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Definition of In-substance defeasance
defeasance whereby debt is removed from the balance sheet but not cancelled.
Practice whereby the borrower sets aside cash or bonds sufficient to service the borrower's debt.
See: in-substance defeasance.
The deposit of cash and permitted securities, as specified in the bond indenture, into an
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
economic environment in which the firm expects to reside over the life of the
Exists when the costs and/or revenues of one project depend on those of another.
The real flow of cash that a firm could pay out forever in the absence of any change in
The extent to which the value of the firm will change because of an exchange rate change.
Cash flow plus change in present value.
The order quantity that minimizes total inventory costs.
Profits in excess of the competitive level.
In project financing, the risk that the project's output will not be salable at a price that will
For any entity, the difference between the market value of all its assets and the market
An agreement between two or more countries that allows the free movement of capital,
economic series that tend to rise or fall in advance of the rest of the economy.
Economic Value Added (EVA)
Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
the creation of multi-country markets
economic order quantity (EOQ)
an estimate of the number
economic production run (EPR)
an estimate of the number
when the incremental revenue from the sale of reworked defective units is greater than
economic value added (EVA)
a measure of the extent to which income exceeds the dollar cost of capital; calculated
The period over which a company expects to be able to use an asset.
economic order quantity
Order size that minimizes total inventory costs.
economic value added (EVA)
Term used by the consulting firm Stern Stewart for profit remaining after deduction of the cost
The school of macroeconomic thought prior to the rise of Keynesianism.
The study of the allocation and distribution of scare resources among competing wants.
The study of the determination of economic aggregates such as total output and the price level.
The study of firm and individual decisions insofar as they affect the allocation and distribution of goods and services.
View that incentives to work, save, and invest play an important role in determining economic activity by affecting the supply side of the economy.
American Depositary Receipts (ADRs)
Certificates issued by a U.S. depositary bank, representing foreign
Date on which particular news concerning a given company is announced to the public.
Balance of payments
A statistical compilation formulated by a sovereign nation of all economic transactions
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
Bottom-up equity management style
A management style that de-emphasizes the significance of economic
Repetitive cycles of economic expansion and recession.
The risk that the cash flow of an issuer will be impaired because of adverse economic
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
The risk that the other party to an agreement will default. In an options contract, the risk
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
Refers to the volatility of returns on international investments caused by events associated
European Union (EU)
An economic association of European countries founded by the Treaty of Rome in
Flight to quality
The tendency of investors to move towards safer, government bonds during periods of high
Fully modified pass-throughs
Agency pass-throughs that guarantee the timely payment of both interest and
Group of five (G5/G-5)
The five leading countries (France, Germany, Japan, United Kingdom, and the U.S.) that
Import-substitution development strategy
A development strategy followed by many Latin American
International Bank for Reconstruction and Development - IBRD or World Bank
International Bank for Reconstruction and Development makes loans at nearly conventional terms to countries for projects of high
The attempt to reduce risk by investing in the more than one nation. By
Law of one price
An economic rule stating that a given security must have the same price regardless of the
The transition from the end of an economic expansion to the start of a contraction.
A periodic review of a capital investment project to evaluate its continued economic viability.
The surplus as measured using regulatory accounting principles (RAP) which may allow
A key input to a firm's financial planning process. External sales forecasts are based on
Tactical Asset Allocation (TAA)
An asset allocation strategy that allows active departures from the normal
An indexing strategy that is linked to active management through the emphasis of a
Top-down equity management style
A management style that begins with an assessment of the overall
The transition point between economic recession and recovery.
A mathematical expression that assigns a value to all possible choices. In portfolio theory the
This term has two quite different meanings. First, it may
A very broad term rooted in economic theory and referring to
Refers to investments by a business in long-term
Refers to one of the two basic sources of capital for a business, the
financial reports and statements
Financial means having to do with
a unit that has been rejected at a control inspection
European Union (EU)
an economic alliance originally created
a series of international standards that are designed
the traditional production system in which
a unit that is rejected at a control inspection
See economic value added.
Economywide (macroeconomic) sources of risk that affect the overall stock market. Also called systematic risk.
Also called economic value added. Profit minus cost of capital employed.
An economic system in which the marketplace, through the pricing mechanism, determines the allocation and distribution of scarce goods and services, with a minimum of government involvement.
An economy in which imports and exports are very small relative to GDP and so are ignored in macroeconomic analysis. Contrast with open economy.
A prolonged period of very low economic activity with large-scale unemployment.
Factor of Production
A resource used to produce a good or service. The main macroeconomic factors of production are capital and labor.
A change in government spending or taxing, designed to influence economic activity.
Basic facilities, such as transportation, communication, and legal systems, on which economic activity depends.
The school of macroeconomic thought based on the ideas of John Maynard Keynes as published in his 1936 book The General Theory of Employment, Interest, and Money. A Keynesian believes the economy is inherently unstable and requires active government intervention to achieve stability.
School of economic thought stressing the importance of the money supply in the economy. Adherents believe that the economy is inherently stable, so that policy is best undertaken through adoption of a policy rule.
Actions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity.
National Income and Product Accounts
The national accounting system that records economic activity such as GDP and related measures.
Organization for economic Cooperation and Development, consisting of most of the world's developed economies.
The economic program of President Ronald Reagan, including tax cuts, restraint in spending except for defence spending, and less regulation.
Loosely speaking, a period of less-than-normal economic growth. Technically, a downturn in economic activity in which real GDP falls in two consecutive quarters.
A specific level of some economic variable that a policy attempts to maintain.
economic activity not observed by tax collectors and government statisticians.
The number of times during a year that the money supply turns over in supporting that year's economic activity, measured as the ratio of nominal income to the money supply.
Probable future economic benefit that is obtained or controlled by an entity as a result of
Extended Amortization Period
An amortization period that continues beyond a long-lived asset's economic useful life.
A probable future sacrifice of economic benefits arising from present obligations of
In England in the 1700's it was popular to bet on the date of death of certain prominent public figures. Anyone could buy life insurance on another's life, even without their consent. Unfortunately, some died before it was their time, dispatched prematurely in order that the life insurance proceeds could be collected. In 1774, English Parliament passed a law which restricted the right to be a beneficiary on a life insurance contract to those who would suffer an economic loss when the life insured died. The law also provided that a person has an unlimited insurable interest in his own life. It is still a legal stipulation that an insurance contract is not valid unless insurable interest exists at the time the policy is issued. Life Insurance companies will not, however, issue unlimited amounts of coverage to an individual. The amount of life insurance which will be approved has to approximate the loss caused by the death of the individual and must not result in a windfall for the beneficiary.
economic assistance provided by unrelated third parties, typically government agencies. They may take the form of loans, loan guarantees, subsidies, tax allowances, contributions, or cost-sharing arrangements.
An expression of economic benefit that motivates behavior that might otherwise not take place.
Future-oriented financial information prepared using assumptions all of which reflect the entity's planned courses of action for the period covered given management's judgment as to the most probable set of economic conditions.
Future-Oriented Financial Information
Information about prospective results of operations, financial position and/or changes in financial position, based on assumptions about future economic conditions and courses of action. Future-oriented financial information is presented as either a forecast or a projection.
What If Scenarios
Analysis of the economic effect of possible future situations such as economic downturns, loss of key customers, changes in interest rates or price levels, new competitors or technologies.
Insurance that provides protection against an economic loss caused by death of the person insured.
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