Direct Cost

A direct cost is a price that can be directly tied to the production of specific goods or services. A direct cost can be traced to the cost object, which can be a service, product, or department. Direct and indirect costs are the two major types of expenses or costs that companies can incur. Direct costs are often variable costs, meaning they fluctuate with production levels such as inventory. However, some costs, such as indirect costs are more difficult to assign to a specific product. Examples of indirect costs include depreciation and administrative expenses.

Pledged Asset

A pledged asset is an asset that is used by a lender to secure a debt or loan and can include cash, stocks, bonds, and other equity or securities. A pledged asset is collateral held by a lender in return for lending funds. Pledged assets can reduce the down payment that is typically required for a loan as well as reduces the interest rate charged.

Index Option

An index option is a financial derivative that gives the holder the right (but not the obligation) to buy or sell the value of an underlying index, such as the S&P 500 index, at the stated exercise price. No actual stocks are bought or sold. Often, an index option will utilize an index futures contract as its underlying asset.Index options are always cash-settled and are typically European-style options, meaning they settle only on the date of maturity and have no provision for early exercise.

Political Risk

Political risk is the risk an investment's returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policymakers or military control. Political risk is also known as "geopolitical risk".

Bond Quote

A bond quote is the last price at which a bond traded, expressed as a percentage of par value and converted to a point scale. Par value is generally set at 100, representing 100% of a bond's face value of $1,000. For example, if a corporate bond is quoted at 99, that means it is trading at 99% of face value. In this case, the cost to buy each bond is $990.

Index Futures

Index futures are futures contracts based on stock market indices (such as the S&P 500 Index, Nasdaq 100 Index, Hang Seng Index, etc.) as the underlying assets. Investors buy and sell these contracts to predict the price of the index at a specific point in the future.

Recapitalization

Recapitalization is a type of a corporate restructuring that aims to change a company’s capital structure. Usually, companies perform recapitalization to make their capital structure more stable or optimal. Recapitalization essentially involves exchanging one type of financing for another – debt for equity, or equity for debt.

Indexed Annuity

An indexed annuity is a type of annuity contract that pays an interest rate based on the performance of a specified market index, such as the S&P 500. It differs from fixed annuities, which pay a fixed rate of interest, and variable annuities, which base their interest rate on a portfolio of securities chosen by the annuity owner. Indexed annuities are sometimes referred to as equity-indexed or fixed-indexed annuities.

Index Fund

An index fund is a passively managed investment fund that aims to replicate the performance of a specific stock market index (such as the S&P 500 Index, Nasdaq 100 Index, Hang Seng Index, etc.). The fund achieves returns similar to the index by holding the same stocks that make up the index.

Paper Trade

Paper trading is a simulated trading activity where investors execute buy and sell operations without using real money. It is typically used to test trading strategies, learn market operations, and improve trading skills. The goal of paper trading is to allow investors to practice in a real market environment without bearing actual financial risk.

Take-Profit Order

A take-profit order (T/P) is a type of limit order that specifies the exact price at which to close out an open position for a profit. If the price of the security does not reach the limit price, the take-profit order does not get filled.

Stop Order

A Stop Order is a type of trading order used to automatically execute a buy or sell operation when the market price reaches a preset level. There are two types of stop orders:Stop Buy Order: This order is executed automatically when the market price rises to the preset trigger price. It is commonly used to buy when the price breaks through a certain level, preventing missing out on further upward movement.Stop Sell Order: This order is executed automatically when the market price falls to the preset trigger price. It is typically used to limit losses or protect existing profits.

Direct Investment

Direct investment is more commonly referred to as foreign direct investment (FDI). FDI refers to an investment in a foreign business enterprise designed to acquire a controlling interest in the enterprise. The direct investment provides capital funding in exchange for an equity interest without the purchase of regular shares of a company's stock.

Hard Dollars

Hard Dollars refer to actual cash payments made by investors or institutions in the financial industry. These payments are typically used to pay for services provided by third parties, such as research reports, trading commissions, consulting services, and more. Hard dollars are different from soft dollars, which are paid through trading volume or other non-direct payment forms.

Direct Quote

A direct quote is a foreign exchange rate quoted in fixed units of foreign currency in variable amounts of the domestic currency. In other words, a direct currency quote asks what amount of domestic currency is needed to buy one unit of the foreign currency—most commonly the U.S. dollar (USD) in forex markets. In a direct quote, the foreign currency is the base currency, while the domestic currency is the counter currency or quote currency.This can be contrasted with an indirect quote, in which the price of the domestic currency is expressed in terms of a foreign currency, or what is the amount of domestic currency received when one unit of the foreign currency is sold. Note that a quote involving two foreign currencies (or one not involving USD) is called a cross currency quote.

Intellectual Capital

Intellectual capital is the value of a company's employee knowledge, skills, business training, or any proprietary information that may provide the company with a competitive advantage.Intellectual capital is considered an asset. It is the sum of employee expertise, organizational processes, and other intangibles that contribute to a company's bottom line.Some of the subsets of intellectual capital include human capital, information capital, brand awareness, and instructional capital.

Checking Account

A checking account is a deposit account that allows you to easily make withdrawals, deposits, and fund transfers. Also called demand accounts or transactional accounts, checking accounts can be accessed using checks, automated teller machines (ATMs), and electronic debits, among other methods. They are often used to keep money for short-term expenses.

Outlay Cost

Outlay Cost refers to the actual cash expenditures incurred by a business during the production of goods or provision of services. These costs include expenses such as purchasing raw materials, paying wages, leasing equipment, and covering utility bills, all of which are directly related to production activities. Outlay costs are typically recorded in financial statements and reflect the actual cash outflows of a business over a specific period. They are an important metric for assessing the operational efficiency and profitability of a company.

Securities Lending

Securities lending is the practice of loaning shares of stock, commodities, derivative contracts, or other securities to other investors or firms. Securities lending requires the borrower to put up collateral, whether cash, other securities, or a letter of credit.When a security is loaned, the title and the ownership are also transferred to the borrower. A loan fee, or borrow fee, is charged by a brokerage to a client for borrowing shares, along with any interest due related to the loan. The loan fee and interest are charged pursuant to a Securities Lending Agreement that must be completed before the stock is borrowed by a client. Holders of securities that are loaned receive a rebate from their brokerage.Securities lending provides liquidity to markets, can generate additional interest income for long-term holders of securities, and allows for short-selling.

Normal Distribution

Normal distribution, also known as the Gaussian distribution, is a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.In graphical form, the normal distribution appears as a "bell curve".

Round Lot

A round lot is a standard number of securities to be traded on an exchange. In stocks, a round lot is considered 100 shares or a larger number that can be evenly divided by 100. In bonds, a round lot is usually $100,000 worth.A round lot is sometimes referred to as a normal trading unit, and may be contrasted with an odd lot.