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Financial Terms | |
Institutional investors |
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Definition of Institutional investorsInstitutional investorsOrganizations that invest, including insurance companies, depository institutions,
Related Terms:BARRA's performance analysis (PERFAN)A method developed by BARRA, a consulting firm in Direct placementSelling a new issue not by offering it for sale publicly, but by placing it with one of several InstitutionalizationThe gradual domination of financial markets by institutional investors, as opposed to Upstairs marketA network of trading desks for the major brokerage firms and institutional investors that Institutionally Induced UnemploymentUnemployment due to institutional phenomena such as the degree of labor force unionization, the level of discrimination, and government policies such as unemployment insurance programs, minimum wages, or regulations on business. Retail investors, individual investorsSmall investors who commit capital for their personal account. activity analysisthe process of detailing the various repetitive actions that are performed in making a product or ![]() Break-even analysisAn analysis of the level of sales at which a project would make zero profit. break-even analysisanalysis of the level of sales at which the company breaks even. Break-Even AnalysisAn analytical technique for studying the relationships between fixed cost, variable cost, and profits. A breakeven chart graphically depicts the nature of breakeven analysis. The breakeven point represents the volume of sales at which total costs equal total revenues (that is, profits equal zero). capital investment analysisRefers to various techniques and procedures Cluster analysisA statistical technique that identifies clusters of stocks whose returns are highly correlated Committee, AIMR Performance Presentation Standards Implementation CommitteeThe Association for Investment Management and Research (AIMR)'s performance Presentation Standards Implementation Common-base-year analysisThe representing of accounting information over multiple years as percentages Comparative credit analysisA method of analysis in which a firm is compared to others that have a desired correlation analysisan analytical technique that uses statistical ![]() Cost-Benefit AnalysisThe calculation and comparison of the costs and benefits of a policy or project. cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course cost driver analysisthe process of investigating, quantifying, Cost–volume–profit analysis (CVP)A method for understanding the relationship between revenue, cost and sales volume. Credit analysisThe process of analyzing information on companies and bond issues in order to estimate the credit analysisProcedure to determine the likelihood a customer will pay its bills. Debt displacementThe amount of borrowing that leasing displaces. Firms that do a lot of leasing will be direct costa cost that is distinctly traceable to a particular cost object Direct costA cost that can be clearly associated with specific activities or products. direct costingsee variable costing Direct costingA costing methodology that only assigns direct labor and material costs Direct costsCosts that are readily traceable to particular products or services. Direct DepositThe direct transfer of payroll funds from the company bank account direct depositA system where funds are electronically credited to your account by a financial institution or a payroll service. For example, you can arrange with your employer to have your pay cheques automatically deposited into your no fee bank account. Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash direct laborthe time spent by individuals who work specifically Direct laborLabor that is specifically incurred to create a product. Direct leaseLease in which the lessor purchases new equipment from the manufacturer and leases it to the direct materiala readily identifiable part of a product; the cost of such a part Direct materials costThe cost of all materials used in a cost object, such as finished goods. Direct materials mix varianceThe variance between the budgeted and actual mixes of Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. direct methoda service department cost allocation approach Direct-Method FormatA format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities. Direct paperCommercial paper sold directly by the issuer to investors. Direct quoteFor foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency. Direct-Response AdvertisingAdvertising designed to elicit sales to customers who can be Direct search marketBuyers and sellers seek each other directly and transact directly. Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. DirectorA member of a company’s Board of directors. Discriminant analysisA statistical process that links the probability of default to a specified set of financial ratios. Factor analysisA statistical procedure that seeks to explain a certain phenomenon, such as the return on a Failure analysisThe examination of failure incidents to identify components Financial Trend AnalysisProcess of analyzing financial statements of a company for any continuing relationship. Foreign direct investment (FDI)The acquisition abroad of physical assets such as plant and equipment, with Fundamental analysisSecurity analysis that seeks to detect misvalued securities by an analysis of the firm's Horizon analysisAn analysis of returns using total return to assess performance over some investment horizon. Horizontal analysisThe process of dividing each expense item of a given year by the same expense item in incremental analysisa process of evaluating changes that indirect costa cost that cannot be traced explicitly to a particular Indirect costA cost that is not directly associated with a single activity or event. Such Indirect costsCosts that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead. Indirect laborThe cost of any labor that supports the production process, but which is Indirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities. Indirect-Method FormatA format for the operating section of the cash-flow statement that Indirect quoteFor foreign exchange, the number of units of a foreign currency needed to buy one U.S.