eFinancialCareers

F
Fifth letter of a Nasdaq stock symbol specifying that the issues is a foreign company.

FAC
See: Federal Advisory Council

Face value
See: Par value

Face-amount certificate
A debt security issued by face amount. The holder makes payments periodically to the issues, and the issuer promises to pay the purchaser the face value at maturity or the surrendered value if the security is presented by the maturity specified in the certificate.

Facilitation
The process of providing a market for a security. Normally, this refers to bids and offers made for large blocks of securities, such as those traded by institutions. Listed options may be used to offset part of the risk assumed by the trader who is facilitation the large block order. See also: Hedge ratio.

Factor
A financial institution that buys a firm's accounts receivable and collects the accounts.

Factor analysis
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a common stock, in terms of the behavior of a set of predictive factors.

Factor model
A way of decomposing the forces that influence a security's rate of return into common and firm-specific influences.

Factor portfolio
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of zero on any other factors.

Factor Return
The return attributable to a particular common factor. We decompose asset returns into a common factor component, based on the asset's exposures to common factors times the factor returns, and a specific return.

Factoring
Sale of a firm's accounts receivable to a financial institution known as a factor.

Fade
Refers to over-the-counter trading. Fill another OTC dealer's bid for or offer of

Fail
A deal is said to fail if on the settlement date either the seller does not deliver securities in proper form or the buyer does not to deliver funds in proper form.

Fair game
An investment prospect that has a zero risk premium.

Fair market price
Amount at which an asset would change hands between two parties, that both have knowledge of the relevant facts. Also referred to as market price.

Fair price
The equilibrium price for futures contracts. Also called the theoretical futures price, which equals the spot price continuously compounded at the cost of carry rate for some time interval. In the context of corporate goverance, Fair-Price provisions limit the range of prices a bidder can pay in two-tier offers. They typically require a bidder to pay to all shareholders the highest price paid to any during a specified period of time before the commencement of a tender offer and do not apply if the deal is approved by the board of directors or a supermajority of the target's shareholders. The goal of this provision is to prevent pressure on the target's shareholders to tender their shares in the front end of a two-tiered tender offer, and they have the result of making such and acquisition more expensive. A majority of states have fair price laws.

Fair price provision
See:Appraisal rights

Fair rate of return
The rate of return that state governments allow a public utility to earn on its investments and expenditures. Utilities then use these profits to pay investors and provide service upgrades to their customers.

Fair value
In the context of futures, the equilibrium price for futures contracts. Also called the theoretical futures price, which equals the spot price continuously compounded at the cost of carry rate for some time interval. More generally, fair value for any asset simply refers to the perception that it is neither underpriced (too cheap) nor overpriced (too expensive).

Fair-and-equitable test
A set of requirements for a plan of reorganization to be approved by the bankruptcy court.

Fairness opinion
An investment banker's professional opinion as to the price an acquiring firm's is offering in a takeover or merger.

Fall Down
In the context of general equities, may not be able to produce as indicated in one's advertised market, due to less help (than anticipated) from other parties or due to changing market conditions.

Fall out of bed
A sudden drop in a stock's price resulting from failed or poor business deals gone bad or falling through.

Fallen angels
Bonds that at the time of issue were considered investment grade but that have dropped below that rating over time.

Fallout risk
A type of mortgage pipeline risk that is generally created when the terms of the loan to be originated are set at the same time the sale terms are established. The risk is that either of the two parties, borrower or investor, fails to close and the loan "falls out" of the pipeline.

Fama, Eugene F.
Finance professor at the University of Chicago. Developer of the Efficient Markets Hypothesis.

Family of funds
Different mutual funds offered by one investment company.

Far month
Used in the context of option or futures to refer to the trading month of the contract that is farthest away. Antithesis of nearest month.

Farther out; farther in
Used in the context of options to refer to the relative length of option contract maturities.

FAS
Abbreviation for the Incoterm Free Alongside Ship.

FASB
See: Financial Accounting Standards Board

FASB No. 52
The US accounting standard that replaced FASB No. 8. US companies are required to translate foreign accounts in terms of the current rate and report the changes from currency fluctuations in a cumulative translation adjustment account in the equity section of the balance sheet.

