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Bank Discount Yield An annualized interest rate assuming simple interest, a 360-day year, and using the face value of the security rather than purchase price to compute return per dollar invested.
Banker's Acceptance A money market asset consisting of a customer's order to a bank to pay a sum of money at a future date.
Bar Chart A type of chart which shows the price movements of a market asset over a certain period of time. The high and the low prices form the vertical bar, the opening price forms the horizontal line to the left of the bar, and the closing price forms the horizontal line to the right of the bar.
Base Currency The base currency is the first currency in a currency pair, and the currency that remains constant when determining a currency pair's price. For example, currency pairs against the USD will be identified as USD/BGN, where USD is the base currency.
Basis The difference between the spot price and the futures price.
Basis Point One hundredth of a percentage point.
Basis Risk The risk associated with an unexpected widening or narrowing of basis (i.e. the difference between the futures price and the spot price).
Bear Investor acting on the belief that prices or the market will decline. (Opposite of Bull).
Bear Market A market in which prices decline sharply against a background of widespread pessimism.
Benchmark Error Use of an inappropriate proxy for the true market portfolio.
Beta A measure of the systematic risk associated with any given security in the market. A ratio of an individual's stock historical returns to the historical returns of the stock market.
Bid The highest price an investor is willing to pay to buy a security.
Bid-Asked Spread The difference between the bid and asked prices.
Bid-Offer Spread The difference between the buy (bid) and sell (offer) price of a currency or financial instrument.
Big Figure Dealer expression referring to the first few digits of an exchange rate.
Binomial Model The binomial options model provides a generalisable numerical method for the valuation of options. The model differs from other option pricing models, in that it uses a "discrete-time" model of the varying price over time of financial instruments.
Black-Scholes Formula A formula developed to estimate the market value of option contracts which includes the stock price, the exercise price, the risk-free interest rate, the expiry date, as well as the standard deviation from the return on securities.
Block House Brokerage firms that help to find potential buyers or sellers of large block trades.
Block Sale A transaction of more than 10,000 shares of stock.
Block Transactions Large transactions in which at least 10,000 shares of stock are bought or sold. Brokers or "block houses" often search directly for other large traders rather than bringing the trade to the stock exchange.
Bogey The return an investment manager is compared to for performance evaluation.
Bollinger Bands An indicator that allows users to compare volatility and relative price levels over a period time. Since the band width is a function of standard deviation, assets with greater volatility will have wider bands. A move outside the band indicates that the trend is b and likely to continue.
Bond Bonds are issued by governments, companies and other entities and individuals in return for cash from lenders and investors. The borrower pays interest to the lender or investor through the life of the bond.
Bond Equivalent Yield Bond yield calculated on an annual percentage rate method. Differs from annual effective yield.
Book Value The net value of a company's assets, less its liabilities and the liquidation price of its preferred issues. The net asset value divided by the number of shares of common stock outstanding equals the book value per share, which may be higher or lower than the stock's market value.
Break-Even Point Refers to the price at which a transaction produces neither a gain nor a loss.
Breakout The point when the market price moves out of the trend channel (previous high or low, consolidation level).
Broker An agent who executes the public's orders for the purchase or sale of securities or another instrument for a fee or commission.
Broker-Dealer A firm that handles transactions for its customers and also purchases securities for its own account, selling them to customers.
Brokered Market A market where an intermediary (a broker) offers search services to buyers and sellers.
Bull Investor acting on the belief that prices or the market will rise. (Opposite of Bear).
Bull CD, Bear CD A bull CD pays its holder a specified percentage of the increase in return on a specified market index while guaranteeing a minimum rate of return. A bear CD pays the holder a fraction of any fall in a given market index.
Bull Market A securities market characterized thus on rising prices.
Bullish, Bearish Words used to describe investor attitudes. Bullish means optimistic; bearish means pessimistic. These terms also describe the bull market and bear market.
Bundling, Unbundling A trend allowing creation of securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes.
Business Cycle The recurrent rise and fall of a country's economic fortune over time. It is characterized by fluctuating employment levels, industrial productivity, and interest rates.
Buy-and-hold approach An investment strategy in which stocks are bought and then held for a long period, regardless of the market's fluctuations. The buy-and-hold approach to investing in stocks and mutual funds rests upon the assumption that in the very long term stock prices will go up.
Buy Limit Indicates a security may be purchased only at the designated price or lower.
Buy Stop A buy order not to be executed until the market price rises to the stop price. Once the security has broken through that price, the order is then treated as a market order.

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