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FINANCIAL
GLOSSARY : D
DAX 30 Index
The main real-time
German share index containing 30 of the biggest companies listed on
the Frankfurt Stock Exchange. The DAX is a 'total return' index in that
it measures the returns from dividends as well as share price performance.
Day trading
The trade of buying
and selling stocks by individuals known as day traders during a trading
day. The aim is to make a profit on the day and not hold stocks at the
close of the trading session.
Debenture
stock
A form of loan stock
legally defined as the written acknowledgement of a debt incurred by
a company, normally containing provisions about the payment of interest
and the eventual repayment of capital.They may be secured by a floating
charge on the company's assets or they may be tied to specific, named
assets. This means that if the company goes into liquidation then debenture
holders are more likely to get payment because the company's assets
will be sold and the proceeds will be distributed to them first before
other stock and share holders.
Deflation
The rate at which
the general level of prices for goods and services is decreasing - the
opposite of inflation.
Deferred
shares
Shares that do not
receive income either for a set period or until share income reaches
a certain level.
Dematerialisation
The increase in
electronic technology and the introduction of systems, such as, Crest
in the Stock Exchange has meant that paper share certificates are no
longer needed. Instead ownership of shares can be logged electronically
in a Crest account and contract notes, confirmation of share transactions,
can be sent electronically.
Demutualisation
The process of changing
the legal structure of a company from a mutual form of ownership to
a stock form of ownership: recently very common with building societies
and insurance companies.
Depositary
receipt
A certificate which
gives the holder, ownership of a specified number of shares in a company
that have been deposited with a financial institution
Depreciation
Accounting procedure
that spreads the cost of an asset over the life time of the asset.
Derivatives
An investment contract,
such as futures and options, which involves the right to buy or sell
the underlying instrument at an agreed price. The value of a derivative
instrument depends on (ie derived from) the value of another asset.
Derivatives can be used to hedge any sort of risk such as foreign exchange
or future. For example a company planning to invest money on deposit
in the future can buy a derivative to potect against the risk of interest
rates falling, ie, hedging against the interest rate risk.
Discount
rate
Rate used to calculate
the present value of future cash flows.
Discounted
rate mortgage
A mortgage which
guarantees that the interest rate charged will be lower than the lender's
standard variable rate.The lower rate offered is usually set for a specified
period of time and reverts to the standard rate after that period.
Discretionary
management
A broker who has
authority to execute all decisions regarding stocks and shares on behalf
of his client without getting prior approval.
Distribution
The payment of dividends
to shareholders from the company's profits.
Dividend
The distribution
of part of the company's profits to the shareholders. Dividends are
paid twice a year, the mid-year payment is known as the interim dividend,
and the end-of-year payment is called the final dividend.
Dividend
yield
The dividend yield
is the return that you are getting for investing in a company. It is
calculated by dividing the dividend by the current share price, expressed
as a percentage. The gross dividend yield is used in preference to the
net dividend yield, so that investors can make a direct comparison with
(gross) interest yields from loanstocks and gilts.
Dow Jones
Industrial Average
'The Dow' is one
of the main USA share indices which monitors the performance of 30 industrial
companies traded on the New York Stock Exchange.
