Guide to Analysing Companies

Traveller’s cheque
A clever method of payment for travellers invented towards the
end of the 19th century. It relies on a double signature for secu-
rity: the owner signs once when he or she buys the cheque at
home, and again when it is cashed abroad. The recipient only
has to check that the signatures match. The traveller’s cheque
has also proved useful in countries that have a poor banking
system (as in parts of Africa, for example), or that are too large
to have a single, nationwide payments system (like the United
States).
The issuers of traveller’s cheques make a small charge per
cheque for their services. Most of the benefit to the issuer,
however, comes from the fact that cheques are often bought
and held for some months before they are cashed. During that
time the issuer has the use of the chequeholder’s money, at no
extra cost.
Treasury bill
A short-term debt instrument issued by a government,
usually with a maturity of three months but sometimes for up
to two years. Treasury bills are traditionally sold at a discount
to their face value, and their yield is a leading indicator of in-
terest-rate trends. In the UK, banks are the biggest holders of
Treasury bills. In the United States, Treasury bills are more
widely held. Because of their safety, liquidity and the fact that
there is an active secondary market in them, Treasury bills
are popular with corporate treasurers as well as banks and other
government agencies. The federal reserve buys and sells
Treasury bills to help it shape monetary policy. options
and futures on Treasury bills are also actively traded.
Triple witching hour
The time when the expiry dates of three types of US finan-
cial instruments coincide:
T
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 stock index futures;
 options on these contracts;
 options on individual stocks in the index.
Such simultaneity can, and has, moved markets, sometimes
dramatically. To relieve the pressure on the financial system, ex-
changes that trade in derivatives have spread the time when
the contracts expire. Instead of all coming to an end at the same
hour on the same day, some now change at the beginning of the
trading session and some at the end. (See also witching
hour.)