Definitions Starting with "H"

H-Shares

H-shares are shares of Chinese companies that are listed on the Hong Kong Stock Exchange. Hong Kong is a "special administrative region" of China. Read more

Habendum Clause

A habendum clause in a real estate contract transfers ownership of a piece of real estate with no restrictions. It generally pertains to oil and gas leases for pieces of property but can relate to any transfer of property. Read more

Haircut

A haircut is a reduction in an asset's value. For example, let's say the Greek government borrowed about $483 billion from banks, investment funds and other groups. Read more

Half Stock

A half stock has a par value that is 50% of what is considered normal. Let's assume the par value of a share of preferred stock is usually $100. Read more

Half-Commission Man

A half-commission man introduces potential clients to financial advisors in return for a cut of the commissions those advisors earn from the new clients. Let's say John Doe knows Jane Smith, who has a net worth of $40 million. Read more

Half-Life

In the investing world, a half-life is the halfway point of mortgage repayment. Let's say John Doe borrows $100,000 to buy a house. Read more

Halloween Massacre

In the investing world, the Halloween Massacre occurred in October 2006, when Canada began taxing all income trusts in the country. Many oil companies created income trusts in Canada, and they issued popular high-yield securities. Read more

Halo Effect

The halo effect is a phenomenon whereby consumers perceive the products or services from a certain company to be better than they really are. Let's say Company XYZ makes the "Xphone. Read more

Hammer Candlestick

The hammer candlestick is a technical indicator that typically appears after a prolonged downtrend. Here is an example of a hammer candlestick: During the period of the hammer candlestick, the stock or index experiences strong selling. Read more

Hands-On Investor

A hands-on investor has a substantial interest in a company and chooses to take an active role in its management. It is the opposite of a hands-off investor. Read more

Hang Seng Index (HSI)

The Hang Seng Index is the leading index for shares traded on the Hong Kong Stock Exchange.   Started in 1969, the Hang Seng Index consists of the 45 largest companies that trade on the Hong Kong Stock Exchange, representing about 67% of its total market capitalization. Read more

Hangman Candlestick

The hangman candlestick has a very long shadow and a very small real body. Typically, it has no upper shadow (or at the very most, an extremely small one). Read more

Hard Asset

A hard asset is a physical, or tangible, asset. It is the opposite of an intangible asset. Read more

Hard Call Protection

Hard call protection is a provision in a callable bond that limits the issuer's ability to exercise the call feature. A callable bond allows the issuer to repay the bond's principal balance before its maturity date with little notice to the holder. Read more

Hard Currency

Hard currency is currency that has been adopted as an acceptable payment method in multiple countries. Hard currencies are generally issued by developed countries that have a strong industrial economy accompanied by a stable government. Read more

Hard Dollars

Hard dollars are money paid to a broker or investment adviser in return for consultation or investment research. Hard dollars do not include fees related to trading. Read more

Hard Inquiry

A hard inquiry is a lender's investigation of an applicant's credit history for the purpose of approving or declining a loan or extension of credit. A hard inquiry helps a bank or credit card company assess the risk that an applicant will default on his or her repayment obligations. Read more

Hard Landing

A hard landing refers to an abrupt downward shift in economic growth resulting from monetary policy. Inflation historically accompanies periods of economic expansion. Read more

Hard Loan

A hard loan is a loan between a lender and borrower in different countries that is denominated in a hard currency. For example, a hard loan from a lender in Cambodia to a borrower in Thailand may be denominated in U. Read more

Hard Money

Hard money is a broad term used in connection with currency and transfer payments. Hard money has two separate meanings. Read more

Hard Money Loan

A hard money loan is a short-term loan that uses the value of real property owned by the borrower as its collateral. A hard money loan provides money for short-term expenses similar to a bridge loan. Read more

Hard Sell

A hard sell is an aggressive sales tactic used to persuade customers to make an immediate purchase. It is the opposite of a soft sell. Read more

Hard Skills

Hard skills are quantifiable capabilities required for specific occupations. They are the opposite of soft skills. Read more

