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Definition of Fedwire

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A wire transfer system for high-value payments operated by the Federal Reserve System.

Related Terms:

Accelerated cost recovery system (ACRS)

Schedule of depreciation rates allowed for tax purposes.

Account Value

The sum of all the interest options in your policy, including interest.

Accounting system

A set of accounts that summarize the transactions of a business that have been recorded on source documents.

Accumulated Value

An amount of money invested plus the interest earned on that money.

actual cost system

a valuation method that uses actual direct
material, direct labor, and overhead charges in determining
the cost of Work in Process Inventory

Adjusted present value (APV)

The net present value analysis of an asset if financed solely by equity
(present value of un-levered cash flows), plus the present value of any financing decisions (levered cash
flows). In other words, the various tax shields provided by the deductibility of interest and the benefits of
other investment tax credits are calculated separately. This analysis is often used for highly leveraged
transactions such as a leverage buy-out.

approximated net realizable value at split-off allocation

a method of allocating joint cost to joint products using a
simulated net realizable value at the split-off point; approximated
value is computed as final sales price minus
incremental separate costs

Fedwire Image 1

Automated storage/retrieval system

A racking System using automated Systems
to load and unload the racks.

Balance of payments

A statistical compilation formulated by a sovereign nation of all economic transactions
between residents of that nation and residents of all other nations during a stipulated period of time, usually a
calendar year.

Balance of Payments

The difference between the demand for and supply of a country's currency on the foreign exchange market.

Balance of Payments Accounts

A statement of a country's transactions with other countries.

Bank wire

A computer message System linking major banks. It is used not for effecting payments, but as a
mechanism to advise the receiving bank of some action that has occurred, e.g. the payment by a customer of
funds into that bank's account.

Benefit Value

The amount of cash payable on a benefit.

Bin transfer

A transaction to move inventory from one storage bin to another.

Bond value

With respect to convertible bonds, the value the security would have if it were not convertible
apart from the conversion option.

Book value

A company's book value is its total assets minus intangible assets and liabilities, such as debt. A
company's book value might be more or less than its market value.

Fedwire Image 2


An asset’s cost basis minus accumulated depreciation.

Book Value

The value of an asset as carried on the balance sheet of a
company. In reference to the value of a company, it is the net worth
(equity) of the company.

Book value

An asset’s original cost, less any depreciation that has been subsequently incurred.

book value

Net worth of the firm’s assets or liabilities according
to the balance sheet.

book value and book value per share

Generally speaking, these terms
refer to the balance sheet value of an asset (or less often of a liability) or
the balance sheet value of owners’ equity per share. Either term emphasizes
that the amount recorded in the accounts or on the books of a business
is the value being used. The total of the amounts reported for
owners’ equity in its balance sheet is divided by the number of stock
shares of a corporation to determine the book value per share of its capital


The theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals:
(Stockholders’ equity) / (Common stock shares outstanding)

Book value per share

The ratio of stockholder equity to the average number of common shares. Book value
per share should not be thought of as an indicator of economic worth, since it reflects accounting valuation
(and not necessarily market valuation).

Book Value per Share

The book value of a company divided by the number of shares

business intelligence (BI) system

a formal process for gathering and analyzing information and producing intelligence to meet decision making needs; requires information about
internal processes as well as knowledge, technologies, and competitors

business-value-added activity

an activity that is necessary for the operation of the business but for which a customer would not want to pay


What a company collected when it sold stock for more than the par value per share.

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Carrying value

Book value.

Cash-surrender value

An amount the insurance company will pay if the policyholder ends a whole life
insurance policy.

Cash Surrender Value

This is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications.

Cash Surrender Value

Benefit that entitles a policy owner to an amount of money upon cancellation of a policy.

Cash value added (CVA)

A method of investment appraisal that calculates the ratio of the net present value of an
investment to the initial capital investment.

charge-back system

a System using transfer prices; see transfer

Clearing House Automated Payments System (CHAPS)

A computerized clearing System for sterling funds
that began operations in 1984. It includes 14 member banks, nearly 450 participating banks, and is one of the
clearing companies within the structure of the Association for Payment Clearing Services (APACS).

Clearing House Interbank Payments System (CHIPS)

An international wire transfer System for high-value
payments operated by a group of major banks.

Conversion value

Also called parity value, the value of a convertible security if it is converted immediately.

Cookie Jar Reserves

An overly aggressive accrual of operating expenses and the creation of
liability accounts done in an effort to reduce future-year operating expenses.

cost control system

a logical structure of formal and/or informal
activities designed to analyze and evaluate how well
expenditures are managed during a period

cost management system (CMS)

a set of formal methods
developed for planning and controlling an organization’s
cost-generating activities relative to its goals and objectives
cost object anything to which costs attach or are related

Coupon payments

A bond's interest payments.

Depository transfer check (DTC)

Check made out directly by a local bank to a particular firm or person.

Du Pont system

A breakdown of ROE and ROA into component ratios.

Dupont system of financial control

highlights the fact that return on assets (ROA) can be expressed in terms
of the profit margin and asset turnover.

Economic Value Added (EVA)

Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
to cover the cost of capital invested in the business.

economic value added (EVA)

a measure of the extent to which income exceeds the dollar cost of capital; calculated
as income minus (invested capital times the cost of capital percentage)

economic value added (EVA)

Term used by the consulting firm Stern Stewart for profit remaining after deduction of the cost
of the capital employed.

EFT (electronic funds transfer)

Funds which are electronically credited to your account (e.g. direct deposit), or electronically debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly loan or mortgage payment). A wire transfer is a form of EFT.

Electronic depository transfers

The transfer of funds between bank accounts through the Automated
Clearing House (ACH) System.

Electronic Federal Tax Payment Systems (EFTPS)

An electronic funds transfer System used by businesses to remit taxes to the government.

enterprise resource planning (ERP) system

a packaged software program that allows a company to
(1) automate and integrate the majority of its business processes,
(2) share common data and practices across the entire enterprise, and
(3) produce and access information in a realtime environment

Enterprise resource planning system

A computer System used to manage all company
resources in the receipt, completion, and delivery of customer orders.

European Monetary System (EMS)

An exchange arrangement formed in 1979 that involves the currencies
of European Union member countries.

Excess reserves

Any excess of actual Reserves above required Reserves.

Excess Reserves

Reserves of commercial banks in excess of those they are legally required to hold.

Exercise value

The amount of advantage over a current market transaction provided by an in-the-money

Exit value

The value that an asset is expected to have at the time it is sold at a predetermined
point in the future.

Expected value

The weighted average of a probability distribution.

Expected Value

The value of the possible outcomes of a variable weighted by the
probabilities of each outcome

Expected value of perfect information

The expected value if the future uncertain outcomes could be known
minus the expected value with no additional information.

Extraordinary positive value

A positive net present value.

Face value

See: Par value.

Face Value

The nominal value of a security. Also called the par value.

Face value

The maturity value of a security. Also known as par value,
principal value, or redemption value.

face value

Payment at the maturity of the bond. Also called par value or maturity value.

Face Value

The payoff value of a bond upon maturity. Also called par value. See principal.

Face Value

The nominal value which appears on the face of a document recording an entitlement, generally an amount of money that has to be repaid on the maturity of a debt instrument.

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.

Fair Value

The amount at which an asset could be purchased or sold or a liability incurred or
settled in a current transaction between willing and informed parties. When a quoted market price
is available, fair value is the product of the number of units in question times that market price.
That product also is referred to as the item's market value. For traded securities, the terms fair
value and market value are synonymous. When no quoted market price is available for the item
in question, fair value must be estimated.

Federal agency securities

Securities issued by corporations and agencies created by the U.S. government,
such as the Federal Home Loan Bank Board and Ginnie Mae.

