Business Glossary: F

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F Fifth letter of a Nasdaq stock symbol specifying that the issues is a foreign company.

FAC See: Federal Advisory Council

FAS Abbreviation for the Incoterm Free Alongside Ship.

FASB See: Financial Accounting Standards Board

FCA Abbreviation for the Free Carrier

FCIA See: Foreign Credit Insurance Association

FCM See: Futures commission merchant

FDI See: Foreign direct investment

FDIC See: Federal Deposit Insurance Corporation

FFO See: Funds from operations

FIRREA See: Financial Institutions Reform, Recovery and Enforcement Act of 1989

FI The two-character ISO 3166 country code for FINLAND.

FIM The ISO 4217 currency code for the Finnish Markka.

FJ The two-character ISO 3166 country code for FIJI.

FJD The ISO 4217 currency code for the Fijian Dollar.

FK The two-character ISO 3166 country code for FALKLAND ISLANDS (MALVINAS).

FKP The ISO 4217 currency code for the Falkland Islands Pound.

FO The two-character ISO 3166 country code for FAROE ISLANDS.

FOK See: Fill or kill order

FM The two-character ISO 3166 country code for MICRONESIA, FEDERATED STATES OF.

FPA Abbreviation for the insurance term Free of Particular Average

FR The two-character ISO 3166 country code for FRANCE.

FRA See: Forward rate agreement

FRF The ISO 4217 currency code for the French Franc.

FRN See: Floating-rate note

FSC See: Foreign Sales Corporation

FX Rate See:Foreign exchange rate

Face-amount certificate A debt security issued by face amount. The holder makes payments periodically to the issues, and the issuer promises to pay the purchaser the face value at maturity or the surrendered value if the security is presented by the maturity specified in the certificate.

Face value See: Par value

Facilitation The process of providing a market for a security. Normally, this refers to bids and offers made for large blocks of securities, such as those traded by institutions. Listed options may be used to offset part of the risk assumed by the trader who is facilitation the large block order. See also: Hedge ratio.

Factor A financial institution that buys a firm's accounts receivable and collects the accounts.

Factor analysis A statistical procedure that seeks to explain a certain phenomenon, such as the return on a common stock, in terms of the behavior of a set of predictive factors.

Factor model A way of decomposing the forces that influence a security's rate of return into common and firm-specific influences.

Factor portfolio A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of zero on any other factors.

Factor Return The return attributable to a particular common factor. We decompose asset returns into a common factor component, based on the asset's exposures to common factors times the factor returns, and a specific return.

Factoring Sale of a firm's accounts receivable to a financial institution known as a factor.

Fade Refers to over-the-counter trading. Fill another OTC dealer's bid for or offer of stock.

Fail A deal is said to fail if on the settlement date either the seller does not deliver securities in proper form or the buyer does not to deliver funds in proper form.

Fair-and-equitable test A set of requirements for a plan of reorganization to be approved by the bankruptcy court.

Fair game An investment prospect that has a zero risk premium.

Fair market price Amount at which an asset would change hands between two parties, that both have knowledge of the relevant facts. Also referred to as market price.

Fair price The equilibrium price for futures contracts. Also called the theoretical futures price, which equals the spot price continuously compounded at the cost of carry rate for some time interval. In the context of corporate goverance, Fair-Price provisions limit the range of prices a bidder can pay in two-tier offers. They typically require a bidder to pay to all shareholders the highest price paid to any during a specified period of time before the commencement of a tender offer and do not apply if the deal is approved by the board of directors or a supermajority of the target's shareholders. The goal of this provision is to prevent pressure on the target's shareholders to tender their shares in the front end of a two-tiered tender offer, and they have the result of making such and acquisition more expensive. A majority of states have fair price laws.

Fair price provision See:Appraisal rights

Fair rate of return The rate of return that state governments allow a public utility to earn on its investments and expenditures. Utilities then use these profits to pay investors and provide service upgrades to their customers.

Fair value In the context of futures, the equilibrium price for futures contracts. Also called the theoretical futures price, which equals the spot price continuously compounded at the cost of carry rate for some time interval. More generally, fair value for any asset simply refers to the perception that it is neither underpriced (too cheap) nor overpriced (too expensive).

Fairness opinion An investment banker's professional opinion as to the price an acquiring firm's is offering in a takeover or merger.

Fall Down In the context of general equities, may not be able to produce as indicated in one's advertised market, due to less help (than anticipated) from other parties or due to changing market conditions.

Fall out of bed A sudden drop in a stock's price resulting from failed or poor business deals gone bad or falling through.

Fallen angels Bonds that at the time of issue were considered investment grade but that have dropped below that rating over time.

Fallout risk A type of mortgage pipeline risk that is generally created when the terms of the loan to be originated are set at the same time the sale terms are established. The risk is that either of the two parties, borrower or investor, fails to close and the loan "falls out" of the pipeline.

Fama, Eugene F. Finance professor at the University of Chicago. Developer of the Efficient Markets Hypothesis.

Family of funds Different mutual funds offered by one investment company.

Far month Used in the context of option or futures to refer to the trading month of the contract that is farthest away. Antithesis of nearest month.

Farther out; farther in Used in the context of options to refer to the relative length of option contract maturities.

FASB No. 8 U.S. accounting standard that requires US firms to translate their foreign affiliates' accounts by the temporal method; that is reporting gains and losses from currency fluctuations in current income. It was in effect between 1975 and 1981 and became the most controversial accounting standard in the US It was replaced by FASB No. 52 in 1981.

FASB No. 52 The US accounting standard that replaced FASB No. 8. US companies are required to translate foreign accounts in terms of the current rate and report the changes from currency fluctuations in a cumulative translation adjustment account in the equity section of the balance sheet.

Fast market Excessively rapid trading in a specific security that causes a delay in the electronic updating of its last sale and market conditions, particularly in options.

Favorable Balance of Trade The value of a nation's exports in excess of the value of its imports.

Favorable trade balance Condition that total exports of a nation exceed total imports, creating a net export.

Feasible portfolio A portfolio that an investor can construct, given the assets available.

Feasible set of portfolios The collection of all feasible portfolios.

Feasible target payout ratios Payout ratios that are consistent with the level of excess funds available to make cash dividend payments.

FED Pass A Federal Reserve action adding more reserves to the banking system, increasing the money available for lending, and making credit easier to attain.

Federal Advisory Council (FAC) Advisory group made up of one representative (in most cases a banker) from each of the 12 Federal Reserve districts. Established by the Federal REserve Act, the council meets periodically with the Board of Governors to discuss business and financial conditions and make recommendations.

Federal agency bond Fixed-income security issued by a government agency such as FNMA.

Federal agency securities Securities issued by corporations and agencies created by the US government, such as the Federal Home Loan Bank Board and Ginnie Mae.

Federal Agricultural Mortgage Corporation (Farmer Mac) A federal agency chartered in 1988 to provide a secondary market for farm mortgage loans.

Federal credit agencies Agencies of the federal government set up to supply credit to various classes or institutions and individuals, e.g., S&Ls, small business firms, students, farmers, and exporters.

Federal deficit (surplus) When federal government expenditures are exceeded by federal government revenue.

Federal Farm Credit Bank An institution created by the government with the purpose of uniting the financing activities of the Federal Land Banks, the Federal Intermediate Credit Banks, and the banks for cooperatives. See: Federal Farm Credit System.

Federal Farm Credit System A system chartered in 1971 through the farm credit act providing farmers with credit services through a Federal Land Bank, a Federal Intermediate Credit Bank, and a bank for cooperatives. See: Federal Farm Credit Bank.

Federal Deposit Insurance Corporation (FDIC) A federal institution that insures bank deposits.

Federal Financing Bank A federal institution that lends to a wide array of federal credit agencies funds it obtains by borrowing from the US Treasury.

Federal funds Noninterest-bearing deposits held in reserve for depository institutions at their district Federal Reserve Bank. Also, excess reserves lent by banks to each other.

Federal funds market The market in which banks can borrow or lend reserves, allowing banks temporarily short of their required reserves to borrow reserves from banks that have excess reserves.

Federal funds rate The interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. The Fed funds rate, as it is called, often points to the direction of US interest rates. The most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate.

Federal gift tax A federal tax imposed on assets conveyed as gifts to individuals.

Federal Home Loan Banks The institutions that regulate and lend to savings and loan associations. The Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-à-vis member commercial banks.

Federal Home Loan Mortgage Corporation (FHLMC) See: Freddie Mac

Federal Housing Administration (FHA) Federally sponsored agency chartered in 1934 whose stock is currently owned by savings institutions across the United States. The agency buys residential mortgages that meet certain requirements, sells these mortgages in packages, and insures the lenders against loss.

Federal Housing Finance Board (FHFB) US government agency chartered in 1989 to assume the responsibilities formerly held by the Federal Home Loan Bank system.

Federal Intermediate Credit Bank A bank sponsored by the federal government to provide funds to institutions making loans to farmers.

Federal intrafund transactions Intrabudgetary transactions in which payments and receipts both occur within the same federal fund group.

Federal Land Bank A bank administered under the US Farm Credit Administration that provides long-term mortgage credit to farmers for agriculture-related expenditures.

Federal margin call A broker's demand upon a customer for cash, or securities needed to satisfy the required Regulation T down payment for a purchase or short sale of securities.

Federal Maritime Commission (FMC) A U.S. government agency that regulates and administers the shipping industry. This agency also grants freight forwarder licenses.

Federal National Mortgage Association (Fannie Mae) A publicly owned, government-sponsored corporation chartered in 1938 to purchase mortgages from lenders and resell them to investors. Known by the nickname Fannie Mae, it packages mortgages backed by the Federal Housing Administration, but also sells some nongovernment-backed mortgages.

Federal Open Market Committee (FOMC) The body that is responsible for setting the interest rates and credit policies of the Federal Reserve System.

Federal Reserve Act of 1913 Federal legislation that established the Federal Reserve System.

Federal Reserve Bank One of the 12 member banks constituting the Federal Reserve System that is responsible for overseeing the commercial and savings banks of its region to ensure their compliance with regulation.

Federal Reserve District (Reserve district or district) One of the twelve geographic regions served by a Federal Reserve Bank.

Federal Reserve Board (FRB) The seven-member governing body of the Federal Reserve System, which is responsible for setting reserve requirements, and the discount rate, and making other key economic decisions.

Federal Reserve float Float is checkbook money that appears on the books of both the check writer (the payor) and the check receiver (the payee) while a check is being processed. Federal Reserve float is float present during the Federal Reserve's check collection process. To promote efficiency in the payments system and provide certainly about the date that deposited funds will become available to the receiving depository institutions (and the payee), the Federal Reserve credits the reserve accounts of banks that deposit check according to a fixed schedule. However, processing certain checks and collecting funds from the banks on which these checks are written may take more time than the schedule allows. Therefore, the accounts of some banks may be credited before the Federal Reserve is able to collect payment from other banks, resulting in Federal Reserve float.

Federal Reserve notes Issues by the US government to the public through the Federal Reserve Banks and their member banks. They represent money owed by the government to the public. Currently, the item "Federal Reserve notes amounts outstanding" consists of new series issues. The Federal Reserve note is the only class of currency currently issued.

Federal Reserve System The monetary authority of the US, established in 1913, and governed by the Federal Reserve Board located in Washington, D.C. The system includes 12 Federal Reserve Banks and is authorized to regulate monetary policy in the US as well as to supervise Federal Reserve member banks, bank holding companies, international operations of US banks, and US operations of foreign banks.

Federal Savings and Loan Association An institution chartered by the federal government whose primary function is to collect savings deposits and to provide mortgage loans.

Federally related institutions Arms of the federal government exempt from SEC registration whose securities are backed by the full faith and credit of the US government (with the exception of the Tennessee Valley Authority).

Fedwire A wire transfer system for high-value payments operated by the Federal Reserve System.

Fee A fixed amount or a percentage of an underwriting or principal.

Fee table Schedule found in a mutual fund's prospectus that discloses and expense illustrates the expenses and fees a shareholder will incur.

Fee-and-commission compensation See: Fee-based compensation

Fee-based compensation Payment to a financial adviser of a set hourly rate, or an agreed-upon percentage of assets under management, for a financial plan. When the plan is implemented, the adviser may also receive commission on some or all of the investment products purchased, which would be fee-and-commission compensation.

Fee-only compensation Payment to a financial adviser of a set hourly rate, or an agreed-upon percentage of assets under management, for a financial plan.

Feedback Systems An equation where the output becomes the input in the next iteration. This is much like a public address system where the microphone is placed next to the speakers generating feedback as the signal is looped through the PA system.

FHA prepayment experience The percentage of loans in a pool of mortgages outstanding at the origination anniversary, based on annual s