D – Investment Vocabulary

Dated Date, or Issue Date: The date of a municipal bond issue from which the bond holder is entitled to receive interest, even though the bonds may actually be delivered at some other date.
Day Loan: A one-day loan granted for the purchase of securities. When the securities are delivered, they are pledged as collateral to secure a regular call loan for a few hours of the business day in order to finance the securities.
Day Order: An order placed to buy or sell securities on a specific day. If the order is not executed, it expires at the end of that trading session.
Dealer: An individual or firm that ordinarily acts as a principal in security transactions. Typically, dealers buy for their own account and sell to a customer from their inventory. The dealer’s profit is determined by the difference between the price paid and the price received.
Dealer Loans: See Broker or Dealer Loans.
Dealer Market: The market for trading government securities.
Debenture: A bond secured only by the general credit of the issuer rather than by a specific lien on property, as is a mortgage bond. Agency bonds are frequently called debentures.
Debt Coverage: The margin of safety for payment of debt, reflecting how much the earnings for a certain period of time exceed the debt payable during that same period. Normally used in connection with revenue bonds and corporate bonds.
Debt Instrument: A written pledge to repay debt, such as a bill, a note, or a bond.
Debt Limit, or Debt Ceiling: The maximum amount of debt that can legally be acquired under the debt-incurring power of a state or municipality.
Debt Service: Interest and principal obligation on an outstanding debt. This is usually for a one-year period.
Default: Failure to pay principal or interest promptly when it is due.
Delivery: Either of two methods of delivering securities: delivery vs. payment and delivery vs. receipt (also called “free”). Delivery vs. payment is delivery of securities with an exchange of money for the securities. Delivery vs. receipt is delivery of securities with an exchange of a signed receipt for the securities.
Demand Loan: A loan that has no fixed maturity date but that is payable upon demand.
Direct Debt: Debt incurred or assumed by an entity in its own name. Occasionally one government assumes the debt of another. When adjoining lands are annexed to a school district, for example, there may be some assumed debt.
Direct Placement: Selling a new issue not by offering it for sale publicly but by placing it with one or several institutional investors.
Discount: The reduction in the price of a security; the difference between its selling price and its face value at maturity. A security may sell below face value in return for such things as prompt payment and quantity purchase. “At a discount” refers to a security selling at less than the face value, as opposed to “at a premium,” when it sells for more than the face value. Discount Book: A book of mathematical tables used to determine the rate of return on a dollar bond for a specified discounted rate at a certain maturity. See Basis Book.
Discount Window: A facility provided by the Federal Reserve Bank.
Discretionary Order: A securities transaction offer placed by a broker who is empowered to act on behalf of a customer with regard to price and timing.
Dollar Bond: A bond that is quoted and traded in dollars rather than on a yield basis. Not to be confused with the term US. dollar bonds, which is commonly used in the Eurobond market.
Don’t Know: Also DK or DKed, as in “don’t know the trade.” An expression used to denote a lack of knowledge of a particular trade or transaction. Trades are often DKed due to conflicting instructions from one party or the other.
Double Exemption: Being exempt from both state and federal income taxes. Term used in relation to municipal bonds
Downside Risk: The maximum amount that can be lost in an investment.
Dumping: Selling large amounts of securities without regard to the effect on the marketplace.