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Financial Terms | |
Information Coefficient (IC) |
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Definition of Information Coefficient (IC)Information Coefficient (IC)The correlation between predicted and actual stock returns, sometimes used to
Related Terms:ABC inventory classificationA method for dividing inventory into classifications, Accomodating PolicyA monetary policy of matching wage and price increases with money supply increases so that the real money supply does not fall and push the economy into recession. Accounting PoliciesThe principles, bases, conventions, rules and procedures adopted by management in preparing and presenting financial statements. acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable Administrative pricing rulesIRS rules used to allocate income on export sales to a foreign sales corporation. Aggressive Capitalization PoliciesCapitalizing and reporting as assets significant portions of algebraic methoda process of service department cost allocation ![]() American Depositary Receipts (ADRs)Certificates issued by a U.S. depositary bank, representing foreign American optionAn option that may be exercised at any time up to and including the expiration date. American optionAn option that can be exercised any time until its American sharesSecurities certificates issued in the U.S. by a transfer agent acting on behalf of the foreign American Stock Exchange (AMEX)The second-largest stock exchange in the United States. It trades American-style optionAn option contract that can be exercised at any time between the date of purchase and Analytical ReviewThe process of attempting to infer the presence of potential problems AnticipationArrangements whereby customers who pay before the final date may be entitled to deduct a ApplicantThe party applying for an insurance policy. ![]() ApplicationA signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued. Arbitrage-free option-pricing modelsYield curve option-pricing models. Arbitrage Pricing Theory (APT)An alternative model to the capital asset pricing model developed by Arithmetic average (mean) rate of returnArithmetic mean return. Arithmetic mean returnAn average of the subperiod returns, calculated by summing the subperiod returns Arm's length priceThe price at which a willing buyer and a willing unrelated seller would freely agree to Articles of incorporationLegal document establishing a corporation and its structure and purpose. ArticulationWhen numbers from different financial statements relate to one another. Ask priceA dealer's price to sell a security; also called the offer price. Asset pricing modelA model for determining the required rate of return on an asset. Asset pricing modelA model, such as the Capital Asset Pricing Model (CAPM), that determines the required Asset-specific RiskThe amount of total risk that can be eliminated by diversification by Asymmetric informationinformation that is known to some people but not to other people. Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. Automatic Benefits PaymentAutomatic payment of moneys derived from a benefit. Automatic StabilizerAny feature built into the economy that automatically cushions fluctuations. Automatic stayThe restricting of liability holders from collection efforts of collateral seizure, which is Automatic Waiver of PremiumA benefit that automatically forfeits premium payments. Back officeBrokerage house clerical operations that support, but do not include, the trading of stocks and BAN (Bank anticipation notes)Notes issued by states and municipalities to obtain interim financing for Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market Basic balanceIn a balance of payments, the basic balance is the net balance of the combination of the current Basic business strategiesKey strategies a firm intends to pursue in carrying out its business plan. basic earnings per share (EPS)This important ratio equals the net Basic Earnings Power RatioPercentage of earnings relative to total assets; indication of how Basic IRR ruleAccept the project if IRR is greater than the discount rate; reject the project is lower than the Basis pricePrice expressed in terms of yield to maturity or annual rate of return. Batch pickingPicking for several summarized orders at the same time, thereby Beggar-My-Neighbor PolicyA policy designed to increase an economy's prosperity at the expense of another country's prosperity. BeneficiaryThis is the person who benefits from the terms of a trust, a will, an RRSP, a RRIF, a LIF, an annuity or a life insurance policy. In relation to RRSP's, RRIF's, LIF's, Annuities and of course life insurance, if the beneficiary is a spouse, parent, offspring or grand-child, they are considered to be a preferred beneficiary. If the insured has named a preferred beneficiary, the death benefit is invariably protected from creditors. There have been some court challenges of this right of protection but so far they have been unsuccessful. See "Creditor Protection" below. A beneficiary under the age of 18 must be represented by an individual guardian over the age of 18 or a public official who represents minors generally. A policy owner may, in the designation of a beneficiary, appoint someone to act as trustee for a minor. Death benefits are not subject to income taxes. If you make your beneficiary your estate, the death benefit will be included in your assets for probate. Probate filing fees are currently $14 