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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Bought deal

Security issue where one or two underwriters buy the entire issue.

Clearing member

A member firm of a clearing house. Each clearing member must also be a member of the
exchange. Not all members of the exchange, however, are members of the clearing organization. All trades of
a non-clearing member must be registered with, and eventually settled through, a clearing member.

Edge corporations

Specialized banking institutions, authorized and chartered by the Federal Reserve Board
in the U.S., which are allowed to engage in transactions that have a foreign or international character. They
are not subject to any restrictions on interstate banking. Foreign banks operating in the U.S. are permitted to
organize and own and Edge corporation.

Financial engineering

Combining or dividing existing instruments to create new financial products.

Foreign Sales Corporation (FSC)

A special type of corporation created by the Tax Reform Act of 1984 that
is designed to provide a tax incentive for exporting U.S.-produced goods.

Locked market

A market is locked if the bid = ask price. This can occur, for example, if the market is
brokered and brokerage is paid by one side only, the initiator of the transaction.

incremental analysis

a process of evaluating changes that
focuses only on the factors that differ from one course of
action or decision to another

steady-state phase

the point at which the learning curve becomes flat and only minimal improvements in performance are achieved

theoretical capacity

the estimated maximum production or
service volume that a firm could achieve during a period

Accelerationist Hypothesis

Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.

Protectionism

Policy of tariffs or import quotas to protect domestic producers from foreign competition.

Contribution Rate

The percentage tax charged by a state to an employer to
cover its share of the state unemployment insurance fund.

Adjusted EBITDA

Conventional earnings before interest, taxes, depreciation, and amortization (EBITDA) revised to exclude the effects of mainly nonrecurring items of revenue or gain and expense or loss.

Bogey

The level of earnings in an incentive compensation or bonus plan below which no incentive
compensation or bonus is earned. Also termed a floor.

Grace Period

Length of time during which repayments of loan principal are excused. Usually occurs at the start of the loan period.