Grey Wave

Grey Wave

An investment or company thought to be profitable in the long-term or very long-term. The investor should not plan for an immediate or even short-term positive return, but rather only when s/he is much older and has grey hair. Grey wave is related to one of the most critical investing concepts - time horizon. Before making investment decisions an investor needs to take into careful consideration when s/he will need to either withdraw the principal or begin drawing down on the dividends and return. The longer the time horizon the more room an investor has for potential mistakes, to adjust to market swings and to benefit from compounding interest.

Gilt Fund

Gilt Fund

A mutual fund that invests in several different types of medium and long-term government securities in addition to top quality corporate debt. Gilts originated in Britain. Gilt funds differ from bond funds because bond funds invest in corporate bonds, government securities, and money market instruments. Gilt funds stick to high quality-low risk debt, mainly government securities. t stores credit card number and shipping details. This wallet initiates the data encryption in a SET transaction.

Electronic Wallet

Electronic Wallet (E-Wallet)

Software, residing as a plug-in in the Web browser, that enables a cardholder to conduct online transactions, manage payment receipts and store digital certificates. Digital wallet stores credit card number and shipping details. This wallet initiates the data encryption in a SET transaction.

Bond Fund

Bond Fund

A fund invested primarily in bonds and other debt instruments. The exact type of debt the fund invests in will depend on its focus, but investments may include government, corporate, municipal and convertible bonds, along with other debt securities like mortgage-backed securities. For investors interested in bonds, a Morningstar bond style box can be used to sort out the investing options available for bond funds. Investors should note that U.S. government bonds are considered to be of the highest credit quality and are not subject to ratings.

Ultra-Short Bond Fund

Ultra-Short Bond Fund

A type of bond fund that invests only in fixed-income instruments with very short-term maturities. An ultra-short bond fund will ideally invest in instruments with maturities around one year. This investing strategy tends to offer higher yields than money market instruments, with less price fluctuations than a typical short-term fund. Ultra-short bond funds offer investors greater protection against interest rate risk than longer term bond investments. Since these funds have very low durations, increases in the rate of interest will affect their value less than a medium or long-term bond fund. While this strategy offers more protection against rising interest rates, they usually carry more risk than most money market instruments. While certificates of deposits follow regulated investment guidelines, an ultra-short bond fund has no more regulation than a standard fixed-income fund.

Hybrid Fund

Hybrid Fund

A category of mutual fund that is characterized by portfolio that is made up of a mix of stocks and bonds, which can vary proportionally over time or remain fixed. Morningstar separates hybrid funds into domestic hybrid and international hybrid categories. In the hybrid category, balanced funds tend to stick to a relatively fixed allocation of stocks and bonds. Actively managed asset allocation funds tend to have portfolios with a mix of stocks and bonds that responds to market conditions as perceived by the fund manager. Passively managed asset allocation, life-cycle and target-date funds generally have a stock-bond mix that changes over a lifetime, moving progressively from aggressive to more conservative structures.

Balanced Fund

Balanced Fund

A fund that combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation A balanced fund is geared toward investors who are looking for a mixture of safety, income and modest capital appreciation. The amounts that such a mutual fund invests into each asset class usually must remain within a set minimum and maximum.

Trade Deficit

Trade Deficit

An economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets. Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United States for the past few decades, which has some economists worried. This means that large amounts of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it more costly to purchase imports.

Current Face

Current Face

The current par value of a mortgage-backed security (MBS). Current face is determined by multiplying the current pool factor by the mortgage-backed security's original face value. A mortgage-backed security's current face represents the outstanding principal balance (or its outstanding face value) of the mortgage's underlying the security. If the MBS pays interest and principal on payment dates, the current face will decline after each payment is made.

Mismatch Risk

Mismatch Risk

A category of risk that refers to the possibility that a swap dealer will be unable to find a suitable counterparty for a swap transaction for which it is acting as an intermediary. The risk that an investor has chosen investments that are not suitable for his or her circumstances. A number of different factors can make it difficult for a swap bank to find a counterparty for a swap transaction. For example, wanting to participate in a swap with a very large notional principal may limit the number of available counterparties. A mismatch between investment type and investment horizon can be a source of mismatch risk. For example, mismatch risk would exist in a situation where an investor with a short investment horizon (such as one who is near retirement) invests heavily in speculative hi-tech stock. Typically, investors with short investment horizons should focus on less speculative investments such as fixed income securities and blue chip equities.

Hard Currency

Hard Currency

A currency in which investors have confidence, such as that of an economically and politically stable country. Hard currencies serve as means of payment settlements because they do not suffer from sharp exchange rate fluctuations. Large, international transactions are often settled in one hard currency or other. The market to buy and sell hard currencies is especially liquid, even by the standards of foreign exchange trading. The price of a hard currency often remains stable in the short-term. Examples of hard currencies include the U.S. dollar, the British pound, the euro, and the Japanese yen.