H

Fifth letter of a Nasdaq stock symbol specifying that the issue is the
second preferred bond of the company.
HAB
See: House Air Waybill
HEX
See: Helsinki Exchange
HHI
See: Herfindahl-Hirschman Index
HK
The two-character ISO 3166 country code for HONG KONG.
HKD
The ISO 4217 currency code for the Hong Kong Dollar.
HKFE
See: Hong Kong Futures Exchange
HLT
See: Highly leveraged transaction
HM
The two-character ISO 3166 country code for HEARD ISLAND AND
MCDONALD ISLANDS.
HN
The two-character ISO 3166 country code for HONDURAS.
HNL
The ISO 4217 currency code for the Honduras Lempira.
HR
The two-character ISO 3166 country code for CROATIA.
HRK
Croatian Kuna currency. (The ISO 4217 currency code)
HT
The two-character ISO 3166 country code for HAITI.
HTG
The ISO 4217 currency code for the Haiti Gourde.
HTM
See: Held to Maturity.
HU
The two-character ISO 3166 country code for HUNGARY.
HUF
The ISO 4217 currency code for the Hungarian Forint.
HUI
An indexed (unhedged) of gold stocks. A popular chart is to compare
the price of gold to this index.
Haircut
The margin or difference between the actual market value of a security
and the value assessed by the lending side of a transaction.
Half-life
 The point in the life of a mortgage-backed security guaranteed or
issued by the Government National Mortgage Association, the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Corporation when half the principal has been repaid.
Half-stock
Stock, common or preferred, with a $50 par value.
Hammering the market
Heavy selling of stocks by speculators who think that the stock is
overvalued and is about to drop.
Handle
The whole-dollar price of a bid or offer is referred to as the handle
(e.g., if a security is quoted at 101.10 bid and 101.11 offered, 101 is
the handle. In this example, the market is then simply quoted as 'ten
to eleven', as in '.10 to .11'.) Traders are assumed to know the handle.
See: Full.
Hands-off investor
An investor who has a large stake in a company, but does not wish to
play an active role in the management of the corporation.
Hands-on investor
An investor who has a large stake in a corporation and takes an active
role in its management . Antithesis of hands-off investor.
Hang Seng index
The major index in Hong Kong.
Hard call protection
Usually refers to callable bonds. The period of time when a bond
cannot be called, no matter what the interest rate is. That is, if the
interest rate falls sharply, most callable bonds will be called (so the
bond issuer can reissue at a lower interest rate). Hard call protection
ensures that the holder of the bond can benefit when rates fall.
Hard capital rationing
A capital budget that under no circumstances can be violated.
Hard currency
A freely convertible currency that is not expected to depreciate in
value in the foreseeable future.
Hard dollars
Actual separate payments made by a customer for services, including
research, provided by a brokerage firm. Antithesis of soft dollars.
Harmless warrant
Warrant that allows the user to purchase a bond only by surrendering
another bond with similar terms.
The Harmonized Commodity Description and Coding System
Commonly known as Harmonized System. It is a classification system
devised by the Customs Cooperation Council to provide uniformity in
tariff classification, trade statistics, and transport documentation
among cooperating countries.
Hart-Scott-Rodino Act
 Often used in risk arbitrage. Antitrust act administered by U.S.
Department of Justice and the FTC that requires an investor to file a
form with the government before he acquires an economic interest in
the lesser amount of $15 million or 15% of the capitalization of a
specific security. The government has thirty days to respond to the
filer.
Harvey, Campbell R.
Author of this glossary. Finance professor at Duke University. Author of
research on international finance, asset allocation, and emerging
markets.
Hawkish
An aggressive tone. For example, if the Federal Reserve uses hawkish
language to describe the threat of inflation, one could reasonably
expect stronger actions from the Fed. There is a similar application to
CEO describing an important issue that a firm faces. Opposite of
Dovish.
