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Definition of Classical Macroeconomics
The school of macroeconomic thought prior to the rise of Keynesianism.
The study of the determination of economic aggregates such as total output and the price level.
Economists who, like classical economists, believe that wages and prices are sufficiently flexible to solve the unemployment problem without help from government policy.
A promise that a life insurance policy will be renewed without penalty or medical examination after the term has expired. The renewal rate can also be guaranteed.
The market in which a new issue of securities is first sold to investors.
Economists who, like Keynes, believe that for good reason wages and prices are sticky and so prolong recessions, suggesting a need for government policy.
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of
Also known as the Big Board or The Exhange. More than 2,00 common
A new issue of stock after the company's securities have previously been issued. A
Sometimes, simply called YRT, this is a form of term life insurance that may be renewed annually without evidence of insurability to a stated age.
Rule in bankruptcy proceedings whereby senior creditors are required to be paid in full
the maximum limit for the number of defects or errors in a process
A monetary policy of matching wage and price increases with money supply increases so that the real money supply does not fall and push the economy into recession.
total liabilities exceed total assets. A firm with a negative net worth is insolvent on
Conflicts of interest among stockholders, bondholders, and managers.
Conflicts of interest between the firm’s owners and managers.
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
Arm's length price
The price at which a willing buyer and a willing unrelated seller would freely agree to
A dealer's price to sell a security; also called the offer price.
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firm's existing
Gives the lessee the option to purchase the asset at a price below fair market
price expressed in terms of yield to maturity or annual rate of return.
a cost that is caused by a group of things
A policy designed to increase an economy's prosperity at the expense of another country's prosperity.
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
Bond price excluding accrued interest.
Coefficient of determination
A measure of the goodness of fit of the relationship between the dependent and
coefficient of determination
a measure of dispersion that
Decreasing inflation by immediately decreasing the money growth rate to a new, low rate. Contrast with gradualism.
Procedures followed by a firm in attempting to collect accounts receivables.
Procedures to collect and monitor receivables.
The degree of assurance that a specified failure rate is not exceeded.
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a
Consumer Price Index (CPI)
An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation.
Conversion parity price
Related:Market conversion price
The contractually specified price per share at which a convertible security can be
Standards set to determine the amount and nature of credit to extend to customers.
unemployment that increases when the economy enters a recession and decreases when the economy enters a boom.
A company’s stated goal for how soon a customer order will be
The price fixed by the Clearing house at which deliveries on futures are in invoiced; also the
Demand Management Policy
Fiscal or monetary policy designed to influence aggregate demand for goods and services.
Devaluation A decrease in the spot price of the currency
Bond price including accrued interest, i.e., the price paid by the bond buyer.
A policy that is a conscious, considered response to each situation as it arises. Contrast with policy rule.
An established guide for the firm to determine the amount of money it will pay as dividends.
This policy governs Canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class.
Dollar price of a bond
Percentage of face value at which a bond is quoted.
Positive or negative differences from the consensus forecast of earnings by institutions
economic environment in which the firm expects to reside over the life of the
economic components model
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
See: in-substance defeasance.
Exists when the costs and/or revenues of one project depend on those of another.
The real flow of cash that a firm could pay out forever in the absence of any change in
The extent to which the value of the firm will change because of an exchange rate change.
Cash flow plus change in present value.
the creation of multi-country markets
The period over which a company expects to be able to use an asset.
economic order quantity
Order size that minimizes total inventory costs.
Economic order quantity (EOQ)
The order quantity that minimizes total inventory costs.
economic order quantity (EOQ)
an estimate of the number
economic production run (EPR)
an estimate of the number
Profits in excess of the competitive level.
In project financing, the risk that the project's output will not be salable at a price that will
For any entity, the difference between the market value of all its assets and the market
An agreement between two or more countries that allows the free movement of capital,
Economic Value Added (EVA)
Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
economic value added (EVA)
a measure of the extent to which income exceeds the dollar cost of capital; calculated
economic value added (EVA)
Term used by the consulting firm Stern Stewart for profit remaining after deduction of the cost
when the incremental revenue from the sale of reworked defective units is greater than
The study of the allocation and distribution of scare resources among competing wants.
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
enterprise resource planning (ERP) system
a packaged software program that allows a company to
Enterprise resource planning system
A computer system used to manage all company
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
Escalating Price Option
A nonqualified stock option that uses a sliding scale for
A statistical study that examines how the release of information affects prices at a particular time.
The price at which the underlying future or options contract may be bought or sold.
The price set for buying an asset (call) or selling an asset (put).
Fair market price
Amount at which an asset would change hands between two parties, both having
The equilibrium price for futures contracts. Also called the theoretical futures price, which equals
Fair price provision
Federal Unemployment Tax Act (FUTA)
A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
The use of government spending and taxing for the specific purpose of stabilizing the economy.
A change in government spending or taxing, designed to influence economic activity.
Fixed price basis
An offering of securities at a fixed price.
Fixed-price tender offer
A one-time offer to purchase a stated number of shares at a stated fixed price,
Flat price (also clean price)
The quoted newspaper price of a bond that does not include accrued interest.
Flat price risk
Taking a position either long or short that does not involve spreading.
A method of budgetary control that flexes, i.e. adjusts the original budget by applying standard
a presentation of multiple budgets that
Flexible Exchange Rate
An exchange rate whose value is determined by the forces of supply and demand on the foreign exchange market.
flexible manufacturing system (FMS)
a production system in which a single factory manufactures numerous variations
Flexible Spending Account
A form of cafeteria plan allowing employees to pay
Optional periods of time which the conditions of a contract will be carried out.
unemployment associated with people changing jobs or quitting to search for new jobs.
The level of output produced by the economy when operating at the natural rate of unemployment.
Also called dirty price, the price of a bond including accrued interest. Related: flat price.
The price at which the parties to a futures contract agree to transact on the settlement date.
See: government securities.
Government National Mortgage Association (Ginnie Mae)
A wholly owned U.S. government corporation
Negotiable U.S. Treasury securities.
Government sponsored enterprises
Privately owned, publicly chartered entities, such as the Student Loan
The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.
A policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example.
a number (prefaced as a multiplier
Tables that indicate how much each industry requires of the production of each other
The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk.
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