T+1, T+2, T+3: Abbreviations that refer to the settlement date of security transactions. The T stands for the day the transaction takes place. The numbers 1, 2, and 3 denote how many days after the transaction date the settlement or the transfer of money and security ownership takes place
Tactical Asset Allocation (TAA): Short-term deviation from a strategic asset allocation to exploit predicted short-term relative movements in markets with the aim of generating excess return relative to a benchmark (typically, the strategic asset allocation).
Tail Risk: A form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean or expected return, is greater than what is shown by a normal distribution.
Taligating: When a broker or advisor purchases or sells a security for their client(s) and then immediately does the same transaction in his/her own account. This is not illegal like front running but is still considered to be unethical because the broker is usually placing a trade for his/her own account based on what the client knows (like inside information).
Take a Bath: To suffer a big loss, either through speculation or investment so and so has taken a bath in XYZ shares.
Takeover: Corporate action where one company makes a bid to acquire another. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
Target Company: A Target company is a listed company i.e. whose shares are listed on any stock exchange and whose shares or voting rights are acquired/ being acquired or whose control is taken over/being taken over by an acquirer.
Target Price: When an investor has bought a share, usually he has a higher price in mind which he expects the share to reach. This is the target price. It is wise in the long run to fix such a target price for every share bought and book profit when the share has reached it, rather than hold it indefinitely, hoping that the price will rise further. Most gains are made in the stock market by acting on the target price, as most losses are made in the stock market by acting on the target price, as most losses are the results of holding on to a share in the hope that it has an endless possibility of appreciating.
Technical Analysis: A method of prediction of share price movements based on the study of price graphs or charts on the assumption that share price trends are repetitive, that since investor psychology follows a certain pattern, what is seen to have happened before is likely to be repeated. The technical analyst is not concerned with the fundamental strength or weakness of a company or an industry, he studies investor and price behavior.
Tender Offer: A tender offer means an offer by a company to buy back its specified securities through a letter of offer from the holders of the specified securities of the company.
Term Deposit: Bank deposit for a fixed period of time. The interest rate may be fixed at the outset or variable
Thin Market: Stock Market in which there is a thin volume of trading and little liquidity. Because the trading volume is low there may be a lot of volatility, as traders have to offer lower prices to attract buyers and sellers can ask for higher prices.
Tier 1 Capital: Describes the capital adequacy of a bank. Tier 1 capital is core capital that includes equity capital and disclosed reserves.
Tier 2 Capital: Describes the capital adequacy of a bank. Tier 2 capital is secondary bank capital that includes items such as undisclosed reserves, general loss reserves, and subordinated term debt.
Tiger Economy: Nickname is given to the economies of Southeast Asia encompassing markets such as Indonesia, Singapore, Malaysia, Thailand, South Korea, and China.
Tombstone: An advertisement placed in a financial newspaper or magazine to announce the completion of a syndicated loan or a new issue of securities. It is called a tombstone because it consists of little more than a list of names and dates. The names are those of the borrower (who pays for the tombstone) and of the financial institutions which participated in the deal. They are ordered in strict seniority, the size of the typeface indicating their importance in the deal. Within the same rank, participants are listed strictly alphabetically. The more the tombstones there are, the less dead is the market.
Time Value (of an option): Part of a traded option’s value that can be attributed to the possibility of future market movements adding to the value of the option. It is reflected by the difference between the traded price of the option and the intrinsic value of the option.
Time-Weighted Rate of Return: Rate of return on an asset or portfolio that adjusts for the effect of cash flows. The time-weighted return can be used to compare portfolio performances against each other and against market indices.
Tokyo Stock Price Index (TOPIX): Index measuring the share prices of selected companies listed on the Tokyo Stock Exchange.
Top Down Investing: an approach to investment analysis that starts from macroeconomic factors (GDP growth, interest rates, inflation, etc.) and business cycle analysis to identify a portfolio distribution across asset classes, then a country/currency mix, a sector distribution, and ultimately a stock selection. It is the converse of the bottom-up approach.
Toronto Stock Exchange (TSX): Largest stock exchange in Canada, historically home to a large number of natural resource companies.
Total Expense Ratio: Total costs experienced by investors in an investment fund, divided by the total asset value of the fund. The total costs include management fees (asset-based or performance-related), transaction costs, broking fees, and auditor fees, among others.
Toxic Asset: Asset for which for which the secondary market has disappeared, on the basis that the asset is expected to incur significant future losses. Investors holding toxic assets may be forced to sell these at large discounts to book value, in order to raise liquidity and stabilize their balance sheets.
Tracking Error: Measure the variability of investment returns relative to a benchmark or index. It is usually expressed as the annualized standard deviation of relative returns. Can be expressed as either ex-post, which is simply the historical tracking error, or ex-ante, which is a forward-looking estimate of the future tracking error.
Trading Band: An envelope or channel created by plotting two lines at a set distance above and below a moving average. The two lines contain normal price fluctuations. If the price goes outside the band, the strength or weakness of the trend is extraordinary.
Trading Pattern: Finding the long-term direction of a share’s price by drawing a line connecting the highest prices reached by the share and another line connecting the lowest prices on a chart over a period of time. The direction will be either up or down, showing the share's trading pattern.
Trade Netting: A legally enforceable consolidation and offsetting of individual trades into net amounts of securities and money due between trading partners or among members of a clearing system. A netting of trades that is not legally enforceable is position netting.
Trading Member: A member of the derivatives exchange or derivatives segment of a stock exchange who settles the trade in the clearing corporation or clearinghouse through a clearing member.
Transaction Statement: The depository participant gives a Transaction Statement periodically, which will detail current balances and various transactions made through the depository account. If so desired, DP may provide the Transaction Statement at intervals shorter than the stipulated ones, probably at a cost.
Transfer Agents: An agent designated by the company to carry out the function of transfer of shares. Transfer Forms Forms which have to accompany the share certificate for effecting a valid transfer of ownership from the seller to the buyer
Trend: Any short, medium, or long time direction of the movement of stock prices, upward, downward, or sideways. This shows the direction the market is moving in at a particular time.
Trend Analysis (TA): Type of technical analysis used to determine or locate significant trends in security.
Trendline (TA): A straight line on a chart that connects consecutive tops or consecutive bottoms of prices. Trendlines are used to identify levels of support and resistance.
Triple Bottom Line (TA): Holistic approach to measuring a company’s performance on environmental, social, and economic issues. The triple bottom line focuses companies not just on the economic value they add but also on the environmental and social value they add or destroy.
Treasury Bills: A short-term bearer discount security issued by governments as a means of financing their cash requirements. Treasury Bills play an important role in the local money market because most banks are required to hold them as part of their reserve requirements and because central bank open market operations undertaken in the process of implementing monetary policy are usually conducted in the treasury bill market.
Triangle: A chart pattern of Technical Analysis in which there are two base points and an apex on the left. If the apex is one the right it makes a reverse triangle. In a proper triangle, there are a number of rallies and price drops where each succeeding really is smaller than the preceding one and each bottom is higher than the last one. When the share’s price breaks out of the triangle formation upwards or downwards, it is supposed to indicate that the rise or fall will continue for some time.
Trustee: Legal custodian who looks after all the monies invested in a unit trust or mutual fund.
Two and Twenty: The fee structure is usually employed by hedge funds and some private equity managers, with a base fee of 2% of the fund’s asset value plus a fee of 20% of the outperformance of the fund.
Two Sided Market (U.S.): The obligation imposed on market makers is that they make both firm bids and firm offers in each security in which they deal.
Stock Market Reference (A-Z)