Face Value
The value that appears on the
face of the scrip, same as nominal or par value of share/debentures.
Family of Funds
A group of mutual funds, each
typically with its own investment objective, managed and distributed by the
same company.
Feeder Fund
Unit Trusts or Mutual Funds which
invest in other trusts promoted by the same manager.
Fill or Kill (Fok) Order
An order that requires the
immediate purchase or sale of a specified amount of stock, though not
necessarily at one price. If the order cannot be filled immediately, it is
automatically cancelled (killed).
Financial crisis
Sharp,brief,ultracyclical
deterioration of all or most of a group of financial indicators – short term
interest rates, asset (stock, real estate, land) prices, commercial
insolvencies and failures of financial institutions.
Firewall
A barrier designed to prevent
losses or risks taken in one part of a financial institution from weakening
other parts of institution.
Firm allotment
Allotment on a firm basis in
public issues by an issuing company made to Indian and multilateral development
financial institutions ,Indian mutual funds , foreign institutional investors
including non-resident Indians and overseas corporate bodies and permanent/regular
employees of the issuer company.
First in/First out
A popular inventory cost
accounting procedure in which the first item manufactured is assumed to be the
first one sold by the company
Five against bond spread
A spread in the futures markets
created by taking offsetting positions in futures contracts for five-year
treasury bonds and long-term (15-30 year) treasury bonds.
Fixed Asset
An item of value used in current operation that would
normally be of use for more than one year.
Fixed Liability
An obligation of a company
payable more than a year hence.
Flip-Over
A provision in a poison pill that
gives shareholders the right to buy the company’s shares (or the shares of the
surviving company after a merger) at half price. Unlike a Flip-in, a flip-over
right does not become effective simply because an interested shareholder buys
some stock. Usually it becomes effective when (i) there is an interested
shareholder and (ii) the company engages in certain transactions with the
interested shareholder or an affiliate, such as a merger or a sale of all or a
large part of its assets. Historically, the flip-over poison pill was devised
several years before the more powerful flip-in. At that time the essential
discrimination against the interested shareholder that the flip-in entails was
widely considered illegal. Now the two are generally combined, although under
most circumstances the flip-in provision of the pill dominates any potential
bidder’s attention.
Flip-in poison pill plan
Shareholders are issued rights to
acquire stock in the target at a significant discount which is usually 50%.
Flip-in
The most important characteristic
of the most effective rights plan (position pill) in use today. It gives
shareholders the right to buy the company’s shares at half price when someone
becomes an ‘interested shareholder’, that is, crosses some stock ownership
threshold such as 15% or 20%. The interested shareholder’s rights are void.
Other shareholders can (typically) use each of their rights to buy a number of
shares equal to two times the exercise price (set in advance), divided by the
current market price of the target company’s stock. Usually, from the
standpoint of a bidder, the flip-in right is a complete show stopper unless the
bidder can convince a court that it should intervene. In the text we have tried
to describe when courts intervene against poison pills under Delaware law.
Flip-over Poison Pill Plan
The most popular type of poison
pill anti-takeover defense. Shareholders of the target firm are issued rights
to purchase common stock at an exercise price high above the current market
price. If a merger occurs, the rights flip over and allow shareholders to
purchase the acquiring firm’s common stock at a substantial discount.
Float
The number of shares issued and
outstanding of a company’s stock.
Floating rate coupon
Coupon rate that varies with
(“floats against”) a standard market benchmark or index.
Floating Stock
The fraction of the paid up
equity capital of a company which normally participates in day to day trading.
Floor
Trading hall of the Stock
Exchange where transactions in securities take place. The trading ring where
members and their assistants assemble with their order books for executing the
order of their constituents.
Floor price
The minimum offer price below
which bids cannot be entered. The Issuer Company in consultation with the lead
book runner fixes the floor price.
Flow back
Securities recently placed in the
markets that are resold on the issuers’ national market. It is one of the major
risks in an equity placement because it may frustrate the objective of
internationalization of the equity market and cause downward pressure on its
market price.
Foreign Exchange Rate
The price of one currency in
terms of the other.
Foreign institutional investor
An institution established or
incorporated outside India which proposes to make investment in India in
securities; provided that a domestic asset management company or domestic
portfolio manager who manages funds raised or collected or brought from outside
India for investment in India on behalf of a sub-account, shall be deemed to be
a Foreign Institutional Investor.
Fortune 500 (U.S.)
Since 1958, Fortune Magazine has
published a list of five hundred largest American Industrial Corporations,
ranked according to size of sales.
Forward Contract
An agreement for the future delivery of the underlying
commodity or security at a specified price at the end of a designated period of
time. Unlike a future contract, a forward contract is traded over the counter
and its terms are negotiated individually. There is no clearing house for
forward contracts, and the secondary market may be non-existent or thin.
Forward rate agreement:
A forward contract on interest rates in which the rate to
be paid or received on a specific obligation for a set period of time,
beginning at some time in the future, is determined at contract initiation.
Free cash flow
Calculated by adding depreciation to net income, and
subtracting capital expenditures. Free cash flow represents the cash that is
available for a company to spend after financing a capital project.
Free-rider Paradox
Sometimes benefits and costs
cannot be allocated accurately or at all to users by the markets or otherwise.
A free rider tries to take advantage of this situation. The paradox is that if
everyone tries to free ride no one can and everyone is worse off. An important
example is the natural environment. Most industrial users of the natural
environment are free riders. Everyone collectively is worse off but no one
individually finds it worthwhile to stop. In takeovers, an important recent
example is the basic research part of corporate research and development. It is
impossible to limit the benefits from basic research to the corporation who
pays the bill. Therefore, there will be a strong temptation for companies to
free ride. Competition in the product and takeover market should increase this
temptation.
Front Running
An unethical practice where
brokers trade an equity based on information from the analysis department
before their clients have been given the information. Fund manager /broker buys
or sells securities in advance of a substantial client order or whereby a
futures or options position position is taken about an impending transaction in
the same or related futures or options contract.
Fund of funds
Fund of funds scheme means a
mutual fund scheme that invests primarily in other schemes of the same mutual
fund or other mutual funds.
Fungible securities
Securities which are easily
interchangeable with another in the same class.
Futures Contract