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Financial Terms | |
Depression |
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Definition of DepressionDepressionA prolonged period of very low economic activity with large-scale unemployment.
Related Terms:Great DepressionThe period of very high unemployment during the early 1930s. Average maturityThe average time to maturity of securities held by a mutual fund. Changes in interest rates BaneIn the words of Warren Buffet, Bill Bane Sr., is, "a great American and one of the last real traders Basic IRR ruleAccept the project if IRR is greater than the discount rate; reject the project is lower than the Basis pointIn the bond market, the smallest measure used for quoting yields is a basis point. Each percentage bondA debt security issued by a government or company. You receive regular interest payments at specified rates while you hold the bond and you receive the face value when it matures. Short-term bonds mature in less than five years; medium-term bonds mature in six to ten years; and long-term bonds mature in eleven years or greater. Candlestick chartA financial chart usually used to plot the high, low, open, ![]() Capital MarketThe 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. CapitalizedRecorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures Comparative AdvantageA country has a comparative advantage over another country in the production of good A if to produce a unit of A it forgoes more of the production of good B than would the other country when it produces a unit of good A. Its efficiency in the production of good A relative to its efficiency in the production of good B is greater than is the case for the other country. See also absolute advantage. Constant dollar accountingA method for restating financial statements by reducing or ConvexityA measure of the rate of change in duration; measured in time. Creative Acquisition AccountingThe allocation to expense of a greater portion of the price DiversificationInvesting so that all your eggs are not in the same basket. By spreading your investments over different kinds of investments, you cushion your portfolio against sudden swings in any one area. Segregated equity funds have become a popular and secure way for average investors to get the benefits of greater diversification. Earnings surprisesPositive or negative differences from the consensus forecast of earnings by institutions economic integrationthe creation of multi-country markets ![]() economically reworkedwhen the incremental revenue from the sale of reworked defective units is greater than Efficient portfolioA portfolio that provides the greatest expected return for a given level of risk (i.e. standard Equity capAn agreement in which one party, for an upfront premium, agrees to compensate the other at financial leverageThe equity (ownership) capital of a business can serve Fixed assetAn item with a longevity greater than one year, and which exceeds a company’s InsolventA firm that is unable to pay debts (liabilities are greater than assets). Intangible assetA nonphysical asset with a life greater than one year. Examples are Level payThe characteristic of the scheduled principal and interest payments due under a mortgage such that Liquidity preference hypothesisThe argument that greater liquidity is valuable, all else equal. Also, the Long runA period of time in which all costs are variable; greater than one year. Long runA period of time in which all costs are variable; greater than one year. Long-termIn accounting information, one year or greater. Longer-Term Fixed AssetsAssets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied. Marketplace price efficiencyThe degree to which the prices of assets reflect the available marketplace Mezzanine DebtRefers to non-conventional debt that has a greater element of risk than secured debt but has less risk than equity. Net financing costAlso called the cost of carry or, simply, carry, the difference between the cost of financing NoteDebt instruments with initial maturities greater than one year and less than 10 years. Okun's LawChanges in employment give rise to greater-than-proportional changes in output, by a factor of about 2.5. Out-of-the-money optionA call option is out-of-the-money if the strike price is greater than the market price overapplied overheada credit balance in the Overhead account Oversubscribed issueInvestors are not able to buy all of the shares or bonds they want, so underwriters must Pareto principlea rule which states that the greatest effects Positive convexity property of option-free bonds whereby the price appreciation for a large upward change procurement carda card given to selected employees as a surplus variablea variable used in a linear programming problem that represents overachievement of a minimum requirement; it is associated with greater-than-or-equal-to constraints Synergistic effectA violation of value-additivity whereby the value of the combination is greater than the Theoretical spot rate curveA curve derived from theoretical considerations as applied to the yields of Tobin's QMarket value of assets divided by replacement value of assets. A Tobin's Q ratio greater than 1 TurnoverMutual Funds: A measure of trading activity during the previous year, expressed as a percentage of variancea difference between an actual and a standard or Yield curveThe graphical depiction of the relationship between the yield on bonds of the same credit quality Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |