A reference to Friday, Apr 2, 1993, when Philip Morris, the maker of Marlboro cigarettes, announced that it would be cutting the price of Marlboros to compete with generic cigarette makers. The company's stock tanked 26% following the announcement, losing about $10 billion off its market cap in a single day. The day is remembered as a landmark moment in the 1990s consumer movement away from name brand products in favor of cheaper generic products with prices 50% lower than their branded competitors. In its wake, money managers moved cash from name brand consumer goods makers like Coca-Cola and Tambrands (the former maker of Tampax tampons) to technology stocks and generic consumer goods producers. Taobiz explains Marlboro Friday Even though Philip Morris's announcement caused the company to initially lose $10 billion in market cap, the event marked the end of a price war. Competitors were priced out of the market, and only two years later, Philip Morris's stock had fully recovered from Marlboro Friday's loss. One analyst (James A. Taylor) was quoted in the New York Times as saying, "I believe the 1990s officially began with Marlboro's inability to sustain its price."
A type of market order that is canceled and re-submitted as a limit order if the price of the asset moves dramatically after the investor places the order. The limit on the limit order is placed at around the current market price as determined by a broker. This type of order adds a protective measure, helping the investor ensure his or her market order will not be completed at a price that is far off from the market price at the time of the order. Taobiz explains Market-With-Protection Order For example, say you place a market-with-protection order to sell 1,000 shares at the current market price of $45. If half of the order is filled at this price but the price of the shares start to fall rapidly to $35, the original market order is canceled and a limit order is placed for the remaining shares at $40. If the price climbs back to $40, the rest of the shares will be sold. If there was no protection on the order, the shares may have been sold at $35, which is far off from the market price of $45 that the investor originally wanted.
A call provision added to fixed income securities that allows for early redemption by the issuer if certain conditions are favorable. |||Also known as Canada calls, these provisions are typically found on corporate debt issues made by Canadian corporations. With a doomsday call provision, issuers are able to redeem at either par value upon maturity of the fixed income security or at a predetermined rate which is usually a benchmark +/- basis points.
The total dollar market value of all of a company's outstanding shares. Market value of equity is calculated by multiplying the company's current stock price by its number of outstanding shares. A company's market value of equity is therefore always changing as these two input variables change. A company's market value of equity differs from its book value of equity because the former does not take into account the company's growth potential. Taobiz explains Market Value Of Equity Market value of equity is basically a synonym for market capitalization. It is used to measure a company's size and helps investors to diversity their investments across companies of different sizes and different levels of risk.
A slang term for a decline in the overall value of the stock market. Market swoons can be seen when indexes, such as the Dow Jones Industrial Average (DJIA) , have a significant drop in price. Taobiz explains Market Swoon Market swoons are often caused by the negative sentiment of investors. When investors grow nervous or fear an upcoming economic event, they will usually stop trading or liquidate a position. This will cause a swoon, lowering security prices across the market.
A type of repurchase transaction in the mortgage pass-through securities market in which the buy side trade counterparty of a "to be announced" (TBA) trade agrees to a sell off the same TBA trade in the current month and to a buy back the same trade in a future month at a lower price. In a dollar roll, the buy side trade counterparty gets to invest the funds that otherwise would have been required to settle the buy trade in the current month until the agreed upon future buy-back. The sell side trade counterparty benefits by not having to deliver the pass-through securities (which they might otherwise have shorted or committed to another trade) in the current month. |||The price difference between months is known as the drop. When the drop becomes very large, the dollar roll is said to be "on special". This might happen for several reasons, including large collateralized mortgage obligation deals that increase the demand for mortgage pass-through securities, or unexpected fallout of mortgage closings in a mortgage originator's pipeline. In both cases, financial institutions might have more sell trades in the current month than they are able to deliver securities into, forcing them to "roll" those trades into a future month. The greater the shortage of available securities in the current month, the larger the drop becomes.
A broker-dealer in which at least one of the principal officers is a member of either the New York Stock Exchange (NYSE), another major stock exchange, a self-regulatory organization or a clearing house corporation. Also referred to as "clearing member". Taobiz explains Member Firm One seat (membership) on the NYSE usually costs more than $1 million. Owning a seat allows on the NYSE allows a person to trad on the floor of the exchange, either as an agent for someone else for for his or her personal account.
Percentage of par, or face value, that a bond is quoted at. The other way bonds are often quoted is in terms of their yield. |||For example, if the price of the bond is $1,120 and the par value of the bond is $1,000, the bond would be quoted at 112% in dollar terms.
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