Category: Financial Terms

Debt Consolidation: What It Is and How to Use It Wisely Debt consolidation means combining multiple debts into a single new loan or credit account. The goal is to simplify payments and — ideally — lower the interest rate or monthly payment. It can make managing debt easier, but it’s not automatically the cheapest or…

Debt Collector: Definition, How They Work, and Your Rights Key takeaways A debt collector is an individual or company hired to recover past-due consumer debts or a company that buys delinquent debt and attempts to collect it. Collectors are typically paid a fee or a percentage of what they recover; debt buyers keep the full…

Debt: What It Is and How It Works Definition Debt is a financial obligation in which one party borrows money or receives goods/services with the agreement to repay the lender, usually with interest. Debt can be secured (backed by collateral) or unsecured (based on the borrower’s creditworthiness). Key takeaways Consumers use debt to fund purchases…

Debit Note A debit note (or debit memo) is a document used in commercial transactions to record an increase in a buyer’s liability or to notify a seller of returned goods. It serves as a formal communication that an account has been debited or that an adjustment is required, and it helps maintain accurate records…

Debit Card A debit card is a payment card linked directly to your checking account. When you use it, funds are withdrawn from your account to pay merchants or to withdraw cash at ATMs. Debit cards function like electronic cash—you’re spending money you already have rather than borrowing. Key takeaways Debit cards draw funds from…

Debit Balance Definition A debit balance in a margin account is the amount of money an investor owes their broker for funds borrowed to purchase securities on margin. It represents the loan portion of the position financed by the broker. How margin and debit balances work Cash account: you can only use the cash you…

Debit Definition A debit is an accounting entry that, in double-entry bookkeeping, increases assets or expenses or decreases liabilities, equity, and revenue. Debits are recorded on the left side of a ledger and must be offset by corresponding credits on the right side so the books remain balanced. The abbreviation “dr” is sometimes used for…

Understanding Debentures Key takeaways * A debenture is an unsecured debt instrument issued by corporations or governments that relies on the issuer’s creditworthiness rather than pledged collateral. * Debentures pay periodic interest (coupons) and have specified maturities; some are convertible into equity. * Major risks include credit/default risk, interest-rate risk, and inflation risk. In bankruptcy,…

Death Taxes Death taxes—commonly called estate or inheritance taxes—are taxes on the transfer of assets when someone dies. They apply only to relatively large estates and vary by federal and state law. How they work Estate tax: Levied on the deceased’s estate before assets are distributed to beneficiaries. The federal estate tax rate ranges from…

Death Cross Key takeaways * A death cross appears when a short-term moving average (commonly the 50-day) crosses below a longer-term moving average (commonly the 200-day). * Despite its ominous name, historical evidence often shows modest or positive returns after a death cross, especially over short- to medium-term horizons. * The pattern is better viewed…

Death Benefit A death benefit is a payment made to a named beneficiary from a life insurance policy, annuity, or pension when the insured person dies. It provides financial support for funeral costs, outstanding debts, and ongoing living expenses. Payments are typically a lump sum or installments and often bypass probate, enabling faster access to…

Dealer Market A dealer market is a financial market structure in which multiple dealers (market makers) post the prices at which they are willing to buy (bid) and sell (ask or offer) a security. Dealers use their own capital to provide liquidity, standing ready to trade against investors rather than simply matching buyers with sellers….

Dealers: Definition, Role, and Regulation Key takeaways A dealer buys and sells securities for its own account and acts as a principal in trades. Dealers help create liquidity and make markets by posting bid and ask quotes. Dealers must register with the SEC, join self‑regulatory organizations (e.g., FINRA), and meet other regulatory requirements. Dealers differ…

Deadweight Loss Definition Deadweight loss is the loss of economic efficiency that occurs when the quantity of a good or service traded is below the socially optimal level. It represents the total surplus (consumer plus producer) that is not realized because market transactions that would have benefited both buyers and sellers do not occur. Key…

Deadweight Loss of Taxation: Definition, How It Works, and Examples Key takeaways * Deadweight loss of taxation is the economic inefficiency that arises when a tax reduces the quantity of a good or service traded below the market equilibrium. * It represents lost consumer and producer surplus that is not captured by government revenue. *…

Dead Cat Bounce: What It Means in Investing Definition A dead cat bounce is a short-lived, often sharp rally in an asset’s price that occurs during a longer-term downtrend and is followed by a continuation of the decline. The term reflects the idea that even a severely falling asset can briefly rebound before resuming its…

Understanding the De Minimis Tax Rule: Definitions & Examples Overview The de minimis tax rule determines whether the gain on a bond bought at a discount is taxed as a capital gain or as ordinary income. For municipal bonds, the IRS treats a very small market discount as insignificant (de minimis). If the discount is…

Days Working Capital Days working capital (DWC) measures how many days it takes a company to convert its working capital into sales. It expresses operational efficiency and short-term liquidity: fewer days means the company is converting resources into revenue more quickly. Understanding working capital Working capital (also called net working capital) is the difference between…

Days Sales Outstanding (DSO) What is DSO? Days Sales Outstanding (DSO) measures the average number of days a company takes to collect payment after making a credit sale. It’s a key indicator of receivables efficiency and short-term liquidity, and it forms part of the cash conversion cycle. Why DSO matters Shows how quickly sales convert…

Days Sales of Inventory (DSI) What is DSI? Days Sales of Inventory (DSI) measures how many days, on average, a company holds inventory before selling it. It gauges inventory liquidity and operational efficiency: lower DSI generally indicates faster turnover and less cash tied up in inventory, while higher DSI can signal slow-moving, obsolete, or intentionally…

Days Payable Outstanding (DPO) What is DPO? Days Payable Outstanding (DPO) is a financial ratio that measures the average number of days a company takes to pay its trade creditors (suppliers and vendors). It shows how long cash is retained before being used to settle payables and helps assess working capital management and liquidity. Formula…

Day Trader Basics: Techniques, Strategies, and Risks What is a day trader? A day trader buys and sells financial instruments—stocks, options, currencies, or futures—within the same trading day, closing positions before the market closes to avoid overnight exposure. Day traders aim to profit from short-term price movements rather than long-term fundamentals. The approach requires fast…

What Is a Day Order? Definition, Duration, Types, and Example Definition A day order is an instruction to buy or sell a security at a specified price that remains active only for the current trading session. If the order is not executed by market close, it is automatically canceled. Day orders are commonly used as…

Day-Count Convention Day-count conventions are standardized rules for counting the number of days between two dates when calculating interest, accrued interest, or present value for financial instruments. They determine the denominator and numerator used in interest formulas and therefore affect pricing, cash flows, and valuation. Why day-count conventions matter They determine how much interest accrues…

DAX Stock Index: Definition and Member Companies What is the DAX? The DAX (Deutscher Aktien Index, also called GER40) is Germany’s primary blue‑chip stock index. It tracks the performance of 40 of the largest and most liquid companies traded on the Frankfurt Stock Exchange. Created in 1988, the DAX is widely used as a barometer…

David Tepper: Early Life, Appaloosa, Investing in Debt Key takeaways * Renowned hedge fund manager and co-founder of Appaloosa Management L.P. * Known for distressed-debt investing and bold, contrarian trades (notably after the 2008 crash). * Owner of the NFL’s Carolina Panthers and a major philanthropist to Carnegie Mellon University. Early life and education David…

David Ricardo David Ricardo was a leading classical economist whose 19th-century theories helped shape modern economics. His work on comparative advantage, the distribution of income, and the relationship between labor and value remains influential in trade theory, political economy, and public finance. Early life and career Born in England in 1772, Ricardo entered his father’s…

Data Universal Numbering System (DUNS) Number What it is A DUNS number is a unique nine-digit identifier for businesses created and issued by Dun & Bradstreet (D&B). Introduced in 1963 and adopted by the U.S. government in the 1990s as a standard identifier, the DUNS number links a business to a D&B profile that includes…

Data Warehousing A data warehouse is a centralized, secure repository that stores an organization’s historical data for analysis and reporting. Designed to support business intelligence, it aggregates structured data from multiple sources and preserves snapshots over time so analysts and decision-makers can spot trends, compare performance, and make informed plans. Key takeaways Data warehouses store…

Data Smoothing: Definition and Purpose Data smoothing is the process of using an algorithm to reduce noise or volatility in a data set so that underlying patterns and trends become clearer. It helps analysts, economists, and investors see longer-term movements by downplaying short-term fluctuations and one-time outliers, and by accounting for seasonality. Key takeaways Smoothing…

Data Mining Data mining uses algorithms and computing techniques to analyze large datasets, uncover patterns, and extract actionable insights. Organizations apply it to improve marketing, detect fraud, optimize operations, and inform strategic decisions. Effective data mining depends on quality data collection, storage, and processing. How data mining works (overview) Data is gathered from internal systems,…

Data Analytics: What It Is and How It’s Used Key takeaways * Data analytics examines raw data to reveal patterns, trends, and actionable insights. * The process includes collecting, cleaning, storing, analyzing, and presenting data. * Four core types: descriptive, diagnostic, predictive, and prescriptive. * Common techniques include regression, factor analysis, cohort analysis, Monte Carlo…

Darvas Box Theory Key takeaways A momentum-based trading method that identifies breakouts using price “boxes” drawn around recent highs and lows. Entry: buy when price breaks above a box’s ceiling (preferably on rising volume). Exit: use the previous box’s ceiling as a trailing stop; sell if price falls back into or below the box. Works…

Understanding the Dark Web: Privacy, Security, and Legal Concerns The dark web is a portion of the internet intentionally hidden from standard search engines and accessible only through specialized software. It provides a high degree of anonymity and encryption, which makes it useful for privacy-sensitive activities but also attractive for illicit uses. What the dark…

Dark Pools Dark pools are private trading venues that allow institutional investors to buy and sell large blocks of securities anonymously. By keeping order details hidden until after execution, dark pools reduce the market impact of big trades and help preserve price stability for participants that might otherwise move markets by revealing large orders. Key…