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. It was a British colony from the 1830s to 199...

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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...

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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. Now it can't pay it back. So ...

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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. Company XYZ issues preferred stock with a par value...

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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 h...

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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. The interest rate is 4% with  a 30-year mortgage. His mont...

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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...

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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." The...

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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 stoc...

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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.A hands-on investor could be a la...

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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...

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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). To be an official hangman, the lower shadow ...

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A hard asset is a physical, or tangible, asset. It is the opposite of an intangible asset.Hard assets include financial instruments, property, deposit and savings accounts, and commodities (for exampl...

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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 bef...

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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 ...

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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.For example, if someone wishes only...

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A hard landing refers to an abrupt downward shift in economic growth resulting from monetary policy.Inflation historically accompanies periods of economic expansion. In the U.S., the Federal Reserve h...

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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 de...

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Hard money is a broad term used in connection with currency and transfer payments.Hard money has two separate meanings. Hard money may refer to continuous cash payments that are part of a grant or sub...

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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. A...

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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. In a hard sell, a salesperson tries to sell a product or service...

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Hard skills are quantifiable capabilities required for specific occupations. They are the opposite of soft skills.Careers require practitioners to have certain practical and personal abilities. Hard s...

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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 orde...

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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 s...

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Hardening refers to stabilization or steady increases in a price level.Financial instruments and derivatives frequently experience volatile market-price fluctuations. Hardening is the process of marke...

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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 ...

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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...

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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 ...

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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...

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The political world is full of nicknames. Hawks are of particular interest to the business community because they often influence or at least put pressure on various parts of the government to take ac...

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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...

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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.To be a...

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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 mo...

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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 t...

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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, ...

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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 wi...

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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 wi...

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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 healt...

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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 in...

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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'...

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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...

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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. Individuals wi...

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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 ma...

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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 com...

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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 quart...

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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. Accordingly, whe...

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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....

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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, ...

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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 wro...

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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 usi...

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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 manage...

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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 s...

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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 mat...

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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. Let's say John, Jane...

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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 competiti...

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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, u...

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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, futu...

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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. In turn, a High St...

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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 sh...

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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...

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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 premiu...

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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 sto...

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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. The ...

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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 inv...

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A high-yield bond fund is a mutual fund that invests in corporate bonds rated below BBB (i.e., high-yield bonds, also called junk bonds).High-yield bonds are high-risk investments, and for this reason...

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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 yie...

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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 m...

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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 an...

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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. To avoid laying off employees, it institu...

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A histogram is a visual display of information. It uses bars to show the frequency of an item of data in successive intervals. A price by volume chart (PBV chart) is a common horizontal histogram tha...

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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. His brokerage firm executes the trade and makes him the holder of...

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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 wha...

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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 ...

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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. NewCo devel...

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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. About 80% of his portfolio is stocks, and of those ...

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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. He puts 20% down and makes another $25,000 in p...

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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 j...

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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. Home equit...

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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 b...

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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. Home mortgages generally range from 10 to 30 years. The two ma...

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The term home office has two definitions. First, a company's home office is its headquarters. Second, a home office is a place of business within a person's home. Let's say John Doe is a ...

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Home office expenses are those costs incurred by working from a home-based office.  These expenses are tax-deductible.In order to qualify as fully tax-deductible, home office expenses must go tow...

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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 lif...

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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 co...

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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 t...

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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. The company can change the world and make its owners f...

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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 ...

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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, in...

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A household employee is a person who provides paid services within a private home. These services are often subject to payroll taxes. According to the Internal Revenue Service, these types of workers...

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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.Homes are usually purchased ...

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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 inves...

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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 h...

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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. The equipme...

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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 ...

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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. You're imagining hyperinflation -...

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