Financial Terms Dictionary - Letter M

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Macro risk

Macro political risk refers to the potential for adverse effects on investment returns and economic conditions stemming from political changes or instability in a country.

mai Index

The MAI Index typically refers to a stock index of smaller or medium-sized companies that may be listed on a particular exchange, such as the Market for Alternative Investment in Thailand.

Mainnet

Mainnet refers to the primary public blockchain network where actual transactions take place on a distributed ledger, as opposed to a testnet used for testing and development.

Maintenance Margin

Maintenance margin is the minimum amount of equity that must be maintained in a margin account following the purchase of securities, and after the initial margin requirement has been met.

Management buy-in (MBI)

A management buy-in occurs when an external management team purchases a significant stake in a company and replaces the existing management team to drive turnaround or growth.

Management buyout (MBO)

A management buyout is a transaction where a company’s existing managers acquire a large part or all of the company from the current owners.

Management fee

Management fee is a charge levied by an investment manager for managing the assets of investors and typically calculated as a percentage of the assets under management.

Manager of managers fund

A manager of manager's fund involves a fund manager hiring several specialised managers to oversee different portions of the fund’s portfolio, aiming to diversify management styles and strategies.

Margin at risk

Margin at risk quantifies the potential future cost to replace the gross margin of open positions in contracts, vital for assessing the financial risk in trading and hedging activities.Learn more

Marginal cost

Marginal cost is the cost of producing one additional unit of a product or service. It is a critical concept in economics and management used for decision making regarding levels of production and pricing.

Marginal Cost of Funds

The marginal cost of funds is the additional cost that a financial institution incurs to raise additional funds or capital. This cost varies depending on the source of the funds and market conditions.Learn more

Mark Twain effect

The Mark Twain effect refers to the phenomenon where stock returns in October are lower than in other months, named humorously after Mark Twain's quote about the treacherousness of October for investors.

Market

The market refers to any structured exchange where the trading of securities, commodities, currencies, and other financial instruments is conducted.

Market Abuse

Market abuse involves actions by an individual or company that distort or manipulate financial markets, including insider trading, spreading false information, and executing trades to create misleading price movements.

Market anomaly

A market anomaly is a price action or market behaviour that contradicts the efficient market hypothesis, suggesting that a market is not always rational or predictable.

Market basket

A market basket is a collection of goods and services used as a basis for calculating inflation or cost of living indexes, reflecting the typical spending patterns of consumers.

Market clearing

Market clearing is the process by which supply and demand in a market reach equilibrium, determining the market price at which all items supplied are sold, leaving no surplus.

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Market Correction

A market correction is a short-term drop in stock market prices, typically by 10% to 20%, considered a natural adjustment following rapid gains in the market.

Market Data

Market data includes various types of information used by traders to make investment decisions, such as prices, volumes, and historical statistics of trading activities.

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Market Definition

The market refers to any structured exchange where the trading of securities, commodities, currencies, and other financial instruments is conducted.

Market Depth

Market depth is a measure of the quantity of buy and sell orders at different prices for a particular security or financial instrument, indicating the liquidity and potential price movement.

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Market distortion

Market distortion occurs when external factors, such as taxes or subsidies, artificially affect prices and lead to inefficiencies in supply and demand.

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Market economy

A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the interactions of citizens and businesses, with little government intervention.

Market efficiency

Market efficiency is a financial market concept in which share prices reflect all available, relevant information, and investors purchasing securities at these prices should expect a normal return.Learn more

Market forces

Market forces are the factors that influence the price and availability of goods and services in a market economy, primarily driven by supply and demand.

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Market Identifier Code

A Market Identifier Code is a unique four-letter code used to identify exchanges, trading platforms, and regulated or non-regulated markets as defined by the ISO 10383 standard.

Market if touched

A market if touched order is a type of order that becomes executable when a set price level is reached and then continues as a market order.

Market impact

Market impact refers to the change in the price of a security caused by the trading action of the order itself, particularly relevant in the context of large orders.

Market impact cost

Market impact cost is the cost of trading a large order without causing a significant impact on the market price of the security.

Market Leader

Market leaders are companies that dominate their industry or sector in terms of market share, often setting prices and standards that other competitors follow.

