Business / Finance Glossary

Dear Money: Over-the-counter options, such as those offered by government and mortgage-backed securities dealers.

Death Play: British term for tight money.

Death Valley Curve: A stock strategy that buys stock on the belief that a key executive will die, the company will be dissolved, and shares will command a higher price at their private market value.

Death-Backed Bonds: In venture capital, refers to the period before a new company starts generating revenues, when it is difficult for the company to raise money.

Debenture: Bonds backed by loans of a policyholder against a life insurance policy. The policyholder will repay the loans while alive or with the benefits from the insurance policy upon death.

Debenture Bond: Any debt obligation backed strictly by the borrower's integrity, e.g. an unsecured bond. A debenture is documented in an indenture.

Debenture Stock: An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond and collater . . . View Full Definition

Debit Balance: A type of stock that makes fixed payments at scheduled intervals of time. Debenture stock differs from a debenture in that it has the status of equity, not debt, in liquidation.

Debit Spread: The amount that is owed to a broker by a margin customer for loans the customer uses to buy securities.

Debt: Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a 'debit spread.' Antithesis of a cred . . . View Full Definition

Debt Bomb: A form of liability that represents money borrowed from banks or other institutions.

Debt Capacity: A default on debt and obligations by a major financial institution that disrupts the stability of the economic system.

Debt Displacement: Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.

Debt Instrument: The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity.

Debt Leverage: An asset requiring fixed dollar payments, such as a government or corporate bond.

Debt Limit: Amplification of the return earned on equity when an investment or firm is financed partially with borrowed money.

Debt Limitation: The maximum amount that a municipality can borrow.

Debt Market: A bond covenant that restricts the firm's ability to incur additional indebtedness in some way.

Debt Ratio: The market for trading debt instruments.

Debt Relief: Total debt divided by total assets.

Debt Retirement: Reducing the principal and/or interest payments on Less developed country loans.

Debt Securities: The complete repayment of debt. See: Sinking fund.

Debt Service: IOUs created through loan-type transactions-commercial paper, bank CDs, bills, bonds, and other instruments.

Debt Service Coverage: Interest payment plus repayments of principal to creditors (retirement of debt).

Debt Service Parity Approach: The ratio of cash flow available to the borrower to the annual interest and principal payments on a loan or other debt.

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