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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
Bond or note secured by assets of company.
A security that is collateralized by loans, leases, receivables, or installment contracts
The ratio of total assets to stockholder equity.
The fee paid on the extension date if the buyer wishes to continue the option.
The subsequent subtraction from inventory records of those parts used
Brokerage house clerical operations that support, but do not include, the trading of stocks and
This term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application.
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 procedure for making the effective date of a policy earlier than the application date. backdating is often used to make the age of the consumer at policy issue lower than it actually was in order to get a lower premium.
a streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires
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
Builder buydown loan
A mortgage loan on newly developed property that the builder subsidizes during the
To purchase an asset; taking a long position.
A passive investment strategy with no active buying and selling of stocks from the
Another term for a repo.
To cover, offset or close out a short position. Related: evening up, liquidation.
Buy limit order
A conditional trading order that indicates a security may be purchased only at the designated
Buy on close
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.
This is an agreement entered into by the owners of a business to define the conditions under which the interests of each shareholder will be bought and sold. The agreement sets the value of each shareholders interest and stipulates what happens when one of the owners wishes to dispose of his/her interest during his/her lifetime as well as disposal of interest upon death or disability. Life insurance, critical illness coverage and disability insurance are major considerations to help fund this type of agreement.
A financial analyst employed by a non-brokerage firm, typically one of the larger money
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
a system using transfer prices; see transfer
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
One of two parties to a conditional sale agreement, the other being the conditional seller.
An account that reduces an equity account. An example is Treasury stock.
Cost of Equity
Same as the cost of common stock. Sometimes viewed as the
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A comparison of debt to equity in a company's capital structure.
A widely used financial statement ratio to assess the
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,
Funds raised from shareholders.
Amounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings).
Refers to one of the two basic sources of capital for a business, the
The difference between the total of all recorded assets and liabilities on the balance
Ownership. Common stock represents equity in a corporation.
The net worth of a business, consisting of capital stock, capital (or paid-in) surplus (or retained earnings), and, occasionally, certain net worth reserves. Common equity is that part of the total net worth belonging to the common shareholders. Total equity includes preferred shareholders. The terms common stock, net worth, and common equity are frequently used interchangeably.
The net worth of a company. This represents the ownership interest of the shareholders (common and preferred) of a company. For this reason, shares or stocks are often known as equities.
Life insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio.
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
Through equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.
Used to refer to warrants because they are usually issued attached to privately placed bonds.
Related: Variable life
Accounting method for an equity security in cases where the investor has sufficient
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
An ownership interest in an enterprise, including preferred and common stock.
A swap in which the cash flows that are exchanged are based on the total return on some stock
Those holding shares of the firm's equity.
Securities sold in the Euromarket. That is, securities initially sold to investors
The retrospective process of measuring performance, comparing it with plan and taking corrective action.
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
The purchase of items exceeding the quantity levels indicated
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.
The purchase of one business entity by another, largely using borrowed
Leveraged buyout (LBO)
A transaction used for taking a public corporation private financed through the use
leveraged buyout (LBO)
Acquisition of the firm by a private group using substantial borrowed funds.
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
The offsetting of a current year loss against the reported taxable
a decision that compares the cost of
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
management buyout (MBO)
Acquisition of the firm by its own management in a leveraged buyout.
Securities backed by a pool of mortgage loans.
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected
Refers to the capital invested in a business by its shareowners
The total of all capital contributions and retained earnings on a business’s
The length of time it takes to recover the initial cost of a project, without regard to the time value of money.
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.
The length of time required for the net revenues of an investment for the net revenues of an investment to return the cost of the investment.
A capital budgeting analysis method that calculates the amount of
The number of years necessary for the net cash flows of an
the time it takes an investor to recoup an
Time until cash flows recover the initial investment of the project.
Related: retention rate.
Fraction of earnings retained by the firm.
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
Funds, other than paid-up capital and retained earnings, employed in a business and which will remain in a business as permanent capital.
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