Financial Terms Dictionary - A-Z Glossary

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D (credit rating)

A D credit rating indicates a company or government has defaulted on its financial obligations, representing the highest level of credit risk to lenders and investors.Learn more

Dark Cloud Cover

Dark cloud cover' is a bearish candlestick pattern used in technical analysis that indicates a potential reversal of an upward trend. It is identified when a black or red candlestick follows a long white or green candlestick.

Dawn raid

A 'dawn raid' refers to the purchase of a substantial number of shares in a company at the opening of the stock market. This strategy is often employed by a company attempting to acquire a controlling stake in the target company.

DAX Index

The DAX Index, traded on Capital.com as the Germany 40, is a stock market index consisting of the 40 major German blue chip companies trading on the Frankfurt Stock Exchange. It is a key indicator of the health of the German stock market and economy.Learn more

Day Order

A day order is an instruction to buy or sell a security that automatically expires if not executed by the end of the trading day.Learn more

Day Trading

Day trading involves buying and selling securities within the same trading day, often looking to capitalise on small price movements and avoiding the risk of overnight market fluctuations.

Dealer

In financial markets, a dealer is an entity that buys and sells securities for their own account, acting as a principal in transactions rather than as an agent for a client.Learn more

Death spiral financing

A death spiral convertible is a type of convertible bond that allows the holder to convert the bond into equity at a rate that varies with the stock price, potentially leading to substantial dilution of the share value.

Debt

Debt refers to money owed by one party, the borrower, to a second party, the lender. It is often materialised through instruments such as loans or bonds, which specify repayment terms and, usually, interest.

Debt ratio

The debt ratio is a financial ratio that measures the proportion of a company's total liabilities to its total assets, indicating the extent to which a company is financed through debt.

Debt service ratio

Debt service

Debt-to-capital ratio

The debt to capital ratio compares a company’s total debt to its total capital, providing an insight into the company’s financial leverage and risk profile.

Debtor

A debtor is an individual or company that owes money to another party. In corporate terms, it often refers to customers who owe money for goods or services provided.

Debtor collection period

The debtor collection period, often calculated as days sales outstanding, measures the average number of days it takes a company to collect payment after a sale has been made.Learn more

Decentralised Autonomous Organisation (DAO)

A decentralised autonomous organisation (DAO) is an entity with no central leadership, run through rules encoded as computer programs called smart contracts. DAOs are entirely autonomous and operate on blockchain technology.

Decentralised Exchanges (DEX)

A decentralised exchange is a cryptocurrency exchange which operates without a central authority, facilitating direct peer-to-peer cryptocurrency transactions online securely and without the need for an intermediary.

Deep discount bond

A deep discount bond is sold at a significant discount from its face value, often with a low interest rate, with the bulk of the profit made at maturity when the bond pays out at its full face value.Learn more

Defensive Stocks

Defensive stocks represent shares in companies whose performance is not heavily dependent on the economic cycle, such as utilities or consumer staples, which tend to be more stable during economic downturns.

Deferred Revenue

Deferred revenue is money received by a company for goods or services yet to be delivered or performed, thus considered a liability until the revenue is earned.

DeFi

Decentralised Finance (DeFi) refers to blockchain-based finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks, and instead utilises smart contracts on blockchains.

DeFi coins

DeFi coins are cryptocurrencies used within the DeFi sector to facilitate transactions and provide services such as lending, borrowing, or earning interest in a decentralised manner.

Deflation

Deflation is the decrease in the general price level of goods and services, typically indicating a reduction in the supply of money and credit in the economy.

Del Credere Agency

A del credere agency is an agent who guarantees to the seller that the buyer will pay their obligations; the agent charges a commission for this guarantee.Learn more

Deleveraging

Deleveraging involves a company or individual reducing their total level of debt by quickly selling assets or using cash flows to pay back creditors.

