Financial Glossary: D

DAX 30 Index

The main real-time German share index containing 30 of the biggest companies listed on the Frankfurt Stock Exchange. The DAX is a 'total return' index in that it measures the returns from dividends as well as share price performance.

Day trading

The trade of buying and selling stocks by individuals known as day traders during a trading day. The aim is to make a profit on the day and not hold stocks at the close of the trading session.

Debenture stock

A form of loan stock legally defined as the written acknowledgement of a debt incurred by a company, normally containing provisions about the payment of interest and the eventual repayment of capital.They may be secured by a floating charge on the company's assets or they may be tied to specific, named assets. This means that if the company goes into liquidation then debenture holders are more likely to get payment because the company's assets will be sold and the proceeds will be distributed to them first before other stock and share holders.

Deflation

The rate at which the general level of prices for goods and services is decreasing - the opposite of inflation.

Deferred shares

Shares that do not receive income either for a set period or until share income reaches a certain level.

Dematerialisation

The increase in electronic technology and the introduction of systems, such as, Crest in the Stock Exchange has meant that paper share certificates are no longer needed. Instead ownership of shares can be logged electronically in a Crest account and contract notes, confirmation of share transactions, can be sent electronically.

Demutualisation

The process of changing the legal structure of a company from a mutual form of ownership to a stock form of ownership: recently very common with building societies and insurance companies.

Depositary receipt

A certificate which gives the holder, ownership of a specified number of shares in a company that have been deposited with a financial institution

Depreciation

Accounting procedure that spreads the cost of an asset over the life time of the asset.

Derivatives

An investment contract, such as futures and options, which involves the right to buy or sell the underlying instrument at an agreed price. The value of a derivative instrument depends on (ie derived from) the value of another asset. Derivatives can be used to hedge any sort of risk such as foreign exchange or future. For example a company planning to invest money on deposit in the future can buy a derivative to potect against the risk of interest rates falling, ie, hedging against the interest rate risk.

Discount rate

Rate used to calculate the present value of future cash flows.

Discounted rate mortgage

A mortgage which guarantees that the interest rate charged will be lower than the lender's standard variable rate.The lower rate offered is usually set for a specified period of time and reverts to the standard rate after that period.

Discretionary management

A broker who has authority to execute all decisions regarding stocks and shares on behalf of his client without getting prior approval.

Distribution

The payment of dividends to shareholders from the company's profits.

Dividend

The distribution of part of the company's profits to the shareholders. Dividends are paid twice a year, the mid-year payment is known as the interim dividend, and the end-of-year payment is called the final dividend.

Dividend yield

The dividend yield is the return that you are getting for investing in a company. It is calculated by dividing the dividend by the current share price, expressed as a percentage. The gross dividend yield is used in preference to the net dividend yield, so that investors can make a direct comparison with (gross) interest yields from loanstocks and gilts.

Dow Jones Industrial Average

'The Dow' is one of the main USA share indices which monitors the performance of 30 industrial companies traded on the New York Stock Exchange.

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