NASD National Association of Securities Dealers

National Association of Securities Dealers A self regulating organization of the US securities industry.

National Securities Markets Improvement Act 1996 law that liberalized regulatory limitations on the activities of hedge funds.

natural numbers The set of "counting" numbers: {1, 2, 3, …}.

NAV Net asset value.

negative definite matrix A square matrix, all of whose eigenvalues are real and negative.

negative semidefinite matrix A square matrix, all of whose eigenvalues are real and nonpositive.

net asset value The value of a mutual fund's holdings (assets minus liabilities) divided by the number of shares outstanding.

net return Has two possible meanings. Most common is as a metric of return taking into account items such as management fees, custody fees and trading costs. Less common is as an alternative word for simple return.

netting The offsetting of cash flows or other obligations against each other.

nexus of contracts theory of the firm The contracts theory of the firm.

no arbitrage condition A condition where prices in  market offer no opportunities for arbitrage.

no-load fund A mutual fund that charges no load and whose 12b-1 fee does not exceed 25 basis points.

nominal par value A par value significantly below the intended issuance price of a security.

nominal yield A bond's yield calculated as annual coupon divided by par value.

non-cumulative preferred stock Preferred stock for which missed dividends are forfeited.

non-linear derivative A derivative instrument whose payoff diagram in highly non-linear.

non-linear position An instrument or position whose payoff or market value as a function of some underlier is highly non-linear.

nonsingular random vector A random vector with nonsingular covariance matrix.

normal distribution A continuous probability distribution whose probability density function has a "bell" shape.

note A medium term coupon-bearing debt instrument.

notice date The date on which a party that is short a future gives notice of delivery.

notice of delivery Notice to a futures exchange of intent to close a short futures position by delivery.

notional amount The quantity of an underlier to which a derivative instrument applies.

notional limit A risk limit based upon notional amount as a crude exposure metric.

numeraire Any unit of account used in financial engineering.

numerical method A methodology for constructing numerical solutions.

numerical solution An approximation that can be evaluated in a finite number of standard operations.