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Security Security Document Transcript

  • Financial Terms related to Security This document is part of the valuable contents available at www.ftpall.com, a free onlineglossary with more than five thousand financial and business terms. This document can be copied and distributed freely Find thousands of financial terms at www.ftpall.com respecting its original format. It is forbidden its transcription, translation or change on its format without authorization of its author or editor.SECURITYAsset backed security • A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate.Bearer security • A security the owner of which is not registered on the books of the issuer. A bearer security is payable to the holder.Bullet loan or security • All principal is due at maturity.Cash commodity or security • The actual commodity or security as opposed to futures contracts for it.Cash equivalent security
  • www.ftpall.com 2|Page • Is a term which has several meanings. It often refers to high grade instruments which are very liquid and have very little time to maturity. Among these are treasury bills, commercial paper, and bankers acceptances. In a somewhat broader sense it can include money market shares and short-term municipal paper.Convertible security • A security that can be converted into common stock at the option of the security holder, including convertible bonds and convertible preferred stock.Debt security Find thousands of financial terms at www.ftpall.com • A security representing a loan by an investor to an issuer such as a corporation, municipality, the federal government, or a federal agency. In return for the loan, the issuer promises to repay the debt on a specified date and to pay interest.Derivative security • A financial security that is neither debt nor equity but derives its value from an underlying asset that is other another security; called derivative for short. • A financial security, such as an option, or future, whose value is derived in part from the value and characteristics of another security, the underlying security.Exchangeable security • Security that grants the security holder the right to exchange the security for the common stock of a firm other than the issuer of the security.Fixed dollar security • A nonnegotiable debt security that can be redeemed at some fixed price or according to some schedule of fixed values, e.g., bank deposits and government savings bonds. • A nonnegotiable debt security that can be redeemed at some fixed price or according to some schedule of fixed values (e.g., bank deposits and government
  • www.ftpall.com 3|Page savings bonds).Government security • A debt obligation of the U.S. government, backed by its full faith, credit and taxing power, and regarded as having no risk of default. The government issues short-term Treasury Bills, medium-term Treasury notes, and long-term Treasury bonds.Government security dealer • An institution that purchases for resale various government securities and other Find thousands of financial terms at www.ftpall.com money market instruments.Host security • The security to which a warrant is attached.Hybrid security • A form of debt or equity financing that possesses characteristics of both debt and equity. • A convertible security whose optioned common stock is trading in a middle range, causing the convertible security to trade with the characteristics of both a fixed- income security and a common stock instrument.Monthly income preferred security • Abbreviated MIP. Preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to the parent.Mortgage pass through security • Also called a pass-through, a security created when one or more mortgage holders form a collection (pool) of mortgages sells shares or participation certificates in the pool. The cash flow from the collateral pool is passed through to the security holder as monthly payments of principal, interest, and prepayments. This is the predominant type of MBS traded in the secondary market. View slide
  • www.ftpall.com 4|PageMunicipal security • See Municipal Bond.Primitive security • An instrument such as a stock or bond for which payments depend only on the financial status of the issuer.Security • Any claim that trades in the marketplace. Stocks, bonds, negotiable CDs, bankers Find thousands of financial terms at www.ftpall.com acceptances are examples of securities. A bank loan is a private contract and it can not be bought or sold. Hence, it is not a security. • According to the Securities Exchange Act of 1934, a security is any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit- sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral- trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a security; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or bankers acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited. A simpler definition is that a security is a piece of paper that can be assigned a value and sold, or any investment made with the expectation of a profit. View slide
  • www.ftpall.com 5|Page • Piece of paper that proves ownership of stocks, bonds and other investments.Security agreement • The agreement between the borrower and the lender that specifies the collateral held against a secured loan.Security analyst • See Analyst.Security characteristic line Find thousands of financial terms at www.ftpall.com • A plot of the excess return on a security over the risk-free rate as a function ofthe excess return on the market.Security deposit initial • Synonymous with the term margin. A cash amount of funds that must be deposited with the broker for each contract as a guarantee of fulfillment of the futures contract. It is not considered as part payment or purchase. Related: marginSecurity deposit maintenance related • Maintenance margin security market line (SML). A description of the risk return relationship for individual securities, expressed in a form similar to the capital market line.Security market line • Abbreviated SML. The depiction of the capital asset pricing model (CAPM) as a graph that reflects the required return for each level of nondiversifiable risk (beta). • Line representing the relationship between expected return and market risk.Security market plane • A plane that shows the equilibrium between expected return and the beta coefficient of more than one factor.
  • www.ftpall.com 6|PageSecurity selection • See: security selection decision.Security selection decision • Choosing the particular securities to include in a portfolio.Social security • A U.S. government program that provides retirement, survivors, and disability income benefits for eligible workers and their families. Formally known as Federal Find thousands of financial terms at www.ftpall.com Old-Age and Survivors Insurance and Disability Insurance or OASDI.Underlying security • Options: the security subject to being purchased or sold upon exercise of an option contract. For example, IBM stock is the underlying security to IBM options. Depository receipts: The class, series and number of the foreign shares represented by the depository receipt.Variable price security • A security, such as stocks and bonds, that sells at a fluctuating, market-determined price. • A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.