Financial Risk Manager

Ways of Financial and Risk Management

Financial and Business Terms - from Bub to Bun
Saturday, May 2, 2009

Bubble theory: Security prices sometimes move wildly above their true values.
Buck: Slang for one million dollars.
Budget: A detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget.
Budget deficit: The amount by which government spending exceeds government revenues.
Builder buydown loan: A mortgage loan on newly developed property that the builder subsidizes during the early years of the development. The builder uses cash to buy down the mortgage rate to a lower level than the prevailing market loan rate for some period of time. The typical buydown is 3% of the interest-rate amount for the first year, 2% for the second year, and 1% for the third year (also referred to as a 3-2-1 buydown).
Bull: An investor who thinks the market will rise.
Bull-bear bond: Bond whose principal repayment is linked to the price of another security. The bonds are issued in two tranches: in the first tranche repayment increases with the price of the other security, and in the second tranche repayment decreases with the price of the other security.
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: Any market in which prices are in an upward trend.
Bull spread: A spread strategy in which an investor buys an out-of-the-money put option, financing it by selling an out-of-the money call option on the same underlying.
Bulldog bond: Foreign bond issue made in London.
Bulldog market: The foreign market in the United Kingdom.
Bullet contract: A guaranteed investment contract purchased with a single (one-shot) premium.
Bullet loan: A bank term loan that calls for no amortization.
Bullet strategy: A strategy in which a portfolio is constructed so that the maturities of its securities are highly concentrated at one point on the yield curve.
Bullish, bearish: Words used to describe investor attitudes. Bullish refers to an optimistic outlook while bearish means a pessimistic outlook.
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.