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Daily price limit |
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The maximum price advance or decline permitted for a futures contract in
one trading session as compared to the previous day's settlement price.
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Day order |
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A type of option order which instructs the broker to cancel any unfilled
portion of the order at the close of trading on the day the order is first
entered. |
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Day trade |
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A position that is opened and closed on the same day. |
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Debenture |
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A bond unsecured by any pledge of property. It is supported by the general
credit of the issuing corporation. |
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Debit |
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Money paid out from an account either by way of a withdrawal or another
transaction that results in decreasing the cash balance. |
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Debit spread |
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A spread strategy that decreases the account's cash balance when it is established.
A bull spread with calls and a bear spread with puts are examples of debit
spreads. |
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Debt |
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An obligation to repay a sum of principal, plus interest. In corporate terms,
debt often refers to bonds or similar securities. |
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Decay |
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See Time decay. |
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Default |
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A bond is in default when the borrower has failed to live up to his/her
obligations under the trust deed with regard to interest and sinking fund
payments or has failed to redeem the bonds at maturity. |
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Defensive stock |
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A company stock purchased from a company that has maintained a record of
stable earnings and continuous dividend payments through periods of economic
downturn. |
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Delist |
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Removal of a security's listing on an exchange. |
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Delivery |
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The process of meeting the terms of a written option contract when notification
of assignment has been received. In the case of a short equity call, the
writer must deliver stock and in return receives cash for the stock sold.
In the case of a short equity put, the writer pays cash and in return receives
the stock. |
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Delivery month |
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The calendar month in which a futures contract may be satisfied by making
or taking delivery. |
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Delta |
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A measure of the rate of change in an option's theoretical value for a one-unit
change in the price of the underlying asset. |
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Depreciation |
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Systematic charges against earnings to write off the cost of an asset over
its estimated useful life because of wear and tear through use, action of
the elements, or obsolescence. |
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Derivative instrument |
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An asset whose value is determined by the market price of a given underlying
asset (security), such as a stock or a commodity. |
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Diagonal spread |
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A strategy involving the simultaneous purchase and writing of two options
of the same type that have different strike prices and different expiration
dates. Example: buying 1 May 60 call and writing 1 March 65 call.
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Dilution |
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Reducing the actual or potential earnings per share by issuing more shares
or giving options to obtain them. |
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Direct bonds |
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Bonds issued directly by governments that are first-hand obligations of
the government itself. |
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Discount |
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A term used to describe an option that is trading at a price less than its
intrinsic value (i.e., trading below parity). |
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Discount rate |
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The percentage in which a payment, that will not be received until some
time in the future needs to be reduced in order to arrive at its current
worth. |
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Discretion |
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Freedom given by an investor to his or her investment advisor to use judgment
regarding the execution of an order. Discretion can be limited, as in the
case of a limit order which gives the trader $0.05 or $0.01 point from the
stated limit price to use his or her judgment in executing the order. Discretion
can also be unlimited, as in the case of a market-not-held order.
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Distributions |
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Payments to investors by a mutual fund from income or from profit realized
from sales of securities. |
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Diversification |
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Limiting investment risk by purchasing different types of securities from
different companies representing different sectors of the economy.
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Dividend |
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A per-share payment designated by a company's board of directors to be distributed
among shareholders. For preferred shares, it is generally a fixed amount.
For common shares, the dividend varies with the fortunes of the company
and the amount of cash on hand. It may be omitted if business is poor or
the directors withhold earnings to invest in plant and equipment.
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Dividend discount model |
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The relationship between a stock's current price and the present value of
all future dividend payments. |
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Dividend fund |
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A mutual fund that invests in common shares of senior Canadian corporations
with a history of regular dividend payments at above average rates, as well
as preferred shares. |
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Dividend tax credit |
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An income tax credit available to investors who earn dividend income through
investments in the shares of Canadian corporations. |
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Dividend yield |
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The dividend yield on either common or preferred stock is the indicated
annual dividend expressed as a percentage of the current market price of
the stock. |
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Dividend reinvestment plan (DRIP) |
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A means of reinvesting dividends, which would otherwise be paid to the shareholder
in cash, in additional stock of the company. |
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Dollar cost averaging |
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Investing a fixed amount of dollars in a specific asset at regular set intervals
over a period of time. Dollar cost averaging lowers the average cost per
share when compared to purchasing a constant number of shares at set intervals.
The investor buys more shares when the price is low and buys fewer shares
when the price is high. |
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Duration |
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The weighted average of the present value of a bond's coupon payments and
principal, expressed in years. |
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