Federal credit agencies

Agencies of the Federal government set up to supply credit to various classes of
institutions and individuals, e.g. S&Ls, small business firms, students, farmers, and exporters.

Federal Deposit Insurance Corporation (FDIC)

A Federal institution that insures bank deposits.

Federal Employer Identification Number

A unique identification number issued
by the Federal government used for payroll purposes to identify the company
when it deals with the Internal Revenue Service.

Federal Financing Bank

A Federal institution that lends to a wide array of Federal credit agencies funds it
obtains by borrowing from the U.S. Treasury.

Federal funds

Non-interest bearing deposits held in Reserve for depository institutions at their district Federal
Reserve Bank. Also, excess Reserves lent by banks to each other.

Federal funds market

The market where banks can borrow or lend Reserves, allowing banks temporarily
short of their required Reserves to borrow Reserves from banks that have excess Reserves.

Federal funds rate

This is the interest rate that banks with excess Reserves at a Federal Reserve district bank
charge other banks that need overnight loans. The Fed Funds rate, as it is called, often points to the direction
of U.S. interest rates.

Federal Funds Rate

The interest rate at which banks lend deposits at the Federal Reserve to one another overnight.

Federal Home Loan Banks

The institutions that regulate and lend to savings and loan associations. The
Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-à-vis
member commercial banks.

Federal Insurance Contributions Act of 1935 (FICA)

A Federal Act authorizing the government to collect Social Security and Medicare payroll taxes.

Federal Open Market Committee (FOMC)

Fed committee that makes decisions about open-market operations.

Federal Reserve Banks

The twelve district banks in the Federal Reserve System.

Federal Reserve Board

Board of Governors of the Federal Reserve System.

Federal Reserve System

The central bank of the U.S., established in 1913, and governed by the Federal
Reserve Board located in Washington, D.C. The System includes 12 Federal Reserve Banks and is authorized
to regulate monetary policy in the U.S. as well as to supervise Federal Reserve member banks, bank holding
companies, international operations of U.S.banks, and U.S.operations of foreign banks.

Federal Reserve System

The central banking authority responsible for monetary policy in the United States.

Federal Reserve (the Fed)

The central bank in the United States, responsible for setting interest rates.

Federal Unemployment Tax Act (FUTA)

A Federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
pool of funds to be used for unemployment benefits.

Federally related institutions

Arms of the Federal government that are exempt from SEC registration and
whose securities are backed by the full faith and credit of the U.S. government (with the exception of the
Tennessee Valley Authority).

Firm's net value of debt

Total firm value minus total firm debt.

flexible manufacturing system (FMS)

a production System in which a single factory manufactures numerous variations
of products through the use of computer-controlled
focused factory arrangement
an arrangement in which a
vendor (which may be an external party or an internal corporate
division) agrees to provide a limited number of
products according to specifications or to perform a limited
number of unique services to a company that is typically
operating on a just-in-time System

Foreign Exchange Reserves

A fund containing the central bank's holdings of foreign currency or claims thereon.

Fractional Reserve Banking

A banking System in which banks hold only a fraction of their outstanding deposits in cash or on deposit with the central bank.

Freddie Mac (Federal Home Loan Mortgage Corporation)

A Congressionally chartered corporation that
purchases residential mortgages in the secondary market from S&Ls, banks, and mortgage bankers and
securitizes these mortgages for sale into the capital markets.

Free reserves

Excess Reserves minus member bank borrowings at the Fed.

Future value

The amount of cash at a specified date in the future that is equivalent in value to a specified
sum today.

Future Value

The amount a given payment, or series of payments, will be worth
at the end of a specified time period, if invested at a given rate

future value

the amount to which one or more sums of
money invested at a specified interest rate will grow over
a specified number of time periods

Future value

The value that a sum of money (the present value) earning
compound interest will have in the future.

future value

Amount to which an investment will grow after earning interest.







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