Haircut

The amount taken off the value of securities for the purpose of calculating the net capital of broker/dealers. A number of criteria such as market risk, maturity (for debt instruments) and type of security would usually be considered in the determination of the most appropriate haircut.

Hedge Fund

Mutual funds that employ hedging techniques to minimize risk.

Hedging

A strategy used by business concerns and investors to reduce the risk of adverse price fluctuation in the prices of Commodities or financial instruments.

Highs

The highest movement of a stock index or price of a security during a given period e.g. a day, month, year, etc. Lows are the opposite of highs.

Historic Cost Accounting

The traditional method of accounting for profit and other balance sheet figures, making no allowance for inflation as in current cost ac counting. Stock is valued at its original cost, not its current replacement cost. Fixed assets are entered at original cost, minus a depreciation figure based on that cost.

Holders of Record

The list of shareholders as shown on a company's register of shareholders at a given date. The distribution of dividends, annual reports, etc. are restricted to holders of record. In Nigeria, these are members of a public company at the close of the company's register on a given date.

Holding Company

A company which owns sufficient equity capital in another company and thus exercises control over the latter.

Horizontal Merger

A merger between companies in similar lines of business.

Hot Issue

A public offering of securities with exceedingly high demand.

Hot Money

Highly volatile foreign investment capital. It refers to monies brought into a country by investors taking advantage of high returns such as favourable interest rates and stock market return, but which are quickly moved out as fundamentals change or as returns in other jurisdictions become more favourable. These are thus, essentially, flows of short duration.

Hypothecation

The pledging of securities as collateral to purchase other securities on a margin account.