Market Maker

A market maker is a firm or individual who actively quotes two-sided markets in a particular security, providing liquidity by being prepared to buy and sell at publicly quoted prices.Learn more

Market microstructure

Market microstructure involves the study of the processes and outcomes of exchanging assets under explicit trading rules, examining how trades are conducted and prices are determined.

Market moving information

Market moving information includes any news or data capable of influencing the prices of securities significantly, such as earnings reports, regulatory changes, or economic indicators.

Market Order

The market order meaning describes a buy or sell order to be executed immediately at the current market price, prioritizing speed over price to ensure that the trade is completed quickly.

Market Portfolio

A market portfolio contains all investable assets, each weighted by its market capitalisation. According to modern portfolio theory, it represents a diversified portfolio that theoretically will deliver optimal returns with minimal risk.

Market price

The market price is the current price at which an asset or service can be bought or sold. It is determined by the supply and demand dynamics in the market at any given time.

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Market profile

Market profile is a graphical representation that depicts trading activities over a specific time period at certain price levels, often used to identify price trends and market value areas.

Market Risk

Market risk, also known as systematic risk, refers to the potential for investors to experience losses due to factors that affect the overall performance of the financial markets.

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Market Saturation

Market saturation occurs when a specific market is no longer generating new demand for certain products or services, typically because a significant proportion of potential consumers have already been reached.

Market Segmentation

Market segmentation involves dividing a broad consumer or business market into sub-groups of consumers (known as segments) based on some type of shared characteristics, to target them more effectively.

Market Share

Market share represents the percentage of an industry's total sales that is earned by a particular company over a specified time period, serving as a metric of dominance in the industry.

Market Trend

A market trend is the overall direction in which the market or a particular traded asset is moving over time, either upward, downward, or sideways.

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Market-based valuation

Market-based valuation assesses the value of an asset based on the selling price of similar items in the market, commonly used for pricing securities based on market perceptions and comparable sales.

Marketable securities

Marketable securities are liquid financial instruments that can be quickly converted into cash at a reasonable price. Examples include stocks, bonds, and government securities.

Martingale system

The martingale system is a betting strategy that suggests increasing the bet size after each loss, in order to eventually recover all previous losses plus win a profit equal to the original stake.

MASI index

The Moroccan All Shares Index (MASI) tracks the performance of all listed companies trading on the Casablanca Stock Exchange in Morocco.

Master transaction agreement

A master transaction agreement provides a standard contractual framework that parties can apply to multiple transactions, simplifying the process and providing consistency across various agreements.

Master-KAG

Master kag is a German phrase – originally Kapitalanlagegesellschaft, translating as capital management company – that describes capital management companies that only practice administration for special assets. The Master-KAG founds the special assets, is in control of the fund accounting and decides the custodian bank for holding and valuing the assets.

Maturity

In finance, maturity refers to the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.Learn more

Maximum Downside Exposure (MDE)

Maximum downside exposure is the largest potential loss that an investment portfolio could incur, based on historical performance data under normal market conditions.

MDAX (Mid Cap)

The MDAX is a stock index that represents 60 mid-cap companies in Germany, which are ranked immediately below the DAX stocks in terms of order book volume and market capitalisation.

Medical underwriting

Medical underwriting is the process used by insurers to evaluate the health of potential policyholders to determine the risks of insuring them and to set premiums accordingly.

Merchant bank

In the UK, a merchant bank is a financial institution that primarily deals with international finance, commercial loans and underwriting, corporate mergers and acquisitions, and services for companies and wealthy individuals.

Mergers and Acquisitions (M&A)

Mergers and acquisitions involve the process of consolidating two or more companies into one, typically to expand a company’s reach, expand into new segments, or gain market share.

MERVAL

The MERVAL is the primary index of the Buenos Aires Stock Exchange, representing the performance of the largest companies by market capitalisation in Argentina.

MESDAQ

MESDAQ was a market for trading the shares of high technology companies in Malaysia, now integrated into the ACE Market of Bursa Malaysia.

MetaTrader 4

What is MT4? It's a popular electronic trading platform widely used by online retail foreign exchange speculative traders. It provides tools and resources for analysing price movements, making transactions, and creating and using automated trading robots.

