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Definition of Investment value
The present value of the total sum of NPVs expected to result from
Also called investment value, the value of a convertible security without the con-version option.
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in todayâ€™s dollars of cash flows that occur in different time periods.
The net present value analysis of an asset if financed solely by equity
With respect to convertible bonds, the value the security would have if it were not convertible
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A
The ratio of stockholder equity to the average number of common shares. Book value
An amount the insurance company will pay if the policyholder ends a whole life
Also called parity value, the value of a convertible security if it is converted immediately.
Automatic reinvestment of shareholder dividends in more shares of a
The amount of advantage over a current market transaction provided by an in-the-money
The return one can expect to earn on an investment. See: capital asset
The weighted average of a probability distribution.
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
Extraordinary positive value
A positive net present value.
See: Par value.
Firm's net value of debt
Total firm value minus total firm debt.
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Future investment opportunities
The options to identify additional, more valuable investment opportunities
The amount of cash at a specified date in the future that is equivalent in value to a specified
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
Related: financial analysts
Financial intermediaries who perform a variety of services, including aiding in the sale of
Decisions concerning the asset side of a firm's balance sheet, such as the decision to
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
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
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
investments that a regulated entity is permitted to make under the rules and regulations
Net amount that could be realized by selling the assets of a firm after paying the debt.
The amount a policyholder may borrow against a whole life insurance policy at the interest rate
1) The price at which a security is trading and could presumably be purchased or sold.
Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
Related: par value.
Mutually exclusive investment decisions
investment decisions in which the acceptance of a project
Net adjusted present value
The adjusted present value minus the initial cost of an investment.
Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share
Net book value
The current book value of an asset or liability; that is, its original book value net of any
Gross, or total, investment minus depreciation.
Net present value (NPV)
The present value of the expected future cash flows minus the cost.
Net present value of growth opportunities
A model valuing a firm in which net present value of new
Net present value rule
An investment is worth making if it has a positive NPV. Projects with negative NPVs
Net salvage value
The after-tax net cash flow for terminating the project.
Original face value
The principal amount of the mortgage as of its issue date.
Also called the maturity value or face value, the amount that the issuer agrees to pay at the maturity date.
Passive investment strategy
See: passive management.
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
The amount of cash today that is equivalent in value to a payment, or to a stream of payments,
Present value factor
Factor used to calculate an estimate of the present value of an amount to be received in
Present value of growth opportunities (NPV)
Net present value of investments the firm is expected to make
Price value of a basis point (PVBP)
Also called the dollar value of a basis point, a measure of the change in
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
The attractiveness measured in terms of risk, liquidity, and return of one instrument relative to
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
Current cost of replacing the firm's assets.
Usually refers to the value of a lessor's property at the time the lease expires.
Return on investment (ROI)
Generally, book income as a proportion of net book value.
Scrap value of plant and equipment.
Short-term investment services
Services that assist firms in making short-term investments.
Also called the normal deviate, the distance of one data point from the mean, divided by
The value of a bond at maturity, typically its par value, or the value of an asset (or an entire
Time value of an option
The portion of an option's premium that is based on the amount of time remaining
Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar
The mirror image of the asset substitution problem, wherein stockholders refuse
Unit investment trust
Money invested in a portfolio whose composition is fixed for the life of the fund.
The welfare a given investor assigns to an investment with a particular return and risk.
Method of indirect taxation whereby a tax is levied at each stage of production on the value
Value-at-Risk model (VAR)
Procedure for estimating the probability of portfolio losses exceeding some
Value additivity principal
Prevails when the value of a whole group of assets exactly equals the sum of the
In the market for Eurodollar deposits and foreign exchange, value date refers to the delivery date
Refers to when value or credit is given for funds transferred between banks.
A manager who seeks to buy stocks that are at a discount to their "fair value" and sell them at
A portfolio of zero net value established by buying and shorting component
An assetâ€™s cost basis minus accumulated depreciation.
BOOK VALUE OF COMMON STOCK
The theoretical amount per share that each stockholder would receive if a companyâ€™s assets were sold on the balance sheetâ€™s date. Book value equals:
CAPITAL IN EXCESS OF PAR VALUE
What a company collected when it sold stock for more than the par value per share.
An arbitrary value that a company may assign to its stock. Par value has no relationship to what the stock is selling for on the open market.
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.
The amount management estimates a piece of equipment will be worth at the end of its useful life, either as a trade-in or if it were sold for scrap.
Cash value added (CVA)
A method of investment appraisal that calculates the ratio of the net present value of an
Economic Value Added (EVA)
Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
A division or unit of an organization that is responsible for achieving an adequate return on
Net present value (NPV)
A discounted cash flow technique used for investment appraisal that calculates the present value of future cash flows and deducts the initial capital investment.
Return on investment (ROI)
The net profit after tax as a percentage of the shareholdersâ€™ investment in the business.
Increasing the value of the business to its shareholders, achieved through a combination of
A variety of approaches that emphasize increasing shareholder value as the primary goal of every business.
No par value stock
Stock issued by the company that does not have an arbitrary value (par value) assigned to it.
An arbitrary value assigned by the company to each share of stock; it is used in the accounting for the sale of stock and in some jurisdictions for calculating taxes.
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