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Facility provided by the Fed enabling member banks to borrow reserves against collateral in the form of
governments or other acceptable paper.
Discrete compounding
Compounding the time value of money for discrete time intervals.
Discrete random variable
A random variable that can take only a certain specified set of discrete possible values - for example, the
positive integers 1, 2, 3, . . .
Discrete variable
Variable like 1,2,3. Bond ratings are examples of discrete classifications.
Discretionary account
Accounts over which an individual or organization, other than the person in whose name the account is
carried, exercises trading authority or control.
Discretionary cash flow
Cash flow that is available after the funding of all positive net present value (N.P.V.) capital investment
projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on.
Discriminant analysis
A statistical process that links the probability of default to a specified set of financial ratios.
Disintermediation
Withdrawal of funds from a financial institution in order to invest them directly.
Distributed
After a Treasury auction, there will be many new issues in dealers hands. As those issues are sold, they are
said to be distributed.
Distributions
Payments from fund or corporate cash flow. May include dividends from earnings, capital gains from sale of
portfolio holdings and return of capital. Fund distributions can be made by check or by investing in additional
shares. Funds are required to distribute capital gains (if any) to shareholders at least once per year. Some
corporations offer Dividend Reinvestment Plans (D.R.P.).
Divergence
When two or more averages or indices fail to show confirming trends.
Diversifiable risk
Related: unsystematic risk.
Diversification
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