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Definition of Information costs
Transaction costs that include the assessment of the investment merits of a financial asset.
costs associated with locating a counterparty to a trade, including explicit costs (such as
The incremental costs of having an agent make decisions for a principal.
information that is known to some people but not to other people.
costs that are identifiable with and able to be influenced by decisions made at the business
When a cost is recorded originally as an increase
costs that increase with increases in the level of investment in current assets.
costs of maintaining current assets, including opportunity cost of capital.
A particularly egregious form of aggressive cost capitalization
costs arising from bankruptcy or distorted business decisions before bankruptcy.
costs that are readily traceable to particular products or services.
The difference between the execution price of a security and the price that would have
The expected value if the future uncertain outcomes could be known
Legal and administrative costs of liquidation or reorganization. Also includes
costs that do not change with increases or decreases in the volume of goods or services
costs that do not depend on the level of output.
fixed expenses (costs)
Expenses or costs that remain the same in amount,
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
The price of obtaining capital, either borrowed or equity, with intent to carry on business operations.
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.
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
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
The rise in the stock price following the dividend signal.
information content of dividends
Dividend increases send good news about cash flow and earnings. Dividend cuts send bad news.
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
management information system (MIS)
a structure of interrelated elements that collects, organizes, and communicates
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
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.
The costs to firms of changing their prices.
The difference in the performance of an actual investment and a desired investment
Overhead generally refers to indirect, in contrast to direct,
The costs that relate to a period of time.
Policy Acquisition Costs
costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
The costs of additional regulation, including higher taxes, borne by large and
A form of start-up cost incurred in preparing for the opening of a new store or facility.
Price impact costs
Related: market impact costs
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
costs that are constant within a defined level of activity but that can increase or decrease when
costs that have both fixed and variable components.
costs incurred from shortages in current assets.
A budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a
costs related to such onetime activities as opening a new facility, introducing
costs that have been incurred and cannot be reversed.
costs that have been incurred in the past.
costs that have been incurred and cannot be recovered.
costs of buying and selling marketable securities and borrowing. Trading costs include
The time, effort, and money necessary, including such things as commission fees and the
Undepreciated Capital Costs
The tax definition of the value of an asset that is eligible for tax deprecation.
costs that change as the level of output changes.
activity-based costing (ABC)
a process using multiple cost drivers to predict and allocate costs to products and services;
business process reengineering (BPR)
the process of combining information technology to create new and more effective
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
a database providing information about the impact
The percentage of the assets that were spent to run a mutual fund (as of the last annual
The production of financial and non-financial information used in planning for the future; making decisions about products, services, prices and what costs to incur; and ensuring that plans are implemented and achieved.
Marketplace price efficiency
The degree to which the prices of assets reflect the available marketplace
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