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Definition of Average life
Also referred to as the weighted-average life (WAL). The average number of years that each
The average time to maturity of securities held by a mutual fund. Changes in interest rates
Accounting principals required by the FHLB that allow S&Ls to elect
Arithmetic mean return.
An arithmetic mean of selected stocks intended to represent the behavior of the market or some
The average project earnings after taxes and depreciation divided by the average
The weighted-average age of all of the firm's outstanding invoices.
The ratio of accounts receivables to sales, or the total
A firm's required payout to the bondholders and to the stockholders expressed as a
An estimation of price that uses the average or representative price of a
The ratio of the average cash inflow to the amount invested.
Taxes as a fraction of income; total taxes divided by total taxable income.
A monthly fixed-dollar payment beginning at retirement age. It is nominal
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Used in charts and technical analysis, the average of security or commodity prices
Simple moving average
The mean, calculated at any time over a past period of fixed length.
Term life insurance
A contract that provides a death benefit but no cash build-up or investment component.
A whole life insurance product whose investment component pays a competitive interest rate
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
Weighted average cost of capital
Expected return on a portfolio of all the firm's securities. Used as a hurdle
Weighted average coupon
The weighted average of the gross interest rate of the mortgages underlying the
Weighted average maturity
The WAM of a MBS is the weighted average of the remaining terms to maturity
Weighted average remaining maturity
The average remaining term of the mortgages underlying a MBS.
Weighted average portfolio yield
The weighted average of the yield of all the bonds in a portfolio.
Whole life insurance
A contract with both insurance and investment components: (1) It pays off a stated
An inventory valuation method that calculates a weighted average cost per unit for all the goods available for sale.
An approach to costing that estimates and accumulates the costs of a product/service over
Weighted average cost of capital
See cost of capital.
A method of accounting for inventory.
weighted-average cost of capital
Weighted means that the proportions of
Average Collection Period
average number of days necessary to receive cash for the sale of
Weighted Average Cost of Capital (WACC)
The weighted average of the costs of the capital components
life cycle costing
the accumulation of costs for activities that
product life cycle
a model depicting the stages through
weighted average cost of capital
a composite of the cost of the various sources of funds that comprise a firmâ€™s capital structure; the minimum rate of return that must be earned on new investments so as not to dilute shareholder value
weighted average method (of process costing)
the method of cost assignment that computes an average cost per
A price average that is adjusted by adding other
A financial chart that plots leading and lagging
The beginning inventory for a period, plus the amount at the end of
The period over which a company expects to be able to use an asset.
Moving average inventory method
An inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase.
The estimated life span of a fixed asset, during which it can be expected to
average tax rate
Total taxes owed divided by total income.
Dow Jones Industrial Average
Index of the investment performance of a portfolio of 30 â€śblue-chipâ€ť stocks.
weighted-average cost of capital (WACC)
Expected rate of return on a portfolio of all the firmâ€™s securities, adjusted for tax savings due to interest payments.
Average Propensity to Consume
Ratio of consumption to disposable income. See also marginal propensity to consume.
Average Propensity to Save
Ratio of saving to disposable income. See also marginal propensity to save.
Average-Cost Inventory Method
The inventory cost-flow assumption that assigns the average
Average Amortization Period
The average useful life of a company's collective amortizable asset base.
The time period during which inventory can be retained in stock and beyond
Shelf life control
Deliberate usage of the oldest items first, in order to avoid exceeding
Group Life Insurance
This is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates.
Level Premium Life Insurance
This is a type of insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than actual cost of protection in the earlier years of the policy and less than the actual cost of protection in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years.
The average number of years of life remaining for a group of people of a given age and gender according to a particular mortality table.
Life Income Fund
Commonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement Income Funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80.
