T - Return to Index

T+1 or T plus 1 - Is the term to represent the required settlement date. It is trade date plus one day, here.

T+N or T plus N - Is a broader description of the stipulated settlement process. Depending on the security and the marketplace, there are different rules and regulations governing settlements. Here, the T refers to the trade date and the N is the number of days from the trade date to the settlement date.

TAC - Is a Targeted Amortization Class security.

TAN - See Tax Anticipation Note.

Target Funds - Are mutual funds which invest in specified categories, such as, average maturities or durations.

Targeted Amortization Class - Is a credit market derivative. It was initially structured as a CMO tranche for MBS deals. It tends to be subordinate to Planned Amortization Class bonds but superior in terms of stability to other Scheduled bonds and Sequentials.

TASE - Is the Tel Aviv Stock Exchange.

Tax Anticipation Note - Is a security issued by a municipality against expected tax collections. It has a maximum maturity of one year. It is used for cash management purposes.

Tax Deferred - Refers to a situation or an investment whereby the tax liability is delayed until a later date. Retirement plans such as 401K and IRAs are examples of this feature.

Tax Efficient Portfolios - Are investment holdings which have both trading profits and tax minimization impact as goals. These portfolios recognize that the subsequent payment of taxes reduces the investor's after tax returns. When holdings are held by pension plans or tax deferred accounts, there is no immediate tax liability on realized gains. However, an investor holding mutual funds which have high rates of security turnover and significant realized gains are subject to immediate tax year liabilities.

Tax Exempt - Refers to income or property which is not subject to tax. Interest on Municipal bond is not subject to federal income tax. Similarly, interest on a treasury bond is not subject to state or local income taxes.

TBA - See To Be Announced.

TD or T/D - Is the Trade Date.

TDA - Is a Tax Deferred Annuity.

It was established under Section 403(b) of the Internal Revenue Code. It is available only to employees of public schools and certain other tax-exempt organizations such as qualifying hospitals.

Technical Analysis - Is the study of market behavior which tries to discern patterns which enhance position taking. Among some of the tools and indicators used are: charts, volume, open interest, put to call ratios, moving averages, and oscillators. This compares to Fundamental Analysis and Conditional Analysis.

Technical Dictionary or Technology Glossary - Refers to a reference which lists, describes and defines technology, computer, networking, and other scientific terms and acronyms. See the popular Technology Glossary or Dictionary.

TED - Is the Treasury Bill to Eurodollar spread. It is often used as a pessimism-to-optimism indicator.

Temporary Financing - Consists of commercial paper, lines of credit, inventory financing and bridge loans. These obligations have to be satisfied within a relatively short timeframe.

Term Bond - Is a newly issued municipal bond with one stated maturity. This compares to Serial Bonds.

Term Repos - Are Repurchase Agreements which are negotiated or renegotiated (rolled over) for more than 1 day periods. These periods can be for multiple days, weeks, or sometimes, months. They are a form of borrowing/lending.

Term Structure of Interest Rates and Volatility - Refers to the variability of short-term rates relative to longer-term rates. It has been documented that short-term rates exhibit greater variability or volatility than long-term rates. However, longer-term instruments experience greater price sensitivity than short-term instruments for a given change in the underlying rate.

A quick measure of this price sensitivity is provided by duration. Typically, debt instruments without option features, explicit or implicit, have greater duration with longer maturities. Zero coupon securities tend to have the greater price sensitivity relative to coupon paying securities. See Duration.

Terminal Value - Refers to the financial remainder, residual amount, or end-of-process (life) valuation. Some examples are the remaining value of an expired option or hedge position. It may also refer to a non-discounted or discounted financial value for an investment.

Theory of Cross Hedging - Refers to a modification of the hedging process. It depends on hedging principles, practices and strategies but with a relaxation of strict standards of cash position specifications versus hedge instrument specifications. Often there can be a slight difference in grade, location, maturity, actual portfolio composition or product relative to the optimal hedge instrument. For example, treasury bond or note futures might be used in conjunction with To Be Announced securities (TBAs) to hedge mortgage backed securities portfolios. Mortgage backed securities are not deliverable against treasury bond futures, but there are features which improve the overall hedging efficiency by using blended hedges.

