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Definition of J-curve
Theory that says a country's trade deficit will initially worsen after its currency depreciates because
the period before a formal announcement of a takeover bid in which one or more bidders are either preparing to make an announcement or speculating that someone else will.
The ratio of net income to net sales.
Money after-tax rate of return minus the inflation rate.
The analysis of principal-agent relationships, wherein one person, an agent, acts on behalf of
An alternative model to the capital asset pricing model developed by
Dollar deposits held in Singapore or other Asian centers.
Net flow of goods (exports minus imports) between countries.
Related: Program trades.
A large trading order, defined on the New York Stock Exchange as an order that consists of
A currency that is not freely convertible to other currencies due to exchange controls.
The managing underwriter for a new issue. The book runner maintains the book of securities sold.
Security prices sometimes move wildly above their true values.
The amount by which government spending exceeds government revenues.
Net income plus depreciation.
A foreign corporation whose voting stock is more than 50% owned
The exchange of goods for other goods rather than for cash; barter.
Covariance of a national economy's rate of return and the rate of return the world economy
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
A type of active international management that measures the contribution to performance
Taking advantage of divergences in exchange rates in different money markets by
The value of a portfolio of specific amounts of individual currencies, used as the basis for
A financial future contract for the delivery of a specified foreign currency.
An option to buy or sell a foreign currency.
Related: Exchange rate risk
Currency risk sharing
An agreement by the parties to a transaction to share the currency risk associated with
Asset allocation in which the investor chooses among investments denominated in
An agreement to swap a series of specified payment obligations denominated in one currency
An excess of liabilities over assets, of losses over profits, or of expenditure over income.
Devaluation A decrease in the spot price of the currency
Eurobonds that pay coupon interest in one currency but pay the principal in a different
A short-term fixed rate time deposit denominated in a currency other than the local
The money market for borrowing and lending currencies that are held in the form of
European Currency Unit (ECU)
An index of foreign exchange consisting of about 10 European currencies,
1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid,
A member who generally trades only for his own account, for an account controlled by him or
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
A bond issued on the domestic capital market of anther company.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
Foreign currency option
An option that conveys the right to buy or sell a specified amount of foreign
Foreign currency translation
The process of restating foreign currency accounts of subsidiaries into the
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
currency from another country.
Foreign exchange controls
Various forms of controls imposed by a government on the purchase/sale of
Foreign exchange dealer
A firm or individual that buys foreign exchange from one party and then sells it to
Foreign exchange risk
The risk that a long or short position in a foreign currency might have to be closed out
Foreign exchange swap
An agreement to exchange stipulated amounts of one currency for another currency
Part of a nation's internal market, representing the mechanisms for issuing and trading
Foreign market beta
A measure of foreign market risk that is derived from the capital asset pricing model.
Foreign Sales Corporation (FSC)
A special type of corporation created by the Tax Reform Act of 1984 that
Foreign tax credit
Home country credit against domestic income tax for foreign taxes paid on foreign
A transaction in which the settlement will occur on a specified date in the future at a price
Excess of the purchase price over the fair market value of the net assets acquired under purchase
A freely convertible currency that is not expected to depreciate in value in the foreseeable future.
trades that are the result of either a reallocation of wealth or an implementation of an
trades in which an investor believes he or she possesses pertinent
Liquidity theory of the term structure
A biased expectations Theory that asserts that the implied forward
Local expectations theory
A form of the pure expectations Theory which suggests that the returns on bonds
A period of time in which all costs are variable; greater than one year.
A period of time in which all costs are variable; greater than one year.
The amount of money that a willing buyer pays to acquire something from a willing seller,
Market segmentation theory or preferred habitat theory
A biased expectations Theory that asserts that the
Modern portfolio theory
Principles underlying the analysis and evaluation of rational portfolio choices
Such a clause on a Euro loan permits the borrower to switch from one currency to
Give the borrower the possibility of drawing a loan in different currencies.
A system, such as the arrangement between the CME and SIMEX, which allows trading
Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected
Elimination of a long or short position by making an opposite transaction. Related: liquidation.
On the run
The most recently issued (and, therefore, typically the most liquid) government bond in a
prices after the decision to trade.
Preferred habitat theory
A biased expectations Theory that believes the term structure reflects the
prices occurring before or at the decision to trade.
Price of a share of common stock on the date shown. Highs and lows are based on the highest and
A relationship espoused by some technical analysts that signals continuing rises
Also called basket trades, orders requiring the execution of trades in a large number of
Publicly traded assets
Assets that can be traded in a public market, such as the stock market.
Pure expectations theory
A Theory that asserts that the forward rates exclusively represent the expected
A member of the exchange who executes frequent trades for his or her own account.
The currency in which the parent firm prepares its own financial statements; that is, U.S.
A foreign currency held by a central bank or monetary authority for the purposes of
Entering the opposite side of a currently held futures position to close out the position.
A run consists of a series of bid and offer quotes for different securities or maturities. Dealers give to and
If an investor thinks the price of a stock is going down, the investor could borrow the stock from
One who has sold a contract to establish a market position and who has not yet closed out this position
Bonds with short current maturities.
See: unmatched book.
The sale of a futures contract(s) to eliminate or lessen the possible decline in value ownership of
This is the total number of shares of a security that investors have borrowed, then sold in the
Occurs when a person sells stocks he or she does not yet own. Shares must be borrowed,
Selling a security that the seller does not own but is committed to repurchasing eventually. It is
Establishing a market position by selling a security one does not own in anticipation of the price
A situation in which a lack of supply tends to force prices upward.
A straddle in which one put and one call are sold.
Costs that fall with increases in the level of investment in current assets.
The risk of falling short of any investment target.
Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as
Short-term financial plan
A financial plan that covers the coming fiscal year.
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