Hard Stop

A hard stop is a standing instruction from a brokerage client to sell units of a security if the market price declines to a specific level. It is a generic term that can refer to both a stop-loss order or a stop order. Read more

Hard-Coded Stock

Hard-coded stock has a unique identifier (a "ticker symbol") assigned to it by a registered exchange. Stocks traded on a registered exchange (for example, the New York Stock Exchange) are represented for easy reference by an alphabetic abbreviation. Read more

Hard-to-Borrow List

A hard-to-borrow list outlines the securities that a brokerage house cannot provide to investors for short selling. Similar to goods and services, financial instruments exist in a limited supply, and some are less available than others. Read more

Hardening

Hardening refers to stabilization or steady increases in a price level. Financial instruments and derivatives frequently experience volatile market-price fluctuations. Read more

Hardship Withdrawal

A hardship withdrawal is a premature withdrawal of money from a retirement account on account of special circumstances. Retirement plans -- for example, 401(k)s and IRAs -- have special tax treatments that encourage individuals to save. Read more

Harmless Warrant

A harmless warrant is a bond provision that instructs a holder to relinquish the bond to the issuer should the holder purchase another bond from the same company with comparable features. A bond with a harmless warrant, also known as a wedding warrant, requires the holder to return the bond to the issuer if the holder purchases a different bond from the same company that quantitatively resembles the original bond. Read more

Harry Markowitz

Harry Markowitz is a famous economist who won the Nobel Prize in Economics in 1990. Born in Chicago in 1927, Markowitz earned his bachelor's degree in economics at the University of Chicago and then joined the RAND Corporation in 1952, where he worked on the optimization techniques and algorithms that would lead to his famous theory: the efficient frontier. Read more

Harvesting

Harvesting, also known as an exit or liquidity event, is the act of cashing out of an ownership position in a company. For example, let’s say John Doe and Jim Smith sink their life savings into opening Company XYZ. Read more

Hawk

A hawk is a person, usually in a politically oriented profession, who favors government efforts to control inflation or who favors reducing the federal budget deficit. Let's assume John Doe works for the presidential administration as an economic advisor. Read more

Hazard Insurance

Hazard insurance doesn't just protect the homeowner; it protects the bank that lends to the homeowner. The price of hazard insurance varies depending on what state the house is in, how it is built and other factors. Read more

Head and Shoulders Pattern

The head and shoulders pattern consists of four distinct parts: The left shoulder, the head, the right shoulder, and the neckline. Each of these four must be present for the formation to exist. Read more

Head of Household

Head of household is a formal IRS filing status for people who are single but provide financial support to at least one other person in his or her home.   Let's say Jane Doe is a single mother with three children. Read more

Head Trader

Head traders have to be licensed, which means they have to pass at least one relevant exam administered by FINRA. There are several exams that can make a person eligible to become a head trader, and the correct one depends on the nature of the trading (i. Read more

Headline Earnings

Headline earnings are a measurement of a company's earnings based solely on operational and capital investment activities. It specifically excludes any income that may relate to staff reductions, sales of assets, or accounting write-downs. Read more

Headline Effect

A headline effect is an adverse effect on a company's stock price brought on by media coverage. For example, let's say that Company XYZ makes a line of sweets and snacks that are sweetened with the "Sweetums" sugar substitute. Read more

Headline Risk

Headline risk is the risk that media coverage of an event will have an adverse effect on a company's stock price. Let's say Company XYZ makes a line of sweets and snacks that are sweetened with the "Sweetums" sugar substitute. Read more

Health Insurance

Health insurance is insurance that covers some or all of the costs of an individuals healthcare. Health insurance absorbs or offsets healthcare costs associated with, but not limited to, routine health examinations, specialist referral visits, inpatient and outpatient surgery, unforeseen eventualities such as illnesses or injuries, and prescription medication. Read more

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that promises continued health insurance coverage and ensures health information privacy for those covered by health insurance plans. HIPAA was passed in 1996 as an amendment to two previous laws: the Public Health Service Act (PHSA) and the Employee Retirement Income Security Act (ERISA). Read more

Health Maintenance Organization (HMO)