Head & shoulders
In technical analysis, a pattern that results where a stock price reaches
a peak and declines; rises above its former peak and again declines;
and rises a third time but not to the second peak, and then again
declines. The first and third peaks are shoulders, while the second
peak is the formation's head. Technical analysts generally consider a
head and shoulders formation to be a very bearish indication,
especially if the market descends more than 3% below the neckline.
Headline inflation
A measure of the total inflation that is experienced throughout an
entire economy. Headline inflation is based off of the U.S. Bureau of
Labor Statistics' Consumer Price Index (CPI). In contrast, the core CPI,
which is used to mearue core inflation excludes price fluctuations in
the food and energy sector due to their seasonal or volatile
movements. See: Consumer Price Index (CPI), Inflation
Heavy
An equities market now dominated by sellers, or oversupply, resulting
in falling prices. See: Overbought, resistance level, tired.
Hedge
A transaction that reduces the risk of an investment.
Hedge clause
A clause in a research report or any published document that attempts
to absolve the writer of responsibility for the accuracy of information
provided.
Hedge fund
An investment vehicle that somewhat resembles a mutual fund, but
with a number of important differences. If the fund is "off-shore", the
fund does not have to adhere to any SEC regulations (and can only sell
to non-U.S. investors or investment vehicles). These funds employ a
number of different strategies that are not usually found in mutual
 funds. The term "hedge" can actually be misleading. The traditional
hedge fund is actually hedged. For example, a fund employing a long-
short strategy would try to select the best securities for purchase and
the worst for short sale. The combination of longs and short provides a
natural hedge to market-wide shocks. However, much more common
are funds that are not hedged. There are funds that are long-biased
and short-biased. There are funds that undertake high frequency
futures strategies, sometimes called managed futures. There are funds
that take long-term macroeconomic bets, sometimes called global
macro. There are funds that try to capitalize on merger and
acquisitions. Another distinguishing feature of hedge funds is the way
that managers are rewarded. There are two fees: fixed and variable.
The fixed fee is a percentage of asset under management. The
variable or performance fee is a percentage of the profit of the fund.
There are also funds of funds which invest in a portfolio of hedge
funds. Another important difference with hedge funds is that the
minimum required investment is usually quite large and, as a result,
minimizes the participation of retail investors.
Hedge quality
Measured by the R-square in a regression of spot rate changes on
futures price changes.
Hedge ratio (delta)
For options, ratio between the change in an option's theoretical value
and the change in price of the underlying stock at a given point in
time. For convertibles, percentage of a convertible bond representing
the number of underlying common shares sold against the shares into
which bonds are convertible. If a preferred is convertible into 2000
common shares, a 75% hedge ratio would be short (long) 1500
common for every 1000 preferred long (short). See: Delta.
Hedge wrapper
An options strategy in which an investor with a long position in an
underlying stock buys an out-of-the-money put and sells an out-of-the-
money call. The hedge wrapper defines a range where the stock will be
sold at expiration of the option, whichever way the stock moves.
Hedged portfolio
A portfolio consisting of a long position in the stock and a long position
in the put option on the stock, so as to be riskless and produce a return
that equals the risk-free interest rate.
Hedged tender
An investor sells a portion of a stock holding short a tender offer in the
anticipation that not all shares tendered will be accepted. For example,
investor Q has 5000 shares of XYZ. An acquiring company makes a
tender offer of $100 a share for 50% of the target company when the
shares are currently worth $80. Investor Q anticipates that if he or she
tenders all 5,000 shares, only 2,500 will be accepted by the bidder pro
rata. Investor Q therefore short-sells 2500 shares after the
 announcement and the price of the stock has approached $100.
Company XYZ purchases only 2500 of the original shares at $100.
Investor Q has sold all shares at $100 even as the price of the stock
drops on a post-news dip.
Hedgie
Slang for a hedge fund.
Hedging
A strategy designed to reduce investment risk using call options, put
options, short-selling, or futures contracts. A hedge can help lock in
profits. Its purpose is to reduce the volatility of a portfolio by reducing
the risk of loss.
