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Equities & Finance Glossary – Terms Starting with M
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Terms Starting with M
MACROshare
Exchange Traded Fund (ETF)-like structures consisting of pairs of exchange traded securities that trade separately and track the movement of a benchmark price (e.g., NYMEX Division Light Sweet Crude Oil Futures Contract). The pair of securities includes an “Up” share and a a “Down” share whose prices move in opposite directions depending upon the movement of the benchmark price. An “Up” MACROshare gains when the benchmark price increases, and a “Down” MACROshare gains when the price declines. MACROshares do not actually own commodity or futures contracts, investing instead in short-term U.S. Treasuries and other short-term securities.
Management Fee Money paid by an investment product to its investment manager or advisor for overseeing the investment product’s portfolio.
Market An order price type placed on the execution of an order. A market order requires that the best price in the current market at the time your order executes is used to buy or sell a security.
Market Capitalization The market price of an entire company, calculated by multiplying the number of shares outstanding by the price per share.
Market Capitalization is a measure of size. For comparison purposes, companies are usually divided into three groups according to Market Capitalization—large cap, mid cap, and small cap. Many of the companies in the Dow Jones Industrial Average and the Standard & Poor's 500 (S&P 500) are large cap. Small cap companies are typically not widely followed by Wall Street analysts. Because they are smaller, small cap companies have the potential to grow faster, but with more risk than larger, more established companies.
Market Edge Market Edge is a sophisticated, quantitatively based suite of investment tools that uses advanced computerized models to analyze nearly 5,000 stocks listed on the New York Stock Exchange, American Stock Exchange, and Nasdaq. Market Edge is a product of Computrade Systems, Inc., a privately-held information management company based in Atlanta, Georgia. Computrade is focused on the management of investment information, and is a leading provider of research to institutions, stockbrokers, and private investors.
Market Price Last reported price at which a security was sold on an exchange.
Market Value The total Market Value of a company or stock. Also called Market Capitalization, Market Value is calculated by multiplying the number of shares outstanding by the latest closing price of the stock. Generally speaking, small cap stocks have market values below $1 billion, while large caps have values in excess of $5 billion. Mid caps fall in between.
Modified Return on Capital (ROC) Modified Return on Capital (ROC) is calculated by dividing EBIT (Operating Income After Depreciation) by the sum of Net Working Capital and Net Fixed Assets for a specified time period. Time periods measured include:
Most Recent Quarter (MRQ) as an annualized figure Trailing Twelve Months (TTM) Return on Capital (ROC) is a measure of how well a company utilizes its own or borrowed capital to invest in its operations.
Mid Blend An investment product, like a mutual fund or an Exchange Traded Fund (ETF), that invests in a variety of mid-cap US stocks, or those that represent 20% of the total capitalization of the US equity market. The mid-cap market capitalization range generally falls between $1 billion to $8 billion. The mid blend style is generally assigned to investment products where neither growth nor value characteristics predominate.
Mid Growth An investment product, like a mutual fund or an Exchange Traded Fund (ETF), that invests primarily in mid-cap, growth-oriented US stocks, or those that represent 20% of the total capitalization of the US equity market. The mid-cap market capitalization range generally falls between $1 billion to $8 billion. The mid growth style is generally based on fast growth (i.e., high growth rates for earnings, sales, book value, and cash flow) and high valuations (i.e., high price ratios and low dividend yields).
Mid Value An investment product, like a mutual fund or an Exchange Traded Fund (ETF), that invests primarily in mid-cap US, value-oriented US stocks, or those that represent 20% of the total capitalization of the US equity market. The mid-cap market capitalization range generally falls between $1 billion to $8 billion. The mid value style is generally based on low valuations (i.e., low price ratios and high dividend yields) and slow growth (i.e., low growth rates for earnings, sales, book value, and cash flow).
Momentum The Momentum indicator measures the amount that a security's price has changed over a given time span. The Momentum indicator displays the rate of change as a ratio, and can be used as a trend-following oscillator or as a leading indicator. When used as a trend-following oscillator, technical analysts typically buy when the indicator bottoms and turns up, and sell when the indicator peaks and turns down. If the Momentum indicator reaches extremely high values and then turns down, you should assume that prices will probably go still higher.
Using the Momentum indicator as a leading indicator assumes that market tops are typically identified by a rapid price increase, and market bottoms with price declines. As the market peaks, the Momentum indicator climbs sharply and then falls off, diverging from the continued upward or sideways movement of the price. Similarly, at a market bottom, Momentum drops sharply and then begins to climb well ahead of prices.
The Momentum indicator in BigCharts charts uses 12 bars as the default.
Money Flow The Money Flow indicator attempts to measure the amount of money buying a stock versus the amount of money selling a stock by assuming that when a stock closes higher than its open, all volume associated with that trading period results from buyers. Similarly, it assumes that when a stock closes lower than its open, all volume associated with that trading period results from sellers. Although these assumptions are simplistic, Money Flow can be a useful indicator when analyzing the general buying and selling pressure on a stock.
Morgan Stanley Capital International Europe, Australasia, and Far East Index (MSCI EAFE Index) An unmanaged market capitalization-weighted index of equity securities of companies domiciled in various countries. The Index is designed to represent the performance of developed stock markets outside the United States and Canada and excludes certain market segments unavailable to U.S. based investors. The Net version of the MSCI EAFE adjusts for withholding taxes applicable to Massachusetts Business Trusts.
Morningstar Exchange Traded Fund Categories To distinguish Exchange Traded Funds (ETFs) by what they own, as well as by their prospectus objectives and styles, Morningstar developed the Morningstar CategoriesSM. While the prospectus objective identifies an ETF's investment goals based on the wording in the ETF prospectus, the Morningstar Category classifies ETFs based on their investment styles as measured by their underlying portfolio holdings (portfolio statistics and compositions over the past three years). If the ETF is new and has no portfolio statistics, Morningstar estimates where it will fall before assigning a more permanent category. When necessary, Morningstar may change a category assignment based on current information.
Morningstar Rating A rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a mutual fund's monthly performance, and includes the effects of sales charges, loads, and redemption fees, placing more emphasis on downward variations and rewards consistent performance. Funds must have a three-year history to receive a Morningstar Rating. Morningstar Ratings break down as follows:
Five Stars The top 10% of funds in each category Four Stars The next 22.5% funds in each category Three Stars The next 35% funds in each category Two Stars The next 22.5% in each category One Star The bottom 10% in each category Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.
The Overall Morningstar RatingTM for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and ten-year performance, if applicable. Morningstar ratings are updated monthly.
Moving Average Convergence/Divergence (MACD) For charts, the Moving Average Convergence/Divergence (MACD) indicator shows the relationship between two moving averages of prices. MACD is derived by dividing one moving average by another, and is based on the point spread difference between two exponential moving averages of the closing price.
The basic MACD trading rule is to sell when the MACD falls below its signal line and to buy when the MACD rises above its signal line. The MACD is most effective in wide-swinging trading markets. When the MACD rises dramatically, it is likely that the security's price is overextending and will soon return to more realistic levels. A bearish divergence occurs when the MACD is making new lows while prices fail to reach new lows. A bullish divergence occurs when the MACD is making new highs while prices fail to reach new highs. These divergences are most significant when they occur at relatively overbought/oversold levels.
The MACD indicator in BigCharts charts references the following default parameters:
First Moving Average: 12 Bars Second Moving Average: 26 Bars Signal Line: 9 Bars For stock and option quotes, MACD is the unit price of the most recent order for shares of the security on the primary exchange. For mutual fund and money market quotes, MACD is the Net Asset Value (NAV) of the fund as of the last time the fund was priced and prior to the date displayed. Other funds are priced once a day after the close of trading. All dates and times are reported in ET.
Moving Average (MA) Envelopes The average value of a security's price over a period of time, calculated by totaling all the previous closing prices over a time period and dividing by the number of bars in that time period. The sharpness of the Moving Average Envelope depends on the number of bars used to calculate the figure. For example, 7- or 12-Day MA Envelopes are typically very sharp, and 40-Day Moving Average Envelopes are typically very smooth.
The Moving Average Envelopes indicator in BigCharts charts references the following fixed parameters:
SMA: 9 bars Deviance: 2%
Moving Averages The average price of a security calculated periodically over a period of time. Price charts typically provide several popular moving averages using SMA or EMA. Moving Averages always plot in the chart's price window.
If you choose a multiple moving average (e.g., SMA (3-line)), the chart automatically determines the lengths of SMA 2 and SMA 3 based on the number you enter. For example, if you select SMA (3-line) and enter 9, the chart plots three Moving Averages of 9 bars, 18 bars, and 27 bars in length. SMA 2 is always twice the length of SMA 1, and SMA 3 is always three times the length of SMA 1.
Mutual Fund An investment that pools shareholders money and invests it toward a specified goal. The group's money is invested by a professional investment manager.
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