Glossary
Click on a letter below to display glossary terms beginning with the selected letter.
Face value
Related:
Par value
Fair price
The equilibrium price for futures con-tracts. Also called the theoretical futures price.
Feasible portfolio
A portfolio that an investor can construct given the assets available.
Feasible set of portfolios
The collection of all feasible portfolios.
Federal funds
Deposits held in reserve for depository institutions at their district Federal Reserve
Bank.
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily short of
their required reserves to borrow reserves from banks that have excess reserves.
Federal funds rate
The interest rate charged to borrow funds in the federal funds market.
Federally related institutions
Arms of the federal government that arc exempt from SEC registration and whose
securities are backed by the full faith and credit of the U.S. government (with the
exception of the Tennessee Valley Authority).
Fill
The price at which an order is executed.
Fill or kill order
A trading order that is canceled unless executed within a designated time period.
Related:
Open order
Filter
The percentage by which the price of a security must change in order to trigger its
purchase or sale.
Financial analysts
Also called securities analysts and investment analysts, professionals who analyze
financial statements, interview corporate executives, and attend trade shows, in order to
write reports recommending either purchasing, selling, or holding various stocks.
Financial leverage ratios
Related:
Capitalization ratios
Financial market
An organized institutional structure or mechanism for creating and exchanging financial
assets.
Financial risk
The risk that the cash flow of an issuer will not be adequate to meet its financial
obligations.
First-in-first-out (FIFO)
A method of valuing the cost of goods sold that uses the cost of the oldest item in
inventory first.
First notice day
The first day, varying by contracts and exchanges, on which notices of intent to deliver
actual financial instruments or physical commodities against futures are authorized.
Fixed-charge coverage ratio
A measure of a firm's ability to meet its fixed-charge obligations: the ratio of (net
earnings before taxes plus interest charges paid plus long- term lease payments) to
(interest charges paid plus long-term lease payments).
Fixed-income equivalent
Also called a busted convertible, a convertible security that is trading like a straight
security because the optioned common stock is trading low.
Fixed-income instruments
Assets that pay a fixed-dollar amount, such as bonds and preferred stock.
Fixed-income market
The market for trading bonds and preferred stock.
Fixed-rate payer
In an interest rate swap the counterparty who pays a fixed rate, usually in exchange for
a floating-rate payment.
Flattening of the yield curve
A change in the yield curve where the spread between the yield on a long-term and
short-term Treasury has decreased. Compare steepening of the yield curve and butterfly
shift.
Floating-rate contract
A guaranteed investment contract where the crediting rate is tied to some variable
("floating") interest rate benchmark, such as a specific-maturity Treasury
yield.
Floating-rate payer
In an interest rate swap, the counterparty who pays a rate based on a reference rate,
usually in exchange for a fixed-rate payment
Floor broker
A member who is paid a fee for executing orders for clearing members or their customers.
A floor broker executing customer orders must be licensed by the CFTC. CFTC.
Floor trader
A member who generally trades only for his own account, for an account controlled by him
or who has such a trade made for him. Also referred to as a "local".
Flow-through method
The practice of reporting to shareholders using straight-line depreciation and
accelerated depreciation for tax purposes and "flowing through" the lower income
taxes actually paid to the financial statement prepared for shareholders.
Foreign market
Part of a nation's internal market, representing the mechanisms for issuing and trading
securities of entities domiciled outside that nation. Compare external market and domestic
market.
Forward contract
A cash market transaction in which delivery of the commodity is deferred until after the
contract has been made. It is not standardized and is not traded on organized exchanges.
Forward rate
A projection of future interest rates calculated from either the spot rates or the yield
curve.
Full faith-and-credit obligations
The security pledges for larger municipal bond issuers, such as states and large cities
which have diverse funding sources.
Full price
Also called dirty price, the price of a bond including accrued interest.
Fully modified pass-throughs
Agency pass-throughs that guarantee the timely payment of both interest and principal.
Related:
Modified pass-throughs
Fund family
Set of funds with different investment objectives offered by one management company. In
many cases, investors may move their assets from one fund to another within the family at
little or no cost.
Fundamental beta
The product of a statistical model to predict the fundamental risk of a security using
not only price data but other market-related and financial data.
Fundamental descriptors
In the model for calculating fundamental beta, ratios in risk indexes other than market
variability, which rely on financial data other than price data.
Funding ratio
The ratio of a pension plan's assets to its liabilities.
Funding risk
Related:
Interest rate risk
Futures
A term used to designate all contracts covering the sale of financial instruments or
physical commodities for future delivery on a commodity exchange.
Futures commission merchant
A firm or person engaged in soliciting or accepting and handling orders for the purchase
or sale of futures contracts, subject to the rules of a futures exchange and, who, in
connection with such solicitation or acceptance of orders, accepts any money or securities
to margin any resulting trades or contracts. The FCM must be licensed by the CFTC.
Related:
Commission house,
Omnibus account
Futures contract
A standardized, transferable legal agreement to make or take delivery of a specified
amount of a certain commodity of a certain grade or type at a specific point in the
future. The price is determined at the time the agreement is made. Futures contracts must
be traded on organized futures exchanges.
Futures contract multiple
A constant, set by an exchange, which when multiplied by the futures price gives the
dollar value of a stock index futures contract.
Futures option
An option on a futures contract.
Related:
Options on physicals
Futures price
The price at which the parties to a futures contract agree to transact on the settlement
date.
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