Glossary D

Day Order

An order to buy or sell that, if not executed, will expire at the end of the trading day on which it was entered. See Also: Good Till Cancelled (GTC).

Day Trade

Buying and selling the same security on the same day.

Debt

Money owed to another and due to be paid according to a predetermined agreement. Mortgage lenders carefully review your debt to help determine their loan decision. Also referred to as liability.

Debt/equity ratio

Long-term debt divided by shareholders' equity.

Delinquency

When you don't submit payments before the due date and any applicable grace period has passed.

De Minimis

A rule applied to determine if there is market discount on a bond. To determine whether the de minimis rule applies, multiply .25 times the number of full years between settlement date and maturity. If the discount is less than this amount then the "market discount" is zero, and is taxed as a capital gain. If the discount is equal to or greater than that amount, there is "market discount" that is taxed as ordinary income.

Depreciation

A decrease in the value of a property due to negative events such as unfavorable changes in market conditions, or damage to the property.

Detachable Call

The option to exercise a call on a bond can be sold by the issuer to a third party. Bonds with detachable calls generally trade in the secondary market at slightly higher yields than non-detachable call bonds. See also Callable.

Dilution

The effect of adding to the number of shares outstanding, which reduces the value to existing shareholders of earnings and assets.

Discount Points, or Points

A percentage of the loan amount paid at closing. For instance, on a $90,000 loan amount, 1 point = 1%, or $900. Points are typically paid to buy down (reduce) the interest rate. Alternatively, in exchange for a higher rate, the lender may pay points to offset a homeowner's closing costs. These are called negative points.

Discounted Security

A security that sells for a price that is below its par value.

Distribution Yield

Distribution Yield most often refers to the 12-month historical cash flow relative to the principal amount invested in a mutual fund. Similar to Current Yield (which only measures cash flow at the current point in time), the Distribution Yield is a measure of cash flow, which will be mostly interest paid out in the period, but can also include capital gains distributions, return of principal, etc. Distribution Yield may be more or less than what the fund has actually earned in the period. Like Current Yield, Distribution Yield is not an accurate measure of the lifetime performance of an investment. See also SEC Yield

Diversification

Spreading investments among different types of securities and various companies in different fields.

Dividends

The share of a company's earnings paid to shareholders, usually in cash or stock.

Document Preparation Fee

Lender fee that offsets the cost of processing your loan for closing. Different companies may refer to them by different names, such as processing fees or underwriting fees.

Dollar Cost Average

A system of buying securities at regular intervals with a fixed dollar amount. Under this system investors buy according to the dollar's worth rather than by the number of shares. If each investment is of the same number of dollars, payments buy more shares when the price is low and fewer when it rises. Temporary downswings in price benefit investors if they continue periodic purchases in both good times and bad and the price at which the shares are sold is more than their average cost.

Domestic Asset Funds

Domestic Asset Mutual Funds seek both income and capital appreciation by determining the optimal percentage of assets to place in domestic stocks, bonds, and cash.

Domestic Growth Funds

Domestic Growth Mutual Funds seek long-term capital appreciation by investing primarily in domestic equity securities of any market capitalization. Income is usually incidental.

Do Not Increase (DNI)

An instruction on Good Till Cancelled buy limit and sell stop orders, not to increase the quantity of shares as a result of a stock split or stock dividend on the ex-dividend date. See Also: Ex-Dividend Date.

Do Not Reduce (DNR)

An instruction on Good Till Cancelled buy limit, sell stop, and sell stop/limit orders, not to reduce the price by the amount of the cash dividend on the ex-dividend date. See Also: Ex-Dividend Date.

Dow Jones Industrial Average

The most widely used market indicator, composed of 30 large, actively traded issues of industrial stocks.

Down Payment

The part of the property purchase price paid in cash, and not financed with a mortgage.

Down Tick

A term used to designate that a trade was executed at a price lower than the preceding trade.

Draw Period

The agreed-upon interval of time when a lender will advance funds to you according to your loan terms

DTC

The Depository Trust Company - An institution owned by its members that serves as a clearinghouse for securities trades. Securities do not change hands physically, but rather are moved by way of bookkeeping entries in member firm accounts. DTC trades settle in fed funds (same day money). When book entry only bonds are issued, a single certificate will be delivered to DTC, and registered under the name "Cede and Co."

Due Date

The date on which a bond matures and the principal is to be returned to the bond holder. Also known as the maturity date.

Duration

"Equity: Duration refers to the length of time an order will remain in force. Examples of duration are: Day, Good Till Cancelled, Fill Or Kill, and Immediate Or Cancel. Please refer to these Glossary items for further definition. Fixed Income: Stated in years, duration refers to the change in value of a fixed-income security resulting from a 1% change in interest rates. For example, the value of a bond with a 5-year duration will drop 5% if interest rates increase by 1%. Duration can be characterized as short, intermediate or long and selected based on the investor's volatility/risk tolerance and anticipated shifts in interest rates."