Mexican peso crisis

The Mexican Peso Crisis, also known as the Tequila Crisis, occurred in the mid-1990s and was characterised by the sudden devaluation of the Mexican Peso, leading to significant economic instability in Mexico and financial contagion in emerging markets.

Mexican unidad de inversión

The Unidad de Inversion (UDI) is an index used in Mexico to adjust obligations and credits based on the inflation rate, helping to preserve the real value of financial instruments over time.Learn more

MIB Group

MIB Group refers to several entities, commonly indicating major stock market indices like the FTSE MIB, an index of 40 most significant and most liquid stocks listed on the Borsa Italiana.

MICEX index

The MICEX Index was a major stock market index that tracked the performance of the most liquid Russian stocks listed on The Moscow Exchange. It merged with the RTS Index to form the MOEX Russia Index.

Microfinance definition | What is Microfinance (Microcredit)

Microfinance involves providing small loans, credit, savings, insurance, and other financial services to individuals or groups in developing countries who lack access to traditional banking services.Learn more

Microprudential regulation

Microprudential regulation focuses on the supervision of individual financial institutions to ensure their safety and soundness, aiming to protect depositors and maintain market confidence.Learn more

Mid price

The mid price in trading is the midpoint between the bid and ask prices of a stock or other security. It represents a fair price estimate in markets where buy and sell orders are quoted separately.Learn more

MIDAS Technical Analysis

MIDAS (Market Interpretation/Data Analysis System) is a set of advanced technical analysis tools used for trading stocks, commodities, and other assets, based on algorithms that adapt to changes in market volatility and volume.

Minimum acceptable rate of return

The minimum acceptable rate of return, also known as the hurdle rate, is the lowest return on an investment that a manager or investor is willing to accept before undertaking a project or investment.Learn more

Minimum Efficient Scale

Minimum efficient scale refers to the smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to supplies and costs.

Minority shareholder

A minority shareholder is an investor who owns less than 50% of a company's shares and therefore does not have controlling interests or decision-making power within the company.

Minsky moment

A Minsky Moment refers to a sudden collapse of asset values which is part of the credit cycle or business cycle, named after economist Hyman Minsky, whose theories highlighted the inherent instability of financial markets.

Mirror trading

Mirror trading is a strategy in forex trading where investors copy the trades of experienced and successful forex investors. Strategies are replicated automatically without the investor's direct intervention.Learn more

Mischler Financial Group

Mischler Financial Group is a certified minority-owned financial services firm offering institutional brokerage and investment banking services.

Mismatch Risk

Mismatch risk arises from differences in the maturity of assets and liabilities or mismatches in the risk characteristics of financial instruments, potentially leading to liquidity issues or losses.

Mitsubishi UFJ Financial Group

Mitsubishi Group is a Japanese conglomerate consisting of a range of autonomous businesses which share the Mitsubishi brand, legacy, and trademark. It is one of the biggest players in various sectors including automotive, finance, and electronics.

Modified accrual accounting

Modified accrual accounting is a method that combines elements of both cash and accrual accounting. Revenues are recognized when they become available and measurable, and expenses are recognised when incurred.

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Modigliani risk-adjusted performance

Modigliani risk-adjusted performance, or M2, measures the returns of an investment adjusted for the risk of the investment relative to that of a benchmark. It’s derived from the Sharpe ratio and adjusts returns for the risk of the portfolio.

Monetary policy

Monetary policy involves the control of money supply and interest rates by central banks to influence economic growth, manage inflation, achieve low unemployment, and maintain currency stability in a country.

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Monetary Value

Monetary value refers to the value of an object or service in terms of money; it's the price at which something can be sold in the market.Learn more

Monetisation

Monetisation is the term used to describe turning an object, goods, service or asset into monetary value. It usually refers to currency – ie metals made into coins and the printing of bank notes – but companies are increasingly looking to turn assets into sources of revenue, and websites can also be monetised.

Money Flow Index definition

The Money Flow Index is a technical indicator used in financial markets to measure buying and selling pressure by incorporating both price and volume data. It operates on a scale from 0 to 100, indicating overbought or oversold conditions.

Money Market

The money market is a segment of the financial market where short-term financial instruments with high liquidity are traded. These include treasury bills, commercial paper, and certificates of deposit, typically with maturities of less than one year.

MoneyBee

MoneyBee refers to a distributed computing project from the early 2000s aimed at forecasting stock market movements. Participants could download software that would analyse market data as part of a collective computational effort.

Moneyness

Moneyness is a term used in options trading to describe the relationship between the strike price of an option and the current price of the underlying asset. It helps classify options as in the money, at the money, or out of the money.

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Monopolistic Markets

A monopolistic market refers to a market structure where there is only one producer/supplier of a particular product or service with significant market control, limiting competition and usually resulting in high prices and restricted supply.

Monopoly

Monopoly definition is a market structure where a single company or entity has complete control over the supply of a particular product or service. The company may either be the sole supplier of a product or service or one of a small number of such suppliers. Governments across the world have legislated to ban, break up or regulate monopolies.

Montana Management

Montana Management was a trust fund once owned by the late Iraqi president Saddam Hussein. It has a 2% holding in Lagardere Group, but all of its holdings were frozen under moves targeting the Saddam regime's leading figures.

Monthly income preferred stock

Monthly income preferred stock refers to a hybrid security, popular in the 1990s, that combines features of preferred stock and bonds.

Moody's rating

Moody's rating is a credit rating system used by Moody's Corporation to grade the creditworthiness of borrowers ranging from governments to private enterprises. Ratings are expressed as letter grades that indicate the risk level of default.

Mortgage

A mortgage is a loan secured by the collateral of specified real estate property that the borrower is obliged to pay back with a predetermined set of payments.

Mortgage underwriting

Mortgage underwriting is the process a lender uses to assess the risk of offering a mortgage to a borrower, which includes examining the borrower's creditworthiness and the value of the property being purchased.

Mortgage yield

Mortgage yield is the amount of return an investor can expect to earn if they were to hold a mortgage or a pool of mortgages (as in MBS) until maturity.

Mortgage-Backed Securities (MBS)

Mortgage backed securities are investment products secured by mortgages, which are pooled together. Investors receive periodic payments similar to bond coupon payments, derived from the mortgages in the pool.

Most Recent Quarter

The MRQ meaning is explained by the 'most recent quarter' and is used in financial reporting to refer to the financial data from the latest completed quarter, indicating the most current performance status of a company.

Mountain Chart

A mountain chart is a type of line chart used in market analysis that shows changes in an asset's price over time. The area under the line is shaded, resembling a mountain, to highlight the magnitude of price movements.

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Moving average

A moving average is a statistical analysis tool used in technical analysis that helps smooth out price data by creating a constantly updated average price over a specific period of time, which can indicate the trend direction. Moving averages might cover 50 periods, such as a 50-day moving average, 100 periods, or even more.

Mr. Market

Mr Market is a character created by investor Benjamin Graham to describe the market's behaviour as if it were a person, acting irrationally and offering business deals at different prices, which represents the emotional and psychological nature of the market.

MTF

An MTF is a European regulatory term for a self-regulated financial trading venue. These facilities are designed to facilitate the exchange of financial instruments between multiple parties, offering an alternative to traditional stock exchanges.

Multi-manager investment

Multi-manager investment involves an investment fund appointing multiple investment managers, each with their own specialized strategy. This approach aims to diversify risk and optimise returns by combining different management styles.Learn more

Multiple factor models

Multiple factor models in finance are used to assess and explain the returns of stocks or portfolios by considering various economic and market variables, or factors, that might influence performance beyond market risk.

Municipal bond

A municipal bond is a debt security issued by a state, municipality, or county to finance its capital expenditures. These bonds are typically exempt from federal taxes and, in some cases, state and local taxes.

Municipal bond arbitrage

Municipal bond arbitrage typically involves exploiting the price differences between tax-exempt municipal bonds and taxable bonds or other financial instruments, using the discrepancies to attempt to generate profit.

Mutual fund

Mutual funds are investment vehicles made up of a pool of funds collected from many investors for the purpose of investing in securities such as shares, money market instruments, and other assets.

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