Transfer Price

Transfer price, also known as transfer cost, is the price at which related parties transact with each other, such as during the trade of supplies or labor between departments. Transfer prices may be used in transactions between a company and its subsidiaries, or between divisions of the same company in different countries.

Switching Costs

Switching costs are the costs that a consumer incurs as a result of changing brands, suppliers, or products. Although most prevalent switching costs are monetary in nature, there are also psychological, effort-based, and time-based switching costs. Switching can also refer to the process of rebalancing or changing investments.

Proprietary Trading

Proprietary trading refers to a financial firm or commercial bank that invests for direct market gain rather than earning commission dollars by trading on behalf of clients. Also known as "prop trading," this type of trading activity occurs when a financial firm chooses to profit from market activities rather than thin-margin commissions obtained through client trading activity. Proprietary trading may involve the trading of stocks, bonds, commodities, currencies, or other instruments.Financial firms or commercial banks that engage in proprietary trading believe they have a competitive advantage that will enable them to earn an annual return that exceeds index investing, bond yield appreciation, or other investment styles.

Registered Representative

A registered representative (RR) is a person who works for a client-facing financial firm such as a brokerage company and serves as a representative for clients who are trading investment products and securities. Registered representatives may be employed as brokers, financial advisors, or portfolio managers.Registered representatives must pass licensing tests and are regulated by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). RRs must furthermore adhere to the suitability standard. An investment must meet the suitability requirements outlined in FINRA Rule 2111 prior to being recommended by a firm to an investor. The following question must be answered affirmatively: "Is this investment appropriate for my client?"

Active Management

The term active management means that an investor, a professional money manager, or a team of professionals is tracking the performance of an investment portfolio and making buy, hold, and sell decisions about the assets in it. The goal of any investment manager is to outperform a designated benchmark while simultaneously accomplishing one or more additional goals such as managing risk, limiting tax consequences, or adhering to environmental, social, and governance (ESG) standards for investing. Active managers may differ from other is how they accomplish some of these goals.For example, active managers may rely on investment analysis, research, and forecasts, which can include quantitative tools, as well as their own judgment and experience in making decisions on which assets to buy and sell. Their approach may be strictly algorithmic, entirely discretionary, or somewhere in between.By contrast, passive management, sometimes known as indexing, follows simple rules that try to track an index or other benchmark by replicating it.

Lead Bank

A lead bank is a bank that oversees the arrangement of loan syndication. The lead bank receives an additional fee for this service, which involves recruiting the syndicate members and negotiating the financing terms. In the Eurobond market, the lead bank acts in an agent capacity for an underwriting syndicate.A lead bank is also known as a lead underwriter.

PIIGS

PIIGS is a derisive acronym for Portugal, Italy, Ireland, Greece, and Spain, which were the weakest economies in the eurozone during the European debt crisis. At the time, the acronym's five countries garnered attention due to their weakened economic output and financial instability, which heightened doubts about the nations' abilities to pay back bondholders and spurred fears that these nations would default on their debts.

Periodic Interest Rate

A periodic interest rate is a rate that can be charged on a loan, or realized on an investment over a specific period of time. Lenders typically quote interest rates on an annual basis, but the interest compounds more frequently than annually in most cases. The periodic interest rate is the annual interest rate divided by the number of compounding periods.

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.

Weekend Effect

The weekend effect is a phenomenon in financial markets in which stock returns on Mondays are often significantly lower than those of the immediately preceding Friday.

Restructuring Charge

A restructuring charge is a one-time expense that a company pays when reorganizing its operations. Examples of one-time expenses include furloughing or laying off employees, closing manufacturing plants or shifting production to a new location. Companies undertake these moves in an effort to boost profitability, but first must take a one-off hit in the form of an upfront restructuring charge.

Seed Capital

The term seed capital refers to the type of financing used in the formation of a startup. Funding is provided by private investors—usually in exchange for an equity stake in the company or for a share in the profits of a product. Much of the seed capital a company raises may come from sources close to its founders including family, friends, and other acquaintances. Obtaining seed capital is the first of four funding stages required for a startup to become an established business.

Bell Curve

A bell curve is a common type of distribution for a variable, also known as the normal distribution. The term "bell curve" originates from the fact that the graph used to depict a normal distribution consists of a symmetrical bell-shaped curve.The highest point on the curve, or the top of the bell, represents the most probable event in a series of data (its mean, mode, andmedian in this case), while all other possible occurrences are symmetrically distributed around the mean, creating a downward-sloping curve on each side of the peak. The width of the bell curve is described by its standard deviation.

Delisting

Delisting is the removal of a listed security from a stock exchange. The delisting of a security can be voluntary or involuntary and usually results when a company ceases operations, declares bankruptcy, merges, does not meet listing requirements, or seeks to become private.

Loyalty Program

Loyalty programs, sponsored by retailers and other businesses, offer rewards, discounts, and other special incentives as a way to attract and retain customers. They are designed to encourage repeat business, offering people a reward for store/brand loyalty (hence the name). Typically, the more often a customer patronizes the merchant—and the more they spend—the greater their rewards.

Interim Dividend

An interim dividend is a dividend payment made before a company's annual general meeting (AGM) and the release of final financial statements. This declared dividend usually accompanies the company's interim financial statements.

Mid-Cap Fund

A mid-cap fund is a pooled investment vehicle (e.g. a mutual fund or ETF) that explicitly invests in the stocks of mid-cap companies, or companies with market capitalizations ranging from approximately $2 billion to $10 billion.

Confidence Interval

A confidence interval, in statistics, refers to the probability that a population parameter will fall between a set of values for a certain proportion of times. Analysts often use confidence intervals that contain either 95% or 99% of expected observations. Thus, if a point estimate is generated from a statistical model of 10.00 with a 95% confidence interval of 9.50 - 10.50, it can be inferred that there is a 95% probability that the true value falls within that range.Statisticians and other analysts use confidence intervals to understand the statistical significance of their estimations, inferences, or predictions. If a confidence interval contains the value of zero (or some other null hypothesis), then one cannot satisfactorily claim that a result from data generated by testing or experimentation is to be attributable to a specific cause rather than chance.

Swaption

A swaption, also known as a swap option, refers to an option to enter into an interest rate swap or some other type of swap. In exchange for an options premium, the buyer gains the right but not the obligation to enter into a specified swap agreement with the issuer on a specified future date.

Lagging Indicator

A lagging indicator is an observable or measurable factor that changes sometime after the economic, financial, or business variable with which it is correlated changes. Lagging indicators confirm trends and changes in trends.Lagging indicators can be useful for gauging the trend of the general economy, as tools in business operations and strategy, or as signals to buy or sell assets in financial markets.

Hysteresis

Hysteresis in the field of economics refers to an event in the economy that persists even after the factors that led to that event have been removed or otherwise run their course. Hysteresis often occurs following extreme or prolonged economic events such as an economic crash or recession. After a recession, for example, the unemployment rate may continue to increase despite growth in the economy and the technical end of the recession.