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Definition of Market Efficiency
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
Marketplace price efficiency
The degree to which the prices of assets reflect the available marketplace
DLOM (discount for lack of marketability)
an amount or percentage deducted from an equity interest to reflect lack of marketability.
QMDM (quantitative marketability discount model)
model for calculating DLOM for minority interests r the discount rate
markets in which the prevailing price is determined through the free interaction of
Any market in which prices are in a declining trend.
An illegal market.
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
The foreign market in the United Kingdom.
The market for trading long-term debt instruments (those that mature in more than one year).
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
Also called spot markets, these are markets that involve the immediate delivery of a security
An agreement between two or more countries that permits the free movement of capital
Common stock market
The market for trading equities, not including preferred stock.
Complete capital market
A market in which there is a distinct marketable security for each and every
Corner A Market
To purchase enough of the available supply of a commodity or stock in order to
A market where traders specializing in particular commodities buy and sell assets for their
The market for trading debt instruments.
markets for derivative instruments.
Direct search market
Buyers and sellers seek each other directly and transact directly.
Part of a nation's internal market representing the mechanisms for issuing and trading
Reflects the amount of wasted energy.
Efficient capital market
A market in which new information is very quickly reflected accurately in share
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
In the interbank Eurodollar deposit market, an either-way market is one in which the bid
The financial markets of developing economies.
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
The money market for borrowing and lending currencies that are held in the form of
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Related: pricing efficiency.
Also referred to as the international market, the offshore market, or, more popularly, the
Fair market price
Amount at which an asset would change hands between two parties, both having
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
An organized institutional structure or mechanism for creating and exchanging financial assets.
The market for trading bonds and preferred stock.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
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.
A market in which participants agree to trade some commodity, security, or foreign
Direct trading in exchange-listed securities between investors without the use of a broker.
A market in which contracts for future delivery of a commodity or a security are bought or sold.
Purchases and sales of eurobonds that occur before the issue price is finally set.
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
The speed and accuracy with which prices reflect new information.
spread The spread between the interest rate offered in two sectors of the bond market for
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
The mechanisms for issuing and trading securities within a nation, including its domestic
Internally efficient market
Operationally efficient market.
Related: See external market.
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
Intramarket sector spread
The spread between two issues of the same maturity within a market sector. For
A futures market in which the nearer months are selling at price premiums to the more
A market is locked if the bid = ask price. This can occur, for example, if the market is
Make a market
A dealer is said to make a market when he quotes bid and offered prices at which he stands
The process whereby the book value or collateral value of a security is adjusted to reflect
An arrangement whereby the profits or losses on a futures contract are settled each day.
The total dollar value of all outstanding shares. Computed as shares times current
Market capitalization rate
Expected return on a security. The market-consensus estimate of the appropriate
Total demand for loans by borrowers equals total supply of loans from lenders. The market,
Market conversion price
Also called conversion parity price, the price that an investor effectively pays for
The period between the 2 latest highs or lows of the S&P 500, showing net performance of a
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
This relationship is sometimes called the single-index model. The market model says that the
This is an order to immediately buy or sell a security at the current trading price.
The theory that in certain situations, institutions wish to sell their shares but postpone the
A portfolio consisting of all assets available to investors, with each asset held -in
Market price of risk
A measure of the extra return, or risk premium, that investors demand to bear risk. The
The amount of money that a willing buyer pays to acquire something from a willing seller,
The return on the market portfolio.
Risk that cannot be diversified away. Related: systematic risk
The classifications of bonds by issuer characteristics, such as state government, corporate, or utility.
Market segmentation theory or preferred habitat theory
A biased expectations theory that asserts that the
A money manager who assumes he or she can forecast when the stock market will go up and down.
Asset allocation in which the investment in the market is increased if one forecasts that the
Market timing costs
Costs that arise from price movement of the stock during the time of the transaction
1) The price at which a security is trading and could presumably be purchased or sold.
Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
market price of a share divided by book value per share.
A price order, below market if a buy or above market if a sell, that automatically
A negotiable security is said to have good marketability if there is an active secondary market
Claims that can be bought and sold in financial markets, such as those of stockholders and
The foreign market in Spain.
Money markets are for borrowing and lending money for three years or less. The securities in
Money market demand account
An account that pays interest based on short-term interest rates.
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the
Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.
Related: internal market
markets in which each transaction is separately negotiated between buyer and seller (i.e.
The market in which a new issue of securities is first sold to investors.
Claims that cannot be easily bought and sold in the financial markets, such as those of
1) A market in which only one side, the bid or asked, is quoted or firm.
Purchase or sale of government securities by the monetary authorities to increase or
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