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Definition of Autocorrelation
The correlation of a variable with itself over successive time intervals.
Schedule of depreciation rates allowed for tax purposes.
The ratio of net credit sales to average accounts receivable, a measure of how
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
The ratio of net sales to total assets.
Related: Premium payback period.
The number of times that financial obligations (for interest, principal payments,
Line depicting the operating activities and cash flows for a firm over a particular period.
A random value that can take any fractional value within specified ranges, as
See: correlation coefficient.
A standardized statistical measure of the dependence of two random variables,
The purchase of a contract to offset a previously established short position.
Ratios used to test the adequacy of cash flows generated through earnings for purposes of
A short call option position in which the writer owns the number of shares of the underlying
A strategy that involves writing a call option on securities that the investor
A portfolio manager invests dollars in an instrument denominated in a foreign
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
A put option position in which the option writer also is short the corresponding stock or has
The return at which two alternative projects have the same net present value.
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
Discrete random variable
A random variable that can take only a certain specified set of discrete possible
Doctrine of sovereign immunity
Doctrine that says a nation may not be tried in the courts of another country
A value determined within the context of a model.
A variable whose value is determined outside the model in which it is used. Also called
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Fixed-charge coverage ratio
A measure of a firm's ability to meet its fixed-charge obligations: the ratio of
Purchase or sale of forward foreign currency in order to offset a known future cash flow.
See: Government securities.
Government National Mortgage Association (Ginnie Mae)
A wholly owned U.S. government corporation
Government sponsored enterprises
Privately owned, publicly chartered entities, such as the Student Loan
Negotiable U.S. Treasury securities.
Interest coverage ratio
The ratio of the earnings before interest and taxes to the annual interest expense. This
Interest coverage test
A debt limitation that prohibits the issuance of additional long-term debt if the issuer's
The ratio of annual sales to average inventory which measures the speed that inventory
Just-in-time inventory systems
Systems that schedule materials/inventory to arrive exactly as they are
The theory that in certain situations, institutions wish to sell their shares but postpone the
A money manager who assumes he or she can forecast when the stock market will go up and down.
Normal random variable
A random variable that has a normal probability distribution.
An indicator that attempts to define when prices have moved too far and too
Overfunded pension plan
A pension plan that has a positive surplus (i.e., assets exceed liabilities).
A strategy of using futures for asset allocation by pension sponsors to avoid disrupting the
Overnight delivery risk
A risk brought about because differences in time zones between settlement centers
A repurchase agreement with a term of one day.
When a security is expected to appreciate at a rate faster than the overall market.
The supposition that investors overreact to unanticipated news, resulting in
The tendency of a pool of MBSs to reflect an especially high rate or prepayments the first time
Investors are not able to buy all of the shares or bonds they want, so underwriters must
In a rights issue, arrangement by which shareholders are given the right to apply
Over-the-counter market (OTC)
A decentralized market (as opposed to an exchange market) where
Portfolio turnover rate
For an investment company, an annualized rate found by dividing the lesser of
Price discovery process
The process of determining the prices of the assets in the marketplace through the
An upward movement of prices. Opposite of reaction.
A function that assigns a real number to each and every possible outcome of a random experiment.
A real time stock or bond quote is one that states a security's most recent offer to sell or bid (buy).
Receivables turnover ratio
Total operating revenues divided by average receivables. Used to measure how
A person willing to accept lower expected returns on prospects with higher amounts of risk.
Reinvest funds received from a maturing security in a new issue of the same or a similar security.
Most term loans in the Euromarket are made on a rollover basis, which means that the loan is
The risk that a central bank will impose foreign exchange regulations that will reduce or
General term referring to transfer of control of a firm from one group of shareholder's to another
Interest-bearing deposit at a savings institution that has a specific maturity.
Demand for payment at a stated future date.
Also called time value, the amount by which the option price exceeds its intrinsic value. The
Time until expiration
The time remaining until a financial contract expires. Also called time to maturity.
Time to maturity
The time remaining until a financial contract expires. Also called time until expiration.
Time value of an option
The portion of an option's premium that is based on the amount of time remaining
Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar
Time-weighted rate of return
Related: Geometric mean return.
Earnings before interest and tax, divided by interest payments.
Total asset turnover
The ratio of net sales to total assets.
time available or needed to effect a turnaround.
Mutual Funds: A measure of trading activity during the previous year, expressed as a percentage of
A short call option position in which the writer does not own shares of underlying stock
A short put option position in which the writer does not have a corresponding short stock
A value determined within the context of a model. Also called endogenous variable.
Annuity contracts in which the issuer pays a periodic amount linked to the investment
A cost that is directly proportional to the volume of output produced. When production is zero,
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
Variable price security
A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.
Variable rate CDs
Short-term certificate of deposits that pay interest periodically on roll dates. On each roll
Variable rated demand bond (VRDB)
Floating rate bond that can be sold back periodically to the issuer.
Variable rate loan
Loan made at an interest rate that fluctuates based on a base interest rate such as the
The number of times a company sold out and replaced its average stock of goods in a year. The formula is:
MACRS (Modified Accelerated Cost Recovery System)
A depreciation method created by the IRS under the Tax Reform Act of 1986. Companies must use it to depreciate all plant and equipment assets installed after December 31, 1986 (for tax purposes).
Those that vary with the amount of goods you produce or sell. These may include utility bills, labor, etc.
Money owed to the bank in a cheque account where payments exceed receipts.
A general term referring to period costs, such as selling, administration and financial expenses.
Any cost other than a direct cost â€“ may refer to an indirect production cost and/or to a non-production expense.
The process of spreading production overhead equitably over the volume of production of goods or services.
The rate (often expressed per hour) applied to the time taken to produce a product/service, used to allocate production overheads to particular products/services based on the time taken. May be calculated on a business-wide or cost centre basis.
A general term referring to indirect costs.
Costs that have both fixed and variable components.
The business income or sales of goods and services.
A cost that increases or decreases in proportion with increases or decreases in the volume of production of goods or services.
A method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs.
accounts receivable turnover ratio
A ratio computed by dividing annual
asset turnover ratio
A broad-gauge ratio computed by dividing annual
Refers to recouping, or regaining, invested capital over
inventory turnover ratio
The cost-of-goods-sold expense for a given
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