Haircut
(1)
The margin or more frequently, the capital tied up when
a financial intermediary takes a position.
(2)
A commission or fee for execution of a transaction
(uncommon).
Hammering The Market
Intensive sale of stocks to drive
prices down.
Hand Delivery
Delivery and payment on the date
stipulated by the Stock Exchange.
Hedge
An asset, liability or financial
commitment that protects against adverse changes in the value of or cash flows
from another investment or liability. An unhedged investment or liability is
called an “exposure”. A perfectly matched hedge will gain in value what the
underlying exposure loses or lose what the underlying exposure gains.
Hedge Funds
Private investment pools that
invest aggressively in all types of markets, with managers of the fund
receiving a percentage of the investment profits. The name is something of a
misnomer since a hedge fund’s raison d’etre is quite the opposite of hedging.
Hedge Ratio
The proportion of one asset
required to hedge against movements in the price of another.
Herfindahl-Hirschman (HH) Index
The sum of the squares of the market
shares of companies in any given industry. It is a measure of industry
concentration and is more sensitive to the effects of mergers than simple
market shares.
Horizontal spread
The purchase of either a call or put option and the
simultaneous sale of the same type of option with typically the same strike
price but with a different expiration month. Also referred to as calendar
spread.
Hostile Bid
An effort to gain control of a
target company that has not been agreed to by the target’s management and
board, usually through a tender offer or an unsolicited proposal to the board.
Sometimes called an unsolicited bid.
Hot Issue
A security that is expected to
trade in the after market at a premium over the public offering price.
Hot Money
Short term international capital
movements, motivated by interest rate differential or revaluation hopes/
devaluation fears.
Hybrid
Any security which has the
character of more than one type of security, including their derivatives.
Hypothecation
