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Definition of Antifraud Provisions
Specific sections and rules of the 1933 Act and 1934 Act that are
A clause in a shareholders agreement preventing a company from issuing additional shares, without allowing the current shareholders the opportunity to participate in the offering to avoid dilution of their percentage ownership.
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
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.
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity.
This doctrine says that a nation is sovereign within its own borders and its domestic
A market in which there is much trading.
A strategy that uses available information and forecasting techniques to seek a
The physical commodity underlying a futures contrAct. Cash commodity, physical.
A protection against borrower fallout risk in the mortgage pipeline.
IRS Rules used to allocate income on export sales to a foreign sales corporation.
SECurities certificates issued in the U.S. by a transfer agent Acting on behalf of the foreign
The pool fActor implied by the scheduled amortization assuming no prepayemts.
The periodic rate times the number of periods in a year. For example, a 5%
The effective, or true, annual rate of return. The APY is the rate Actually
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 SECurity that is collateralized by loans, leases, receivables, or installment contrActs
Number of shares authorized for issuance by a firm's corporate charter.
Basic IRR rule
Accept the project if IRR is greater than the discount rate; reject the project is lower than the
Large and creditworthy company.
A contrAct for privately placed debt.
The Treasury and federal agencies are moving to a book-entry system in which SECurities are not represented by engraved pieces of paper but are maintained in computerized records at the
Bretton Woods Agreement
An agreement signed by the original United Nations members in 1944 that
A guaranteed investment contrAct purchased with a single (one-shot) premium. Related:
Cash deficiency agreement
An agreement to invest cash in a project to the extent required to cover any cash
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.
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
A reduction in the likelihood one or more of the firm's claimants will be fully repaid,
The percentage of a given month's sales collected during the month of sale and each
Related: Unsystematic risk
An offering of SECurities through competitive bidding.
An understanding between a company and the host government that specifies the
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
A SECurity that can be converted into common stock at the option of the SECurity holder,
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
financial planning conducted by a firm that encompasses preparation of both
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
A statistical methodology applied to a set of firms at a particular point in time.
Net flow of goods, services, and unilateral transActions (gifts) between countries.
Value of cash, accounts receivable, inventories, marketable SECurities and other assets that
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently
Amount owed for salaries, interest, accounts payable and other debts due within 1 year.
In Treasury SECurities, the most recently auctioned issue. Trading is more Active in current
current time to maturity on an outstanding debt instrument.
Current rate method
Under this currency translation method, all foreign currency balance-sheet and income
Indicator of short-term debt paying ability. Determined by dividing current assets by current
For bonds or notes, the coupon rate divided by the market price of the bond.
Related: Benchmark issues
Existing in Actual fAct although not by official recognition.
IOUs created through loan-type transActions - commercial paper, bank CDs, bills, bonds, and
Depository Trust Company (DTC)
DTC is a user-owned SECurities depository which accepts deposits of
A financial SECurity, such as an option, or future, whose value is derived in part from the
Diminution in the proportion of income to which each share is entitled.
Present value of $1 received at a stated future date.
Non-interest-bearing money market instruments that are issued at a discount and
Discounted payback period rule
An investment decision Rule in which the cash flows are discounted at an
agreement between two countries that taxes paid abroad can be offset against
Dual syndicate equity offering
An international equity placement where the offering is split into two
Dupont system of financial control
Highlights the fAct that return on assets (ROA) can be expressed in terms
Employee stock ownership plan (ESOP)
A company contributes to a trust fund that buys stock on behalf of
Equity contribution agreement
An agreement to contribute equity to a project under certain specified
A bond portfolio management strategy that involves finding the lowest cost portfolio
SECurity that grants the SECurity holder the right to exchange the SECurity for the
Instruments exempt from the registration requirements of the SECurities Act of 1933 or the
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 agency securities
SECurities issued by corporations and agencies created by the U.S. government,
Also called SECurities analysts and investment analysts, professionals who analyze
Claims on real assets.
The management of a firm's costs and expenses in order to control them in relation to
Events preceding and including bankruptcy, such as violation of loan contrActs.
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
Combining or dividing existing instruments to create new financial products.
A contrAct entered into now that provides for the delivery of a specified asset in exchange
Institutions that provide the market function of matching borrowers and lenders or
Long-term, non-cancelable lease.
Use of debt to increase the expected return on equity. financial leverage is measured by
Financial leverage clientele
A group of investors who have a preference for investing in firms that adhere to
Financial leverage ratios
Related: capitalization ratios.
An organized institutional structure or mechanism for creating and exchanging financial assets.
Objectives of a financial nature that the firm will strive to accomplish during the period
A financial blueprint for the financial future of a firm.
The process of evaluating the investing and financing options available to a firm. It
That portion of the media devoted to reporting financial news.
The result of dividing one financial statement item by another. Ratios help analysts interpret
The risk that the cash flow of an issuer will not be adequate to meet its financial obligations.
See:diversifiable risk or unsystematic risk.
Fiscal agency agreement
An alternative to a bond trust deed. Unlike the trustee, the fiscal agent Acts as an
A nonnegotiable debt SECurity that can be redeemed at some fixed price or according to
A guaranteed investment contrAct where the credit rating is tied to some variable
The requirement that all pool information, as specified under the PSA Uniform PrActices, in a
A cash market transAction in which delivery of the commodity is deferred until after the
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