Financial Terms

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Definition of EDGAR

EDGAR Image 1


The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit
company documents such as 10-Ks, 10-Qs, quarterly reports, and other SEC filings, to investors.

Related Terms:


Annual report required by the SEC each year. Provides a comprehensive overview of a company's state
of business. Must be filed within 90 days after fiscal year end. A 10Q report is filed quarterly.

Accumulated Other Comprehensive Income

Cumulative gains or losses reported in shareholders'
equity that arise from changes in the fair value of available-for-sale SECurities, from the
effects of changes in foreign-currency Exchange rates on consolidated foreign-currency financial
statements, certain gains and losses on financial derivatives, and from adjustments for underfunded
pension plans.

Allocation base A measure of activity or volume such as labour

hours, machine hours or volume of production
used to apportion overheads to products and

American Stock Exchange (AMEX)

The SECond-largest stock Exchange in the United States. It trades
mostly in small-to medium-sized companies.

Asset-Backed Securities

Bond or note SECured by assets of company.

Asset-backed security

A SECurity that is collateralized by loans, leases, receivables, or installment contracts
on personal property, not real estate.

Automated storage/retrieval system

A racking system using automated systems
to load and unload the racKs.

EDGAR Image 1

Available-for-Sale Security

A debt or equity SECurity not classified as a held-to-maturity SECurity or a trading SECurity. Can be classified as a current or noncurrent investment depending on the intended holding period.

Beta equation (Stocks)

The beta of a stock is determined as follows:
[(n) (sum of (xy)) ]-[(sum of x) (sum of y)]
[(n) (sum of (xx)) ]-[(sum of x) (sum of x)]
where: n = # of observations (24-60 months)
x = rate of return for the S&P 500 Index
y = rate of return for the stock

Bill of exchange

General term for a document demanding payment.

Blue-chip company

Large and creditworthy company.

Book-entry securities

The Treasury and federal agencies are moving to a book-entry system in which SECurities are not represented by engraved pieces of paper but are maintained in computerized records at the
Fed in the names of member banKs, which in turn keep records of the SECurities they own as well as those they
are holding for customers. In the case of other SECurities where a book-entry has developed, engraved
SECurities do exist somewhere in quite a few cases. These SECurities do not move from holder to holder but are
usually kept in a central clearinghouse or by another agent.

Chicago Mercantile Exchange (CME)

A not-for-profit corporation owned by its members. Its primary
functions are to provide a location for trading futures and options, collect and disseminate market information,
maintain a clearing mechanism and enforce trading rules.


The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or
their dollar value. In 1975, deregulation led to the creation of discount brokers, who charge lower
Commissions than full service brokers. Full service brokers offer advice and usually have a full staff of
analysts who follow specific industries. Discount brokers simply execute a client's order -- and usually do not
offer an opinion on a stock. Also known as a round-turn.

Commission broker

A broker on the floor of an Exchange acts as agent for a particular brokerage house and
who buys and sells stocKs for the brokerage house on a Commission basis.

Commission house

A firm which buys and sells future contracts for customer accounts. Related: futures
Commission merchant, omnibus account.

EDGAR Image 2

Commodities Exchange Center (CEC)

The location of five New York futures Exchanges: Commodity
Exchange, Inc. (COMEX), the New York Mercantile Exchange (NYMEX), the New York Cotton Exchange,
the Coffee, Sugar and Cocoa Exchange (CSC), and the New York futures Exchange (NYFE). common size
statement A statement in which all items are expressed as a percentage of a base figure, useful for purposes of
analyzing trends and the changing relationship between financial statement items. For example, all items in
each year's income statement could be presented as a percentage of net sales.

Common stock/other equity

Value of outstanding common shares at par, plus accumulated retained
earnings. Also called shareholders' equity.

Company Acquisitions

Assets acquired to create money. May include plant, machinery and equipment, shares of another company etc.

company cost of capital

Expected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations.

Company-specific risk

Related: Unsystematic risk

Companyspecific Risk

See asset-specific risk

Consigned stocks

Inventories owned by a company, but located on the premises
of its agents or distributors.

Consortium banks

A merchant banking subsidiary set up by several banKs that may or may not be of the
same nationality. Consortium banKs are common in the Euromarket and are active in loan syndication.

Convertible exchangeable preferred stock

Convertible preferred stock that may be Exchanged, at the
issuer's option, into convertible bonds that have the same conversion features as the convertible preferred

Convertible security

A SECurity that can be converted into common stock at the option of the SECurity holder,
including convertible bonds and convertible preferred stock.

Cost company arrangement

Arrangement whereby the shareholders of a project receive output free of
charge but agree to pay all operating and financing charges of the project.

