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Definition of Lambda
The percentage change in the price of an option relative to a 1%
The ratio of a change in the option price to a small change in the option volatility. It is the partial
Collectively, "greeks" refer to the financial measures delta, gamma,
Capital rationing that under certain circumstances can be violated or even viewed
The option of terminating an investment earlier than originally planned.
Clause causing repayment of a debt, if specified events occur or are not met.
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
An alteration in the accounting methodology or estimates used in
A ratio computed by dividing annual
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but Also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
See quick ratio
The sum of cash, accounts receivable, and short-term marketable
Cash flow provided by operating
An option that may be exercised at any time up to and including the expiration date.
An option that can be exercised any time until its
American Stock Exchange (AMEX)
The second-largest stock exchange in the United States. It trades
An option contract that can be exercised at any time between the date of purchase and
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5%
annual percentage rate (APR)
Interest rate that is annualized using simple interest.
Annual percentage yield (APY)
The effective, or true, annual rate of return. The APY is the rate actually
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard
Arbitrage-free option-pricing models
Yield curve option-pricing models.
Arm's length price
The price at which a willing buyer and a willing unrelated seller would freely agree to
Articles of incorporation
Legal document establishing a corporation and its structure and purpose.
option based on the average price of the asset during the life of the option.
A dealer's price to sell a security; Also called the offer price.
Asset activity ratios
ratios that measure how effectively the firm is managing its assets.
A security that is collateralized by loans, leases, receivables, or installment contracts
The ratio of total assets to stockholder equity.
asset turnover ratio
A broad-gauge ratio computed by dividing annual
A debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period.
Gives the lessee the option to purchase the asset at a price below fair market
Contracts with trigger points that, when crossed, automatically generate buying or selling of
Basic Earnings Power Ratio
percentage of earnings relative to total assets; indication of how
price expressed in terms of yield to maturity or annual rate of return.
Packages that involve the exchange of more than two currencies against a base currency at
Benefit Ratio Method
The proportion of unemployment benefits paid to a company’s
Benefit Wage Ratio Method
The proportion of total taxable wages for laid off
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically
Bill of exchange
General term for a document demanding payment.
Binomial option pricing model
An option pricing model in which the underlying asset can take on only two
Black-Scholes option-pricing model
A model for pricing call options based on arbitrage arguments that uses
cafeteria plan a “menu” of fringe benefit options that include
cash or nontaxable benefits
Call an option
To exercise a call option.
An option contract that gives its holder the right (but not the obligation) to purchase a specified
A contract that gives the holder the right to buy an asset for a
Right to buy an asset at a specified exercise price on or before the exercise date.
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
Canadian Deposit Insurance Corporation
Better known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds.
Placing one or more limits on the amount of new investment undertaken by a firm, either
a condition that exists when there is an
Limit set on the amount of funds available for investment.
Also called financial leverage ratios, these ratios compare debt to total capitalization
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash Flow–to–Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
The proportion of a firm's assets held as cash.
ratio of cash and cash equivalents to liabilities; in the case of a bank, the ratio of cash to total deposit liabilities.
Change in Accounting Estimate
A change in accounting that occurs as the result of new information
Change in Accounting Estimate
A change in the implementation of an existing accounting
Change in Accounting Principle
A change from one generally accepted accounting principle to another generally accepted accounting principle—for example, a change from capitalizing expenditures
Change in Reporting Entity
A change in the scope of the entities included in a set of, typically, consolidated financial statements.
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
Bond price excluding accrued interest.
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
Common stock ratios
ratios that are designed to measure the relative claims of stockholders to earnings
option on an option.
A single centralized account into which funds collected at regional locations
System whereby customers make payments to a regional collection center which transfers funds to
Movement of cash from different lockbox locations into a single concentration
A review of all engineering documentation used as the basis
Verifying that a delivered product matches authorizing
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a
Consumer Price Index (CPI)
An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation.
contribution margin ratio
the proportion of each revenue dollar remaining after variable costs have been covered;
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
Conversion parity price
Related:Market conversion price
The number of shares of common stock that the security holder will receive from
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
The contractually specified price per share at which a convertible security can be
A security that can be converted into common stock at the option of the security holder,
A legal "person" that is separate and distinct from its owners. A corporation is allowed to own
A legal entity, organized under state laws, whose investors purchase
Business owned by stockholders who are not personally
The net present value of an investment divided by the investment's initial cost. Also called
ratios used to test the adequacy of cash flows generated through earnings for purposes of
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
Restriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans.
Cumulative Effect of a Change in Accounting Principle
The change in earnings of previous years
Cumulative Effect of Accounting Change
The change in earnings of previous years assuming
An option to buy or sell a foreign currency.
Indicator of short-term debt paying ability. Determined by dividing current assets by current
A ratio that shows how many times a company could pay its current debts if it used its current assets to pay them. The formula:
Calculated to assess the short-term solvency, or debt-paying
A measure of the ability of a company to use its current assets to
Current assets divided by current liabilities. This ratio indicates the extent to which the claims of short-term creditors are covered by assets expected to be converted to cash in the near future.
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Over-the-counter options, such as those offered by government and mortgage-backed
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