- ABS
- Abbreviation for Asset Backed Securities
- Accepted bill
- Drawn bill of exchange which has been accepted by the drawee (the principal debtor). This endows the payment instruction with an obligation to pay on the part of the drawee. The opposite of an accepted bill is a bill of exchange, which does not contain the drawee's signature. There are different types of accepted bills:
short and full accepted bills;
partial accepted bills (whereby the drawee is only liable for part of the total sum indicated on the bill of exchange);
collateral acceptance (recourse guarantee).
- Accrued interest paper
- Security which is issued at face value but which does not bear regular interest; however, in addition to the capital sum, the repayment sum includes interest and compound interest. Repayment is usually made after an agreed fixed term. The amount of interest is determined on the date on issue. The opposite of accrued interest paper is interest discount paper.
- Accumulation of profits
- This term actually refers to the accumulation of securities. It is used to define the reinvestment of interest and similar income from securities which is are not distributed but invested in new securities. In general, the retention or non-distribution of profits.
- Act./Act.
- Day-count convention according to which interest is calculated on an exact days basis, taking account of the actual number of calendar days. This method is commonly used in the bond market.
- Act./360
- Day-count convention according to which interest on credits is calculated on an exact days basis and which is based on a 360-day calendar year. This method is generally applied in the money market and will likely be applied in ESCB monetary policy operations.
- Ad hoc publicity
- Immediate publication of facts which are likely to have a significant influence on the market price of a security (§ 15 of the WphG [Securities Trading Act]). The necessary so-called sector publicity must take the form of publication in at least one nationwide official stock exchange gazette or via an electronically-operated information circulation system. Prior to publication, the issuer must notify the stock exchanges at which the securities are listed for trading and the Federal Supervisory Board.
- Adaptation
- If changes occur in the conditions of the capital market, it is possible to adapt the entire loan, or individual conditions of the loan, to the changes in the capital market. Adaptation is possible in terms of interest rate term and/or repayment.
- Address
- Stock market term for investors or issuers. In terms of creditworthiness, a 'prime address' is classified first class and, generally speaking, is accorded more favourable conditions in the money or capital market than less attractive addresses.
- Address non-payment risk
- see Credit risk
- ADR
- Abbreviation for American Depositary Receipt
- AG
- Abbreviation for Aktiengesellschaft (Joint-stock company)
- AIBD
- Abbreviation for Association of International Bond Dealers, now known as the ISMA
- Altersvorsorge-Sondervermögen
- New investment fund product for retirement pension savings. Capital invested with an investment company against issuance of unit certificates and assets thus acquired constitute special assets. Such assets are to be kept separate from the investment company's own assets and are not liable for the company's debts. Retirement pension special assets are subject to special stipulations: funds must largely be invested in blue-chip companies; equity weighting max. 75%; share of open real estate funds and directly held real estate interests max. 30%; dormant holdings max. 10%. Investment companies are obliged to offer the following: savings plans and withdrawal plans with regular payments including the option to regroup assets as investors approach retirement; no later than after three quarters of the lifetime of the contract.
- American Depositary Receipt (ADR)
- Negotiable share certificates issued by major US banks, related to non-American shares deposited with them. ADR's are generally issued in a ratio of 1:1 for 100 foreign shares, but they may also be issued for smaller quantities. They are designed to simplify, accelerate and reduce the cost of dealing. Due to specific stock exchange trading regulations, some foreign shares are only traded in this form on the US stock exchanges.
- American option
- Purchase or sales option (Option dealing) which can be exercised at any time during its term. The opposite of the American option is the European option.
- American Stock Exchange (AMEX, ASE)
- In comparison with the NYSE, a very important US securities exchange. Located in New York, it is principally concerned with trading in securities which are not listed on the main stock exchange. Frequently, the introduction to the AMEX of the shares of a company is the prelude to quotation on the NYSE.
- AMEX
- Abbreviation for American Stock Exchange
- Annual statement of account
- The balance sheet and the profit and loss account together form the annual statement of accounts. Under commercial law, the businessman, at the beginning of his commercial enterprise and at the end of each trading year, is required to prepare a statement of accounts (opening balance, balance sheet) showing the relationship between his assets and liabilities. The profit and loss account, as the final bookkeeping account, summarises the expenditure and income for the trading year and indicates the annual profit or annual loss. The legal representatives of the corporate enterprise are required to attach an annex to the annual statement of accounts, contain explanatory notes regarding the balance sheet and the profit and loss calculation.
- Annuity
- The total interest and repayment rates to be paid annually on a loan. In the case of annuity repayment, this amount remains constant throughout the term of the loan, whereby the repayment share increases annually by the amount of interest saved.
- AR
- German abbreviation for Aufsichtsrat; (see Supervisory Board)
- Arbitrage
- Transactions involving the simultaneous exploitation of differences in prices, market prices or interest rates at different trading centres, by purchasing in markets with a low rate and selling in markets with a high rate. According to the type of quoted securities, the term arbitrage is applied to dealings in foreign exchange, foreign notes and coins, bills of exchange, precious metals and commodities.
- Arranger
- Manager of a consortium in the case of credit syndicates and flotations. The arranger is responsible for the documentation and the placement mechanism. He is comparable with the lead manager of an international loan.
- ASE
- Abbreviation for American Stock Exchange
- Asian option
- Option whose basic price is not fixed in advance but is determined, e.g., from the mean underlying market prices over a specific period.
- Asset
- Assets are all the capital of a firm that are compared with the commitments liabilities in the balance sheet. The assets provide information on the use of the capital invested in the firm.
- Asset Backed Securities (ABS)
- The purpose of ABS is to transform previously non-liquid assets into fixed-interest, negotiable securities. As security, specific financial assets of a company (such as accounts receivable from mortgages, consumer loans, leasing contracts, etc.) are placed in a pool of accounts receivable which is managed in trust by a financing company. The cash flow of the financial assets converted into securities are placed at the disposal of the loan creditor.
- Asset rights
- The Federal Government debenture bonds are issued as so-called asset rights, which are entered in the Federal Debt Register. This means that no effective papers (securities instruments) exist for these documents. The investor can choose between a deposit credit note (collective share) and individual claim for payment of a debt. In the latter case, his share is entered separately in the #FedDebtReg">Debt Register and maintained directly by the Federal Debt Administration.
- Asset swap
- Interest rate swap through which a fixed-interest asset is transformed within the framework of a separate valuation unit into a variable-interest asset.
- Assignment by security
- Also referred to as cession by security. It is a form of suretyship loan security, but is not expressly regulated by law. Credit can be secured in such a way that debts and other rights of the borrower can be assigned to the credit institution issuing the credit. In addition, a debt which the borrower owes to a third person can be assigned to the credit institution by means of a contract. This contract of assignment is concluded between the creditor of this debt, known as the assignor, and the credit institution or another secured party, known as the assignee, without the participation of the debtor. The contract is valid without formalities. In addition to this silent cession, there is also the open cession, whereby the third party debtor is informed about the assignment. There are also other types of assignment: the individual assignment of debts and blanket and all-inclusive cession. While, in the case of the blanket cession, the borrower assigns different outstanding debts, future debts only count as assigned when these debts have been lodged with the bank, in the case of all-inclusive cession, he assigns all current and future debts owing to specific third party debtors, so that these are regarded as assigned as soon as they arise.
- Assignment of debt (cession)
- Contractual transfer of a debt from the creditor to a third party. In so doing, the new creditor (assignee) takes the place of the old (assignor). In banking the assignment of debt is frequently used to guarantee loans.
- At-the-money
- One option is at-the-money, if its basic price corresponds approximately to the current rate of the base value.
- Attendance stock exchange
- Conventional stock exchange trading which continues to take place with the physical presence of the market participants on the dealing floor. In Germany and the USA, stock exchange dealing is primarily organised on the principle of the attendance stock market. This involves the daily attendance of the market participants at the stock exchange during normal trading hours, when they execute customer orders or their own business, in the form of personally-negotiated contracts with interested parties or their representatives. For a transaction between the market participants to be legally binding, in accordance with stock exchange convention, the 'spoken word' is sufficient.