Narrowing the spread
Also called "closing the market." Action taken by a dealer to reduce the difference
between bids and offers.
NASDAQ
See National Association of Securities Dealers Automated Quotations.
National Association of Securities Dealers Automated Quotations (NASDAQ)
A computerized network by which NASD firms can communicate bids and offers for stocks and bonds traded over-the-counter. These securities are NOT listed on an exchange.
National Futures Association (NFA)
An industry-wide, industry-supported, self-regulatory organization for futures and options markets. The primary responsibilities of the NFA are to enforce ethical standards and customer protection rules, screen future professionals for membership, audit and monitor professionals for financial and general compliance rules and provide for arbitration of futures-related disputes.
National Securities Clearing Corporation (NSCC)
Securities clearing organization through which brokerages, exchanges and other clearing corporations reconcile accounts with one another.
Near money
A bond that is close to its maturity date.
The futures contract month closest to expiration. Also referred to as spot month.
Negative convexity
A characteristic of REMICs and other callable or pre-payable securities that causes investors to have their principal returned sooner than expected in a declining interest rate environment or later than expected in a rising interest rate environment. In the former scenario, investors may have to reinvest their funds at lower rates ("call risk"); in the latter, they may miss an opportunity to earn higher rates ("extension risk"). Convexity refers to the change in price sensitivity of a security as the prevailing level of interest rates change. Option-embedded securities can have negatively convex characteristics, such that as interest rates fall, the percentage price change of an option-embedded security for a given shift in rates declines as the likelihood of the bond being called increases.
Negative yield curve
A chart in which the yield level is plotted on the vertical axis and the term to maturity of debt instruments of similar creditworthiness is plotted on the horizontal axis. The yield curve is positive when long-term rates are higher than short-term rates. The yield curve is negative or inverted when long-term rates are lower than short-term rates.
Net operating income (NOI)
Net operating income is computed as revenue less expenses before federal taxes plus non-cash expenses. It is a key indicator of financial strength.
Net present value
Discounted or present value of all cash inflows and outflows from an investment at a given discount rate. See present value and discount rate.
Net price
The total amount an investor pays for a bond.
New-issue market
Market for new issues of municipal bonds and notes.
New issue
Bonds offered to the public for the first time.
New money
The amount of proceeds greater than the amount of the bonds being refunded.
New York Stock Exchange (NYSE)
The oldest and largest stock exchange in the U.S., located on Wall Street in New York City. Responsible for setting policy, supervising member activities, listing securities, overseeing the transfer of member seats, and evaluating applicants. Also called Big Board.
Next coupon
Date the security will pay its next coupon.
Noncallable debt
A bond that cannot be called either for redemption by or at the option of the issuer before its specified maturity date.
Nonperforming asset
An asset such as a mortgage that is not currently accruing interest or on which interest is not being paid.
Short-term debt securities promising to pay specified amounts of money, secured by specified sources of future revenues, such as taxes, federal and state aid payments and bond proceeds. In the case of Treasury securities, a debt security with a maturity of one to ten years.
Notice day
According to Chicago Board of Trade rules, the second day of the three-day delivery process when the clearing corporation matches the buyer with the oldest reported long position to the delivering seller and notifies both parties. See first notice day.
Notice of sale
The announcement of a sale of a municipal bond at competitive bidding. The announcement will include the place, date and time of the sale, the principal amount and other information about the issue.
Notional principal amount
The hypothetical amount on which interest rate swap payments are based. The notional principal amount in an interest rate swap generally is not paid or received by either party.