| Dollar Bond
1: Municipal revenue bonds that are quoted and traded at a dollar price rather than at a yield to maturity.
2: Bonds that are issued in the United States by foreign companies and denominated in US dollars.
3: Bonds that are issued outside the United States and denominated in US dollars.
See: Eurobond; Eurodollar Bond
Dollar Cost Averaging
An investment method that involves consistently buying at regular intervals equal dollar amounts of a security, rather than a certain number of shares, regardless of the price. As a result, more shares are bought when prices are low than at high prices. Thus, the average cost is less than the average of the prices paid. However, the method does not guarantee a profit. The investor only profits if the sale price exceeds the average cost per share.
See: Accumulation; Average Down; Average Up; Dividend Reinvestment Plan; Monthly Investment Plan
A bond's price stated as a percentage of face value. For example, a dollar price of 95 represents 95% of face value or $950 per $1,000 face value.
See: Face Value
Donoghue's Money Fund Average
An average of major money market fund yields that is issued weekly in many newspapers for 7 and 30-day yields. Donoghue also tracks the maturities of the securities in the portfolios. Portfolios with short maturities are an indication that fund managers have the opinion that interest rates are going to rise.
See: Money Market Fund
Do Not Reduce (DNR)
A designation used on an order (specifically--buy limit, sell stop and sell stop-limit orders) to specify that an order's limit price should not be reduced by the amount of the dividend. When the stock goes ex-dividend, its price is reduced by the amount of the cash dividend. DNRs only apply to cash dividends.
See: Cash Dividend; Ex-Dividend; Stop Limit Order; Stop Order
Don't Fight the Tape
Brokerage lingo meaning that an investor should not buy aggressively when the market is falling and conversely, the investor should not sell short when during a market rally.
Don't Know (DK) Notice
Brokerage lingo used when dealers, or dealer to custodian, compare a transaction and the trade is unknown by one side. When a dealer receives a comparison for a trade that it does not recognize, the dealer will send the other party a DK notice.
DOT (Designated Order Turnaround)
Electronic system provided by the New York Stock Exchange (NYSE) and used by NYSE members to expedite execution of market orders for 1 to 2,099 shares. The system routes the orders directly from the member firm to the specialist. A similar system called "Super Dot" routes limit orders.
See: Limit Order; Market Order; Specialist
A municipal revenue bond that has two separate entities making a financial commitment. The project's revenues provide the initial security and the secondary guarantee is provided by the general obligation taxing powers of the issuer. To illustrate, a revenue bond would be double-barreled if a highway authority issues a bond that is secured by toll revenues and if the state also secures the bonds. Thus, if highway usage is low and toll revenues are insufficient to cover principal and interest payments, investors are safeguarded against default because of the state's guarantee.
Used in technical analysis, it is chart pattern of a stock's prices showing a drop in price, then a rebound, then another drop to the same low price. The pattern usually means the stock has support at that low price and should not decline further. However, if the stock's price does drop through that same low price, the security is expected to reach a new low.
See: Double Top; Technical Analysis
Corporate earnings taxed at both the corporate level and again as a stockholder dividend.
Used in technical analysis, it is chart pattern of a stock's prices showing a rise to a high price, then a drop, then rebound to the same high price. The pattern usually means the stock is resisting a move to go higher. However, if the stock's price does move through that same high price, the security is expected to achieve a new high.
See: Double Bottom; Technical Analysis
Dow Jones Composite
Combination of the Dow Jones Industrial Average (DJIA), Dow Jones Transportation Average (DJTA) and the Dow Jones Utility Average (DJUA).
See: Dow Jones Industrial Average; Dow Jones Transportation Average; Dow Jones Utility Average
Dow Jones Industrial Average (DJIA)
Average of the prices of 30 well-known, predominantly blue-chip, industrial stocks. The following 30 stocks make up the DJIA as of February 1995: Allied Signal; Alcoa, American Express; A T & T; Bethlehem Steel; Boeing; Caterpillar; Chevron; Coca Cola; Disney; Dupont; Exxon; General Electric; General Motors; Goodyear; IBM; International Paper; Kodak; McDonalds; Merck; 3M; JP Morgan; Philip Morris; Proctor Gamble; Sears; Texaco; Union Carbide; United Tech; Westinghouse and Woolworth.
See: Dow Jones Composite; Dow Jones Transportation Average; Dow Jones Utility Average
Dow Jones Transportation Average (DJTA)
Average of the prices of 20 representative transportation companies.
See: Dow Jones Composite; Dow Jones Industrial Average; Dow Jones Utility Average
Dow Jones Utility Average (DJUA)
Average of the prices of 15 geographically representative gas and electric utility companies.
