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Definition of Discount period
The period during which a customer can deduct the discount from the net amount of the bill
An investment decision rule in which the cash flows are discounted at an
The period of time between the end of the discount period and the date payment is due.
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
an amount or percentage deducted from a pro rata share of the value of 100% of an equity interest in a business, to reflect the absence of some or all of the powers of control.
an amount or percentage deducted from an equity interest to reflect lack of marketability.
the rate of return on investment that would be required by a prudent investor to invest in an asset with a specific level risk. Also, a rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
the combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor.
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity.
model for calculating DLOM for minority interests r the discount rate
In portfolio accounting, a straight-line accumulation of capital gains on discount
The annual rate of return that when compounded t times, would have
The ratio of accounts receivables to sales, or the total
A convention used for quoting bids and offers for treasury bills in terms of annualized
An incentive offered to purchasers of a firm's product for payment within a specified time
The length of the time period (for example, a quarter in the case of quarterly
The length of time for which the customer is granted credit.
A bond issued with a very low coupon or no coupon and selling at a price far below par
Referring to the selling price of a bond, a price below its par value. Related: premium.
Debt sold for less than its principal value. If a discount bond pays no interest, it is called a
Present value of $1 received at a stated future date.
The interest rate that the Federal Reserve charges a bank to borrow funds when a bank is
Non-interest-bearing money market instruments that are issued at a discount and
Facility provided by the Fed enabling member banks to borrow reserves against collateral
Selling something on a discounted basis is selling below what its value will be at maturity,
Discounted cash flow (DCF)
Future cash flows multiplied by discount factors to obtain present values.
Discounted dividend model (DDM)
A formula to estimate the intrinsic value of a firm by figuring the
Calculating the present value of a future amount. The process is opposite to compounding.
Dividend discount model (DDM)
A model for valuing the common stock of a company, based on the
Documented discount notes
Commercial paper backed by normal bank lines plus a letter of credit from a
The time interval over which a money manager's performance is evaluated.
A currency trades at a forward discount when its forward price is lower than its spot price.
Length of time that an individual holds a security.
Holding period return
The rate of return over a given period.
A portfolio strategy in which a portfolio is created that will be capable of
In the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not
Original issue discount debt (OID debt)
Debt that is initially offered at a price below par.
A bond that will make only one payment of principal and interest. Also called a zerocoupon
The return of a portfolio over a shorter period of time than the evaluation period.
T-period holding-period return
The percentage return over the T-year period an investment lasts.
Time during which the SEC studies a firm's registration statement. During this time the firm
Realignment period of a temporary misaligned yield relationship that sometimes occurs in
The period of time for which financial statements are produced – see also financial year.
Discounted cash flow (DCF)
A method of investment appraisal that discounts future cash flows to present value using a discount rate, which is the risk-adjusted cost of capital.
The costs that relate to a period of time.
Periodic inventory system
An inventory system in which the balance in the Inventory account is adjusted for the units sold only at the end of the period.
A contra account that reduces purchases by the amount of the discounts taken for early payment.
A contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales.
discounted cash flow (DCF)
Refers to a capital investment analysis technique
Average Collection Period
Average number of days necessary to receive cash for the sale of
The process of calculating the present value of a stream of future
The rate of interest used to calculate the present value of a stream
The process of calculating the present value of a stream of future
The number of years necessary for the net cash flows of an
ad hoc discount
a price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased
the time between each interest computation
the process of reducing future cash flows to present value amounts
the rate of return used to discount future cash
the time it takes an investor to recoup an
cost other than one associated with making or acquiring inventory
a pay plan based on the time spent on the task rather than the work accomplished
risk-adjusted discount rate method
a formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk
The curve of discount rates vs. maturity dates for bonds.
Odd first or last period
Fixed-income securities may be purchased on dates
Discounted cash flow
A technique that determines the present value of future cash
The time period for which transactions are compiled into a set of financial statements.
A reduction in the price of a product or service that is offered by the
constant-growth dividend discount model
Version of the dividend discount model in which dividends grow at a constant rate.
Present value of a $1 future payment.
Interest rate used to compute present values of future cash flows.
dividend discount model
Computation of today’s stock price which states that share value equals the present value of all expected future dividends.
Time until cash flows recover the initial investment of the project.
The percentage amount at which bonds sell below their par value. Also the percentage amount at which a currency sells on the forward market below its current rate on the spot market.
A bond with no coupons, priced below its face value; the return on this bond comes from the difference between its face value and its current price.
Calculating the present value of a future payment.
The interest rate at which the Fed is prepared to loan reserves to commercial banks.
The Federal Reserve facility at which reserves are loaned to banks at the discount rate.
Average Amortization Period
The average useful life of a company's collective amortizable asset base.
Extended Amortization Period
An amortization period that continues beyond a long-lived asset's economic useful life.
Extended Amortization Periods
Amortizing capitalized expenditures over estimated useful lives that are unduly optimistic.
A physical inventory count taken on a repetitive basis.
A specific period of time after a premium payment is due during which the policy owner may make a payment, and during which, the protection of the policy continues. The grace period usually ends in 30 days.
In October 1996 it was announced in the international news that scientists had finally located the link between cigarette smoking and lung cancer. In the early 1980's, some Canadian Life Insurance Companies had already started recognizing that non-smokers had a better life expectancy than smokers so commenced offering premium discounts for life insurance to new applicants who have been non-smokers for at least 12 months before applying for coverage. Today, most life insurance companies offer these discounts.
Critical Growth Periods
Times in a company's history when growth is essential and without which survival of the business might be in jeopardy.
A rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
Discounted Cash Flow
Techniques for establishing the relative worth of a future investment by discounting (at a required rate of return) the expected net cash flows from the project.
The process of finding the present value of a series of future cash flows. discounting is the reverse of compounding.
Discounting of Accounts Receivable
Short-term financing in which accounts receivable are used as collateral to secure a loan. The lender does not buy the accounts receivable but simply uses them as collateral for the loan. Also called pledging of accounts receivable.
Full Credit Period
The period of trade credit given by a supplier to its customer.
Length of time during which repayments of loan principal are excused. Usually occurs at the start of the loan period.
An amount deducted from an invoice by a supplier in exchange for quick payment (a typical example might be a 2% discount if paid in 10 days or the full amount of the invoice in 30 days).
The time between each payment under an annuity.
Waiting Period (Credit Insurance)
A specific time that must pass following the onset of a covered disability before any benefits will be paid under a creditor disability policy. (Also known as an elimination period).
PV (present value of cash flows)
the value in today’s dollars of cash flows that occur in different time periods.
The most distant months of a futures contract. A bond that sells at a discount and does not
Internal rate of return
a. The average annual yield earned by an investment during the period held.
The Macaulay duration discounted by the per-period
Today’s value of an investment that yields some future value
The amount due on an obligation less any interest on that obligation that would
period of delay allowed by a firm's supplier to pay its invoices. Frequently, the terms are : 2% discount on invoice if paid in 10 days or net if paid in 30 days.
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