Category: Financial Terms

Depository Trust and Clearing Corporation (DTCC) Overview The Depository Trust and Clearing Corporation (DTCC) is the primary clearing, settlement, and information-services provider for U.S. securities markets. Established as a holding company in 1999, DTCC centralizes and automates post-trade processes through subsidiaries such as the Depository Trust Company (DTC) and the National Securities Clearing Corporation (NSCC)….

Depository Transfer Check: Definition, How It Works, and Benefits What is a Depository Transfer Check (DTC)? A depository transfer check (DTC), also called a depository transfer draft, is an instrument used by a designated collection or concentration bank to consolidate and deposit a company’s daily receipts from multiple locations. It resembles a personal check but…

Understanding Depositary Receipts Key takeaways * Depositary receipts (DRs) are negotiable certificates issued by banks that represent shares of foreign companies and trade on local exchanges. * American Depositary Receipts (ADRs) let U.S. investors buy foreign stocks in U.S. dollars; Global Depositary Receipts (GDRs) serve a similar role for other markets. * DRs simplify access…

Depository: Definition, Types, and How They Work A depository is a facility or institution that accepts and safeguards assets—most commonly money or securities—and helps facilitate their transfer and trading. Depositories can be banks, credit unions, savings institutions, central securities depositories, vaults, or other organizations that hold assets for safekeeping and provide services such as settlement,…

Deposition: Meaning, Purpose, and How It Works A deposition is sworn testimony given outside of court during the discovery phase of a lawsuit. An authorized officer (typically a court reporter) records the questions and answers, producing a written transcript—and sometimes a video—that can be used at trial. Key takeaways Depositions provide a preview of evidence…

Deposit Slip A deposit slip is a form used to record details of money deposited into a bank account. It identifies the depositor, date, account number, and the breakdown of cash and checks so the bank can credit the correct account and create a transaction record. What a deposit slip includes Depositor name (sometimes optional)…

Deposit Multiplier The deposit multiplier (also called the deposit expansion multiplier or simple deposit multiplier) measures the maximum amount of checkable deposits a banking system can create for each unit of reserves held. It arises from fractional reserve banking: banks hold a fraction of deposits as reserves and lend out the remainder, which then becomes…

Deposit/Withdrawal at Custodian (DWAC) Key takeaways DWAC is an electronic service from the Depository Trust Company (DTC) that moves securities between brokers/custodial banks and transfer agents without physical certificates. It uses the FAST (Fast Automated Securities Transfer) program to speed settlement and reduce costs and risk. DWAC differs from the Direct Registration System (DRS): DWAC…

Deposit Explained: Definition, Types, and Examples What is a deposit? A deposit is money transferred to another party for safekeeping or as security. Commonly, it refers to funds placed in a bank or credit union account. It can also mean a partial payment or collateral required to secure goods, services, rentals, or financial contracts. Explore…

Depletion: Definition, How It Works, and Methods Depletion is an accrual accounting technique that allocates the capitalized cost of extracting natural resources—such as timber, minerals, oil, and gas—over the periods in which those resources are produced and sold. Like depreciation and amortization, depletion is a non-cash expense that reduces the carrying value of an asset…

What Is a Dependent? A dependent is someone who relies on another person for financial support. For tax purposes, a dependent is either a qualifying child or a qualifying relative as defined by the IRS. Claiming a dependent can make you eligible for tax benefits such as the Child Tax Credit, Earned Income Tax Credit,…

Dependent Care Benefits: Meaning, How It Works Dependent care benefits are employer-provided programs and tax provisions that help employees cover the costs of caring for dependents—commonly young children or disabled family members. These benefits can include flexible spending accounts (FSAs), tax credits, and paid leave, and they reduce the after-tax cost of care or the…

Dependency Ratio — Definition and Guide The dependency ratio is a demographic measure that compares the number of dependents in a population to the number of people of typical working age. It helps assess the relative economic burden on the workforce to support non-working-age groups. Key point * Dependents are usually defined as people aged…

Understanding Denomination What is a denomination? A denomination is the monetary unit or face value assigned to a financial instrument. It applies to currency (coins and banknotes), securities (bonds, stocks), and other assets that carry a stated value. Denominations determine: The unit in which a transaction is priced (for example, U.S. dollar–denominated bonds). The face…

What is demutualization? Demutualization is the process by which a mutual company — a business owned by its customers or members (for example, many insurance companies, mutual savings institutions, and some credit unions) — converts into a publicly traded stock company owned by shareholders. The conversion replaces member ownership rights with shareholder equity, often involving…

Understanding Demonetization: Process, Examples, and Economic Impact Demonetization is the official withdrawal of a currency’s legal tender status. It directly alters the medium of exchange used in an economy and is typically pursued to stabilize a currency, curb inflation, reduce illicit financial activity, or modernize payment systems. Because it affects everyday transactions, demonetization can produce…

Demographics Demographics are statistical descriptions of a population’s characteristics. They summarize who people are and how groups are changing over time, providing essential information for public policy, business strategy, market research, and academic study. Key takeaways Demographic data describe populations using variables such as age, sex/gender, income, education, race/ethnicity, employment, and household composition. Governments use…

What Is the Demographic Dividend, and How Does It Work? Key takeaways A demographic dividend is the potential economic boost that follows a change in a country’s age structure—typically when fertility and mortality fall and the share of working‑age people rises relative to dependents. The dividend works through higher labor supply, greater savings, and increased…

Dematerialization (DEMAT) Dematerialization is the process of replacing physical securities certificates with electronic records. Instead of holding paper stock certificates, investors hold securities in electronic form—often in a DEMAT account—so ownership and transfers are recorded digitally. How it works Securities are registered and transferred electronically through depositories (for example, the Depository Trust Company in the…

Demand Theory What demand theory explains Demand theory is a core microeconomic principle that describes how consumers’ willingness and ability to buy goods and services affects market prices and quantities. It focuses on the demand side of the market and underpins the familiar downward-sloping demand curve: as price rises, quantity demanded tends to fall (all…

Demand Shock: Definition, Causes, Impact, and Examples What is a demand shock? A demand shock is a sudden, unexpected event that sharply increases or decreases demand for a good or service. A positive demand shock raises demand—often creating shortages and upward pressure on prices—while a negative demand shock reduces demand, potentially producing excess supply and…

Demand Schedules A demand schedule is a table that lists the quantity of a good or service consumers are willing to buy at different price levels. When plotted, the schedule produces a demand curve that illustrates how quantity demanded varies with price. Key takeaways A demand schedule shows quantity demanded at specific prices and can…

Demand-Pull Inflation Definition Demand-pull inflation occurs when aggregate demand for goods and services in an economy exceeds aggregate supply, causing a general rise in prices. Economists often describe this as “too many dollars chasing too few goods.” How it works When consumer demand grows faster than companies can increase production, shortages develop and firms raise…

Demand for Labor: Definition, Key Concepts, and Economic Role What is demand for labor? Demand for labor is a derived demand: firms hire workers because they need labor to produce goods and services that consumers buy. A firm’s demand for labor depends on the real wage it must pay and the expected additional revenue that…

Price Elasticity of Demand Price elasticity of demand measures how sensitive the quantity demanded of a good or service is to a change in its price. It expresses the percentage change in quantity demanded resulting from a one-percent change in price. Formula and interpretation Price elasticity of demand (PED) = (% change in quantity demanded)…

Demand Drafts: A Secure Prepaid Bank Payment Key takeaways * A demand draft (DD) is a prepaid bank instrument that transfers funds to a payee without requiring the drawer’s signature. * Because funds are debited when the draft is issued, DDs generally provide a guaranteed form of payment and reduce the risk of bouncing. *…

Demand Deposit What it is A demand deposit is a bank account from which funds can be withdrawn at any time without advance notice. Common examples are checking accounts and many savings accounts. Because the money is immediately accessible, these accounts prioritize liquidity over high interest. How it works Account holders can withdraw cash, use…

Demand Curve Key takeaways A demand curve shows how the quantity demanded of a good varies with its price. Price is typically on the vertical (y) axis and quantity on the horizontal (x) axis; the curve usually slopes downward from left to right (law of demand). Price elasticity measures how responsive quantity demanded is to…

Demand: How It Works and What Drives It Key takeaways * Demand is consumers’ willingness and ability to buy goods or services at various prices. * The law of demand describes an inverse relationship between price and quantity demanded. * Demand can refer to market demand for a single good or aggregate demand for all…

Delta Neutral What is delta neutral? A delta-neutral portfolio has a total delta of zero. Delta measures how much an option’s price changes for a $1 move in the underlying asset. By combining positions with positive and negative deltas, traders can neutralize directional exposure and focus on other drivers of option value (time decay, volatility)….

Delta Hedging Delta hedging is an options strategy that neutralizes directional exposure to an underlying asset by offsetting an option position’s delta with trades in the underlying security (or other options). The goal is a delta-neutral position so small moves in the underlying have minimal impact on the position’s value. Key takeaways Delta measures how…

Delta Key takeaways Delta (Δ) measures how much a derivative’s price changes for a $1 move in its underlying asset. Call option deltas range from 0 to +1; put option deltas range from 0 to −1. Delta can be interpreted as a hedge ratio, a measure of directional risk, and (approximately) the probability an option…

Delphi Method The Delphi Method is a structured forecasting and decision-making technique that builds consensus among a panel of experts through multiple rounds of anonymous questionnaires and controlled feedback. Key takeaways Experts answer several rounds of questionnaires anonymously. After each round, responses are aggregated and shared with the group, allowing participants to revise their answers….

Delivery Versus Payment (DVP) What is DVP? Delivery versus payment (DVP) is a securities settlement method that ensures securities are delivered only when the corresponding payment has been made. From the buyer’s perspective it’s called DVP; from the seller’s perspective it’s commonly referred to as receive versus payment (RVP). The purpose is to eliminate the…

Delivered Ex-Ship (DES) Overview Delivered Ex-Ship (DES) was an Incoterm used in international shipping contracts that required the seller to deliver goods to an agreed port of destination, bearing all costs and risks until the goods arrived at that port. The seller’s obligation ended once the goods were delivered on board the ship at the…