Financial Terms Main Page

This site contains comprehensive definitions for a wide range of terms that cover topics such as financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit...

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Monthly Financial Term Picks:

Currency future

A financial future contract for the delivery of a specified foreign currency.

Debt securities

IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
other instruments.

Expected future cash flows

Projected future cash flows associated with an asset of decision.

Positive covenant (of a bond)

A bond covenant that specifies certain actions the firm must take. Also called
and affirmative covenant.

Standstill agreements

Contracts where the bidding firm in a takeover attempt agrees to limit its holdings
another firm.

Tax shield

The reduction in income taxes that results from taking an allowable deduction from taxable income.

Time-weighted rate of return

Related: Geometric mean return.

Underwriting

Acting as the underwriter in a purchase and sale.

Duration

The weighted average of the time until maturity of each of the
expected cash flows of a debt security

capital budgeting

a process of evaluating an entity’s proposed
long-range projects or courses of future activity for
the purpose of allocating limited resources to desirable
projects

continuous budgeting

a process in which there is a rolling
twelve-month budget; a new budget month (twelve months
into the future) is added as each current month expires

Put

An option to sell a stipulated amount of stock or securities within a
specified time and at a fixed exercise price. See Call.

Transfer price

The price at which one part of a company sells a product or service to
another part of the same company.

financial slack

Ready access to cash or debt financing.

internally generated funds

Cash reinvested in the firm; depreciation plus earnings not paid out as dividends.