Macro Economic Forecasts: Forecasts on a nation’s economy and the state of industries based on such data as price levels, employment, rate of inflation, and industrial production.
Maintenance Margin: The minimum margin that must be maintained on a futures contract.
Management Buy-in (MBI): Purchase of a controlling interest of a company by an outside investor where either new management is implemented or existing management is retained.
Management Buyout (MBO): Repurchasing of all, or the majority of, a company’s outstanding shares by a firm’s own management.
Managed Portfolio: A portfolio of shares in which decisions to buy and sell are made by a person other than the owner. Such a person is called a portfolio manager.
Manipulation of Financial Markets: Activities whose objective is to alter prices in financial markets through the use of techniques that result in unnatural market prices, often through the use of wash sales or reporting of fictional or apparent market prices.
Mandate: Description of the fund management requirements that an investor demands from a manager — for example, high-risk global equity management. May include performance targets set by reference to a benchmark.
Margin: An advance payment of a portion of the value of a stock transaction. The amount of credit a broker or lender extends to a customer for stock purchase.
Market: Public place where buyers and sellers make transactions, directly or via intermediaries.
Market Breadth: Proportion of the total market that is taking part in the market’s up or down move.
Market Instrument: A fully negotiable instrument for short-term debt.
Market Timing: The decision when to buy or sell a share or when to switch from one share to another. Technical analysis claims to advise investors correctly about market timing.
Mark Up: Opposite of Markdown. When a broker is selling from his account to a customer, he charges the best ask price and adds commission which is marked up.
Marked To Market Basis: The process whereby the book value or collateral value of a security is adjusted to reflect the current market value.
Market Capitalization: The market value of a company, calculated by multiplying the number of shares issued and outstanding by their current market price.
Market Inefficiency: Condition in which current security prices do not reflect all the publicly available information about security, such as when some investors receive information before others, or when some investors do not effectively analyze the available information.
Market Indicators: Technical measurements used by market analysts to forecast the market’s direction, such as the volume of trading or the direction of interest rates.
Market Maker: A member firm that gives a two-way quotation for a particular security/(ies) and who is under an obligation to buy and sell them subject to certain conditions such as overall exposure, spread, etc.
Market Model: This relationship is sometimes called the single-index model. The market model says that the return on a security depends on the return on the market portfolio and the extent of the security’s responsiveness as measured by beta (b). In addition, the return will also depend on conditions that are unique to the firm. Graphically, the market model can be depicted as a line fitted to a plot of asset returns against returns on the market portfolio.
Market Risk: Risk, representing the probability of an adverse change in value, which is common to an entire class of assets or liabilities. It is the level of risk in the market that cannot be eliminated by diversification. Also known as systematic risk.
Market Timer: Investor who believes that he/she can predict the timing of changes in future market directions and invests based on this belief.
Market Price: The last reported sale price for exchange-traded security.
Marketweight: Specific rating within a three-part credit rating system which indicates whether fixed-income security should be bought (overweight), sold (underweight), or held (market weight).
Mark to Market Margin (MTM): Collected in cash for all Futures contracts and adjusted against the available Liquid Net worth for option positions. In the case of Futures Contracts MTM may be considered as Mark to Market Settlement.
Markup: A charge levied by a broker when selling securities from its own account to a customer. These sales as principals to a customer take place at the best ask price plus a commission equivalent to markup.
Matched Transaction: A check is carried out on the computer to find out whether purchases and sales as reported by the members match. The transactions, thus compared are called matched transactions. Maturity (Date) The date on which a loan, bond, or debenture becomes due for payment.
Maturity Value: The amount an investor receives when security is redeemed at maturity, not including any periodic interest payments. The value usually equals the par value although, on zero-coupon, compound interest, and multiplier bonds, the principal amount of the security at issuance plus the accumulated investment return on the security is included.
Mean: Average amount or value.
Mean Reversion Theory: Theory that assumes financial ratios and asset class returns have long-term equilibria (means), and that when there is a deviation from these equilibria, reversion to the equilibrium (mean) can be expected.
Median: Value of the middle figure in a distribution of values that have been ranked according to size. For example, a median performance among a universe of five managers would be the third-ranked manager. A median return is not the same as the mean and may be above or below it depending on the distribution of returns.
Merchant Banker: Any person who is engaged in the business of issue management either by making arrangements regarding selling, buying, or subscribing to securities or acting as manager, consultant, adviser, or rendering corporate advisory service in relation to such issue management.
Mergers and Acquisitions: Combining two companies to create one larger company that is expected to be more valuable than the individual companies on their own. In an acquisition, one company is a clear buyer aiming to completely take over a “target” company. The target company ceases to exist whilst the buyer company’s shares continue to e traded. In a merger, two companies (usually of similar size) cease to exist as individual companies (with separate stock on the market) and agree to operate as a completely new company with new stock being issued.
Mezzanine (private equity): Company whose flotation on a quoted market is imminent.
Meltdown: The phenomenon of fast, uncontrolled fall in share price.
Microcap Fraud: Microcap fraud typically takes one of the two forms. The first – the pump and dump scheme – often involves fraudulent sales practices, including pressure tactics from boiler room operations where a small army of sales personnel could call potential investors using scrips to induce them to purchase house stocks - stocks in which the firm makes a market or has a large inventory. The information conveyed to investors often is at best exaggerated and at worst completely fabricated. Increasingly these stocks are being touted on the internet by unregistered promoters. The promoters of these companies, and often company insiders, typically hold large amounts of stock and make substantial profits when the stock price rises following intense promotional efforts. Once the price rises, insiders and brokers sell, realizing their profits. Second, as part of pump and dump, unscrupulous brokers often employ a variety of fraudulent sales practices including bait and switch tactics, unauthorized trading, no net sales policies, and churning.
Modern Portfolio Theory (MPT): Blanket name for the quantitative analysis of assets and optimization of their collective composition, based upon their expected return, expected risk (standard deviation), and correlations. According to MPT, investors should only invest in portfolios (constituting of the previously analyzed assets) that generate the highest return at any given level of risk.
Momentum: The extent to which stock market values are supported by a strong level of trading activity and investor interest. Also refers to an investment style of purchasing stocks that have recently exhibited strong price growth.
Monetary Policy: Management of the economy by use of interest rates and money supply. Monetary policy can be used to reflate or deflate the economy.
Money Laundering: Process of converting the proceeds of illegal activities – disclosure of which would trigger financial losses or criminal prosecution – into real or financial assets whose origins remain effectively hidden from law enforcement officials and from society in general.
Money Market: The market encompassing the trading and issuance of short-term non-equity debt instruments, including treasury bills, commercial paper, bankers’ acceptance, certificates of deposits, etc. The market may be local or international.
Money Market Mutual Funds: Schemes investing exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc.
Mortgage Backed Securities: Securities backed by mortgage loans, including pass-through securities, modified pass-through securities, mortgage-backed bonds, and mortgage pay-through securities.
Mortgage Trust: Unit trust which invests in mortgage loans. Effectively the unit trust invests money in real estate and receives an interest return with security over the property which has been purchased. The interest which is charged on mortgage trust loans is normally higher than that of other sources of finance like banks so the investor usually receives a very competitive rate or return.
Moral Hazard: The risk that a party to a transaction has not entered into a contract in good faith has provided misleading information about its assets, liabilities, or credit capacity or has an incentive to take unusual risks in a desperate attempt to avoid losses.
Moody’s: Independent rating agency which assesses the creditworthiness of companies and their debt. The highest rating awarded is AAA, and the lowest is D. Other well-known agencies are Standard & Poor’s and Fitch Ratings.
Morgan Stanley Capital International (MSCI) Indices: Family of indices covering most main stock markets and regions worldwide.
Moving Average: An average of share prices for specified periods of one week, one fortnight, a month, or a year or years, showing trends of price movements, rather than daily fluctuations. For example, a weekly moving average will take a week’s prices till yesterday and for tomorrow’s average, it will drop on the earliest day and include today.
Mutual Funds /Unit Trusts: Mutual Fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in the offer document. A fund is established in the form of a trust to raise monies through the sale of units to the public or a section of the public under one or more schemes for investing in securities, including money market instruments.Stock Market Reference (A-Z)