Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

Category: Finance Dictionary

NEWSPRINT

because of its short life span, wood pulp paper is used for newspapers but not for books or records. Pulp is absorbent, coarse, off-white or light brown, and soft.

NITRATE (NO3)

Inorganic or organic ester or nitric acid salt containing the (NO3) ion. Nitrates play a major part in nitrogen cycle and nitrate pollution. They are the most water soluble of all salts.

NO FAULT INSURANCE

Whether or not one is at fault in an accident, the insured is covered for the stated risk by this type of auto insurance policy.

NO-GROWTH

Restricting or discouraging a community’s commercial development as a practice.

ODD LOT THEORY

The theory that a new peak is being reached if odd lots are becoming more common for the company.

POISON PUT

An option that allows investors to redeem their bonds if a trigger event occurs. The sudden redemption reduces cash value and makes the stock less attractive to the buyer.

POTENTIAL EXPOSURE

The amount of risk associated with a financial investment with uncertain value. AKA risk equivalent exposure.

PREREFUNDING

A new bond floated to pay an existing bond issue. This occurs at the first call date. Proceeds are invested in low risk securites until the original bond is redeemable. This is

PUKE POINT

When a dealer or trader sell all or some of a money losing position.

PUT PROTECTED EQUITY

When a company buys an option on its own stock. This is done through a middle man generating gain even if stock value declines. Refer to loss equity put.

RATE LOCK

This guarantees a borrower an interest rate on a loan for 30 to 90 days. This makes all financing costs known for the period of time. AKA lockin provision. Refer to drop

REDISCOUNT

Discounting an instrument a second time. Each time a discount is given the credit risk goes up.

RETROCEDANT

The first party involved in the contractual transfer of responsibility to another party.

REVERSE KNOCKIN OPTION

When an inthemoney option is created out of a latent option by pushing the barrier above the strike price. AKA kickin option. Refer to reverse knockout option.

RISK CAPITAL

Economic capital set aside to cover risk related exposure and losses. It can be handled internally or with regulations. Refer to regulatory capital and risk adjusted return on capital.

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