Shuaa Logo
Shuaa

Glossary

H

Harmonic mean
A type of weighted mean computed by averaging the reciprocals of the observations, then taking the reciprocal of that average.
Heating degree day
The greater of (i) the average daily temperature minus 65 degree Farenheit, and (ii) zero.
Hedge fund
A historically loosely regulated, pooled investment vehicle that may implement various investment strategies.
Hedge ratio
The relationship of the quantity of an asset being hedged to the quantity of the derivative used for hedging.
Hedged return
The foreign asset return in local currency terms plus the forward discount (premium).
Hedging
A general strategy usually thought of as reducing, if not eliminating, risk.
Held-for-trading securities
Debt or equity financial assets bought with the intention to sell them in the near term, usually less than three months; securities that a company intends to trade. Synonyms: trading securities
Held-to-maturity investments
Debt (fixed-income) securities that a company intends to hold to maturity; these are presented at their original cost, updated for any amortization of discounts or premiums.
Herfindahl–Hirschman Index
A measure of market concentration that is calculated by summing the squared market shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regulatory challenges.
Heteroskedastic
With reference to the error term of a regression, having a variance that differs across observations.
Hedge
A commitment or investment made with the intention of minimizing the impact of adverse price movements in an asset or liability, offsetting potential losses.
HF
Hedge Fund
HFSC
House Financial Services Committee
High grade bond
See investment-grade bond.
High-yield bond (or junk bond)
Bonds rated Ba (by Moody's) or BB (by S&P and Fitch) or below, whose lower credit ratings indicate a higher risk of default. Due to the increased risk of default, these bonds are typically issued at a higher yield than more creditworthy bonds. 
High yield
A value investment substyle that focuses on stocks offering high dividend yield with prospects of maintaining or increasing the dividend.
High-water mark
A specified net asset value level that a fund must exceed before performance fees are paid to the hedge fund manager.
High-yield investing
A distressed securities investment discipline that involves investment in high-yield bonds perceived to be undervalued.
Histogram
A bar chart of data that have been grouped into a frequency distribution.
Historical cost
In reference to assets, the amount paid to purchase an asset, including any costs of acquisition and/or preparation; with reference to liabilities, the amount of proceeds received in exchange in issuing the liability.
Historical equity risk premium approach
An estimate of a country’s equity risk premium that is based upon the historical averages of the risk-free rate and the rate of return on the market portfolio.
Historical exchange rates
For accounting purposes, the exchange rates that existed when the assets and liabilities were initially recorded.
Historical method
A method of estimating VAR that uses data from the returns of the portfolio over a recent past period and compiles this data in the form of a histogram.
Historical simulation
Another term for the historical method of estimating VAR. This term is somewhat misleading in that the method involves not a simulation of the past but rather what actually happened in the past, sometimes adjusted to reflect the fact that a different portfolio may have existed in the past than is planned for the future. Synonyms: back simulation
Historical simulation method
The application of historical price changes to the current portfolio.
HLCCFM
High Level Coordination Committee on Financial Matters
Holder-of-record date
The date that a shareholder listed on the corporation’s books will be deemed to have ownership of the shares for purposes of receiving an upcoming dividend; two business days after the ex-dividend date.
Holding period return
The return that an investor earns during a specified holding period. Synonyms: total return
Holding period yield
The return that an investor earns during a specified holding period; holding period return with reference to a fixed-income instrument. Synonyms: HPY
Holdings-based style analysis 
An approach to style analysis that categorizes individual securities by their characteristics and aggregates results to reach a conclusion about the overall style of the portfolio at a given point in time.
Homogenization
Creating a contract with standard and generally accepted terms, which makes it more acceptable to a broader group of participants.
Homogenization
Creating a contract with standard and generally accepted terms, which makes it more acceptable to a broader group of participants.
Homoskedasticity
The property of having a constant variance; refers to an error term that is constant across observations.
Horizontal analysis
Common-size analysis that involves comparing a specific financial statement with that statement in prior or future time periods; also, cross-sectional analysis of one company with another.
Horizontal common-size analysis
A form of common-size analysis in which the accounts in a given period are used as the benchmark or base period, and every account is restated in subsequent periods as a percentage of the base period’s same account.
Horizontal merger
A merger involving companies in the same line of business, usually as competitors.
Hostile transaction
An attempt to acquire a company against the wishes of the target’s managers.
Human capital
The value of skills and knowledge possessed by the workforce.
Hurdle rate
The rate of return that must be met for a project to be accepted.
Hybrid markets 
Combinations of market types that offer elements of batch auction markets and continuous auction markets as well as quote-driven markets.
Hypothesis
With reference to statistical inference, a statement about one or more populations.
Hypothesis testing
With reference to statistical inference, the subdivision dealing with the testing of hypotheses about one or more populations.
Hypothetical events
A type of scenario analysis used in stress testing that involves the evaluation of performance given events that have never happened in the markets or market outcomes to which we attach a small probability.
Back to top