Theory of Hedging - Refers to economically reasonable techniques that generate compensatory offsets relative to inventory, portfolio or other course of business positions and transactions. It is predicated on the understanding that the resultant basis series between the actual position and the hedge position is more financially stable and has a lower monetary amplitude than the unhedged series. Often this definition refers to verisimilar items in terms of the position to be hedged and the hedge vehicle.

Theta - Is the sensitivity of an option premium or price relative to changes in time. This characteristic tends be viewed on an instantaneous basis in financial literature and on a daily change basis in practice.

Theta Risk - Refers to the time value exposure for an option. Academic literature tends to view it on an instantaneous basis whereas practioners tend to view it on a daily basis. For the later it can calculate the time value difference between 6.7.00 and 6.8.00 all other things being held constant. Then the amounts would be expressed in dollars or other designated currency.

Thin Tails - Describes the appearance of a probability curve which has a lower-than-normally-expected occurrence of observations in the remote areas, or tails, away from the mean.

Third Market - Is when a listed security is traded over-the-counter by non-exchange member brokers.

Tick - Is the minimum allowable price change increment for a futures, options or security transaction. It may be equal to 1, 5 or more basis points in terms of price. It may refer to an 1/8, 1/16, 1/32, 1/64 or other fraction of minimally acceptable change. The term is dependent on the rules of each market and exchange.

Ticket - Is the physical record of an order. Tickets are time stamped and show quantity, price or market pending price, type of order, and customer. If additional information is required to minimize errors such as type of order, market location, commission or spread, broker taking the order and so forth then that should be entered at the time of order acceptance. In some firms tickets are generated from the Trading Blotter.

Ticks - Refer to various price changes or price change sequences. Whereas a simple tick defines the minimally acceptable price change for an instrument from one transaction to another, ticks come in different orders.

Among these other ticks are: These designations can have significance for trading besides being descriptive. Ticks and their rule implications can impact program trading and short selling activities.

Time - Is the element which quantifies investment horizons, time remaining to maturity, time remaining to expiration, or time of holding period. It measures the distance between chronological points.

Its definition can be complex even when determining the remaining period for an option until its expiration. This is because some practitioners use only business days, others use calendar days, still others base their years on 252, 253, 360, 365 or 366 days (leap years). Also, for modeling purposes some analysts view time discretely while others view it continuously. At the simplest level, this is evident between the difference of simple interest calculations and continuous compounding interest calculations.

Time Is Of the Essence - Is a clause which asserts that there will not be any change in the settlement or timing of a transaction.

Time Spread - See Horizontal Spread.

Time Value - Has two general meanings. The first is the value or amount of a sum of money adjusted by an interest rate for a given time period. The second common usage is in the context of options. Here, it defines the amount of premium attributed to the remaining term of the option after factoring out any in-the-money component.

Is multiplicative factor which is dependent on the time remaining to expiration and the attendant volatility. However, time value is not proportional but tends to more nearly approximate a square root function.

TIN - Refers to the Tax Identification Number or to the Tax Payer Identification Number.

Title - Is a document indicates ownership of a specific property such as a motor vehicle, boat, or real estate.

Title Insurance - Is insurance coverage which protects against defects in title. Most lenders require its purchase. Unlike over insurances, it is purchased by a one-time premium payment.

Title Search - Is the examination of a property's filed document history. This would include verification of title/ownership, tax records, judgments, liens and other items which could encumber the title.

To Be Announced - Is the generic forward market for mortgage backed securities. A coupon, par quantity, agency, maturity and coupon characteristics are indicated but the exact details, such as specific pools, are to be formalized at a later time. This subsequent specification is to be done within the rules governing deliveries.

To Leg - Is the non-simultaneous execution of a spread, rollover, or modification of a complex position. It entails the separate execution of component parts of the entire position.

Too Late to Cancel - Is a report that the cancellation effort occurred after the order was executed.

Tombstone Ad or Advertisement - Is a pulished announcement of a new issue by the underwriters after the fact.

Total Return or Total Rate of Return - Refers to the change in asset value plus income. For a stock it would refer to the change in the adjusted stock price plus and dividends and other distributions, if any. For a bond it would reflect the change in bond price plus any interest received or accrued.

It more completely measures the overall perform of an investment.

Toxic Waste - Is a security which has been severely value impaired due to events or triggers of implicit option features.

Toxic Waste Swap - Is a transaction whereby two traders agree to exchange toxic waste or deeply underwater securities with one another with a swap transaction. Here, the traders can hide the losses associated with the initial losing position. Nevertheless, both parties continue to hold positions in securities which are inherently overvalued for trading or investment purposes. Upon discovery these positions will be subject to severe mark downs in price.

TPA or TPAs - Refer to Third Party Administrators.

Trade Date - Is the date of the transaction.

Trade House - Is a company which deals in the actual or physical commodities. These firms may also do an important amount of futures or options related business.

Trade Restrictions - Are taxes, tariffs, capital constraints, multiple currency rates dependent on type of transaction, quotas, and other impediments or requirements to execute an exchange of goods, services or financial transactions.

Tranche - Is the piece, portion or slice of a deal or structured financing. The so called "A to Z" securities of a CMO offering of a partitioned MBS portfolio. It can also refer to segments which are offered domestically and internationally. Tranches have distinctive features which for economic or legal purposes must be financially engineered or structured in order to conform to prevailing requirements.

Transfer Agent - Is the party that maintains a record of each registered shareholder. This record includes the name and address of the shareholder, the number of shares held by each, and is responsible for issuing and canceling security certificates. The last procedure occurs when there is a change in ownership.

Transparency - Refers to the presentation or announcement of positions. In portfolio and risk management it focuses on positions and the associated risk profiles.

While strides can be made in depicting greater transparency, reports by their very nature are historic. Many financial institutions experience continuous change in assets, liabilities and equity. Positions during the day may significantly be greater than end-of-day positions.

Nevertheless, explanations or realistic descriptions of intraday, end-of-day, and intraperiod and end-of-period positions and risks is useful. This transparency activity reduces the mystery of financial positions. Often substantial off-balance sheet items such as forwards, futures, swaps, and unsettled transactions could have a material impact on an organization's finances.

Treasury Stock - Is the amount of stock held by a corporation after its issuance. When it is held by the corporation, it is nonvoting and no dividends are paid. These shares may be reissued subsequently for various purposes. At that time, they regain their voting rights and dividend status. These shares may also be permanently retired. See Authorized Shares and Issued Shares for related terms.

Trigger - Is a point, threshold, or event which precipitates an action, exercise, or change in behavior. The occurrence is often viewed as the catalyst of an important condition.

Triple Witching - Is the concurrence of the expiration of stock index futures, options on stock index futures, and security options on stock indices.

Tropical Products - Refer broadly to the commodity futures markets for Coffee, Cocoa, Sugar and FCOJ (Frozen Concentrated Orange Juice).

Troy Ounce - Is equal to 1.09 ounces avoirdupois. Troy ounces are used for precious metals.

Truncated Distribution - Is a distribution which has the graphical appearance of being cut or severed. The distribution can be normal, lognormal or some other process. Often, truncated distributions are shown for option related strategies. This is due to the fact that a put purchased against a portfolio would limit the downside returns or effectively cutoff losses past the strike, or effective strike, level.

TRS or TRSs - Refer to Total Return Swaps. Generally, the market maker or bank will pay an asset's total rate of return in exchange for a cash payment. The stipulated asset or index is the benchmark or reference point. The counterparty to the investor or risk manager often receives LIBOR plus a risk financing margin.

TSE - Is the Toronto Stock Exchange.

TVAs - Are debt securities issued by the Tennessee Valley Authority.

Two-Tail Test - Is a statistical test which evaluates both extreme sides, or tails, of a probability distribution. It considers both high rates of return and high rates of loss.

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