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Definition of Investment bank
Financial intermediaries who perform a variety of services, including aiding in the sale of
Middleman between a corporation issuing new securities and the public. The middleman buys the securities issue outright and then resells it to customers. Also called an underwriter.
Communication barrier between financiers (investment bankers) and traders. This barrier is
An undewriting in which an investment banking firm commits to buy the
The commercial or investment bank with the primary responsibility for organizing syndicated
A financial institution that engages in investment banking functions, such as advising clients in mergers and acquisitions, underwriting securities and taking debt or equity positions.
A party that guarantees the proceeds to the firm from a security sale, thereby in effect taking
See investment banker.
A group of investment banks that work together to sell new security offerings to
A bank machine, sometimes referred to as an automated teller machine (ATM).
A form of organization commonly used by foreign banks to enter the U.S. market. An agency
Notes issued by states and municipalities to obtain interim financing for
Money in a bank cheque account, the difference between receipts and payments.
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.
A convention used for quoting bids and offers for treasury bills in terms of annualized
A draft addressed to a bank.
A guaranteed form of payment which is issued in amounts over $5,000.
Bank for International Settlements (BIS)
An international bank headquartered in Basel, Switzerland, which
Line of credit granted by a bank to a customer.
Money owed to the bank in a cheque account where payments exceed receipts.
The process of taking the balances from the bank statement and the general ledger and making adjustments so that they agree.
A comparison between the cash position recorded on a company’s
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
A bill of exchange, or draft, drawn by the borrower for payment on a specified date, and accepted by a chartered bank. Upon acceptance, the bill becomes, in effect, a postdated certified cheque.
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from
The reorganization or liquidation of a firm that cannot pay its debts.
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
Business Expansion Investment
The use of capital to create more money through the addition of fixed assets or through income producing vehicles.
capital investment analysis
Refers to various techniques and procedures
Money used to purchase fixed assets for a business, such as land, buildings, or machinery. Also, money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses.
A public agency responsible for regulating and controlling an economy's monetary and financial institutions. It is the sole money-issuing authority.
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value
A privately owned, profit-seeking firm that accepts deposits and makes loans.
System whereby customers make payments to a regional collection center which transfers funds to
A merchant banking subsidiary set up by several banks that may or may not be of the
Dividend reinvestment plan (DRP)
Automatic reinvestment of shareholder dividends in more shares of a
Eligible bankers' acceptances
In the BA market, an acceptance may be referred to as eligible because it is
Through equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.
A bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans.
Expected return on investment
The return one can expect to earn on an investment. See: capital asset
Export-Import Bank (Ex-Im Bank)
The U.S. federal government agency that extends trade credits to U.S.
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
Federal Reserve Banks
The twelve district banks in the Federal Reserve System.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Fractional Reserve Banking
A banking system in which banks hold only a fraction of their outstanding deposits in cash or on deposit with the central bank.
Future investment opportunities
The options to identify additional, more valuable investment opportunities
guaranteed investment certificate (GIC)
A GIC is an investment that gives you a guaranteed rate of return over a fixed period of time, usually between 30 days and 5 years. GICs are available from banks, trust companies, and other financial institutions.
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
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
The commitment of funds (capital) in anticipation of an increased
Related: financial analysts
a responsibility center in which the manager
A division or unit of an organization that is responsible for achieving an adequate return on
a judgment about which assets will be
Decisions concerning the asset side of a firm's balance sheet, such as the decision to
Bonds rated Baa or above by Moody’s or BBB or above by Standard & Poor’s.
Investment grade bonds
A bond that is assigned a rating in the top four categories by commercial credit
The revenue from a portfolio of invested assets.
Also called a portfolio manager and money manager, the individual who manages a
Investment product line (IPML)
The line of required returns for investment projects as a function of beta
Expenditures on capital goods including new housing. Financial ''investments" and sales of existing assets are not included.
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
Investment Tax Credit
A reduction in taxes offered to firms to induce them to increase investment spending.
A closed-end fund regulated by the investment Company Act of 1940. These funds have a
As a discipline, the study of financial securities, such as stocks and bonds, from the investor's
A legal proceeding for liquidating or reorganizing a business.
investments that a regulated entity is permitted to make under the rules and regulations
A British term for a bank that specializes not in lending out its own funds, but in providing
Money center banks
banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
Mutually exclusive investment decisions
investment decisions in which the acceptance of a project
Gross, or total, investment minus depreciation.
investment spending minus depreciation.
Net present value of future investments
The present value of the total sum of NPVs expected to result from
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
Passive investment strategy
See: passive management.
PIBOR (Paris Interbank Offer Rate)
The deposit rate on interbank transactions in the Eurocurrency market
the process of gathering information
A bankruptcy in which a debtor and its creditors pre-negotiate a plan or
qualified investments (Canada)
Qualified investments is the term used for investments that can be held in an RSP. These investments generally include:
Regular Investment Plan (RIP)
A plan under which you may make regular deposits of the same amount to your Mutual Funds account once a month, once every 2 weeks, or once a week. You can also make regular deposits up to four times a month on any dates you choose.
an assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR
The rate at which an investor assumes interest payments made on a debt security can be
The risk that proceeds received in the future will have to be reinvested at a lower potential
REIT (real estate investment trust)
Real estate investment trust, which is similar to a closed-end mutual
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
return on investment
a ratio that relates income generated
Return on investment (ROI)
Generally, book income as a proportion of net book value.
RETURN ON INVESTMENT (ROI)
In its most basic form, the rate of return equals net income divided by the amount of money invested. It can be applied to a particular product or piece of equipment, or to a business as a whole.
Return on investment (ROI)
The net profit after tax as a percentage of the shareholders’ investment in the business.
return on investment (ROI)
A very general concept that refers to some
Short-term investment services
Services that assist firms in making short-term investments.
Society for Worldwide Interbank Financial Telecommunications (SWIFT)
A dedicated computer network to support funds transfer messages internationally between over 900 member banks worldwide.
The mirror image of the asset substitution problem, wherein stockholders refuse
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