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Abbreviation used in newspaper listings of bonds to indicate a matured bond.

Basic money supply figure that includes currency in circulation, demand deposits (checking accounts), credit union share drafts, and non-bank travelers' checks. NOW accounts and Super-NOW accounts are included in demand deposits.

A wider definition of money supply than M1, it includes M1 plus savings accounts, time deposits under $100,000, money market mutual funds shares, overnight repurchase agreements and overnight Eurodollars.

Analysis of the overall economy using information such as unemployment, inflation, production and price levels.

See: Inflation; Microeconomics

Maintenance Call
A call for more money or securities to be deposited into brokerage client's margin account. A call will be made when the account's margin equity falls below exchange requirements or the brokerage firm's house requirements. Currently, NYSE maintenance requirements are 25% in a long account (client has long positions) and 30% in a short account (client has short positions generated from selling short). The brokerage firm's house requirements are usually more stringent than the exchanges. If the account is not brought up to maintenance levels, some of the client's securities may be sold to eliminate the deficiency.

Maintenance Fee
Yearly charge to maintain certain types of brokerage or bank accounts such as an IRA or an asset management account.

Majority Shareholder
A shareholder who controls more than half of the outstanding shares of a corporation--commonly considered 51% of the outstanding shares. However, if ownership is widely distributed such that there are no majority shareholders, control may be gained with far less than 51% of the outstanding shares.

Make A Market
The process of maintaining firm bid and asked prices in a given security by standing ready to buy or sell round lots at publicly quoted prices. In the over-the-counter market, the dealer is called a "market maker," and on the exchanges, a "specialist."

Maloney Act Of 1938
An amendment to the Securities Exchange Act of 1934 that allows self-regulation by securities firms dealing in the over-the-counter market. As a result, the National Association of Securities Dealers was created.

Management Fee
An expense paid by an investment company to the investment advisor for managing a portfolio. As disclosed in the prospectus, this fee is past onto the investor and is a fixed percentage of the fund's asset value.

In the securities industry, it usually refers to the illegal process of buying or selling a security to create a false or misleading appearance of active trading for the purpose of raising or depressing the price to induce purchase or sale by others.

"On Margin"--a process whereby a brokerage client uses credit to finance securities transactions.

Margin Account
An account with a brokerage firm that allows its clients to buy securities with money borrowed from the broker. Depending on the security, an investor can sometimes borrow up to 50% or more of the market value. Margin accounts are governed by Regulation T of the Federal Reserve Board, by the NYSE, and by the brokerage firm's house rules. Margin requirements can be met with cash, eligible securities, or any combination thereof.

Margin Agreement
Document that must be signed by a brokerage client who wished to trade on margin--also called a "hypothecation agreement." The document details the rules governing a margin account, including the hypothecation of securities, how much equity the customer must keep in the account, and the interest rate on margin loans.

Margin Call
A demand for a client to deposit money or eligible securities with the broker to bring a margin account up to the initial margin or minimum maintenance requirements. A Regulation T margin call is sent when a purchase is made and a maintenance margin call is sent when the margin account's equity falls below specific levels. If the client does not respond to the call, securities in the account may be liquidated.

Margin Department
Department within a brokerage firm that monitors:

  • Customer compliance with margin regulations;
  • Purchases of stock on margin;
  • Short sales;
  • Extensions of credit by the broker.

Margin Requirement
According to Regulation T of the Federal Reserve Board, it is the minimum of $2,000 or 50% of the purchase price of eligible securities bought on margin or 50% of the proceeds of short sales. This amount must be deposited in the client's margin account in the form of cash or eligible securities.

Margin Security
A security that may be bought or sold in a margin account. Regulation T of the Federal Reserve Board determines which securities are eligible.

1: The overall security markets, also called "marketplace," or the New York Stock Exchange in particular.

2: Short for "market value"--the value of an asset based on the price it would command on the open market. It is usually set by the market price at which comparable assets have recently been bought or sold.

Marketable Securities
Securities that can be easily sold--that is, any asset that can be readily converted into cash, for example--government securities and commercial paper.

