Bloomberg Financial Glossary
Bloomberg Financial Glossary
letter  Campbell R. Harvey
Fifth letter of a Nasdaq stock symbol specifying that the issue is the company's fourth class of preferred shares.
See: Management buyout
See: Mortgage-Backed Securities Clearing Corporation
See: Multiple discriminant analysis
See: Manufactured housing securities
See: Monthly income preferred security
See: Market-if-touched
See: Master limited partnership
See: Money market demand account
See: Multinational corporation
See: Morgan Stanley Capital International
Macaroni defense
A tactic used by a corporation that is the target of a hostile takeover bid involving the issue of a large number of bonds that must be redeemed at a higher value if the company is taken over.
Macaulay duration
The weighted-average term to maturity of the cash flows from a bond, where the weights are the present value of the cash flow divided by the price.
Analysis of a country's economy as a whole.
Madrid Stock Exchange (Bolsa de Madrid)
The largest of Spain's four stock exchanges.
Magic of diversification
The effective reduction of risk (variance) of a portfolio, achieved without reduction to expected returns through the combination of assets with low or negative correlations (covariances). Related: Markowitz diversification.
Mail float
Time period that checks for payment spend in the postal system.
Maintenance call
A call for additional money or securities when a margin account falls below its exchange-mandated required level.
Maintenance fee
A yearly charge to maintain brokerage accounts, such as asset management accounts or IRAs.
Maintenance margin requirement
A sum, usually smaller than but part of the original margin, that must be maintained on deposit at all times. If a customer's equity in any futures position drops to or below, the maintenance margin level, the broker must issue a margin call for the amount at money required to restore the customer's equity in the account to the original margin level. Related: Margin, margin call.
Majority shareholder
A shareholder who is part of a group that controls more than half the outstanding shares of a corporation.
Majority voting
Voting system under which corporate shareholders vote for each director separately. Related: Cumulative voting.
Make a market
Dealers are said to make a market when they quote bid and offered prices at which they stand ready to buy and sell.
Make whole provision
Related to the lump-sum payments made when a loan or bond is called, equal to the NPV of future loan or coupon payments not paid because of the call. The payment can be significant and negate the attractiveness of a call.
Making delivery
Refers to the seller's actually turning over to the buyer the assets agreed upon in a forward contract.
Malaysia Commodity Exchange
A subsidiary of the KLSE that trades interest rate futures on the three-month Kuala Lumpur Interbank offered rate.
Maloney Act
1938 legislation amending the Securities Exchange Act that regulates the OTC market.
Managed account
An investment portfolio one or more clients entrusted to a manager who decides how to invest it.
Managed float
Also known as "dirty" float, this is a system of floating exchange rates with central bank intervention to reduce currency fluctuations.
The people who administer a company, create policies, and provide the support necessary to implement the owners' business objectives.
Management buying
The acquisition of a controlling interest in a promising business by an outside investment group that retains existing management and places representatives on the board of directors.
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
Management/closely held shares
Percentage of shares held by persons closely related to a company, as defined by the Securities and Exchange Commission. Part of these percentages often are included in "institutional holdings"--making the combined total of these percentages over 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.
Management discussion and analysis (MD&A)
A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial statements in the annual report.
Management fee
An investment advisory fee charged by the financial adviser to a fund typically on the basis of the fund's average assets, but sometimes determined on a sliding scale that declines as the dollar amount of the fund increases.
Managerial decisions
Decisions concerning the operation of the firm, such as the choice of firm size, firm growth rates, and employee compensation.
Managing underwriter
The leading firm in an underwriting group, which originates the deal and acts as an agent for the group.
Mandatory convertibles
A debt instrument that is exchangeable at some point for equity in the form of common stock or a new issue.
Mandatory redemption schedule
Schedule according to which bond sinking fund payments must be made.
Dealing in a security to create a false appearance of active trading, in order to bring in more traders. Illegal.
Manufactured housing securities (MHS)
Loans on manufactured homes-that is, factory-built or prefabricated housing, including mobile homes.
Maple Leaf
A gold, silver, or platinum coin minted in Canada that usually trades at slightly more than its current bullion value.
Allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes. Related: Security deposit (initial).
Margin account (stocks)
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.
