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Definition of Capital market
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.
A market that specializes in trading long-term, relatively high risk
The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded.
Reflects the relative amount of wealth wasted in making transactions. An efficient
The view that issuing debt is generally valuable but that the firm's
The line defined by every combination of the risk-free asset and the market portfolio.
A market in which there is a distinct marketable security for each and every
A market in which new information is very quickly reflected accurately in share
A market in which there are never any arbitrage opportunities.
markets for long-term financing.
Financial markets in which security prices rapidly reflect all relevant information about asset values.
The total dollar value of all outstanding shares. Computed as shares times current
Expected return on a security. The market-consensus estimate of the appropriate
Analysis of a firm's capital structure decision, which shows the
Current market value per share of
Aggregate value of a corporation as determined by the market price of its total issued and outstanding stock.
A type of bond that has an infinite life but is not issued in the U.S. capital markets.
The slope of the capital market line (CML). Since the CML represents the
A bond issued on the domestic capital market of anther company.
Freddie Mac (Federal Home Loan Mortgage Corporation)
A Congressionally chartered corporation that
Bonds that are designed so as to qualify for immediate trading in any domestic capital market
Financial securities, such as money market instruments or capital market insturments.
Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
Perfectly competitive financial markets
markets in which no trader has the power to change the price of
Pie model of capital structure
A model of the debt/equity ratio of the firms, graphically depicted in slices of
The process of creating a passthrough, such as the mortgage pass-through security, by which
Security deposit (maintenance)
Related: Maintenance margin security market line (SML). A description of
Transferable put right
An option issued by the firm to its shareholders to sell the firm one share of its
An investment in a start-up business that is perceived to have excellent growth prospects but
The interim holding period from the time of the closing of a loan to its subsequent marketing to
Financial market in which funds are borrowed or lent for short periods. (The money market is distinguished from the capital market, which is the market for long term funds.)
DLOM (discount for lack of marketability)
an amount or percentage deducted from an equity interest to reflect lack of marketability.
QMDM (quantitative marketability discount model)
model for calculating DLOM for minority interests r the discount rate
markets in which the prevailing price is determined through the free interaction of
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
Any market in which prices are in a declining trend.
An illegal market.
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
The foreign market in the United Kingdom.
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.
When a stock is sold for a profit, it's the difference between the net sales price of securities and
Capital gains yield
The price change portion of a stock's return.
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.
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
Also called spot markets, these are markets that involve the immediate delivery of a security
An agreement between two or more countries that permits the free movement of capital
Common stock market
The market for trading equities, not including preferred stock.
Corner A Market
To purchase enough of the available supply of a commodity or stock in order to
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
A market where traders specializing in particular commodities buy and sell assets for their
The market for trading debt instruments.
Total par value (number of shares issued, multiplied by the par value of each share). Also
markets for derivative instruments.
Direct search market
Buyers and sellers seek each other directly and transact directly.
Part of a nation's internal market representing the mechanisms for issuing and trading
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
In the interbank Eurodollar deposit market, an either-way market is one in which the bid
The financial markets of developing economies.
The money market for borrowing and lending currencies that are held in the form of
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Also referred to as the international market, the offshore market, or, more popularly, the
Fair market price
Amount at which an asset would change hands between two parties, both having
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
An organized institutional structure or mechanism for creating and exchanging financial assets.
The market for trading bonds and preferred stock.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
Part of a nation's internal market, representing the mechanisms for issuing and trading
Foreign market beta
A measure of foreign market risk that is derived from the capital asset pricing model.
A market in which participants agree to trade some commodity, security, or foreign
Direct trading in exchange-listed securities between investors without the use of a broker.
A market in which contracts for future delivery of a commodity or a security are bought or sold.
Purchases and sales of eurobonds that occur before the issue price is finally set.
Hard capital rationing
capital rationing that under no circumstances can be violated.
The unique capabilities and expertise of individuals.
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
spread The spread between the interest rate offered in two sectors of the bond market for
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
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