Market Analysis
Research used to assist in predicting the direction of the markets based on technical data relating to price movements of the market, or on fundamental data such as corporate earnings.

Market Breadth
The scope of change in stock prices as measured by analyzing the number of stocks that advanced or declined during the period or by the number of stocks hitting new highs or new lows.

Market Maker
Securities dealer in a specific over-the-counter stock who makes a market--that is, one who maintains firm bid and asked prices in a given security by standing ready to buy or sell round lots.

Market Order
An order to buy or sell a specific number of shares at the best available price once the order is received in the marketplace. Normally, a market order is executed at the quoted price given before the order was entered, or at a price quite close to the quote. However, if the security is volatile, the execution price could be better or worse than anticipated.

Market Price
The last reported price at which a security was sold or the current quote.

Market Risk
The chance that a security's value will decline. With fixed income securities, market risk is closely tied to interest rate risk--as interest rates rise, prices decline and vice versa.

Market Timing
Determination of when to buy or sell securities through use of fundamental or technical indicators. Mutual funds investors can accomplish market timing decisions by switching from different types of funds within a family as the market outlook changes. For example, the investor can switch from a stock fund to a money market fund and back again.

Mark To Market
The comparison and adjustment of a position to reflect current market values. Mark to market is conducted on stocks that were sold short, uncovered calls and puts and when-issued securities. The adjustment may cause a margin call to be issued.

Maturity Date
The date on which the principal amount of a loan, bond, or any other debt instrument becomes due and is to be paid in full.

Medium Term Bond
A bond that has a maturity of 2 to 10 years.

Member Firm
A brokerage firm that has at least one general partner, officer, or employee who is a member of the New York Stock Exchange. Although it is technically the employee who is a member, the firm enjoys the privileges of membership as well as the obligations of membership.

Member Short Sales Ratio
The ratio of the total shares sold short for the accounts of NYSE members in one week divided by the total short sales for the same week. The ratio is considered an indicator of market trends. A ratio of 68% or lower is considered bullish and a ratio of 82% or higher is considered bearish. The member short ratio is issued in the Monday edition of "The Wall Street Journal."

Two or more companies combined to achieve greater efficiencies of scale and productivity. This is accomplished through the elimination of duplicated plant, equipment, and staff, and the reallocation of capital assets to increase sales and profits in the enlarged company.

Analysis of the behavior of economic units such as companies, industries, or households.

Minimum Maintenance Requirement
As required by the NYSE, the NASD, and brokerage firms, the amount of equity that must be maintained in brokerage clients' margin accounts. Regulation T of the Federal Reserve Board requires $2,000 in cash or eligible securities to be deposited in margin accounts before brokers can extend credit. Additionally, upon a margin transaction, an initial margin requirement must be met, presently 50% of the market value of eligible securities long or short in customers' accounts. The NYSE and NASD require a margin account's equity to equal at least 25% of the market value of securities in margin accounts. Brokerage firm requirements are usually a more conservative 30%. When the market value of margined securities falls below these minimums, margin calls are issued to clients requesting additional equity to be delivered by a specified date. If customers fail to comply, brokers may sell margined securities or close out short positions (from short sales).

Minority Interest
Shareholders who own less than half the shares in a corporation.

Missing The Market
Said when a broker, acting as agent, fails to execute a transaction at a price that was available, and the resultant transaction is unfavorable to the client. The agent is required to make the client whole by reimbursing the amount lost.

Mixed Account
A brokerage account in which some securities are long positions and some are short positions.

Money Market
The market for short term debt instruments maturing in one year or less. Examples of money market instruments include Treasury bills, commercial paper, and certificate of deposits.

Money Market Fund
A mutual fund investing in short term money market instruments, such as certificates of deposit, treasury bills and commercial paper. The fund's net asset value is usually $1 a share and its interest rate goes up or down. Most money market funds offer checkwriting privileges.

Money Supply
The total amount of money in the economy as defined by M1 or M2 measurements. If there is too much money in the economy, interest rates tend to go down while inflation tends to rise. Conversely, if there is too little money in the economy, interest rates tend to go up, and prices and production tend to go down This can cause unemployment and idle plant capacity.

Monthly Investment Plan
Investment technique whereby an investor puts a fixed dollar amount into a particular investment every month.

Moody's Investment Grade
Rating assigned to investment grade or bank quality municipal short-term debt securities. The debt securities are classified as MIG-1, 2, 3, 4 to signify best, high, favorable, and adequate quality, respectively.

Moody's Investors Service
One of the two best known bond rating services, the other being Standard & Poor's. Moody's also rates commercial paper, preferred and common stocks, and municipal short-term issues. It publishes six manuals annually that provide information on issuers and securities. The manuals are updated weekly. It also publishes Moody's Handbook of Common Stocks on a quarterly basis. The handbook follows over 500 companies and provides an analysis of the company's financial background, recent financial results, and its future outlook.

Most Active List
Stocks with the heaviest trading volume for a given day. If a stock's trading volume is much greater than its normal volume, it may be caused by a release of earnings figures, institutional trading, bad news, and other factors.

Moving Average
An average that is based on security or commodity prices over a period of time (few days to few years) that shows trends for the latest period. It is a rolling average when the latest day's figures are included in the average and the oldest day's figures are not included.

Municipal Bond
A debt obligation issued by a state, state agency or authority, or a political subdivision, such as county, city, town or village. They may be issued for general governmental needs or special projects. Issuance must be approved by referendum or by an electoral body.

Before the Tax Reform Act of 1986, interest paid on municipal bonds was exempt from federal income tax and state and local income tax within the issuing state. The terms municipal and tax-exempt were synonymous. However, the Act separated municipal bonds into two broad groups--public purpose bonds and private purpose bonds. Public purpose bonds are tax-exempt and may be issued without limitations. Private purpose bonds are taxable unless specifically exempted. The difference between public and private purpose bonds is based on the percentage in which the bonds benefit private parties.

Municipal Bond Insurance
Insurance policies that protect investors if a municipal bond should default--the bonds will be purchased from investors at par. The insurance may either be purchased by the issuer or the investor. Two major insurers of municipal bonds are the Ambac Indemnity Corporation and the Municipal Bond Insurance Association (MBIA). Insured municipal bonds usually have the highest ratings. Subsequently, the bond's marketability increases, which lowers the cost to their issuers. However, the yield on an insured bond is usually lower than similarly rated uninsured bonds--the cost of the insurance is passed on to the investor. To obtain the extra degree of safety, many investors do not care if the yields are slightly lower.

Municipal Bond Insurance Association (MBIA)
See: Municipal Bond Insurance

Municipal Securities Rulemaking Board (MSRB)
A self-regulatory organization of the municipal securities industry that was created in 1975 under an amendment to the Securities Exchange Act of 1934. Its primary responsibility is to develop rules and regulations to govern the activities of municipal securities dealers, and to provide arbitration facilities to broker-dealers and bank dealers in municipal securities.

The newswire service for the municipal bond industry. It provides information on both new issues and secondary market offerings.

Mutilated Securities
A certificate that is torn or defaced in such a manner that the name of the issuer or other necessary details cannot be identified. If such a certificate is delivered to make settlement of a sell transaction, it is difficult to effect the transfer of title. It is up to the seller (seller's broker) to take corrective action--getting the transfer agent to guarantee the buyer's rights of ownership.

Mutual Fund
An open-end investment company that offers the investor the benefits of portfolio diversification (provides greater safety and reduced volatility), and professional management. The shares are redeemable on demand at their net asset value. The fund invests the pooled assets into various investment vehicles including stocks, bonds, options, commodities and money market securities. How the fund invests is determined by the fund's objectives. The mutual fund's prospectus details this type of information plus information on any fees, the management company and other relevant data.

Mutual Fund "Family"
A group of mutual funds supervised by the same investment company. Funds can be moved easily from one type of fund to another if conditions (market or personal) dictate a change. As a rule, investors may apply purchases in all funds (within the family) toward sales charge breakpoints.