|
Madrid Stock Exchange
The largest most international of Spain's four stock exchanges. Trading on the continuous market owned by the four exchanges is from 10 A.M. to 5 P.M. with pre-opening trading from 10 A.M. to 11 A.M. Trading on the exchanges is from 10 A.M. to 12:15 P.M. Monday through Friday and is handled through an electronic trading system based on the CATS system developed by the Toronto Stock Exchange. Settlement is five business days after the trade date.
Maintenance Performance Bond
A sum, usually smaller than-but part of-the initial performance bond, which must be maintained on deposit in the customer's account at all times. If a customer's equity in any futures position drops to, or under, the maintenance performance bond level, a "performance bond call" is issued for the amount of money required to restore the customer's equity in the account to the initial margin level.
Major Auction
The overall trend of the market such as might be observed on a bar chart.
Major Trend
Underlying price trend prevailing in a market despite temporary declines or rallies.
Make a Market
To stand ready to buy or sell a particular security as a dealer for its own account. A market maker accepts the risk of holding the position in the security. (See also: Market Maker)
Managed Account
This is similar to a discretionary account where a client has given specific written authorization to a partner, director or qualified portfolio manager of an investment dealer to select securities and execute trades, but on a continuing basis and for a fee. Managed accounts can be solicited whereas discretionary accounts are opened as a matter of convenience to clients who are ill or out of the country.
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 is included in Institutional Holdings-making the combined total of these percentages more than 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.
Management Expense Ratio (MER)
This figure comprises the management fee plus all other expenses (excluding government taxes) that are charged directly to the mutual fund (as set out in each fund's prospectus), stated as a percentage of the Net Asset Value of the Fund.
Mandelbrot Set
Complex but structured pattern produced by an equation in which the result is fed back into the equation repeatedly; self-similarity.
Mapping
A function, or relation between values.
Margin
A deposit made by a trader with a clearinghouse to ensure that he/she will fulfill any financial obligations resulting from his or her trades. Margin is the amount of money a company will lend you against the security of the investment you buy. The equity contributed by a customer as a percentage of the current market value of the securities held in a margin account is thus the margin amount. The same attributes apply to leverage. This amount will change as the price of the investment changes.
Margin Account
A customer account in which a brokerage firm lends the customer part of the purchase price of securities.
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 and, 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.
Marginal Significance Level of Test-Statistics
The probability distribution used to test the hypothesis that the beta coefficient does not equal zero. A T-statistic of approximately 1.65 reflects a 0.90 or 90% confidence and the marginal significance is 1-0.90 = 0.1 or 10%.
Margin Call
The Federal Reserve Board's demand that a customer deposit a specified amount of money or securities when a purchase is made in a margin account; the amount is expressed as a percentage of the market value of the securities at the time of purchase. The deposit must be made within one payment period.
Margin Ratio
A measure of a corporation's relative profitability. It is calculated by dividing the operating profit by the net sales.
Margin Requirements
When purchasing securities one may borrow (usually from a broker) to finance part of the purchase. The down payment required, or the proportion of funds the investor has to put up, is called the margin requirement. It is normally expressed as a percentage.
Margin Requirements (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 intra-day price changes.
Marginal Cost of Capital
Refers to the weighted cost of the additional capital raised in a given period. Weighted cost of capital, also known as composite cost of capital, is the weighted average of costs applicable to the issues of debt and classes of equity that compose the corporation's capital structure.
Mark-to-Market
The daily adjustment of margin accounts to reflect profits and losses.
Markdown
The difference between the highest current bid price among dealers and the lower price that a dealer pays to a customer.
Marked to Market
At the end of each business day the open positions carried in an account held at a brokerage firm are credited or debited funds based on the settlement price of the open positions that day.
Market
1. The place where buyers and sellers meet to exchange goods and services.
2. The demand, actual or potential, for a product or service.
Market Arbitrage
The simultaneous purchase and sale of the same security in different markets to take advantage of a price disparity between the two markets.
Market Capitalization
The total dollar value of all outstanding shares. Computed as shares multiplied by the current market price. It is a measure of corporate size.
