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Words used to describe investor attitudes. Bullish refers to an optimistic outlook while bearish means a
pessimistic outlook.
Bull market
Any market in which prices are in an upward trend.
Bull spread
A spread strategy in which an investor buys an out-of-the-money put option, financing it by selling an out-of-
the money call option on the same underlying security.
Bundling, unbundling
A trend allowing creation of securities either by combining primitive and derivative securities into one
composite hybrid or by separating returns on an asset into classes.
Business cycle
Repetitive cycles of economic expansion and recession. The official peaks and troughs of the U.S. cycle are
determined by the National Bureau of Economic Research in Cambridge, MA.
Business failure
A business that has terminated with a loss to creditors.
Business risk
The risk that the cash flow of an issuer will be impaired because of adverse economic conditions, making it
difficult for the issuer to meet its operating expenses.
Busted convertible
Related: Fixed-income equivalent. Mainly applies to convertible securities. Convertible bond selling
essentially as a straight bond. Assuming the issuer is money good, or will continue to meet credit
obligations, such issues can be highly attractive since the price virtually makes no allowance for the bonds
call on the common stock; however, such issues usually carry high premiums.
Butterfly shift
A non-parallel shift in the yield curve involving the height of the curve.
Butterfly spread
Applies to derivative products. Complex option strategy that involves selling two calls and buying two calls
on the same or different markets, with several maturity dates. One of the options has a higher exercise price
and the other has a lower exercise price than the other two options. The payoff diagram resembles the
shape of a butterfly.
Buy
To purchase an asset; taking a long position.
Buy-and-hold strategy
A passive investment strategy with no active buying and selling of stocks from the time the portfolio is
created until the end of the investment horizon.
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