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Financial dictionary terms starting with “d”
D-mark is slang for deutschmark, the national currency of Germany until it joined the European Union in 2002. See More.
DAGMAR is a marketing term that stands for "define advertising goals, measure advertising results." See More.
Daily cut-off is a term signifying the end of the trading day for foreign exchange markets. See More.
A daily money manager (DMM) is a person who manages day-to-day financial responsibilities for clients. See More.
A daily trading limit is the maximum gain or loss allowed on a derivative or currency in one trading day. See More.
In finance, a daisy chain is an investment scam whereby a group of fraudulent investors inflate the price of a security and then sell it at a profit. See More.
A dangerous asset is an asset (usually a physical asset rather than a security) that carries a high degree of liability for its owner. See More.
A dark pool is trading activity that occurs directly between parties without the use of an exchange, thereby keeping the transactions private. See More.
Dark pool liquidity refers to the amount of trading activity that occurs directly between parties without the use of an exchange, thereby keeping the transaction private. See More.
Named after famous ballroom dancer Nicolas Darvas, the Darvas box theory is a trading technique based on 52-week highs and volumes. See More.
A dash to trash occurs when investors bid up the price of a security to a point well above the security's reasonable value. See More.
Data mining refers to the systematic software analysis of groups of data in order to uncover previously unknown patterns and relationships. See More.
Data smoothing is a statistical technique that involves removing outliers from a data set in order to make a pattern more visible. See More.
A date certain is a legal term identifying a date on which an action or process must occur or complete. See More.
David Ricardo was an English classical economist and one-time member of the country's Parliament who lived from 1772 to 1823. He is the author of The Principles of Political Economy and Taxation and other books. See More.
In the finance world, a dawn raid is the purchase of a large number of shares or securities as soon as the market opens, usually in a takeover effort. See More.
The DAX Index is the most commonly cited benchmark for measuring the returns posted by stocks on the Frankfurt Stock Exchange. See More.
A day cycle is a period of time for sending ACH debits and credits for settlement. See More.
Day trader is a term applied to a very active securities trader who holds securities for a short period of time. Day traders will often open and close a position within the same day. See More.
A day-around order is an order that replaces an order from another day. It is most common in the equities markets. See More.
A day-count convention is a method of counting the days between coupon dates. See More.
A daylight overdraft occurs when a bank transfers out more in a day than it has in its reserves. See More.
Days payable outstanding (DPO) is the ratio of payables to the daily average of cost of sales. The formula for DPO is: Days Payables Outstanding = Accounts Payable/(Cost of Sales/360) See More.
Days sales of inventory is a ratio of inventory to sales. The formula is: Days Sales of Inventory = (Inventory/Cost of Sales) x 365 See More.
Days sales outstanding (DSO) is the ratio of receivables to the daily average of credit sales. See More.
Days working capital is the ratio of working capital to sales. The formula is: Days Working Capital = (Average Working Capital x 365)/Annual Sales See More.
A dead cat bounce refers to a temporary recovery in a stock price or a temporary market rally after a significant downward trend. See More.
When supply and demand are out of equilibrium, the market inefficiency created and the societal cost is known as deadweight loss. When used in economics, deadweight loss will be applied to the deficiency that has occurred due to the inefficient al See More.
A death benefit is a payment to the beneficiary on an annuity, pension, or life insurance policy upon the death of the annuitant or policyholder. See More.
A death cross is a technical indicator that occurs when a stock's short-term moving average falls below its long-term moving average. See More.
A death put is an option added to a bond that gives the bondholder's estate the right, but not the obligation, to sell the bond back to the issuer at face value if the bondholder dies. See More.
A death spiral is a kind of loan investors provide to a company in exchange for debt that can convert into stock, typically at below-market share prices. See More.
A Death Star IPO is a wildly successful IPO. The term is a reference to the Star Wars movies, in which Darth Vader's Death Star battle station could pulverize other planets with a single laser beam. See More.
A death tax, also called an estate tax, is a tax assessed on all or a portion of an inherited estate. Life insurance, pensions, real estate, cars, belongings and debts are all part of one's estate. "Death tax" is generally a pejorative te See More.
Debentures are bonds that are not secured by specific property or collateral. Instead, they are backed by the full faith and credit of the issuer, and bondholders have a general claim on assets that are not pledged to other debt. See More.
A debit is an accounting record that represents either an increase in assets or a decrease in liabilities or net worth. A debit is the opposite of a credit. See More.
A debt discharge is a legal action that relieves a borrower from his or her obligations to a lender. See More.
Debt load is the total amount of debt that a company has on its balance sheet. All publicly traded companies must file financial statements, including balance sheets, every quarter. See More.
A debt security is an investment in a debt instrument issued by a corporation or government as it borrows money. Commonly, the security, also referred to as a bond or fixed income security, will be issued with a stated face value (amount borrowed), m See More.
A company's debt service coverage ratio (DSCR) refers to its ability to meet periodic obligations on outstanding liabilities with respect to its net operating revenue. See More.
The debt-to-equity ratio is a measure of the relationship between the capital contributed by creditors and the capital contributed by shareholders. It also shows the extent to which shareholders' equity can fulfill a company's obligations to creditor See More.
A debtor is a person or entity legally required to provide a payment, service or other benefit to another person or entity (the obligee). Debtors are often also called borrowers or obligors in contracts. See More.
Debtor in possession (DIP) refers to the status of a business that retains control of its assets and continues to operate while under the Chapter 11 bankruptcy reorganization process. See More.
Debtor-in-possession (DIP) financing refers to financing for a business that retains control of its assets and continues to operate while under the Chapter 11 bankruptcy reorganization process. See More.
In the income investing world, a declaration date is the date on which a company announces an upcoming dividend payment, usually by issuing a press release a few weeks before the dividend is actually paid. See More.
Decoupling refers to instances in which security prices behave contrary to normally-occurring correlations. See More.
A dedicated portfolio is a passively managed portfolio whose cash flows are designed to match the cash flows needed to fulfill a future obligation. See More.
In the finance world, deductible is usually short for tax-deductible, which refers to an expense that reduces the amount of income that is subject to tax. In the insurance world, a deductible is a required payment from the insured to the insurer in See More.
A deduction is a reduction in taxable income, which thereby lowers the amount of taxes owed. Federal, state, and local tax codes determine what kinds of items or expenses are deductible and which taxpayers are eligible for deductions. See More.
A deed is an ownership document that entitles its holder to specific rights to a property based on a set of explicit conditions. See More.
A deed of trust, most commonly used in real estate transactions, is an agreement between a borrower and a lender that the title to the property purchased by the loan will be held in trust by a neutral third party, a trustee, until the loan is paid in See More.
A deep discount bond is a bond that sells at a price which is 20% or more below the face value of the bond, and carries a low rate of interest during the term of the bond. See More.
A default is a violation of a promise to pay debt in agreed amounts at agreed times. See More.
Default risk is the chance that the bond issuer will not make the required coupon payments or principal repayment to its bondholders. See More.
A defensive company is a company that does well or at least remains stable during economic contractions and expansions. See More.
A defensive stock is a stock that is either stable or a market outperformer during an economic contraction. See More.
A deferred annuity is a type of annuity that delays monthly or lump-sum payments until an investor-specified date. The interest usually grows tax-deferred before it is withdrawn. See More.
Deferred income tax refers to a portion of income earned by a company during a given year for which the associated income tax has not yet been paid. See More.
A deferred interest bond is a bond which pays interest in full upon maturity. See More.
A deferred payment option is an option contract for which the payment is deferred until, and paid not sooner than, the contract’s expiration date. See More.
Deferred revenue refers to payments received in advance for services which have not yet been performed or goods which have not yet been delivered. These revenues are classified on the company's balance sheet as a liability and not as an asset. See More.
A deferred stock purchase plan is an uncapped stock contribution with an employer matching the contribution that vests as the employee provides additional service during a deferral period. See More.
Deferred tax liability (DTL) is a balance sheet line item that accounts for the temporary difference between taxes that will come due in the future and taxes paid today. See More.
A deficit occurs when expenses exceed revenues, imports exceed exports, or liabilities exceed assets. A deficit is the opposite of a surplus. See More.
Deficit spending is spending that reduces or offsets a surplus. In the business world, the term often refers to situations where expenses exceed revenues, imports exceed exports or liabilities exceed assets. See More.
A defined benefit plan is a qualified retirement account that contractually agrees to pay a specified benefit at the plan holder's age of retirement. This type of qualified plan clearly defines the amount of retirement income to be paid to the ac See More.
In general, a defined contribution plan is a tax-deferred savings plan that people fund with their own money (rather than an employer) and use to save for retirement. It is the opposite of a defined benefit plan, which is typically a pension plan fun See More.
Deflation describes the general decline in the prices of goods and services in an economy, which in turn increase the purchasing power of money. It is the opposite of inflation, but is not the same as disinflation (which is the slowing of inflation). See More.
In finance, to dehedge is to engage in an investing strategy that does not protect an investment or portfolio against loss. It usually involves securities that move in the same direction. See More.
Delinquent means “something or someone who fails to accomplish that which is required by law, duty, or contractual agreement, such as the failure to make a required payment or perform a particular action.” In financing and investing, del See More.
Delisting refers to the removal of a security from active trading. It generally occurs when a company goes private, is bought out, declares bankruptcy or fails to meet listing requirements. See More.
A delivery option is incorporated into an interest rate future contract and allows the writer to specify the time and place of delivery as well as the asset to be delivered. See More.
Delta is the ratio comparing the change in price of an underlying asset to the change in price of a derivative. It is one of the four main statistics, known as "Greeks," used to analyze derivatives. See More.
A demand deposit is an account with a bank or other financial institution that allows the depositor to withdraw his or her funds from the account without warning or with less than seven days' notice. Demand deposits are a key component of the M1 See More.
Demand elasticity is a measure of how sensitive the demand for a product or service is to changes in the price of that product or service. The formula for demand elasticity is: Elasticity = % Change in Quantity/% Change in Price See More.
A demand loan is a loan where the lender may require the borrower (a brokerage house) to repay at any time. These loans may also be called a broker loan or call loan, See More.
Usually associated with currency, a denomination is the value specified on a monetary instrument. See More.
A dependent relies on someone else for most or all of his or her financial support. See More.
A depletion allowance is a tax deduction allowed in order to compensate for the depletion or "using up" of natural resource deposits such as oil, natural gas, iron, timber etc. The allowance is a form of cost recovery for capital invest See More.
The deposit interest rate is the rate of interest earned on a deposit account held by a depositor at a bank or savings institution. Common types of deposit accounts include savings accounts, interest-bearing checking accounts, and certificates of dep See More.
The Depository Trust & Clearing Corporation (DTCC) is a subsidiary of the National Securities Clearing Corporation (NSCC). The DTCC, established in 1973, settles transactions between buyers and sellers of securities. See More.
Depreciated cost is the cost of an asset minus its accumulated depreciation. Another term for this concept is net book value. The formula for depreciated cost is: Depreciated Cost = Original Asset Price - Accumulated Depreciation See More.
Depreciation is a concept used for tax and accounting purposes that describes the method a company uses to account for the declining value of its assets. The reasoning? An asset acquired one year is unlikely to be worth as much five years later See More.
A depression is a sustained downturn in economic activity characterized by high unemployment, decreased output and reduced levels of trade. See More.
Deregulation occurs when there is a significant decrease or elimination of government regulation over an industry, market, or economy. See More.
A derivative is a financial contract with a value that is derived from an underlying asset. Derivatives have no direct value in and of themselves -- their value is based on the expected future price movements of their underlying asset. See More.
The descending triangle is a pattern observed in technical analysis. It is the bearish counterpart of the bullish ascending triangle pattern. The trendline connecting peak price levels should be downward sloping toward the horizontal trendline connec See More.
A detachable warrant is a warrant that can be sold separately from the security to which it was originally attached. See More.
Devaluation refers to a decrease in a currency's value with respect to other currencies. See More.
Diluted earnings per share is a measure of profit. The formula for diluted earnings per share is: Fully Diluted Earnings Per Share = (Net Income - Preferred Stock Dividends) / (Common Shares Outstanding + Unexercised Employee Stock Options + Con See More.
Dilution is a reduction in proportional ownership caused when a company issues additional shares. See More.
Direct access trading (DAT) refers to any computerized trading system which connects traders to markets, thereby eliminating the need for a broker. See More.
A direct cost is any cost related to the production method of a good or service. It is the opposite of an indirect cost. See More.
Direct deposit refers to the electronic transfer of a cash payment into the recipient's bank account. See More.
A direct tax is any tax levied on companies or individuals that cannot be transferred to another party. It is the opposite of indirect tax. See More.
A disclosure statement is an official document that outlines the terms, conditions, risks and rules of a financial transaction, such as a loan or an investment. See More.
A discount broker is a stockbroker who charges a reduced commission to buy and sell shares for clients. See More.
The discount rate, also known as the Fed discount rate, is the interest rate charged to commercial banks and other institutions on loans from a Federal Reserve bank. This process is a key tool of Federal Reserve monetary policy and an integral part o See More.
Discount to net asset value (NAV) refers to a situation where shares of a closed-end stock fund are trading at a price lower than the fund’s net asset value per share. For example, a fund could be described as "trading 5% discount to NAV. See More.
The discount window is the method that banks use to borrow money from a central bank on a short-term basis, named after an actual teller window at the Federal Reserve where such transactions used to be carried out. The discount window is used only in See More.
Discounted cash flow (DCF) analysis is the process of calculating the present value of an investment's future cash flows in order to arrive at a current fair value estimate for the investment. See More.
Discretionary income is the income left over after paying taxes and normal living expenses. See More.
Diseconomies of scale lead the marginal cost of a product to increase as a company grows. This is the opposite of economies of scale which cause the marginal cost for a product to decrease as a result of efficiencies achieved as a company grows and c See More.
Disposable income, also known as net pay, refers to the income that’s left for personal spending after direct taxes, such as federal and state income taxes, have been accounted for. It is a key concept in personal budgeting and economic policy. See More.
Disposition refers to disposing of an asset through sale, assignment, or other transfer method. See More.
A distressed sale occurs when a sale must be made under unfavorable conditions for the seller. See More.
Distressed securities are financial instruments of a company that are under price pressure due to bankruptcy (Chapter 7), reorganization (Chapter 11), financial turmoil, or other economic trauma. See More.
Diversification is a method of portfolio management whereby an investor reduces the volatility (and thus risk) of his or her portfolio by holding a variety of different investments that have low correlations with each other. See More.
A diversified common stock fund is a type of mutual fund that invests exclusively in shares of common stock. See More.
A divestiture or divestment is the reduction of an asset or business through sale, liquidation, exchange, closure, or any other means for financial or ethical reasons. It is the opposite of investment. See More.
Dividends represent a distribution of corporate earnings to company shareholders and usually take place in one of two forms -- cash or stock. Each organization's board of directors determines the actual dividend amount that the firm will pay out. See More.
The term "dividend achievers" is used to describe an elite group of companies that have improved their annual regular dividends for at least 10 consecutive years and meet certain liquidity requirements. See More.
The term "dividend aristocrats" is used to describe Standard & Poor's (S&P) 500® Index companies that have consistently improved their dividend rates every year for at least 25 consecutive years. See More.
The dividend capture strategy is the act of purchasing a security for its dividend, capturing the dividend, and then selling the security to buy another about to pay a dividend. By doing this, investors can receive a steady stream of dividend income See More.
A dividend declaration date is the date on which a company announces an upcoming dividend payment, usually by issuing a press release a few weeks before the dividend is actually paid. See More.
The dividend discount model (DDM) is a method for assessing the present value of a stock based on the growth rate of dividends. See More.
A dividend ETF is a basket of dividend-paying securities that are bundled together into a single security that can be bought and sold like a stock. See More.
A dividend fund is a type of mutual fund which invests exclusively in equity shares which pay regular dividends. See More.
The dividend payable date is the date on which a company pays a dividend to its shareholders of record. See More.
The dividend payout ratio measures the percentage of a company's net income that is given to shareholders in the form of dividends. See More.
A dividend record date is the date on which the company finalizes the list of investors who qualify as "shareholders of record." Investors listed as shareholders of record will receive the firm's dividend payment. See More.
A dividend reinvestment plan (DRIP) is an arrangement offered by companies to investors wishing to receive additional shares of company stock in lieu of cash dividend payments. See More.
The dividend tax credit generally refers to a Canadian tax program whereby Canadian residents receive a reduction in taxes owed on dividends received from Canadian corporations. See More.
Dividend yield is the annual dividend payment shareholders receive from a particular stock shown as a percentage of the stock's price. (Dividends are corporate earnings distributed to company shareholders typically through the two form See More.
"Dogs of the Dow" is a stock-picking strategy whereby an investor buys equal amounts of the 10 highest-yielding stocks within the Dow Jones Industrial Average at the beginning of each year. After every year, the investor updates their holding See More.
A doji candlestick is a significant signal in the technical analysis of financially traded assets. If prices finish very close to the same level (so that no body or a very small real body is visible), then that candle can also be read See More.
Dollar cost averaging is a strategy in which an investor places a fixed dollar amount into a given investment (usually common stock) on a regular basis. The investment generally takes place each and every month regardless of what is occurring in the See More.
The donut hole is a situation that occurs as part of Medicare’s Part D prescription coverage. See More.
The double bottom -- one of the many charting patterns used in technical analysis -- is characterized by a fall in price, followed by a rebound, followed by another drop to a level roughly similar to the original drop, and finally another rebound. See More.
Double taxation occurs when a tax is imposed more than once on the same asset, income stream, or transaction. See More.
A double-dip recession occurs when the economy experiences a recession followed by a brief recovery and then another period of recession. See More.
The Dow Jones Industrial Average (DJIA), sometimes referred to as simply the Dow, is one of several well-known stock market indices. The DJIA was created by Charles Dow, founder of the Wall Street Journal, to measure the daily stock price moveme See More.
The Dow Jones Transportation Average (DJTA) is the most widely recognized gauge of the transportation sector. It is also the oldest index used today, even older than its more famous brother, the Dow Jones Industrial Average (DJIA). The Transportation See More.
The Dow Jones Utilities Average (DJUA) is the most widely cited utilities index in the United States and the most widely recognized gauge of the utilities sector. See More.
Dow Theory is an analysis that explores the relationship between the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA). When one of these averages climbs to an intermediate high, then the other is expected to follow See More.
A down payment is the initial payment a borrower puts toward a large purchase, and is usually a specified percentage of the total purchase price. Down payments are typically used for real estate, cars and other big-ticket items that are not usually p See More.
A downgrade is an announcement of an analyst lowering their opinion on the desirability of a company as an investment. It can apply to either debt or equity. See More.
Downside risk is the probability that an asset will fall in price. It is also the measure of the possible loss from that decline. See More.
Downsizing is a strategy used to reduce the size and scope of a business in order to improve its financial performance, usually by laying off employees or closing less-profitable divisions. See More.
Downstream refers to the benefits (or costs) that will ultimately result from decisions made today. See More.
A downtick occurs when a security sells at a price less than the preceding sale. A downtick is the opposite of an uptick. See More.
A dragonfly doji is the most uncommon candle of the four different types of doji candlesticks. As with any doji, the dragonfly depicts a situation in which supply and demand are in equilibrium, thus possibly signaling an important reversal. It is cha See More.
Also called a naked trust or a passive trust, with a dry trust, a person transfers assets into a trust in order to pass them on to heirs or beneficiaries. See More.
Dual listing (also known as interlisting or cross-listing) is the listing of any security on two or more different exchanges. See More.
Dual-class ownership is a type of stock structure in which a company issues different classes of stock, each with different privileges. See More.
A company has dual-class stock if it has more than one type of stock and the different classes have varying voting rights, dividend payments, or other characteristics. See More.
Due diligence is the careful, thorough evaluation of a potential investment, whether on a corporate or individual level. See More.
Dun & Bradstreet provides information about businesses through a global commercial database. See More.
A DUNS number (DUNS stands for Data Universal Numbering System) identifies a company. See More.
A duopoly is a form of oligopoly occurring when two companies (or countries) control all or most of the market for a product or service. See More.
DuPont analysis examines the return on equity (ROE) analyzing profit margin, total asset turnover, and financial leverage. It was created by the DuPont Corporation in the 1920s. See More.
The DuPont identity breaks down return on equity (ROE) into its components -- profit margin, total asset turnover, and financial leverage -- so that each one can be examined in depth. See More.
Durable goods are a category of consumer products that do not need to be purchased frequently because they are made to last for a long time (usually lasting for three years or more). They are also called consumer durables or durables. See More.
Durables are a category of consumer products that do not have to be purchased frequently because they are made to last a long time (typically more than three years). They are also called durable goods or consumer durables. See More.
Duration is a measure of a bond's sensitivity to interest rate changes. The higher the bond's duration, the greater its sensitivity to changes in interest rates (also known as volatility) and vice versa. See More.
Duress is pressure that one person or entity puts on another person to do something that he or she would normally not do. See More.
A Dutch auction is a method for pricing shares (often in an initial public offering) whereby the price of the shares offered is lowered until there are enough bids to sell all shares. All the shares are then sold at that price. See More.
In the tax and import/export world, a duty (or customs duty) is money collected under a tariff. See More.
In the mortgage business, a dwarf is a group of mortgage-backed securities that mature in fewer than 15 years. The Federal National Mortgage Association (FNMA or Fannie Mae) issues dwarves. See More.