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Definition of Hypothecation
The pledge of property and assets to secure a loan. hypothecation does not transfer title, but it does provide the right to sell the hypothecated property in the event of default.
A merger or consolidation in which an acquirer purchases the selling firm's assets.
A right of shareholders in a merger to demand the payment of a fair price for their shares, as
A firm's productive resources.
A common element of a financial plan that describes projected capital spending and the
A loan in which two companies in separate countries borrow each other's currency for a
Related: Call money rate.
A mortgage loan on newly developed property that the builder subsidizes during the
A bank term loan that calls for no amortization.
A provision under which default on one debt obligation triggers default on another debt
Value of cash, accounts receivable, inventories, marketable securities and other assets that
Overnight, collateralized loan made to a dealer financing his position by borrowing from a
Failure to make timely payment of interest or principal on a debt security or to otherwise comply
A differential in promised yield that compensates the investor for the risk inherent in
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an
Depository transfer check (DTC)
Check made out directly by a local bank to a particular firm or person.
A shareholders' rights to receive per-share dividends identical to those other shareholders receive.
Electronic depository transfers
The transfer of funds between bank accounts through the Automated
Given the after-tax stream associated with a lease, the maximum amount of conventional
The risk that the ability of an issuer to make interest and principal payments will change because
A statistical study that examines how the release of information affects prices at a particular time.
Events of default
Contractually specified events that allow lenders to demand immediate repayment of a debt.
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
In connection with a rights offering, shares of stock that are trading without the rights attached.
The date on which a share of common stock begins trading ex-rights.
Federal Home Loan Banks
The institutions that regulate and lend to savings and loan associations. The
Claims on real assets.
A loan on which the rate paid by the borrower is fixed for the life of the loan.
Freddie Mac (Federal Home Loan Mortgage Corporation)
A Congressionally chartered corporation that
loan made by one unit of a corporation to another unit of the same corporation.
A secured short-term loan to purchase inventory. The three basic forms are a blanket
loans of $1 billion or more. Or, loans that exceed the statutory size limit eligible for purchase or
The rights of a firm's securityholders in the event the firm liquidates.
Loan amortization schedule
The schedule for repaying the interest and principal on a loan.
Group of banks sharing a loan. See: syndicate.
The amount a policyholder may borrow against a whole life insurance policy at the interest rate
Value of property, equipment and other capital assets minus the depreciation. This is an
Give the borrower the possibility of drawing a loan in different currencies.
loans usually represented by conventional mortgages on multi-family rental apartments.
Negative pledge clause
A bond covenant that requires the borrower to grant lenders a lien equivalent to any
The difference between total assets on the one hand and current liabilities and noncapitalized longterm
A tangible asset with unique physical properties, like a parcel of land, a mine, or a
Official unrequited transfers
Include a variety of subsidies, military aid, voluntary cancellation of debt,
Also called the option writer , the party who grants a right to trade a security at a given price in
Other current assets
Value of non-cash assets, including prepaid expenses and accounts receivable, due
Actual forward rate expressed in dollars per currency unit, or vice versa.
A process whereby two companies in different countries borrow each other's currency for a
Common stockholder's right to anything of value distributed by the company.
Private unrequited transfers
Refers to resident immigrant workers' remittances to their country of origin as
Project loan certificate (PLC)
A primary program of Ginnie Mae for securitizing FHA-insured and coinsured
Project loan securities
Securities backed by a variety of FHA-insured loan types - primarily multi-family
Usually FHA-insured and HUD-guaranteed mortgages on multiple-family housing complexes,
rights of individuals and companies to own and utilize property as they see fit and to receive
Publicly traded assets
assets that can be traded in a public market, such as the stock market.
Current assets minus inventories.
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a
A tangible asset with physical properties that can be reproduced, such as a building or
assets that remain after sufficient assets are dedicated to meet all senior debtholder's claims in full.
Return on assets (ROA)
Indicator of profitability. Determined by dividing net income for the past 12 months
Return on total assets
The ratio of earnings available to common stockholders to total assets.
A short-lived (typically less than 90 days) call option for purchasing additional stock in a firm, issued
Issuance of "rights" to current shareholders allowing them to purchase additional shares,
Shares trading with rights attached to them.
Savings and Loan association
National- or state-chartered institution that accepts savings deposits and
Debt that, in the event of default, has first claim on specified assets.
loan to finance current assets, The sale of the current assets provides the cash to repay
Related: short hedge.
Sell limit order
Conditional trading order that indicates that a, security may be sold at the designated price or
All banks involved in selling or marketing a new issue of stock or bonds
If an investor thinks the price of a stock is going down, the investor could borrow the stock from
Also called a Wall Street analyst, a financial analyst who works for a brokerage firm and
The property that portfolio choice can be separated into two independent tasks: 1)
Establishing a market position by selling a security one does not own in anticipation of the price
Special drawing rights (SDR)
A form of international reserve assets, created by the IMF in 1967, whose
A bank loan, typically with a floating interest rate, for a specified amount that matures in between
A loan extended by a bank for a specific purpose. In contrast, lines of credit and revolving
ndividual or institution appointed by a company to look after the transfer of securities.
The price at which one unit of a firm sells goods or services to another unit of the same firm.
Transferable put right
An option issued by the firm to its shareholders to sell the firm one share of its
Items in the current account of the balance of payments of a country's accounting books
Debt that does not identify specific assets that can be taken over by the debtholder in case of default.
Variable rate loan
loan made at an interest rate that fluctuates based on a base interest rate such as the
The right to vote on matters that are put to a vote of security holders. For example the right to
Purchase of shares in which the buyer is entitled to the rights to buy shares in the company's
Anything of value that a company owns.
Cash, things that will be converted into cash within a year (such as accounts receivable), and inventory.
PROPERTY AND EQUIPMENT
assets such as land, buildings, machinery, and equipment that the business will use for several
RATE OF RETURN ON TOTAL ASSETS
The percentage return or profit that management made on each dollar of assets. The formula is:
What was spent to run the sales part of a company, such as sales salaries, travel, meals, and lodging for salespeople, and advertising.
Things that the business owns.
Amounts receivable by the business within a period of 12 months, including bank, debtors, inventory and prepayments.
Things that the business owns and are part of the business infrastructure – fixed assets may be
Intangible fixed assets
Non-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks).
Optimum selling price
The price at which profit is maximized, which takes into account the cost behaviour of fixed and variable costs and the relationship between price and demand for a product/service.
Tangible fixed assets
Physical assets that can be seen and touched, e.g. buildings, machinery, vehicles, computers etc.
The price at which goods or services are bought and sold within divisions of the same organization, as opposed to an arm’s-length price at which sales may be made to an external customer.
Items owned by the company or expenses that have been paid for but have not been used up.
assets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises.
Amounts that have been loaned to the company and that it still owes.
Current refers to cash and those assets that will be turned
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