Margin agreement
The agreement governing customers' margin accounts.
Margin call
A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance.
Margin department
The department in a brokerage firm that monitors customers' margin accounts, ensuring that all short sales, stock purchases, and other positions are covered by the margin account balance.
Margin of profit
Gross profit divided by net sales. Used to measure a firm's operating efficiency and pricing policies in order to determine how competitive the firm is within the industry.
Margin requirement (options)
The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intraday price changes.
Margin of safety
With respect to working capital management, the difference between (1) the amount of long-term financing and (2) the sum of fixed assets and the permanent component of current assets.
Margin security
A security that may be bought or sold in a margin account as defined in Regulation T.
Marginal cost
The increase or decrease in a firm's total cost of production as a result of changing production by one unit.
Marginal efficiency of capital
The percentage yield earned on an additional unit of capital.
Marginal revenue
The change in total revenue as a result of producing one additional unit of output.
Marginal tax rate
The tax rate that would have to be paid on any additional dollars of taxable income earned.
Marginal utility
The change in total satisfaction as a result of consuming one additional unit of a specific good or service.
Marital deduction
A tax deduction that allow spouses to transfer unlimited amounts of property to one another.
Adjustment of the book value or collateral value of a security to reflect current market value.
A negotiable security is said to have good marketability if there is an active secondary market in which it can easily be resold.
Marketable securities
Securities that are easily convertible to cash because there is high demand allowing them to be sold quickly.
Marketable title
A clear, reasonably incontestable title to a piece of real estate that is good for transaction purposes.
The amount subtracted from the selling price of securities when they are sold to a dealer in the OTC market. Also, the discounted price of municipal bonds after the market has shown little interest in the issue at the original price.
Adjustment of the book value or collateral value of a security to reflect current market value.
An arrangement whereby the profits or losses on a futures contract are settled each day.
Usually refers to the equity market. "The market went down today" means that the value of the stock market dropped that day.
Market analysis
An analysis of technical corporate and market data used to predict movements in the market.
Market-book ratio
Market price of a share divided by book value per share.
Market break
See: Break
Market capitalization
The total dollar value of all outstanding shares. Computed as shares times current market price. Capitalization is a measure of corporate size.
Market capitalization rate
Expected return on a security. The market-consensus estimate of the appropriate discount rate for a firm's cash flow.
Market clearing
Total demand for loans by borrowers equals total supply of loans from lenders. The market, any market, clears at the equilibrium rate of interest or price.
Market conversion price
Also called conversion parity price, the price that an investor effectively pays for common stock by purchasing a convertible security and then exercising the conversion option. This price is equal to the market price of the convertible security divided by the conversion ratio.
Market cycle
The period between the two latest highs or lows of the S&P 500, showing net performance of a fund through both an up and a down market. A market cycle is complete when the S&P is 15% below the highest point or 15% above the lowest point (ending a down market).
Market Eye
A financial information service based in the U.K. sponsored by the ISE (International Stock Exchange of the U.K. and the Republic of Ireland) that provides current market and statistical information.
Market impact costs
The result of a bid/ask spread and a dealer's price concession. Also called price impact costs.
Market index
Market measure that consists of weighted values of the components that make up certain list of companies. A stock market tracks the performance of certain stocks by weighting them according to their prices and the number of outstanding shares by a particular formula.
Market jitters
Anxiety among many investors, causing them to sell stocks and bonds, pushing prices down.
Market letter
A newsletter analyzing the market that is written by an SEC-registered investment adviser who sells the letter to subscribers. See: Hulbert Rating.
Market maker
Used in the context of general equities. One who maintains firm bid and offer prices in a given security by standing ready to buy or sell round lots at publicly quoted prices. See: Agent, dealer, and specialist.
Market model
The market model says that the return on a security depends on the return on the market portfolio and the extent of the security's responsiveness as measured by beta. The return also depends on conditions that are unique to the firm. The market model can be graphed as a line fitted to a plot of asset returns against returns on the market portfolio. This relationship is sometimes called the single-index model.
Market-on-Close (MOC) order
An order to trade stocks, options, or futures as close as possible to the market close.
Market opening
The start of formal trading on an exchange.
Market order
Used in the context of general equities. Order to buy or sell a stated amount of a security at the most advantageous price obtainable after the order is represented in the trading crowd. You cannot specify special restrictions such as all or none (AON) or good 'til cancelled order (GTC) on market orders. See: Limit order.
Market order go-along/participating
Used for listed equity securities. See: Percentage order.
Market out clause
A clause that may appear in an underwriting firm commitment that releases it from its purchase requirement if there are negative securities market developments.
Market overhang
The theory that, in certain situations, institutions wish to sell their shares but postpone the sale because large orders under current market conditions would drive down the share price and that the consequent threat of securities sales will tend to retard the rate of share price appreciation. Support for this theory is largely anecdotal.
Market penetration/share
Used in the context of general equities. Percent of trading volume in a stock that a particular market maker trades.
Market Performance Committee (MPC)
A group of NYSE market oversight specialists who monitor specialists' efficiency in maintaining fair prices and orderly markets.
Market portfolio
A portfolio consisting of all assets available to investors, with each asset held in proportion to its market value relative to the total market value of all assets.
Market price
The last reported price at which a security was traded on an exchange.
Market price of risk
A measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-risk ratio of the market portfolio.
Market prices
The amount of money that a willing buyer pays to acquire something from a willing seller, when a buyer and seller are independent and when such an exchange is motivated by only commercial consideration.
Market research
A technical analysis of factors such as volume, price trends, and market breadth that are used to predict price movement.
Market return
The return on the market portfolio.
Market risk
Risk that cannot be diversified away. Related: Systematic risk
Market sectors
The classifications of bonds by issuer characteristics, such as state government, corporate, or utility.
Market segmentation theory or preferred habitat theory
A biased expectations theory that asserts that the shape of the yield curve is determined by the supply of and demand for securities within each maturity sector.
Market share
The percentage of total industry sales that a particular company controls.
Market sweep
A second offering following a tender offer, allowing institutional investors to obtain a controlling interest at a price higher than the original offer.
Market timer
A money manager who assumes he or she can forecast when the stock market will go up and down.
Market timing
Asset allocation in which investment in the equity market is increased if one forecasts that the equity market will outperform T-bills and is decreased when the market is anticipated to underperform.
Market timing costs
Costs that arise from price movement of a stock during a transaction period but attributable to other activity in the stock.
Market tone
The general state of well-being of a securities market, based mostly on trading activity.
Market-if-touched (MIT)
A price order, below market if a buy or above market if a sell, that automatically becomes a market order if the specified price is reached.
Market value
(1) The price at which a security is trading and could presumably be purchased or sold. (2) What investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares.
Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial statement items.
Market value-weighted index
An index of a group of securities computed by calculating a weighted average of the returns on each security in the index, where the weights are proportional to outstanding market value.
Marketed claims
Claims that can be bought and sold in financial markets, such as those of stockholders and bondholders.
Marketplace price efficiency
The degree to which the prices of assets reflect the available marketplace information. Marketplace price efficiency is sometimes estimated as the difficulty faced by active management of earning a greater return than passive management would, after adjusting for the risk associated with a strategy and the transactions costs associated with implementing a strategy.
Marking up or down
The amount by which a securities dealer raises or lowers the price of a stock or bond due to changes in demand and supply.
Markowitz, Harry
Nobel laureate in economics. Father of modern portfolio theory.
Markowitz diversification
A strategy that seeks to combine in a portfolio assets with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return. Related: Naive diversification.
Markowitz efficient frontier
The graphical depiction of the Markowitz efficient set of portfolios representing the boundary of the set of feasible portfolios that have the maximum return for a given level of risk. Any portfolios above the frontier cannot be achieved. Any below the frontier are dominated by Markowitz efficient portfolios.
Markowitz efficient portfolio
Also called a mean-variance efficient portfolio, a portfolio that has the highest expected return at a given level of risk.
Markowitz efficient set of portfolios
The collection of all efficient portfolios, which can be graphed as the Markowitz efficient frontier.
Marriage penalty
A tax that has the effect of penalizing a married couple because they pay more tax on a joint tax return than they would if they file tax returns individually.
Married put
A put option bought at the same time as its underlying securities in order to hedge the price paid for the securities.
Master limited partnership (MLP)
A publicly traded limited partnership.
Matador market
The foreign market in Spain.
A bank is said to match-fund a loan or other asset when it does so by buying (taking) a deposit of the same maturity. The term is commonly used in the Euromarket.
Matched book
A bank runs a matched book when the of maturities of its assets and liabilities is distribution equal.
Matched and lost
The outcome of the flip of a coin used to determine which of two brokers who are locked in competition for equal trades may actually execute the trades.
Matched maturities
The coordination by a financial institution of the maturities of its assets (loans) and liabilities (deposits) in order to enable it to meet its obligations at the required times.
Matched orders
Used for listed equity securities. Participate in equal amounts of a trade at a certain price, particularly when two parties have the same level of priority on the exchange floor (this requires standing in the trading crowd).
Matched sale transaction
Applies mainly to convertible securities. Procedure whereby the Federal Reserve Bank of New York sells government securities to a nonbank dealer against payment in federal funds. The agreement requires the dealer to sell the securities back by a specified date, which ranges from 1 to 15 days. The Fed pays the dealer a rate of interest equal to the discount rate. These transactions, also called reverse repurchase agreements, decrease the money supply for temporary periods by reducing dealers' bank balances and thus excess reserves.
Matching concept
The accounting principle that requires the recognition of all costs that are associated with the generation of the revenue reported in the income statement.
The importance of an event or information in influencing a company's stock price.
Materials requirement planning
Computer-based systems that plan backward from the production schedule to make purchases in order to manage inventory levels.
Mathematical programming
An operations research technique that solves problems in which an optimal value is sought subject to specified constraints. Mathematical programming models include linear programming, quadratic programming, and dynamic programming.
Matif SA
The futures exchange of France.
Matrix trading
Swapping bonds in order to take advantage of temporary differences in the yield spread between bonds with different ratings or different classes.
To cease to exist; to expire.
Mature economy
The economy of a nation with a stable population and slowing economic growth.
For a bond, the date on which the principal is required to be repaid. In an interest rate swap, the date that the swap stops accruing interest.
Maturity date
Usually used for bonds. Date that the bond finishes and is paid off. Date on which the principal amount of a note, draft, acceptance, bond, or other debt instrument becomes due and payable.
Maturity factoring
An arrangement that provides collection and insurance of accounts receivable.
Maturity phase
A stage of company development in which earnings to grow at the rate of the general economy. Related: Three-phase DDM.
Maturity spread
The difference in returns between bonds of different time lengths.
Maturity value
Related: Par value
Maximum capital gains mutual fund
A mutual fund whose objective is to produce capital gains by investing in small or risky rapid-growth companies.
Maximum price fluctuation
The greatest amount by which the contract price can change, up or down, during one trading session, as fixed by exchange rules in the contract specification. Related: Limit price.
May Day
The date of May 1, 1975, after which brokers were allowed to charge any brokerage commission, rather than a mandatory rate.
May expand
Used in the context of general equities. Warning that the size of the order/total may be increased. See: "more behind it."
MBS depository
A book-entry depository for GNMA securities. The depository was initially operated by MBSCC and is now a separately incorporated, participant-owned, limited-purpose trust company organized under the State of New York Banking Law.
MBS servicing
The requirement that the mortgage servicer maintain payment of the full amount of contractually due principal and interest payments whether or not actually collected.
Meals and entertainment expense
A tax deduction allowed for meals and entertainment expenses incurred in the course of business.
The expected value of a random variable. Arithmetic average of a sample.
Mean return
See: Expected return
Mean of the sample
The arithmetic average; that is, the sum of the observations divided by the number of observations.
Mean-variance analysis
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
Mean-variance criterion
The selection of portfolios based on the means and variances of their returns. The choice of the higher expected return portfolio for a given level of variance or the lower variance portfolio for a given expected return.
Mean-variance efficient portfolio
Related: Markowitz efficient portfolio
Measurement error
Errors in measuring an explanatory variable in a regression, which leads to biases in estimated parameters.
Medium-term bond
A bond maturing in two to ten years.
Medium-term note
A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from maturity bands of: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc., up to 30 years.
Meff Renta Fija
The derivatives exchange in Barcelona, Spain, listing futures and options on fixed interest securities and on interest rates, including the MIBOR (Madrid Interbank Offered Rate).
Meff Renta Variable
Spain's screen-based trading of stock index and equity derivatives market in Spain trading futures and options on the Iberian Exchange (IBEX)-35 index and on individual stocks.
Member bank
A national- or state-chartered bank that is a member of the Federal Reserve System.
Member firm
Used for listed equity securities. Brokerage firm that has at least one membership on a major stock exchange even though, by exchange rules, the membership is in the name of an employee and not the firm itself.
Member short sale ratio
The total shares sold short by NYSE members divided by total short sales, which is used to analyze market expectations and bullish or bearish trends.
Membership or a seat on the exchange
A limited number of exchange positions that enable the holder to trade for the holder's own accounts and charge clients for the execution of trades for their accounts. Related: Member firm.
Used in the context of general equities. Hierarchy of choices concerning price and volume of bids or offers proposed to a customer (e.g., menu of offerings to a customer buyer: (1) 10m @ 24 1/4; (2) 25m @ 24 1/2; or (3) 50m @ 24 3/4).
The Merc
Shorthand for Chicago Mercantile Exchange.
Mercantile agency
An organization that supplies credit ratings and reports on firms that are prospective customers.
Mercato Italiano Futures (MIF)
The Italian futures market trading Italian Treasury bond (BTF) futures.
All movable goods such as cars, textiles, or appliances.
Merchant bank
A British term for a bank that specializes not in lending its own funds, but in providing various financial services such as accepting bills arising out of trade, underwriting new issues, and providing advice on acquisitions, mergers, foreign exchange, or `portfolio management.
(1) Acquisition in which all assets and liabilities are absorbed by the buyer. (2) More generally, any combination of two companies. The firm's activity in this respect is sometimes called M&A (merger and acquisition)
Mexican Stock Exchange
The only stock exchange in Mexico. The Indice de Precios y Cotizaciones, or IPC index, consists of the 35 most representative stocks chosen every two months.
Mezzanine bracket
The members of an underwriting group with involvement large enough to be just below the top tier.
Mezzanine financing
The stage of financing that follows venture capital financing.
Mezzanine level
The period in a company's development just before it goes public.
Analysis of the behavior of individual economic units such as companies, industries, or households.
A stock with a capitalization of usually between $1 billion and $5 billion.
Midcap SPDRs
This is the same as a SPDR, except that the index it tracks is Standard & Poor's Midcap 400. This SPDR also trades on the AMEX, under the symbol MDY.
Milan Stock Exchange
The largest regional stock exchange in Italy, facilitating more than 90% of the country's trading volume.
Miller, Merton
Nobel Laureate and co-author of the famous Miller-Modigliani theorems. Finance professor at the University of Chicago.
An imitation that sends a false signal.
Trading in the underwriting security of an option contract in order to manipulate its price so that the options will become in the money.
Minimum maintenance
The lowest required equity level that must be held with a broker in a margin account. See: Margin call.
Minimum price fluctuation
Smallest increment of price movement possible in trading a given contract. Also called point or tick.
Minimum purchases
For mutual funds, the amount required to open a new account (minimum initial purchase) or to deposit into an existing account (minimum additional purchase). These minimums may be reduced for buyers participating in an automatic purchase plan
Minimum-variance frontier
Graph of the lowest possible portfolio variance that is attainable for a given portfolio expected return.
Minimum-variance portfolio
The portfolio of risky assets with lowest variance.
Minority interest
An outside ownership interest in a subsidiary that is consolidated with the parent for financial reporting purposes.
The symbol (-) that precedes the change figure in a stock table to indicate a closing sale lower than that of the previous day.
Minus tick
See: Downtick
Misery index
An index that sums the unemployment and inflation rates, used as a political rating or measure of consumer confidence.
Mismatch bond
Floating-rate note whose interest rate is reset at more frequent intervals than the rollover period (e.g., a note whose payments are set quarterly on the basis of the one-year interest rate).
Miss the price/market
Used for listed equity securities. (1) Have an order in hand but fail to execute a transaction on terms favorable to a customer and, thus, be negligent as a broker; (2) receive an order just after a print has transpired.
Mixed account
A brokerage account holding both long and short positioned securities.
Mixed bag
Used in the context of general equities. Group of stocks including some that are up, some down, and some neutral.
Mob spread
The yield spread between a tax-free municipal bond and a Treasury bond with the same maturity.
Mock trading
The simulated trading of securities used as a learning device in training investors and brokers.
The process of creating a depiction of reality, such as a graph, picture, or mathematical representation.
Modern portfolio theory
Principles underlying the analysis and evaluation of rational portfolio choices based on risk-return trade-offs and efficient diversification.
Modified Accelerated Cost Recovery System (MACRS)
A 1986 act that set out rules for the depreciation of qualifying assets, allowing for greater acceleration over longer periods of time.
Modified duration
The ratio of Macaulay duration to (1 + y), where y = the bond yield. Modified duration is inversely related to the approximate percentage change in price for a given change in yield.
Modified pass-throughs
Agency pass-throughs that guarantee (1) timely interest payments and (2) principal payments as collected, but no later than a specified time after they are due. Related: Fully modified pass-throughs.
Modigliani and Miller Proposition I
A proposition by Franco Modigliani and Merton Miller that states that a firm cannot change the total value of its outstanding securities by changing its capital structure proportions. Also called the irrelevance proposition.
Modigliani and Miller Proposition II
A proposition by Franco Modigliani and Merton Miller that states that the cost of equity is a linear function of the firm's debt/equity-ratio.
The amount of acceleration of an economic, price, or volume movement. A trader who follows a movement strategy will purchase stocks that have recently risen in price.
Momentum indicators
Indicators used in market analysis to quantify the momentum of upward and downward price movements.
M-1, M-2, and M-3
See: Money supply
MONEP (Marche des Options Negociables de Paris)
A subsidiary of the Paris Bourse that trades stock and index options.
An economist who believes that changes in the money supply are the most important determinants of economic activity and economic cycles.
Monetary gold
Gold held by government authorities as a financial asset.
Monetary indicators
Economic indicators of the effects of monetary policy, such as the condition of the credit market.
Monetary/nonmonetary method
Under this translation method, monetary items (e.g. cash, accounts payable and receivable, and long-term debt) are represented at the current rate, while nonmonetary items (e.g., inventory, fixed assets, and long-term investments) are represented at historical rates.
Monetary policy
Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply or interest rates.
Monetize the debt
Financing the national debt by printing new money, which causes inflation as a result of a larger money supply.
Currency and coin that are guaranteed as legal tender by the government.
Money base
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
Money management
Related: Investment management
Money manager
Related: Investment manager
Money market
Money markets are for borrowing and lending money for three years or less. The securities in a money market can be U.S. government bonds, Treasury bills and commercial paper from banks and companies.
Money market demand account (MMDA)
An account that pays interest based on short-term interest rates.
Money market fund
A mutual fund that invests only in short-term securities, such as banker's acceptances, commercial paper, repurchase agreements, and government bills. The net asset value per share is maintained at $1.00. Such funds are not federally insured, although the portfolio may consist of guaranteed securities or the fund may have private insurance protection.
Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the home currency value of a foreign currency transaction.
Money market notes
Publicly traded issues that may be collateralized by mortgages and mortgage backed securities (MBS).
Money order
A financial instrument backed by a deposit at a certain firm such as a bank that can be easily converted into cash.
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and the firm contributes at the same or a different rate. Also called an individual account plan.
Money rate of return
Annual money return as a percentage of asset value.
Money supply
M1-A: Currency plus demand deposits.
M1-B: M1-A plus other checkable deposits.
M2: M1-B plus overnight repos, money market funds, savings, and small (less than $100M) time deposits.
M3: M-2 plus large time deposits and term repos.
L: M-3 plus other liquid assets.
To seek information about an agent's behavior; a mechanism that provides such information.
Market characterized by absolute control of all sales and distribution in the market by one firm, due to some barrier to entry of other firms, allowing the firm to sell at a higher price than the societally optimal price.
Market characterized by the existence of only one buyer in a market, forcing sellers to accept a lower price than the societally optimal price.
Monte Carlo simulation
An analytical technique for solving a problem by performing a large number of trail runs, called simulations, and deducing a solution from the collective results of the trial runs. Method for calculating the probability distribution of possible outcomes.
Monthly income preferred security (MIP)
Preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to the parent.
Monthly investment plan
A plan in which a certain amount is invested each month in order to benefit from dollar cost averaging.
Montreal Exchange/Bourse de Montreal
The oldest stock exchange in Canada trading stocks, bonds, futures, and options. The Canadian Market Portfolio Index (XXM) tracks the market performance of the 25 highest-capitalization stocks traded on at least two Canadian exchanges.
Moody's investment grade
A rating of one through four assigned by Moody's Investor Service to municipal short-term bonds.
Moody's Investors Service
A security and bond rating agency publishing bond manuals and a common stock handbook annually.
Moral hazard
The risk that the existence of a contract will change the behavior of one or both parties to the contract, e.g., an insured firm will take fewer fire precautions.
Moral obligation bond
A tax-exempt bond issued by a municipality or a state financial intermediary that is backed by the moral, but not legal, obligation of a state government to appropriate funds in case of default.
"More behind it"
Used in the context of general equities. More stock exists to be bought or sold by the same buyer or seller, respectively. Often, the buyer or seller does not disclose the full size of its buy or sell interest as not to affect the market adversely. See: May expand.
Morgan Stanley Capital International (MSCI)
Publisher of a number of well-known benchmarks, such as the MSCI World Index.
Morningstar Rating System
A proprietary ranking of mutual funds and annuities issued by Morningstar Inc. of Chicago.
Mortality tables
Tables of probability that individuals of various ages will die within one year.
A loan secured by the collateral of some specified real estate property that obliges the borrower to make a predetermined series of payments.
Mortgage-backed securities (MBS)
Investment instruments backed by a pool of mortgage loans.
Mortgage-Backed Securities Clearing Corporation (MBSCC)
A wholly owned subsidiary of the Midwest Stock Exchange that operates a clearing service for the comparison, netting, and margining of agency-guaranteed MBS transacted for forward delivery.
Mortgage banker
A company or individual that originates mortgage loans and sells them to investors, while taking care of borrowers' loan payments, records, taxes, and insurance.
Mortgage bond
A bond whose issuer has granted bondholders a lien against pledged assets. See: Collateral trust bonds.
Mortgage broker
A company or individual that places mortgage loans with lenders, but does not originate or service loans like a mortgage banker.
Mortgage duration
A modification of standard duration to account for the impact on duration of MBS of changes in prepayment speed resulting from changes in interest rates.
Mortgage interest deduction
A federal tax deduction for interest paid on a mortgage used to acquire, construct, or improve a residence.
Mortgage life insurance
A life insurance policy that pays off the remaining balance of the insured person's mortgage at death.
Mortgage pass-through security
Also called a pass-through, a security created when one or more mortgage holders form a collection (pool) of mortgages and sells shares or participation certificates in the pool. The cash flow from the collateral pool is "passed through" to the securityholder as monthly payments of principal, interest, and prepayments. This is the predominant type of MBS traded in the secondary market.
Mortgage pipeline
The period from the taking of applications from prospective mortgage borrowers to the marketing of the loans.
Mortgage pipeline risk
The risk associated with taking applications from prospective mortgage borrowers who may opt to decline to accept a quoted mortgage rate within a certain grace period.
Mortgage pool
A group of mortgages with similar class, interest rate, and maturity characteristics.
Mortgage rate
The interest rate on a mortgage loan.
Mortgage REIT
An REIT that invests in loans secured by real estate that derives income from mortgage interest and fees.
Mortgage servicing
The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default, involved with a mortgage loan.
The lender of a loan secured by property.
The borrower of a loan secured by property.
Moscow Interbank Currency Exchange (MICEX)
Established in 1992, the most liquid and best organized financial exchange in Russia.
Most active list
The stocks with the highest volume of trading on a certain day.
Most distant futures contract
When several futures contracts are considered, the contract settling last. Related: Nearby futures contract.
Moving average
Used in charts and technical analysis, the average of security or commodity prices constructed in a period as short as a few days or as long as several years, and showing trends for the latest interval. As each new variable is included in calculating the average, the last variable of the series is deleted.
Medium-term notes issued by corporations, much like shorter-term commercial paper.
A municipal utility district, which is a political subdivision that administers utility-related services, sometimes requiring the issue of special assessment bonds.
Multicurrency clause
An agreement in the case of a Euro loan that permits the borrower to switch from one currency to another currency on a rollover date.
Multicurrency loans
Give the borrower the flexibility of drawing a loan in different currencies.
Multifactor CAPM
A version of the capital asset pricing model derived by Robert Merton that includes extra-market sources of risk referred to as factors. Related: Arbitrage pricing theory.
Multifamily loans
Loans usually represented by conventional mortgages on multifamily rental apartments.
Multinational corporation (MNC)
A firm that operates in more than one country.
Multioption financing facility
A syndicated confirmed credit line with attached options.
Multiperiod immunization
Creating a portfolio that will be capable of satisfying more than one predetermined future liability regardless of interest rate changes.
Multiple-discriminant analysis (MDA)
Statistical technique for distinguishing between two groups on the basis of their observed characteristics.
Multiple-issuer pools
Under the GNMA-II program, pools formed through the aggregation of individual issuers' loan packages.
Multiple listing
An agreement used by a broker who is a member of a multiple-listing organization, providing the exclusive right to sell, with the additional authority and obligation to distribute the listing to the other brokers in a multiple listing organization.
Multiple peril insurance
Insurance policy that covers a wide variety of property damage.
Multiple rates of return
More than one rate of return from the same project that makes the net present value of the project equal to zero. This situation arises when the IRR method is used for a project in which negative cash flows follow positive cash flows. For each sign change in the cash flows, there is a different rate of return.
Multiple regression
The estimated relationship between a dependent variable and more than one explanatory variable.
Another name for price-earnings ratios.
In the case of an investment a factor that quantifies the overall effects of investment spending on total income. In the case of deposit, a factor that shows the effects of a change in bank deposits on the total amount of outstanding credit and the money supply.
Multirule system
A technical trading strategy that combines mechanical rules, such as the CRISMA (cumulative volume, relative strength, moving average) with other trading systems.
Municipal bond
Represents borrowing by state or local governments to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes.
Municipal bond insurance
An insurance policy that guarantees payment on municipal bonds in the event the issuer defaults.
Municipal improvement certificate
A certificate used to finance local government projects and services that are financed by a special tax assessment. Its interest is tax-free.
Municipal Investment Trust (MIT)
A unit investment trust that buys municipal bonds and usually holds them until maturity, passing the bond income on to shareholders, usually tax-free.
Municipal notes
Short-term notes issued by municipalities in anticipation of tax receipts, proceeds from a bond issue, or other revenues.
Municipal revenue bond
A bond issued to finance a public project that is funded by receipts from the project's operation.
Mutilated security
A certificate on which the name of the issue, the issuer, or some other identifying detail cannot be read.
Mutual association
A savings and loan association organized as a cooperative. Members purchase shares, vote on association affairs, and receive income in the form of dividends.
Mutual company
A corporation that is owned by a group of members and that distributes income in proportion to the amount of business that members do with the company.
Mutual exclusion doctrine
The tenet that rules municipal bond interest is federal tax-free. In return for this federal tax exemption, states and localities cannot tax interest generated by federal government securities.
Mutual fund
Mutual funds are pools of money that are managed by an investment company and regulated by the Investment Company Act of 1940. They offer investors a variety of goals, depending on the fund and its investment charter. Some funds seek to generate income on a regular basis. Others seek to preserve an investor's money. Still others seek to invest in companies that are growing at a rapid pace. Funds can impose a sales charge, or load, on investors when they buy or sell shares. No-load funds impose no sales charge. Related: Open-end fund, closed-end fund.
Mutual fund cash-to-assets ratio
The cash instruments portion of a mutual fund as a proportion of its total assets.
Mutual fund custodian
A commercial bank or trust company that holds securities owned by a mutual fund and sometimes acts as transfer agent for the mutual fund.
Mutual fund theorem
A result associated with the CAPM, asserting that investors will choose to invest their entire risky portfolio in a market index or mutual fund.
Mutual offset
A system, such as the arrangement between the Chicago Mercantile Exchange (CME) and Singapore International Monetary Exchange (SIMEX), that allows trading positions established on one exchange to be offset or transferred on another exchange.
Mutual savings bank
A state-chartered savings bank that is owned by its depositors and managed by a fiduciary board of trustees.
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project precludes the acceptance of one or more alternative projects.

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