per thousand of estate value in British Columbia and $15 per thousand of estate value in Ontario. BeneficiaryThe person designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. Beneficiary (Credit Insurance)The person or party designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. In the case of credit insurance, the beneficiary will always be the creditor. Beta coefficientA measurement of the extent to which the returns on a given stock move with stock market. Bid priceThis is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically Bill and Hold PracticesProducts that have been sold with an explicit agreement that delivery Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Budget deficitThe amount by which government spending exceeds government revenues. Budget DeficitThe excess of government spending over tax receipts. Call priceThe price, specified at issuance, at which the issuer of a bond may retire part of the bond at a Call priceThe price for which a bond can be repaid before maturity under a call provision. Candlestick chartA financial chart usually used to plot the high, low, open, Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and Capital Asset Pricing Model (CAPM)A model for estimating equilibrium rates of return and values of capital asset pricing model (CAPM)Theory of the relationship between risk and return which states that the expected risk Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Cash deficiency agreementAn agreement to invest cash in a project to the extent required to cover any cash Certificate of deposit (CD)Also called a time deposit, this is a certificate issued by a bank or thrift that Certificate of Deposit (CD)A bank deposit that cannot be withdrawn for a specified period of time. See also term deposit. Characteristic lineThe market model applied to a single security. The slope of the line is a security's beta. Cherry PickingSelecting specific assets for sale so as to record desired gains or losses. Chicago Mercantile Exchange (CME)A not-for-profit corporation owned by its members. Its primary chief financial officer (CFO)Officer who oversees the treasurer and controller and sets overall financial strategy. Classical MacroeconomicsThe school of macroeconomic thought prior to the rise of Keynesianism. Clean priceBond price excluding accrued interest. coefficient of correlationa measure of dispersion that indicates the degree of relative association existing between two variables Coefficient of determinationA measure of the goodness of fit of the relationship between the dependent and coefficient of determinationa measure of dispersion that coefficient of variationa measure of risk used when the standard deviations for multiple projects are approximately Cold-Turkey PolicyDecreasing inflation by immediately decreasing the money growth rate to a new, low rate. Contrast with gradualism. Collection policyProcedures followed by a firm in attempting to collect accounts receivables. collection policyProcedures to collect and monitor receivables. Company-specific riskRelated: Unsystematic risk Companyspecific RiskSee asset-specific risk Complementary PoliciesPolicies which enhance each other. Concentration servicesMovement of cash from different lockbox locations into a single concentration Confidence indicatorA measure of investors' faith in the economy and the securities market. A low or Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that Consumer Price Index (CPI)The CPI, as it is called, measures the prices of consumer goods and services and is a Consumer Price Index (CPI)An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation. Contingent BeneficiaryThis is the person designated to receive the death benefit of a life insurance policy if the primary beneficiary dies before the life insured. This is a consideration when husband and wife make each other the beneficiary of their coverage. Should they both die in the same car accident or plane crash, the death benefits would go to each others estate and creditor claims could be made against them. Particularly if minor children could be survivors, then a trustee contingent beneficiary should be named. Conversion parity priceRelated:Market conversion price Convertible priceThe contractually specified price per share at which a convertible security can be Correlation coefficientA standardized statistical measure of the dependence of two random variables, Correlation CoefficientA measure of the tendency of two variables to change values Correlation coefficientA statistic in which the covariance is scaled to a cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course Cost-plus pricingA method of pricing in which a mark-up is added to the total product/service cost. CountercyclicalFalling during expansions and rising during recessions. A countercyclical policy stimulates during a recession and contracts during an expansion. Creative Accounting PracticesAny and all steps used to play the financial numbers game, including credit policyStandards set to determine the amount and nature of credit to extend to customers. Critical Growth PeriodsTimes in a company's history when growth is essential and without which survival of the business might be in jeopardy. Critical Illness InsuranceCoverage that provides a lump-sum payment should you be diagnosed with a critical illness and survive a pre-determined period of time. There are no restrictions on how you use your benefit. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |