Glossary

Below are some of the most used terms and definitions in the world of banking, finance and investment.

Dealer

  1. An individual or firm willing to buy or sell securities for their own account.
  2. One who purchases goods or services for resale to consumers.

Denomination

A classification for the stated or face value of financial instruments, including currency notes and coins, as well as bonds and other fixed-income investments. Denomination may also refer to the base currency in a transaction, or the currency in which a financial asset is quoted. This further classification helps clarify acceptable payment options in transactions.

Depository Receipt

A negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange.

Depression

A severe and prolonged recession characterized by inefficient economic productivity, high unemployment and falling price levels.

Devaluation

A deliberate downward adjustment to a country's official exchange rate relative to other currencies. In a fixed exchange rate regime, only a decision by a country's government (i.e central bank) can alter the official value of the currency. Contrast to "revaluation".

Discounted Cash Flows - DCF

A valuation method used to estimate the attractiveness of an investment opportunity. Discounted cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one.

Dividend

  1. A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield. Also referred to as "Dividend Per Share (DPS)."
  2. Mandatory distributions of income and realized capital gains made to mutual fund investors."