Hedging demands
Demands for securities to hedge particular sources of consumption
risk, beyond the usual mean-variance diversification motivation.
Held at the opening
Used for listed equity securities. Not open for trading because
specialists or regulators are not allowing trading to occur until
imbalances dissipate or news is disseminated.
Held order
Order that must be executed without hesitation (Hit the bid or take the
offer in line) or if the stock can be bought or sold at that price (held
limit order) in sufficient quantity.
Held to maturity
Investment in securities with the intention and ability to hold them to
maturity. Note that these can only be debt securities as equity has no
maturity. These are reported at amortized cost and temporary
fluctuations in market prices do not affect the value reported on
financial statements. Also see Available for Sale, Trading Securities.
Hell-or-high-water contract
A contract that obligates a purchaser of a project's output to make
cash payments to the project in all events, even if no product is offered
for sale.
Helsinki Exchanges (HEX)
The Helsinki Exchanges (HEX Ltd., Helsinki Securities and Derivatives
Exchange and Clearing House) was formed at the beginning of 1998
following the merger of the Helsinki Stock Exchange Ltd. and SOM Ltd.,
the Securities and Derivatives Exchange, and the Clearing House.
Hemline theory
A theory that stock prices move in the same direction as the hemlines
of women's dresses. For example, short skirts (1920s and 1960s) are
symbolic of bullish markets and long skirts (1930s and 1940s) are
symbolic of bearish markets.
Herfindahl-Hirschman Index (HHI)
A measure of market concentration, it depends on the number of firms
and their size relative to the market. It is calculated by summing up
the squares of market shares of each firm. For example, a market
 where the HHI comes to more than 1800 will be considered a
concentrated market. Mergers or acquisitions that change the HHI by
more than 100 points in a concentrated market may raise antitrust
concerns within the Department of Justice.
Hermes
The trade finance agency for Germany.
Herstatt risk
The risk of loss in foreign exchange trading that one party will deliver
foreign exchange but the counterparty financial_institution will fail to
complete its end of the contract. This is also referred to as settlement
risk.
H-H page
Quotron display page that shows new listed inquiries/orders received
after the block call.
HIBOR
Hong Kong Interbank Offered Rate, the annualized offer rate banks pay
to attain Hong Kong three-month deposits denominated in dollars.
Hidden load
A sales charge that is not explicitly disclosed or is buried in the fine
print of a mutual fund prospectus or life insurance policy and therefore
is not immediately apparent.
Hidden values
Valuable assets owned by a company that are not accurately reflected
in its stock price at a particular time.
High-coupon bond refunding
Replacing a high-coupon bond with a new, lower-coupon bond.
High credit
The maximum amount of outstanding loans for a particular customer
on a bank's record.
High current income mutual fund
A mutual fund whose primary goal is to produce a high level of income
by making higher-risk investments in instruments such as junk bonds.
High flyer
High-priced and highly speculative stock that moves up and down
sharply over a short period. Generally glamorous in nature due to the
capital gains potential associated with them; also used to describe any
high-priced stock. Antithesis of sleeper.
High-grade
Credit quality of AAA or AA.
High-grade bond
A bond with Triple-A or Double-A rating in Standard & Poor's, or
Moody's rating system.
High powered money
See monetary base..
High price
 The highest closing price of a stock over the past 52 weeks, adjusted
for any stock splits, or the highest intraday price of a stock in the most
recent (or current) trading session.
High-premium convertible debenture
A bond with a long-term, high-premium, common stock conversion
feature. It also offers a competitive interest rate. This type of
investment vehicle is aimed at bond investors who want to be able to
convert into stock to hedge against inflation.
High-tech stock
Stocks of companies operating in high-technology fields.
High withholding tax interest income
Interest income that is subject to a foreign gross withholding tax of 5%
or more. Specified in US tax code.
High yield
In the context of hedge funds, a style of management that focuses on
low rated fixed income securities.
High-yield bond
See: Junk bond
Highjacking
Japanese term for a takeover.