A health maintenance organization (HMO) is a health insurance provider with a network of contracted healthcare providers and facilities. Subscribers pay a fee for access to services within the HMO's network. Read more

Health Reimbursement Account (HRA)

A health reimbursement account (HRA) is a sum of money set aside by a company to offset employee healthcare costs not covered by the company's health insurance plan. A company establishes an HRA as a separate discretionary account that it funds on a periodic basis. Read more

Health Savings Account (HSA)

Health savings accounts (HSA) are tax-free savings accounts connected to high-deductible health plans (HDHP). HSAs are used to cover healthcare-related expenses not covered by an HDHP. Read more

Healthcare Power of Attorney (HCPA)

A healthcare power of attorney (HCPA) is a document that legally authorizes someone to make health-related decisions on someone else's behalf. Individuals sometimes become too unwell or unfit to make decisions regarding their healthcare treatments. Read more

Healthcare Sector

The healthcare sector is the sector of the economy made up of companies that specialize in products and services related to health and medical care. The healthcare sector includes publicly-traded companies that power all dimensions of the healthcare industry. Read more

Heavy

In the investing world, heavy refers to a security whose price can't seem to rise. Let's say Company XYZ has been trading between $12 and $15 a share for the last six months despite two quarters of good earnings. Read more

Heavy Industry

Heavy industries often sell their products to other industries rather than to end users and consumers. In other words, they usually make products that are used to make other products. Read more

Hedge

In finance, a hedge is a strategy intended to protect an investment or portfolio against loss. It usually involves buying securities that move in the opposite direction than the asset being protected. Read more

Hedge Accounting

Hedge accounting is a portfolio accounting method that combines the values of both a security and its offsetting hedge instrument. If investors purchase a security that comprises a high level of risk, they may accompany the purchase with an opposing item (usually a derivative, such as an option or future contract) referred to as a hedge. Read more

Hedge Clause

A hedge clause is a disclaimer found in financial documents that protects a financial reports' authors from liability for errors within the report. A hedge clause simply absolves the authors of wrongdoing in connection with the presented information. Read more

Hedge Fund

A hedge fund is an investment structure designed to allow management of a private, unregistered portfolio of assets.   The original concept of a hedge fund was to offer plays against the market using short selling, futures, and derivatives. Read more

Hedge Fund Manager

A hedge fund manager is an individual responsible for directing all activities associated with the operation of a hedge fund. The role of a hedge fund manager is similar to that of a mutual fund manager. Read more

Hedge-like Mutual Fund

A hedge-like mutual fund is a mutual fund that engages in strategies similar to a hedge fund. Hedge funds are capitalized by and available only to individuals with high net worth. Read more

Hedged Tender

A hedged tender is a strategy used to ensure a profit as a part of a tender offer. A tender offer is a proposition from one investor or company to purchase a number of shares of another company's stock at a higher-than-market price. Read more

Hedgelet

A hedgelet is a binary futures contract whose payoff is conditional upon a specific economic occurrence. A hedgelet is a futures contract which hedges that a specific event (for example, movements in interest rates, commodity prices, or exchange rates) will have occurred on or before the contract's expiration date. Read more

Held at the Opening

There are a lot of reasons a security might be held at the opening: acquisition announcements, order problems or listing violations. Stock exchanges can stop trading at any time, but when they stop a security from trading before the beginning of the trading day, they are holding a security at the opening. Read more

Held-to-Maturity Securities

Held-to-maturity securities refer to debt securities which an investor holds until maturity. When investors purchase debt securities such as bonds, they have two choices: to hold the security until maturity or to sell it at a premium following a relative decline in interest rates. Read more

Herd Instinct

A herd instinct is emotional pressure to agree with other members of a group. The herd instinct results in failures to think critically about an issue, situation or decision. Read more

Herfindahl Index

The Herfindahl Index, also known as the Herfindahl-Hirschman Index (HHI), measures the market concentration of an industry's 50 largest firms in order to determine if the industry is competitive or nearing monopoly. The Herfindahl Index formula is calculated by squaring the market share for each firm (up to 50 firms) and then summing the squares. Read more