See: Dow Jones Composite; Dow Jones Industrial Average; Dow Jones Transportation Average
An assessment as to the extent that a security could decline in value--considering all possible factors that could affect the security's market price.
Also called "minus tick," the sale of a listed stock at a price that is less than the previous sale price. For example, if a stock traded at $12 a share, the next trade would be a downtick if it is at 11 7/8.
See: Minus Tick
A decline in a stock market or economic cycle.
See: Economic Growth Rate; Economic Indicators
Market theory whereby a major stock market trend must be corroborated by a similar movement in the Dow Jones Industrial Average and the Dow Jones Transportation Average. A trend is confirmed only when both Dow Jones indexes obtain new highs or lows. If they do not, the market will return to its previous trading range. Believers of the Dow Theory frequently disagree on when a true trend is taking place.
See: Dow Jones Industrial Average; Dow Jones Transportation Average
DPP (Direct Participation Program)
A business venture, usually organized as a limited partnership, that is structured to pass-through income and "tax losses" of the underlying investments to investors. However, its use as a tax shelter has been severely reduced by tax legislation.
See: Limited Partnership
Actions that are taken by the Federal Reserve to reduce the money supply in order to cut the funds available to banks for lending purposes. The Fed accomplishes this by:
* Raising reserve requirements--banks will need to keep more money on deposit with Federal Reserve banks;
* Escalating the rate that banks borrow to maintain reserves--making it unattractive to drain reserves by making loans; and
* Selling bonds at such attractive rates that dealers will reduce their bank balances to buy them.
See: Federal Reserve System
DRIP (Dividend Reinvestment Plan)
A program in which a dividend paying company (especially mutual funds) will automatically reinvest an investor's dividend to purchase additional shares of the company's stock. The dividend is still taxable by the IRS. In participating in a DRIP, an investor uses dollar cost averaging to increase their amount of capital in the stock.
See: Dollar Cost Averaging
DTC (Depository Trust Company)
A central securities certificate repository that is a member of the Federal Reserve System and is industry-owned. The New York Stock Exchange is the majority owner. DTC members deliver securities to each other via computerized debit and credit entries. This reduces the need to actually move paper certificates.
See: Federal Reserve System
A security that is listed on more than one exchange--either the New York Stock Exchange and a regional exchange or the American Stock Exchange and a regional exchange. However, a security may not be listed on both the New York and American stock exchanges. Being dual listed increases the liquidity of a security.
See: American Stock Exchange; Listing Requirements; New York Stock Exchange
Dual Purpose Investment Company
An exchange listed closed-end investment company that issues two classes of shares--income and capital. The income (preferred) shareholders receive all the income (dividends and interest) from the portfolio, and the capital (common) shareholders receive all the capital gains. As dual purpose funds are not highly traded, many analysts do not follow them closely.
See: Closed End Fund
A written notification that either dividends, interest, or other distributions are owed by the seller to the buyer or vice versa. For example, a security is purchased prior to its ex-dividend date and the seller does not deliver the security until after the dividend's record date. The security is delivered with a due bill attached because the seller will receive the dividend in which he is not entitled. The seller's name was on the company books even though he no longer owned the security. The due-bill is a notification that the purchaser is entitled to receive the dividend. Conversely, if a security is purchased ex-dividend (without dividend) and the security is delivered before the record date, the buyer's name will be on the company books on the record date. The buyer will receive a dividend in which he is not entitled. The buyer signs a due bill stating that the dividend he receives is payable to the seller.
Event that occurs when a seller offers a large amount of stock for sale with no concern as to how it will affect the stock's price or the market.
Dun & Bradstreet (D & B)
Company that provides subscribers with a ratings directory and credit reports of corporations. It also publishes financial composite ratios and offers an accounts receivable collection service. Moody's Investor Service, which rates bonds and commercial paper, is a subsidiary of D & B.
See: Moody's Investors Service; Rating
Auction method used in which the security's price is gradually lowered until it meets an acceptable bid and is sold. The Treasury uses this auction system when selling new notes or bonds to determine the lowest bid price (stop-out price). The opposite is the "auction market" system used by major stock exchanges.
See: Treasury Bill
Dutch Auction Preferred Stock
Type of adjustable rate preferred stock whereby the dividend to be paid is determined in a Dutch Auction process that occurs every seven weeks. Shares are bought and sold at face values that range from $100,000 to $500,000 per share.
See: Dutch Auction; Face Value; Preferred Stock
DVP (Delivery versus payment)
Securities industry procedure whereby the sold securities are delivered to the buyer's bank in exchange for payment. From the seller's perspective, it is called "receive versus payment." Institutional customers customarily use delivery versus payment to make settlement on transactions. It is also referred to as COD (cash on delivery) transactions.