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Financial Terms | |
Keynesianism |
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Definition of KeynesianismKeynesianismThe school of macroeconomic thought based on the ideas of John Maynard Keynes as published in his 1936 book The General Theory of Employment, Interest, and Money. A Keynesian believes the economy is inherently unstable and requires active government intervention to achieve stability.
Related Terms:Classical MacroeconomicsThe school of macroeconomic thought prior to the rise of keynesianism. MacroeconomicsThe study of the determination of economic aggregates such as total output and the price level. New ClassicalsEconomists who, like classical economists, believe that wages and prices are sufficiently flexible to solve the unemployment problem without help from government policy. Absolute priorityRule in bankruptcy proceedings whereby senior creditors are required to be paid in full Accrued interestThe accumulated coupon Interest earned but not yet paid to the seller of a bond by the Accrued InterestThe amount of Interest accumulated on a debt security between Accrued InterestThe amount of Interest owing but not paid. ![]() ActiveA market in which there is much trading. Active portfolio strategyA strategy that uses available information and forecasting techniques to seek a Activity-based budgetingA method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing. activity-based budgeting (ABB)planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and Activity-based costingA method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers. activity based costing (ABC)A relatively new method advocated for the activity-based costing (ABC)a process using multiple cost drivers to predict and allocate costs to products and services; Activity-based costing (ABC)A cost allocation system that compiles costs and assigns activity-based management (ABM)a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received ![]() Agency theoryThe analysis of principal-agent relationships, wherein one person, an agent, acts on behalf of Amortizing interest rate swapSwap in which the principal or national amount rises (falls) as Interest rates Arbitrage Pricing Theory (APT)An alternative model to the capital asset pricing model developed by Asset-based financingMethods of financing in which lenders and equity investors look principally to the Asset-Based FinancingLoans granted usually by a financial institution where the asset being financed constitutes the sole security given to the lender. At-the-moneyAn option is at-the-Money if the strike price of the option is equal to the market price of the attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute Base interest rateRelated: Benchmark Interest rate. Benchmark interest rateAlso called the base Interest rate, it is the minimum Interest rate investors will Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization BookA banker or trader's positions. Bookcash A firm's cash balance as reported in its financial statements. Also called ledger cash. Book-entry securitiesThe 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 Book IncomePretax income reported on the income statement. Book inventoryThe amount of Money invested in inventory, as per a company’s Book profitThe cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT. book rate of returnAccounting income divided by book value. Book Returnsbook yield is the investment income earned in a year on a portfolio of assets purchased over a number of years and at different Interest rates, divided by the book value of those assets. Book runnerThe managing underwriter for a new issue. The book runner maintains the book of securities sold. Book valueA company's book value is its total assets minus intangible assets and liabilities, such as debt. A BOOK VALUEAn asset’s cost basis minus accumulated depreciation. Book ValueThe value of an asset as carried on the balance sheet of a Book valueAn asset’s original cost, less any depreciation that has been subsequently incurred. book valueNet worth of the firm’s assets or liabilities according book value and book value per shareGenerally speaking, these terms BOOK VALUE OF COMMON STOCKThe 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: Book value per shareThe ratio of stockholder equity to the average number of common shares. book value Book Value per ShareThe book value of a company divided by the number of shares Bubble theorySecurity prices sometimes move wildly above their true values. Call money rateAlso called the broker loan rate , the Interest rate that banks charge brokers to finance Capitalized interestInterest that is not immediately expensed, but rather is considered as an asset and is then Capitalized InterestInterest incurred during the construction period on monies invested in Cash flow after interest and taxesNet income plus depreciation. Closed EconomyAn economy in which imports and exports are very small relative to GDP and so are ignored in macroeconomic analysis. Contrast with open economy. Compound interestInterest paid on previously earned Interest as well as on the principal. Compound InterestInterest paid on principal and on Interest earned in previous compound interesta method of determining Interest in which Interest that was earned in prior periods is added to the original investment so that, in each successive period, Interest is earned on both principal and Interest compound interestInterest earned on Interest. Compound InterestInterest earned on an investment at periodic intervals and added to principal and previous Interest earned. Each time new Interest earned is calculated it is on a combined total of principal and previous Interest earned. Essentially, Interest is paid on top of Interest. Country risk GeneralLevel of political and economic uncertainty in a country affecting the value of loans or Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign Cyclical UnemploymentUnEmployment that increases when the economy enters a recession and decreases when the economy enters a boom. Daily Interest AccumulationAccount in which Interest is accrued daily and credited to the account at the end of a specified time. earnings before interest and income tax (EBIT)A measure of profit that Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings before interest and taxes (EBIT)The operating profit before deducting Interest and tax. Earnings before interest, taxes, depreciation and amortization (EBITDA)The operating profit before deducting Interest, tax, depreciation and amortization. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working Earnings surprisesPositive or negative differences from the consensus forecast of earnings by institutions Effective annual interest rateAn annual measure of the time value of Money that fully reflects the effects of effective annual interest rateInterest rate that is annualized using compound Interest. Effective Interest RateThe rate of Interest actually earned on an investment. It is enterprise resource planning (ERP) systema packaged software program that allows a company to Enterprise resource planning systemA computer system used to manage all company Equilibrium rate of interestThe Interest rate that clears the market. Also called the market-clearing Interest Equity-based insuranceLife insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio. expectations theory of exchange ratesTheory that expected spot exchange rate equals the forward rate. Federal Unemployment Tax Act (FUTA)A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a Fiat MoneyFiat Money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat Money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category. Fixed Interest RateA rate that does not fluctuate with General market conditions. Floating Interest RateA rate that fluctuates with General market condition. Forward interest rateInterest rate fixed today on a loan to be made at some future date. fractional interest discountthe 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. Frictional UnemploymentUnEmployment associated with people changing jobs or quitting to search for new jobs. Full EmploymentThe level of Employment corresponding to the natural rate of unEmployment. Full-Employment OutputThe level of output produced by the economy when operating at the natural rate of unEmployment. General Agreementon Tariffs and Trade (GATT) a treaty GENERAL-AND-ADMINISTRATIVE EXPENSESWhat was spent to run the non-sales and non-manufacturing part of a company, such as office salaries and Interest paid on loans. General cash offerA public offering made to investors at large. general cash offerSale of securities open to all investors by an already-public company. General ledgerA book that contains all the accounts of the company and the balances of those accounts. General ledgerThe master set of accounts that summarizes all transactions occurring General obligation bondsMunicipal securities secured by the issuer's pledge of its full faith, credit, and General partnerA partner who has unlimited liability for the obligations of the partnership. General partnershipA partnership in which all partners are General partners. Generally Accepted Accounting Principals (GAAP)A technical accounting term that encompasses the Generally accepted accounting principlesThe rules that accountants follow when processing accounting transactions and creating financial reports. The rules are primarily generally accepted accounting principles (GAAP)This important term generally accepted accounting principles (GAAP)Procedures for preparing financial statements. Generally Accepted Accounting Principles (GAAP)A common set of standards and procedures Generally Accepted Accounting Principles (GAAP)GAAP is the term used to describe the underlying rules basis on which financial statements are normally prepared. This is codified in the Handbook of The Canadian Institute of Chartered Accountants. global economyan economy characterized by the international Government bondSee: government securities. Government National Mortgage Association (Ginnie Mae)A wholly owned U.S. government corporation Government securitiesNegotiable U.S. Treasury securities. Government sponsored enterprisesPrivately owned, publicly chartered entities, such as the Student Loan Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |