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Factor |
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Definition of FactorFactorA financial institution that buys a firm's accounts receivables and collects the debt. FactorAn agent who buys and sells goods on behalf of others for a commission.
Related Terms:ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. PPF (periodic perpetuity factor)a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity. Amortization factorThe pool factor implied by the scheduled amortization assuming no prepayemts. Annuity factorPresent value of $1 paid for each of t periods. Conversion factorsRules set by the Chicago Board of Trade for determining the invoice price of each Discount factorPresent value of $1 received at a stated future date. Factor analysisA statistical procedure that seeks to explain a certain phenomenon, such as the return on a Factor modelA way of decomposing the factors that influence a security's rate of return into common and Factor portfolioA well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of FactoringSale of a firm's accounts receivable to a financial institution known as a factor. Maturity factoringfactoring arrangement that provides collection and insurance of accounts receivable. Multifactor CAPMA version of the capital asset pricing model derived by Merton that includes extramarket Net benefit to leverage factorA linear approximation of a factor, T*, that enables one to operationalize the Old-line factoringfactoring arrangement that provides collection, insurance, and finance for accounts receivable. One-factor APTA special case of the arbitrage pricing theory that is derived from the one-factor model by Pool factorThe outstanding principal balance divided by the original principal balance with the result Present value factorfactor used to calculate an estimate of the present value of an amount to be received in Reported factorThe pool factor as reported by the bond buyer for a given amortization period. Single factor modelA model of security returns that acknowledges only one common factor. Two-factor modelBlack's zero-beta version of the capital asset pricing model. Limiting factorThe production resource that, as a result of scarce resources, limits the production of goods critical success factors (CSF)any item (such as quality, customer FactoringThe sale of accounts receivable to a third party, with the third party bearing Factory overheadAll the costs incurred during the manufacturing process, minus the annuity factorPresent value of an annuity of $1 per period. discount factorPresent value of a $1 future payment. Factor of ProductionA resource used to produce a good or service. The main macroeconomic factors of production are capital and labor. FactoringThe discounting, or sale at a discount, of receivables on a nonrecourse, notification Scrap factorAn anticipated loss percentage included in the bill of material and Shrinkage factorThe expected loss of some proportion of an item during the FactoringType of financial service whereby a firm sells or transfers title to its accounts receivable to a factoring company, which then acts as principal, not as agent. Interest FactorNumbers found in compound interest and annuity tables. Usually called the FVIF or PVIF. fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor. PV (present value of cash flows)the value in todayâ€™s dollars of cash flows that occur in different time periods. AlphaA measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A Discounted cash flow (DCF)Future cash flows multiplied by discount factors to obtain present values. Expectations hypothesis theoriesTheories of the term structure of interest rates which include the pure Force majeure riskThe risk that there will be an interruption of operations for a prolonged period after a Index modelA model of stock returns using a market index such as the S&P 500 to represent common or Inflation uncertaintyThe fact that future inflation rates are not known. It is a possible contributing factor to Manufactured housing securities (MHSs)Loans on manufactured homes - that is, factory-built or Mortgage durationA modification of standard duration to account for the impact on duration of MBSs of Nonsystematic riskNonmarket or firm-specific risk factors that can be eliminated by diversification. Also Performance attribution analysisThe decomposition of a money manager's performance results to explain Sales forecastA key input to a firm's financial planning process. External sales forecasts are based on Security market lineLine representing the relationship between expected return and market risk. Single index modelA model of stock returns that decomposes influences on returns into a systematic factor, Technical condition of a marketDemand and supply factors affecting price, in particular the net position, Tilted portfolioAn indexing strategy that is linked to active management through the emphasis of a Weighted average couponThe weighted average of the gross interest rate of the mortgages underlying the Weighted average maturityThe WAM of a MBS is the weighted average of the remaining terms to maturity extraordinary gains and lossesNo pun intended, but these types of gains product costThis is a key factor in the profit model of a business. Product unit-driven expensesExpenses that vary in close proportion to changes accretionan increase in units or volume caused by the addition cost drivera factor that has a direct cause-effect relationship degree of operating leveragea factor that indicates how a percentage change in sales, from the existing or current efficiencya measure of the degree to which tasks were performed environmental constraintany limitation on strategy options flexible manufacturing system (FMS)a production system in which a single factory manufactures numerous variations incremental analysisa process of evaluating changes that key variablea critical factor that management believes will linear programminga method of mathematical programming used to solve a problem that involves an objective function and multiple limiting factors or constraints long-term variable cost a cost that was traditionally viewed as a fixed cost overheadany factory or production cost that is indirect to Forward rateThe future interest rate of a bond inferred from the term Implied volatilityFor an option, the variance that makes a call option price Cost driverA factor that directly impacts the incidence of a cost, and which is generally DriverA factor that has a direct impact on the incurring of a cost. For example, adding unique riskRisk factors affecting only that firm. Also called diversifiable risk. Circular FlowIncome payments to factors of production are spent to buy output. The receipts from these sales are used to pay factors of production, creating a circular flow of income. Consumption FunctionThe relationship between consumption demand and disposable income. More generally, it refers to the relationship between consumption demand and all factors that affect this demand. Okun's LawChanges in employment give rise to greater-than-proportional changes in output, by a factor of about 2.5. Inventory ShrinkageA shortfall between inventory based on actual physical counts and inventory Restructuring ChargesCosts associated with restructuring activities, including the consolidation and/or relocation of operations or the disposition or abandonment of operations or productive assets. Significant InfluenceThe extent of influence of an investor over the operating and financial Preferred RatesAs non-smoking rates caused a major reduction in the cost of life insurance in the early 1980's, the emergence of preferred non-smoker rates in 1998 has caused another noteworthy reduction in rates. A growing number of insurance companies are offering better rates which go beyond simply looking at gender or smoking habits. Other health related factors such as physical build, lifestyle, avocation and personal and family health history indicating longer life expectancy can add up to significant cost savings to new life insurance applicants. Make certain to ask about these new preferred rates. Future ValueThe amount to which a payment or series of payments will grow by a given future date when compounded by a given interest rate. FVIF future value interest factor. Progress PaymentsPeriodic payments to a supplier, contractor or subcontractor for work satisfactorily performed to date. prospectusA legal document that must be filed with securities regulators in order to distribute securities, including mutual funds. Mutual fund dealers are required by law to distribute this document to investors before the purchase of any units. It contains all key information, such as investment objectives and strategies, risk factors and financial highlights. Contribution PrincipleThis is the principle which specifies the factors that must be taken into account when calculating dividends. At Canada Life, the key factors are: interest earnings, mortality, and operating expense. Operating ExpensesThe amount of money the company must spend on overhead, distribution, taxes, underwriting the risk and servicing the policy. It is a factor in calculating premium rates.
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