FASB No. 8
U.S. accounting standard that requires US firms to translate their foreign affiliates' accounts by the temporal method; that is reporting gains and losses from currency fluctuations in current income. It was in effect between 1975 and 1981 and became the most controversial accounting standard in the US It was replaced by FASB No. 52 in 1981.

Fast market
Excessively rapid trading in a specific security that causes a delay in the electronic updating of its last sale and market conditions, particularly in options.

Favorable Balance of Trade
The value of a nation's exports in excess of the value of its imports.

Favorable trade balance
Condition that total exports of a nation exceed total imports, creating a net export.

FCA
Abbreviation for the Free Carrier

FCIA
See: Foreign Credit Insurance Association

FCM
See: Futures commission merchant

FDI
See: Foreign direct investment

FDIC
See: Federal Deposit Insurance Corporation

Feasible portfolio
A portfolio that an investor can construct, given the assets available.

Feasible set of portfolios
The collection of all feasible portfolios.

Feasible target payout ratios
Payout ratios that are consistent with the level of excess funds available to make cash dividend payments.

FED Pass
A Federal Reserve action adding more reserves to the banking system, increasing the money available for lending, and making credit easier to attain.

Federal Advisory Council (FAC)
Advisory group made up of one representative (in most cases a banker) from each of the 12 Federal Reserve districts. Established by the Federal REserve Act, the council meets periodically with the Board of Governors to discuss business and financial conditions and make recommendations.

Federal agency bond
Fixed-income security issued by a government agency such as FNMA.

Federal agency securities
Securities issued by corporations and agencies created by the US government, such as the Federal Home Loan Bank Board and Ginnie Mae.

Federal Agricultural Mortgage Corporation (Farmer Mac)
A federal agency chartered in 1988 to provide a secondary market for farm mortgage loans.

Federal credit agencies
Agencies of the federal government set up to supply credit to various classes or institutions and individuals, e.g., S&Ls, small business firms, students, farmers, and exporters.

Federal deficit (surplus)
When federal government expenditures are exceeded by federal government revenue.

Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.

Federal Farm Credit Bank
An institution created by the government with the purpose of uniting the financing activities of the Federal Land Banks, the Federal Intermediate Credit Banks, and the banks for cooperatives. See: Federal Farm Credit System.

Federal Farm Credit System
A system chartered in 1971 through the farm credit act providing farmers with credit services through a Federal Land Bank, a Federal Intermediate Credit Bank, and a bank for cooperatives. See: Federal Farm Credit Bank.

Federal Financing Bank
A federal institution that lends to a wide array of federal credit agencies funds it obtains by borrowing from the US Treasury.

Federal funds
Noninterest-bearing deposits held in reserve for depository institutions at their district Federal Reserve Bank. Also, excess reserves lent by banks to each other.

Federal funds market
The market in which 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 that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. The Fed funds rate, as it is called, often points to the direction of US interest rates. The most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate.

Federal gift tax
A federal tax imposed on assets conveyed as gifts to individuals.

Federal Home Loan Banks
The institutions that regulate and lend to savings and loan associations. The Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-à-vis member commercial banks.

Federal Home Loan Mortgage Corporation (FHLMC)
See: Freddie Mac

Federal Housing Administration (FHA)
Federally sponsored agency chartered in 1934 whose stock is currently owned by savings institutions across the United States. The agency buys residential mortgages that meet certain requirements, sells these mortgages in packages, and insures the lenders against loss.

Federal Housing Finance Board (FHFB)
US government agency chartered in 1989 to assume the responsibilities formerly held by the Federal Home Loan Bank system.

Federal Intermediate Credit Bank
A bank sponsored by the federal government to provide funds to institutions making loans to farmers.

Federal intrafund transactions
Intrabudgetary transactions in which payments and receipts both occur within the same federal fund group.

Federal Land Bank
A bank administered under the US Farm Credit Administration that provides long-term mortgage credit to farmers for agriculture-related expenditures.

