Daisy Chain
Artificial volume created by market manipulators that gives the appearance of activity in shares so as to lure genuine investors.

Dated Date
The first day that interest starts to accrue on newly issued bonds.

Day Order
An order that, if not executed on the day it is entered, expires at the close of that day's trading.

Day Trade
The buying and selling of the same security on the same day.

Dead-Cat Bounce
An Americanism used to describe a temporary market recovery after a significant fall as opposed to the reversal of a bear trend. This is often a result of short covering rather than genuine buying. The analogy describes a temporary respite in a lifeless market which will inevitably keep falling.

Dealer
A firm that functions as a market maker and that, as such, positions the security to buy and sell versus the public and/or brokerage community.

Death Taxes
Taxes incurred at death, including federal estate taxes, federal and state generation-skipping transfer taxes, and state estate or inheritance taxes. See State death taxes.

Debenture Bond
A debt that is issued by a corporation and that is backed or secured by the good name of the issuing company.

Debit Balance
The amount of loan in a margin account.

Decedent
A person who has died.

Deductible Liability
A debt on which the interest payments are deductible for income tax purposes, such as a home mortgage or home equity loan, trade or business loan, investment loan, etc.

Deed
A legally binding document that has been signed, sealed, witnessed and delivered and that sets out the terms of and confirms an agreement between two or more parties.

Deed Of Trust
The trust agreement drawn up when a corporation plans to issue bonds or other debt securities. It includes such items as assets, interest payments, maturity dates, etc. Also, see indenture.

Default
An issuer's failure to pay accreted interest when a zero coupon issue matures. Treasury securities are considered default-free.

Deferred Annuity
A contract purchased from an insurance company that offers tax-deferred growth of the contract owner's investment until earnings are withdrawn. It can be tailored to meet the specific needs of the individual during retirement. See Annuity.

Deferred Pension
An employee in a pension scheme who leaves before retirement is entitled to a deferred or preserved pension. This is calculated in the same way as a normal pension by multiplying the number of years of service by a fraction (usually 1/60th). The purchase money in a deferred pension should not normally be less than the member's total contributions.

Deferred Sales Charge
A type of back end load sales charge, a deferred sales charge is a fee charged when shares are redeemed within a specific period following their purchase.

Defined-benefit plan
A qualified retirement plan that specifies the benefit a participant will receive at retirement, commonly expressed as a percentage of pre-retirement compensation.

Defined-contribution plan
A qualified retirement plan that specifies the annual contributions to the plan, commonly expressed as a percentage of the employee's compensation. The contributions may be made by the employer, the employee or both, depending on how the plan is designed.

Delivery Balance Order (DBO)
An order issued by the clearing corporation to any firm that, after the day's trades are netted, has delivery or sale position remaining. The order defines what is to be delivered to whom.

Delivery Versus Payment (DVP)
Settlement of security transactions used by institutional customers. Certificates are delivered to a bank designated by the customer whereupon the bank makes payment on delivery.

Denomination
1). The face value of a security, i.e. the sum to be paid on its redemption or its par value. 2). Nominating the currency used by the parties to a contract

Depository
A central location for keeping securities on deposit.

Depository Trust Company (DTC)
A corporation, owned by banks and brokerage firms, that holds securities, arranges for their receipt and delivery, and arranges for the payments in settlement.

Depreciation
A decline in an investment's value.

Deregulation
1). The regulation of an industry by private bodies rather than by statute. This often increases the form of regulation but allows all the rules to be enforced by the industry's elected governing body rather than civil servants. The government can provide broad outlines within which the regulatory bodies can operate and supervise their effectiveness. See: Securities and Investments Board. 2). Deregulation of an economy involves, for example, privatisation of public industry, making provisions for greater competition, removal of exchange rate controls, removal of state subsidies, and leaving interest rates to market forces.

Derivative
A financial security whose value is based on, or "derived" from, a traditional security, asset, or market index.

Derivative Zeros
Zero coupon bonds created by stripping coupon and principal payments from a U.S. Treasury Security.

Designated Order Turnaround (DOT)
An order routing and execution reporting system of the NYSE.

Diagonal Spread
A spread of the same class of options but with different exercise prices and different expiration dates.

Differential
The fraction of a point added to the purchase price or subtracted from the sale price of odd lot orders. The charge represents compensation to the dealer/specialist for executing the odd lot order.

