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Terms starting with M

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Bonds & Fixed Income

Macaulay Duration

The weighted average time until a bond's cash flows are received, with each time weighted by the present value of its cash flow.

Macaulay Duration = Sum of (Time x Present Value of Cash Flow) / Bond Price years
Indicators & Oscillators

MACD

The moving average convergence divergence indicator: the difference between a fast and a slow exponential moving average of price.

MACD Line = 12-period EMA - 26-period EMA; Signal Line = 9-period EMA of the MACD Line
Indicators & Oscillators

MACD Histogram

The difference between the MACD line and its signal line, plotted as bars around a zero axis.

Histogram = MACD Line - Signal Line
Risk & Portfolio Management

Margin

Borrowed funds or collateral used to take a position larger than the cash available.

Margin Requirement = Position Value x Required Percentage; Leverage = Position Value / Margin Posted
Risk & Portfolio Management

Margin Call

A demand from a broker for additional funds when losses reduce collateral below the required level.

Shortfall = Required Margin - Available Collateral, payable immediately
Fundamental Analysis & Valuation

Margin of Safety

The discount between the price paid for a security and the analyst's estimate of its intrinsic value.

Margin of Safety = (Estimated Intrinsic Value - Market Price) / Estimated Intrinsic Value x 100 %
Derivatives, Futures & Options

Mark to Market

The daily revaluation of open derivative positions at the closing price, with gains and losses settled in cash.

Daily Mark-to-Market = (Today's Settlement Price - Yesterday's Settlement Price) x Lot Size x Number of Lots
Indicators & Oscillators

Market Breadth

The extent to which a market's move is shared across its constituents rather than concentrated in a few.

Measures include advance-decline ratio, percentage of securities above their 200-day moving average, and new highs minus new lows %
Economy, Macro & Market Cycles

Market Cap to GDP Ratio

The total market capitalisation of listed companies divided by the country's gross domestic product.

Market Cap to GDP = Total Market Capitalisation of Listed Companies / Nominal GDP x 100 %
Market Basics & Instruments

Market Capitalisation

The total market value of a company's outstanding shares, obtained by multiplying the share price by the number of shares.

Market Capitalisation = Market Price per Share x Total Shares Outstanding ₹ crore
Economy, Macro & Market Cycles

Market Crash

A sudden, severe fall in prices across a market, typically over days rather than months.

Test: a broad index falls sharply within a very short period, usually accompanied by a spike in volatility and volume %
Economy, Macro & Market Cycles

Market Cycle

The recurring pattern of rising and falling market prices, related to but distinct from the underlying economic cycle.

Phases commonly described as accumulation, mark-up, distribution and mark-down qualitative
Orders, Execution & Market Structure

Market Depth

The quantity of shares available at each price level on both sides of the order book.

Depth at a level = total quantity of resting orders at that price on the relevant side shares
Economy, Macro & Market Cycles

Market Efficiency

The proposition that prices already reflect available information, so consistently earning excess returns from that information is not…

Forms: weak, where prices reflect past prices; semi-strong, adding public information; strong, adding private information qualitative
Orders, Execution & Market Structure

Market Maker

A participant that continuously quotes both a bid and an ask, standing ready to buy or sell and earning the spread.

Gross Earnings = Bid-Ask Spread x Volume Transacted, less losses from adverse price moves on inventory
Indian Market, Regulation & Taxation

Market Manipulation

Conduct intended to create a false or misleading appearance of trading or an artificial price in a security.

Test: the conduct creates a false appearance of trading activity or an artificial price, whether by matched trades, circular trading, wash trades or misleading statements qualitative
Orders, Execution & Market Structure

Market Order

An instruction to buy or sell immediately at the best price currently available in the order book.

Test: the order specifies quantity but no price, and executes against resting orders until filled qualitative
Market Basics & Instruments

Market Price

The price at which a security most recently changed hands on the exchange.

Market Price = price of the most recent executed trade
Market Psychology & Behavioural Finance

Market Sentiment

The prevailing attitude of investors toward a market or security, independent of its fundamentals.

Test: measured by proxies such as put-call ratios, volatility indices, survey data, fund flows and new issue activity qualitative
Technical Analysis & Chart Patterns

Marubozu

A candlestick with no wicks, where the open and close are the period's extremes.

Test: Open equals either the High or the Low, and Close equals the other, so both wicks are zero or negligible qualitative
Corporate Actions, Dividends & Governance

Material Disclosure

A listed company's obligation to inform the exchanges of events that could affect its securities' price.

Test: the event meets a prescribed materiality threshold or the company's own policy, and is disclosed within the specified timeline qualitative
Bonds & Fixed Income

Maturity

The date on which a bond's principal is repaid and the obligation ends.

Residual Maturity = Maturity Date - Today's Date, expressed in years years
Derivatives, Futures & Options

Max Pain

The strike at which the total value of in-the-money options outstanding would be smallest at expiry.

For each strike, compute the total payoff owed on all open calls and puts if expiry settled there; the minimum is the max pain point index points
Risk & Portfolio Management

Maximum Drawdown

The largest peak-to-trough decline a portfolio or strategy has experienced over a measured period.

Maximum Drawdown = the largest value of (Peak - Trough) / Peak observed across the period %