Cross-sectional approach

A statistical methodology applied to a set of firms at a particular point in time.

Customized benchmarks

A benchmark that is designed to meet a client's requirements and long-term


bits of knowledge or facts that have not been summarized
or categorized in a manner useful to a decision maker

data mining

a form of analysis in which statistical techniques
are used to uncover answers to important questions about
business operations

Debt securities

IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
other instruments.

Debt Security

A SECurity representing a debt relationship with an enterprise, including a government
SECurity, municipal SECurity, corporate bond, convertible debt issue, and commercial

Departmental stocks

The informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock.

Depository Trust Company (DTC)

DTC is a user-owned SECurities depository which accepts deposits of
eligible SECurities for custody, executes book-entry deliveries and records book-entry pledges of SECurities in
its custody, and provides for withdrawals of SECurities from its custody.

Derivative security

A financial SECurity, such as an option, or future, whose value is derived in part from the
value and characteristics of another SECurity, the underlying SECurity.

Discount securities

Non-interest-bearing money market instruments that are issued at a discount and
redeemed at maturity for full face value, e.g. U.S. Treasury bills.

Dividend yield (Stocks)

Indicated yield represents annual dividends divided by current stock price.

e-commerce (electronic commerce)

any business activity that uses the Internet and World Wide Web to engage in financial transactions

Effective Exchange Rate

The weighted average of several Exchange rates, where the weights are determined by the extent of our trade done with each country.

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.

Electronic data interchange (EDI)

The Exchange of information Electronically, directly from one firm's
computer to another firm's computer, in a structured format.

electronic data interchange (EDI)

the computer-to-computer transfer of information in virtual real time using standardized formats developed by the American National Standards Institute

Electronic depository transfers

The transfer of funds between bank accounts through the Automated
Clearing House (ACH) system.

Electronic Federal Tax Payment Systems (EFTPS)

An Electronic funds transfer system used by businesses to remit taxes to the government.

Employee Retirement Income Security Act of 1974 (ERISA)

A federal Act that sets minimum operational and funding standards for employee benefit

Equation of Exchange

The quantity theory equation Mv = PQ.

Equity Security

An ownership interest in an enterprise, including preferred and common stock.


The marketplace in which shares, options and futures on stocKs, bonds, commodities and indices
are traded. Principal US stock Exchanges are: New York Stock Exchange (NYSE), American Stock Exchange
(AMEX) and the National Association of SECurities Dealers (NASDAQ)

Exchange controls

Governmental restrictions on the purchase of foreign currencies by domestic citizens or
on the purchase of the local domestic currency by foreigners.

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.

Exchange offer

An offer by the firm to give one SECurity, such as a bond or preferred stock, in Exchange for
another SECurity, such as shares of common stock.

Exchange rate

The price of one country's currency expressed in another country's currency.

exchange rate

Amount of one currency needed to purchase one unit of another.

Exchange Rate Mechanism (ERM)

The methodology by which members of the EMS maintain their
currency Exchange rates within an agreed upon range with respect to other member countries.

Exchange Rate, Nominal

The price of one currency in terms of another, in this book defined as number of units of foreign currency per dollar.

Exchange Rate, Real

The nominal Exchange rate corrected for price level differences.

Exchange rate risk

Also called currency risk, the risk of an investment's value changing because of currency
Exchange rates.

Exchange risk

The variability of a firm's value that results from unexpected Exchange rate changes or the
extent to which the present value of a firm is expected to change as a result of a given currency's appreciation
or depreciation.

Exchangeable Security

SECurity that grants the SECurity holder the right to Exchange the SECurity for the
common stock of a firm other than the issuer of the SECurity.

Exempt securities

Instruments exempt from the registration requirements of the SECurities Act of 1933 or the
margin requirements of the SEC Act of 1934. such SECurities include government bonds, agencies, munis,
commercial paper, and private placements.

expectations theory of exchange rates

Theory that expected spot Exchange rate equals the forward rate.

Federal agency securities

SECurities issued by corporations and agencies created by the U.S. government,
such as the Federal Home Loan Bank Board and Ginnie Mae.

Federal Home Loan Banks

The institutions that regulate and lend to savings and loan associations. The
Federal Home Loan BanKs play a role analogous to that played by the Federal Reserve BanKs vis-à-vis
member commercial banKs.

Federal Reserve Banks

The twelve district banKs in the Federal Reserve System.