Federal margin call
A broker's demand upon a customer for cash, or securities needed to satisfy the required Regulation T down payment for a purchase or short sale of securities.

Federal Maritime Commission (FMC)
A U.S. government agency that regulates and administers the shipping industry. This agency also grants freight forwarder licenses.

Federal National Mortgage Association (Fannie Mae)
A publicly owned, government-sponsored corporation chartered in 1938 to purchase mortgages from lenders and resell them to investors. Known by the nickname Fannie Mae, it packages mortgages backed by the Federal Housing Administration, but also sells some nongovernment-backed mortgages.

Federal Open Market Committee (FOMC)
The body that is responsible for setting the interest rates and credit policies of the Federal Reserve System.

Federal Reserve Act of 1913
Federal legislation that established the Federal Reserve System.

Federal Reserve Bank
One of the 12 member banks constituting the Federal Reserve System that is responsible for overseeing the commercial and savings banks of its region to ensure their compliance with regulation.

Federal Reserve Board (FRB)
The seven-member governing body of the Federal Reserve System, which is responsible for setting reserve requirements, and the discount rate, and making other key economic decisions.

Federal Reserve District (Reserve district or district)
One of the twelve geographic regions served by a Federal Reserve Bank.

Federal Reserve float
Float is checkbook money that appears on the books of both the check writer (the payor) and the check receiver (the payee) while a check is being processed. Federal Reserve float is float present during the Federal Reserve's check collection process. To promote efficiency in the payments system and provide certainly about the date that deposited funds will become available to the receiving depository institutions (and the payee), the Federal Reserve credits the reserve accounts of banks that deposit check according to a fixed schedule. However, processing certain checks and collecting funds from the banks on which these checks are written may take more time than the schedule allows. Therefore, the accounts of some banks may be credited before the Federal Reserve is able to collect payment from other banks, resulting in Federal Reserve float.

Federal Reserve notes
Issues by the US government to the public through the Federal Reserve Banks and their member banks. They represent money owed by the government to the public. Currently, the item "Federal Reserve notes amounts outstanding" consists of new series issues. The Federal Reserve note is the only class of currency currently issued.

Federal Reserve System
The monetary authority of the US, established in 1913, and governed by the Federal Reserve Board located in Washington, D.C. The system includes 12 Federal Reserve Banks and is authorized to regulate monetary policy in the US as well as to supervise Federal Reserve member banks, bank holding companies, international operations of US banks, and US operations of foreign banks.

Federal Savings and Loan Association
An institution chartered by the federal government whose primary function is to collect savings deposits and to provide mortgage loans.

Federally related institutions
Arms of the federal government exempt from SEC registration whose securities are backed by the full faith and credit of the US government (with the exception of the Tennessee Valley Authority).

Fedwire
A wire transfer system for high-value payments operated by the Federal Reserve System.

Fee
A fixed amount or a percentage of an underwriting or principal.

Fee table
Schedule found in a mutual fund's prospectus that discloses and expense illustrates the expenses and fees a shareholder will incur.

Fee-and-commission compensation
See: Fee-based compensation

Fee-based compensation
Payment to a financial adviser of a set hourly rate, or an agreed-upon percentage of assets under management, for a financial plan. When the plan is implemented, the adviser may also receive commission on some or all of the investment products purchased, which would be fee-and-commission compensation.

Fee-only compensation
Payment to a financial adviser of a set hourly rate, or an agreed-upon percentage of assets under management, for a financial plan.

Feedback Systems
An equation where the output becomes the input in the next iteration. This is much like a public address system where the microphone is placed next to the speakers generating feedback as the signal is looped through the PA system.

FFO
See: Funds from operations

FHA prepayment experience
The percentage of loans in a pool of mortgages outstanding at the origination anniversary, based on annual statistical historic survival rates for FHA-insured mortgages.

FI
The two-character ISO 3166 country code for FINLAND.

Fiat money
Nonconvertible paper moneyy.

FICO
See: Financing corporation

Fictitious credit
A margin account's credit balance. Fictitious credit exists after the proceeds from a short sale are accounted for with respect to the margin requirement. The proceeds from the short sale are reflected as a credit, but must stay in the account to serve as security for the loan of securities made in a short sale, and are therefore inaccessible to the client for withdrawal.

