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Definition of Form I-9
The Employment Eligibility Verification form, which must be filled
All equity rate
The discount rate that reflects only the business risks of a project and abstracts from the
All or none
Requirement that none of an order be executed unless all of it can be executed at the specified price.
Total costs, explicit and implicit.
An arrangement whereby a security issue is canceled if the underwriter is unable
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
Information that is known to some people but not to other people.
Balance sheet identity
Total Assets = Total Liabilities + Total Stockholders' Equity
Any large principal payment due at maturity for a bond or loan with or without a a sinking
BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
A rise in a security's price above a resistance level (commonly its previous high price) or drop
Purchase of a controlling interest (or percent of shares) of a company's stock. A leveraged buy-out is
An option that gives the right to buy the underlying futures contract.
Call an option
To exercise a call option.
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An option contract that gives its holder the right (but not the obligation) to purchase a specified
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
decision allocation of invested funds between risk-free assets versus the risky portfolio.
Refers to a situation where a firm runs out of cash and cannot readily sell marketable securities.
Communication barrier between financiers (investment bankers) and traders. This barrier is
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales outstanding
Average collection period.
A provision that prohibits the company from calling the bond before a certain date. During this
Dividend payout ratio
Percentage of earnings paid out as dividends.
Barrier option that expires if asset price hits a barrier.
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Feasible target payout ratios
Payout ratios that are consistent with the availability of excess funds to make
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
With CMOs, the start of the cash flow cycle for the cash flow window.
A method of valuing the cost of goods sold that uses the cost of the oldest item in
Flat benefit formula
Method used to determine a participant's benefits in a defined benefit plan by
A method of selling a new issue of common stock in which the SEC declares the registration
See: financial lease.
Generally Accepted Accounting Principals (GAAP)
A technical accounting term that encompasses the
A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal in
The right of the homeowner to prepay, or call, the mortgage at any time.
A situation involving information that is known to some, but not all, participants.
Information Coefficient (IC)
The correlation between predicted and actual stock returns, sometimes used to
Transaction costs that include the assessment of the investment merits of a financial asset.
Organizations that furnish investment and other types of information, such as
The rise in the stock price following the dividend signal.
The speed and accuracy with which prices reflect new information.
Trades that are the result of either a reallocation of wealth or an implementation of an
Trades in which an investor believes he or she possesses pertinent
Tables that indicate how much each industry requires of the production of each other
Relevant information about a company that has not yet been made public. It is illegal for
The sale of an asset in exchange for a specified series of payments (the installments).
Internally efficient market
Operationally efficient market.
In the mortgage pipeline, risk that occurs when the originator commits loan terms to the
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
A method of valuing inventory that uses the cost of the most recent item in
Leveraged buyout (LBO)
A transaction used for taking a public corporation private financed through the use
The last-in-first-out inventory valuation methodology. A method of valuing
With PAC bond CMO classes, the period before the PAC sinking fund becomes effective. With
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
A demand for additional funds because of adverse price movement. Maintenance margin
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project
Net working capital
Current assets minus current liabilities. Often simply referred to as working capital.
To get or bring in as a net; to clear as profit.
New York Stock Exchange (NYSE)
Also known as the Big Board or The Exhange. More than 2,00 common
The market in which a new issue of securities is first sold to investors.
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of
Non-parallel shift in the yield curve
A shift in the yield curve in which yields do not change by the same
Normal annuity form
The manner in which retirement benefits are paid out.
The method of trading used at futures exchanges, typically involving calling out the specific
Operationally efficient market
Also called an internally efficient market, one in which investors can obtain
A call option is out-of-the-money if the strike price is greater than the market price
Actual forward rate expressed in dollars per currency unit, or vice versa.
Outstanding share capital
Issued share capital less the par value of shares that are held in the company's treasury.
Shares that are currently owned by investors.
When a security is expected to appreciate at a rate faster than the overall market.
A process whereby two companies in different countries borrow each other's currency for a
Parallel shift in the yield curve
A shift in the yield curve in which the change in the yield on all maturities is
Generally, the proportion of earnings paid out to the common stockholders as cash dividends.
Performance attribution analysis
The decomposition of a money manager's performance results to explain
The evaluation of a manager's performance which involves, first, determining
The calculation of the return realized by a money manager over some time interval.
Shares of stock given to managers on the basis of performance as measured by earnings
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
The market has already incorporated information, such as a low dividend, into the price of a stock.
Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure
Pro forma financial statements
Financial statements as adjusted to reflect a projected or planned transaction.
Pro forma statement
A financial statement showing the forecast or projected operating results and balance
Provisional call feature
A feature in a convertible issue that allows the issuer to call the issue during the noncall
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
An upward movement of prices. Opposite of reaction.
Seasoned new issue
A new issue of stock after the company's securities have previously been issued. A
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