|Modigliani and Miller Proposition I|
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Definition of Modigliani and Miller Proposition I
Modigliani and Miller Proposition I
A proposition by modigliani and miller which states that a firm cannot
A proposition by modigliani and miller which states that the cost of
Theory that under ideal conditions, the value of the firm is unaffected by dividend policy.
The value of a firm is unaffected by its capital structure.
The required rate of return on equity increases as the firm’s debt-equity ratio increases.
Theory that anticipated policy has no effect on output.
A promise to sell an asset before the seller has lined up purchase of the asset. This
Information that is known to some people but not to other people.
A situation wherein participants in a transaction have different net tax rates.
A lack of equivalence between two things, such as the unequal tax treatment of interest expense
an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute
A subcommittee of a company's board of directors assigned the responsibility
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
The 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:
The actual physical commodity, as distinguished from a futures contract.
A dividend paid in cash to a company's shareholders. The amount is normally based on
Payment of cash by the firm to its shareholders.
Cash flow per common share
Cash flow from operations minus preferred stock dividends, divided by the
A privately owned, profit-seeking firm that accepts deposits and makes loans.
Commercial Business Loan (Credit Insurance)
An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes.
Demand for payment.
A loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest.
Short-term unsecured promissory notes issued by a corporation. The maturity of
Short-term unsecured notes issued by firms.
The risk that a foreign debtor will be unable to pay its debts because of business events,
The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or
A broker on the floor of an exchange acts as agent for a particular brokerage house and
A firm which buys and sells future contracts for customer accounts. Related: futures
A trader is said to have a commitment when he assumes the obligation to accept or make
A fee paid to a commercial bank in return for its legal commitment to lend funds that have
a cost related either to the long-term investment
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
A commodity is food, metal, or another physical substance that investors buy or sell, usually via
The representing of accounting information over multiple years as percentages
common body of knowledge (CBK)
the minimum set of knowledge needed by a person to function effectively in a particular field
An agreement between two or more countries that permits the free movement of capital
Are equity instruments that take no security against assets, have no fixed terms of repayment and pay no fixed dividends.
common-size balance sheet
Balance sheet that presents items as a percentage of total assets.
common-size income statement
Income statement that presents items as a percentage of revenues.
These are securities that represent equity ownership in a company. Common shares let an
Shares of ownership sold to the public.
A financial security that represents an ownership claim on the
Ownership shares in a publicly held corporation.
That part of the capital stock of a corporation that carries voting rights and represents
Common stock equivalent
A convertible security that is traded like an equity issue because the optioned
Common stock market
The market for trading equities, not including preferred stock.
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Common stock ratios
Ratios that are designed to measure the relative claims of stockholders to earnings
a company committee comprised mainly of members of the board of directors; is responsible
constant-growth dividend discount model
Version of the dividend discount model in which dividends grow at a constant rate.
An arrangement in which the money manager pursues an active bond portfolio
Cost of Common Stock
The rate of return required by the investors in the common stock of
Cumulative dividend feature
A requirement that any missed preferred or preference stock dividends be paid
Discounted dividend model (DDM)
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
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.
A payment made to shareholders that is proportional to the number of shares
Periodic cash distribution from the firm to its shareholders.
As the term dividend relates to a corporation's earnings, a dividend is an amount paid per share from a corporation's after tax profits. Depending on the type of share, it may or may not have the right to earn any dividends and corporations may reduce or even suspend dividend payments if they are not doing well. Some dividends are paid in the form of additional shares of the corporation. dividends paid by Canadian corporations qualify for the dividend tax credit and are taxed at lower rates than other income.
Unlike dividends which are paid to company shareholders, participating insurance policy dividends are not based on the company's overall profits. Rather, they are determined by grouping policies by type and country of issue and looking at how each class contributes to the company's earnings and surplus.
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
Computation of today’s stock price which states that share value equals the present value of all expected future dividends.
Dividend discount model (DDM)
A model for valuing the common stock of a company, based on the
dividend growth method
a method of computing the cost
Dividend growth model
A model wherein dividends are assumed to be at a constant rate in perpetuity.
Income that a company receives in the form of dividends on stock in other companies that it holds.
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.
dividend payout ratio
Computed by dividing cash dividends for the year
dividend payout ratio
Percentage of earnings paid out as dividends.
An established guide for the firm to determine the amount of money it will pay as dividends.
This policy governs Canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class.
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 ratio
Cash dividends paid by a business over the most
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
Amounts paid to the owners of a company that represent a share of the income of the company.
Profits paid out to shareholders by a corporation.
Dividends per share
Amount of cash paid to shareholders expressed as dollars per share.
Dividends per share
dividends paid for the past 12 months divided by the number of common shares
Doctrine of sovereign immunity
Doctrine that says a nation may not be tried in the courts of another country
e-commerce (electronic commerce)
any business activity that uses the Internet and World Wide Web to engage in financial transactions
Earnings per share of common stock
How much profit a company made on each share of common stock this year.
Short-term notes with maturities up to 360 days that are issued by companies in
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
Date that determines whether a stockholder is entitled to a dividend payment; anyone holding stock before this date is entitled to a dividend.
Extra or special dividends
A dividend that is paid in addition to a firm's "regular" quarterly dividend.
Federal Open Market Committee (FOMC)
Fed committee that makes decisions about open-market operations.
Firm commitment underwriting
An undewriting in which an investment banking firm commits to buy the
Futures commission merchant
A firm or person engaged in soliciting or accepting and handling orders for
The ratio of a change in the option delta to a small change in the price of the asset on which the
The rate of change of delta for a derivative security relative to the
Mortgage-backed securities (MBS) on which registered holders receive an aggregate principal and
Sale of some shares of stock to get cash that would be similar to receiving a cash dividend.
Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA)
A federal Act shielding employers from liability if they have made
Delivery and settlement of securities within five business days.
Immigration Reform and Control Act of 1986
A federal Act requiring all employers having at least four employees to verify the identity and employment
The construction of an asset and a liability that are subject to offsetting changes in value.
A bond portfolio strategy whose goal is to eliminate the portfolio's risk against a
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