Subjective probabilities
Probabilities that are determined subjectively (for example, on the basis of judgment rather than statistical sampling).
Replacement Chain
A concept that views a capital investment as an indefinite commitment to a specific type of technology. The replacement chain concept can be used to allow the comparison of mutually exclusive investments with unequal lives.
Underlying debt
Municipal bonds issued by government entities but under the control of larger government entities and for which the larger entity shares the credit responsibility.
Mark Berch: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.
Efficient market
Market in which prices correctly reflect all relevant information.
Crash
Dramatic loss in market value. The last great crash was in 1929. Some refer to October 1987 as a crash but the market return for the entire year of 1987 was positive. Mark Berch
Futures commission merchant (FCM)
A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of futures contracts, subject to the rules of a futures exchange and, who, in connection with such solicitation or acceptance of orders, accepts any money or securities to provide margin for any resulting trades or contracts. The FCM must be licensed by the CFTC. Related: Commission house, omnibus account.
