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Modigliani and Miller Proposition I |
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Definition of Modigliani and Miller Proposition IModigliani and Miller Proposition IA proposition by modigliani and miller which states that a firm cannot
Related Terms:Modigliani and Miller Proposition IIA proposition by modigliani and miller which states that the cost of MM dividend-irrelevance propositionTheory that under ideal conditions, the value of the firm is unaffected by dividend policy. MM's proposition I (debt irrelevance proposition)The value of a firm is unaffected by its capital structure. MM's proposition IIThe required rate of return on equity increases as the firm’s debt-equity ratio increases. Policy-Ineffectiveness PropositionTheory that anticipated policy has no effect on output. Advance commitmentA promise to sell an asset before the seller has lined up purchase of the asset. This Asymmetric informationInformation that is known to some people but not to other people. ![]() Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. AsymmetryA lack of equivalence between two things, such as the unequal tax treatment of interest expense attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute Audit CommitteeA subcommittee of a company's board of directors assigned the responsibility Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit CommitteesA committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial 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: Cash commodityThe actual physical commodity, as distinguished from a futures contract. Cash dividendA dividend paid in cash to a company's shareholders. The amount is normally based on cash dividendPayment of cash by the firm to its shareholders. ![]() Cash flow per common shareCash flow from operations minus preferred stock dividends, divided by the Commercial BankA 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. Commercial draftDemand for payment. Commercial MortgageA loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest. Commercial paperShort-term unsecured promissory notes issued by a corporation. The maturity of commercial paperShort-term unsecured notes issued by firms. Commercial riskThe risk that a foreign debtor will be unable to pay its debts because of business events, CommissionThe fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or Commission brokerA broker on the floor of an exchange acts as agent for a particular brokerage house and Commission houseA firm which buys and sells future contracts for customer accounts. Related: futures ![]() CommitmentA trader is said to have a commitment when he assumes the obligation to accept or make Commitment feeA fee paid to a commercial bank in return for its legal commitment to lend funds that have committed costa cost related either to the long-term investment Committee, AIMR Performance Presentation Standards Implementation CommitteeThe 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 CommodityA commodity is food, metal, or another physical substance that investors buy or sell, usually via Common-base-year analysisThe 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 Common marketAn agreement between two or more countries that permits the free movement of capital Common SharesAre equity instruments that take no security against assets, have no fixed terms of repayment and pay no fixed dividends. common-size balance sheetBalance sheet that presents items as a percentage of total assets. common-size income statementIncome statement that presents items as a percentage of revenues. Common stockThese are securities that represent equity ownership in a company. Common shares let an Common stockShares of ownership sold to the public. Common StockA financial security that represents an ownership claim on the common stockOwnership shares in a publicly held corporation. Common StockThat part of the capital stock of a corporation that carries voting rights and represents Common stock equivalentA convertible security that is traded like an equity issue because the optioned Common stock marketThe market for trading equities, not including preferred stock. Common stock/other equityValue of outstanding common shares at par, plus accumulated retained Common stock ratiosRatios that are designed to measure the relative claims of stockholders to earnings compensation committeea company committee comprised mainly of members of the board of directors; is responsible constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. Contingent immunizationAn arrangement in which the money manager pursues an active bond portfolio Cost of Common StockThe rate of return required by the investors in the common stock of Cum dividendWith dividend. Cumulative dividend featureA 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 DividendA dividend is a portion of a company's profit paid to common and preferred shareholders. A stock DividendA payment a company makes to stockholders. Earnings before income tax. The profit a company made DividendThe payment of after-tax profits to shareholders as their share of the profits of the business for an accounting period. DividendA payment made to shareholders that is proportional to the number of shares dividendPeriodic cash distribution from the firm to its shareholders. DividendAs 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. DividendUnlike 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. Dividend clawbackWith respect to a project financing, an arrangement under which the sponsors of a project Dividend clienteleA group of shareholders who prefer that the firm follow a particular dividend policy. For dividend discount modelComputation 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 methoda method of computing the cost Dividend growth modelA model wherein dividends are assumed to be at a constant rate in perpetuity. Dividend incomeIncome that a company receives in the form of dividends on stock in other companies that it holds. Dividend limitationA bond covenant that restricts in some way the firm's ability to pay cash dividends. Dividend payout ratioPercentage of earnings paid out as dividends. dividend payout ratioComputed by dividing cash dividends for the year dividend payout ratioPercentage of earnings paid out as dividends. Dividend policyAn established guide for the firm to determine the amount of money it will pay as dividends. Dividend PolicyThis 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. Dividend rateThe 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 Dividend rightsA 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 ratioCash dividends paid by a business over the most Dividend yield (Stocks)Indicated yield represents annual dividends divided by current stock price. DividendsAmounts paid to the owners of a company that represent a share of the income of the company. DividendsProfits paid out to shareholders by a corporation. Dividends per shareAmount of cash paid to shareholders expressed as dollars per share. Dividends per sharedividends paid for the past 12 months divided by the number of common shares Doctrine of sovereign immunityDoctrine 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 stockHow much profit a company made on each share of common stock this year. Euro-commercial paperShort-term notes with maturities up to 360 days that are issued by companies in Ex-dividendThis literally means "without dividend." The buyer of shares when they are quoted ex-dividend Ex-dividend dateThe first day of trading when the seller, rather than the buyer, of a stock will be entitled to ex-dividend dateDate 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 dividendsA 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 underwritingAn undewriting in which an investment banking firm commits to buy the Futures commission merchantA firm or person engaged in soliciting or accepting and handling orders for GammaThe ratio of a change in the option delta to a small change in the price of the asset on which the GammaThe rate of change of delta for a derivative security relative to the GNMA-IIMortgage-backed securities (MBS) on which registered holders receive an aggregate principal and Homemade dividendSale 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 Immediate settlementDelivery and settlement of securities within five business days. Immigration Reform and Control Act of 1986A federal Act requiring all employers having at least four employees to verify the identity and employment ImmunizationThe construction of an asset and a liability that are subject to offsetting changes in value. Immunization strategyA bond portfolio strategy whose goal is to eliminate the portfolio's risk against a Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |