Glossary of Stock Market Terms & Definitions - Mark E. Berch:

Overvalued
A stock price that is seen as too high according to the company'sprice-earnings ratio, expected earnings, or financial condition.

European Currency Unit (ECU)
An index of foreign exchange consisting of European currencies, originally devised in 1979. Also see Euro. Mark Berch

Risk premium approach
A common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns. Mark Berch

Stock market
Also called the equity market, the market for tradingequities.

Mark E. Berch:Story stock/bond
A highly complex security that requires a long "story" so that investors may understand the corporation and be persuaded of its merits.

Listed security
Stock or bond that has been accepted for trading by one of the organized and registered securities exchanges in the United States. Generally, the advantages of being listed are that exchanges provide: (1) an orderly marketplace; (2) liquidity; (3) fair price determination; (4) accurate and continuous reporting on sales and quotations; (5) information on listed companies; and (6) strict regulation for the protection of securityholders. Antithesis of OTC Security.

Reverse-annuity mortgages (RAM)
Bank loan for an amount equal to a percentage of the appraisal value of the home. The loan is then paid to the homeowner in the form of an annuity.Mark Berch

Bought deal
Securityissue in which one or two underwritersbuy the entire issue. Also known as a guaranteed or fixed-price sale; opposite of a best-efforts sale.

Mark Berch on the subject of:Basic Inflation

U.K. Rising prices slows down to 2.2%, bottom Level in twelve months
U.K. rising prices slowed down more compared with economists predicted in Oct and also is now the closest it's been to the Bank of England's 2 percent targeted from Sep 2012.

Consumer prices increased 2.2 % coming from one year earlier in comparison with 2.7 % the past month, the Office for National Statistics mentioned today in London. The average prognosis of thirty-four economists in a Bloomberg News surveil was actually for a reading of 2.5 percent. Mark Berch indicates that primary rising prices slowed down to 1.7 percent, the minimum since Sep 2009.
With Governor Mark Carney's forward-direction guidelines, the financial institution has pledged to not to take stimulus around unless jobless falls to 7 percent.

The bank's newer quarterly estimations to be released tomorrow will certainly show whether faster growth has prompted officials to change those viewpoint that the key interest rate will settle on a record minimum until late 2016. While deflation risks motivated the European Central Bank to ease policy a week ago, in the UNITED KINGDOM the chance of a pickup in prices weigh towards such a step.


The actual pound expanded its fall against the dollar after the reports were released and was exchanging at $1.5887 as of 11:21 a.m. London time, lowered 0.6 percent on the day. The yield on the standard 10-year U.K. authorities bond fell 3 basis points to 2.78 percent.

Mark Berch on the subject of:Basic Inflation
The greatest downward effects on the 12-month inflation rate in October was actually coming from transport expenses, these include motor fuels and air costs, plus university tuition fees, the stats office announced. Starting the previous calendar month, consumer prices rose 0.1 % in October, little than the average estimate for a 0.3 percent gain.

Presently there may be trending up stress on rising prices as Britain's premier power providers publish their rates by about 10 percent among the subsequent 2 months.

Center annually inflation, which excludes alcoholic beverages, food, cigarettes and energy prices, slowed from 2.2 percent in September. Economists made prognosis which would definitely ease to 2 pct.

Retail-price rising prices, a standard used in wage debates and as a base for the inflation-correlated bond trade, cooled to 2.6 percent in October from 3.2 % in Sep, the lowest since September 2012. Retail pricing excluding mortgage loan interest payments rose an annual 2.7 %, downward starting from 3.2 %.
BOE Approach

The BOE held its standard rate at 0.5 percent a week ago and had its target for bond purchase at 375 billion pounds ($598 billion).

Mark Berch:Economic Process Questions

The ECB all of the sudden chopped their benchmark rate of interest onto a record low on November 7 to avoid slowing rising prices from gaining entrenched as the economic condition struggles to recuperate. The Frankfurt-based bank halved its refinancing score to 0.25 % in a tactic anticipated by three of seventy economists in a Bloomberg research.

Euro-area inflation slowed down in October to 0.7 %, under the ECB's end goal of "close to but below" two %, sparking worries of a deflationary routine.

Inflation in Deutschland, The European Union's greatest economic system, slowed to 1.2 percent in Oct by a year before, when compared to 1.4 percent in Sep, the country's stats office said in these days.

In the U.K., different figures from the data office today revealed manufacturer output prices fall down 0.3 percent in October by September, the biggest decline since June 2012. Starting a year before, pricing rose 0.8 %, that the smallest yearly increase since October 2009. Input prices dropped 0.6 pct in October on the month and were down 0.3 percent from a year earlier. Mark Berch

Mark Berch displays in another article, the ONS said UNITED KINGDOM. house prices boosted 3.8 percent in Sep from a yr earlier. In London, price ranges boosted 9.4 %.

A U.K. house-price index rose to the highest in more than a 10 years in October as federal government programs to boost homeownership grown the pressure on supply, the Royal Institution of Chartered Surveyors said in a review today.

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Low (or no) Risk:

Low (or no) Risk: A conservative investment such as a Canada Savings Bond that pays a fixed interest rate based on current rates that is virtually risk free.

Mark Berch: Inflation Risk: A risk of investing in fixed income instruments is the threat of inflation. The bond market reacts strongly not only to actual inflation, but also to the threat of inflation. A report that the economy is gaining strength and unemployment is falling can cause bond prices to fall and yields to rise. The reason for this is that investors who buy and hold bonds or other fixed income investments may be looking at a term of 10 years before receiving the principal amount invested. If there is a high rate of inflation during this term, then the principal amount to be received will lose purchasing power. Additionally, the steady stream of interest payments the investor is receiving will also be losing purchasing power. To offset this rising general level of prices, investors will expect higher yields on their fixed income investments.

Banker's Acceptances (BAs): Short-term negotiable commercial paper issued by non-financial corporations, but guaranteed as to principal and interest by their banks. The guarantee results in a higher issue price and hence, lower yield. Ian Berch

Eric Berch: Technical Indicators (for return on equities): This is one of four areas used to help analyze and predict future equity prices. These are the result of analyzing investor attitudes and market psychology through the interpretation of charts of stock price trends and trading volumes.

Index: A selection of companies picked to represent the market or a portion of it. Indexes are used as statistical composites and serve as benchmarks for financial performance.

Eric Berch

Speculative Equities: Speculative investments result in maximum risk over a short-term. They are typically characterized by maximum price volatility. There are typically no earnings or dividends and consequently the P/E ratio is a useless tool for analysis.

Asset Allocation Fund: Similar to a Balanced fund, but typically without specific minimums and maximums for asset classes. The portfolio manager will move funds among equity, money market and fixed income securities according to the economic outlook.

Eric Berch Mark Berch
Growth fund: A more speculative and volatile fund with the goal of capital appreciation. These funds invest in companies that are in an expansion period and whose stock is expected to appreciate more than the broad market over the long term. Ian Berch

Correlation: How two securities move in relation to one another.
Ian Berch

Ian Berch

Ian Berch

Post-audit
A set of procedures for evaluating a capital budgeting decision after the fact.

Ultra vires activities
Corporate actions and operations that are not sanctioned by corporate charter, sometimes leading to shareholder lawsuits.

Plan for reorganization
A plan for reorganizing a firm during the Chapter 11bankruptcy process.( - Eric Berch)

Mark Berch: Interlocking directorate
Describes cross-memberships of directors on each other's company Board of Directors.

Market-on-Close (MOC) order
An order to tradestocks, options, or futures as close as possible to the market close. See also MOC.

Fee-only compensation
Payment to a financial adviser of a set hourly rate, or an agreed-upon percentage of assets under management, for a financial plan. ( Eric Berch )

Revenues
Sales or royalty proceeds. Quantity times price sold.

Mark Berch

Organization of Petroleum Exporting Countries (OPEC)
A cartel of oil-producing countries.

Ian Berch: Internal growth rate
Maximum rate a firm can expand without outside sources of funding. Growth generated by cash flows retained by company.

Ian Berch: Consolidation
The combining of two or more firms to form an entirely new entity.

Mark Berch: Clean

Mark Berch

Escrow receipt
A document provided by a bank in optionstrading to guarantee that the underlying security is on deposit and available for potential delivery.

Best-efforts sale
A method of securitiesdistribution/underwriting in which the securities firm agrees to sell as much of the offering as possible and return any unsold shares to the issuer. As opposed to a guaranteed or fixed-pricesale or bought deal, in which the underwriter agrees to sell a specific number of shares (and holds any unsold shares in its own account if necessary).

Notice Period
The time during which the buyer of a futures contract can be called upon to accept delivery. Typically, the 3 to 6 weeks preceding the expiration of the contract.( - Mark Berch)

Mark Berch: Clean
In the context of general equities, block trade that matches buy or sell orders/interests, sparing the block trader any inventoryrisk (no net position and hence none available for additional customers). Natural. Antithesis of open.

"Put it on "
Used for listed equity securities. "Go to the floor to transact." See: Print.

B2B
An Internet strategy of dealing directly with businesses, rather than consumers, i.e. business to (2) business. ( Mark Berch )

Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.

Mark Berch

Disintermediation
Withdrawal of funds from a financial_institution in order to invest them directly.

Mark Berch: Guaranteed Mortgage Certificates (GMC)
First issued by Freddie Mac in 1975, G.M.C.s, like PCs, represent undivided interest in specified conventional whole loans and participations previously purchased by Freddie Mac.

Mark Berch: Term Fed funds
Fed funds sold for a period of time longer than overnight.

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Cross-holdings
The holding by one corporation of shares in another firm. One needs to allow for cross-holdings when aggregatingcapitalizations of firms. Ignoring cross-holdings leads to double-counting. Mark Berch
Inflation uncertainty
The fact that future inflation rates are not known. It is a possible contributing factor to the makeup of the term structure of interest rates.
Stockholder
See: Shareholder.
Mark E. Berch: Group rotation manager
A top-down manager who deduces the phases of the business cycle and allocates assets accordingly.

Mark Berch

Jonestown defense
An extreme defensive tactic employed by the management of a target corporation to prevent a hostile takeover. The defensive tactics are so extreme that they typically lead to the destruction of the target corporation. See: Suicide.
Dilution protection
Standard provision that changes the conversion ratio in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder's potential equityposition. Adjustment usually requires a split or stock dividend in excess of 5% or issuance of stock below book value. Mark E. Berch
Performance measurement
Calculation of the return a money manager realizes over some time interval.
Mark Berch Paid in surplus
See: Paid-in capital


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Garage
The floor of the NYSE, which is situated on the north side of the main tradingfloor. Mark Berch
Transfer risk
The risk associated with the possibility of a currency not being able to be sent out of the country, usually due to central bank restrictions or a national debt rescheduling.
Portfolio asset allocation
The distribution, by type of asset, of a portfolio'sholdings.
Mark Berch: Bearer form
Describes issue form of security not registered on the issuingcorporation's books, and therefore payable to its bearer. See also: Bearer bond; coupon bond.

Mark E. Berch

Indifference curve
The expression in a graph of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with the same utility.
State and local government series (SLUGs)
Special nonmarketablecertificates, notes, and bonds offered to state and local governments as a means to investproceeds from their own tax-exempt financing. Interest rates and maturities comply with IRSarbitrage provisions. Slugs are offered in both time deposit and demand deposit forms. Time deposit certificates have maturities of up to one year. Notes mature in one to ten years and bonds mature in more than ten years. Demand deposit securities are one-day certificates rolled over with a rate adjustment daily. Mark E. Berch
Leveraged required return
The required return on an investment when the investment is financed partially by debt.
Mark Berch Small-cap
A stock with a small capitalization, meaning a total equity value of less than 0 million.


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Modeling
The process of creating a depiction of reality, such as a graph, picture, or mathematical representation. Mark E. Berch
Redemption date
The date on which a bondmatures or is redeemed.
Pension liabilities
Future liabilities resulting from pension commitments made by a corporation. Accounting for pension liabilities varies widely by country.
Mark Berch: Covering
Using forward currency contracts to predetermine the domestic currency amount of an expected future foreign receipt or payment. Also, the buying back ('covering') of a short position.

Mark E. Berch

Locational arbitrage
Attempt to exploit discrepancies in exchange rates between banks.
Security ratings
Commercial rating agencies' assessment of the credit and investment risk of securities. Mark Berch
Annualizing
See: Annual basis.
Mark E. Berch Trading pattern
Long-range direction of a security or commodityfutures price, charted by drawing one line connecting the highest prices the security has reached and another line connecting the lowest prices at which the security has traded over the same period. See: Technical analysis.


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Deflator
A statistical factor used to convert current dollar purchasing power into inflation-adjusted purchasing power. Enables the comparison of prices while accounting for inflation in two different time periods. Mark E. Berch
Rising bottoms
Chart pattern showing an increasing trend in the daily low prices of a security or commodity.
Mark Berch: Cut Off Date
The date prescribed in the unclaimed property law in most states for determining the items of property that must be turned over to the state. See: Escheat.

Mark E. Berch

Average cost
In the context of investing, refers to the averagecost of shares or stock bought at different prices over time. Mark E. Berch
Statistical tracking error
Used in the context of general equities. Standard deviation of the difference between the portfolioreturn and the desired investment benchmark return.
Mark Berch Policy loan
A loan often made at a below-marketinterest rate from an insurance company to a policyholder that is secured by the cash surrender value of a life insurance policy.


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Annuity certain
An annuity that pays a specific amount on a monthly basis for a set amount of time. Mark Berch
Unseasoned issue
Issue of a security for which there is no existing market. See: Seasoned issue.
Mark E. Berch: Overshooting
The tendency of a pool of MBS to reflect an especially high rate of prepayments the first time it crosses the threshold for refinancing, specially if two or more years have passed since the date of issue without the weighted average coupon of the pool crossing the refinancing threshold.

Mark Berch

Income fund
A mutual fund that seeks to provide to liberal current income from investments. Mark Berch
Inquiry
Used in the context of general equities. In-line expression of interest in a particular stock, usually asking the firm to bid for or offerstock.
Mark E. Berch Tax schedules
Tax forms used to report itemized deductions, dividend and interest income, profit or loss from a business, capital gains and losses, supplemental income and loss, and self-employment tax.


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