- Back-end loan fund
- A mutual fund that charges investors a fee to sell (redeem)
shares, often ranging from 4% to 6%. Some back-end load funds impose a full
commission if the shares are redeemed within a designated time period after
purchase, such as one year, reducing the commission the longer the investor holds
the shares. The formal name for the back-end load is the contingent deferred sales
charge, or CDSC.
- A market condition in which futures prices are lower in the distant
delivery months than in the nearest delivery month.
balance sheet Also called the statement of financial condition, a summary of the
assets, liabilities, and owners' equity.
- Balanced fund
- An investment company that invests in both stocks and bonds.
- Balloon maturity
- Any principal due at maturity for a bond with a sinking fund
- Bank discount basis
- A convention used for quoting bids and offers for Treasury bills
in terms of annualized yield based on a 360-day year.
- Bankers acceptance
- A security representing a bank's promise to repay a loan
created in a commercial transaction in case the debtor fails to perform. Commonly
used in international transactions.
- Barbell strategy
- A strategy in which the maturities of the securities included in the
portfolio are concentrated at two extremes.
- BARRA's performance analysis (PERFAN) factor model
- A method developed by
BARRA, a consulting firm in Berkeley, California, which is commonly used by
institutional investors applying performance attribution analysis to evaluate their money
- Base interest rate
- Related: Benchmark interest rate
- Base probability of loss
- The probability of not achieving a portfolio expected return.
- Regarding a futures contract, the difference between the cash price and the
futures price observed in the market.
- Basis risk
- The uncertainty about the basis at the time a hedge may be lifted.
Hedging substitutes basis risk for price risk.
- Basket trades
- Program trades.
- Before-tax profit margin
- The ratio of net income before taxes to net sales.
- One who believes prices will move lower. Related: Bull
- Bear Market
- Any market in which prices are in a declining trend.
- Bellwether issues
- Related: benchmark issues.
- The performance of a predetermined set of securities, for comparison
purposes. Such sets may be based on published indexes or may be customized to
suit an investment strategy.
- Benchmark interest rate
- Also called the base interest rate, the minimum interest rate
that investors will demand for investing in a non-Treasury security. The yield to
maturity offered on a comparable-maturity Treasury security that was most recently
- Benchmark issues
- Also called on-the-run or current coupon issues or bellwether
issues. In the secondary market, the most recently auctioned Treasury issues for
- The slope of the market model for the asset,which measures the degree to
which the historical returns on the asset change systematically with changes in the
market portfolio's return. Hence, beta is referred to as an index of that systematic risk
due to general market conditions that cannot be diversified away.
- Biased expectations theories
- Related: Pure expectations theory.
- A proposal to buy at a specified price. Related: Ask, Offer
- A rapid and sharp price decline.
- Black-Scholes option-pricing model
- A model for pricing call options based on
arbitrage arguments that uses the stock price, the exercise price, the risk-free interest
rate, the time to expiration, and the standard deviation of the stock return.
- Block trade
- A large trading order, defined on the New York Stock Exchange as an
order that consists of 10,000 shares of a given stock or that has a total market value
of $200,000 or more.
- An instrument in which the issuer (debtor/borrower) promises to repay to the
lender/investor the amount borrowed plus interest over some specified period of time.
- Bond-equivalent basis
- The method used for computing the bond-equivalent yield.
- Bond-equivalent yield
- The annualized yield to maturity computed by doubling the
- Bond indenture
- The contract that sets forth the promises of a corporate bond issuer
and the rights of investors.
- Bond indexing
- Designing a portfolio so that its performance will match the
performance of some bond index.
- A system that monitors and evaluates the performance of a fixed-income
portfolio as well as the individual securities held in the portfolio. BONDPAR
decomposes the return into those elements beyond the manager's control, such as the
interest rate environment and client imposed duration policy constraints, and those
that the management process contributes to, such as interest rate management,
sector/quality allocations, and individual bond selection.
- Book value
- The total owners' equity shown in the balance sheet.
- Book value per share
- The ratio of stockholders' equity to the average number of
common shares. Book value per share should not be thought of as an indicator of
economic worth, since it reflects accounting valuation (and not necessarily market
- A process of creating a theoretical spot rate curve, using one yield
projection as the basis for the yield of the next maturity.
- Bottom-up equity management style
- A management style that de-emphasizes the
significance of economic and market cycles and focuses instead on the analysis of
- Break-even time
- Related: Premium payback period
- An individual who is paid a commission for executing customer orders.
Either a Floor Broker who executes orders on the floor of the Exchange, or an
Upstairs Broker who handles retail customers and their orders.
- Broker loan rate
- Related: Call money rate
- A rapid and sharp price decline
- One who expects prices to rise.
- Bull market
- Any market in which prices are in an upward trend.
bull spread A spread strategy in which an investor buys an out-of-the-money put
option and fiances this purchase by selling an out-of-the money call option on the
- Bulldog market
- The foreign market in the United Kingdom.
- Bullet contract
- A guaranteed investment contract purchased with a single (one-shot)
premium. Related: Window contract
- Bullet strategy
- A strategy in which a portfolio is constructed so that the maturities of
its securities are highly concentrated at one point on the yield curve.
- Business risk
- The risk that the cash flow of an issuer will be impaired because of
adverse economic conditions, making it difficult for the issuer to meet its operating
- Busted convertible
- Related: Fixed-income equivalent
- Butterfly shift
- A non-parallel shift in the yield curve involving the humpedness of the
- Buy-and-hold strategy
- A passive investment strategy with no active buying and
selling of stocks once the portfolio is created until the end of the investment horizon.
buy hedge See long hedge.
- Buy in
- To cover, offset or close out a short position. Related: Evening up, Liquidation, Offset
- Buy limit order
- A conditional trading order that indicates that a security may be
purchased only at the designated price or lower. Related: Sell limit order
- Buy-side analyst
- A financial analyst employed by a non-brokerage firm, typically one
of the larger money management firms that purchase securities on their own accounts.
- Buy on close
- To buy at the end of the trading session at a price within the closing
- Buy on margin
- A transaction in which an investor borrows to buy additional shares
using the shares themselves as collateral.
- Buy on opening
- To buy at the beginning of a trading session at a price within the
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