F

 

Fidelity Bond

Insurance policy taken by an organization against losses which may arise as a result of dishonest activities of employees.

 

Final Dividend

The last dividend distribution during a company's fiscal year. However, some companies pay dividend only once in a year.

 

Financial Future

A future contract whose underlying product is a financial instrument such as stock, bond, currency, treasury bill or certificate.

 

Financial Instrument

(i)            A financial product such as stock, bonds, treasury bill, and certificate, commercial paper and bankers' acceptances which is created to facilitate the flow of funds from surplus to deficit economic units.

(ii)          Any document which denotes ownership of a financial asset or evidences credit to a company or government.

 

Financial Intermediary

An institution such as a bank, stock broking firm or issuing house, which mobilizes, or facilitates the mobilization of funds from surplus to deficit economic units.

 

Financial Leverage

The proportion of debt to equity in a company's capital structure. A company is highly leveraged when the proportion of debt is higher than equity.

 

Financial Market

A market which provides a mechanism for the efficient mobilization of funds from the surplus economic units (suppliers of funds) to the deficit economic units (users of funds). The market is made up of two principal segments -the money and the capital markets.

 

Fixed Capital

Funds invested by a company in fixed assets such as plants, machineries and equipments.

 

Fixed Rate Securities

A debt security whose interest rate does not vary (fluctuate) but is fixed throughout the life of the instrument.

 

Flight Capital

Monies which are taken out of a country as a result of instability in the political, economic or social environment.

 

Floating Rate Note

Debt instruments with variable interest rates.

 

Flotation

Public offering of new securities by a company or government.

 

Foreign Bond

Bond issued by a government or company in a foreign country and denominated in that (foreign) country's currency. Usually, the issuer does so to take advantage of more favourable market conditions in the country of issue. In the international capital market, certain coinages linked to the country of issue have developed to describe some foreign bonds. These include yankee bonds (foreign bonds issued in the U.S.), Samurai bonds (Japan) and Bulldog bonds (United Kingdom).

 

Forward Contract

Similar to a futures contract but neither traded on an exchange nor carry standardized terms. A forward contract can thus be customized to suit the special needs of the parties to the contract.

 

Franked Income

Investment income on which tax has already been paid (usually deducted at source) and thus exempted from additional tax by the investor. Income on unit trust is franked in many countries. 1

 

Front Running

The sale or purchase of securities by a broker-dealer for his account ahead of client's order and based on privileged information available to the broker-dealer about the client's order flow.

 

Full Disclosure

The provision of comprehensive information and material facts relevant to an issue of securities to the public to enable rational and informed investment decision.

 

Fully Paid-up Capital (Shares)

The portion of a company's authorized share capital that has been issued and paid for by shareholders.

 

Futures Contract

An agreement to buy or sell a specified quantity of a financial instrument or commodity at a price and time agreed by the parties. Futures, basically developed to hedge against adverse fluctuations in the prices of financial instruments or commodities, and have also become important speculative instruments. Unlike forward contracts, futures contracts are standardized and traded on an exchange.

 

Futures Exchange

An organized market for trading in futures contracts.