The role of this glossary is to present brief definitions of most of the key concepts in economics and finance (in total 1064 names-definitions) as well as security markets (financial, capital, money) with aim the reader to be able to understand and become familiar with the terminology in the analyses that will present in the category economics.
Additionally, we hope that the reader by acquiring intimacy with the economic terminology, he will also love the science/art of economics, giving to it a significant part of his personal time.
In the following glossary we tried to include the most well-known definitions and terms in the field of Economics & Finance. If you still find that a term or definition is missing and you know that it can be included in this glossary, please do not hesitate to contact us via the contact form of our web-site (Contact Us) and the Liberal Globe will edit it and will include it.
Glossary Economics & Finance
There are currently 73 names in this directory beginning with the letter D.
Date of record
is the date which is established quarterly by a corporation's board of directors, on which the stockholders of record are determined for the purpose of paying a cash or stock dividend.
Day of the week effect (weekend effect)
is an observed consistency whereby stock returns appear to be lower on Mondays as opposed to other days of the week.
Day order
is a trading order for which the broker will attempt to fill the order only during the day in which it was entered.
Dealer (market maker)
is named a person who facilitates the trading of financial assets by maintaining an inventory of specified securities. The market maker is entitled to buy and sell securities from this inventory, profiting from the differences in the buying and selling prices.
Debit balance
is named the amount of money borrowed from a broker as the result of a margin purchase.
Debt deflation
is called a condition in the economy in which a considerable fall in the price level sets in, leading to a further worsening in firms' net value because of the bigger burden of indebtedness.
Debt refunding
is the process in which takes place an issue of a new debt with aim the full repayment of an old debt which matures today.
Debt-equity swaps
is called a structure by which a sovereign debtor exchanges stocks of local companies in exchange for dent titles purchased on the secondary market; in substance the financial institute becomes a stockholder.
Decay factor (Lamda (λ))
is named the weight applied in the exponential moving average. It takes a value between (0,1). Risk Metrics uses a decay factor of 0,94 in the calculation of volatilities and correlations for the one day-horizon, and 0,97 for the one-month horizon.
Dedicating portfolio
is called a portfolio of bonds which its structure provides its owner the cash inflows that are matched against a specific stream of cash outflows.
Deductible
is called the fixed amount that is subtracted from the insured's loss when a claim is paid off.
Deep discount bond
is called a bond which sell at prices significantly below the other bonds of similar characteristics. The coupon interest rate of this bond is significantly below those of other bonds which otherwise possess similar characteristics.
Default
is named the situation in which the issuer of a debt instrument is unable to make interest payments or pay off the amount owed when the specific debt instrument matures.
Default premium
is named the difference between the promised and expected yield-to-maturity on a bond arising from the possibility that the bond issuer might default on the bond.
Default risk
is the chance that the issuer of a bond will default which means either he will not be able to pay interest payments or repay the face value when the bond matures.
Defensive open market operations
are called all those implemented open market operations with aim to counterbalance movements in other factors that affect the monetary base.
Deflation
is named a period of sustained decrease in the general price level, or sometimes more generally a sustained decline in the inflation rate.
Degrees of freedom
is the number of free or linearly independent sample observations that is used in the calculation of a statistic.
Delisting
is called the process which an organized security exchange implements with aim to remove a security's eligibility for trading.
Demand curve
depicts the association between the quantity demanded and the price, given that all the other economic variables are held unchanged.
Demand for capital (marginal efficiency for capital)
is named the quantity of capital wanted by an investor at different interest-rate levels.
Demand multiplier
is named a ratio which specifies the consequence of increases in exogeneous components of aggregate demand on total aggregate demand.
Demand pull inflation
is called the inflation which is appeared in economy when the policymakers implement policies that shift the aggregate demand.
Demand to buy schedule
is named a description of the quantities of a security that an investor is arranged to buy at alternative prices.
Demand to hold schedule
is named a description of the quantities of a security that an investor wants to preserve in his portfolio at alternative prices.
Depletion
is named an income of depreciating certain natural resource assets for corporate income tax purposes.
Deposit outflows
is named the loss of deposits for credit-institutions when the depositors withdraw their deposits due to withdrawals or to make payments.
Depository trust company
is named a central computerized depository for securities recorded in the names of member firms. The task of the depository trust company is to keep computerized records of ownership. The security certificates of its members are immobilized and give the ability to take place electronic transfer of the securities from one member to another as trades are conducted between the members' clients.
