Glossary of Financial Terms: B
Description
This article is from the Glossary of
Financial Terms.
Glossary of Financial Terms: B
- Back office
Brokerage house clerical operations that support, but do not
include, the trading of stocks and other securities. Includes all
written confirmation and settlement of trades, record keeping and
regulatory compliance.
- Banker's acceptance
A short-term credit investment created by a non-financial firm and
guaranteed by a bank as to payment. Acceptances are traded at
discounts from face value in the secondary market. These
instruments have been a popular investment for money market
funds.
- Basis
The price an investor pays for a security plus any out-of-pocket
expenses. It is used to determine capital gains or losses for tax
purposes when the stock is sold.
- Basis points
Refers to yield on bonds. Each percentage point of yield in bonds
equals 100 basis points. If a bond yield changes from 7.25 % to
7.39 %, that's a rise of 14 basis points.
- Bear
An investor who believes a stock or the overall market will
decline. A bear market isa prolonged period of falling stock
prices, usually by 20% or more.
- Bear raid
A situation in which large traders sell positions with the
intention of driving prices down.
- Beta (stocks)
Measure of a stock's risk in relation to the market. 0.7 means a
stock price is likely to move up or down 70 % of the market
change; 1.3 means the stock is likely to move up or down 30 % more
than the market.
- Beta equation (stocks)
The beta of a stock is determined as follows:
[(n) (sum of
(xy)) ]-[(sum of x) (sum of y)]
[(n) (sum of (xx)) ]-[(sum of
x) (sum of x)]
where: n = # of observations (24-60 months)
x = rate of
return for the S&P 500 Index
y = rate of return for the
stock
- Beta (mutual funds)
The measure of a fund's risk in relation to the market. 0.7 means
the fund's total return is likely to move up or down 70 % of the
market change; 1.3 means total return is likely to move up or down
30 % more than the market.
- Beta equation (mutual funds)
The beta of a fund is determined as follows:
[(n) (sum of
(xy)) ]-[ (sum of x) (sum of y)]
[(n) (sum of (xx)) ]-[ (sum
of x) (sum of x)]
where: n = # of observations (36 months)
x = rate of return
for the S&P 500 Index
y = rate of return for the fund
- Blow-off top
A steep and rapid increase in price followed by a steep and rapid
drop in price. This is an indicator seen in charts and used in
technical analysis of stock price and market trends.
- Breakout
A rise in a security's price above a resistance level (commonly
its previous high price) or drop below a level of support
(commonly the former lowest price.) A breakout is taken to signify
a continuing move in the same direction. Can be used by technical
analysts as a buy or sell indication.
- Bull
An investor who thinks the market will rise.
- Bull market
A market which is on a consistent upward trend.
- Buyout
Purchase of a controlling interest (or percent of shares) of a
company's stock. A leveraged buyout is done with borrowed
money.
 
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