|Difference from S&P|
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Definition of Difference from S&P
Difference from S&P
A mutual fund's return minus the change in the Standard & Poors 500 Index for the
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.
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity.
Part of the return that is not due to systematic influences (market wide influences). In
Money after-tax rate of return minus the inflation rate.
The second-largest stock exchange in the United States. It trades
For investment companies, the management fee and "other expenses,"
The periodic rate times the number of periods in a year. For example, a 5%
The effective, or true, annual rate of return. The APY is the rate actually
If stock X appreciates 1.5% in one month, the annualized gain for that sock over a twelve
The annual rate of return that when compounded t times, would have
Arithmetic mean return.
An average of the subperiod returns, calculated by summing the subperiod returns
Also known as a trading Index (TRIN)= (number of advancing issues)/ (number of declining
The average project earnings after taxes and depreciation divided by the average
The ratio of accounts receivables to sales, or the total
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
Gives the lessee the option to purchase the asset at a price below fair market
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:
Bill of exchange
General term for a document demanding payment.
Designing a portfolio so that its performance will match the performance of some bond Index.
A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face
Related: Premium payback period.
Buying the index
Purchasing the stocks in the S&P 500 in the same proportion as the Index to achieve the
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.
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
An investment company that sells shares like any other corporation and usually does not
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
The length of the time period (for example, a quarter in the case of quarterly
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Cost of funds
Interest rate associated with borrowing money.
The length of time for which the customer is granted credit.
Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the
Those points designated by futures exchanges at which the financial instrument or
The period during which a customer can deduct the discount from the net amount of the bill
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an
Dividend yield (Funds)
Indicated yield represents return on a share of a mutual fund held over the past 12
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
The European, Australian, and Far East stock Index, computed by Morgan Stanley.
Electronic data interchange (EDI)
The exchange of information electronically, directly from one firm's
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
Also called Indexing plus, an Indexing strategy whose objective is to exceed or replicate
The time interval over which a money manager's performance is evaluated.
Ex post return
Related: Holding period return
The expected return of a portfolio based on the expected returns of its component assets and
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Also called abnormal returns, returns in excess of those required by some asset pricing model.
The marketplace in which shares, options and futures on stocks, bonds, commodities and indices
A nickname for the New York stock exchange. Also known as the Big Board. More than
Governmental restrictions on the purchase of foreign currencies by domestic citizens or
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
The price of one country's currency expressed in another country's currency.
Exchange Rate Mechanism (ERM)
The methodology by which members of the EMS maintain their
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Security that grants the security holder the right to exchange the security for the
Expected future return
The return that is expected to be earned on an asset in the future. Also called the
The return expected on a risky asset based on a probability distribution for the possible rates
Expected return on investment
The return one can expect to earn on an investment. See: capital asset
Expected return-beta relationship
Implication of the CAPM that security risk premiums will be
Non-interest bearing deposits held in reserve for depository institutions at their district Federal
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
Federal funds rate
This is the interest rate that banks with excess reserves at a Federal Reserve district bank
A country's decision to tie the value of its currency to another country's currency, gold
Floating exchange rate
A country's decision to allow its currency value to freely change. The currency is not
Currency from another country.
Foreign exchange controls
Various forms of controls imposed by a government on the purchase/sale of
Foreign exchange dealer
A firm or individual that buys foreign exchange from one party and then sells it to
Foreign exchange risk
The risk that a long or short position in a foreign currency might have to be closed out
Foreign exchange swap
An agreement to exchange stipulated amounts of one currency for another currency
Forward exchange rate
Exchange rate fixed today for exchanging currency at some future date.
Forward Fed funds
Fed funds traded for future delivery.
Set of funds with different investment objectives offered by one management company. In many
Security analysis that seeks to detect misvalued securities by an analysis of the firm's
The product of a statistical model to predict the fundamental risk of a security using not
In the model for calculating fundamental beta, ratios in risk Indexes other than
Debt maturing after more than one year.
The ratio of a pension plan's assets to its liabilities.
Related: interest rate risk
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
Geometric mean return
Also called the time weighted rate of return, a measure of the compounded rate of
A mutual fund that can invest anywhere in the world, including the U.S.
Gold exchange standard
A system of fixing exchange rates adopted in the Bretton Woods agreement. It
An international monetary system in which currencies are defined in terms of their gold
Warrant that allows the user to purchase a bond only by surrendering an existing bond
A fund that may employ a variety of techniques to enhance returns, such as both buying and
High-coupon bond refunding
Refunding of a high-coupon bond with a new, lower coupon bond.
Historical exchange rate
An accounting term that refers to the exchange rate in effect when an asset or
Length of time that an individual holds a security.
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