Day order
An order that is placed for execution, if possible, during only one trading session. If the order cannot hp executed that day, it is automatically canceled.
Day trading
Refers to establishing and liquidating the same position or positions within one day's trading.
An entity that stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price).
Dealer options
Over-the-counter options, such as those offered by government and mortgage backed securities dealers.
Debenture bond
An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond, mortgage bond, and collateral trust bonds.
Debt instrument
An asset requiring fixed dollar payments, such as a government or corporate bond.
Debt market
The market for trading debt instruments.
Dedicating a portfolio
Related: Cash flow matching
Default risk
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an issuer of a bond may be unable to make timely principal and interest payments.
Deferred futures
The most distant months of a futures contract. Related: Nearby deferred-interest bond A bond that sells at a discount and does not pay interest for an initial period, typically from three to seven years. Compare step-up bond and payment-in-kind bond.
Defined benefit plan
A pension plan in which the sponsor agrees to make specified dollar payments to qualifying employees. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan
Defined contribution plan
A pension plan in which the sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan
The tender and receipt of an actual commodity or financial instrument in settlement of a futures contract.
Delivery notice
The written notice given by the seller of his intention to make delivery against an open, short futures position on a particular date. Related: Notice day
Delivery options
The options available to the seller of an interest rate futures contract, including the quality option, the timing option, and the wild card option. Delivery options make the buyer uncertain of which Treasury bond will be delivered or when it will be delivered.
Delivery points
Those points designated by futures exchanges at which the financial instrument or commodity covered by a futures contract may be delivered in fulfillment of such contract.
Delivery price
The price fixed by the Clearing house at which deliveries on futures are in invoiced; also the price at which the futures contract is settled when deliveries are made.
Also called the hedge ratio, the ratio of the change in price of a call option to the change in price of the underlying stock.
Demand deposits
Checking accounts that pay no interest and can be withdrawn upon demand. Related: Negotiable order of withdrawal accounts
Derivative instruments
Contracts such as options and futures whose price is derived from the price of the underlying financial asset.
Derivative markets
Markets for derivative instruments.
Deterministic models
Liability-matching models that assume that the liability payments and the asset cash flows are known with certainty. Related: Compare stochastic models
Differential disclosure
The practice of reporting conflicting or markedly different information in official corporate statements including annual and quarterly reports and the 10-Ks and 10-Qs.
Diffusion process
A conception of the way a stock's price changes that assumes that the price takes on all intermediate values. dirty price. Related: Full price
Disclaimer of opinion
An auditor's statement disclaiming any opinion regarding the company's financial condition.
Referring to the selling price of a bond, a price below its par value. Related: Premium
Discount rate
The interest rate that the ]Federal Reserve charges a bank to borrow funds when a bank is temporarily short of funds. Collateral is necessary to borrow, and such borrowing is quite limited because the Fed views it as a privilege to be used to meet short-term liquidity needs, and not a device to increase earnings.
Discretionary account
Accounts over which an individual or organization, other than the person in whose name the account is carried, exercises trading authority or control.
Diversifiable risk
Related: Unsystematic risk
Dividend discount model (DDM)
A model for valuing the common-stock of a company, based on the present value of the expected cash flows.
Dividend rate
The fixed or floating rate paid on preferred stock based on par value.
Dividend yield
The cash yield of a stock or stock index, used in determining the net financing cost for a stock index future contract.
Dollar duration
The product of modified duration and the initial price.
Dollar return
The return realized on a portfolio for any evaluation period, including (1) the change in market value of the portfolio and (2) any distributions made from the portfolio during that period.
Dollar safety margin
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization strategy.
Dollar value of an 01
Related: Price value of a basis point
Dollar-weighted rate of return
Also called the internal rate of return, the interest rate that will make the present value of the cash flows from all the subperiods in the evaluation period plus the terminal market value of the portfolio equal to the initial market value of the portfolio.
Domestic market
Part of a nation's internal market representing the mechanisms for issuing and trading securities of entities domiciled within that nation. Compare external market and foreign market.
Dual-currency issues
Eurobonds that pay coupon interest in one currency but pay the principal in a different currency.
A common gauge of the price sensitivity of an asset or portfolio to a change in interest rates.
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in response to -changing market conditions, as in a portfolio insurance strategy, for example.
Dynamic hedging
A strategy that involves rebalancing hedge positions as market conditions change; a strategy that seeks to insure the value of a portfolio using a synthetic put option.

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