Business Glossary: M

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M Fifth letter of a NASDAQ stock symbol specifying that the issue is the company's fourth class of preferred shares.

M1 Measure of the U.S. money stock that consists of currency held by the public, travelers checks, demand deposits and other checkable deposits including NOW (negotiable order of withdrawal) and ATS (automatic transfer service) account balances and share draft account balances at credit unions.

M2 Measure of the U.S. money stock that consists of M1, certain overnight repurchase agreements and certain overnight Eurodollars, savings deposits (including money market deposit accounts), time deposits in amounts of less that $100,000 and balances in money market mutual funds (other than those restricted to institutional investors).

M3 Measure of the U.S. money stock that consists of M2, time deposits of $100,000 or more at all depository institutions, term repurchase agreements in amounts of $100,000 or more, certain term Eurodollars and balances in money market mutual funds restricted to institutional investor.

MA The two-character ISO 3166 country code for MOROCCO.

MAB See: Master Air Waybill

MAD The ISO 4217 currency code for the Moroccan Dirham.

MBO See: Management buyout

MBSCC See: Mortgage-Backed Securities Clearing Corporation

MC The two-character ISO 3166 country code for MONACO.

MD The two-character ISO 3166 country code for MOLDOVA, REPUBLIC OF.

MDA See: Multiple discriminant analysis

MDL The ISO 4217 currency code for the Moldovan Leu.

MG The two-character ISO 3166 country code for MADAGASCAR.

MGF The ISO 4217 currency code for the Madagascar Franc.

MH The two-character ISO 3166 country code for MARSHALL ISLANDS.

MHS See: Manufactured housing securities

MK The two-character ISO 3166 country code for MACEDONIA, THE FORMER YUGOSLAV REPUBLIC OF.

MIP See: Monthly income preferred security

MIT See: Market-if-touched

MKD The ISO 4217 currency code for the Macedonian Denar.

ML The two-character ISO 3166 country code for MALI.

MLP See: Master limited partnership

MM The two-character ISO 3166 country code for MYANMAR.

MMDA See: Money Market Demand Account. Same as Money Market Deposit Account

MMK The ISO 4217 currency code for the Myanmar (ex-Burma) Kyat.

MMME See: Middle Market Manufacturing Exporter

MN The two-character ISO 3166 country code for MONGOLIA.

MNC See: Multinational corporation

MNT The ISO 4217 currency code for the Mongolian Tugrik.

MO The two-character ISO 3166 country code for MACAU.

MOC See Market on Close.

MOP The ISO 4217 currency code for the Macau Pataca.

MP The two-character ISO 3166 country code for NORTHERN MARIANA ISLANDS.

MQ The two-character ISO 3166 country code for MARTINIQUE.

MR The two-character ISO 3166 country code for MAURITANIA.

MRO The ISO 4217 currency code for the Mauritanian Ouguiya.

MRQ A short-form for Most Recent Quarter. Often used in the context of explaining company performance. MRQ earnings, for example.

MS The two-character ISO 3166 country code for MONTSERRAT.

MSCI See: Morgan Stanley Capital International

MT The two-character ISO 3166 country code for MALTA.

MTL The ISO 4217 currency code for the Maltese Lira.

MU The two-character ISO 3166 country code for MAURITIUS.

MUR The ISO 4217 currency code for the Mauritius Rupee.

MV The two-character ISO 3166 country code for MALDIVES.

MVR The ISO 4217 currency code for the Maldive Islands Rufiyaa.

MW The two-character ISO 3166 country code for MALAWI.

MWK The ISO 4217 currency code for the Malawian Kwacha.

MY The two-character ISO 3166 country code for MALAYSIA.

MYR The ISO 4217 currency code for the Malaysian Ringgit.

MX The two-character ISO 3166 country code for MEXICO.

MXN The ISO 4217 currency code for the Mexican Peso.

MZ The two-character ISO 3166 country code for MOZAMBIQUE.

MZM The ISO 4217 currency code for the Mozambique Metical.

Macaroni defense A tactic used by a corporation that is the target of a hostile takeover bid involving the issue of a large number of bonds that must be redeemed at a higher value if the company is taken over.

Macaulay duration The weighted-average term to maturity of the cash flows from a bond, where the weights are the present value of the cash flow divided by the price.

Macro In the context of hedge funds, a style of management that takes long-term strategic bets. For example, the manager might believe that the Yen will appreciate relative to the dollar over the next six months and alter the portfolio to capture this potential profit opportunity.

Macro country risks Country risks or political risks that affect all foreign firms in a host country.