Split Dollar Life Insurance
The split dollar concept is usually associated with cash value life insurance where there is a death benefit and an accumulation of cash value. The basic premise is the sharing of the costs and benefits of a life insurance policy by two or more parties. Usually one party owns and pays for the insurance protection and the other owns and pays for the cash accumulation. There is no single way to structure a split dollar arrangement. The possible structures are limited only by the imagination of the parties involved.
Temporary Life Insurance
Temporary insurance coverage is available at time of application for a life insurance policy if certain conditions are met. Normally, temporary coverage relates to free coverage while the insurance company which is underwriting the risk, goes through the process of deciding whether or not they will grant a contract of coverage. The qualifications for temporary coverage vary from insurance company to insurance company but generally applicants will qualify if they are between the ages of 18 and 65, have no knowledge or suspicions of ill health, have not been absent from work for more than 7 days within the prior 6 months because of sickness or injury and total coverage applied for from all sources does not exceed $500,000. Normally a cheque covering a minimum of one months premium is required to complete the conditions for this kind of coverage. The insurance company applies this deposit towards the cost of a policy at its issue date, which may be several weeks in the future.
Term Life Insurance
A plan of insurance which covers the insured for only a certain period of time and not necessarily for his or her entire life. The policy pays a death benefit only if the insured dies during the term.
Weighted Average Cost of Capital (WACC)
A weighted average of the component costs of debt, preferred shares, and common equity. Also called the composite cost of capital.
Canadian Life and Health Insurance Association (CLHIA)
An association of most of the life and health insurance companies in Canada that conducts research and compiles information about the life and health insurance industry in Canada.
Joint Policy Life
One insurance policy that covers two lives, and generally provides for payment at the time of the first insured's death. It could also be structured to pay on second death basis for estate planning purposes.
Insurance that provides protection against an economic loss caused by death of the person insured.
Life Insurance (Credit Insurance)
Group Term life insurance that pays or reduces the balance due on a loan if the borrower dies before the loan is repaid.
The person who's life is protected by an individual policy.
Mortgage Life insurance (Credit Insurance)
Decreasing term life insurance that provides a death benefit amount corresponding to the decreasing amount owed on a mortgage.
A product that provides life coverage for a specified duration typically not beyond the age of 75.
An unbundled life product with a separate investment component. It typically does not participate in companies profits.
Component that provides life coverage during the insured's life.
Option based on the average price of the asset during the life of the option.
1) The difference between the average price in Treasury auctions and the stopout price.
accounting rate of return (ARR)
the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow
This is a telephone interview of the person applying for life insurance conducted by someone from the underwriting department of the insurance company. Some insurance companies only sporadically contact applicants and some contact every applicant. On average the interview lasts between 15 to 30 minutes. The questions asked relate to personal habits (like smoking and alcohol consumption) and finances, including income and net worth, confirmation of employment, duties and the nature of the applicant's business. In addition, there are questions about driving, sports, aviation and currently held insurance. All information obtained is strictly confidential and is submitted solely to the underwriter for review.
Registered Pension Plan
Commonly referred to as an RPP this is a tax sheltered employee group plan approved by Federal and Provincial governments allowing employees to have deductions made directly from their wages by their employer with a resulting reduction of income taxes at source. These plans are easy to implement but difficult to dissolve should the group have a change of heart. Employer contributions are usually a percentage of the employee's salary, typically from 3% to 5%, with a maximum of the lessor of 20% or $3,500 per annum. The employee has the same right of contribution. Vesting is generally set at 2 years, which means that the employee has right of ownership of both his/her and his/her employers contributions to the plan after 2 years. It also means that all contributions are locked in after 2 years and cannot be cashed in for use by the employee in a low income year. Should the employee change jobs, these funds can only be transferred to the RPP of a new employer or the funds can be transferred to an individual RRSP (or any number of RRSPs) but in either scenario, the funds are locked in and cannot be accessed until at least age 60. The only choices available to access locked in RPP funds after age 60 are the conversion to a life Income Fund or a Unisex Annuity.
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