Delist worthless

To delist shares means to remove them from a stock exchange, ceasing their trading publicly, which can occur voluntarily or involuntarily.

Delivered Duty Unpaid (DDU)

Devaluation is monetary policy tool used by governments to reduce the value of a country's currency in relation to another currency, group of currencies or standard. Governments can use this when their country has a fixed exchange rate or a semi-fixed exchange rate. They do this to improve their trading position in the world.Learn more

Delta neutral

Delta neutral refers to a multiple position portfolio strategy which consists of offsetting positive and negative deltas so that the total deltas of the assets in question make up zero. A portfolio which is delta neutral balances the movements in the market up to a certain range, to make the net change of the position zero.

Demand

Demand in economics refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.

Demand Guarantee

A demand guarantee is a type of financial commitment where the guarantor agrees to repay the lender or creditor upon request, without any conditions or defenses.

Demat Account

A demat account, short for 'dematerialised account', is used in India to hold securities electronically, replacing the need for physical paper shares, making trading and transfers easier and more secure.

Dematerialization

Dematerialisation refers to the process of converting physical certificates of investments, such as shares or bonds, into electronic form, maintained and accounted for in a digital ledger.

Demonetisation

Demonetisation is the act of stripping a currency unit of its status as legal tender, often to combat inflation, curb corruption, or encourage the use of digital transactions.

Deposit Margin

Deposit margin refers to the initial margin or collateral required to enter into a trading position or financial agreement to cover credit risk.Learn more

Deposit risk

Deposit risk refers to the dangers associated with depositing money in a bank or financial institution, including the risk of bank failure.

Depreciation

In finance, 'depreciation' describes the decrease in an asset's value and also the method used by accounting departments to allocate the cost of its tangible assets that depreciate, such as buildings, vehicles, and machinery.

Derivative

Derivatives are financial instruments whose value is derived from the value of an underlying asset, such as stocks, bonds, commodities, currencies, interest rates, or market indexes.

Derivatives Market

A derivatives market is a financial marketplace where instruments like CFDs, which represent the price of an underlying asset such as a commodity or an index, can be traded. Derivatives markets are used for a variety of goals, including hedging, speculation, and arbitrage. Learn more

Deutsche Bank

Deutsche Bank is a global banking and financial services company headquartered in Frankfurt, Germany. It employs more than 100,000 employees in more than 70 countries and is one of the largest foreign exchange dealers in the world.

Devaluation

Devaluation is a deliberate downward adjustment to the value of a country's currency relative to another currency, group of currencies, or standard, often by official action of the national government or central bank.

Devolvement

In finance, devolvement refers to underwriters or other financial backers taking on unsold shares or securities themselves when an offering (like a bond or public issue) does not attract enough buyers.

Digital Assets

Digital assets include digital data such as multimedia content, digital documents, rights to use digital services, and digital currencies, including cryptocurrencies. They can be owned, bought, sold, and transferred digitally.Learn more

Digital Banking

Digital banking refers to the delivery of banking services via electronic platforms such as the internet, mobile apps, and ATMs, allowing customers to manage accounts, transfer funds, and access financial services remotely without visiting a physical branch.

Dilution

Dilution occurs when a company issues additional shares, reducing the ownership percentage of existing shareholders. This often results in a decrease in earnings per share and the value of existing shares.

Direct cost

Direct costs are expenses that can be directly tied to the production of specific goods or services, such as materials and labour. These costs are directly attributable to a specific product, department, or project.

Direct finance

Direct Investment

Foreign direct investment involves an individual or business entity from one country making an investment into a business or real assets in another country, typically obtaining a controlling interest to influence the management and operations.Learn more

Direct market access

Direct market access is a way of allowing private investors to buy and sell directly on the order books of a stock exchange. It's done electronically and helps firms execute trades at lower costs.

Direct participation program

A direct participation program is an arrangement that allows investors to participate in the income and tax benefits of a business. They're most commonly found in real estate and the energy sector.

