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Definition of Accountability
The process of satisfying stakeholders in the organization that managers have acted in the best interests of the stakeholders, a result of the stewardship function of managers, which takes place through accounting.
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
A federal Act expanding upon many of the insurance reforms created by
ADF (annuity discount factor)
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
fractional interest discount
the combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor.
PPF (periodic perpetuity factor)
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity.
Act of state doctrine
This doctrine says that a nation is sovereign within its own borders and its domestic
A market in which there is much trading.
Active portfolio strategy
A strategy that uses available information and forecasting techniques to seek a
The physical commodity underlying a futures contract. Cash commodity, physical.
The pool factor implied by the scheduled amortization assuming no prepayemts.
Present value of $1 paid for each of t periods.
Asset activity ratios
Ratios that measure how effectively the firm is managing its assets.
A guaranteed investment contract purchased with a single (one-shot) premium. Related:
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
A transaction where exchange is immediate, as contrasted to a forward contract, which
The market model applied to a single security. The slope of the line is a security's beta.
Refers to the fact that the merger of two firms decreases the probability of default on
The percentage of a given month's sales collected during the month of sale and each
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
A term of reference describing a unit of trading for a financial or commodity future. Also, the actual
The month in which futures contracts may be satisfied by making or accepting a delivery.
Rules set by the Chicago Board of Trade for determining the invoice price of each
Existing in actual fact although not by official recognition.
Present value of $1 received at a stated future date.
A bond portfolio management strategy that involves finding the lowest cost portfolio
A financial institution that buys a firm's accounts receivables and collects the debt.
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
A way of decomposing the factors that influence a security's rate of return into common and
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of
Sale of a firm's accounts receivable to a financial institution known as a factor.
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
A guaranteed investment contract where the credit rating is tied to some variable
A cash market transaction in which delivery of the commodity is deferred until after the
Forward forward contract
In Eurocurrencies, a contract under which a deposit of fixed maturity is agreed to
Agreement to buy or sell a set number of shares of a specific stock in a designated future
Futures contract multiple
A constant, set by an exchange, which when multiplied by the futures price gives
A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal in
Publicly owned stock in a firm is replaced with complete equity ownership by a
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
A contract that obligates a purchaser of a project's output to make cash
Highly leveraged transaction (HLT)
Bank loan to a highly leveraged firm.
The law of averages. The average outcome for many independent trials of an experiment
Transaction carried out between two units of the same corporation.
Manufactured housing securities (MHSs)
Loans on manufactured homes - that is, factory-built or
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Factoring arrangement that provides collection and insurance of accounts receivable.
Most distant futures contract
When several futures contracts are considered, the contract settling last.
A version of the capital asset pricing model derived by Merton that includes extramarket
Nearby futures contract
When several futures contracts are considered, the contract with the closest
Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the
Next futures contract
The contract settling immediately after the nearby futures contract.
Nexus (of contracts)
A set or collection of something.
Factoring arrangement that provides collection, insurance, and finance for accounts receivable.
A special case of the arbitrage pricing theory that is derived from the one-factor model by
Contracts which have been bought or sold without the transaction having been completed by
The contract that balances the three types of agency costs (contracting, monitoring, and
A contract that, in exchange for the option price, gives the option buyer the right, but not
Options contract multiple
A constant, set at $100, which when multiplied by the cash index value gives the
The supposition that investors overreact to unanticipated news, resulting in
The outstanding principal balance divided by the original principal balance with the result
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put
Present value factor
Factor used to calculate an estimate of the present value of an amount to be received in
Price impact costs
Related: market impact costs
A decline in prices following an advance. Opposite of rally.
Receivables balance fractions
The percentage of a month's sales that remain uncollected (and part of
The pool factor as reported by the bond buyer for a given amortization period.
Round-trip transactions costs
Costs of completing a transaction, including commissions, market impact
Security characteristic line
A plot of the excess return on a security over the risk-free rate as a function of
Set of contracts perspective
View of corporation as a set of contracting relationships, among individuals
Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as
Single factor model
A model of security returns that acknowledges only one common factor.
Structured arbitrage transaction
A self-funding, self-hedged series of transactions that usually utilize
Tactical Asset Allocation (TAA)
An asset allocation strategy that allows active departures from the normal
A contract that obligates the purchaser to take any product that is offered to it (and pay
Tax Reform Act of 1986
A 1986 law involving a major overhaul of the U.S. tax code.
Any transaction that is not tax-free to the parties involved, such as a taxable acquisition.
Term life insurance
A contract that provides a death benefit but no cash build-up or investment component.
Provides a death benefit only, no build-up of cash value.
Risk to a firm with known future cash flows in a foreign currency that arises from
The time, effort, and money necessary, including such things as commission fees and the
A loan extended by a bank for a specific purpose. In contrast, lines of credit and revolving
Transaction demand (for money)
The need to accommodate a firm's expected cash transactions.
A desire to hold cash for the purpose of conducting cash based transactions.
Turnkey construction contract
A type of construction contract under which the construction firm is
Black's zero-beta version of the capital asset pricing model.
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
Whole life insurance
A contract with both insurance and investment components: (1) It pays off a stated
A guaranteed investment contract purchased with deposits over some future designated
CASH FLOWS FROM FINANCING ACTIVITIES
A section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations.
CASH FLOWS FROM INVESTING ACTIVITIES
A section on the cashflow statement that shows how much cash came in and went out because of various investing activities like purchasing machinery.
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
A method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers.
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
Cost of manufacture
The cost of goods manufactured for subsequent sale.
The production resource that, as a result of scarce resources, limits the production of goods
The financial description of a business event.
activity based costing (ABC)
A relatively new method advocated for the
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
One of the three classes of cash flows reported in the
One of the three classes of cash flows reported in the
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