$. Indirect TaxesTaxes paid by consumers when they buy goods and services. A sales tax is an example. Interac® Direct PaymentInstead of paying with cash or a credit card, Interac direct Payment allows you to pay for your purchase with a debit card, such as your bank card. The amount of the purchase is electronically debited, or withdrawn, from your bank account (see debit card). least squares regression analysisa statistical technique that investigates the association between dependent and independent variables; it determines the line of "best fit" for a set of observations by minimizing the sum of the squares Mean-variance analysisEvaluation of risky prospects based on the expected value and variance of possible outcomes. Multiple-discriminant analysis (MDA)Statistical technique for distinguishing between two groups on the Pareto analysisa method of ranking the causes of variation Pareto analysisThe 80:20 ratio that states that 20% of the variables included in an Performance attribution analysisThe decomposition of a money manager's performance results to explain Performance evaluationThe evaluation of a manager's performance which involves, first, determining performance evaluationthe process of determining the degree performance management systema system reflecting the entire package of decisions regarding performance measurement and evaluation Performance measurementThe calculation of the return realized by a money manager over some time interval. Performance sharesShares of stock given to managers on the basis of performance as measured by earnings PlacementA bank depositing Eurodollars with (selling Eurodollars to) another bank is often said to be pre-authorized direct depositA system where funds are electronically credited to your account by a financial institution or a payroll service. Private placementThe sale of a bond or other security directly to a limited number of investors. private placementSale of securities to a limited number of investors without a public offering. Private PlacementSale of stocks, bonds or other investments directly to an institutional investor or individuals. Prior registration with the regulatory authorities is not required if the securities are purchased for investment as opposed to resale. Pro forma capital structure analysisA method of analyzing the impact of alternative capital structure Ratio analysisA method of analysing financial reports to interpret trends and make comparisons by using ratios – two numbers, with one generally expressed as a percentage of the other. Ratio analysisA method of relating numbers from the various financial statements to one another in order to get meaningful information for comparison. Ratio AnalysisThe process of using financial ratios, calculated from key accounts Regression analysisA statistical technique that can be used to estimate relationships between variables. Regression analysisStatistical analysis techniques that quantify the ReplacementThis subject of replacement of existing policies is covered because sometimes existing life insurance policies are unnecessarily replaced with new coverage resulting in a loss of valuable benefits. If someone suggests replacing your existing coverage, insist on having a comparison disclosure statement completed. Replacement Capital ExpendituresCapital expenditures required to replace productive Replacement-chain problemIdea that future replacement decisions must be taken into account in selecting Replacement costCost to replace a firm's assets. replacement costan amount that a firm would pay to replace an asset or buy a new one that performs the same functions as an asset currently held Replacement costThe cost that would be incurred to replace an existing asset with one having the same utility. Replacement cycleThe frequency with which an asset is replaced by an equivalent asset. Replacement partsParts requiring some modification before being substituted Replacement valueCurrent cost of replacing the firm's assets. Replacement ValueThe amount necessary to duplicate a company's assets at current Replacement ValueCost of acquiring a new asset to replace an existing asset with the same functional utility. Scenario analysisThe use of horizon analysis to project bond total returns under different reinvestment rates scenario analysisProject analysis given a particular combination of assumptions. Sensitivity analysisanalysis of the effect on a project's profitability due to changes in sales, cost, and so on. Sensitivity analysisAn approach to understanding how changes in one variable of cost–volume–profit analysis are affected by changes in the other variables. sensitivity analysisa process of determining the amount of change that must occur in a variable before a different decision would be made sensitivity analysisanalysis of the effects of changes in sales, costs, and so on, on project profitability. 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