Investments Dictionary
Main Content
# -
A -
B -
C -
D -
E -
F -
G -
H -
I -
J -
K -
L -
M -
N -
O -
P -
Q -
R -
S -
T -
U -
V -
W
- X -
Y -
Z
- Face Value
- The maturity value of a bond.
- Factor Beta
- Sensitivity of security returns to changes in
a systematic factor. Alternatively, factor loading; factor
sensitivity.
- Factor Loading
- See factor beta.
- Factor Model
- A way of decomposing the factors that
influence a security's rate of return into common and firmspecific
influences.
- Factor Portfolio
- A well-diversified portfolio constructed to
have a beta of 1.0 on one factor and a beta of 0 on any other
factor
- Factor Sensitivity
- See factor beta.
- Fair Game
- An investment prospect that has a zero risk
premium.
- Fair Value Accounting
- Use of current values rather than
historic cost in historic firm's financial statements.
- Federal Funds
- Funds in a bank's reserve account.
- Fiduciary
- Of, relating to, or involving a confidence or trust as (1) held or founded in trust or confidence, (2) holding in trust, (3) depending on public confidence for value or currency.
- FIFO
- The first‐in first‐out accounting method of inventory
valuation.
- Financial Assets
- Financial assets such as stocks and bonds
are claims to the income generated by real assets or claims
on income from the government.
- Financial Engineering
- Creating and designing securities
with custom‐tailored characteristics.
- Financial Intermediary
- An institution such as a bank,
mutual fund, investment company, or insurance company
that serves to connect the household and business
sectors so households can invest and businesses can finance
production.
- Firm-specific Risk
- See diversifiable risk
- First-pass Regression
- A time series regression to estimate
the betas of securities or portfolios.
- Fiscal Policy
- The use of government spending and taxing
for the specific purpose of stabilizing the economy.
- Fixed Annuities
- Annuity contracts in which the insurance
company pays a fixed dollar amount of money per period.
- Fixed-charged Coverage Ratio
- Ratio of earnings to all fixed
cash obligations, including lease payments and sinking fund
payments.
fixed‐income
- Fixed-income Security
- A security such as a bond that pays a
specified cash flow over a specific period.
- Flight to Quality
- Describes the tendency of investors to
require larger default premiums on investments under
uncertain economic conditions.
- Floating-rate Bond
- A bond whose interest rate is reset
periodically according to a specified market rate.
- Forced Conversion
- Use of a firm's call option on a callable convertible bond when the firm knows that bondholders will
exercise their option to convert.
- Forecasting Records
- The historical record of the forecasting
errors of a security analyst.
- Forecasting Records
- The historical record of the forecasting
errors of a security analyst.
- Foreign Exchange Market
- An informal network of banks
and brokers that allows customers to enter forward
contracts to purchase or sell currencies in the future at a rate
of exchange agreed upon now.
- Foreign Exchange Swap
- An agreement to exchange
stipulated amounts of one currency for another at one or
more future dates.
- Forward Contract
- An agreement calling for future delivery of
an asset at an agreed‐upon price. Also see futures contract.
- Forward Interest Rate
- Rate of interest for a future period
that would equate the total return of a long‐term bond with
that of a strategy of rolling over shorter‐term bonds. The
forward rate is inferred from the term structure.
- Framing
- Decisions are affected by how choices are
described, for example, whether uncertainty is posed as
potential gains from a low baseline level, or as losses from a
higher baseline value.
- Fully Diluted Earnings per Share
- Earnings per share
expressed as if all outstanding convertible securities and
warrants have been exercised.
- Fundamental Analysis
- Research to predict stock value that
focuses on such determinants as earnings and dividends
prospects, expectations for future interest rates, and risk
evaluation of the firm.
- Fundamental Risk
- Risk that even if an asset is mispriced,
there is still no arbitrage opportunity, because the mispricing
can widen before price eventually converges to intrinsic value.
- Funded Status
- The actuarial value of assets divided by the
actuarial Liability. The funded status represents the percentage
of assets In the plan compared to the actuarial liability. The
funded status Can also be calculated using the market value of
assets.
- Funds of Funds
- Hedge funds that invest in several other
hedge funds.
- Futures Contract
- Obliges traders to purchase or sell an asset
at an agreed-upon price on a specified future date. The long
position is held by the trader who commits to purchase, The
short position is held by the trader who commits to sell.
Futures differ from forward contracts in their standardization,
exchange trading, margin requirements, and daily
settling (marking to market).
- Futures Option
- The right to enter a specified futures contract
at a futures price equal to the stipulated exercise price.
- Futures Price
- The price at which a futures trader commits
to make or take delivery of the underlying asset.
Relative Content