Highly confident letter
An investment banking firm's letter indicating that the firm is highly
confident it will be able to arrange financing for a securities deal.
Highly leveraged transaction (HLT)
Bank loan to a highly leveraged firm.
Highs
Stocks that have hit an all-time high for the current 52-week time
period.
Hire Purchase
The right to purchase an asset by the user of the asset according to a
pre-agreed method. The user may be the owner for tax purposes.
Historical cost
Describes the accounting cost carried in the books and reflecting the
cost of the item at the time it was purchased, rather than its current
value.
Historical Cost Accounting Convention
An accounting technique that values an asset for balance sheet
purposes at the price paid for the asset at the time of its acquisition.
Historical exchange rate
An accounting term that refers to the exchange rate in effect at the
time an asset or liability is acquired.
Historical trading range
The range of price over which a security or a commodity has traded
since listing on a exchange.
Historical volatility
Fluctuations estimated from a historical time series.
Historical yield
A measure of a mutual fund's yield over a specific period of time, e.g.,
1 year, 2 year, 5 year, or year to date.
Hit the bid
A dealer who agrees to sell at the bid price quoted by another dealer is
said to "hit" that bid. Antithesis of take the offer.
Hit the ribbon
Used in the context of general equities. See: Print.
Hold
To maintain ownership of a security over a long period of time. "Hold"
is also a recommendation of an analyst who is not positive enough on
a stock to recommend a buy, but not negative enough on the stock to
recommend a sell.
Holder
The purchaser of an option.
Holder of record date
The date on which holders of record in a firm's stock ledger are
designated as the recipients of either dividends or stock rights. Also
called date of record or record date.
Holding company
A corporation that owns enough voting stock in another firm to control
management and operations by influencing or electing its Board of
Directors.
Holding the market
The illegal practice of maintaining and/or placing a sufficient number of
buy orders to create price support for a security or commodity in an
amount sufficient to stabilize a downward trend.
Holding period
Length of time a security is held.
Holding-period return
Rate of return on an investment over a given period.
Holding-Period Yield (HPY)
The rate of return (including any interest or dividends paid during the
holding period) actually realized on an investment in a bond.
Home asset bias
The tendency of investors to over invest in their own county's assets.
Home run
Large capital gain in a stock in a short period of time.
Homemade dividend
Sale of some shares of stock to get cash in an amount similar to that of
a cash dividend.
Homemade leverage
Idea that as long as individuals borrow (or lend) on the same terms as
the firm, they can duplicate the effects of corporate leverage on their
own. Thus, if levered firms are priced too high, rational investors will
simply borrow on personal accounts to buy shares in unlevered firms.
Homeowner's equity account
A credit line offered by mortgage lenders allowing a homeowner a
second mortgage that uses the equity present in the customer's
account as collateral.
Homeowner's insurance policy
An insurance policy protecting a homeowner against damage or loss to
property.
Homogeneity
The degree to which items are similar.
Homogeneous
Exhibiting a high degree of homogeneity.
Homogeneous expectations assumption
An assumption of Markowitz portfolio construction that investors have
the same expectations with respect to the inputs that are used to
derive efficient portfolios: asset returns, variances, and covariances.
Hong Kong Futures Exchange (HKFE)
Established in 1976, the Hong Kong Futures Exchange (H.K.F.E.)
operates futures and options markets in index, stock, interest rate, and
foreign exchange products.
Horizon analysis
An analysis of returns using total return to assess performance over
some investment horizon.
Horizon matching strategy
An income immunization strategy that cash-matches over the next few
years and duration-matches the rest.
Horizon return
Total return over a given horizon.
Horizontal acquisition
Merger between two companies producing similar goods or services.
Horizontal analysis
The process of dividing each expense item of a given year by the same
expense item in the base year. It allows assessment of changes in the
relative importance of expense items over time and the behavior of
expense items as sales change.
Horizontal merger
A merger involving two or more firms in the same industry that are
both at the same stage in the production cycle; that is, two or more
competitors.
Horizontal price movement
Stock price movement within a narrow price range over an extended
period of time which creates the appearance of a relatively straight
line on a graph of the stock's price.
Horizontal spread
The simultaneous purchase and sale of two options that differ only in
their expiration dates.
Hospital revenue bond
 A bond issued to finance construction of a hospital by a municipal or
state agency.
Host security
The security to which a warrant is attached.
Hostile takeover
A takeover of a company (usually made by an open tender offer to
shareholders) against the wishes of the current management and the
Board of Directors by an acquiring company or raider.
Hot
Used in the context of general equities. Active, usually with positive
price implications.
Hot Issue
An IPO for which demand heavily exceeds supply.
Hot money
Money that moves across country borders in response to interest rate
differences and that moves away when the interest rate differential
disappears.
House
Firms that conduct business as broker-dealers in securities or in the
investment banking field are characterized as houses.
House account
A type of account at a brokerage firm that is given a high level of
priority and is handled by the main office or an executive, rather than
a traditional salesperson.
House Air Waybill (AWB)
An air waybill issued by an air freight consolidator.
House call
Notification by a brokerage house that a customer's margin account is
below the minimum maintenance level. The client must provide more
cash or equity, or the account will be liquidated.
House of issue
An investment banking firm whose business it is to underwrite stock or
bond issues and offer the securities to the public.
House maintenance requirement
The internal rules of a brokerage house that govern the minimum
amount of equity that must be present in a customer's margin account.
House poor
People who are short on cash because most of their money is tied up in
their homes are "house poor."
House rules
Internal rules of broker-dealer firm that govern the handling of its
customers' accounts.
Housing bond
Bonds issued by a local housing authority to finance housing projects.
"How are you making XXX?"
"What is your market in a particular stock?" See: Quotation.
Hubris
An arrogance due to excessive pride and an insolence toward others. A
classic character flaw of a trader or investor.
Hulbert rating
A rating by Hulbert Financial Digest, a service of CBS MarketWatch, of
how well the recommendations of various investment advisory
newsletters have performed.
Human capital
The unique capabilities and expertise of individuals.
Humphrey-Hawkins Act
Informal name for the Full Employment and Balanced Growth Act of
1978, from the names of the act's original sponsors.
Hung up
Used to describe the position of an investor whose stocks or bonds
have dropped in value below their original purchase price.
Hunkering down
A term used to describe a trader selling off a big position in a stock.
Hurdle rate
The required return in capital budgeting. For example, if a project has
an expected rate of return higher than the hurdle rate, the project may
be accepted. Also, the rate of current return an income trust must earn
consistently in order for it to be able to maintain distributions at their
current level.
Hurst Exponent(H)
A measure of the bias in fractional Brownian motion. H=0.50 for
Brownian motion. 0.50<H<1.00 for persistent, or trend-reinforcing
series. 0<H<0.50 for an anti-persistent, or mean-reverting system. The
inverse of the Hurst exponent is equal to alpha, the characteristic
exponent for Stable Paretian distributions. The fractal dimension of a
time series, D, is equivalent to 2-H.
Hybrid
A package of two or more different kinds of risk management
instruments that are usually interactive.
Hybrid annuity
A type of insurance company investment that combines the benefits of
both a fixed annuity and a variable annuity.
Hybrid security
A convertible security whose optioned common stock is trading in a
middle range between the par value of the root security and the
market value of the security it is convertible into, causing the
convertible security to trade with the characteristics of both a fixed
income security and a common stock instrument.
Hyperinflation
See: Inflation
Hypothecation
In banking, refers to the commitment of property to secure a loan.
 In securities, refers to the commitment of securities to serve as
collateral for margin loans at the broker-dealer firm.

Hysteresis
Used to characterize a lagging effect. Firms may fail to enter markets
that appear attractive, or firms that are once invested in a market may
persist in operating at a loss. The effect is characteristic of investments
with high entry and exit costs along with high uncertainty.