Financial Terms Main Page

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Feasible set of portfolios

The collection of all feasible portfolios.

Hit

A dealer who agrees to sell at the bid price quoted by another dealer is said to "hit" that bid.

Modigliani and Miller Proposition II

A proposition by Modigliani and Miller which states that the cost of
equity is a linear function of the firm's debt-equity-ratio.

Note issuance facility (NIF)

An agreement by which a syndicate of banks indicates a willingness to accept
short-term notes from borrowers and resell these notes in the Eurocurrency markets.

Other current assets

Value of non-cash assets, including prepaid expenses and accounts receivable, due
within 1 year.

Planning horizon

The length of time a model projects into the future.

Substitution swap

A swap in which a money manager exchanges one bond for another bond that is similar in
terms of coupon, maturity, and credit quality, but offers a higher yield.

RETAINED EARNINGS

Profits a company plowed back into the business over the years. Last January’s retained earnings, plus the net income or profit that a company made this year (which is calculated on the income statement), minus dividends paid out, equals the retained earnings balance on the balance sheet date.

Bill of materials

A listing of all the materials and quantities that go to make up a completed product.

Strategic management accounting

The provision and analysis of management accounting data about a business and its competitors, which is of use in the development and monitoring of strategy (Simmonds).

Lambda

The percentage change in the price of an option relative to a 1%
change in the price of the underlying security. Also known as Elasticity.

Goodhart's Law

Whatever measure of the money supply is chosen for application of the monetarist rule will soon begin to misbehave.

Uniformed Services Employment and Reemployment Rights Act of 1994

A federal act that minimizes the impact on people serving in the Armed Forces
when they return to civilian employment by avoiding discrimination and increasing
their employment opportunities.

Solvent

State of being able to meet maturing obligations as they come due.

credit bureau

An organization that provides financial institutions with credit information concerning existing or potential customers who are looking to obtain credit services.