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- Tactical asset allocation (TAA)
- An asset allocation strategy that allows active departures from the normal
asset mix based upon rigorous objective measures of value.
- Tangible asset
- An asset whose value depends on particular physical properties. These
include reproducible assets such as buildings or machinery and non-
reproducible assets such as land, a mine, or a work of art. Related: Intangible
asset
- Tax-exempt sector
- The municipal bond market where state and local governments raise funds.
Bonds issued in this sector are exempt from federal income taxes.
- Technical analysts
- Also called chartists or technicians, analysts who use mechanical rules to
detect changes -in the supply of and demand for a stock and capitalize on
the expected change.
- Technical descriptors
- In the model for calculating fundamental beta, ratios in the market
variability risk index which rely on market-related data.
- Technician
- Related: Technical analysts
- Tender
- To offer for delivery against futures.
- Term bonds
- Often referred to as bullet-maturity bonds or simply bullet bonds, bonds
whose principal is payable at maturity. Related: Serial bonds
- Term life insurance
- A contract that provides a death benefit but no cash build-up or
investment component. The premium remains constant only for a specified term
of years, and the policy is usually renewable at the end of each term.
- Term repo
- A repurchase agreement with a term of more than one day. term structure of
interest rates The relationship between the yields on otherwise comparable
securities with different maturities, often depicted as a yield curve.
- Term to maturity
- The time remaining on a bond's life, or the date on which the debt will
cease to exist and the borrower will have completely paid off the amount
borrowed.
- Term trust
- A closed-end fund that has a fixed termination or maturity date.
- Theoretical futures price
- Also called the fair price, the equilibrium futures price.
- Theoretical spot rate curve
- A curve derived from theoretical considerations as applied to the yields
of actually traded Treasury debt securities because there are no zero-coupon
Treasury debt issues with a maturity greater than one year. Like the yield
curve, this is a graphical depiction of the term structure of interest
rates.
- Theta
- Also called time decay, the ratio of the change in an option price to the
decrease in time to expiration.
- Three-phase DDM
- A version of the dividend discount model which applies a different
expected dividend rate depending on a company's life-cycle phase, growth
phase, transition phase, or maturity phase.
- Tick
- Refers to change in price, either up or down. Related: Point
- Tick-test rules
- SEC-imposed restrictions on when a short sale may be executed, intended to
prevent investors from destabilizing the price of a stock when the market
price is falling. A short sale can be made only when either (1) the sale
price of the particular stock is higher than the last trade price (referred
to as an uptick trade) or (2) if there is no change in the last trade price
of the particular stock, the previous trade price must be higher than the
trade price that preceded it (referred to as a zero uptick).
- Tilted portfolio
- An indexing strategy that is linked to active management through the
emphasis of a particular industry sector, selected performance factors such
as earnings momentum, dividend yield, price-earnings ratio, or selected
economic factors such as interest rates and inflation.
- Time decay
- Related: Theta
- Time deposit
- Related: Certificate of deposit
- Time premium
- Also called time value, the amount by which the option price exceeds its
intrinsic value.
- Time value of an option
- Related: Time premium
- Time value
- The market value of an option minus its intrinsic value; that is, the
difference between the option premium and the amount, if any, that the
option is in-the-money. Related: In-the-Money
- Time-weighted rate of return
- Related: Geometric mean return
- Timing option
- For a Treasury bond or note futures contract, the seller's choice of when
in the delivery month to deliver.
- Top-down equity management style
- A management style that begins with an assessment of the overall economic
environment and makes a general asset allocation decision regarding various
sectors of the financial markets and various industries. The top-down
manager then selects a portfolio of individual securities within the favored
sectors.
- Total asset turnover
- The ratio of net sales to total assets.
- Total debt to equity ratio
- A capitalization ratio comparing current liabilities plus long- term debt
to shareholders' equity.
- Total return
- In performance measurement, the actual rate of return realized over some
evaluation period. In fixed income analysis, the potential return that
considers all three sources of return (coupon interest, interest on
interest, and any capital gain/loss) over some investment horizon.
- Tracking error
- In an indexing strategy, the difference between the performance of the
benchmark and the replicating portfolio.
- Trade house
- A firm which deals in actual commodities.
- Tranche
- One of several related securities offered at the same time.
- Trade date
- In an interest rate swap, the date that the counterparties commit to the
swap.
- Transactions costs
- Related: Round-trip transactions costs, Information costs, Search
costs
- Transition phase
- A phase of development in which the company's earnings begin to mature and
decelerate to the rate of growth of the economy as a whole. Related: Three-phase
DDM
- Treasuries
- Related: Treasury securities
- Treasury bills
- Debt obligations of the U.S. Treasury that have maturities of one year or
less.
- Treasury bonds
- Debt obligations of the U.S. Treasury that have maturities of 10 years or
more.
- Treasury notes
- Debt obligations of the U.S. Treasury that have maturities of more than 2
years but less than 10 years.
- Treasury securities
- Securities issued by the U.S. Department of the Treasury.
- Trend
- The general direction of the market.
- Treynor Index
- A measure of the excess return per unit of risk, where excess return is
defined as the difference between the portfolio's return and the risk-free
rate of return over the same evaluation period and where the unit of risk is
the portfolio's beta. Related: Sharpe Index
- 12b-i funds
- Mutual funds that do not charge an upfront or back-end commission, but
instead take out up to 1.25% of average daily fund assets each year to cover
the costs of selling and marketing shares, an arrangement allowed by the
SEC's Rule 12b- I (passed in 1980).
- Two-factor model
- Black's zero-beta version of the capital asset pricing model.
- Two-fund separation theorem
- The theoretical result that all investors will hold a combination of the
risk-free asset and the market portfolio.
Options Glossary
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