Macroassessment Overall risk assessment of a country without consideration of an MNC's business.

Macroeconomics Analysis of a country's economy as a whole.

Madrid Stock Exchange (Bolsa de Madrid) The largest of Spain's four stock exchanges.

Magic of diversification The effective reduction of risk (variance) of a portfolio, achieved without reduction to expected returns through the combination of assets with low or negative correlations (covariances). Related: Markowitz diversification.

Mail Delay Time a payment spends in the postal system before delivery.

Mail float Time period that checks for payment spend in the postal system.

Mailing Date A specific date set for the mailing of certain material to security holders such as interim reports, proxy material and dividend checks.

Maintenance Appropriate ongoing adjustments to security holder records.

Maintenance call A call for additional money or securities when a margin account falls below its exchange-mandated required level.

Maintenance fee A yearly charge to maintain brokerage accounts, such as asset management accounts or IRAs.

Maintenance margin The dollar amount required to be kept at the OCC throughout the life of an option contract; percentage of the dollar amount of securities that must always be kept as margin.

Maintenance margin requirement A sum, usually smaller than but part of the original margin, that must be maintained on deposit at all times. If a customer's equity in any futures position drops to or below, the maintenance margin level, the broker must issue a margin call for the amount at money required to restore the customer's equity in the account to the original margin level. Related: Margin, margin call.

Majority shareholder A shareholder who is part of a group that controls more than half the outstanding shares of a corporation.

Majority voting Voting system under which corporate shareholders vote for each director separately. Related: Cumulative voting.

Make a market Dealers are said to make a market when they quote bid and offered prices at which they stand ready to buy and sell.

Make-up The amount of deficiency when a cash flow or capital item is deficient. For example, an interest make-up relates to the interest amount above a ceiling percentage.

Make whole provision Related to the lump-sum payments made when a loan or bond is called, equal to the NPV of future loan or coupon payments not paid because of the call. The payment can be significant and negate the attractiveness of a call.

Making delivery Refers to the seller's actually turning over to the buyer the assets agreed upon in a forward contract.

Malaysia Commodity Exchange A subsidiary of the KLSE that trades interest rate futures on the three-month Kuala Lumpur Interbank offered rate.

Maloney Act 1938 legislation amending the Securities Exchange Act that regulates the OTC market.

Managed account An investment portfolio one or more clients entrusted to a manager who decides how to invest it.

Managed float Also known as "dirty" float, this is a system of floating exchange rates with central bank intervention to reduce currency fluctuations.

Managed Futures In the context of hedge funds, a style of management that focuses on short-term trading in the futures market.

Management The people who administer a company, create policies, and provide the support necessary to implement the owners' business objectives.

Management buying The acquisition of a controlling interest in a promising business by an outside investment group that retains existing management and places representatives on the board of directors.

Management buyout (MBO) Leveraged buyout whereby the acquiring group is led by the firm's management.

Management/closely held shares Percentage of shares held by persons closely related to a company, as defined by the Securities and Exchange Commission. Part of these percentages often are included in "institutional holdings"--making the combined total of these percentages over 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.

Management contract An agreement by which a company will provide its organizational and management expertise in the form of services.

Management fee An investment advisory fee charged by the financial adviser to a fund typically on the basis of the fund's average assets, but sometimes determined on a sliding scale that declines as the dollar amount of the fund increases.

Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial statements in the annual report.

Manager A medium-level participant established according to final take.

Managerial decisions Decisions concerning the operation of the firm, such as the choice of firm size, firm growth rates, and employee compensation.

Managerial flexibility Flexibility in the timing and scale of investment provided by a real investment option.

Managing underwriter The leading firm in an underwriting group, which originates the deal and acts as an agent for the group.

Mandate The formal appointment to advise on or arrange a project financing.

Mandatory convertibles A debt instrument that is exchangeable at some point for equity in the form of common stock or a new issue.

Mandatory redemption schedule Schedule according to which bond sinking fund payments must be made.

Manipulation Dealing in a security to create a false appearance of active trading, in order to bring in more traders. Illegal.

Manufactured housing securities (MHS) Loans on manufactured homes-that is, factory-built or prefabricated housing, including mobile homes.

Maple Leaf A gold, silver, or platinum coin minted in Canada that usually trades at slightly more than its current bullion value.

Margin Allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes. Related: Security deposit (initial). In the context of hedging and futures contracts, the cash collateral deposited with a trader or exchanged as insurance against default.

Margin account (stocks) A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

Margin requirement A performance bond paid upon purchase of a futures contract that protects the exchange clearinghouse from loss.

Margin stock Any stock listed on a national securities exchange, any over-the-counter security approved by the SEC for trading in the national market system, or appearing on the Board's list of over-the-counter margin stock and most mutual funds.

Margin trading Buying securities, in part, with borrowed money.

Marginal Incremental.

Margin agreement The agreement governing customers' margin accounts.

Marginal cost The increase or decrease in a firm's total cost of production as a result of changing production by one unit.

Marginal efficiency of capital The percentage yield earned on an additional unit of capital.

Marginal revenue The change in total revenue as a result of producing one additional unit of output.

Marginal tax rate The tax rate that would have to be paid on any additional dollars of taxable income earned.

Marginal utility The change in total satisfaction as a result of consuming one additional unit of a specific good or service.

Margin call A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance.

Margin department The department in a brokerage firm that monitors customers' margin accounts, ensuring that all short sales, stock purchases, and other positions are covered by the margin account balance.

Margin of profit Gross profit divided by net sales. Used to measure a firm's operating efficiency and pricing policies in order to determine how competitive the firm is within the industry.

Margin of safety With respect to working capital management, the difference between (1) the amount of long-term financing and (2) the sum of fixed assets and the permanent component of current assets.

Margin requirement (options) The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intraday price changes.

Margin security A security that may be bought or sold in a margin account as defined in Regulation T.

Marine Cargo Insurance Insurance covering loss or damage to goods in transit.

Marital deduction A tax deduction that allow spouses to transfer unlimited amounts of property to one another.

Marital trust A trust created to allow one spouse to transfer, during life or upon death, an unlimited amount of property to his/her spouse without incurring gift or estate tax.

Markdown The amount subtracted from the selling price of securities when they are sold to a dealer in the OTC market. Also, the discounted price of municipal bonds after the market has shown little interest in the issue at the original price.

Marked-to-market An arrangement whereby the profits or losses on a futures contract are settled each day.

Market Usually refers to the equity market. "The market went down today" means that the value of the stock market dropped that day.

Market analysis An analysis of technical corporate and market data used to predict movements in the market.

Market-based forecasting Analyzing future spot rates on the basis of a market-determined exchange rate (such as the current spot rate or forward rate).

Market-based corporate governance system Organization of a corporation whereby the supervisory board represents a dispersed set of largely equity shareholders.

Market-book ratio Market price of a share divided by book value per share.

Market break See: Break

Market capitalization The total dollar value of all outstanding shares. Computed as shares times current market price. Capitalization is a measure of corporate size.

Market capitalization rate Expected return on a security. The market-consensus estimate of the appropriate discount rate for a firm's cash flow.

Market check An investigation typically conducted by an investment banking firm, on behalf of a target's Board of Directors (or Special Committee) as part of a process to determine whether a proposed price for the target (or its assets) is fair.

Market clearing Total demand for loans by borrowers equals total supply of loans from lenders. The market, any market, clears at the equilibrium rate of interest or price.

Market conversion price Also called conversion parity price, the price that an investor effectively pays for common stock by purchasing a convertible security and then exercising the conversion option. This price is equal to the market price of the convertible security divided by the conversion ratio.

Market correction A relatively short-term drop in stock market prices, generally viewed as bringing overpriced stocks back to a level closer to companies' actual values.

Market cycle The period between the two latest highs or lows of the S&P 500, showing net performance of a fund through both an up and a down market. A market cycle is complete when the S&P is 15% below the highest point or 15% above the lowest point (ending a down market).

Market Eye A financial information service based in the U.K. sponsored by the ISE (International Stock Exchange of the UK and the Republic of Ireland) that provides current market and statistical information.

Market failure The inability of arm's length markets to deliverer goods or services. A multinational corporation's market internalization advantages may take advantage of market failure.

Market-if-touched (MIT) A price order, below market if a buy or above market if a sell, that automatically becomes a market order if the specified price is reached.

Market impact costs The result of a bid/ask spread and a dealer's price concession. Also called price impact costs.

Market index Market measure that consists of weighted values of the components that make up certain list of companies. A stock market tracks the performance of certain stocks by weighting them according to their prices and the number of outstanding shares by a particular formula.

Market interest rate Rates of interest paid on deposits and other investments, determined by the interaction of the supply of and demand for funds in the money market.

Market internalization advantages Conditions that allow a corporation to exploit the failure of an arm's length market to deliver goods or services efficiently.

Market jitters Anxiety among many investors, causing them to sell stocks and bonds, pushing prices down.

Market letter A newsletter analyzing the market that is written by an SEC-registered investment adviser who sells the letter to subscribers. See: Hulbert Rating.