Directors' dealings

Directors' dealings refer to transactions in which directors of the company buy or sell shares of the company they manage.

Discount house

In finance, a discount house is a financial company that is engaged in discounting, trading and negotiating bills of exchange or promissory notes. They act as money lenders, or as intermediaries between commercial borrowers and lenders.Learn more

Discount rate

The discount rate is the interest rate used to determine the present value of future cash flows. It reflects the time value of money and investment risk. In central banking, it's the rate at which banks borrow from the central bank. Lower discount rates increase borrowing and spending, while higher rates reduce it.

Discounted maximum loss

Discounted maximum loss is a risk management measure that estimates the worst-case scenario for losses, discounted back to present value.

Dishonour

In financial contexts, dishonour refers to the refusal of a bank to pay a cheque when presented, usually due to insufficient funds in the account.

Disinflation

Disinflation describes a decrease in the rate of inflation – a slowdown in the rate at which prices increase, rather than deflation, where prices actually decrease.

Displaced Moving Average (DMA)

The displaced moving average, or DMA, is defined as a simple moving average that can be adjusted to fit a line of trend. It is a technical analysis indicator that could help traders in forecasting price trends. Learn more

Diversification

Portfolio diversification refers to the spreading of risk across various types of assets in a trading or investment portfolio. For example, if a trader holds a large amount of 'risk on' assets such as growth stocks, they may want to diversify with traditionally safer assets such as gold. Learn more

Dividend

A dividend is a payment by a company to its shareholders. When a company generates a profit and accumulates retained earnings, those earnings can be either reinvested in the business or paid out to shareholders as a dividend.Learn more

Dividend Cover

Dividend cover is a ratio that measures the number of times a company could pay dividends to its shareholders out of its net income.

Dividend future

A dividend future is a forward contract traded on an exchange. It allows investors to take a long or short position on the amount of dividends paid by a company to its shareholders for a specific maturity date in the future.Learn more

Dividend imputation

Dividend imputation refers to a tax system where some or all of the tax paid by a company may be attributed to shareholders by way of a tax credit to reduce income tax payable on a distribution.

Dividend indices

Dividend indices track the performance of companies that pay high dividends and are often used by investors who seek regular income through dividend payments, reflecting the overall yield of dividend-paying stocks.

Dividend payout ratio

The dividend payout ratio is the proportion of earnings paid out to shareholders as dividends, typically expressed as a percentage.

Dividend Policy

A dividend policy refers to the set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders in dividends. The policy balances between retaining earnings for investment and rewarding shareholders.

Dividend puzzle

The dividend puzzle refers to the question of why companies pay dividends even when it might be more advantageous financially to reinvest the earnings into the company, considering the tax inefficiency of dividends.

Dividend reinvestment plan

A dividend reinvestment plan is an option offered by companies that allows shareholders to use dividend payments to purchase additional shares of the company's stock, usually without commission.

Dividend rights issue

A dividend rights issue is when a public company sells new shares in return for cash. Shares are usually offered at a discount price within a set time frame to encourage existing shareholders to take up the rights. They have first refusal for the shares.Learn more

Dividend Stock

A dividend stock represents a listed company that regularly distribute a portion of their earnings to shareholders in the form of dividends.

Dividend stripping

Dividend stripping describes a short-term trading strategy and happens when someone buy's a stock shortly before a dividend has been declared, with the intention of selling it immediately after the dividend is paid.Learn more

Dividend Tax

Dividend tax is the income tax imposed on dividends received from stock investments, varying by country in terms of how dividends are taxed and at what rates.

Dividend units

Dividend units, in relation to mutual funds, refer to additional fund units added to an investor’s holding instead of cash dividends when the fund declares a dividend.

Dividends received deduction

The dividends received deduction is a tax deduction received by companies on the dividends received from their investments in other companies, reducing the taxable income.