High Earners, Not Rich Yet (HENRYs)

High Earners, Not Rich Yet (HENRYs) are young, usually well educated, and highly paid but have not accumulated significant wealth yet. HENRYs often earn $250,000 to $500,000 per year per household, usually placing them in the top 2% of American household income. Read more

High Flier

A high flier is stock that has risen very quickly. Let's say Company XYZ rises 45% in five days -- well ahead of the market's rise of 10% over that time. Read more

High Frequency Trading (HFT)

High frequency trading (HFT) is a computerized trading strategy used to exploit fleeting market inefficiencies. These ultra-short-term positions can be in a wide range of assets: stocks, options, futures, currencies, exchange-traded funds (ETFs), and virtually any other asset that can be traded electronically. Read more

High Street Bank

A High Street Bank is a retail bank in the United Kingdom that has many locations. The term gets its name from the British equivalent of "Main Street" in the United States. Read more

High Wave Candlestick

The high wave candlestick has a very small real body, and it typifies a stock or index plagued by uncertainty.   The spinning top has small upper and lower shadows, whereas in the high wave the shadows are longer, revealing more volatility. Read more

High Yield Savings Account

A high yield savings account is a savings account that pays an account holder a higher-than-average interest rate. If the average US savings account offers an interest rate of 1%, for example, then a high yield savings account might offer a 1. Read more

High-Deductible Health Plan (HDHP)

The dollar limits on HDHPs change often (the government thresholds are indexed for inflation). HDHPs are growing in popularity because they help employers limit insurance costs (they have lower premiums) and because they allow people to open Health Savings Accounts (HSAs). Read more

High-Income Trigger Securities (HITS)

High-income trigger securities (HITS) are senior unsecured debt securities that pay an annual coupon rate and repay their original principal either in cash or shares, depending on the issuer's stock performance. Let's assume Morgan Stanley issues HITS on Company XYZ that have $10 face values, pay a 10% annual coupon, and mature one year from today. Read more

High-Ratio Loan

High-ratio loans typically have higher interest rates because they are riskier. If the borrower defaults on the loan, the bank might not be able to sell the property for enough to repay the loan. Read more

High-Yield Bond

A high-yield bond is a corporate bond with a credit rating below BBB (also called a junk bond). High-yield bonds are high-risk investments, and for this reason they (and the mutual funds that invest in them) have potential for higher returns than other types of bonds or bond funds. Read more

High-Yield Bond Fund

A high-yield bond fund is a mutual fund that invests in corporate bonds rated below BBB (i. e. Read more

High-Yield Bond Spread

A high-yield bond spread is simply the difference in yield between two high-yield debt securities or, more commonly, two classes of high-yield debt securities. Let's assume that junk bond X is yielding 5%, and junk bond Y is yielding 7%. Read more

Highly Compensated Employee

Highly compensated employees are usually limited in the amount of money they can set aside in their 401(k) plans and other retirement plans. Specifically, the federal government limits the amount of money that the HCEs at a company can contribute to 125% of the average that the non-HCE's contribute to a plan. Read more

Hindenburg Omen

The Hindenburg Omen is a technical indictor that attempts to predict market crashes. The Hindenburg Omen is triggered when three complex conditions are met: 1) The number of new daily 52-week highs and lows on the NYSE is more than 2. Read more

Hiring Freeze

A hiring freeze is a temporary cessation in hiring new employees. Let's say Company XYZ is running out of cash and needs to conserve in every way it can. Read more

Histogram

A histogram is a visual display of information. It uses bars to show the frequency of an item of data in successive intervals. Read more

Holder of Record

A holder of record is the registered owner of a stock, bond or other security. Let's say John Doe buys 100 shares of Company XYZ. Read more

Holding Company

A holding company owns controlling interest in another company or owns enough stock to control the company's management and operations. Different legal jurisdictions have different rules about what technically constitutes a holding company. Read more

Holding Period

Holding period refers to the time during which an investor holds a given security. The holding period for a security is defined as the elapsed time between the initial date of purchase and the date on which the security was sold. Read more

