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Definition of Disintermediation
Withdrawal of funds from a financial institution in order to invest them directly.
Investment through a financial institution. Related: disintermediation.
The process whereby financial intermediaries channel funds from lender/savers to borrower/spenders.
Mutual funds that do not charge an upfront or back-end commission, but instead take out up to
Mortgage pass-through securities whose principal and interest payments are
The beta of a fund is determined as follows:
The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means
The use of capital to create more money through the addition of fixed assets or through income producing vehicles.
A conditional trading order that indicates a security may be purchased only at the designated
Refers to various techniques and procedures
Money used to purchase fixed assets for a business, such as land, buildings, or machinery. Also, money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses.
Cash receipts and payments involving
A section on the cashflow statement that shows how much cash came in and went out because of various investing activities like purchasing machinery.
Sources of funds internally provided from operations that alter a company's
Officer who oversees the treasurer and controller and sets overall financial strategy.
The investigation of a firm's business in conjunction with a
Also called private-label pass-throughs, any mortgage pass-through security not
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
Cost of funds
Interest rate associated with borrowing money.
costs of financial distress
Costs arising from bankruptcy or distorted business decisions before bankruptcy.
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Refers to the volatility of returns on international investments caused by events associated
An order to buy or sell stock that automatically expires if it can't be executed on the day it is entered.
Discrete order picking
A picking method requiring the sequential completion of
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
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
economic order quantity
order size that minimizes total inventory costs.
Economic order quantity (EOQ)
The order quantity that minimizes total inventory costs.
economic order quantity (EOQ)
an estimate of the number
EFT (electronic funds transfer)
funds which are electronically credited to your account (e.g. direct deposit), or electronically debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly loan or mortgage payment). A wire transfer is a form of EFT.
investment funds established for the support of institutions such as colleges, private
engineering change order (ECO)
a business mandate that changes the way in which a product is manufactured or a
through equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.
Expected return on investment
The return one can expect to earn on an investment. See: capital asset
External Financial Statements
Corporate financial statements that have been reported on by an external independent accountant.
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
Federal Funds Rate
The interest rate at which banks lend deposits at the Federal Reserve to one another overnight.
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
Fill or kill order
A trading order that is canceled unless executed within a designated time period.
The production of financial statements, primarily for those interested parties who are external to the business.
a discipline in which historical, monetary
Also called securities analysts and investment analysts, professionals who analyze
Claims on real assets.
Claims to the income generated by real assets. Also called securities.
Economic assistance provided by unrelated third parties, typically government agencies. They may take the form of loans, loan guarantees, subsidies, tax allowances, contributions, or cost-sharing arrangements.
a plan that aggregates monetary details
The management of a firm's costs and expenses in order to control them in relation to
A feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants.
A promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism.
Events preceding and including bankruptcy, such as violation of loan contracts.
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
Combining or dividing existing instruments to create new financial products.
A contract entered into now that provides for the delivery of a specified asset in exchange
a monetary reward provided for performance
An expression of economic benefit that motivates behavior that might otherwise not take place.
institutions that provide the market function of matching borrowers and lenders or
Firm that raises money from many small investors and provides financing to businesses or other
Any institution, such as a bank, that takes deposits from savers and loans them to borrowers.
The process whereby financial intermediaries channel funds from lender/savers to borrower/spenders.
Long-term, non-cancelable lease.
Lease in which the service provided by the lessor to the lessee is limited to financing equipment. All other responsibilities related to the possession of equipment, such as maintenance, insurance, and taxes, are borne by the lessee. A financial lease is usually noncancellable and is fully paid out amortized over its term.
Use of debt to increase the expected return on equity. financial leverage is measured by
The equity (ownership) capital of a business can serve
Debt financing amplifies the effects of changes in operating income on the returns to stockholders.
Financial leverage clientele
A group of investors who have a preference for investing in firms that adhere to
Financial leverage ratios
Related: capitalization ratios.
An organized institutional structure or mechanism for creating and exchanging financial assets.
Markets in which financial assets are traded.
Financial Numbers Game
The use of creative accounting practices to alter a financial statement
Objectives of a financial nature that the firm will strive to accomplish during the period
A financial blueprint for the financial future of a firm.
The process of evaluating the investing and financing options available to a firm. It
Status of a firm's assets, liabilities, and equity accounts as of a certain time, as shown in its financial statement.
That portion of the media devoted to reporting financial news.
The result of dividing one financial statement item by another. Ratios help analysts interpret
financial reports and statements
financial means having to do with
Financial reports or statements
The Profit and Loss account, Balance Sheet and Cash Flow statement of a business.
The risk that the cash flow of an issuer will not be adequate to meet its financial obligations.
Risk to shareholders resulting from the use of debt.
Ready access to cash or debt financing.
Financial Trend Analysis
Process of analyzing financial statements of a company for any continuing relationship.
The accounting period adopted by a business for the production of its financial statements.
An account for the investment credit to show all income statement benefits of the credit
The practice of reporting to shareholders using straight-line depreciation and
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Forward Fed funds
Fed funds traded for future delivery.
Fraudulent Financial Reporting
Intentional misstatements or omissions of amounts or disclosures
Fully modified pass-throughs
Agency pass-throughs that guarantee the timely payment of both interest and
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
Future investment opportunities
The options to identify additional, more valuable investment opportunities
Future-Oriented Financial Information
Information about prospective results of operations, financial position and/or changes in financial position, based on assumptions about future economic conditions and courses of action. Future-oriented financial information is presented as either a forecast or a projection.
Mutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities.
guaranteed investment certificate (GIC)
A GIC is an investment that gives you a guaranteed rate of return over a fixed period of time, usually between 30 days and 5 years. GICs are available from banks, trust companies, and other financial institutions.
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
Mutual funds that seek regular income. This type of fund invests primarily in government, corporate and other types of bonds, debt securities, and other income producing securities and in certain circumstances can also hold common and preferred shares.
Mutual funds that aim to track the performance of a specific stock or bond index. This process is also referred to as indexing and passive management.
Organizations that invest, including insurance companies, depository institutions,
The gradual domination of financial markets by institutional investors, as opposed to
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