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Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will demand for investing in a non-
Treasury security. It is also tied to the yield to maturity offered on a comparable-maturity Treasury security
that was most recently issued (on-the-run).
Benchmark issues
Also called on-the-run or current coupon issues or bellwether issues. In the secondary market, it is the most
recently auctioned Treasury issues for each maturity.
Beneath
Used for listed equity securities. 1) Behind; 2) Lower in price.
Beneficial ownership
Often used in risk arbitrage. Person who enjoys the benefits of ownership even though title is in another
name. (Abused through the illegal use of a parking violation.)
Best-efforts sale
A method of securities distribution/underwriting in which the securities firm agrees to sell as much of the
offering as possible and return any unsold shares to the issuer. As opposed to a guaranteed or fixed price
sale, where the underwriter agrees to sell a specific number of shares (with the securities firm holding any
unsold shares in its own account if necessary).
Best-interests-of-creditors test
The requirement that a claim holder voting against a plan of reorganization must receive at least as much as
he would have if the debtor were liquidated.
Beta
The measure of a funds or stocks risk in relation to the market, or an alternative benchmark. A beta of 1.5
means that a stocks excess return is expected to move 1.5 times the market excess returns. E.g. if market
excess return is 10% then we expect, on average, the stock return to be 15%. Beta is referred to as an glossary
of the systematic risk due to general market conditions that cannot be diversified away.
Beta equation
The beta of a fund is determined as follows: Regress excess returns of stock y on excess returns of the
market. The slope coefficient is beta. Define n as number of observation numbers.
Beta equation (Stocks)
The beta of a stock is determined as follows:
Biased expectations theories
Related: pure expectations theory.
Bid
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically speaking,
this is the available price at which an investor can sell shares of stock. Related: Ask , offer.
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