Holding the Bag

An investor is left "holding the bag" when his or her investment has gone from valuable to worthless or almost worthless. Let's assume that John invests $10,000 in NewCo, Inc. Read more

Home Bias

Home bias is a tendency to invest in companies that reside in the investor's home country. For example, let's say John Doe lives in Canada. Read more

Home Equity

Home equity equals the value of a house less the balance owed on the homeowner's mortgage. Let's assume that John Doe pays $200,000 for a house. Read more

Home Equity Line of Credit (HELOC)

A home equity line of credit (or HELOC) is a flexible loan that lets you turn your home's equity into cash whenever you need it, up to a certain amount. A HELOC uses your home as collateral just like a home equity loan or cash out refinance, but works more like a credit card because it's revolving credit. Read more

Home Equity Loan (HEL)

A home equity loan (HEL), also called a second mortgage, is a loan secured by the equity in a house. Equity equals the value of the house less the balance owed on the homeowner's mortgage. Read more

Home Loan

A home loan (or mortgage) is a contract between a borrower and a lender that allows someone to borrow money to buy a house, apartment, condo, or other livable property. A home loan is typically paid back over a term of 10, 15 or 30 years. Read more

Home Mortgage

A home mortgage is a loan secured for a house. The borrower is usually obligated to make a predetermined series of payments on the loan. Read more

Home Office

The term home office has two definitions. First, a company's home office is its headquarters. Read more

Home Office Expense

Home office expenses are those costs incurred by working from a home-based office.   These expenses are tax-deductible. Read more

Horizontal Integration

Horizontal integration occurs when a company purchases a number of competitors. It is the opposite of vertical integration, whereby the parent purchases businesses in each stage of a product's life cycle (that is, it buys suppliers, distributors, wholesalers and retailers of the product). Read more

Hostile Takeover

A hostile takeover is a type of corporate acquisition or merger which is carried out against the wishes of the board (and usually management) of the target company. In a hostile takeover, the target company's board of directors rejects the offer, but the bidder continues to pursue the acquisition. Read more

Hostile Takeover Bid

A hostile takeover bid is a type of acquisition or merger offer that is made against the wishes of the board (and usually management) of the target company. In a hostile takeover bid situation, the target company's board of directors rejects the offer, but the bidder continues to pursue the acquisition. Read more

Hot IPO

A hot IPO is an IPO for which there is great demand. For example, let's say Company XYZ invents a cure for cancer and patents the invention. Read more

Hot List

A hot list is a list of credit cards that are reported stolen, canceled or compromised in some way.   A hot list is also called a "warning bulletin," "restricted card list" or "cancellation bulletin. Read more

House Poor

House poor is used to describe a homeowner who spends too large a portion of his or her income on home ownership, leaving too little for discretionary spending. Typically, home ownership expenses, including mortgage, insurance, and taxes should comprise no more than 28% of a family's gross income. Read more

Household Employee

A household employee is a person who provides paid services within a private home. These services are often subject to payroll taxes. Read more

Housing Starts

Housing starts is a measure of new private homes built during a given month.   This statistic is viewed as a key economic indicator reflecting the state of the economy. Read more

Human Capital

Human capital is the skill, talent, and productivity that employees bring to a company. Coined by University of Chicago economist Theodore Schultz in 1964, the term refers to capital produced by investing in knowledge. Read more

Human Resources

Human resources is an organizational function related to the procurement and retention of talented employees. All companies deal with human resources in some form or another, even if they don't have dedicated human resource departments. Read more

Hurdle Rate

A hurdle rate is an investor's minimum rate of required return on an investment. Let's assume Company XYZ is deciding whether to purchase a piece of factory equipment for $300,000. Read more

Hybrid Security

A hybrid security is a security that has characteristics of one or more asset classes. For example, a convertible bond is a hybrid security because it is a bond that allows the holder to exchange the bond for other securities (usually the issuer's stock). Read more

Hyperinflation

Hyperinflation is a period of extremely high inflation. Imagine if $30,000 -- money that could buy you a car today -- was only enough to buy you dinner tomorrow. Read more