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underlying futures contract or stock price. For a call option, a delta of 0.50 means a half-point rise in
premium for every dollar that the stock goes up. As options near expiration, in-the-money call option
contracts approach a delta of 1.0, while in the money put options approach a delta of -1. See: hedge ratio,
neutral hedge.
Delta hedge
A dynamic hedging strategy using options with continuous adjustment of the number of options used, as a
function of the delta of the option.
Delta neutral
The value of the portfolio is not affected by changes in the value of the asset on which the options are
written.
Demand deposits
Checking accounts that pay no interest and can be withdrawn upon demand.
Demand line of credit
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.
Demand master notes
Short-term securities that are repayable immediately upon the holders demand.
Demand shock
An event that affects the demand for goods and services in the economy.
Dependent
Acceptance of a capital budgeting project contingent on the acceptance of another project.
Depository preferred
Mainly applies to convertible securities. Device enabling an issuer to circumvent an arbitrary corporate limit
on the number of preferred shares issuable.
Depository transfer check (DTC)
Check made out directly by a local bank to a particular firm or person.
Depository Trust Company (DTC)
D.T.C. is a user-owned securities depository which accepts deposits of eligible securities for custody,
executes book-entry deliveries and records book-entry pledges of securities in its custody, and provides for
withdrawals of securities from its custody. Used in the context of general equities. Central securities
repository where stock and bond certificates are exchanged. Most of these exchanges now take place
electronically, and few paper certificates actually change hands. The D.T.C. is a member of the Federal
Reserve System and is owned by most of the brokerage houses on Wall Street and the N.Y.S.E.
Depreciate
To allocate the purchase cost of an asset over its life.
Depreciation
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