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Haircut |
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Definition of HaircutHaircutThe margin or difference between the actual market value of a security and the value assessed by the
Related Terms:DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. PV (present value of cash flows)the value in today’s dollars of cash flows that occur in different time periods. QMDM (quantitative marketability discount model)model for calculating DLOM for minority interests r the discount rate ActualsThe physical commodity underlying a futures contract. Cash commodity, physical. Adjusted present value (APV)The net present value analysis of an asset if financed solely by equity After-tax profit marginThe ratio of net income to net sales. Annual reportYearly record of a publicly held company's financial condition. It includes a description of the Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts Auction marketsmarkets in which the prevailing price is determined through the free interaction of Auditor's reportA section of an annual report containing the auditor's opinion about the veracity of the Bear marketAny market in which prices are in a declining trend. Before-tax profit marginThe ratio of net income before taxes to net sales. Black marketAn illegal market. Bond valueWith respect to convertible bonds, the value the security would have if it were not convertible Book valueA company's book value is its total assets minus intangible assets and liabilities, such as debt. A Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value Brokered marketA market where an intermediary offers search services to buyers and sellers. Bull marketAny market in which prices are in an upward trend. Bulldog marketThe foreign market in the United Kingdom. Buy on marginA transaction in which an investor borrows to buy additional shares, using the shares Buy-side analystA financial analyst employed by a non-brokerage firm, typically one of the larger money Capital marketThe market for trading long-term debt instruments (those that mature in more than one year). Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Capital market imperfections viewThe 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. Carrying valueBook value. Cash marketsAlso called spot markets, these are markets that involve the immediate delivery of a security Cash transactionA transaction where exchange is immediate, as contrasted to a forward contract, which Cash-surrender valueAn amount the insurance company will pay if the policyholder ends a whole life Common marketAn agreement between two or more countries that permits the free movement of capital Common stock marketThe market for trading equities, not including preferred stock. Complete capital marketA market in which there is a distinct marketable security for each and every Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that Contribution marginThe difference between variable revenue and variable cost. Conversion valueAlso called parity value, the value of a convertible security if it is converted immediately. Convertible securityA security that can be converted into common stock at the option of the security holder, Corner A MarketTo purchase enough of the available supply of a commodity or stock in order to Dealer marketA market where traders specializing in particular commodities buy and sell assets for their Debt marketThe market for trading debt instruments. Derivative marketsmarkets for derivative instruments. Derivative securityA financial security, such as an option, or future, whose value is derived in part from the Difference from S&PA mutual fund's return minus the change in the Standard & Poors 500 Index for the Direct search marketBuyers and sellers seek each other directly and transact directly. Dollar safety marginThe dollar equivalent of the safety cushion for a portfolio in a contingent immunization Domestic marketPart 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 marketA market in which new information is very quickly reflected accurately in share Efficient Market HypothesisIn general the hypothesis states that all relevant information is fully and Either-way marketIn the interbank Eurodollar deposit market, an either-way market is one in which the bid Emerging marketsThe financial markets of developing economies. Equilibrium market price of riskThe slope of the capital market line (CML). Since the CML represents the Equity marketRelated:Stock market Eurocurrency marketThe money market for borrowing and lending currencies that are held in the form of Excess return on the market portfolioThe difference between the return on the market portfolio and the Exchangeable Securitysecurity that grants the security holder the right to exchange the security for the Exercise valueThe amount of advantage over a current market transaction provided by an in-the-money Expected valueThe weighted average of a probability distribution. Expected value of perfect informationThe expected value if the future uncertain outcomes could be known External marketAlso referred to as the international market, the offshore market, or, more popularly, the Extraordinary positive valueA positive net present value. Face valueSee: Par value. Fair market priceAmount at which an asset would change hands between two parties, both having Federal funds marketThe market where banks can borrow or lend reserves, allowing banks temporarily Financial marketAn organized institutional structure or mechanism for creating and exchanging financial assets. Firm's net value of debtTotal firm value minus total firm debt. Fixed-dollar securityA nonnegotiable debt security that can be redeemed at some fixed price or according to Fixed-income marketThe market for trading bonds and preferred stock. Foreign banking marketThat portion of domestic bank loans supplied to foreigners for use abroad. Foreign bond marketThat portion of the domestic bond market that represents issues floated by foreign Foreign equity marketThat portion of the domestic equity market that represents issues floated by foreign companies. Foreign marketPart of a nation's internal market, representing the mechanisms for issuing and trading Foreign market betaA measure of foreign market risk that is derived from the capital asset pricing model. Forward marketA market in which participants agree to trade some commodity, security, or foreign Fourth marketDirect trading in exchange-listed securities between investors without the use of a broker. Future valueThe amount of cash at a specified date in the future that is equivalent in value to a specified Futures marketA market in which contracts for future delivery of a commodity or a security are bought or sold. Gestation repoA reverse repurchase agreement between mortgage firms and securities dealers. Under the Going-private transactionsPublicly owned stock in a firm is replaced with complete equity ownership by a Gray marketPurchases and sales of eurobonds that occur before the issue price is finally set. Gross profit marginGross 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. Host securityThe security to which a warrant is attached. Hybrid securityA convertible security whose optioned common stock is trading in a middle range, causing Implied repo rateThe 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 Indifference curveThe graphical expression of a utility function, where the horizontal axis measures risk and Initial margin requirementWhen buying securities on margin, the proportion of the total market value of Insider informationRelevant information about a company that has not yet been made public. It is illegal for Insider tradingTrading by officers, directors, major stockholders, or others who hold private inside InsidersThese are directors and senior officers of a corporation -- in effect those who have access to inside Intercompany transactiontransaction carried out between two units of the same corporation. Intermarket sectorspread The spread between the interest rate offered in two sectors of the bond market for Intermarket spread swapsAn exchange of one bond for another based on the manager's projection of a Internal marketThe mechanisms for issuing and trading securities within a nation, including its domestic Internally efficient marketOperationally efficient market. International marketRelated: See external market. International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Intramarket sector spreadThe spread between two issues of the same maturity within a market sector. For Intrinsic value of an optionThe amount by which an option is in-the-money. An option which is not in-themoney Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |