Investing Advice

Definitions of Investing, Legal, & Business Terms

  Investing Term Dictionary
Choose below the first letter of the investment term you would like defined.
Dead Cat Bounce: Slaughtered stocks may stage a little rally that offer hope. But after a short rise, they head right back down.
Debenture: A note or bond that is backed only by the credit-worthiness of the issuing company, generally with a maturity of at least 15 years.  
Debtor: A person or business that owes money.
Default: When a company fails to make payments of interest or principle when due.
Default Judgment: A court's decision to grant a plaintiff's motion or request without a trial simply because the defendant failed to appear in court to provide any debate on the subject. 
Deferred Compensation: Salary and earnings to be received at some point in the future, rather than when they are earned. Deferring payment often hast ax advantages.
Deflation: A widespread decline in prices. The opposite of inflation. 
Demographics: Characteristics of individuals, such as age, education level, and marital status, that are used to better target marketing efforts to appropriate groups of consumers.
Defined Benefit Plan: A pension plan that specifies when and how much the retired worker will receive.
Defined Contribution Plan: A retirement plan paid for by the employer. The employer is only required to pay into the plan, without any guarantee of the amount that will be there at the employee's retirement.
Depreciation: The gradual tax write-off of equipment, buildings, or vehicles as they decrease in value.
Depth of Market: The number of shares of a security that can be bought or sold at the bid and ask prices near the market without causing a dramatic change in price.
Derivative: A bet on the direction of prices of a stock, a commodity, a stock index, an interest rate, or a foreign currency exchange rate. Options are derivatives. 
Devaluation: Lowering a country's currency relative to the price of gold or to another country's currency.
Dilution: The decline in value of earnings per share and stock price when new shares are issued by a company.
Direct Marketing: A marketing method that involves mailing brochures and promotional materials to a group of consumers believed to have a need for, or interest in, a company's product.
Discretionary Account: An account where the investor gives a broker, bank, or another person authority to make investment decisions on the investor's behalf.
Discount Rate: 1. The interest rate that the Federal Reserve charges banks on loans. 2. The rate used to calculate the time value of money; the value of future cash if it were to be received today.
Disposable Income: Income available to consumers after expenses for food, clothing, shelter, and other debts have been covered. Also known as discretionary income.
Divestiture: The act of selling off an asset or business, typically because it is under-performing financially or no longer fits within a company's strategic plan.
Distribution: A payment of a dividend or capital gain that is paid to a shareholder.
Diversification: Spreading your money over many investments. Don't bet everything on one solution or put all your eggs in one basket. For instance, if you were to allocate one-half of your investment money to stocks and one-half to bonds, you would diversify your stock investments by buying stock in companies in at least 2 or more industries, and diversify your bond investments by purchasing 2 or more types of bonds.
Dividend: Profits that are distributed to shareholders, which may be quarterly, semi-annually, or once a year.
Dividend Yield: The current dividend paid on one share of stock, divided by the current price of that share. When an investor buys a stock, his dividend yield is based on the price that he paid for the stock, not the current stock price.
Dog: A product or service with minimal sales in a low-growth market. Generally, companies attempt to rid themselves of dogs, which can be a drain on cash flow.
Downtick: A transaction executed at a price lower than the preceding transaction in that security, or a new quote registered at a lower price than the preceding quote in that security.
Drawee: The individual or institution who has been instructed to pay another individual out of funds on deposit. Generally, when a check is written by an individual, the bank on which the check is drawn is the drawee.
Drawer: The individual or institution that has writ- ten the check or has requested that payment be made by the drawee.
Due Diligence: A thorough investigation of a company that is preparing to go public, undertaken by the company's underwriter and accounting firm.
Dumping: Selling large numbers of shares of a stock, despite the fact that such a large-scale sale may cause the share price to drop or the market to decline in response. Also used to define the act of selling goods at below cost to force competitors out of the market.
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