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Definition of Decile rank
Performance over time, rated on a scale of 1-10.1 indicates that a mutual fund's return was in the
a listing of service departments in an order that begins with the one providing the most service
Costs and benefits that would occur if a particular course of action were
Employer-paid insurance that provides their employees with wage compensation if they are injured on the job.
Cash flow provided by operating
With some exceptions, the cash effects of transactions
Cash receipts and payments involving
Cash receipts and payments involving
Automatic payment of moneys derived from a benefit.
a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock.
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
Part of the return that is not due to systematic influences (market wide influences). In
Schedule of depreciation rates Allowed for tax purposes.
Any depreciation method that produces larger deductions for depreciation in the
The ratio of net credit sales to average accounts receivable, a measure of how
A strategy that uses available information and forecasting techniques to seek a
After-tax real rate of return
Money after-tax rate of return minus the inflation rate.
All equity rate
The discount rate that reflects only the business risks of a project and abstracts from the
All or none
Requirement that none of an order be executed unless All of it can be executed at the specified price.
Total costs, explicit and implicit.
An arrangement whereby a security issue is canceled if the underwriter is unable
Annual fund operating expenses
For investment companies, the management fee and "other expenses,"
Annualized holding period return
The annual rate of return that when compounded t times, would have
Arithmetic average (mean) rate of return
Arithmetic mean return.
Arithmetic mean return
An average of the subperiod returns, calculated by summing the subperiod returns
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
The ratio of net sales to total assets.
An option is at-the-money if the strike price of the option is equal to the market price of the
Average accounting return
The average project earnings after taxes and depreciation divided by the average
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
Balanced mutual fund
This is a fund that buys common stock, preferred stock and bonds. The same as a
Any large principal payment due at maturity for a bond or loan with or without a a sinking
A strategy in which the maturities of the securities included in the portfolio are concentrated
BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in
Beta (Mutual Funds)
The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means
Beta equation (Mutual Funds)
The beta of a fund is determined as follows:
A steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
Related: Premium payback period.
A strategy in which a portfolio is constructed so that the maturities of its securities are highly
Buy limit order
A conditional trading order that indicates a security may be purchased only at the designated
A passive investment strategy with no active buying and selling of stocks from the
An option that gives the right to buy the underlying futures contract.
Call an option
To exercise a cAll option.
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call money rate
Also cAlled the broker loan rate , the interest rate that banks charge brokers to finance
An option contract that gives its holder the right (but not the obligation) to purchase a specified
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.
A feature of some cAllable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back All or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a cAll provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a cAll option attached to it, i.e., the issuer has the right to
decision Allocation of invested funds between risk-free assets versus the risky portfolio.
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Communication barrier between financiers (investment bankers) and traders. This barrier is
An investment company that sells shares like any other corporation and usuAlly does not
A strategy in which a put and with the same strike price and expiration are either both
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for investment Management and Research (AIMR)'s Performance Presentation Standards Implementation
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Movement of cash from different lockbox locations into a single concentration
The acquisition of one firm by anther firm.
Debt obligations issued by corporations.
A legal document creating a corporation.
one of the three areas of the discipline of finance. It deals with the operation of the firm
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
Financial planning conducted by a firm that encompasses preparation of both
Corporate processing float
The time that elapses between receipt of payment from a customer and the
Corporate tax view
The argument that double (corporate and individual) taxation of equity returns makes
Corporate taxable equivalent
Rate of return required on a par bond to produce the same after-tax yield to
Cost of funds
Interest rate associated with borrowing money.
The purchase of a contract to offset a previously established short position.
Ratios used to test the adequacy of cash flows generated through earnings for purposes of
A short cAll option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a cAll option on securities that the investor
Covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
A put option position in which the option writer also is short the corresponding stock or has
Refers to the volatility of returns on international investments caused by events associated
The return at which two alternative projects have the same net present value.
Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the
An order to buy or sell stock that automaticAlly expires if it can't be executed on the day it is entered.
Interest payment plus repayments of principal to creditors, that is, retirement of debt.
Debt service parity approach
An analysis wherein the alternatives under consideration will provide the firm
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
Refers to multi-period cash flow matching.
A provision that prohibits the company from cAlling the bond before a certain date. During this
Dividends per share
Amount of cash paid to shareholders expressed as dollars per share.
Dividend reinvestment plan (DRP)
Automatic reinvestment of shareholder dividends in more shares of a
Dividend yield (Funds)
Indicated yield represents return on a share of a mutual fund held over the past 12
Dividends per share
Dividends paid for the past 12 months divided by the number of common shares
Doctrine of sovereign immunity
Doctrine that says a nation may not be tried in the courts of another country
The return realized on a portfolio for any evaluation period, including (1) the change in market
Dollar-weighted rate of return
Also cAlled the internal rate of return, the interest rate that will make the
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Dynamic asset allocation
An asset Allocation strategy in which the asset mix is mechanisticAlly shifted in
Economic order quantity (EOQ)
The order quantity that minimizes total inventory costs.
Economies of scale
The decrease in the marginal cost of production as a plant's scale of operations increases.
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Employee stock fund
A firm-sponsored program that enables employees to purchase shares of the firm's
investment funds established for the support of institutions such as colleges, private
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
Ex post return
Related: Holding period return
The expected return of a portfolio based on the expected returns of its component assets and
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