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Definition of Erosion
An innovation that has a negative impact on one or more of a firm's existing assets.
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
A merger or consolidation in which an acquirer purchases the selling firm's assets.
A bond covenant that specifies certain actions the firm must take.
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
A firm's productive resources.
A common element of a financial plan that describes projected capital spending and the
An option is at-the-money if the strike price of the option is equal to the market price of the
Gives the lessee the option to purchase the asset at a price below fair market
Also called the broker loan rate , the interest rate that banks charge brokers to finance
A transaction in which the purchaser's intention is to reduce or eliminate a short position in
he written statement that follows any "trade" in the securities markets. Confirmation is issued
Value of cash, accounts receivable, inventories, marketable securities and other assets that
The purchase by investors of securities directly from the issuer.
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Claims on real assets.
Refers to an order to buy or sell that can be executed without confirmation for some fixed period. Also,
Firm commitment underwriting
An undewriting in which an investment banking firm commits to buy the
Firm's net value of debt
Total firm value minus total firm debt.
See:diversifiable risk or unsystematic risk.
A phase of development in which a company experiences rapid earnings growth as it produces
Money that moves across country borders in response to interest rate differences and that moves
International Monetary Fund
An organization founded in 1944 to oversee exchange arrangements of
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
A put option that has a strike price higher than the underlying futures price, or a call option
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
Law of one price
An economic rule stating that a given security must have the same price regardless of the
Value of property, equipment and other capital assets minus the depreciation. This is an
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
A phase of company development in which earnings continue to grow at the rate of the
For mutual funds, the amount required to open a new account (Minimum Initial
Gold held by governmental authorities as a financial asset.
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
Related: Investment management.
Related: Investment manager.
Money markets are for borrowing and lending money for three years or less. The securities in
Money market demand account
An account that pays interest based on short-term interest rates.
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the
Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Money rate of return
Annual money return as a percentage of asset value.
M1-A: Currency plus demand deposits
A loan repayment schedule in which the outstanding principal balance of the loan
Related: net financing cost
A bond characteristic such that the price appreciation will be less than the price
A bond covenant that limits or prohibits altogether certain actions unless the bondholders agree.
A situation in which the price of the MBS moves in the same direction as interest rates.
Negative pledge clause
A bond covenant that requires the borrower to grant lenders a lien equivalent to any
Neglected firm effect
The tendency of firms that are neglected by security analysts to outperform firms that
The difference between total assets on the one hand and current liabilities and noncapitalized longterm
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of
A tangible asset with unique physical properties, like a parcel of land, a mine, or a
One man picture
The picture quoted by a broker is said to be a one-man picture if both the bid and offered
A special case of the arbitrage pricing theory that is derived from the one-factor model by
1) A market in which only one side, the bid or asked, is quoted or firm.
Open-market purchase operation
A systematic program of repurchasing shares of stock in market
A transaction in which the purchaser's intention is to create or increase a long position in
Other current assets
Value of non-cash assets, including prepaid expenses and accounts receivable, due
A call option is out-of-the-money if the strike price is greater than the market price
In mutual funds, the ability to transfer shares between funds in the same family by
The option of postponing a project without eliminating the possibility of undertaking it.
Precautionary demand (for money)
The need to meet unexpected or extraordinary contingencies with a
Price impact costs
Related: market impact costs
Publicly traded assets
assets that can be traded in a public market, such as the stock market.
To buy, to be long, to have an ownership position.
Method of accounting for a merger in which the acquirer is treated as having purchased
As used in connection with project financing, an agreement to purchase a specific
Purchase and sale
A method of securities distribution in which the securities firm purchases the securities
Resembles a sinking fund except that money is used only to purchase bonds if they are selling
Accounting for an acquisition using market value for the consolidation of the two entities'
Purchasing power parity
The notion that the ratio between domestic and foreign price levels should equal
Related: inflation risk
Current assets minus inventories.
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a
Relative purchasing power parity (RPPP)
Idea that the rate of change in the price level of commodities in
A tangible asset with physical properties that can be reproduced, such as a building or
An agreement with a commitment by the seller (dealer) to buy a security back from
Repurchase of stock
Device to pay cash to firm's shareholders that provides more preferable tax treatment
assets that remain after sufficient assets are dedicated to meet all senior debtholder's claims in full.
Return on assets (ROA)
Indicator of profitability. Determined by dividing net income for the past 12 months
Return on total assets
The ratio of earnings available to common stockholders to total assets.
Willing to pay money to transfer risk from others.
Extended credit for customers who order goods in periods other than peak seasons.
Issue of a security for which there is an existing market. Related: Unseasoned issue.
Seasoned new issue
A new issue of stock after the company's securities have previously been issued. A
Program by which a corporation buys back its own shares in the open market. It is usually
SIMEX (Singapore International Monetary Exchange)
A leading futures and options exchange in Singapore.
The tendency of small firms (in terms of total market capitalization) to outperform the
Speculative demand (for money)
The need for cash to take advantage of investment opportunities that may arise.
Investment principle that states a firm should accept or reject a project by comparing it
Liability-matching models that assume that the liability payments and the asset cash flows
A firm's repurchase of outstanding shares of its common stock.
A firm that is the object of a takeover by another firm.
Target zone arrangement
A monetary system under which countries pledge to maintain their exchange rates
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