Haircut: Difference between the quoted market value of an asset and the value attributed to the asset for the purpose of holding it as collateral.

Hang Seng Index: Principal Hong Kong share price index.

Hard Currency: Generally refers to currencies of developed economies but is often restricted to referring to the major global currencies, that is, the US dollar, the euro, and the yen.

Hammering: Concerted selling of shares by operators to bring the price down, often short-selling heavily. The term is associated with bears.

Head and Shoulders: A pattern in a share price chart resembling the heads and shoulders of a person.

Hedging: Reducing exposure to risk. In the investment of one’s funds in the share market, it is done by buying different kinds of shares, so that if one falls in price another will rise, or by investing in different kinds of shares, e.g., shares, debentures, bonds, gold, silver, real estate, etc. Hedging against inflation is putting one’s money on assets that will neutralize inflationary increases.

Hedge: An asset, liability or financial commitment that protects against adverse changes in the value of or cash flows from another investment or liability. An unhedged investment or liability is called an “exposure”. A perfectly matched hedge will gain in value what the underlying exposure loses or lose what the underlying exposure gains.

Hedge Funds: Private investment pools that invest aggressively in all types of markets, with managers of the fund receiving a percentage of the investment profits. The name is something of a misnomer since a hedge fund’s raison d’etre is quite the opposite of hedging.

Hedge Ratio: The proportion of one asset required to hedge against movements in the price of another.

Herfindahl-Hirschman (HH) Index: The sum of the squares of the market shares of companies in any given industry. It is a measure of industry concentration and is more sensitive to the effects of mergers than simple market shares.

High Yield Stocks: Shares that have a higher than average dividend yield or those where a relatively high proportion of the total return is derived from dividend income. Typical examples of high yield stocks are utilities.

Historic Volatility: Volatility is mathematically determined from price fluctuations of the underlying asset over a past specified period of time.

Hitech Stocks: Stocks of companies dealing in IT, computers, electronics, biotechnology, etc.

Horizontal Spread: The purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month. Also referred to as calendar spread.

Hostile Bid: An effort to gain control of a target company that has not been agreed to by the target’s management and board, usually through a tender offer or an unsolicited proposal to the board. Sometimes called an unsolicited bid.

Homemade Portfolio: A portfolio of shares of different mutual fund companies, such a portfolio is a diversification of diversified risk, carrying practically no risk.

House View: Formal opinion formed on an issue by an organization as a whole.

Hot Issue: A security that is expected to trade in the aftermarket at a premium over the public offering price.

Hot Money: Money that is transferred at short notice from one international financial center to another for fear of exchange rate fluctuations, or in response to changes in rates of interest. Another kind of hot money in which has been acquired dishonestly.

Hurdle Rate: Minimum rate of return required before a prerequisite profit is made or a performance fee is paid.

Hybrid: Any security which has the character of more than one type of security, including its derivatives.

Hyperinflation: Describes extremely high rates of inflation. Usually coincides with general economic collapse.

Hypothecation: Pledging assets against a loan. The ownership of the asset or the income from the asset is not transferred, except that in default of repayment of the loan the asset may be sold to realize its value. Brokers will accept shares as collateral for loans to finance the purchase of shares or to cover short sales.

Stock Market Reference (A-Z)


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