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A

Abandon

The choice made by the holder of a covered warrant to allow the warrant to expire without exercise.

Accountants

They are the "gatekeepers" of the public securities markets. Accountants ensure that the financial statements are correct and complete and give an accurate picture of the company.

Acquisitions

One company takes over another by purchasing its assets or shares. Acquisitions can be friendly or hostile.

Active fund

A fund in which the fund manager actively manages investments (see active management).

Active management

Fund managers strive to outperform the market by identifying stocks that could produce better returns and beat the overall market (or target index).

Actuals

The physical commodity underlying a futures contract. Cash commodity, physical.

Additional hedge

A protection against borrower fallout risk in the mortgage pipeline.

Adverse selection

A situation in which market participation is a negative signal.

Agency bank

A form of organization commonly used by foreign banks to enter the U.S. market. An agency bank cannot accept deposits or extend loans in its own name; it acts as agent for the parent bank.

AIBD

Association of International Bond Dealers.

Alpha

A measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A positive alpha is the extra return awarded to the investor for taking a risk, instead of accepting the market return. For example, an alpha of 0.4 means the fund outperformed the market-based return estimate by 0.4%. An alpha of -0.6 means a fund's monthly return was 0.6% less than would have been predicted from the change in the market alone. In a Jensen Index, it is factor to represent the portfolio's performance that diverges from its beta, representing a measure of the manager's performance.

Asset Class

A specific category of assets or investments, such as stocks, bonds, cash, international securities and real estate. Assets within the same class generally exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations.