See: Calendar Spread; Vertical Spread

Digits Deleted
Specification on the exchange tape indicating that some digits are not being displayed because the tape is delayed. For example, 15 1/4...15 3/8...26 1/8 becomes 5 1/4... 5 3/8... 5 1/8.

See: Late Tape; Tape

Dilution
The effect on book value per share and earnings per share if all stock options or warrants are exercised or all convertible securities are converted.

See: Convertible Securities; Warrant

Dip
After a security's prolonged up-trend, a small drop in its price. Analysts frequently advise investors to buy on dips because it is seen as only a temporary price weakness.

See: Technical Analysis

Director
An individual elected by corporate shareholders to serve on that corporation's Board of Directors. The Board of Directors decide when dividends will be paid, appoint the corporation's president, vice president and all other officers.

Direct Participation Program (DPP)
A business venture, usually organized as a limited partnership, that is structured to pass-through income and "tax losses" of the underlying investments to investors. However, its use as a tax shelter has been severely reduced by tax legislation.

See: Limited Partnership

Direct Placement
Securities directly sold to one or more professional investors.

Disbursement
Money paid out to discharge a debt or an expense.

Discharge of Bankruptcy
Order ending bankruptcy proceedings. It usually releases the debtor of any legal liability for specific obligations.

Discharge of Lien
Order removing a lien on property after the claimant has been paid or the debt is otherwise satisfied.

Disclosure Document
A pamphlet published by the Options Clearing Corporation (OCC) that outlines the risks and uses of options trading.

See: Options

Discount
1: A bond that trades in the market at a price below its face or redemption value. A bond selling below par is said to be "selling at a discount."

See: Discount Bond; Par

2: Securities, such as treasury bills, that are issued for less than their face value and mature at face value. At maturity, the difference between the purchase price and the face value is the interest.

See: Original Issue Discount; Zero Coupon Security

3: To evaluate a security's current price, all applicable news and information about the corporation are used.

4: Relationship between two countries' currencies. For example, the French Franc may sell at a discount to the German Mark.

Discount Bond
Bond trading for less than its redemption value.

See: Deep Discount Bond

Discount Broker
A brokerage firm that executes buy and sell orders at lower commission rates than those charged by a full service broker.

See: Full Service Broker

Discounted Cash Flow
Future value of anticipated cash receipts and expenditures on a specified date. It is computed using net present value (NPV) or internal rate of return (IRR) and is a consideration in analyses of capital and securities investments. The NPV method uses a discounted rate of interest based on the marginal cost of capital to future cash flows to bring them into to the present. The IRR formula finds an investment's average return for the life of the investment. It identifies the discount rate that matches the present value of future cash flows to the investment's cost.

Discounting the News
The act of bidding a stock's price up or down in the anticipation of news about the stock's corporate financial outlook. This process may occur regardless of whether the news is good or bad.

Discount Rate
The rate of interest charged by a Federal Reserve Bank on a loan to a member bank, using government securities or eligible paper as collateral.

See: Eligible Paper

Discount Window
Federal Reserve location where banks can borrow money at the discount rate.

See: Discount Rate

Discount Yield
Yield on a security sold at a discount--most notably T-bills. To calculate the annual yield, divide the discount by the face amount and multiply that number by the approximate number of days in the year divided by the number of days to maturity.

See: Yield To Maturity

Discretionary Account
A type of brokerage account whereby clients authorize their broker to buy and sell securities or commodities when the broker deems it is appropriate. The broker will decide when and which securities, the amount of shares, and price to be paid or received without the client's prior knowledge or consent. Some clients may set guidelines for the broker, such as limiting the type of securities in which to invest.

See: Discretionary Order

Discretionary Income
The amount of income leftover after essential commitments, such as housing and food, have been paid. Spending discretionary income can spur the economy. Thus, the amount of discretionary income can be a key economic indicator.

See: Economic Indicators

Discretionary Order
An order to buy or sell a security for a customer that lets the broker, who has limited power of attorney over the customer's account, decide when to execute the trade and at what price.

See: Discretionary Account

Discretionary Trust
Mutual fund or unit trust where the management decides on the best way to invest the assets. The fund is not limited to a specific kind of security.

See: Mutual Fund; Unit Investment Trust

Disinflation
A process that commonly occurs during a recession whereby price increases slow down--as sales decrease, retailers may not be able to pass on higher prices to customers.

See: Deflation; Inflation; Recession

Disintermediation
The withdrawal of money from low yielding financial accounts, such as saving accounts, and the reinvestment into higher yielding securities such as Treasury bills. Banks, in an effort to keep the money, may pay depositors higher rates. In order to afford the higher rate, banks will then charge their borrowers higher interest rates. This can possibly lead to tight money and reduced economic activity.

Disinvestment
Capital investment shrinkage caused by a firm's failure to maintain or replace capital assets being used up or by the firm's sale of capital goods such as equipment.

See: Capital Asset

Disposable Income
Income that remains after tax payments. This money may be spent on essentials (e.g., food and shelter), nonessentials (e.g., dining in a restaurant) or it can be saved.

See: Discretionary Income

Disproportionate
An arrangement in an oil and gas direct participation program (DPP) whereby the general partner carries a portion of the program's cost in return for a larger percentage of the income.

See: Direct Participation Program

Dissolution
The termination of a business endeavor.

Distributing Syndicate
Group of brokerage firms or investment bankers that work together to expedite the distribution of securities in an offering.

See: Distributions

Distribution Area
Price range in which a security trades for an extended time period. Distribution areas are a factor in a technical analysts' prediction of when a security may decline from that price range. To avoid pushing a security's price below its range, a seller will want to be mindful not to sell below it. Accumulation of shares in the range aids in the stability of the security's price.

See: Accumulation Area

Distributions
1: The payment, to investors, of realized capital gains on securities within the portfolio of a mutual fund or closed-end investment company.

See: Closed End Management Company; Mutual Fund

2: Sale of a large block of securities over a period to avoid a decline in their prices. Technical analysts consider distribution patterns to predict when the security's price will fall.

See: Accumulation Area; Distribution Area

District Business Conduct Committee (DBCC)
Financial Industry Regulatory Authority (FINRA) committee that has jurisdiction in handling complaints against, or violations by FINRA members within its district.