Definition 2. M & I Flashcards
M^2
A measure of what a portfolio would have returned if it had taken on the same total risk as the market index.
M^2 alpha
Difference between the risk-adjusted performance of the portfolio and the performance of the benchmark.
Macaulay duration
The approximate amount of time a bond would have to be held for the market discount rate at pur- chase to be realized if there is a single change in interest rate. It indicates the point in time when the coupon rein- vestment and price effects of a change in yield-to- maturity offset each other.
Machine learning
Computer based techniques that seek to extract knowledge from large amounts of data by “learn- ing” from known examples and then generating structure or predictions. ML algorithms aim to “find the pattern, apply the pattern.”
Macroeconomics
The branch of economics that deals with aggregate economic quantities, such as national output and national income.
Maintenance covenants
Covenants in bank loan agreements that require the borrower to satisfy certain financial ratio tests while the loan is outstanding.
Maintenance margin
The minimum amount that is required by a futures clearinghouse to maintain a margin account and to protect against default. Participants whose margin balances drop below the required maintenance margin must replenish their accounts
Maintenance margin requirement
The margin requirement on any day other than the first day of a transaction.
Management buy-ins
Leveraged buyout in which the current
management team is being replaced and the acquiring team will be involved in managing the company.
Management buyout
A leveraged buyout event in which a group of investors consisting primarily of the company’s existing management purchase at least controlling interest in its outstanding shares. At the extreme, they may pur-
chase all shares and take the company private.
Management fee
A fee based on assets under management or committed capital, as applicable, also called a base fee.
Manufacturing resource planning (MRP)
The incorporation of production planning into inventory management. A MRP analysis provides both a materials acquisition schedule and a production schedule.
Margin
The amount of money that a trader deposits in a margin account. The term is derived from the stock mar- ket practice in which an investor borrows a portion of the money required to purchase a certain amount of stock. In futures markets, there is no borrowing so the margin is more of a down payment or performance bond.
Margin bond
A cash deposit required by the clearinghouse from the participants to a contract to provide a credit guarantee. Also called a performance bond.
Margin call
A request for the short to deposit additional funds to bring their balance up to the initial margin.
Margin loan
Money borrowed from a broker to purchase securities.
Marginal cost
The cost of producing an additional unit of a good.
Marginal probability
The probability of an event not conditioned on another event.
Marginal product
Measures the productivity of each unit of input and is calculated by taking the difference in total product from adding another unit of input (assuming other resource quantities are held constant).
Marginal propensity to consume
The proportion of an additional unit of disposable income that is consumed or spent; the change in consumption for a small change in income.
Marginal propensity to save
The proportion of an additional unit of disposable income that is saved (not spent).
Marginal revenue
The change in total revenue divided by
the change in quantity sold; simply, the additional revenue from selling one more unit.
Marginal value curve
A curve describing the highest price
consumers are willing to pay for each additional unit of a good.
Mark to market
The revaluation of a financial asset or liability
to its current market value or fair value.