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Definition of Capital gain
When a stock is sold for a profit, it's the difference between the net sales price of securities and
The gain recognized on the sale of a capital item (fixed asset), calculated
An increase in the value of an asset.
The positive difference between the adjusted cost base of an investment held as a capital property and the proceeds of disposition you receive when you sell it. When you sell such an investment for more than you paid, you realize a capital gain.
The price change portion of a stock's return.
In portfolio accounting, a straight-line accumulation of capital gains on discount
Regarding a futures contract, the difference between the cash price and the futures price observed in the
A dividend paid in cash to a company's shareholders. The amount is normally based on
Payments from fund or corporate cash flow. May include dividends from earnings, capital
Special accounts where you can save and invest, and the taxes are deferred until money
Unrealized capital gain (loss) on securities held in portfolio, based on a comparison of
Buying long-term bonds in anticipation of capital gains as yields fall with the
The view that shareholders prefer capital gains over dividends,
The feature of the U.S. Internal Revenue Code that the capital gains tax on an asset is
The option to sell an asset and claim a loss for tax purposes or not to sell the asset and
The dollar return on a nondollar investment, which includes the sum of any
In performance measurement, the actual rate of return realized over some evaluation period. In
An argument that "within reason," investors prefer large dividends to
Legislation under which interest, dividends, or capital gains earned on assets you transfer to your spouse will be treated as your own for tax purposes. Interest or dividends relating to property transferred to children under 18 also will be attributed back to you. The exception to this rule is that capital gains relating to property transferred to children under 18 will not be attributed back to you.
Last To Die Coverage
This means that there are two or more life insured on the same policy but the death benefit is paid out on the last person to die. The cost of this type of coverage is much less than a first to die policy and it is generally used to protect estate value for children where there might be substantial capital gains taxes due upon the death of the last parent. This kind of policy is also valuable when one of two people covered has health problems which would prohibit obtaining individual coverage.
If stock X appreciates 1.5% in one month, the annualized gain for that sock over a twelve
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
Gives the lessee the option to purchase the asset at a price below fair market
Money invested in a firm.
Net result of public and private international investment and lending activities.
decision Allocation of invested funds between risk-free assets versus the risky portfolio.
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
A firm's set of planned capital expenditures.
The process of choosing the firm's long-term capital assets.
Amount used during a particular period to acquire or improve long-term assets such as
The transfer of capital abroad in response to fears of political risk.
A lease obligation that has to be capitalized on the balance sheet.
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
The market for trading long-term debt instruments (those that mature in more than one year).
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
Placing one or more limits on the amount of new investment undertaken by a firm, either
The makeup of the liabilities and stockholders' equity side of the balance sheet, especially
Amounts of directly contributed equity capital in excess of the par value.
The debt and/or equity mix that fund a firm's assets.
A method of constructing a replicating portfolio in which the manager purchases a
Also called financial leverage ratios, these ratios compare debt to total capitalization
A table showing the capitalization of a firm, which typically includes the amount of
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures
Interest that is not immediately expensed, but rather is considered as an asset and is then
Complete capital market
A market in which there is a distinct marketable security for each and every
Cost of capital
The required return for a capital budgeting project.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
Total par value (number of shares issued, multiplied by the par value of each share). Also
Efficient capital market
A market in which new information is very quickly reflected accurately in share
Hard capital rationing
capital rationing that under no circumstances can be violated.
The unique capabilities and expertise of individuals.
Issued share capital
Total amount of shares that are in issue. Related: outstanding shares.
Value at which a company's shares are recorded in its books.
Indicator of financial leverage. Shows long-term debt as a proportion of the
The total dollar value of all outstanding shares. Computed as shares times current
Market capitalization rate
Expected return on a security. The market-consensus estimate of the appropriate
Net working capital
Current assets minus current liabilities. Often simply referred to as working capital.
Nondiversifiability of human capital
The difficulty of diversifying one's human capital (the unique
Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in
In the balance of payments, other capital is a residual category that groups all the capital
Outstanding share capital
Issued share capital less the par value of shares that are held in the company's treasury.
Pecking-order view (of capital structure)
The argument that external financing transaction costs, especially
Perfect capital market
A market in which there are never any arbitrage opportunities.
Perfect market view (of capital structure)
Analysis of a firm's capital structure decision, which shows the
Personal tax view (of capital structure)
The argument that the difference in personal tax rates between
Pie model of capital structure
A model of the debt/equity ratio of the firms, graphically depicted in slices of
Planned capital expenditure program
capital expenditure program as outlined in the corporate financial plan.
Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure
Wealth that can be represented in financial terms, such as savings account balances, financial
"Soft" Capital Rationing
capital rationing that under certain circumstances can be violated or even viewed
Static theory of capital structure
Theory that the firm's capital structure is determined by a trade-off of the
An investment in a start-up business that is perceived to have excellent growth prospects but
Weighted average cost of capital
Expected return on a portfolio of all the firm's securities. Used as a hurdle
Defined as the difference in current assets and current liabilities (excluding short-term
Working capital management
The management of current assets and current liabilities to maximize shortterm liquidity.
Working capital ratio
Working capital expressed as a percentage of sales.
The money, raised by selling stock or bonds or taking out loans, that you use to start, operate, and grow a business.
CAPITAL IN EXCESS OF PAR VALUE
What a company collected when it sold stock for more than the par value per share.
The shareholdersâ€™ investment in the business; the difference between the assets and liabilities
The total of debt and equity, i.e. the total funds in the business.
To make a payment that might otherwise be an expense (in the Profit and Loss account) an asset
The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.
Cost of capital
The costs incurred by an organization to fund all its investments, comprising the risk-adjusted
Return on capital employed (ROCE)
The operating profit before interest and tax as a percentage of the total shareholdersâ€™ funds plus
Weighted average cost of capital
See cost of capital.
Current assets less current liabilities. Money that revolves in the business as part of the process of buying, making and selling goods and services, particularly in relation to debtors, creditors, inventory and bank.
Additional paid-in capital
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par.
Capital in excess par
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with additional paid-in capital.
The amount put into the business by the owners by purchasing stock and by paying more than the par value for the stock (additional paid-in capital or capital in excess of par).
A very broad term rooted in economic theory and referring to
Refers generally to analysis procedures for ranking
Refers to investments by a business in long-term
capital investment analysis
Refers to various techniques and procedures
Refers to recouping, or regaining, invested capital over
Ownership shares issued by a business corporation. A business
capital structure, or capitalization
Terms that refer to the combination of
capitalization of costs
When a cost is recorded originally as an increase
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