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Definition of All-or-none underwriting
An arrangement whereby a security issue is canceled if the underwriter is unable
All equity rate
The discount rate that reflects only the business risks of a project and abstracts from the
All or none
Requirement that none of an order be executed unless all of it can be executed at the specified price.
Total costs, explicit and implicit.
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
Any large principal payment due at maturity for a bond or loan with or without a a sinking
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
An option that gives the right to buy the underlying futures contract.
Call an option
To exercise a call option.
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An option contract that gives its holder the right (but not the obligation) to purchase a specified
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
decision allocation of invested funds between risk-free assets versus the risky portfolio.
Communication barrier between financiers (investment bankers) and traders. This barrier is
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
A provision that prohibits the company from calling the bond before a certain date. During this
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
Firm commitment underwriting
An undewriting in which an investment banking firm commits to buy the
With CMOs, the start of the cash flow cycle for the cash flow window.
Generally Accepted Accounting Principals (GAAP)
A technical accounting term that encompasses the
A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal in
The right of the homeowner to prepay, or call, the mortgage at any time.
The sale of an asset in exchange for a specified series of payments (the installments).
Internally efficient market
Operationally efficient market.
In the mortgage pipeline, risk that occurs when the originator commits loan terms to the
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
A demand for additional funds because of adverse price movement. Maintenance margin
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project
Non-parallel shift in the yield curve
A shift in the yield curve in which yields do not change by the same
Operationally efficient market
Also called an internally efficient market, one in which investors can obtain
A process whereby two companies in different countries borrow each other's currency for a
Parallel shift in the yield curve
A shift in the yield curve in which the change in the yield on all maturities is
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
Provisional call feature
A feature in a convertible issue that allows the issuer to call the issue during the noncall
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
An upward movement of prices. Opposite of reaction.
The risk of falling short of any investment target.
The tendency of small firms (in terms of total market capitalization) to outperform the
Small issues exemption
Securities issues that involve less than $1.5 million are not required to file a
Tactical Asset Allocation (TAA)
An asset allocation strategy that allows active departures from the normal
A short call option position in which the writer does not own shares of underlying stock
Acting as the underwriter in a purchase and sale.
The portion of the gross underwriting spread that compensates the securities firms that
For an insurance company, the difference between the premiums earned and the costs
A group of investment banks that work together to sell new security offerings to
Generic term for firms that buy, sell, and underwrite securities.
Wall Street analyst
Related: Sell-side analyst.
Stock that has fallen out of favor with investors; tends to have a low P/E (price to earnings ratio).
Yield to call
The percentage rate of a bond or note, if you were to buy and hold the security until the call date.
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
The process of spreading production overhead equitably over the volume of production of goods or services.
Allowance for doubtful accounts
A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
acid test ratio (also called the quick ratio)
The sum of cash, accounts receivable, and short-term marketable
generally accepted accounting principles (GAAP)
This important term
net income (also called the bottom line, earnings, net earnings, and net
A contract that gives the holder the right to buy an asset for a
assign based on the use of a cost driver, a cost predictor,
the systematic assignment of an amount to a recipient
approximated net realizable value at split-off allocation
a method of allocating joint cost to joint products using a
the assignment, using some reasonable basis,
when the incremental revenue from the sale of reworked defective units is greater than
mutually exclusive projects
a set of proposed capital projects from which one is chosen, causing all the others to be rejected
mutually inclusive projects
a set of proposed capital projects that are all related and that must all be chosen if the primary project is chosen
net realizable value at split-off allocation
a method of allocating joint cost to joint products that uses, as the proration base, sales value at split-off minus all costs necessary
physical measurement allocation
a method of allocating a joint cost to products that uses a common physical characteristic as the proration base
sales value at split-off allocation
a method of assigning joint cost to joint products that uses the relative sales values of the products at the split-off point as the proration basis; use of this method requires that all joint products
standard quantity allowed
the quantity of input (in hours or some other cost driver measurement) required at standard for the output actually achieved for the period
an agreement between two or more firms
a. An option to buy a certain quantity of a stock or commodity for a
A bond that allows the issuer to buy back the bond at a
The process of storing costs in one account and shifting them to other
Allowance for bad debts
An offset to the accounts receivable balance, against which
Generally accepted accounting principles
The rules that accountants follow when processing accounting transactions and creating financial reports. The rules are primarily
A reduction in a price that is allowed by the seller, due to a problem
Right to buy an asset at a specified exercise price on or before the exercise date.
Bond that may be repurchased by the issuer before maturity at specified call price.
generally accepted accounting principles (GAAP)
Procedures for preparing financial statements.
internally generated funds
Cash reinvested in the firm; depreciation plus earnings not paid out as dividends.
mutually exclusive projects
Two or more projects that cannot be pursued simultaneously.
Capital Consumption Allowance
Tax deductions that businesses can claim when they spend money on investment goods.
Fallacy of Composition
The incorrect conclusion that something that is true for an individual is necessarily true for the economy as a whole.
Institutionally Induced Unemployment
Unemployment due to institutional phenomena such as the degree of labor force unionization, the level of discrimination, and government policies such as unemployment insurance programs, minimum wages, or regulations on business.
Roth IRA. An IRA account whose earnings are not taxable at all under certain
Allowance for Doubtful Accounts
An estimate of the uncollectible portion of accounts receivable
Generally Accepted Accounting Principles (GAAP)
A common set of standards and procedures
A contra- or reduction account to deferred tax assets.
A document attached to a pallet, showing the description, part number,
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