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Glossary of Financial Terms — T 







Shorthand abbreviation for Trade Date plus three which is the current standard settlement time frame for equity and debt securities in the U.S.


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Commonly refers to the difference between the average and stop prices in Treasury cash auctions. An increment to a bid or offer in competition to avoid ties.


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Buyers “take” offerings when they agree to buy at the offering price.


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Take Down

To receive and to take into position an allotment in the new issue market.


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Cash retained as a result of the sale of one block of bonds and the purchase of another block at a lower cost.


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Event level used in describing the work flow at the lowest level; preceded by Activities. Activities describe “what” is done. Tasks describe “how” the activity is done.


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Technical Correction

A price movement generated by internal market variables, such as street positions, as opposed to one generated by more fundamental economic or credit factors.


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Tender Offer

A cash offer to the public, usually at a premium over current market price, for a specific aggregate amount of securities or the entire issue. Typically a fee is paid to the dealer who solicits the tender and the dealer manager.


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Term Repo

A repurchase agreement usually longer than overnight.


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Term Structure

The internal structure of the yield curve; the level and shape of the yield curve; the relationship among yields on securities of varying maturities.


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Term Structure Hypothesis

The theory that the market is priced in such a way that an investment in a riskless issue of any maturity is expected to produce roughly the same rate of return. The hypothesis enables investors to imply a market forecast based on the shape ( or term structure) of the existing yield curve.


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As applied to a market, means that bids and offerings are scarce and the market is subject to wide fluctuations and small-sized executions.


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Thrift Institution

An institution that accepts and maintains accounts for small depositors but is legally barred from offering demand deposit accounts. Institutions offering demand deposit facsimile accounts are considered thrift institutions and not commercial banks.


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Through the Market

When a new bond offering has come to market and the yield to maturity is lower than comparable bonds outstanding, the new bond is said to be offered “ through the market.”


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The minimum price fluctuation for a futures contract. Commonly used in reference to GNMA’s and Treasury bond futures to indicate 1/32 of one percent par value.


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Tick Size

The increments used for expressing bond prices. For example, the tick size for United Kingdom Gilt Stocks is 1/32.


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Highly competitive. A tight market is characterized by a small spread between the bid and offer levels for a given security.


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Time Deposit

A deposit with a maturity fixed by law of at least 30 days. Savings accounts at commercial banks also are regarded as time deposits.


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Title XI

A bond backed by a ship mortgage and guaranteed by the United States Government according to the ship Financing Act of 1972.


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An advertisement that states the name and terms of a security, the underwriters, and where a prospectus can be obtained. Does not constitute any offer to buy or sell such securities.


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Total Cash Less Unsettled Trades

This refers to all items in the Cash Accounts section of the inventory, less any Due-to-Broker and Due-From-Broker amounts.


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Total Cost

This is the total original cost of positions. When positions consist of several “lots” purchased at different prices, it is the total cost of the lots. Any expenses associated with an acquisition (i.e., postage, insurance, commissions).


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Total Return

The aggregate increase or decrease in the value of the portfolio resulting from the net appreciation or depreciation of the principal of the fund, plus or minus the net income or loss experienced by the fund during the period.


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Tracking Error

Tracking Error is the annualized standard deviation of the monthly return difference between the portfolio and the benchmark. A statistical measure that refers to the risk of underperformance. A low tracking error means that the return from a portfolio of investments is likely to achieve a similar return to its benchmark. A high tracking error means there is a significant chance of a large degree of both under and outperformance.


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Trade Date

The date when a transaction is effected or executed.


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A person whose intention is to profit from buying and selling, rather than the holding of securities.


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Traditional Mortgage

A mortgage with a fixed interest rate and term to maturity, requiring level payments of principal and interest.


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A part of a single market operation which may have shared documentation, but different terms; e.g., a USD 200 million issue, one tranche of USD 100 million having a maturity of 5 years and the second tranche of USD 100 million having a 10 year maturity.


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Transfer Payment

A government or other payment for which the recipient renders no current services. Social security, unemployment compensation and welfare benefits are the largest types of transfer payments.


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Negotiable debt obligations of the U.S. government, secured by its full faith and credit and issued at various schedules and maturities. Examples are T-Bills with maturities ranging from 3 months to 30 years at the time of the issue. These are generally non-callable.


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Treasury Bill

A non-interest bearing obligation, fully guaranteed by the U.S. Government, payable to the bearer. Bills are sold on a discount basis so that the income is the difference between the purchase price and the face value.


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Treasury Bond

A coupon security of the U.S. Treasury which may be issued with any maturity but generally carries a maturity of more than 10 years.


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Treasury Inflation-Protected Securities

Marketable securities whose principal is adjusted by changes in the Consumer Price Index; with inflation the principal increases, with deflation the principal decreases. Tips pay an interest at a fixed rate every six months. At maturity you receive the adjusted principal or the original principal, whichever is greater.
-TIPS are issued in terms of 5, 10, and 20 years.
-The interest rate is determined at auction
-Tips or sold in increments of USD 100.


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Treasury Note

A coupon security issued by the U.S. Treasury with a maturity of not less than one year not more than 10 years.


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Treasury Strips (Zero Coupons)

Broker/Dealers repackage Treasury cash flows to create “Strip” securities. “Strips” have varying maturities, trade on discount basis, pay no coupon and mature at par.


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A bank designated as the custodian of funds and official representative of bondholders to enforce their contract with the issuer.


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Refers to the ability to clear securities which are bought and sold for same-day settlement. The optimum is to receive and deliver the security within the established delivery period.


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The rate at which securities within a portfolio are exchanged for other securities.


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Turnover Ratio

In the case of mutual funds, the percentage of a fund’s assets that have changed over the course of a given time period, usually a year. Turnover ratio for a mutual fund is calculated by dividing the average assets during the period by the lesser of the value of purchases and the value of sales during the same period. Mutual funds with higher turnover ratios tend to have higher expenses.


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Twelve-Year Prepayment Assumption

The traditional cash flow assumption used to compute 30-year mortgage yields. It derives from an accounting practice used by mortgage bankers in keeping their books. It assumes that there are no prepayments or defaults. At the end of 12 years, the unamortized principal balance is redeemed at par.


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Two-Sided Market

Synonymous with market; consists of a bid and an asked price, both of which are firm and operable for the standard unit of trading.


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Information contained herein is believed to be reliable, but the accuracy and completeness of this material cannot be guaranteed.


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