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Definition of Equity Buy-Back
Refers to the investors percentage ownership of a company that can be re-acquired by the company, usually at a pre-determined amount.
The discount rate that reflects only the business risks of a project and abstracts from the
The ratio of total assets to stockholder equity.
A security that is collateralized by loans, leases, receivables, or installment contracts
The fee paid on the extension date if the buyer wishes to continue the option.
Brokerage house clerical operations that support, but do not include, the trading of stocks and
An intercompany loan channeled through a bank.
A loan in which two companies in separate countries borrow each other's currency for a
1) When bond yields and prices fall, the market is said to back-up.
A market condition in which futures prices are lower in the distant delivery months than in
A management style that de-emphasizes the significance of economic
A mortgage loan on newly developed property that the builder subsidizes during the
To purchase an asset; taking a long position.
To cover, offset or close out a short position. Related: evening up, liquidation.
A conditional trading order that indicates a security may be purchased only at the designated
To buy at the end of the trading session at a price within the closing range.
Buy on margin
A transaction in which an investor borrows to buy additional shares, using the shares
Buy on opening
To buy at the beginning of a trading session at a price within the opening range.
A passive investment strategy with no active buying and selling of stocks from the
Mortgages in which monthly payments consist of principal and interest, with portions of these
Buying the index
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the
Purchase of a controlling interest (or percent of shares) of a company's stock. A leveraged buy-out is
Another term for a repo.
A financial analyst employed by a non-brokerage firm, typically one of the larger money
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A common term for convertible bonds because of their equity component and the
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an
With respect to a project financing, an arrangement under which the sponsors of a project
Dual syndicate equity offering
An international equity placement where the offering is split into two
Represents ownership interest in a firm. Also the residual dollar value of a futures trading account,
An agreement in which one party, for an upfront premium, agrees to compensate the other at
Also called a residual claim, a claim to a share of earnings after debt obligation have been
The simultaneous purchase of an equity floor and sale of an equity cap.
Equity contribution agreement
An agreement to contribute equity to a project under certain specified
An agreement in which one party agrees to pay the other at specific time periods if a specific
Used to refer to warrants because they are usually issued attached to privately placed bonds.
Total assets divided by total common stockholders' equity; the amount of total assets per
Securities that give the holder the right to buy or sell a specified number of shares of stock, at
A swap in which the cash flows that are exchanged are based on the total return on some stock
Related: Variable life
Those holding shares of the firm's equity.
Securities sold in the Euromarket. That is, securities initially sold to investors
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
GEMs (growing-equity mortgages)
Mortgages in which annual increases in monthly payments are used to
The balance of a margin account. Related: buying on margin, initial margin requirement.
Leveraged buyout (LBO)
A transaction used for taking a public corporation private financed through the use
Stock in a firm that relies on financial leverage. Holders of leveraged equity face the
Limitation on sale-and-leaseback
A bond covenant that restricts in some way a firm's ability to enter into
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
An option that allows the buyer to choose as the option strike price any price of the
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
Securities backed by a pool of mortgage loans.
Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected
The length of time it takes to recover the initial cost of a project, without regard to the time value of money.
Related: retention rate.
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a
Protective put buying strategy
A strategy that involves buying a put option on the underlying security that is
Return on equity (ROE)
Indicator of profitability. Determined by dividing net income for the past 12
Sale and lease-back
Sale of an existing asset to a financial institution that then leases it back to the user.
This is a company's total assets minus total liabilities. A company's net worth is the
Balance sheet item that includes the book value of ownership in the corporation. It
The residual claims that stockholders have against a firm's assets, calculated by
Stratified equity indexing
A method of constructing a replicating portfolio in which the stocks in the index
Stripped mortgage-backed securities (SMBSs)
Securities that redistribute the cash flows from the
The sale of an interest rate swap by one counterparty to the other, effectively ending the swap.
Tax clawback agreement
An agreement to contribute as equity to a project the value of all previously
Top-down equity management style
A management style that begins with an assessment of the overall
Total debt to equity ratio
A capitalization ratio comparing current liabilities plus long-term debt to
RATE OF RETURN ON STOCKHOLDERS’ EQUITY
The percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it:
RATIO OF DEBT TO STOCKHOLDERS’ EQUITY
A ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company:
STOCKHOLDERS’ (OR OWNERS’) EQUITY
The value of the owners’ interests in a company.
Funds raised from shareholders.
The retrospective process of measuring performance, comparing it with plan and taking corrective action.
A method of investment appraisal that calculates the number of years taken for the cash flows from an investment to cover the initial capital outlay.
An account that reduces an equity account. An example is Treasury stock.
Amounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings).
The total amount of contributed capital and retained earnings; synonymous with stockholders' equity.
The total amount of contributed capital and retained earnings; synonymous with shareholders’ equity.
A widely used financial statement ratio to assess the
Refers to one of the two basic sources of capital for a business, the
Refers to the capital invested in a business by its shareowners
return on equity (ROE)
This key ratio, expressed as a percent, equals net
stockholders' equity, statement of changes in
Although often considered
Cost of Equity
Same as the cost of common stock. Sometimes viewed as the
The number of years necessary for the net cash flows of an
Return on Common Equity Ratio
A measure of the percentage return earned on the value of the
a streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires
a system using transfer prices; see transfer
a decision that compares the cost of
the time it takes an investor to recoup an
The difference between the total of all recorded assets and liabilities on the balance
The purchase of one business entity by another, largely using borrowed
The offsetting of a current year loss against the reported taxable
The total of all capital contributions and retained earnings on a business’s
A capital budgeting analysis method that calculates the amount of
leveraged buyout (LBO)
Acquisition of the firm by a private group using substantial borrowed funds.
management buyout (MBO)
Acquisition of the firm by its own management in a leveraged buyout.
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