|Excess return on the market portfolio|
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Definition of Excess return on the market portfolio
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Part of the return that is not due to systematic influences (market wide influences). In
Goods may be returned to the seller by the purchaser without restrictions.
A method of investment appraisal that measures
the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow
A strategy that uses available information and forecasting techniques to seek a
Money after-tax rate of return minus the inflation rate.
The fund return, for any 12-month period, including changes in unit value and the reinvestment of distributions, but not taking into account sales, redemption, distribution or other optional charges or income taxes payable by any unitholder that would reduce returns.
The annual rate of return that when compounded t times, would have
Arithmetic mean return.
An average of the subperiod returns, calculated by summing the subperiod returns
markets in which the prevailing price is determined through the free interaction of
The average project earnings after taxes and depreciation divided by the average
The ratio of the average cash inflow to the amount invested.
Any market in which prices are in a declining trend.
A market in which stock or bond prices are generally
A prolonged period of falling stock market prices.
An illegal market.
book rate of return
Accounting income divided by book value.
Book yield is the investment income earned in a year on a portfolio of assets purchased over a number of years and at different interest rates, divided by the book value of those assets.
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
A market in which stock or bond prices are generally rising.
A prolonged period of rising stock market prices.
The foreign market in the United Kingdom.
CAPITAL IN EXCESS OF PAR VALUE
What a company collected when it sold stock for more than the par value per share.
Capital in excess par
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with additional paid-in capital.
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.
A market that specializes in trading long-term, relatively high risk
The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded.
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
markets for long-term financing.
CARs (cumulative abnormal returns)
a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock.
Also called spot markets, these are markets that involve the immediate delivery of a security
An agreement between two or more countries that permits the free movement of capital
Common stock market
The market for trading equities, not including preferred stock.
Complete capital market
A market in which there is a distinct marketable security for each and every
The entire portfolio, including risky and risk-free assets.
Corner A Market
To purchase enough of the available supply of a commodity or stock in order to
Cost Plus Estimated Earnings in Excess of Billings
Revenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts
Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the
A market where traders specializing in particular commodities buy and sell assets for their
The market for trading debt instruments.
Dedicating a portfolio
Related: cash flow matching.
markets for derivative instruments.
Direct search market
Buyers and sellers seek each other directly and transact directly.
DLOM (discount for lack of marketability)
an amount or percentage deducted from an equity interest to reflect lack of marketability.
The return realized on a portfolio for any evaluation period, including (1) the change in market
Dollar-weighted rate of return
Also called the internal rate of return, the interest rate that will make the
Part of a nation's internal market representing the mechanisms for issuing and trading
Efficient capital market
A market in which new information is very quickly reflected accurately in share
efficient capital markets
Financial markets in which security prices rapidly reflect all relevant information about asset values.
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
Efficient Markets Hypothesis
The hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security.
A portfolio that provides the greatest expected return for a given level of risk (i.e. standard
In the interbank Eurodollar deposit market, an either-way market is one in which the bid
The financial markets of developing economies.
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
The money market for borrowing and lending currencies that are held in the form of
Ex post return
Related: Holding period return
The expected return of a portfolio based on the expected returns of its component assets and
Unused production capacity.
A situation in which demand exceeds supply.
Any excess of actual reserves above required reserves.
Reserves of commercial banks in excess of those they are legally required to hold.
Also called abnormal returns, returns in excess of those required by some asset pricing model.
A situation in which supply exceeds demand.
Expected future return
The return that is expected to be earned on an asset in the future. Also called the
The return expected on a risky asset based on a probability distribution for the possible rates
The total amount of money (return) an investor anticipates to receive from an investment.
Expected return-beta relationship
Implication of the CAPM that security risk premiums will be
Expected return on investment
The return one can expect to earn on an investment. See: capital asset
Also referred to as the international market, the offshore market, or, more popularly, the
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of
Fair market price
Amount at which an asset would change hands between two parties, both having
Fair market value
The price that an asset or service will fetch on the open market.
Fair Market Value
The highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact.
Farm Improvement and Marketing Cooperatives Loans Act
A portfolio that an investor can construct given the assets available.
Feasible set of portfolios
The collection of all feasible portfolios.
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
Federal Open Market Committee (FOMC)
Fed committee that makes decisions about open-market operations.
An organized institutional structure or mechanism for creating and exchanging financial assets.
markets in which financial assets are traded.
The market for trading bonds and preferred stock.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
Foreign Exchange Market
A worldwide market in which one country's currency is bought or sold in exchange for another country's currency.
Part of a nation's internal market, representing the mechanisms for issuing and trading
Foreign market beta
A measure of foreign market risk that is derived from the capital asset pricing model.
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.
A market in which participants agree to trade some commodity, security, or foreign
Direct trading in exchange-listed securities between investors without the use of a broker.
A market in which contracts for future delivery of a commodity or a security are bought or sold.
Geometric mean return
Also called the time weighted rate of return, a measure of the compounded rate of
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