Market Capitalization Rate
The rate of discount that investors apply to future cash flows when establishing the current market price for a security. It also represents the effective yield provided by the security, or the discounted rate that, if applied to anticipated cash flows, equates the present value of such cash flows with the current market price of the security.
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). The dates of the last market cycle are: 12/04/87 to 10/11/90 (low to low).
Market-If-Touched (M.I.T. )
A price order that automatically becomes a market order if the price is reached. .
Market Maker
A dealer willing to accept the risk of holding a particular security in its own account to facilitate trading in that security. On the Over-The-Counter markets, there are individuals and companies that maintain bid and offerings for stocks. They must be prepared to buy or sell stocks from investors at any time.
Market on Close
An order specification that requires the broker to get the best price available on the close of trading, usually during the last five minutes of trading.
Market Order
Buying or selling securities at the price given at the time the order reached the market. This can be different than the price on the broker's screen depending on how fast the market is moving. A market order is to be executed immediately at the best available price, and is the only order that guarantees execution.
Market Out Clause
A clause in an underwriting agreement allowing the underwriter to cancel the agreement without penalty for certain specified reasons, such as the issue becoming unsellable due to an unexpected change in securities markets, or in the affairs of the company whose securities are being underwritten.
Market Portfolio
Investment portfolio encompassing all securities traded in financial markets in appropriate proportions. This is the most diversified portfolio available to investors, and has a beta coefficient of 1.
Market Price
The most recent price at which a security transaction took place.
Market Risk
The potential for an investor to experience losses owing to day-to-day fluctuations in the prices at which securities can be bought or sold.
Market Sentiment
Crowd psychology, typically a measurement of bullish or bearish attitudes among investors and traders.
Market Timing
Using analytical tools to devise entry and exit methods.
Market Value
The price at which investors buy or sell a share of common stock or a bond at a given time. Market value is determined by the interaction between buyers and sellers.
Market Weighted
When a portfolio sector or stock-weighting matches the weighting held by a market index, we say that the Fund is "market weighted" in that sector or stock.
Markov Chain
A set of processes where the probabilities for the next state are dependent on the present state.
Martingale
From roulette; a tactical system that requires doubling your bet after each loss, so that winning once you recoup the amount originally bet.
Matching Orders
Simultaneously entering identical (or nearly identical) buy and sell orders for a security to create the appearance of active trading in that security. This violates the anti-fraud provisions of the Securities Exchange Act of 1934.
Material Change
Any change in business operations or capital of the issuer that would be expected to have a significant effect on the market price or value of the securities.
Materiality
Information or an event that is significant enough to have a large impact on a corporation's stock prices is said to have materiality, or be material. Material information is information a reasonable investor needs to make an informed decision about the investment, such as an earnings report not yet released, plans to takeover another company, or that the company has itself become a target company.
Maturity Date
The date on which a bond's principal is repaid to the investor and interest payments cease. Maturity is the number of years until the principal amount of a bond is due and payable by the issuer to its bondholders. Bonds are issued with a variety of short- (a few days to one year), intermediate- (two to ten year), and long-term (ten to forty year) maturities. At the end of the term, the debt (bond) is expected to be repaid in full.
Maturity Factoring
An arrangement whereby the factor performs the entire credit and collection function and remits to the seller for the receivables sold each month on the average due date of the factored receivables. The factor's commission ranges from 0.75% to 2%, depending upon the bad debt risk and handling costs.
Maxima
The highest or maximum value.
Maximax
Optimistic decision-making that identifies the decision alternative with the best possible outcomes.
Maximin
Pessimistic decision-making that identifies the decision alternative with the worst possible outcomes.
Maximum Adverse Excursion
A historical measurement of the closed losing trades versus the closed profitable trades of a trading system. Used to determine the stop-loss level that can be used that will allow winning trades to remain; the extreme unfavorable price level reached for both profitable and unprofitable trades.
Maximum Entropy Method (MEM)
More flexible than Fourier analysis, the maximum entropy method is both a tool for spectrum analysis and a method of adaptive filtering and trend forecasting. As a tool for spectrum analysis, the MEM system can provide high resolution spectra for identifying the dominant data cycles within relatively short time series, such as open, high, low, close, volume and open interest, or study results, such as RSI, TRIX, and so on. (Fourier analysis, in contrast, gives best results when applied to time series of 6 months or longer.) As a forecasting tool, MEM is used in conjunction with moving averages to forecast lower and upper trend channels in the data.