Director
A corporate board member elected by stockholders.

Discount
When the market price of a newly issued security is lower than the issue price.

Discount Market
The element of the primary money market dominated by banks, discount houses and bill brokers. By borrowing money at short notice from commercial banks or discount houses, bill brokers can profitably discount bills of exchange, especially Treasury bills, and trade them in the discount market.

Discretionary Account
A client account in which the account executive is permitted to buy and sell securities for the client without the client's prior permission. The opening of such an account requires the special permission of the firm's management.

Discretionary Expenses
Living expenses that could be reduced, resulting in savings that could be used to meet specific financial goals. These expenses may include personal enjoyment or luxury items such as vacations, entertainment, home improvements and new cars. See Committed expenses.

Discretionary Income
The difference between your income and expenses. It is money you have available to invest to help reach your financial goals.

Distribution
The payment of dividends and capital gains to shareholders

Distributor
The organization arranging for the sale of fund shares either directly to the public or through intermediaries, such as financial advisers.

District Business Conduct Committee (DBCC)
Part of the NASD that investigates, reviews, and renders a verdict on customer complaints or other industry improprieties.

Diversification
The practice of spreading investments among different securities to reduce risk. Diversification works best when the returns of the securities are varied, so that losses incurred by securities falling in price are offset by gains of those rising in price. By nature, mutual funds are a diversified investment. Diversification may also mean the participation of a large corporation in a wide range of business activities.

Dividends
Earnings paid by a corporation to its stockholders. In preferred stock, dividends usually are fixed; with common shares, dividends vary with the fortunes of the company. Preferred stock is supposed to pay a regular and prescribed dividend amount. Common stock pays varying amounts when declared.

Do Not Reduce (DNR)
An instruction that informs the order handling personnel not to reduce the price of the order by the amount of dividends, if and when paid by the corporation. DNR is placed on buy limit, sell stop and sell stop limit GTC orders.

Dollar Cost Averaging
A method of investing that calls for the investment of a set dollar amount at regular intervals, regardless of the fund's share price. As a result, more fund shares are bought when prices are low than at high prices, usually bringing down an investor's average cost per share over time. Dollar cost averaging does not, however, guarantee a profit or protect against a loss.

Dollar-Denominated
Foreign securities that pay interest and principal in U.S. dollars.

Double Exempt Fund
A fund that only invests in tax-exempt bonds of issuers from a single state. Income from a double exempt fund is free of federal and state income taxes for investors residing in the same state as the issuers of the bonds. Double-exempt funds have been particularly popular in the high-tax states of California and New York. Double tax exempt funds are usually subject in part or whole to the Alternative Minimum Tax (AMT). AMT percentage calculations for income tax purposes are available after each year end by contacting the fund directly.

Double Taxation
Corporations pay taxes on revenue before paying dividends. The dividends, in the hands of the stockholder, are taxed again as ordinary income. Hence "double" taxation.

Dow Jones Industrial Average (DJIA)
A widely quoted stock market index. The DJIA reflects a price-weighted average of 30 actively traded blue chip stocks. These 30 securities represent between 15-20% of the market value of the New York Stock Exchange traded stocks.

Downstairs Trader
A trader who operates on the floor of an exchange and who "trades" positions against the public market. See also Upstairs Trader.

Downtick
A listed equity trade whose price is lower than that of the last different sale.

Dual Purpose Fund
A closed-end fund offering two classes of stock in approximately equal amounts. One class (income shares) is entitled to all the income from the fund's portfolio (i.e., dividends from investments). The second class (capital shares) is entitled to all of the capital appreciation from the fund's holdings. At the time a dual purpose fund is established, a date is set on which the fund will be liquidated. At that time, income shareholders receive preference up to the par value of their shares and capital shareholders receive any excess.

Due Diligence Meeting
The last meeting between corporate officials and underwriters prior to the issuance of the security. At the meeting, the content of the prospectus is discussed, and relevant parts of the underwriting are put into place.

Durable Power Of Attorney
A document that authorizes someone to act as the agent or ''attorney in fact" for another person (called the ''principal'') even if the principal becomes incapacitated or incompetent. Ordinarily, a power of attorney loses its validity when the principal becomes incompetent. A durable power must specifically state that it will remain valid in spite of the principal's incapacity or incompetence.

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