Page 54 - PRIAA Glossary

DISTRIBUTED GENERATION
A system characterised by smaller, geographically dispersed and interconnected generators, rather than one central generator. It is used for the reduction in the loss of energy due to transmission.
DISTRIBUTION WATERFALL
The methodology by which a fund chooses to disburse capital amongst its investors. It also dictates the order and preference in which the funds are to be distributed amongst the participants as underlying investments are sold.
DIVERSIFICATION
In an effort to minimise risk (portfolio returns volatility), portfolio managers select investments from differing asset classes, countries, currencies or sectors when constructing their portfolio to ensure that the returns from each investment are minimally correlated to each other, thereby reducing the overall volatility of returns for the combined portfolio.
DIVIDEND
A payment made by a company, fund or institution that chooses to disburse profits/funds amongst its stakeholders. However, the amount of dividend may vary amongst the different stakeholders—not just in proportion to their stakes but also in reference to the category of their investments. Dividends are usually given as cash (cash dividend), but they can also take the form of stock (stock dividend).
DIVIDEND GROWTH
Of importance when determining the value of a stock using the dividend discount model, where the expected increase in dividend payouts can be reflected in a higher price of the stock (dividend rate discounted by the excess of company internal growth rate less dividend growth rate).
DIVIDEND SWAP
A fixed-term contract between two parties where one party will make an interest rate payment for each interval and the other party will pay the total dividends received as pay-out by a selected underlying asset.
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