A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #

Dead Cat Bounce:

A temporary recovery from a prolonged decline or bear market, after which the market continues to fall.

Deer Market:

A flat market. Neither a bull or bear market, a deer market is characterized by low activity, with timid investors waiting for a sign of which way the market is going to end up moving.

Deferred Annuity:

A type of annuity contract that delays payments of income, installments or a lump sum until the investor elects to receive them. This type of annuity has two main phases, the savings phase in which you invest money into the account, and the income phase in which the plan is converted into an annuity and payments are received.

A deferred annuity can be either variable or fixed.

Deflation:

A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.

Depreciation:

1. In accounting, an expense recorded to allocate a tangible asset’s cost over its useful life. Since it is a non-cash expense, it increases free cash flow while decreasing reported earnings.

2. A decrease in the value of a particular currency relative to other currencies.

Derivative:

In finance, a security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.

Devaluation:

A deliberate downward adjustment to a country’s official exchange rate relative to other currencies. In a fixed exchange rate regime, only a decision by a country’s government (i.e central bank) can alter the official value of the currency. Contrast to “revaluation”.

Disinflation:

A slowing of the rate at which prices increase. Typically, this occurs during a recession as sales drop and retailers are not able to pass on higher prices to customers.

Diversification:

A risk-management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.

Dividend:

Distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (i.e. dividends per share or DPS). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.

Dollar-Cost Averaging (DCA):

The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.

Also referred to as “constant dollar plan”.

Dow Jones Industrial Average:

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

Downside Risk:

An estimation of a security’s potential to suffer a decline in price if the market conditions turn bad.

Downtick:

A transaction on an exchange that occurs at a price below the previous transaction.

In order for a downtick to occur, a transaction price must be followed by a decreased transaction price. This is commonly used in reference to stocks, but it can also be extended to commodities and other forms of securities.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #