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Definition of Intermediary
An independent third party that may act as a mediator during negotiations.
Firm that raises money from many small investors and provides financing to businesses or other
Any institution, such as a bank, that takes deposits from savers and loans them to borrowers.
A market where an intermediary offers search services to buyers and sellers.
If the average maturity of a bank's liabilities is less than that of its assets, it is said to be
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
the combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor.
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity.
This doctrine says that a nation is sovereign within its own borders and its domestic
A market in which there is much trading.
A strategy that uses available information and forecasting techniques to seek a
The physical commodity underlying a futures contract. Cash commodity, physical.
A bond covenant that specifies certain actions the Firm must take.
A form of organization commonly used by foreign banks to enter the U.S. market. An agency
The pool factor implied by the scheduled amortization assuming no prepayemts.
Present value of $1 paid for each of t periods.
Asset activity ratios
Ratios that measure how effectively the Firm is managing its assets.
Methods of financing in which lenders and equity investors look principally to the
An option is at-the-money if the strike price of the option is equal to the market price of the
An intercompAny loan channeled through a bank.
BAN (Bank anticipation notes)
Notes issued by states and municipalities to obtain interim financing for
Bank collection float
The time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank.
Bank discount basis
A convention used for quoting bids and offers for treasury bills in terms of annualized
A draft addressed to a bank.
Line of credit granted by a bank to a customer.
A computer message system linking major banks. It is used not for effecting payments, but as a
A short-term credit investment created by a non-financial Firm and guaranteed by a
Bank for International Settlements (BIS)
An international bank headquartered in Basel, Switzerland, which
State of being unable to pay debts. Thus, the ownership of the Firm's assets is transferred from
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
The risk that a Firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
The argument that expected bankruptcy costs preclude Firms from being financed entirely
Large and creditworthy compAny.
The Treasury and federal agencies are moving to a book-entry system in which securities are not represented by engraved pieces of paper but are maintained in computerized records at the
Interim financing of one sort or another used to solidify a position until more permanent
A guaranteed investment contract purchased with a single (one-shot) premium. Related:
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
A transaction where exchange is immediate, as contrasted to a forward contract, which
The market model applied to a single security. The slope of the line is a security's beta.
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value
The percentage of a given month's sales collected during the month of sale and each
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Related: Unsystematic risk
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
he written statement that follows Any "trade" in the securities markets. ConFirmation is issued
A merchant banking subsidiary set up by several banks that may or may not be of the
A term of reference describing a unit of trading for a financial or commodity future. Also, the actual
The month in which futures contracts may be satisfied by making or accepting a delivery.
Rules set by the Chicago Board of Trade for determining the invoice price of each
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
Cost of lease financing
A lease's internal rate of return.
on the other side of a trade or transaction.
The risk that the other party to an agreement will default. In an options contract, the risk
Existing in actual fact although not by official recognition.
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
New debt obtained by a Firm during the Chapter 11 bankruptcy process.
Checking accounts that pay no interest and can be withdrawn upon demand.
Depository Trust Company (DTC)
DTC is a user-owned securities depository which accepts deposits of
Present value of $1 received at a stated future date.
Non-interest-bearing money market instruments that are issued at a discount and
Eligible bankers' acceptances
In the BA market, an acceptance may be referred to as eligible because it is
A bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans.
A bond portfolio management strategy that involves finding the lowest cost portfolio
Instruments exempt from the registration requirements of the securities act of 1933 or the
Export-Import Bank (Ex-Im Bank)
The U.S. federal government agency that extends trade credits to U.S.
A financial institution that buys a Firm's accounts receivables and collects the debt.
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
A way of decomposing the factors that influence a security's rate of return into common and
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of
Sale of a Firm's accounts receivable to a financial institution known as a factor.
Federal agency securities
securities issued by corporations and agencies created by the U.S. government,
Federal Financing Bank
A federal institution that lends to a wide array of federal credit agencies funds it
Federal Home Loan Banks
The institutions that regulate and lend to savings and loan associations. The
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
Decisions concerning the liabilities and stockholders' equity side of the Firm's balance
Refers to an order to buy or sell that can be executed without conFirmation for some fixed period. Also,
Firm commitment underwriting
An undewriting in which an investment banking Firm commits to buy the
Firm's net value of debt
Total Firm value minus total Firm debt.
See:diversifiable risk or unsystematic risk.
A guaranteed investment contract where the credit rating is tied to some variable
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
A cash market transaction in which delivery of the commodity is deferred until after the
Forward forward contract
In Eurocurrencies, a contract under which a deposit of fixed maturity is agreed to
Agreement to buy or sell a set number of shares of a specific stock in a designated future
Futures contract multiple
A constant, set by an exchange, which when multiplied by the futures price gives
A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal in
Publicly owned stock in a Firm is replaced with complete equity ownership by a
Negotiable U.S. Treasury securities.
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time
Guaranteed investment contract (GIC)
A pure investment product in which a life compAny agrees, for a
A contract that obligates a purchaser of a project's output to make cash
Highly leveraged transaction (HLT)
bank loan to a highly leveraged Firm.
A corporation that owns enough voting stock in another Firm to control management and
money that moves across country borders in response to interest rate differences and that moves
A project whose acceptance or rejection is independent of the acceptance or rejection of
organizations that invest, including insurance companies, depository institutions,
The gradual domination of financial markets by institutional investors, as opposed to
Loan made by one unit of a corporation to another unit of the same corporation.
Transaction carried out between two units of the same corporation.
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
International Banking Facility (IBF)
International banking Facility. A branch that an American bank
A put option that has a strike price higher than the underlying futures price, or a call option
Intrinsic value of a firm
The present value of a Firm's expected future net cash flows discounted by the
Financial intermediaries who perform a variety of services, including aiding in the sale of
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