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Day Order:
An order, which is only good for the day it is placed, to a stockbroker to buy or sell particular shares. If the order is to be held till it can be executed, it is called a Good-Till-Cancelled order.
Day Trading:
Buying and selling the same share during a single day, hoping to make a profit from price fluctuations. See IN-AND-OUT TRADER.
Dead-Cat Bpunce:
A deceptive, temporary recovery in share prices.
Deadweight Debt:
A debt incurred to meet current needs without the support of an enduring asset. National debt is often such a debt.
Dear Money:
Also called Tight Money, obtained with difficulty as a result of government's stringent policy regarding loans, and at a high rate of interest.
Death-Valley Curve:
Period during which a company is using up its venture capital(shareholders' equity plus long-term loans) before supporting its operations from its own earnings.
Debentures:
A long-term instrument of debt, called bond in the United States. A debentureholder is a creditor to the company who loans funds for a period of 7-10 years against a fixed rate of interest. After the stipulated loan period the debentures are reedeemed, i.e.,the loan is paid back, sometimes with a very small premium. Debentures are generally secured against company's assets. Convertible debetures can be either fully or partly converted into a certain number of shares, usually at a premium, after a stated period of time. Convertible debentures may carry a lower rate of interest than non-convertible debentures which are redeemed after the state period.A very conservative investment; there is little risk but also little prospect of appreciation. In the absence of an exit mechanism, and a properly organized secondary market where they could be easily traded, they are virtually illiquid investments. See TRANSFER OF DEBENTURES.
Debit Spread:
When two options are traded and the value of one bought exceeds the value of one sold, there is a debt spread.sometimes principal of creditors, who may be banks and financial institutions, in exchange of an equity stake in the company. Naturally, ther company in which the creditors are thus acquiring a stake must be potentially promising, which but for the element of debt, would have run profitably and grown.
Debt Rescheduling:
When a debtor company has difficulty in repaying debt or finds the burden of interest too heavy, it may try to renegotiate the terms of loan. This may take the form of an extension of the existing loan period, an entirely new loan, or deferment of the interest payment. It may also take the form of converson of the loan amount into equity sharesat par or at a premium. Highly leveraged companies sometimes have recourse to this kind of conversion as a rehabilitation exercise.
Debt Securitization:
By securitizing its debt, a company can transform its credit assets into liquid and marketable instruments. This obviates the necessity of selling its assets in the event of severe cash crunch. For example,a bank has a large auto-loans receivable. By securitizing it the bank can make it a money market instrument. Buyers of these would expect a credit rating for these instruments, but if the rating is high, there should be no difficulty in selling them to meet the cash crunch. See CHERRY PICKING.
Debt instrument:
Document to raise a short-term loan, such as promissory note, bill of exchange, bond, certificate of deposit, or any other legally binding document
Deep Discount Bond:
A long-term (could even be 25 years) debt instrument selling at a high discount of 20% or considerably more of its face value, depending on its period of maturity. When current interest rates drop, such a bond may yeild better returns. These bonds are usually encashable earlier at depending on its period of maturity. When current interest rates drop, such a bond may yeild better returns. These bonds are usually encashable earlier at a discounted interest. An example of a deep discount bond is: deposit Rs 2500 today, and collect Rs.100,000 after 25 years. Ascertain if on maturity these bonds will attract Capital Gains Tax, which is more advantageous than income tax at current rates.
Deep in the Money:
A call opton whose exercise price is well below the market price of the security, and a put option whose exercise price is well above the market price. The premium for buying a deep-in- the-money option is high. A put option deep in the money is one where the exercise price will be well above the market price of the underlying security.
Deep out of the money:
A call option whose exercise price is well above the market price of the security, and a put option whose exercise price is well below the market price of the security. The premium for buying this option is low.
Defensive Investment:
Cautious investment strategy where a safe return on the investment is sought, in addition to ensuring that the invested capital is not eroded by a downturn in prices. Investment in government bonds, debentures, Unit Trust, Mutual Funds, and blue clip shares are defensive in character, as they bring in a regular income, and do not depreciate in value as a result of inflation.
Defensive Stock:
Shares which are more stable than others and tend to fall less in a bear market, providing a safe return of e investor's money. BLUECHIPS fall in this class.
Deffered Annuity:
An ANNUITY in which payments do not start at once, but at a large date, clearly specified, or when the annuitant reaches a certain age.
Deflation:
Opposite of inflation, it is a reduction in national income and output, accompanied by a general fall in prices. It can be brought about by reduced imports, higher taxation, and high interest rates, among other measures. During a deflationary period the stock market usually suffers from DEPRESSION. See also DISINFLATION.
Degearing:
Replacing fixed interest loan by issuing quity shares of a comparable value. This is done to lower the company's capital gearing or LEVERAGE.
Delayed Opening:
Delay in the start of trading as a result of imbalance between buy and sell orders. When this is resolved, trading starts. The imbalance may be caused by an event such as a takeover offer.
Delinquency:
Failure to pay or meet an obligation on the due date.
Delisting:
Striking off a company's name from the OFFICIAL LIST of a stock exchange so that the company's shares are not traded. It changes the status of the company; from a widely held and traded company it becomes an unlisted company with higher tax rates and higher borrowing costs. The listing agreement between a stock exchange and a company requires regular publication of the company's financial results and meeting such obligations as timely issue of allotment letters, share certificates, paymentof dividend and interest and timely redemption of debentures. These are the company's post-issue responsibilities; the pre-issue conditions have been met before the listing.
Delivery Order:
At the end of a settlement period, an account is given to each member of the stock exchange, containing details such as the number and the value of share, and names of receiving members, to enable him to deliver such shares on time.
Delivery price:
The price determined by the stock exchange at which deliveries on FUTURES are invoiced. Also, the price at which futures contracts are settled, when deliveries are made.
Delta Stocks:
The least liquid shares of a stock exchange.
Demand-Pull Inflation:
INFLATION caused by the increase in demand in excess of the industry's capacity to supply.
Dematerialization of Scrips:
Making stock trading scripless, all transactions being computerized and electronically entered into a ledger; an outcome of the options market. See NATIONAL DEPOSITORY SYSTEM.
Demonetization:
Derecognition and withdrawl from circulation of a particular currency, such as one thousand-rupee notes. It is not the same as devaluation of currency which affects imports and exports.
Depository:
See NATIONAL DEPOSITORY SYSTEM.
Depreciated Cost:
The net book value of an asset after accumulated depreciation has been deducted from the original cost.
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