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Definition of Irrelevance result
The Modigliani and Miller theorem that a firm's capital structure is irrelevant to the firm's
benchmarking in which an end product or service is examined; the focus is on product/service specifications and performance results
Theory that under ideal conditions, the value of the firm is unaffected by dividend policy.
The value of a firm is unaffected by its capital structure.
Earnings after removing the effects of nonrecurring or nonoperating items.
A promise to sell an asset before the seller has lined up purchase of the asset. This
A lack of equivalence between two things, such as the unequal tax treatment of interest expense
Information that is known to some people but not to other people.
A situation wherein participants in a transaction have different net tax rates.
The actual physical commodity, as distinguished from a futures contract.
A dividend paid in cash to a company's shareholders. The amount is normally based on
Cash flow from operations minus preferred stock dividends, divided by the
Demand for payment.
Short-term unsecured promissory notes issued by a corporation. The maturity of
The risk that a foreign debtor will be unable to pay its debts because of business events,
The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or
A broker on the floor of an exchange acts as agent for a particular brokerage house and
A firm which buys and sells future contracts for customer accounts. Related: futures
A trader is said to have a commitment when he assumes the obligation to accept or make
A fee paid to a commercial bank in return for its legal commitment to lend funds that have
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
A commodity is food, metal, or another physical substance that investors buy or sell, usually via
An agreement between two or more countries that permits the free movement of capital
These are securities that represent equity ownership in a company. Common shares let an
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Common stock equivalent
A convertible security that is traded like an equity issue because the optioned
Common stock market
The market for trading equities, not including preferred stock.
Common stock ratios
Ratios that are designed to measure the relative claims of stockholders to earnings
The representing of accounting information over multiple years as percentages
An arrangement in which the money manager pursues an active bond portfolio
Cumulative dividend feature
A requirement that any missed preferred or preference stock dividends be paid
Discounted dividend model (DDM)
A formula to estimate the intrinsic value of a firm by figuring the
A dividend is a portion of a company's profit paid to common and preferred shareholders. A stock
With respect to a project financing, an arrangement under which the sponsors of a project
A group of shareholders who prefer that the firm follow a particular dividend policy. For
Dividend discount model (DDM)
A model for valuing the common stock of a company, based on the
Dividend growth model
A model wherein dividends are assumed to be at a constant rate in perpetuity.
A bond covenant that restricts in some way the firm's ability to pay cash dividends.
Dividend payout ratio
Percentage of earnings paid out as dividends.
Dividends per share
Amount of cash paid to shareholders expressed as dollars per share.
An established guide for the firm to determine the amount of money it will pay as dividends.
The fixed or floating rate paid on preferred stock based on par value.
Dividend reinvestment plan (DRP)
Automatic reinvestment of shareholder dividends in more shares of a
A shareholders' rights to receive per-share dividends identical to those other shareholders receive.
Dividend yield (Funds)
Indicated yield represents return on a share of a mutual fund held over the past 12
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
Dividends per share
dividends paid for the past 12 months divided by the number of common shares
Doctrine of sovereign immunity
Doctrine that says a nation may not be tried in the courts of another country
Short-term notes with maturities up to 360 days that are issued by companies in
Extra or special dividends
A dividend that is paid in addition to a firm's "regular" quarterly dividend.
This literally means "without dividend." The buyer of shares when they are quoted ex-dividend
The first day of trading when the seller, rather than the buyer, of a stock will be entitled to
Firm commitment underwriting
An undewriting in which an investment banking firm commits to buy the
Futures commission merchant
A firm or person engaged in soliciting or accepting and handling orders for
The ratio of a change in the option delta to a small change in the price of the asset on which the
Sale of some shares of stock to get cash that would be similar to receiving a cash dividend.
Delivery and settlement of securities within five business days.
The construction of an asset and a liability that are subject to offsetting changes in value.
A bond portfolio strategy whose goal is to eliminate the portfolio's risk against a
Total amount of dividends that would be paid on a share of stock over the next 12 months
A situation involving information that is known to some, but not all, participants.
Variant of linear programming whereby the solution values must be integers.
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
Technique for finding the maximum value of some equation subject to stated linear constraints.
Letter of comment
A communication to the firm from the SEC that suggests changes to its registration
Payment by a firm to its owners from capital rather than from earnings.
An operations research technique that solves problems in which an optimal
Modigliani and Miller Proposition I
A proposition by Modigliani and Miller which states that a firm cannot
Modigliani and Miller Proposition II
A proposition by Modigliani and Miller which states that the cost of
A portfolio strategy in which a portfolio is created that will be capable of
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
An agreement by the loan purchaser to allow the monthly loan quota to be
Residual dividend approach
An approach that suggests that a firm pay dividends if and only if acceptable
Securities & Exchange Commission
The SEC is a federal agency that regulates the U.S.financial markets.
Signaling view (on dividend policy)
The argument that dividend changes are important signals to investors
Society for Worldwide Interbank Financial Telecommunications (SWIFT)
A dedicated computer network to support funds transfer messages internationally between over 900 member banks worldwide.
Also referred to as an extra dividend. dividend that is unlikely to be repeated.
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend
Symmetric cash matching
An extension of cash flow matching that allows for the short-term borrowing of
Tax differential view ( of dividend policy)
The view that shareholders prefer capital gains over dividends,
Traditional view (of dividend policy)
An argument that "within reason," investors prefer large dividends to
Purchase of shares in which the buyer is entitled to the forthcoming dividend. Related: exdividend.
Zero-one integer programming
An analytical method that can be used to determine the solution to a capital
BOOK VALUE OF COMMON STOCK
The theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals:
A payment a company makes to stockholders. Earnings before income tax. The profit a company made
Earnings per share of common stock
How much profit a company made on each share of common stock this year.
The payment of after-tax profits to shareholders as their share of the profits of the business for an accounting period.
Planning, programming and budgeting system (PPBS)
A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres.
Shares of ownership sold to the public.
Income that a company receives in the form of dividends on stock in other companies that it holds.
Amounts paid to the owners of a company that represent a share of the income of the company.
dividend payout ratio
Computed by dividing cash dividends for the year
dividend yield ratio
Cash dividends paid by a business over the most
Securities and Exchange Commission (SEC)
The federal agency that
A financial security that represents an ownership claim on the
Cost of Common Stock
The rate of return required by the investors in the common stock of
Return on Common Equity Ratio
A measure of the percentage return earned on the value of the
the process of investigating how others do something better so that the investigating company can imitate,
a cost related either to the long-term investment
common body of knowledge (CBK)
the minimum set of knowledge needed by a person to function effectively in a particular field
a company committee comprised mainly of members of the board of directors; is responsible
dividend growth method
a method of computing the cost
e-commerce (electronic commerce)
any business activity that uses the Internet and World Wide Web to engage in financial transactions
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