Campbell R. Harvey's Hypertextual Finance Glossary

Copyright © 2002. All Worldwide Rights Reserved. Do not reproduce without explicit permission.

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Fifth letter of a Nasdaq stock symbol specifying that it is in bankruptcy proceedings.
The two-character ISO 3166 country code for QATAR.
The ISO 4217 currency code for the Qatar Rial.
Q ratio or Tobin's Q ratio
Market value of a firm's assets divided by replacement value of the firm's assets. Named after James Tobin of Yale University.
Quadratic programming
Variant of linear programming in which the objective function is quadratic rather than linear. In portfolio selection, we often minimize the variance of the portfolio (which is a quadratic function) subject to constraints on the mean return of the portfolio.
Qualification period
A period of time during the first few months or weeks of a new policy when an insurance company will not reimburse a policyholder for a claim in order to allow the insurance company time to find any fraudulent information in the application.
Qualified Domestic Relations Order (QDRO)
A judgment, decree, or order that gives a pension plan participant access to retirement assets that must be used to pay an ex-spouse or dependent children.
Qualified endorsement
A signature on the back of a negotiable instrument transferring the amount to some other party but that includes wording that limits the endorser's liability.
Qualified opinion
An auditor's opinion expressing certain limitations of an audit.
Qualified plan or trust
A tax-deferred plan allowing employer and employee contributions that build up savings, which are paid out at retirement or on termination of employment. Tax is paid only when amounts are drawn from the trust.
Qualified retirement plan
A retirement plan established by employers for their employees that meets the requirements of Internal Revenue Code Section 401(a) or 403(a) and is eligible for special tax considerations. The plan may provide for employer contributions, as in a pension or profit-sharing plan, as well as employee contributions. Employers can deduct plan contributions made on behalf of eligible employees on the business's tax return as business expenses. Plan earnings are not taxed to the employee until withdrawn.
Qualified Terminable Interest Property Trust (Q-TIP)
A trust that allows a surviving spouse to receive income generated from the trust, while the actual distribution of the trust's assets is made to other beneficiaries such as the grantor's children.
Qualified total distribution
A payment representing an employee's interest in a qualified retirement plan. The payment must be prompted by retirement (or other separation from service), death, disability, or attainment of age 59-1/2. Payment can be in installments as long as the complete distribution is made within a single tax year.
Qualifying annuity
An annuity allowable as investment for a qualified plan or trust.
Qualifying share
Shares of common stock that a person must hold in order to qualify as a director of the issuing corporation.
Qualifying stock option
A benefit granted by a corporation that allows employees to purchase shares at a discount price.
Qualitative analysis
An analysis of the qualities of a company that cannot be measured concretely, such as management quality or employee morale.
Qualitative research
Traditional analysis of firm-specific prospects for future earnings. It may be based on data collected by the analysts, there is no formal quantitative framework used to generate projections.
Quality of earnings
Increased earnings due to increased sales and cost controls, as compared to artificial profits created by inflation of inventory or other asset prices.
Quality option
Gives the seller choice of deliverables in Treasury bond and Treasury note futures contracts. Also called the swap option. Related: Cheapest to deliver issue.
Quantitative analysis
An assessment of specific measurable securities or investment factors, such as cost of capital, value of assets; and projections of sales, costs, earnings, and profits. Combined with more subjective or qualitative considerations (such as management effectiveness), quantitative analysis can enhance investment decisions and portfolios.
Quantity risk
Occurs when the quantity of an asset to be hedged is uncertain.
Quality spread
Difference between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating. For instance, the difference between yields on Treasuries and those on single A-rated industrial bonds. Also called credit spread.
A person with numerical and computer skills who carries out quantitative analyses of companies.
To convert an asset or liability into a currency other than the regular trading currency.
Quantitative analysis
An analysis of the mathematically measurable figures of a company, such as the value of assets or projected sales.
Quantitative research
Use of advanced econometric and mathematical valuation models to identify the firms with the best possible prospectives. Antithesis of qualitative research.
Quanto swap
See: Differential swap
Currency options with a guaranteed exchange rate that enable buyers who like an asset, German bonds for example, but not the asset's pricing currency, to arrange payment in a different currency for a fee.
Quarter stock
Stock with a par value of $25 per share.
Occurring every three months.
Quarterly financing
February 15, May 15, August 15 and November 15, or next working day offerings of several "coupon" security issues. Quarterly issues currently consist of a 3-year note, a 10-year note, and a 30-year bond. The Treasury sometimes offers additional amounts of outstanding long-term notes or bonds, rather than selling new security issues. See: Reopening.
Quasi-public corporation
A corporation that is operated privately, but is supported by the government in its operations and that often traded publicly.
A landing place or pier, usually of solid construction, where vessels berth to load or unload cargo.
Quick assets
Current assets minus inventories.
Quick ratio
Indicator of a company's financial strength (or weakness). Calculated by taking current assets less inventories, divided by current liabilities. This ratio provides information regarding the firm's liquidity and ability to meet its obligations. Also called the Acid test ratio.
Quid pro quo
An arrangement allowing a firm to use research from another firm at no cost in exchange for executing all of its trades with the firm that provides the research.
Quiet period
Time period an issuer is "in registration" with the SEC and may not promote its forthcoming issue.
The minimum number of people who must be present or must provide a proxy to vote at a meeting in order to make a valid decision.
See Import Quota
Highest bid and lowest offer (asked) price currently available on a security or a commodity.
Quotation board
The electronic board at a brokerage firm displaying prices other financial data.
Quote rule
Rule requiring market makers to publish quotations for any listed security when a quotation represents more than 1% of the aggregate trading volume for that security.
Quoted price
The price at which the last trade of a particular security or commodity took place.

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Copyright © 2002, Campbell R. Harvey. All Worldwide Rights Reserved. Do not reproduce without explicit permission.

[Version October 15, 2002.]

Want to learn more? Join a Duke University Webcast of a real MBA course.

Order the popular hard copy version coauthored with the 2002 Pulitzer Prize winner for financial writing, Gretchen Morgenson of the New York Times.

Order via Amazon
Order via Barnes and Noble