DJ New Zealand index

The DJ New Zealand index is an international equity index created by Dow Jones to provide data on the New Zealand market. The index consists of the 50 largest eligible stocks by flat-adjusted market capitalisation listed on the main board of the NZX.

DJ Shanghai index

The DJ Shanghai index is an international equity index created by the Dow Jones to provide data on the Chinese market. China is classed as an emerging market, which means it is accessible to foreign investors but less so than a developed market.

Doji

A doji is a candlestick pattern in technical analysis that signals indecision among traders, represented by a candlestick with an opening and closing price that are more or less equal.

Domestic Market

Domestic market refers to the supply and demand of goods and services within one country. Firms that operate in a domestic market are based in the country in question and sell their goods or services to its own citizens.Learn more

Don't fight the tape

Don't fight the tape' is an adage in trading that advises traders not to go against the market trend. So if an asset's price is rising, this statement would mean you shouldn't sell, and if it's falling, that you shouldn't buy.

Dotcom bubble

The dot-com bubble was marked by a period of excessive speculation in the late 1990s, causing a rapid rise in US technology stock equity valuations fuelled by investments in internet-based companies.

Double Hedging

Double hedging refers to the practice of hedging a risk with two separate hedging strategies, which can be unnecessary and increase costs without providing additional protection.

Dow 30 Index

The Dow 30 is another term for the Dow Jones Industrial Average, referring to the 30 large publicly-owned companies that influence the American economic landscape, and can be traded via our US Wall Street 30 market. Learn more

Dow Jones

The Dow Jones refers to the Dow Jones Industrial Average, a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. It can be traded with Capital.com via our US Wall Street 30 market. Learn more

Dow Jones Asian Titans 50 Index

The Dow Jones Asian Titans 50 index tracks 50 leading blue-chip companies in Asia, representing major industrial sectors and providing a benchmark for the region's stock performance.

Dow Jones EURO STOXX 50

The Dow Jones Euro Stoxx 50 is a stock index of eurozone stocks designed to provide a blue-chip representation of supersector leaders in the eurozone. It covers 50 stocks from 11 eurozone countries. It can be traded with Capital.com through our EU Stocks 50 market.

Dow Jones Industrial Average

The Dow Jones Industrial Average is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States, and can be traded with Capital.com through our US Wall Street 30 market.

Dow Jones Sustainability North America Index

The Dow Jones Sustainability North America index tracks the performance of the top 20% of the largest 600 North American companies in the S&P Global Broad Market Index based on long-term economic, environmental, and social criteria.

Downside beta

Downside beta is a measure of an asset’s risk in relation to the market when the market is declining, indicating how sensitive the asset is to negative market movements.

Downside risk

Downside risk is a measure of potential loss in an investment or trade, evaluating the likelihood of a negative change in the value of a portfolio or an asset.

Dragon King Theory

Dragon King theory suggests that some extreme events (Dragon Kings) are fundamentally different from other events (eg, normal distributions or 'Black Swans') and result from amplifying mechanisms that require separate study and analysis.

DSES

The Dhaka Stock Exchange Small Cap (DSES) Index tracks the performance of small-cap companies listed on the Dhaka Stock Exchange, providing insight into the smaller segment of the market in Bangladesh.

DTC Chill

A DTC Chill is a restriction imposed by the Depository Trust Company, limiting or suspending the transfer of securities through its system, usually due to regulatory concerns or questions about the trading activity.

Dual-beta

Dual beta market refers to an approach in financial modelling that differentiates between an asset's sensitivity to upward versus downward market movements, suggesting different risk profiles during bull and bear markets.

Due Diligence

Due diligence involves a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets, liabilities, and evaluate its commercial potential before a transaction like a merger or acquisition.

Dynamic risk measure

A dynamic risk measure assesses the risk of a portfolio through time, adapting to changes in market conditions and other factors, thus providing a time-consistent and forward-looking evaluation of risk.