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Definition of Haircut
The margin or difference between the actual market value of a security and the value assessed by the
an amount or percentage deducted from an equity interest to reflect lack of marketability.
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in today’s dollars of cash flows that occur in different time periods.
model for calculating DLOM for minority interests r the discount rate
The physical commodity underlying a futures contract. Cash commodity, physical.
The net present value analysis of an asset if financed solely by equity
The ratio of net income to net sales.
Yearly record of a publicly held company's financial condition. It includes a description of the
A security that is collateralized by loans, leases, receivables, or installment contracts
markets in which the prevailing price is determined through the free interaction of
A section of an annual report containing the auditor's opinion about the veracity of the
Any market in which prices are in a declining trend.
The ratio of net income before taxes to net sales.
An illegal market.
With respect to convertible bonds, the value the security would have if it were not convertible
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
The foreign market in the United Kingdom.
Buy on margin
A transaction in which an investor borrows to buy additional shares, using the shares
A financial analyst employed by a non-brokerage firm, typically one of the larger money
The market for trading long-term debt instruments (those that mature in more than one year).
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.
Also called spot markets, these are markets that involve the immediate delivery of a security
A transaction where exchange is immediate, as contrasted to a forward contract, which
An amount the insurance company will pay if the policyholder ends a whole life
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
Conflict between bondholders and stockholders
These two groups may have interests in a corporation that
The difference between variable revenue and variable cost.
Also called parity value, the value of a convertible security if it is converted immediately.
A security that can be converted into common stock at the option of the security holder,
Corner A Market
To purchase enough of the available supply of a commodity or stock in order to
A market where traders specializing in particular commodities buy and sell assets for their
The market for trading debt instruments.
markets for derivative instruments.
A financial security, such as an option, or future, whose value is derived in part from the
Difference from S&P
A mutual fund's return minus the change in the Standard & Poors 500 Index for the
Direct search market
Buyers and sellers seek each other directly and transact directly.
Dollar safety margin
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization
Part of a nation's internal market representing the mechanisms for issuing and trading
Effective margin (EM)
Used with SAT performance measures, the amount equaling the net earned spread, or
Efficient capital market
A market in which new information is very quickly reflected accurately in share
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
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
Excess return on the market portfolio
The difference between the return on the market portfolio and the
security that grants the security holder the right to exchange the security for the
The amount of advantage over a current market transaction provided by an in-the-money
The weighted average of a probability distribution.
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
Also referred to as the international market, the offshore market, or, more popularly, the
Extraordinary positive value
A positive net present value.
See: Par value.
Fair market price
Amount at which an asset would change hands between two parties, both having
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
An organized institutional structure or mechanism for creating and exchanging financial assets.
Firm's net value of debt
Total firm value minus total firm debt.
A nonnegotiable debt security that can be redeemed at some fixed price or according to
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.
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.
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.
The amount of cash at a specified date in the future that is equivalent in value to a specified
A market in which contracts for future delivery of a commodity or a security are bought or sold.
A reverse repurchase agreement between mortgage firms and securities dealers. Under the
Publicly owned stock in a firm is replaced with complete equity ownership by a
Purchases and sales of eurobonds that occur before the issue price is finally set.
Gross profit margin
Gross profit divided by sales, which is equal to each sales dollar left over after paying
Highly leveraged transaction (HLT)
Bank loan to a highly leveraged firm.
The security to which a warrant is attached.
A convertible security whose optioned common stock is trading in a middle range, causing
Implied repo rate
The rate that a seller of a futures contract can earn by buying an issue and then delivering
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
The graphical expression of a utility function, where the horizontal axis measures risk and
Initial margin requirement
When buying securities on margin, the proportion of the total market value of
Relevant information about a company that has not yet been made public. It is illegal for
Trading by officers, directors, major stockholders, or others who hold private inside
These are directors and senior officers of a corporation -- in effect those who have access to inside
transaction carried out between two units of the same corporation.
spread The spread between the interest rate offered in two sectors of the bond market for
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
The mechanisms for issuing and trading securities within a nation, including its domestic
Internally efficient market
Operationally efficient market.
Related: See external market.
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
Intramarket sector spread
The spread between two issues of the same maturity within a market sector. For
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
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