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Definition of Linter's observations
John Lintner's work (1956) suggested that dividend policy is related to a target level of
The second-largest stock exchange in the United States. It trades
General term for a document demanding payment.
A dividend paid in cash to a company's shareholders. The amount is normally based on
Sources of funds internally provided from operations that alter a company's
A not-for-profit corporation owned by its members. Its primary
Procedures followed by a firm in attempting to collect accounts receivables.
The location of five New York futures exchanges: Commodity
The degree of assurance that a specified failure rate is not exceeded.
Convertible preferred stock that may be exchanged, at the
A requirement that any missed preferred or preference stock dividends be paid
An entry in a translated balance sheet in which gains
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
Electronic data interchange (EDI)
The exchange of information electronically, directly from one firm's
The marketplace in which shares, options and futures on stocks, bonds, commodities and indices
A nickname for the New York stock exchange. Also known as the Big Board. More than
Governmental restrictions on the purchase of foreign currencies by domestic citizens or
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
The price of one country's currency expressed in another country's currency.
Exchange Rate Mechanism (ERM)
The methodology by which members of the EMS maintain their
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Security that grants the security holder the right to exchange the security for the
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
Feasible target payout ratios
Payout ratios that are consistent with the availability of excess funds to make
The use of government spending and taxing for the specific purpose of stabilizing the economy.
A country's decision to tie the value of its currency to another country's currency, gold
Floating exchange rate
A country's decision to allow its currency value to freely change. The currency is not
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
Forward exchange rate
Exchange rate fixed today for exchanging currency at some future date.
Gold exchange standard
A system of fixing exchange rates adopted in the Bretton Woods agreement. It
Historical exchange rate
An accounting term that refers to the exchange rate in effect when an asset or
Sale of some shares of stock to get cash that would be similar to receiving a cash dividend.
Total amount of dividends that would be paid on a share of stock over the next 12 months
The characteristic of the scheduled principal and interest payments due under a mortgage such that
Bond with a stream of coupon payments that are the same throughout the life of the bond.
London International Financial Futures Exchange (LIFFE)
A London exchange where Eurodollar futures
Payment by a firm to its owners from capital rather than from earnings.
London International Financial Futures Exchange (LIFFE)
London exchange where Eurodollar futures as well as futures-style options are traded.
Actions taken by the Board of Governors of the Federal Reserve System to influence the
This is the difference between a day's last trade and the previous day's last trade.
Net working capital
Current assets minus current liabilities. Often simply referred to as working capital.
New York Stock Exchange (NYSE)
Also known as the Big Board or The Exhange. More than 2,00 common
Nominal exchange rate
The actual foreign exchange quotation in contrast to the real exchange rate that has
A securities marketplace wherein purchasers and sellers regularly gather to trade
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
Philadelphia Stock Exchange (PHLX)
A securities exchange where American and European foreign
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
Also called speed, the estimated rate at which mortgagors pay off their loans ahead of
Real exchange rates
Exchange rates that have been adjusted for the inflation differential between two countries.
Residual dividend approach
An approach that suggests that a firm pay dividends if and only if acceptable
A price level above which it is supposedly difficult for a security or market to rise.
Securities & Exchange Commission
The SEC is a federal agency that regulates the U.S.financial markets.
SIMEX (Singapore International Monetary Exchange)
A leading futures and options exchange in Singapore.
Signaling view (on dividend policy)
The argument that dividend changes are important signals to investors
Also referred to as an extra dividend. dividend that is unlikely to be repeated.
Spot exchange rates
Exchange rate on currency for immediate delivery. Related: forward exchange rate.
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend
Formal organizations, approved and regulated by the Securities and Exchange Commission
A price level below which it is supposedly difficult for a security or market to fall.
Target cash balance
Optimal amount of cash for a firm to hold, considering the trade-off between the
A firm that is the object of a takeover by another firm.
Target payout ratio
A firm's long-run dividend-to-earnings ratio. The firm's policy is to attempt to pay out a
Target zone arrangement
A monetary system under which countries pledge to maintain their exchange rates
The firm buys back its own stock from a potential bidder, usually at a substantial
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
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
Purchase of shares in which the buyer is entitled to the forthcoming dividend. Related: exdividend.
Defined as the difference in current assets and current liabilities (excluding short-term
Working capital management
The management of current assets and current liabilities to maximize shortterm liquidity.
Working capital ratio
working capital expressed as a percentage of sales.
Informal arrangement between a borrower and creditors.
Realignment period of a temporary misaligned yield relationship that sometimes occurs in
A payment a company makes to stockholders. Earnings before income tax. The profit a company made
The payment of after-tax profits to shareholders as their share of the profits of the business for an accounting period.
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