Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
Main Page: stock trading, inventory control, business, payroll, inventory, investment, financial advisor, accounting,
Definition of discount rate
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 interest rate that the Federal Reserve charges a bank to borrow funds when a bank is
The rate of interest used to calculate the present value of a stream
the rate of return used to discount future cash
Interest rate used to compute present values of future cash flows.
The interest rate at which the Fed is prepared to loan reserves to commercial banks.
A rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
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 discount rate that reflects only the business risks of a project and abstracts from the
Accept the project if IRR is greater than the discount rate; reject the project is lower than the
A discount rate used to find the present value of a series of future cash receipts. Sometimes called discount rate.
Also called the Gordon-Shapiro model, an application of the dividend discount
The discount rate that should be used in the capital budgeting process.
The discount rate that equates the after-tax inflows with outflows for capital
The curve of discount rates vs. maturity dates for bonds.
The Federal Reserve facility at which reserves are loaned to banks at the discount rate.
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.
Dollar-weighted rate of return. discount rate at which net present value (NPV)
a. The average annual yield earned by an investment during the period held.
The precise discount rate that makes the
The discount rate that equates the present value of the net cash
the expected or actual rate of
internal rate of return (IRR)
discount rate at which project NPV = 0.
log size model
Abrams’ model to calculate discount rates as a function of the logarithm of the value of the firm.
Market capitalization rate
Expected return on a security. The market-consensus estimate of the appropriate
A graph of NPV as a function of the discount rate.
present value (PV)
This amount is calculated by discounting the future
PV (present value of cash flows)
the value in today’s dollars of cash flows that occur in different time periods.
QMDM (quantitative marketability discount model)
model for calculating DLOM for minority interests r the discount rate
an assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR
weighted-average cost of capital
Weighted means that the proportions of
Accelerated cost recovery system (ACRS)
Schedule of depreciation rates allowed for tax purposes.
Any depreciation method that produces larger deductions for depreciation in the
(1) The estimated useful life of the fixed asset being depreciated is
Any of several methods that recognize an increased amount
Accounting rate of return (ARR)
A method of investment appraisal that measures
accounting rate of return (ARR)
the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow
Accretion (of a discount)
In portfolio accounting, a straight-line accumulation of capital gains on discount
Active portfolio strategy
A strategy that uses available information and forecasting techniques to seek a
ad hoc discount
a price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased
ADF (annuity discount factor)
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may be collateralized by mortgages and MBSs.
After-tax real rate of return
Money after-tax rate of return minus the inflation rate.
Amortizing interest rate swap
Swap in which the principal or national amount rises (falls) as interest rates
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5%
annual percentage rate (APR)
Interest rate that is annualized using simple interest.
Arithmetic average (mean) rate of return
Arithmetic mean return.
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
Average tax rate
Taxes as a fraction of income; total taxes divided by total taxable income.
average tax rate
Total taxes owed divided by total income.
Bank discount basis
A convention used for quoting bids and offers for treasury bills in terms of annualized
A strategy in which the maturities of the securities included in the portfolio are concentrated
Base interest rate
Related: Benchmark interest rate.
Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.
Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will
Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
book rate of return
Accounting income divided by book value.
Break-even payment rate
The prepayment rate of a MBS coupon that will produce the same CFY as that of
Break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering
Broker loan rate
Related: Call money rate.
A strategy in which a portfolio is constructed so that the maturities of its securities are highly
A passive investment strategy with no active buying and selling of stocks from the
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
cash burn rate
A relatively recent term that refers to how fast a business
An incentive offered to purchasers of a firm's product for payment within a specified time
A strategy in which a put and with the same strike price and expiration are either both
a foundation for the compensation plan that addresses the role compensation should play in the organization
computer integrated manufacturing (CIM)
the integration of two or more flexible manufacturing systems through the use of a host computer and an information networking system
an organizational strategy in which company management decides to confront, rather than avoid, competition; an organizational strategy in which company management still attempts to differentiate company
A firm engaged in two or more unrelated businesses.
A merger involving two or more firms that are in unrelated businesses.
constant-growth dividend discount model
Version of the dividend discount model in which dividends grow at a constant rate.
The process of calculating the present value of a stream of future
The percentage tax charged by a state to an employer to
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 leadership strategy
a plan to achieve the position in a
In bonds, notes or other fixed income securities, the stated percentage rate of interest, usually
The rate of interest paid on a debt security. Generally stated on an
The nominal interest rate that the issuer promises to pay the
Annual interest payment as a percentage of face value.
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
The interest rate offered on an investment type insurance policy.
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates
The return at which two alternative projects have the same net present value.
Current rate method
Under this currency translation method, all foreign currency balance-sheet and income
Refers to multi-period cash flow matching.
A bond issued with a very low coupon or no coupon and selling at a price far below par
a technique for avoiding competition by distinguishing a product or service from that of competitors through adding sufficient value (including quality and/or features) that customers are willing to pay
Referring to the selling price of a bond, a price below its par value. Related: premium.
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.
Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.