Depreciation (capital)
is the progressive reduction of the initial capital value of an asset due to usage, maturity and economic uselessness.
Diminishing marginal productivity
is named the trend that as long the inputs of raw materials in the production increased, the increases of output are diminishing.
Discount bond
is named a credit market instrument which is purchased at a price lower than its value, and the value of which is refunded on the expiry date; It does not make any interest payments.
Discount broker
is named an association that offers a limited range of brokerage services and charges fees substantially below those of brokerage firms that provide a full range of services.
Discount factor
is the present value of one unit of currency to be received from a security in specified number of years.
Discount lending or rediscounting
is named an instrument of monetary control employed by the central bank when it lends reserves directly to commercial banks at the discount rate.
Discount loans
is named the borrowing of a commercial bank from the Federal Reserve System-is the advance payment.
Discount rate
is named the interest rate that is used for the estimation of the present value of future cash flows of a given asset. The discount rate reflects except of the time value of money and the dangerousness of the cash flows. It is also the interest rate charged banks on discount loans.
Discounting
is named the procedure of estimation of the present value of a predetermined cash flows of an asset.
Discretionary order
is named the order which a trader gives to the broker by permitting him to set the provisions of the trading order.
Disintermediation
is named the decrease of the flow of funds which are entered into the banking system with aim to decline the volume of financial intermediation.
Disposable income
is named the total amount of income which is disposed for expenditures and it is equal with the total income minus taxes.
Diversification
is named the portfolio strategy which involves the purchase of several different types of assets with aim to decrease the risk to wealth as a result of the possible fluctuations in the value of any single asset.
Diversification benefit
is named the factor that measures the risk deduction that arises from holding a collection of assets that are not perfectly correlated. For example, the diversification benefit for the portfolio which has Risk Grade (n) is difference between the computed portfolio Risk Grade (n) and the market value weighted average of the individual asset Risk Grades. The portfolio diversification benefit for EMLoss (Loss in Extreme Markets) is estimated as the difference between the computed portfolio EMLoss and the sum of the individual asset EMLoss values.
Dividend decision
is named the process which a company takes in order to determine the number of dividends that will pay to its stockholders.
Dividend discount model
is named the term which is used for the capitalization of income method of valuation as applied to common stocks. All variations of dividend discount models accept that the intrinsic value of a share of common stock is equal to the discounted value of the dividends forecast to be paid on the stock.
Dividend yield
is named the current annualized dividend paid on a share of common stock, expressed as a percentage of the current market price of the corporation's common stock.
Dollar weighted return
a method of measuring the performance of a portfolio over a period. It is the discount rate which makes the present value of cash flows into and out of the portfolio, as well as the portfolio's ending value, equal to the portfolio's beginning value.
Domestic return
is named the yield of an investment in a foreign financial asset, excluding the effect of exchange rate changes.
Dominant variables
are named all these independent variables that account for so much of the variation in a dependent variable that the influence of other variables cannot be estimated.
Dominated asset
is named an asset which is characterized by lower rate of return relative to other assets of the same degree of risk.
Double auction
is named the bidding among both buyers and sellers for a security that may occur when the specialist's bid-ask spread is large enough to permit sales at one or more prices within the spread.
Double coincidence of wants
is named a condition required for barter to take place, in which the type and quantity of goods offered by one trader match those desired by the other.
Dual banking system
is named the banking system in the USA, in which the banks that supervised by the Federal Government and the states operate side by side.
Dummy variable trap
is the variable that is used in order to immunize the data. Forgetting to omit the dummy variable for one category when an intercept is included for all categories then we get an exact linear relationship between the dummies and the intercept.
Duration
is named a unit measure of the average maturity of the stream of payments which are coming from a credit market instrument (asset). In terms of mathematics, the duration is defined as the weighted average of the lengths of time until the asset's remaining payments are made. In this mathematical calculation the weights assign is the production of the asset's total present value represented by the present value of the respective cash flows.
Duration analysis
is named a procedure that measures the sensitivity of the market value of the bank's assets and liabilities to changes in interest rates.
Dynamic efficiency/inefficiency
an economy is named that is dynamically efficient when a reduction in the current level of consumption (or increase in the current level of savings) will make all future generations better off; On the other hand, an economy is characterized as dynamically inefficient when a reduction in the current level of savings (or increase in the current level of consumption) can make all generations (current and future) better off.
