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Definition of Average
An arithmetic mean of selected stocks intended to represent the behavior of the market or some
Arithmetic mean return.
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
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
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.
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
The mean, calculated at any time over a past period of fixed length.
Expected return on a portfolio of all the firm's securities. Used as a hurdle
The weighted average of the gross interest rate of the mortgages underlying the
Weighted average life
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.
An inventory valuation method that calculates a weighted average cost per unit for all the goods available for sale.
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
weighted average cost of capital
a composite of the cost of the various sources of funds that comprise a firm’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
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.
average tax rate
Total taxes owed divided by total income.
Dow Jones Industrial Average
Index of the investment performance of a portfolio of 30 “blue-chip” stocks.
weighted-average cost of capital (WACC)
Expected rate of return on a portfolio of all the firm’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.
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.
Accounts receivable turnover
The ratio of net credit sales to average accounts receivable, a measure of how
Arithmetic mean return
An average of the subperiod returns, calculated by summing the subperiod returns
Also known as a trading index (TRIN)= (number of advancing issues)/ (number of declining
Option based on the average price of the asset during the life of the option.
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
Days in receivables
average collection period.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Days' sales outstanding
average collection period.
When two or more averages or indices fail to show confirming trends.
Dividends per share
Dividends paid for the past 12 months divided by the number of common shares
Earnings per share (EPS)
EPS, as it is called, is a company's profit divided by its number of outstanding
The weighted average of a probability distribution.
Geometric mean return
Also called the time weighted rate of return, a measure of the compounded rate of
The law of averages. The average outcome for many independent trials of an experiment
The ratio of annual sales to average inventory which measures the speed that inventory
Lag response of prepayments
There is typically a lag of about three months between the time the weighted
The weighted-average term to maturity of the cash flows from the bond, where the
An investment advisory fee charged by the financial advisor to a fund based on the fund's
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
Mean of the sample
The arithmetic average; that is, the sum of the observations divided by the number of
A technical trading strategy that combines mechanical rules, such as the CRISMA
In a Treasury auction, bidding for a specific amount of securities at the price, whatever it
The average time intervening between the acquisition of materials or services and the final
That portfolios with low P/E stocks have exhibited higher average risk-adjusted returns than high P/E stocks.
Portfolio turnover rate
For an investment company, an annualized rate found by dividing the lesser of
Progressive tax system
A tax system wherein the average tax rate increases for some increases in income but
Receivables turnover ratio
Total operating revenues divided by average receivables. Used to measure how
An equation that describes the average relationship between a dependent variable and a
Regulatory accounting procedures
Accounting principals required by the FHLB that allow S&Ls to elect
Return on assets (ROA)
Indicator of profitability. Determined by dividing net income for the past 12 months
1) The difference between the average price in Treasury auctions and the stopout price.
Terms of trade
The weighted average of a nation's export prices relative to its import prices.
Mutual Funds: A measure of trading activity during the previous year, expressed as a percentage of
Mutual funds that do not charge an upfront or back-end commission, but instead take out up to
If the average maturity of a bank's liabilities is less than that of its assets, it is said to be
See: Weighted average cost of capital.
The common recurrent low or negative average return from Friday to Monday in the stock market.
The number of times a company sold out and replaced its average stock of goods in a year. The formula is:
NUMBER OF DAYS SALES IN RECEIVABLES
(also called average collection period). The number of days of net sales that are tied up in credit sales (accounts receivable) that haven’t been collected yet.
accounts receivable turnover ratio
A ratio computed by dividing annual
inventory turnover ratio
The cost-of-goods-sold expense for a given
price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)
This key ratio equals the current market price
The weighted average of the time until maturity of each of the
The weighted average of the squared deviations from the
Yield to Maturity
The measure of the average rate of return that will be earned on a
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
cost of capital (COC)
the weighted average cost of the
the rate of return used to discount future cash
FIFO method (of process costing)
the method of cost assignment that computes an average cost per equivalent
labor rate variance
the actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period;
modified FIFO method (of process costing)
the method of cost assignment that uses FIFO to compute a cost per
the long-run (5–10 years) average production
optimal mix of capital
the combination of capital sources at which the lowest weighted average cost of capital is achieved
any line that goes through the means (or averages) of the set of observations for an independent variable and its dependent variables; mathematically, there is a line of “best fit,” which is the least squares regression line
the measure of variability of data around
standard error of the estimate
a measure of dispersion that reflects the average difference between actual observations and expected results provided by a regression line
Bollinger band chart
A financial chart that plots actual asset data along
Internal rate of return
a. The average annual yield earned by an investment during the period held.
A widely used measure of price sensitivity to yield
a. A number that typifies a set of numbers, such as a geometric mean
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