An example would be mutual funds, whose “NAV” price is a mark to market price of how much the mutual fund closed for at the end of a trading session. The mark to market accounting method has some pros and cons. On the pro side, if an asset is very liquid, then MTM will provide an accurate reflection of its current value.
But if an asset is illiquid, the mark to market may not actually reflect the asset’s true value. This was apparent during the 2008 financial crisis, when the mark to market rule in November 2007 (FAS 157) forced banks to mark to market their portfolios of mortgage backed securities.
Since those securities endured a period where they were practically unsellable, the MTM rule made their value drop precipitously almost overnight - also shrinking bank balance sheets with it - even though many of those securities still had longer term value.
‘Buy to Cover’ is a term that applies when an investor buys shares of a security that they had previously sold short
A Dividend Reinvestment Plan, referred to as DRIP, is a plan offered by corporations that allows investors to reinvest..
Equilibrium is where a price is stable because the supply and demand have balanced out. Disequilibrium is all the rest in trading
Regular pension payments are periodic distributions. This will be the default option on pension arrangements
The Federal Discount Rate is the interest rate that the Federal Reserve charges banks for borrowing money
Run rate is an estimation of a future annual outlay or annual performance based on the most current numbers
When a mortgage loan is made, the bank or loan institution is the mortgagee, while the consumer is the mortgagor
The Dead Cat Bounce pattern appears when a stock’s price falls quickly but has a temporary “v-shaped” recovery
The Symmetrical Triangle Top pattern forms when a currency pair price fails to retest a high or low and forms two trend lines
The Rising Wedge pattern forms when prices appear to spiral upward, with higher highs and higher lows