Finance Company

company engaged in making loans to individuals or businesses. Unlike a bank, it does not receive deposits from the public.

financial reports and statements

Financial means having to do with
money and economic wealth. Statement means a formal presentation.
Financial reports are printed and a copy is sent to each owner and each
major lender of the business. Most public corporations make their financial
reports available on a web site, so all or part of the financial report
can be downloaded by anyone. Businesses prepare three primary financial
statements: the statement of financial condition, or balance sheet;
the statement of cash flows; and the income statement. These three key
financial statements constitute the core of the periodic financial reports
that are distributed outside a business to its shareowners and lenders.
Financial reports also include footnotes to the financial statements and
much other information. Financial statements are prepared according to
generally accepted accounting principles (GAAP), which are the authoritative
rules that govern the measurement of net income and the reporting
of profit-making activities, financial condition, and cash flows.
Internal financial statements, although based on the same profit
accounting methods, report more information to managers for decision
making and control. Sometimes, financial statements are called simply

Financial reports or statements

The Profit and Loss account, Balance Sheet and Cash Flow statement of a business.

Fixed-dollar security

A nonnegotiable debt SECurity that can be redeemed at some fixed price or according to
some schedule of fixed values, e.g., bank deposits and government savings bonds.

Fixed-exchange rate

A country's decision to tie the value of its currency to another country's currency, gold
(or another commodity), or a basket of currencies.

Fixed Exchange Rate

An Exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign Exchange market.

Fixed-income security

A SECurity that pays a specified cash flow over a
specific period. Bonds are typical fixed-income SECurities.

Flexible Exchange Rate

An Exchange rate whose value is determined by the forces of supply and demand on the foreign Exchange market.

Floating exchange rate

A country's decision to allow its currency value to freely change. The currency is not
constrained by central bank intervention and does not have to maintain its relationship with another currency
in a narrow band. The currency value is determined by trading in the foreign Exchange market.

Floating Exchange Rate

See flexible Exchange rate.

floating-rate security

SECurity paying dividends or interest that vary with short-term interest rates.

Floor stocks

Low-cost, high-usage inventory items stored near the shop floor,
which the production staff can use at will without a requisition and which are
expensed at the time of receipt, rather than being accounted for through a formal
inventory Database.

Foreign exchange

Currency from another country.

Foreign Exchange

The currency of a foreign country.

Foreign exchange controls

Various forms of controls imposed by a government on the purchase/sale of
foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

Foreign exchange dealer

A firm or individual that buys foreign Exchange from one party and then sells it to
another party. The dealer makes the difference between the buying and selling prices, or spread.

Foreign Exchange Market

A worldwide market in which one country's currency is bought or sold in Exchange for another country's currency.

Foreign Exchange Reserves

A fund containing the central bank's holdings of foreign currency or claims thereon.

Foreign exchange risk

The risk that a long or short position in a foreign currency might have to be closed out
at a loss due to an adverse movement in the currency rates.

Foreign exchange swap

An agreement to Exchange stipulated amounts of one currency for another currency
at one or more future dates.

Form 1099

A form used by businesses to report to the government payments
made to certain types of suppliers.

Forward Exchange Market

A market in which foreign Exchange can be bought or sold for delivery (and payment) at some specified future date but at a price agreed upon now.

Forward exchange rate

Exchange rate fixed today for exchanging currency at some future date.

forward rate of exchange

Exchange rate for a forward transaction.

Futures commission merchant

A firm or person engaged in soliciting or accepting and handling orders for
the purchase or sale of futures contracts, subject to the rules of a futures Exchange and, who, in connection
with such solicitation or acceptance of orders, accepts any money or SECurities to margin any resulting trades
or contracts. The FCM must be licensed by the CFTC. Related: Commission house , omnibus account

Gold exchange standard

A system of fixing Exchange rates adopted in the Bretton Woods agreement. It
involved the U.S. pegging the dollar to gold and other countries pegging their currencies to the dollar.

Government securities

Negotiable U.S. Treasury SECurities.


Collectively, "greeKs" refer to the financial measures delta, gamma,
lambda, rho, theta, and vega, which are sensitivity measures used in
evaluating derivatives.

Held-to-Maturity Security

A debt SECurity for which the investing entity has both the positive
intent and the ability to hold until maturity.

Historical exchange rate

An accounting term that refers to the Exchange rate in effect when an asset or
liability was acquired.

Holding company

A corporation that owns enough voting stock in another firm to control management and
operations by influencing or electing its board of directors.

Host security

The SECurity to which a warrant is attached.

Hybrid security

A convertible SECurity whose optioned common stock is trading in a middle range, causing
the convertible SECurity to trade with the characteristics of both a fixed-income SECurity and a common stock

Institutional investors

Organizations that invest, including insurance companies, depository institutions,
pension funds, investment companies, mutual funds, and endowment funds.







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