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Definition of Multifactor CAPM
A version of the capital asset pricing model derived by Merton that includes extramarket
An economic theory that describes the relationship between risk and
A model for estimating equilibrium rates of return and values of
Theory of the relationship between risk and return which states that the expected risk
See capital asset pricing model.
capital rationing that under certain circumstances can be violated or even viewed
A merger or consolidation in which an acquirer purchases the selling firm's assets.
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par.
Any payment received from investors for stock that exceeds
Difference between issue price and par value of stock. Also called capital surplus.
IRS rules used to allocate income on export sales to a foreign sales corporation.
capitalizing and reporting as assets significant portions of
Cost capitalization that stretches the flexibility within generally
Yield curve option-pricing models.
An alternative model to the capital asset pricing model developed by
Any possession that has value in an exchange.
A resource, recorded through a transaction, that is expected to yield a benefit to a
Something that is owned; a financial claim or a piece of property that is a store of value.
Probable future economic benefit that is obtained or controlled by an entity as a result of
Anything owned by, or owed to, an individual or business which has commercial or exchange value (e.g., cash, property, etc.).
All things of value owned by an individual or organization.
Asset activity ratios
Ratios that measure how effectively the firm is managing its assets.
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
Bond or note secured by assets of company.
A security that is collateralized by loans, leases, receivables, or installment contracts
Methods of financing in which lenders and equity investors look principally to the
Loans granted usually by a financial institution where the asset being financed constitutes the sole security given to the lender.
Categories of assets, such as stocks, bonds, real estate and foreign securities.
Extent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position.
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
The ratio of total assets to stockholder equity.
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another
Also called surplus management, the task of managing funds of a financial
The weighting of assets in an investment portfolio among different asset classes (e.g. shares, bonds, property, cash, overseas investments.
Asset pricing model
A model for determining the required rate of return on an asset.
Asset pricing model
A model, such as the capital asset pricing model (CAPM), that determines the required
The amount of total risk that can be eliminated by diversification by
A firm's investing in assets that are riskier than those that the debtholders expected.
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firm's existing
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to
The ratio of net sales to total assets.
a ratio measuring asset productivity and showing the number of sales dollars generated by each dollar of assets
asset turnover ratio
A broad-gauge ratio computed by dividing annual
A firm's productive resources.
Anything of value that a company owns.
Things that the business owns.
Items owned by the company or expenses that have been paid for but have not been used up.
A common element of a financial plan that describes projected capital spending and the
authorized share capital
Maximum number of shares that the company is permitted to issue, as specified in the firm’s articles of incorporation.
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
A method of pricing options or other equity derivatives in
Binomial option pricing model
An option pricing model in which the underlying asset can take on only two
The first complete mathematical model for pricing
Black-Scholes option-pricing model
A model for pricing call options based on arbitrage arguments that uses
Money invested in a firm.
The money, raised by selling stock or bonds or taking out loans, that you use to start, operate, and grow a business.
The shareholders’ investment in the business; the difference between the assets and liabilities
A very broad term rooted in economic theory and referring to
The investment by a company’s owners in a business, plus the impact of any
a) Physical capital: buildings, equipment, and any materials used to produce other goods and services in the future rather than being consumed today.
Expenditures Purchases of productive long-lived assets, in particular, items of property,
Any asset or stock of assets, financial or physical, capable of producing income.
Net result of public and private international investment and lending activities.
That part of the balance of payments accounts that records demands for and supplies of a currency arising from purchases or sales of assets.
decision Allocation of invested funds between risk-free assets versus the risky portfolio.
an asset used to generate revenues or cost savings
A fixed asset, something that is expected to have long-term usage within
A firm's set of planned capital expenditures.
management’s plan for investments in longterm
List of planned investment projects.
The process of choosing the firm's long-term capital assets.
Refers generally to analysis procedures for ranking
The process of ranking and selecting investment alternatives and
a process of evaluating an entity’s proposed
The series of steps one follows when justifying the decision to purchase
capital budgeting decision
Decision as to which real assets the firm should acquire.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
The total of debt and equity, i.e. the total funds in the business.
Amount used during a particular period to acquire or improve long-term assets such as
Refers to investments by a business in long-term
The transfer of capital abroad in response to fears of political risk.
Purchase by foreigners of our assets (capital inflows) or our purchase of foreign assets (capital outflows).
When a stock is sold for a profit, it's the difference between the net sales price of securities and
The gain recognized on the sale of a capital item (fixed asset), calculated
An increase in the value of an asset.
The positive difference between the adjusted cost base of an investment held as a capital property and the proceeds of disposition you receive when you sell it. When you sell such an investment for more than you paid, you realize a capital gain.
Capital gains yield
The price change portion of a stock's return.
CAPITAL IN EXCESS OF PAR VALUE
What a company collected when it sold stock for more than the par value per share.
Capital in excess par
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with additional paid-in capital.
capital investment analysis
Refers to various techniques and procedures
Money used to purchase fixed assets for a business, such as land, buildings, or machinery. Also, money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses.
A lease obligation that has to be capitalized on the balance sheet.
A lease in which the lessee obtains some ownership rights over the asset
One where substantially all of the benefits and risks of ownership are transferred to the lessee. It must be reflected on the company's balance sheet as an asset and corresponding liability.
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
The negative difference between the adjusted cost base of an investment held as a capital property and the proceeds of disposition you receive when you sell it. When you sell such an investment for less than you paid, you incur a capital loss.
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.
A market that specializes in trading long-term, relatively high risk
The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded.
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
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