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Definition of by-product
an incidental output of a joint process; it is salable,
A product that is an ancillary part of the primary production process, having
A material created incidental to a production process, which can be
a measure of the demands on activities and,
a production system dictated by product sales
A bill of material format in which components and subassemblies
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in today’s dollars of cash flows that occur in different time periods.
Schedule of depreciation rates allowed for tax purposes.
The net present value analysis of an asset if financed solely by equity
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Total costs, explicit and implicit.
Also called surplus management, the task of managing funds of a financial
A firm's required payout to the bondholders and to the stockholders expressed as a
The argument that expected indirect and direct bankruptcy costs offset the other
A method of securities distribution/ underwriting in which the securities firm agrees to sell
Large and creditworthy compAny.
With respect to convertible bonds, the value the security would have if it were not convertible
A compAny's book value is its total assets minus intangible assets and liabilities, such as debt. A
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
Bottom-up equity management style
A management style that de-emphasizes the significance of economic
costs that increase with increases in the level of investment in current assets.
Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash
An amount the insurance compAny will pay if the policyholder ends a whole life
A transaction in which the seller's intention is to reduce or eliminate a long position in a stock,
Related: Unsystematic risk
The collection of money managers of similar investment style used for assessing
An undertaking either (1) to complete a project such that it meets certain specified
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
Contingent deferred sales charge (CDSC)
The formal name for the load of a back-end load fund.
Also called parity value, the value of a convertible security if it is converted immediately.
Corporate financial management
The application of financial principals within a corporation to create and
Corporate processing float
The time that elapses between receipt of payment from a customer and the
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
Cost of capital
The required return for a capital budgeting project.
Cost of carry
Related: Net financing cost
Cost of funds
Interest rate associated with borrowing money.
Cost of lease financing
A lease's internal rate of return.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
The net present value of an investment divided by the investment's initial cost. Also called
In the balance of payments, counterpart items are analogous to unrequited transfers in the
The parties to an interest rate swap.
on the other side of a trade or transaction.
The risk that the other party to an agreement will default. In an options contract, the risk
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Days' sales outstanding
Average collection period.
Depository Trust Company (DTC)
DTC is a user-owned securities depository which accepts deposits of
A conception of the way a stock's price changes that assumes that the price takes on all
Domestic International Sales Corporation (DISC)
A U.S. corporation that receives a tax incentive for
Equivalent annual cost
The equivalent cost per year of owning an asset over its entire life.
The difference between the execution price of a security and the price that would have
The amount of advantage over a current market transaction provided by an in-the-money
The weighted average of a probability distribution.
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
Extraordinary positive value
A positive net present value.
See: Par value.
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
Firm's net value of debt
Total firm value minus total firm debt.
A cost that is fixed in total for a given period of time and for given production levels.
Foreign Sales Corporation (FSC)
A special type of corporation created by the Tax Reform Act of 1984 that
A method for hedging price risk which involves an agreement between a lender and an investor
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
The amount of cash at a specified date in the future that is equivalent in value to a specified
A partner who has unlimited liability for the obligations of the partnership.
A partnership in which all partners are general partners.
Gross domestic product (GDP)
The market value of goods and services produced over time including the
Gross national product (GNP)
Measures and economy's total income. It is equal to GDP plus the income
A corporation that owns enough voting stock in another firm to control management and
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
Industrial revenue bond (IRB)
Bond issued by local government agencies on behalf of corporations.
Transaction costs that include the assessment of the investment merits of a financial asset.
Tables that indicate how much each industry requires of the production of each other
The sale of an asset in exchange for a specified series of payments (the installments).
Loan made by one unit of a corporation to another unit of the same corporation.
Transaction carried out between two units of the same corporation.
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
Investment product line (IPML)
The line of required returns for investment projects as a function of beta
In-house processing float
Refers to the time it takes the receiver of a check to process the payment and
An agreement between two or more firms to share risk and financing responsibility in
Joint clearing members
Firms that clear on more than one exchange.
Limitation on merger, consolidation, or sale
A bond covenant that restricts in some way a firm's ability to
Limitation on sale-and-leaseback
A bond covenant that restricts in some way a firm's ability to enter into
A partner who has limited legal liability for the obligations of the partnership.
A partnership that includes one or more partners who have limited liability.
Net amount that could be realized by selling the assets of a firm after paying the debt.
The amount a policyholder may borrow against a whole life insurance policy at the interest rate
A partnership that includes one or more partners who have limited liability.
Management/closely held shares
Percentage of shares held by persons closely related to a compAny, as
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
An investment advisory fee charged by the financial advisor to a fund based on the fund's
Manufactured housing securities (MHSs)
Loans on manufactured homes - that is, factory-built or
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
1) The price at which a security is trading and could presumably be purchased or sold.
Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
Master limited partnership (MLP)
A publicly traded limited partnership.
Materials requirement planning
Computer-based systems that plan backward from the production schedule
Related: par value.
Related: Investment management.
A system, such as the arrangement between the CME and SIMEX, which allows trading
Situation in which the terms of an offering are determined by negotiation between the issuer
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