Market maker Used in the context of general equities. One who maintains firm bid and offer prices in a given security by standing ready to buy or sell round lots at publicly quoted prices. See: Agent, dealer, specialist.

Market microstructure The functional setup of a market.

Market model The market model says that the return on a security depends on the return on the market portfolio and the extent of the security's responsiveness as measured by beta. The return also depends on conditions that are unique to the firm. The market model can be graphed as a line fitted to a plot of asset returns against returns on the market portfolio. This relationship is sometimes called the single-index model.

Market Neutral In the context of hedge funds, a style of management that has long and short equity exposure with nearly exposure on average to fluctuations in the market. However, the on average qualification is important. The risk of the longs and the shorts could fluctuate through time leading to negative returns when the market falls sharply.

Market Not Held Order Also a market order, but the investor is allowing the floor broker to use his own discretion as to the exact timing of the execution. If the floor broker expects a decline in price and he is holding a "market not held buy order", he (she) may wait to buy, figuring that a better price will soon be available. There is no guarantee that a "market not held order" will be filled.

Market-on-Close (MOC) order An order to trade stocks, options, or futures as close as possible to the market close. See also MOC.

Market opening The start of formal trading on an exchange.

Market order Used in the context of general equities. Order to buy or sell a stated amount of a security at the most advantageous price obtainable after the order is represented in the trading crowd. You cannot specify special restrictions such as all or none (AON) or good 'til canceled order (GTC) on market orders. See: Limit order.

Market order go-along/participating Used for listed equity securities. See: Percentage order.

Market out clause A clause that may appear in an underwriting firm commitment that releases it from its purchase requirement if there are negative securities market developments.

Market overhang The theory that, in certain situations, institutions wish to sell their shares but postpone the sale because large orders under current market conditions would drive down the share price and that the consequent threat of securities sales will tend to retard the rate of share price appreciation. Support for this theory is largely anecdotal.

Market penetration/share Used in the context of general equities. Percent of trading volume in a stock that a particular market maker trades.

Market Performance Committee (MPC) A group of NYSE market oversight specialists who monitor specialists' efficiency in maintaining fair prices and orderly markets.

Market price The last reported price at which a security was traded on an exchange.

Market research A technical analysis of factors such as volume, price trends, and market breadth that are used to predict price movement.

Marketplace price efficiency The degree to which the prices of assets reflect the available marketplace information. Marketplace price efficiency is sometimes estimated as the difficulty faced by management of earning a greater return than passive management would, after adjusting for the risk associated with a strategy and the transactions costs associated with implementing a strategy.

Market portfolio A portfolio consisting of all assets available to investors, with each asset held in proportion to its market value relative to the total market value of all assets.

Market price of risk A measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-risk ratio of the market portfolio.

Market prices The amount of money that a willing buyer pays to acquire something from a willing seller, when a buyer and seller are independent and when such an exchange is motivated by only commercial consideration.

Market return The return on the market portfolio.

Market risk Risk that cannot be diversified away. Related: Systematic risk

Market RRR (required rate of return) Schedule A line that indicates the minimum return required by investors at each level of investment risk. The schedule begins at the risk-free interest rate and rises as risk increases.

Market sectors The classifications of bonds by issuer characteristics, such as state government, corporate, or utility.

Market segmentation theory or preferred habitat theory A biased expectations theory that asserts that the shape of the yield curve is determined by the supply of and demand for securities within each maturity sector.

Market share The percentage of total industry sales that a particular company controls.

Market sweep A second offering following a tender offer, allowing institutional investors to obtain a controlling interest at a price higher than the original offer.

Market timer A money manager who assumes he or she can forecast when the stock market will go up and down.

Market timing 1. Used in the practice of Asset allocation. Based on public information, managers actively decide which stocks, sectors, countries, or asset classes to over or underweight. Market timing takes advantage of a small but important amount of predictability in asset returns. The strategy contrasts with the buy-and-hold strategy in which a portfolio is decided on and held for long periods of time. Market timing is an active rather than passive strategy.

Market timing 2. A misnomer synonym used in reference to 2003 mutual fund scandal. The misnomer synonym refers to Stale Price Arbitrage.

Market timing costs Costs that arise from price movement of a stock during a transaction period but attributable to other activity in the stock.

Market tone The general state of well-being of a securities market, based mostly on trading activity.

Market value (1) The price at which a security is trading and could presumably be purchased or sold. (2) What investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares.

Market value ratios Ratios that relate the market price of the firm's common stock to selected financial statement items.

Market value-weighted index An index of a group of securities computed by calculating a weighted average of the returns on each security in the index, where the weights are proportional to outstanding market value.

Marketability A negotiable security is said to have good marketability if there is an active secondary market in which it can easily be resold.

Marketable securities Securities that are easily convertible to cash because there is high demand allowing them to be sold quickly.

Marketable title A clear, reasonably incontestable title to a piece of real estate that is good for transaction purposes.

Marketed claims Claims that can be bought and sold in financial markets, such as those of stockholders and bondholders.

Marking to market Settling or reconciling changes in the value of futures contracts on a daily basis. Also refers to the practice of reporting the value of assets on a market rather than book value basis.

Marking up or down The amount by which a securities dealer raises or lowers the price of a stock or bond due to changes in demand and supply.

Markowitz, Harry Nobel laureate in economics. Father of portfolio theory.

Markowitz diversification A strategy that seeks to combine in a portfolio assets with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return. Related: Naive diversification.

Markowitz efficient frontier The graphical depiction of the Markowitz efficient set of portfolios representing the boundary of the set of feasible portfolios that have the maximum return for a given level of risk. Any portfolios above the frontier cannot be achieved. Any below the frontier are dominated by Markowitz efficient portfolios.

Markowitz efficient portfolio Also called a mean-variance efficient portfolio, a portfolio that has the highest expected return at a given level of risk.

Markovian Dependence The condition where observations in a time series are dependent on previous observations in the near term. Markovian dependence dies quickly, while long-memory effects like Hurst dependence, decay over very long time periods.

Markowitz efficient set of portfolios The collection of all efficient portfolios, which can be graphed as the Markowitz efficient frontier.

Marks and Numbers Identifying symbols and numbers placed by the shipper on each piece of cargo in a shipment.

Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value.

Marriage penalty A tax that has the effect of penalizing a married couple because they pay more tax on a joint tax return than they would if they file tax returns individually.

Married put A put option bought at the same time as its underlying securities in order to hedge the price paid for the securities.

Marrried Put and Stock The simultaneous purchase of stock and the corresponding number of put options. This is a limited risk strategy during the life of the puts because the stock can be sold at the strike price of the puts.

Married Put Strategy A put and stock are considered to be married if they are bought on the same day, and the position is designated at that time as a hedge.

Master Air Waybill (MAB) A document issued by the originating airline when and if a shipment involves more than one air carrier.

Master limited partnership (MLP) A publicly traded limited partnership.

Master pension plan See: Prototype plan

Matador market The foreign market in Spain.

Matched and lost The outcome of the flip of a coin used to determine which of two brokers who are locked in competition for equal trades may actually execute the trades.

Match-fund A bank is said to match-fund a loan or other asset when it does so by buying (taking) a deposit of the same maturity. The term is commonly used in the Euromarket.

Matched book A bank runs a matched book when the of maturities of its assets and liabilities is distribution equal.

Matched maturities The coordination by a financial_institution of the maturities of its assets (loans) and liabilities (deposits) in order to enable it to meet itsobligations at the required times.

Matched orders Used for listed equity securities. Participate in equal amounts of a trade at a certain price, particularly when two parties have the same level of priority on the exchange floor (this requires standing in the trading crowd).

Matched Sale Purchase Transactions Transcations in which the Federal Reserve sells a government security to a dealer or a foregin central bank and agrees to buy back the security to a dealer or a foreign central bank and agrees to buy back the security on a specified date (usually within seven days) at eh same price (the reverse of a repurchase agreement). Such transaction allow the Federal Reserve to temporarily absorb excess reserves from the banking system, limiting the ability of banks to make new loans and investments.

Matched sale transaction Applies mainly to convertible securities. Procedure whereby the Federal Reserve Bank of New York sells government securities to a nonbank dealer against payment in federal funds. The agreement requires the dealer to sell the securities back by a specified date, which ranges from 1 to 15 days. The Fed pays the dealer a rate of interest equal to the discount rate. These transactions, also called reverse repurchase agreements, decrease the money supply for temporary periods by reducing dealers' bank balances and thus excess reserves.

Matching concept The accounting principle that requires the recognition of all costs that are associated with the generation of the revenue reported in the income statement.

Material Adverse Change or Effect Many mergers and acquisitions contracts include a material adverse change clause that allows a company to renegotiate or walk away from a deal if the other company or its subsidiaries announces a significant event that may negatively affect its stock price or operations. See also materiality.

Materiality The importance of an event or information in influencing a company's stock price. Companies must report any material events within one month by filing SEC form 8-K.

Materials requirement planning Computer-based systems that plan backward from the production schedule to make purchases in order to mana

 

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism