects: The effects exchange rates has on reported profits due to the consolidation of accounts in different currencies.…
Exchange traded fund: An investment fund, units of which can be bought and sold on a stock exchange. Often used by tracker funds.…
Ex-dividend: A share goes ex-dividend when buyers will no-longer receive a dividend that is to be paid.…
Execution only: A low cost stock broking service that does not include any advice or portfolio management but simply buying and selling securities.…
Execution risk: The risk that a company's plans, usually at a time of change, will go awry, and the financial risk that entails.…
Exercise price: The price at which a derivative gives the right (or obligation) to buy or sell the underlying security. Also known as the strike price.…
Exotic options: Types of option more complex than the simple and common European, American and Asian varieties.…
Expected return: The average of all possible returns an investment will produce, weighted by probability.…
Expense ratio: For a general insurer, operating expenses as a percentage of premium income. It is an efficiency measure.…
Ex-rights: A share is said to be trading ex-rights when buyers will no longer have rights under a pending rights issue.…
Extraordinary general meeting: A meeting of shareholders other than the AGM.…
Fabless semiconductor company: A company that designs and markets semiconductors, but does not manufacture them.…
Face value: The nominal value of a security, shown on the face of a certificate.…
Factoring: Factoring is a form of financing uses invoiced debtors as a security against which to raise money and outsources the management and collection of this debt.…
Fair value: The value of an asset or liability in an arms length transaction between unrelated willing and knowledgeable parties. A concept used in many accounting standards including the IFRSs.…
Fast market: A combination of heavy trading and volatile prices in a security or market.…
Fat tails: A fat tailed probability distribution is one in which extreme events are more probable.…
FCF: How much money a company could pay shareholders out of profits without expanding, but without running down its existing operations either.…
FIFO: A method of valuing stocks (inventory) for accounting purposes. Stocks issued are assumed to be the oldest available.…
Fill or kill: Fill or kill orders must either immediatly be completely executed, or cancelled.…
Finance lease: A lease that is a way of raising money to buy the asset leased, rather than a true rental.…
Financial covenants: Agreements between a company and its creditors that it should that the company should operate within certain limits, typically on debt levels, asset sales or gearing.…
Financial economics: The theory of finance including securities valuation and capital structure.…
Financial gearing: A measure of the extent to which a company is funded by debt.…
Financial model: A mathematical construct that can range from a simple formula (such as PE) to complex computer programs that may take days to run.…
First mover advantage: The competitive advantage that the first company to launch a new type of product should have over those that start later.…
Fisher hypothesis: The Fisher hypothesis, suggests that, in the long run, inflation and nominal interest rates move together, implying that real interest rates are stable in the long term.…
Fisher separation: The theorem that investment decisions by firms need not be linked to consumption decisions by individual investors.…
Fixed asset: Fixed assets are assets that have a remaining life over an year.…
Fixed asset turnover: A measure of how effectively fixed assets are used to generate sales: sales ÷fixed assets.…
Fixed costs: Costs that do not change with the level of sales.…
Fixed interest: An interest rate that is set in advance and does not change depending on external factors.…
Fixed odds betting terminals: Electronic gambling machines which accept fixed odds bets on the outcome of a simulated game up to a pre-set maximum.…
Flat yield: The flat yield of a bond is simply the coupon rate divided by the current price.…
Floating interest rates: Interest rates that change over time in line with market rates (or a bank's central rate).…
FOK order: Fill or kill orders must either immediatly be completely executed, or cancelled.…
Footfall: The number of people visiting a shop or a chain of shops in a period of time.…
Forwardation: The price of a futures contract being greater than the spot price of the underlying (usually a commodity). Also known as contango.…
Forward integration: Increasing vertical integration by combining a core business with its buyers.…
Forward rate bias: The tendency of currency markets to over-estimate movements in currency.…
Forwards: An agreement to buy or sell a given quantity of a commodity or a particular asset at a specified future date at a pre-agreed price.…
Founders' shares: Shares issued to the founders of a company that may have different characteristics from ordinary shares.…
FRC (Financial Reporting Council): The regulator of financial reporting in the UK.…
Free asset ratio: (Available assets - required minimum margin of solvency) ÷ admissible assets.…
Free cash flow: How much money a company could pay shareholders out of profits without expanding, but without running down its existing operations either.…
Free float: The proportion of a company's shares that are likely to be tradeable on the market: a measure of how many shares are reasonably liquid.…
FRN: A debt instrument, issued for three years or longer and carrying a variable (floating) interest rate.…
Front office: Work connected with originating transactions and providing advice.…
Front running: Trading by a broker on their own account, ahead of processing a client's order that is likely to affect prices.…
FRSSE (financial reporting standard for smaller entities): A simplified UK accounting standard for small organisations.…
FSA: The Financial Services Authority is the regulator of all financial services in the UK.…
F-score (Piotroski's): A measurement of the financial strength of companies, combining several other measures.…
FTK (Freight Tonne Kilometres): FTK measures actual freight traffic. It is the equivalent of RPK for freight. One FTK is one metric tonne of revenue load carried one kilometre.…
FTSE: A publisher of indices, including the most widely used in the UK.…
FTSE 100: An equity index whose constituents are the 100 largest UK listed companies.…
FTSE 250: An index of mid-cap London listed shares.…
FTSE 350: An index tracking UK mid-cap and large company shares. Its constituents cover about 90% of UK market cap.…
FTSE Small cap index: An index, the constituents of which are companies in the FTSE all-share index that are too small for the FTSE 350.…
FTSE small cap indices: FSTE publishes three small cap indices.…
Fundamental analysis: The most common way in which investors value securities: using methods such as discounted cash flows and valuation ratios.…
Fundamentally weighted index: A market index that is weighted using measures such as accounting numbers.…
Fund mandate: The parameters within which a fund should invest.…
Fund of funds: A collective investment vehicle that invests in other funds.…
Fungible: A security or commodity is fungible if it is perfectly interchangeable with any other of the same type, class and issuer.…
Futures: A future is a contract to buy an underlying security or commodity at a fixed price at a future date.…
GAAP: A set of rules, accounting principles and standards that are used in a particular region or country. Mostly being converged with IFRSs.…
Game Theory: A mathematical framework for analysing what choices rational individuals will make, when the pay-offs depend on the combination of all player's choices.…
Gamma: The rate of change of a derivative's delta with the price of the underlying. Approximately, the change in the delta from a one unit change in the price.…
Gamma hedging: A hedge constructed using both the delta and gamma of a portfolio. A gamma hedge needs less frequent re-balancing than a delta hedge.…
GDP deflater: The inflation measure that is used to adjust economic growth statistics.…
GDP (Gross Domestic Product): The total value of all goods and services produced in an economy.…
GDR: A security issued in one country which bundles together a number of shares in a company in another country.…
Gearing: Measures the extent to which a company is funded by debt.…
Generic drug: A drug that that is in effect a copy of an original proprietary version of a drug.…
Geometric mean: An average calculated by multiplying a series of numbers and taking the nth root where n is the number of numbers in the series.…
Giffen good: Something that consumers will buy more of if the price rises.…
Gilts: British government bonds. A very wide range of gilts are in issue at any given time.…
Global depositary receipt: A security issued in one country which bundles together a number of shares in a company in another country.…
Going concern: The assumption for the purposes of accounting or valuation, or the fact in the case of a sale, that a business will continue to operate.…
Golden share: A share with special voting rights, typically veto powers under certain cirumstances.…
Goodwill: Goodwill arises when a company buys another business at a price greater than the book value.…
GOPPAR: Gross operating profit per available room. A measure of hotels' profit relative to capacity.…
Gordon growth model: A simplified dividend discount model: easy to apply but flawed and not suited to all companies.…
Government bonds: Bonds issued by a government in its own currency.…
Greater fool: Buying an over-priced investment, especially during a bubble, expecting that it will be possible to sell at a profit to a “greater fool”.…
Greeks: Measures of the rate of change (mathematically the derivative) of the price of a derivative security or portfolio with another quantity.…
Greenmail: The use of the threat of a hostile takeover to coerce managment into buying off a potential bidder.…
Gross margin: Gross profit divided by sales as a percentage.…
Gross operating profit per available room: A measure of hotels' profit relative to capacity.…
Gross premium written: Premium written before deduction of re-insurance expenses; a measure of sales.…
Gross profit: Sales minus the cost of goods sold. A very simple but useful profit measure.…
Gross win: In a gambling business this is the amount the company has won (and its customers have lost) over a given period.…
Growth investing: An investment style that emphasises future growth rather than the value of the existing profits and cash flows.…
Haircut: The percentage deducted from the value of a security (usually debt) to determine the maximum amount against which it can be used as collateral.…
Harmonised index of consumer prices: An inflation measure required by the EU,called the CPI in the UK.…
Headline EPS: EPS adjusted for non-cash or one-off items such as amortisation and exceptional costs to give a better indication of underlying trends.…
Hedge: A financial strategy that reduces the risks from one security or other investment by buying or selling others.…
Hedge fund: Hedge funds use a range of generally high risk investment strategies including arbitrage and short selling , they are frequently highly geared.…
Hedonic price index: A price index adjusted for changes in factors such as product quality.…
Hedonic pricing model: A model of the factors (such as quality) that affect prices, so price indices can be adjusted for changes in these factors.…
HICP: An inflation measure required by the EU, now identical to the UK's CPI.…
High frequency trading: The placing of orders at rates as high as thousands per second.…
Historical cost: An asset value based on the actual purchase cost, or the accounting principle that requires this.…
Historical PE: A PE ratio based on published accounts rather than forecast data.…
Horizontal integration: The widening of a business by widening its operations at the same point in the supply chain.…
Hostile takeover bid: A takeover bid that is opposed by the directors of the target company.…
H-share: The shares of a mainland Chinese company listed in Hong Kong.…
Hybrid security: A hybrid security or hybrid instrument is a security that has characteristics of both debt and equity.…