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- H
- Fifth letter of a Nasdaq stock symbol specifying that the issue is the second preferredbond of the company.
- HAB
- See: House Air Waybill
- Haircut
- The margin or difference between the actual market value of a security and thevalue assessed by the lending side of a transaction).
- Half-life
- The point in the life of a mortgage-backedsecurity guaranteed or issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation when half the principal has been repaid.
- Half-stock
- Stock, common or preferred, with a $50 par value.
- Hammering themarket
- Heavy selling of stocks by speculators who think that the stock isovervalued and is about to drop.
- Handle
- The whole-dollar price of a bid or offer is referred to as the handle (e.g., if a security is quoted at 101.10 bid and 101.11 offered, 101 is the handle). Traders are assumed to know the handle. See Also: Full
- Hands-off investor
- An investor who has a large stake in a company, but does not wish to play an active role in the management of the corporation.
- Hands-on investor
- An investor who has a large stake in a corporation and takes an active role in its management . Antithesis of hands-offinvestor.
- Hang Seng index
- The major index in Hong Kong.
- Hard callprotection
- Usually refers to callable bonds. The period of time when a bond cannot becalled, no matter what the interest rate is. That is, if the interest ratefalls sharply, most callable bonds will be called (so the bond issuer canreissue at a lower interest rate). Hard call protection ensures that the holderof the bond can benefit when rates fall.
- Hard capitalrationing
- A capital budget that under nocircumstances can be violated.
- Hard currency
- A freely convertible currency that is notexpected to depreciate in value in theforeseeable future.
- Hard dollars
- Actual separate payments made by a customer for services, including research,provided by a brokerage firm. Antithesis of softdollars.
- Harmless warrant
- Warrant that allows the user to purchase a bond only by surrendering another bond with similar terms.
- Hart-Scott-RodinoAct
- Often used in risk arbitrage.Antitrust act administered by U.S. Department of Justice and the FTC thatrequires an investor to file a form with thegovernment before he acquires an economic interest in the lesser amount of $15million or 15% of the capitalization ofa specific security. The government hasthirty days to respond to the filer.
- Harvey, Campbell R
- Author of this glossary. Finance professor at Duke University. Author ofresearch on international finance, asset allocation, and emerging markets.
- Hawkish
- An aggressive tone. For example, if the Federal Reserve uses hawkish languageto describe the threat of inflation, one could reasonably expect strongeractions from the Fed. There is a similar application to CEO describing animportant issue that a firm faces. Opposite of Dovish.
- Head & shoulders
- In technical analysis, a patternthat results where a stock price reaches a peak and declines; rises above its former peak and again declines; andrises a third time but not to the second peak, and then again declines. Thefirst and third peaks are shoulders, while the second peak is the formation'shead. Technical analysts generallyconsider a head and shoulders formation to be a very bearish indication.
- Heavy
- An equity_market now dominated bysellers, or oversupply, resulting in falling prices.See: Overbought, resistance level, tired.
- Hedge
- A transaction that reduces the risk of an investment.
- Hedge clause
- A clause in a research report or any published document, that attempts toabsolve the writer of responsibility for the accuracy of information provided.
- Hedge fund
- An investment vehicle that somewhat resembles a mutual fund, but with a numberof important differences. If the fund is "off-shore", the fund doesnot have to adhere to any SEC regulations (and can only sell to non-U.S.investors or investment vehicles). These funds employ a number of differentstrategies that are not usually found in mutual funds. The term"hedge" can actually be misleading. The traditional hedge fund isactually hedged. For example, a fund employing a long-short strategy would tryto select the best securities for purchase and the worst for short sale. Thecombination of longs and short provides a natural hedge to market-wide shocks.However, much more common are funds that are not hedged. There are funds thatare long-biased and short-biased. There are funds that undertake high frequencyfutures strategies, sometimes called managed futures. There are funds that takelong-term macroeconomic bets, sometimes called global macro. There are fundsthat try to capitalize on merger and acquisitions. Another distinguishingfeature of hedge funds is the way that managers are rewarded. There are twofees: fixed and variable. The fixed fee is a percentage of asset undermanagement. The variable or performance fee is a percentage of the profit ofthe fund. There are also funds of funds which invest in a portfolio of hedgefunds. Another important difference with hedge funds is that the minimumrequired investment is usually quite large and, as a result, minimizes theparticipation of retail investors.
- Hedge quality
- Measured by the R-square in a regression of spot rate changes on futures price changes.
- Hedge ratio (delta)
- For options, ratio between the change in anoption's theoretical value and thechange in price of the underlying stock at a given point in time. For convertibles, percentage of a convertible bond representing the number of underlying common shares soldagainst the shares into which bonds are convertible. If a preferred is convertible into 2000 common shares, a 75% hedge ratio would be short (long) 1500 common for every 1000preferred long (short). See Also: Delta
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