Business / Finance Glossary

Bankruptcy Cost View: The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt financing.

Bankruptcy Risk: The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.

Bankruptcy View: The argument that expected bankruptcy costs preclude firms from financing entirely with debt.

Bar: Slang for one million dollars.

Barbell Strategy: A fixed income strategy in which the maturities of the securities included in the portfolio are concentrated at two extremes.

Barefoot Pilgrim: A slang term for an unsophisticated investor who has lost everything on the stock market.

Bargain Hunter: In the context of general equities, purchaser who is extremely selective in the price sought on a transaction.

Bargain-Purchase-Price Option: Gives the lessee the option to purchase the asset at a price below fair market value when the lease expires.

Barometer: Economic and market data that represent an overall trend. The Dow Jones Industrial Average is an example of a stock market barometer.

BARRAs Performance Analysis (PERFAN): A method developed by BARRA, a consulting firm in Berkeley, Calif. It is commonly used by institutional investors applying performance attribution analysis to evaluate their money managers' . . . View Full Definition

Barrier Options: Option contracts with trigger points that, when crossed, automatically generate buying or selling of other options. These are exotic options.

Barrons Confidence Index: Index measuring the ratio of the average yield on 10 top-grade bonds to the average yield on 10 intermediate-grade bonds. The discrepancy between high-rated top-grade bonds and low-rated bon . . . View Full Definition

Barter: The trading/exchange of goods or services without using currency.

Base: A technical analysis tool. A chart pattern depicting the period when the supply and demand of a certain stock are in relative equilibrium, resulting in a narrow trading range. The merging of . . . View Full Definition

Base Currency: Applies mainly to international equities. Currency in which gains or losses from operating an international portfolio are measured.

Base Interest Rate: Related: Benchmark interest rate.

Base Market Value: A group of securities, average market price at a specific time. Used for the purpose of indexing.

Base Period: A particular period of time used for comparative purposes when measuring economic data.

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