An intentional or unintentional departure from the original way a mutual fund was being managed, and a change to a new way of managing of the fund. At their inception, all funds have an objective or specific style of investing, usually determined by the management of that fund. Style drift indicates a change in the investment style, which could occur for many reasons, such as a change in the management team, or a decision made by the team because of a change of circumstance in the market.
An extreme version of the poison pill defense in which a target company engages in an activity that might destroy the company in order to avoid a hostile takeover.
Buying futures to hedge against the sale of a cash commodity. An investor might use a buying hedge if he/she expects to buy a certain amount of the commodity in the future, but is worried about price fluctuations. He/she will buy a futures contract in order to be able to buy the commodity at a fixed price later. also called long hedge.
The exchange ratio that a company offers to a target company during the acquisition process that defines how many target company shares will be exchanged for each acquiring company share. The swap ratio is generally negotiated, but is based on the total asset value of the target company.
An investing strategy that seeks to expose an investor to a wide variety of investments without putting the principal at risk. The allocation is dynamic because the investment shifts between a zero-coupon bond or interest-bearing security and an underlying equity investment. A dynamic asset allocation is used in constant proportion portfolio insurance. also called guaranteed linked notes.
An arrangement in which a client has given his/her broker the ability to make certain types of trades without prior consent. An investor must sign a specific agreement allowing brokers to undertake discretionary transactions. Such an arrangement is only recommended if the investor has a high degree of trust in the broker’s professional ability.
A riskless transaction consisting of the short sale of a security, the purchase of a call, and the writing of a put. If the value of the security increases, the call is exercised to negate the short sale. If the value of the security decreases, the put will be exercised by the holder and the received security will negate the short sale.
Situation where the company being acquired or “merged” into the buying company is consolidated into the purchasing company. Also called cleanup merger.
The commercial or investment bank which has primary responsibility for organizing a given credit or bond issuance. This bank will find other lending organizations or underwriters to create the syndicate, negotiate terms with the issuer, and assess market conditions. also called lead underwriter, lead manager, managing underwriter.
The first day of the ex-dividend period. The reinvestment date was created to allow all pending transactions to be completed before the record date. If an investor does not own the stock before the reinvestment date, he or she will be ineligible for the dividend payout. Further, for all pending transactions that have not been completed by the reinvestment date, the exchanges automatically reduce the price of the stock by the amount of the dividend. This is done because a dividend payout automatically reduces the value of the company (it comes from the company’s cash reserves), and the investor would have to absorb that reduction in value (because neither the buyer nor the seller are eligible for the dividend). also called ex-dividend date.
NASD requirements imposed on Nasdaq market makers, including: maintaining two-sided markets on a continuous basis, quoting firm bid and ask prices, participating in the Small Order Execution System, and reporting price and volume data for each Nasdaq security transaction within 90 seconds of execution.
Stock market manipulation in which a trader with a position in a stock places an anonymous buy order for a large number of shares through an ECN and then cancels it seconds later. The price of the stock will immediately jump, giving the impression of high demand, which draws others into buying the stock, allowing the manipulator to sell at a higher price. Some market analysts believe this is one cause of increased volatility in the markets.
A fee charged by a broker or agent for his/her service in facilitating a transaction, such as the buying or selling of securities or real estate. In the case of securities trading, brokers can be split into two broad categories depending on the sales fees they charge. Discount brokers charge relatively low sales fees, but provide no services beyond executing trades. Full service brokers charge higher sales fees, but provide research and investment advisory services. also called commission.
An intentional or unintentional departure from the original way a mutual fund was being managed, and a change to a new way of managing of the fund. At their inception, all funds have an objective or specific style of investing, usually determined by the management of that fund. Style drift indicates a change in the investment style, which could occur for many reasons, such as a change in the management team, or a decision made by the team because of a change of circumstance in the market.
An extreme version of the poison pill defense in which a target company engages in an activity that might destroy the company in order to avoid a hostile takeover.
Buying futures to hedge against the sale of a cash commodity. An investor might use a buying hedge if he/she expects to buy a certain amount of the commodity in the future, but is worried about price fluctuations. He/she will buy a futures contract in order to be able to buy the commodity at a fixed price later. also called long hedge.
The exchange ratio that a company offers to a target company during the acquisition process that defines how many target company shares will be exchanged for each acquiring company share. The swap ratio is generally negotiated, but is based on the total asset value of the target company.
Options Prices Reporting Authority. A subscription service that disseminates inside quotations and last sale data for options.
An investing strategy that seeks to expose an investor to a wide variety of investments without putting the principal at risk. The allocation is dynamic because the investment shifts between a zero-coupon bond or interest-bearing security and an underlying equity investment. A dynamic asset allocation is used in constant proportion portfolio insurance. also called guaranteed linked notes.
An arrangement in which a client has given his/her broker the ability to make certain types of trades without prior consent. An investor must sign a specific agreement allowing brokers to undertake discretionary transactions. Such an arrangement is only recommended if the investor has a high degree of trust in the broker’s professional ability.
A riskless transaction consisting of the short sale of a security, the purchase of a call, and the writing of a put. If the value of the security increases, the call is exercised to negate the short sale. If the value of the security decreases, the put will be exercised by the holder and the received security will negate the short sale.
Situation where the company being acquired or “merged” into the buying company is consolidated into the purchasing company. Also called cleanup merger.
The commercial or investment bank which has primary responsibility for organizing a given credit or bond issuance. This bank will find other lending organizations or underwriters to create the syndicate, negotiate terms with the issuer, and assess market conditions. also called lead underwriter, lead manager, managing underwriter.
The first day of the ex-dividend period. The reinvestment date was created to allow all pending transactions to be completed before the record date. If an investor does not own the stock before the reinvestment date, he or she will be ineligible for the dividend payout. Further, for all pending transactions that have not been completed by the reinvestment date, the exchanges automatically reduce the price of the stock by the amount of the dividend. This is done because a dividend payout automatically reduces the value of the company (it comes from the company’s cash reserves), and the investor would have to absorb that reduction in value (because neither the buyer nor the seller are eligible for the dividend). also called ex-dividend date.
NASD requirements imposed on Nasdaq market makers, including: maintaining two-sided markets on a continuous basis, quoting firm bid and ask prices, participating in the Small Order Execution System, and reporting price and volume data for each Nasdaq security transaction within 90 seconds of execution.
Stock market manipulation in which a trader with a position in a stock places an anonymous buy order for a large number of shares through an ECN and then cancels it seconds later. The price of the stock will immediately jump, giving the impression of high demand, which draws others into buying the stock, allowing the manipulator to sell at a higher price. Some market analysts believe this is one cause of increased volatility in the markets.
A fee charged by a broker or agent for his/her service in facilitating a transaction, such as the buying or selling of securities or real estate. In the case of securities trading, brokers can be split into two broad categories depending on the sales fees they charge. Discount brokers charge relatively low sales fees, but provide no services beyond executing trades. Full service brokers charge higher sales fees, but provide research and investment advisory services. also called commission.