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Definition of Information-content effect
The rise in the stock price following the dividend signal.
Result of a transaction that increases earnings per common share (e.g. by decreasing the
information that is known to some people but not to other people.
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
The tendency of stocks to perform differently at different times, including such anomalies as
The grouping of investors who have a preference that the firm follow a particular financing
Refers to the fact that the merger of two firms decreases the probability of default on
The cumulative, after-tax, prior-year effect of a change in accounting
The change in earnings of previous years
The change in earnings of previous years assuming
Result of a transaction that decreases earnings per common share.
An annual measure of the time value of money that fully reflects the effects of
Interest rate that is annualized using compound interest.
Annualized interest rate on a security computed using compound interest techniques.
Annualized rate of return on a security computed using compound
The strike price in an optional redemption provision plus the accrued interest to the
The convexity of a bond calculated with cash flows that change with yields.
In an interest rate swap, the date the swap begins accruing interest.
The duration calculated using the approximate duration formula for a bond with an
Effective Exchange Rate
The weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country.
Effective Interest Rate
The rate of interest actually earned on an investment. It is
Effective margin (EM)
Used with SAT performance measures, the amount equaling the net earned spread, or
A measure of the time value of money that fully reflects the effects of compounding.
The gross underwriting spread adjusted for the impact of the announcement of the common
Effective Tax Rate
The total tax provision divided by pretax book income from continuing
a measure of how well an organization’s goals
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
A theory that nominal interest rates in two or more countries should be equal to the required real
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.
bits of knowledge or fact that have been carefully
A situation involving information that is known to some, but not all, participants.
Information Coefficient (IC)
The correlation between predicted and actual stock returns, sometimes used to
information content of dividends
Dividend increases send good news about cash flow and earnings. Dividend cuts send bad news.
Transaction costs that include the assessment of the investment merits of a financial asset.
Trades in which an investor believes he or she possesses pertinent
Organizations that furnish investment and other types of information, such as
The speed and accuracy with which prices reflect new information.
Trades that are the result of either a reallocation of wealth or an implementation of an
Relevant information about a company that has not yet been made public. It is illegal for
International Fisher effect
States that the interest rate differential between two countries should be an
international Fisher effect
Theory that real interest rates in all countries should be equal, with differences in nominal rates reflecting differences in expected inflation.
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
management information system (MIS)
a structure of interrelated elements that collects, organizes, and communicates
Medical Information Bureau
This organization was established in 1902. The Medical information Bureau (M.I.B.) is a non-profit association of life insurance companies. Its purpose is to detect and deter fraud by providing warnings called, alerts, to member companies. For example, if an insurance applicant advised one insurance company of a heart attack and then applied to another insurance company omitting this history, codes, reported by the first insurance company, indicating a heart attack would alert the second insurance company to the undisclosed history. It is a rarity, however, that the alert is the only notice of a specific medical impairement as most applicants completely disclose their history.
Neglected firm effect
The tendency of firms that are neglected by security analysts to outperform firms that
That portfolios with low P/E stocks have exhibited higher average risk-adjusted returns than high P/E stocks.
Panel on Audit Effectiveness
A special committee of the Public Oversight Board that was created
Theory that anticipated policy has no effect on output.
The tendency of small firms (in terms of total market capitalization) to outperform the
A violation of value-additivity whereby the value of the combination is greater than the
The effect on spending of a change in wealth caused by a change in the overall price level.
The common recurrent low or negative average return from Friday to Monday in the stock market.
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