Fidelity bond
See: Blanket fidelity bond

Fiduciary
One who must act for the benefit of another party.

Fiduciary out
A provision that permits the Board of Directors to terminate a proposed merger if a better deal arises with another party.

Field warehouse
Warehouse rented by a company on another firm's premises.

FIFO
See: First in, first out

Figure
Refers to details about price including the bid and offer. See: Handle

Figuring the tail
Calculating the yield at which a future money market (one available some period hence) is purchased when that future security is created by buying an existing instrument and financing the initial portion of its life with a term repo.

Fill
The price at which an order is executed.

Fill or kill order (FOK)
A trading order that is canceled unless executed within a designated time period. A market or limited price order that is to be executed in its entirety as soon as it is represented in the trading crowd, and, if not so executed, is to be treated as canceled. For purposes of this definition, a stop is considered an execution. Equivalent to AON and IOC simultaneously.

Filter
A rule that stipulates when a security should be bought or sold according to its price action.

FIM
The ISO 4217 currency code for the Finnish Markka.

Final Take
In the context of project financing, the final participation.

Finance
A discipline concerned with determining value and making decisions. The finance function allocates resources, including the acquiring, investing, and managing of resources.

Finance charge
The total cost of credit a customer must pay on a consumer loan, including interest.

Finance company
A company whose business and primary function is to make loans to individuals, while not receiving deposits like a bank.

Finance Lease
An agreement where the leaser receives lease payments to cover its ownership costs. The lessee is responsible for maintenance, insurance, and taxes. Some finance leases are conditional sales or hire purchase agreements.

Financial Accounting Standards Board (FASB)
Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP).

Financial adviser
A professional offering financial advice to clients for a fee and/or commission.

Financial analysis
Analysis of a company' financial statement, often by financial analysts.

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

Financial assets
Claims on real assets.

Financial Close
The time when the documentation has been executed and conditions precedent have been satisfied or waived. Drawdowns are now permissible.

Financial control
The management of a firm's costs and expenses in relation to budgeted amounts.

Financial distress
Events preceding and including bankruptcy, such as violation of loan contracts.

Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes implied costs associated with impaired ability to do business (indirect costs).

Financial engineering
Combining or carving up existing instruments to create new financial products.

Financial future
A contract entered into now that provides for the delivery of a specified asset in exchange for the selling price at some specified future date.

Financial guarantee insurance
Insurance created to cover losses from specified financial transactions.

Financial innovation
Design of any new financial product, such as exotic currency options and swaps.

Financial institution
An enterprise such as a bank whose primary business and function is to collect money from the public and invest it in financial assets such as stocks and bonds.

Financial institution buyer credit policy
Insurance coverage for loans by banks to foreign buyers of exports.

Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)
Legislation that established the Office of Thrift Supervision, which was created in the wake of the savings and loan crisis of the late 1980s.

Financial intermediaries
institution that provide the market function of matching borrowers and lenders or traders.

Financial lease
Long-term, noncancellable rental agreement.

Financial leverage
Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plus equity.

Financial leverage clientele
A group of investors who have a preference for investing in firms that adhere to a particular financial leverage policy.

Financial leverage ratios
Common ratios are debt divided by equity a debt divided by the sum of debt plus equity. Related: capitalization ratios.

Financial market
An organized institutional structure or mechanism for creating and exchanging financial assets.

Financial needs approach
A method of establishing the amount of life insurance required by an individual by estimating the financial needs of dependents in the event of the individual's death.

Financial objectives
Goals related to returns that a firm will strive to accomplish during the period covered by its financial plan.

Financial plan
A blueprint relating to the financial future of a firm.

Financial planner
An investment professional who assists individuals with long- and short-term financial goals.

Financial planning
Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against that plan.

Financial policy
Criteria describing a corporation's choices regarding its debt/equity mix, currencies of denomination, maturity structure, method of financing investment projects, and hedging decisions with a goal of maximizing the value of the firm to some set of stockholders.

Financial position
The account status of a firm's or individual's assets, liabilities, and equity positions as reflected on its financial statement.

Financial press
Media devoted to reporting financial news.

Financial price risk
The chance there will be unexpected changes in a financial price, including currency (foreign exchange) risk, interest rate risk, and commodity price risk.

Financial public relations
Public relations division of a company charged with cultivating positive investor relations and proper disclosure information.

Financial pyramid
A risk structure that spreads investor's risks across low-, medium-, and high-risk vehicles. The bulk of the assets are in safe, low-risk investments that provide a predictable return (base of the pyramid). At the top of the pyramid are a few high-risk ventures that have a modest chance of success.

Financial ratio
The result of dividing one financial statement item by another. Ratios help analysts interpret financial statements by focusing on specific relationships.

Financial risk
The risk that the cash flow of an issuer will not be adequate to meet its financial obligations. Also referred to as the additional risk that a firm's stockholder bears when the firm uses debt and equity.

Financial service income
Income from delivery of financial services such as banking, insurance, leasing, or financial service management fees.

Financial statement
A report of basic accounting data that helps investors understand a firm's financial history and activities.

Financial statement analysis
Evaluation of a firm's financial statements in order to assess the firm's worth and its ability to meet its financial obligations.

Financial strategy
Practices a firm adopts to pursue its financial objectives.

Financial structure
The way in which a company's assets are financed, such as short-term borrowings, long-term debt, and owners equity. Financial structure differs from capital structure in that capital structure accounts for long-term debt and equity only.

Financial supermarket
A company offering a wide variety of financial services such as a combination of banking services, stock, and insurance brokerage.

Financial tables
Tables found in newspapers listing prices, dividends, yields, price-earnings ratios, trading volume, and other important data on stocks, bonds, mutual funds, and futures contracts.

Financial Times (F-T)-Actuaries indexes
Share price indexes for U.K. companies The denominator in the index formula is the market capitalization at the base date, adjusted for all capital changes affecting the particular index since the base date. See: Footsie (FTSE) (pronounced footsie).

Financing Agreements
In the context of project financing, the documents which provide the project financing and sponsor support for the project as defined in the project contracts.

Financing Corporation (FICO)
A government agency chartered in 1987 to bail out the Federal Savings and Loan Insurance Corporation (FSLIC) by issuing bonds.

Financing Cost Savings
A source of competitive advantage that depends on access to low cost sources of capital.

Financing decisions
Decisions concerning the liabilities and stockholders' equity side of the firm's balance sheet, such as a decision to issue bonds.

Financing Intermediaries
institutions that effect agreement terms between borrower and lender by reaching separate agreements with the borrower and the lender.

Finder's fee
A fee a person or company charges for service as an intermediary in a transaction.

FINEX
The Financial Futures and Options Division of the New York Cotton Exchange (NYCE), with a trading floor in Dublin, FINEX Europe, creating a 24-hour market in most FINEX contracts.

Finish
Used in the context of general equities. See: Fill.

Finite-Life Real Estate Investment Trust (FREIT)
A Real Estate Investment Trust whose priority is to sell its holdings within a specified period to realize capital gains.

Firewall
The legal barrier between banking and broker/dealer operations within a financial institution created to prevent the exchange of inside information.

Firm
Refers to an order to

Firm anomalies
Trading strategies that generate abnormal returns based on firm-specific characteristics.

Firm commitment underwriting
An underwriting in which an investment banking firm commits to buy and sell an entire issue of stock and assumes all financial responsibility for any unsold shares.

Firm market
In the context of general equities, prices at which a security can actually be bought or sold in decent sizes, as compared to an inside market with very little depth. See: Actual market.

Firm order
In the context of general equities, (1) order to

Firm quote
A definite price on a round-lot bid or offer declared by a market maker on a given security and not identified as a nominal quotation (therefore is not negotiable).

Firm's net value of debt
Total firm value minus total firm debt.

Firm-specific news
News that affects only a specific firm. Market. news by contrast affects many firms.

Firm-specific risk
See: Diversifiable risk or unsystematic risk

FIRREA
See: Financial Institutions Reform, Recovery and Enforcement Act of 1989