- Macaulay duration
- The weighted-average term to maturity of the cash flows from the
bond, where the weights are the present value of the cash flow divided by the price.
- 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
- Maintenance margin requirement
- A sum, usually smaller than - but part of the
original margin, which must be maintained on deposit at all times. If a customer's
equity in any futures position drops to, or under, 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
- Management fee
- An investment advisory fee charged by the financial advisor to a
fund based on the fund's average assets, but sometimes determined on a sliding scale
that declines as the dollar amount of the fund increases.
- Also called security deposit. An amount of funds that must be deposited
with the broker for each contract as a good faith deposit on the contract. Related: Security
- Margin call
- A demand for additional funds because of adverse price
- Maintenance margin requirement, Security deposit maintenace
- The daily adjustment of an account to reflect profits and losses.
- 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. Related: Market order
- 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 impact costs
- Also called price impact costs, the result of a bid/ask spread
and a dealer's price concession.
- Market model
- This relationship is sometimes called the single-index 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 ( i). In
addition, the return will also depend on conditions that are unique to the firm.
Graphically, the market model can be depicted as a line fitted to a plot of asset returns
against returns on the market portfolio.
- Market order
- An order for immediate execution given to a broker to buy or sell at the
best obtainable price.
- 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
- Market risk
- Related: Systematic risk
- Market sectors
- The classifications of bonds by issuer characteristics, such as state
government, corporate, or utility.
- Market segmentation 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 timer
- A money manager who assumes he or she can forecast when the
stock market will go up and down.
- Market timing costs
- Costs that arise from price movement of the stock during the
time of the transaction which is attributed to other activity in the stock.
- 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.
- Markowitz diversification
- A strategy that seeks to combine assets a portfolio 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,
graphically referred to as the Markowitz efficient frontier.
- Matador market
- The foreign market in Spain.
- 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
- 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
- Maturity date
- 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 phase
- A phase of company development in which earnings continue to
grow at the rate of the general economy. Related: Three-phase DDM
- Maturity spread
- The spread between any two maturity sectors of the bond market.
- Maturity value
- Related: Par value
- Maximum price fluctuation
- The maximum amount the contract price can change, up
or down, during one trading session, as fixed by exchange rules in the contract
specification. Related: Lmit price
- Mean-variance efficient portfolio
- Related: Markowitz efficient portfolio
- 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
the following maturity bands: 9 months to 1 year, more than 1 year to 18 months,
more than 18 months to 2 years, etc., up to 30 years.
- Minimum price fluctuation
- Smallest increment of price movement possible in trading
a given contract. Also called point or tick. Related: Point, Tick
minimum variance zero-beta portfolio The zero-beta portfolio with the least risk.
- 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
- 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
- The market for trading short-term debt instruments (those that mature
in less than one year). Related: Capital market
- Money market demand account
- An account that pays interest based on short-term
- A loan secured by the collateral of some specified real estate property
which obliges the borrower to make a predetermined series of payments.
- Mortgage-backed securities
- Securities backed by a pool of mortgage loans.
- Mortgage bond
- A bond in which the issuer has granted the bondholders a lien
against the pledged assets.
- Collateral trust bonds
- Mortgage pass-through security
- Also called a passthrough, a security created when
one or more mortgage holders form a collection (pool) of mortgages and sell shares or
participation certificates in the pool.
- Mortgage rate
- The interest rate on a mortgage loan.
- The lender of a loan secured by property.
- The borrower of a loan secured by property.
- Most distant futures contract
- When several futures contracts are considered, the
contract settling last. Related: Nearby futures contract
- Multifactor CAPM
- A version of the capital asset pricing model derived by Merton
that includes extra-market sources of risk referred to as factor .
- Multiperiod immunization
- A portfolio strategy in which a portfolio is created that will
be capable of satisfying more than one predetermined future liability regardless if
interest rates change.
- Multiple regression
- The estimated relationship be-tween a dependent variable and
more than one explanatory variable.
- Multirule system
- A technical trading strategy that combines mechanical rules, such
as the CRISMA (cumulative volume, relative strength, moving average) Trading
System of Pruitt and White.
- Mutual fund
- Related: Open-end fund
- Mutual offset
- A system, such as the arrangement between the CME and SIMEX,
which allows trading positions established on one exchange to be offset or transferred
on another exchange.
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