ExpertGlossary

The daily trading limit is the most that the price of a futures contract can rise or fall in a single session before trading in that contract is stopped for the day.

Trading limits are designed to protect investors from wild price fluctuations and the potential for major losses. They're comparable to the circuit breakers established by stock exchanges to suspend trading when prices fall by a specific percentage.

The date of maturity, or maturity date, is the day on which a bond's term ends, and its issuer repays the principal and makes the final interest payment.

When the phrase is used in connection with mortgages or other personal loans, the date of maturity is the day your last payment is due and your debt is repaid.

A day order is an instruction you give to your broker to buy or sell a security at the market price or at a particular price you name before the end of the trading day. The order expires if it isn't filled.

In contrast, a good 'til canceled (GTC) order remains open on the broker's books until it's filled, you cancel it, or the brokerage firm's time limit for GTCs expires.

When you continuously buy and sell investments within a very short time, perhaps a few minutes or hours, and rarely hold them overnight, you're considered a day trader.

The strategy is to take advantage of rapid price changes to make money quickly.

The risk is that as a day trader you can lose substantial amounts of money since no one can predict how or when prices will change. That risk is compounded by the fact that technology does not always keep pace with investors' orders, so if you authorize a sell at one price the price it's executed at may be higher or lower, wiping out potential profit.

In addition, you pay transaction costs on each buy and sell order. Your gains must be large enough to offset those costs if you're going to come out ahead.

Dealers, or principals, buy and sell securities for their own accounts, adding liquidity to the marketplace and seeking to profit from the spread between the prices at which they buy and sell.

In the over-the-counter market, in most cases, it is dealers - also called market makers - who provide the bid and ask quotes you see when you look up the price of a security.

Those dealers are willing to commit their capital to specific securities and are ready to trade the securities at the quoted prices.

A death benefit is money your beneficiary collects from your life insurance policy if you die while the policy is still in force.

In most cases, the beneficiary receives the face value of the policy as a lump sum. However, the death benefit is reduced by the amount of any unpaid loans you've taken against the policy.

Some retirement plans, including Social Security, also provide a one-time death benefit to your beneficiary at the time of your death.

A debenture is an unsecured bond. Most bonds issued by corporations are debentures, which are backed by its reputation rather than by any collateral, such as the company's buildings or its inventory.

Although debentures sound riskier than secured bonds, they aren't when they're issued by well-established companies with good credit ratings.

A debit is the opposite of a credit. A debit may be an account entry representing money you owe a lender or money that has been taken from your account.

For example, your bank debits your checking account for the amount of a check you've written, and your broker debits your investment account for the cost of a security you've purchased.

Similarly, a debit card authorizes the bank to take money out of your bank account electronically, either as cash or as an on-the-spot payment to a merchant. That's different from a credit card, which authorizes you to borrow the money from the card issuer.

A debit balance is what you owe. It's entered as accounts receivable on the books of the lender and appears on your account statement as a liability.

For example, if you have a margin account and borrow money to buy stock, your monthly brokerage statement will show a debit balance for the amount of the margin loan.

A debit card - sometimes called a cash plus card - allows you to make point-of-sale (POS) purchases by swiping the card through the same type of machine you use to make credit card purchases.

Sometimes you authorize a debit card transaction with your personal identification number (PIN). Other times, you sign a receipt just as you would if you were charging the purchase to your credit card. You can also use the card to make ATM withdrawals.

When you use a debit card, the amount of your purchase is debited, or subtracted, from your account at the time of the transaction and transferred electronically to the seller's account.

You have some of the same protections against loss with a debit card as you do with a credit card, but there is one important difference. While $50 is the most you can ever be responsible for if your credit card is lost or stolen, you could lose much more with a lost or stolen debit card if you don't report that has happened within two days of discovering it.

If you delay reporting a missing card, you could lose up to $500. And if you wait more than 60 days after receiving a bank statement that includes a fraudulent use of your card, you could lose everything in your account including your overdraft line of credit. You can find the specific rules on the Federal Trade Commission website at www.ftc.gov.

In addition, if you purchase defective merchandise with a debit card there are no refunds. Most credit card issuers do not, generally speaking, make you pay for defective products.

A debt is an obligation to repay an amount you owe. Debt securities, such as bonds or commercial paper, are forms of debt that bind the issuer, such as a corporation, bank, or government, to repay the security holder. Debts are also known as liabilities.

Debt securities are interest-paying bonds, notes, bills, or money market instruments that are issued by governments or corporations.

Some debt securities pay a fixed rate of interest over a fixed time period in exchange for the use of the principal. In that case, that principal, or par value, is repaid at maturity.

Some are pass-through securities, with principal and interest repaid over the term of the loan. Still other issues are sold at discount, with interest included in the amount paid at maturity.

US Treasury bills, corporate bonds, commercial paper, and mortgage-backed bonds are all examples of debt securities.

A company's debt-to-equity ratio indicates the extent to which the company is leveraged, or financed by credit. A higher ratio is a sign of greater leverage.

You find a company's debt-to-equity ratio by dividing its total long-term debt by its total assets minus its total debt. You can find these figures in the company's income statement, provided in its annual report.

Average ratios vary significantly from one industry to another, so what is high for one company may be normal for another company in a different industry.

From an investor's perspective, the higher the ratio, the greater the risk you take in investing in the company. But your potential return may be greater as well if the company uses the debt to expand its sales and earnings.

US stocks, derivatives linked to stocks, and some bonds trade in decimals, or dollars and cents. That means that the spread between the bid and ask prices can be as small as one cent.

The switch to decimal stock trading, which was completed in 2001, was the final stage of a conversion from trading in eighths, or increments of 12.5 cents.

Trading in eighths originated in the 16th century, when North American settlers cut European coins into eight pieces to use as currency. In an intermediary phase during the 1990s, trading was handled in sixteenths, or increments of 6.25 cents.

Stocks that have dropped, or fallen, in value over a particular period are described as decliners. If more stocks decline than advance, or go up in value, over the course of a trading day, the financial press reports that decliners led advancers.

The indexes that track the market may decline as well. If decliners dominate for a period of time, the market may also be described as bearish.

With a decreasing term life insurance policy, the amount of the death benefit decreases each year of the fixed term - such as 20 years - although the premium remains the same.

This type of insurance tends to be an economical way to protect your beneficiaries should you die unexpectedly during a period when you have substantial financial responsibilities.

For example, young parents with a large mortgage might consider decreasing term policies to help insulate each other against the responsibility of meeting their financial obligations should something happen to one of them.

A deductible is the dollar amount you must pay for healthcare, damage to your property, or any other insurable claim before your insurance company begins to cover the cost of the bill.

For example, if you have a health insurance policy with an annual $300 deductible, you have to spend $300 of your own money before your insurer will pay whatever portion of the rest of the year's bills it has agreed to cover.

However, in some types of policies, the deductible is per event, not per year. Generally speaking, the higher the deductible you agree to pay, the lower your insurance premiums tend to be. However, the deductible for certain coverage is fixed by the insurance provider. That's the case with Original Medicare.

A deduction is an amount you can subtract from your gross income or adjusted gross income to lower your taxable income when you file your income tax return

Certain deductions, such as money contributed to a traditional IRA or interest payments on a college loan, are available only to taxpayers who qualify for these deductions based on specific expenditures or income limits, or both.

Other deductions are more widely available. For example, you can take a standard deduction, an amount that's fixed each year. And if your expenses for certain things, such as home mortgage interest, real estate taxes, and state and local income taxes, total more than the standard deduction, it may pay for you to itemize deductions instead.

However, if your adjusted gross income is above the amount Congress sets for the year, you may lose some or all of these deductions.

A deed is a written document that transfers ownership of land or other real estate from the owner, also known as the grantor, to the buyer, or grantee.

The form a deed takes varies from place to place, but the overall structure and the provisions it contains are the same. The description of the property being transferred is always included.

When you use a mortgage to purchase the property that's being transferred by deed, you may receive the deed at the time of purchase, with the lender holding a lien on the property. Or the deed may belong to the lender until you have paid off the mortgage.

In either case, a deed's creation must be witnessed and should be recorded with the appropriate local authority to ensure its validity.