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Glossary of Terms

daily range

the difference between the highest price paid for a share or derivative and the lowest price paid during one trading day.

day order

an order that is placed for execution during only one trading session. if the order cannot be executed that day, it is automatically cancelled.

day trading

the practice of buying and selling shares or derivatives within one day’s trading. the day is ended with no established position in the market.

debenture

a type of debt security of a company with a fixed rate of interest and backed by the general credit of the issuer, not by a specific security. it is secured by a trust deed over the assets of the company.

debt to equity ratio

a measure of a company’s borrowings showing the relationship between long-term debt and common shareholders’ equity (ie. borrowings divided by shareholders' funds).

deficit

the extent to which income falls short of expenditure. the opposite of surplus.

deflation

a decline in general price levels, often caused by a reduction in the supply of credit or money. consumer spending is substantially reduced, bank loans are curtailed and the amount of money in circulation is reduced.

delisting

the removal of securities or shares from listing on the stock exchange. the removal could be the result of a company failing to comply with the exchange's rules, or it is no longer meeting the listing requirements (eg. has been taken over) or is going into liquidation.

depreciation

the allocation of the cost of an asset over the life of that asset for accounting and tax purposes.

depression

a period during which business activity enters a prolonged slump. often characterised by rising unemployment and serious falls in production and the consumption of goods.

derivative security

a financial security whose value is determined in part from the value and characteristics of another security. the other security is referred to as the underlying security. examples are options, warrants and futures.

discount

describes any asset that is selling below its normal price. the difference between the present price of a security and the original offering price. alternatively, the amount by which a security is selling below its present asset backing. the opposite of premium.

discretionary account

a trading account over which the holder gives the broker, or someone else, the authority to buy and sell securities without prior approval of the account holder.

diversification

a portfolio strategy that aims to reduce risk by spreading investments among different classes of securities.

dividend

a taxable payment made to shareholders from a company’s after-tax earnings.

drawdown

reduction in equity of a trading account from a single trade or a series of trades.

due diligence

the process of investigating and verifying details of a potential investment, covering such items as a prospectus, operations, management and material facts.

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