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Financial Terms | |
Erosion |
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Definition of ErosionErosionAn innovation that has a negative impact on one or more of a firm's existing assets.
Related Terms:Acquisition of assetsA merger or consolidation in which an acquirer purchases the selling firm's assets. Affirmative covenantA bond covenant that specifies certain actions the firm must take. All or noneRequirement that none of an order be executed unless all of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the underwriter is unable AssetsA firm's productive resources. ASSETSAnything of value that a company owns. AssetsThings that the business owns. ![]() AssetsItems owned by the company or expenses that have been paid for but have not been used up. Assets requirementsA common element of a financial plan that describes projected capital spending and the At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance Closing purchaseA transaction in which the purchaser's intention is to reduce or eliminate a short position in ComponentRaw materials or subassemblies used to make either finished goods Confirmationhe written statement that follows any "trade" in the securities markets. Confirmation is issued Current assetsValue of cash, accounts receivable, inventories, marketable securities and other assets that ![]() Current assetsCash, things that will be converted into cash within a year (such as accounts receivable), and inventory. Current assetsAmounts receivable by the business within a period of 12 months, including bank, debtors, inventory and prepayments. current assetsCurrent refers to cash and those assets that will be turned Current AssetsCash and other company assets that can be readily turned into cash within one year. Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Dow Jones Industrial AverageIndex of the investment performance of a portfolio of 30 “blue-chip” stocks. economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies Exchange of assetsAcquisition of another company by purchase of its assets in exchange for cash or stock. Fiat MoneyFiat Money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category. Financial assetsClaims on real assets. financial assetsClaims to the income generated by real assets. Also called securities. FirmRefers to an order to buy or sell that can be executed without confirmation for some fixed period. Also, Firm commitment underwritingAn undewriting in which an investment banking firm commits to buy the Firm's net value of debtTotal firm value minus total firm debt. Firm-specific riskSee:diversifiable risk or unsystematic risk. Fixed assetsThings that the business owns and are part of the business infrastructure – fixed assets may be fixed assetsAn informal term that refers to the variety of long-term operating Fixed AssetsLand, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation. Fixed Assets Turnover RatioA measure of the utilization of a company's fixed assets to Growth phaseA phase of development in which a company experiences rapid earnings growth as it produces High-Powered MoneySee money base. Hot moneyMoney that moves across country borders in response to interest rate differences and that moves In-the-moneyA put option that has a strike price higher than the underlying futures price, or a call option Intangible assetsassets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises. Intangible fixed assetsNon-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks). International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Fund (IMF)Organization originally established to manage the postwar fixed exchange rate system. International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Intrinsic value of a firmThe present value of a firm's expected future net cash flows discounted by the Law of one priceAn economic rule stating that a given security must have the same price regardless of the law of one priceTheory that prices of goods in all countries should be equal when translated to a common currency. Long-term assetsValue of property, equipment and other capital assets minus the depreciation. This is an Longer-Term Fixed Assetsassets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied. Market impact costsAlso called price impact costs, the result of a bid/ask spread and a dealer's price concession. Maturity phaseA phase of company development in which earnings continue to grow at the rate of the Minimum purchasesFor mutual funds, the amount required to open a new account (Minimum Initial MonetarismSchool of economic thought stressing the importance of the money supply in the economy. Adherents believe that the economy is inherently stable, so that policy is best undertaken through adoption of a policy rule. Monetarist RuleProposal that the money supply be increased at a steady rate equal approximately to the real rate of growth of the economy. Contrast with discretionary policy. Monetary AggregateAny measure of the economy's money supply. Monetary BaseSee money base. Monetary goldGold held by governmental authorities as a financial asset. Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Monetary policyActions taken by the Board of Governors of the Federal Reserve System to influence the Monetary PolicyActions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity. Monetizing the DebtSee printing money. MoneyAny item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange. Money baseComposed of currency and coins outside the banking system plus liabilities to the deposit money banks. Money BaseCash plus deposits of the commercial banks with the central bank. Money center banksBanks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds. Money LaunderingThis is the process by which "dirty money" generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to their illegal origins. Money managementRelated: Investment management. Money managerRelated: Investment manager. Money marketMoney markets are for borrowing and lending money for three years or less. The securities in Money MarketA market that specializes in trading short-term, low-risk, very liquid money marketMarket for short-term financial assets. Money MarketA financial market in which short-term (maturity of less than a year) debt instruments such as bonds are traded. Money MarketFinancial market in which funds are borrowed or lent for short periods. (The money market is distinguished from the capital market, which is the market for long term funds.) Money market demand accountAn account that pays interest based on short-term interest rates. Money market fundA mutual fund that invests only in short term securities, such as bankers' acceptances, money market fundA type of mutual fund that invests primarily in short-term debt securities maturing in one year or less. These include treasury bills, bankers’ acceptances, commercial paper, discount notes and guaranteed investment certficates. Money market hedgeThe use of borrowing and lending transactions in foreign currencies to lock in the Money market notesPublicly traded issues that may be collateralized by mortgages and MBSs. Money MultiplierChange in the money supply per change in the money base. money orderA guaranteed form of payment in amounts up to and including $5,000. You might request a money order in order to pay for tuition fees at a university or a college, or for a magazine subscription. Money purchase planA defined benefit contribution plan in which the participant contributes some part and Money Rate of InterestSee interest rate, nominal. Money rate of returnAnnual money return as a percentage of asset value. Money supplyM1-A: Currency plus demand deposits Negative amortizationA loan repayment schedule in which the outstanding principal balance of the loan Negative carryRelated: net financing cost negative cash flowThe cash flow from the operating activities of a business Negative convexityA bond characteristic such that the price appreciation will be less than the price Negative covenantA bond covenant that limits or prohibits altogether certain actions unless the bondholders agree. Negative durationA situation in which the price of the MBS moves in the same direction as interest rates. Negative goodwillA term used to describe a situation in which a business combination Negative Loan CovenantsLoan covenants designed to limit a corporate borrower's behavior Negative pledge clauseA bond covenant that requires the borrower to grant lenders a lien equivalent to any Neglected firm effectThe tendency of firms that are neglected by security analysts to outperform firms that Net assetsThe difference between total assets on the one hand and current liabilities and noncapitalized longterm Neutrality of MoneyThe doctrine that the money supply affects only the price level, with no long-run impact on real variables. New moneyIn a Treasury auction, the amount by which the par value of the securities offered exceeds that of Non-reproducible assetsA tangible asset with unique physical properties, like a parcel of land, a mine, or a Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |