Glossary List D

Dawn Raid

Dawn raid is a period of time wherein the investor or the firm purchases a substantial number of shares in a company, the first thing in the morning. The moment the stock markets are open, the shares are being bought at lower costs.

Debentures

Debentures are debt instruments, an issuing company offers general public as a way of raising capital. These are neither backed by collateral nor loan security but issued based on the general credit worthiness and reputation of the borrower.

Debt fund

An overall investment pool which issues various forms of investments such as mutual funds, exchange traded funds or securities is known as a debt fund. The fund comprises of core holdings that are fixed income investments such as short or long term bonds or securitized money instruments.

Deep discount bonds

A deep discount bond otherwise known as a zero-coupon bond is a debt instrument that is purchased at a price far lesser than its nominal face value. The total value of the instrument is borne by the investor only at the time of maturity of the investment.

Defensive stock

A defensive stock refers to series of well-procured investment coupons that offer investors with ample dividends and stable forms of income irrespective of what the market conditions are. As defensive bonds are always in demand, these stocks facilitate a stable growth of the investment portfolio.

Deficit

When the amount required for a particular fund falls short of the mark, a deficit is created. The deficit is clearly defined as the difference between cash inflows and outflows such as trade deficit or budget deficit.

Deflation

Deflation is an overall stabilized situation in the economy wherein there is a deep contraction in prevalence of circulated money. The purchasing power of people improves and wages increase unlike what happens while there is inflation.

Delivery trading

Delivery trading is the most secured form of trading wherein the investor buys the shares on the current day and sells it the very next day. In delivery trading, shares or securities can be sold at any time before the market closes.

Demand draft

A demand draft or DD is a negotiable instrument for making transfer payments from one bank to another. Demand drafts or DD’s differ from cheques in the sense, the DD’s do not require signatures but just require the right bank account or routing numbers.

De-mat account

A de-mat account is a trading account wherein the shares and relevant certificates of investment holders are held in an electronic form. The de-mat account holds certificates of shares, government securities, bonds, mutual funds and ETF’s (Exchange traded funds) all under the same roof.

Dematerialization

Dematerialization is a process in which physical copies of share certificates are converted into an electronic or digital format.

De-merger

A de-merger is a business strategy in which the corporate entity or a large business conglomerate is broken down or split into several components either to operate on their own or to prevent an acquisition or take-over by another company. The independent entities are then sold to a third party or dissolved the process also has a motive to sell off those components or streams of the firm that are no longer a part of the core product line of the business.

Department of economic affairs

Department of Economic affairs or DEA is the pivotal agency of the Union Government involved in formulating and monitoring economic policies and programs that have a strategic bearing on the overall management of the economy, both across domestic as well as international frontiers.

Depository

Depository is clearly defined as a facility say like an organization, bank or financial institution that holds and assists traders and investors in buying and selling of shares and securities.

Depository Participants

Depository participants or DP’s are defined as the intermediaries between the depository (agency) and the investors. Classic examples of DP’s are brokers or traders who perform trading transactions on behalf of their clients by taking a commission known as brokerage fee.

Depreciation

Depreciation is decrease in the value of an asset with efflux of time on account of constant wear and tear of the same. A business entity deducts a certain percentage off the asset in the name of depreciation and accounts for the same in the Profit and Loss Account.

Derivatives

Derivative is a security or a stock whose price is determined or derived from one of more underlying assets not belonging to the same cluster of assets. Examples of derivatives include stocks, bonds, commodities, currencies and interest rates.

Discretionary account

A discretionary account is a kind of a managed account wherein the trader or the broker buys and sells securities from the client’s account even without the client’s notice. However, the client signs up a discretionary disclosure document which serves as the evidential proof that client gives his or her full-fledged consent for the same.

Diversification

Diversification is a strategic investment technique wherein the investor grabs on to varied forms of investments within the same investment portfolio. The main object behind this is to earn enhanced returns over multiple forms of investment and to pose a lesser risk on the income portfolio over independent forms of investment.

Diversified debt funds

Debt funds are fixed income securities like bonds, mutual funds or treasury bills and provide investors with enhanced returns on their investments despite market odds. Investing into multiple streams of fixed income securities is what is known as diversified debt funds.

Diversified equity funds

A diversified equity fund is a kind of fund that invests in companies regardless of the size or range of operations they are involved in. Classic examples of diversified equity funds are mutual funds, unit linked insurance plans or ULP’s and SIP’s (Systematic equity plans). The securities optimize equity and debt.

Dividend

A dividend is a lucrative source of income for investment holders who have invested in shares or equity market. Dividends are profits rolled out by the issuing companies to the respective stake holders or shareholders.

Dividend Distribution Tax or DDT

Dividend Distribution Tax or DDT is clearly defined as the tax imposed by the Indian Govt. to entities or corporates that issue dividends to shareholders. The Dividend distribution tax or DDT is estimated to be 15% as per the Union Budget reports 2007.

Dividend stripping

Dividend stripping is an investment strategy adopted by investors who purchase shares just before the onset of the company announcing dividends. The move is made by corporate entities or investors for a tax avoidance purpose, as well.

Domestic Institutional Investor or DII

Domestic Institutional Investors or DII’s refer to Indian investors who invest their money at the financial markets of India. Classic examples of DII’s are Investors or Stakeholders of the Indian stock market.

Domestic trade deficit

A domestic trade deficit is a glum scenario in the economy wherein the country’s imports exceed those of exports. A negative balance of trade thus results in outflow of domestic currency to foreign markets.

Due Diligence

Due diligence is an authentic form of audit or investigation carried out on investment consoles with respect to reviewing all financial records and other forms of so-called deemed material. If the investor makes a due diligence analysis before investing into the firm, he/she makes sure that the money is in safe hands.