Glossary - M

Macro-based
An investment strategy driven by macroeconomic considerations.

Mandatory quote
The period of time when all registered market makers in a security must display their prices. For the Stock Exchange Automated Quotes, this is Monday to Friday, 8.00am to 4.30pm.

Margin
Borrowing money to use specifically for buying securities of any kind in a brokerage account.

Marked to market
Adjusting the price of a security to reflect current market conditions and interest rates.

Market
A place where transactions are undertaken, including the London Stock Exchange, AIM and PLUS. All exchanges are markets.

Market capitalisation
The total market value of all of a firm’s outstanding shares, calculated by multiplying a firm’s share price by the number of shares outstanding.

Market index
The percentage rise or fall in value of the market over the relevant timescale. An example of a market index is the FTSE All-Share. Firms are sometimes given weightings in the index according to their market capitalisation to create a market value weighted index.

Market makers
Stock exchange member firms that are obliged to make a continuous two-way price – that is, to offer to buy and sell securities – during market hours.

Market size
The number of shares that can be traded at a given quote price. To trade more than this amount would be to trade outside of the market size.

Market value
The value of an asset based upon the price it would obtain on the open market.

Maturity
Another word for redemption. The date on which the principal of a bond is due to be repaid or redeemed.

Maximum trailing value
The maximum number of pence per share that a share price can fall from its peak value (for sales) or rise above its lowest value (for purchases) for a trailing stop order to be dealt.

Mean
Another word for the average. Calculated by adding together all values and dividing by the number of values.

Mean reversion
The name given to the processes by which variables such as prices, rates, and volatilities tend to return to a mean or average value after reaching extremes.

Mediums
Government stocks that have five to 15 years until repayment.

Merger
When two or more companies agree to merge into one and pool their interests to avoid the expense of a takeover.

Mid price
The price half way between the prices quoted in the London Stock Exchange's Daily Official List. The prices found in the newspapers are the mid prices.

Minimum quote size
The minimum number of shares in which market makers are obliged to display prices on.

Minimum trailing value
The minimum number of pence per share that a share price is required to fall from its peak value (for sales) or rise above its lowest value (for purchases) to trigger a trailing stop order.

Money market
A market in which money and other liquid assets can be lent and borrowed in order to satisfy the short-term cash flow requirements of banks and other institutions. Personal investors with large sums of money to deposit can also gain access to the money market via the commercial banks.

Money market fund
See cash fund

Monte Carlo simulation
An analytical technique for solving a problem by performing a large number of trial runs, called simulations, and inferring a solution from the collective results of the trial runs. Method for calculating the probability distribution of possible outcomes.

Municipal bond
Bond issued by a state or local government authority.

Mutual company
A company that has no shares, but is owned by policyholders or members. Examples include building societies, friendly societies or co-operatives.

Mutual fund
The US equivalent of a unit trust.