Maximum Price Fluctuation
The maximum amount the contract price can change, up or down, during one trading session, as stipulated by Exchange rules.
McClellan Oscillator
This index is based on New York Stock Exchange net advances over declines. It provides a measure of such conditions as overbought/oversold and market direction on a short- to intermediate-term basis. The McClellan Oscillator measures a bear market selling climax when it registers a very negative reading in the vicinity of -150. A sharp buying pulse in the market would be indicated by a very positive reading, well above 100.
Mean
When the sum of the values is divided by the number of observations.
Mean Deviation
The average absolute value of the difference between the population of numbers and the mean.
Mean Return
The average monthly total return of a stock. The total return is price change added to dividends and indicates the probability distribution of possible returns. Also known as the Expected Return.
Mean Return (Securities)
A term used in security analysis to indicate the expected value (or statistical mean) of all the likely returns of investments comprising an investment portfolio. Also known as the Expected Return. The purpose of the analysis of investment portfolios is to quantify the relationship between risk and return. The underlying assumption is that investors have different risk-value preferences and that rational investors will always seek the maximum return rate for every level of acceptable risk.
Mean Reverting
The term adopted in academic literature for one possible state of a price series: that state when price is oscillating randomly about some (unknown) mean value-that is, it is not trending.
Median Line
The line that is drawn from an extreme that bisects a line drawn through the next corrective phase after the pivot point.
Medium-term Bond
A bond or debenture that matures in more than three years, but less than 10.
Member
1. At the New York Stock Exchange: one of the 1,366 individuals owning a seat on the Exchange.
2. Of the National Association of Securities Dealers: any broker or dealer admitted to membership in the Association.
Member Firm
A broker-dealer or stock brokerage company in which at least one of the principal officers is a member of a recognized stock exchange, a recognized self-governing body (i.e., the IDA), or a clearing corporation.
Merger
Combining two or more companies by offering the stockholders of one company securities in another company in exchange for the surrender of their stock.
Minima
The lowest or minimum value.
Minimum Price Fluctuation
Smallest increment of price movement possible in trading a given contract, often referred to as a "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 lowered for buyers participating in an automatic purchase plan
Minor Auction
The latest trend of the market (i.e., what it is doing now).
Minority Interest
This appears on consolidated financial statements where the parent company's figures are combined with those of its subsidiaries. Even if the parent company owns less than 100% of a subsidiary's stock, all of the subsidiary's assets and liabilities are combined in the consolidated financial statements. To compensate, the part not owned by the parent company is minority interest and is shown as a liability on the balance sheet and deducted in the earnings statement.
Mode
The most frequently occurring value. Model equation.
Momentum
A time series representing change of today's price from some fixed number of days back in history.
Momentum Filter
A measure of change, derivative or slope of the underlying trend in a time series. Implemented by first applying a low pass filter to the data and then applying a differencing operation to the results.
Momentum Indicator
A market indicator utilizing price and volume statistics for predicting the strength or weakness of a current market and any overbought or oversold conditions, and to note turning points within the market.
Momentum Trading
Investing with (or against) the momentum of the market in hopes of profiting from it.
Money Laundering
Popular term used to describe the process whereby criminals conceal illicitly acquired funds by converting them into seemingly legitimate income. While the term refers to the proceeds of organized crime generally, it is now most often associated with financial activities of drug dealers who seek to launder the large amounts of cash generated from the sale of narcotics.
Money Market
The securities market that deals in short-term debt. Money-market instruments are forms of debt that mature in less than one year and are very liquid. Treasury bills make up the bulk of the money-market instruments.
Money Market Fund
A mutual fund that invests only in short-term securities, such as bankers' acceptances, commercial paper, repurchase agreements and government bills. The net asset value per share is maintained at $1. Such funds are not federally insured, although the portfolio may consist of guaranteed securities and/or the fund may have private insurance protection. The fund's objective is to earn interest while maintaining a stable net asset value of $1 per share. Generally sold with no load, the fund may also offer draft-writing privileges and low opening investments.
Money Market Instruments
Debt instruments such as Treasury bills or corporate paper with a maturity of less than one year that are easily converted to cash.
Money Market Securities
Short-term securities that pay some income and focus on price stability. Considered very conservative investments because they offer little potential for growth.
Money Supply
The total stock of bills, coins, loans, credit and other liquid instruments in the economy. It is divided into three categories: M1, M2 and M3, according to the type of account in which the instrument is kept.
Monowave
In Elliott Wave Theory, a single wave within a range of waves.
Morgan Stanley Capital International Index (MSCI)
Provides a list of indices measuring international performance (such as the World Index, Far East) and national performance (including Australia, Canada and US) based on the share prices of more than 1,600 companies. It also provides performance measurement for emerging markets and international industry groups.
Moving Averages
The moving average is probably the best-known, and most versatile, indicator in the analyst's tool chest. It can be used with the price of your choice (highs, closes or whatever) and can also be applied to other indicators, helping to smooth out volatility. A mathematical procedure to smooth or eliminate the fluctuations in data and to assist in determining when to buy and sell. Moving averages emphasize the direction of a trend, confirm trend reversals and smooth out price and volume fluctuations or "noise" that can confuse interpretation of the market; the sum of a value plus a selected number of previous values divided by the total number of values. As the name implies, the Moving Average is the average of a given amount of data. For example, a 14-day average of closing prices is calculated by adding the last 14 closes and dividing that number by 14. The result is noted on a chart. The next day the same calculations are performed with the new result being connected (using a solid or dotted line) to yesterdays, and so forth.
Moving Average Chart
A tool used by technical analysts to track the price movements of a commodity. It plots average daily settlement prices over a defined period of time (for example, over three days for a three-day moving average).
Moving Average Convergence/Divergence (MACD)
The MACD is used to determine overbought or oversold conditions in the market. The crossing of two exponentially smoothed moving averages that are plotted above and below a zero line. The crossover, movement through the zero line, and divergences generate buy and sell signals. Written for stocks and stock indices, MACD can be used for commodities as well. The MACD line is the difference between the long and short exponential moving averages of the chosen item. The signal line is an exponential moving average of the MACD line. Signals are generated by the relationship of the two lines.
Moving Average Crossovers
The point where the various moving average lines intersect each other or the price line on a moving average price bar chart. Technicians use crossovers to signal price-based buy and sell opportunities.
Moving Average Model
A time series equation representing a linear combination of present and past random shocks (forecast errors). A moving-average process of order Q, MA(q), may be written.
Moving Window
Snapshot of a portion of a time series at an instant in time. The window is moved along the time series at a constant rate.
Multicolinearity
Two variables that have a correlation of greater than 0.70 or less than -0.70 in a regression model. The final result is the two variables explaining the same portion of variation where either variable would be sufficient.
Multiple Linear Regression
More than one independent variable is used to account for the variability in one dependent variable.
Municipal Bond
A debt security issued by a state, a municipality or other subdivision (such as a school, park, sanitary or other local taxing district) to finance its capital expenditures. Such expenditures might include the construction of highways, public works or school buildings.
Municipal Bond Fund
A mutual fund that invests in municipal bonds and operates either as a unit investment trust or as an open-end fund. The fund's objective is to maximize federally tax-exempt income. See also: mutual fund.
Mutual Fund
An open-end investment company that pools investors' money to invest in a variety of stocks, bonds, or other securities. A mutual fund issues and redeems shares to meet demand, and the redemption value per share is the net asset value per share, less in some cases a redemption fee which represents a rear-end load. The shares are redeemable on any business day at the net asset value. Each mutual fund's portfolio is invested to match the objective stated in the prospectus, which guides the fund's professional manager in picking securities for the fund to buy. A closed end fund, often incorrectly called a mutual fund, is instead an investment trust. Both are investment companies regulated by the Investment Company Act of 1940.
Mutual Fund Prospectus
A legal document which describes the investment objective of the fund, the manner in which the fund is administered and operated, the fees and other pertinent information. The prospectus should be read thoroughly before making an investment decision.
|
