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Normal random variable |
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Definition of Normal random variableNormal random variableA random variable that has a normal probability distribution.
Related Terms:CARs (cumulative abnormal returns)a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock. Abnormal returnsPart of the return that is not due to systematic influences (market wide influences). In Continuous random variableA random value that can take any fractional value within specified ranges, as Cumulative abnormal return (CAR)Sum of the differences between the expected return on a stock and the Discrete random variableA random variable that can take only a certain specified set of discrete possible Endogenous variableA value determined within the context of a model. Exogenous variableA variable whose value is determined outside the model in which it is used. Also called Lognormal distributionA distribution where the logarithm of the variable follows a normal distribution. Normal annuity formThe manner in which retirement benefits are paid out. Normal backwardation theoryHolds that the futures price will be bid down to a level below the expected Normal deviateRelated: standardized value Normal probability distributionA probability distribution for a continuous random variable that is forms a Normal portfolioA customized benchmark that includes all the securities from which a manager normally Normalizing methodThe practice of making a charge in the income account equivalent to the tax savings Random variableA function that assigns a real number to each and every possible outcome of a random experiment. Random walkTheory that stock price changes from day to day are at random; the changes are independent Randomized strategyA strategy of introducing into the decision-making process a random element that is Standardized normal distributionA normal distribution with a mean of 0 and a standard deviation of 1. VariableA value determined within the context of a model. Also called endogenous variable. Variable annuitiesAnnuity contracts in which the issuer pays a periodic amount linked to the investment Variable costA cost that is directly proportional to the volume of output produced. When production is zero, Variable life insurance policyA whole life insurance policy that provides a death benefit dependent on the Variable price securityA security, such as stocks or bonds, that sells at a fluctuating, market-determined price. Variable rate CDsShort-term certificate of deposits that pay interest periodically on roll dates. On each roll Variable rated demand bond (VRDB)Floating rate bond that can be sold back periodically to the issuer. Variable rate loanLoan made at an interest rate that fluctuates based on a base interest rate such as the VARIABLE EXPENSESThose that vary with the amount of goods you produce or sell. These may include utility bills, labor, etc. Semi-variable costsCosts that have both fixed and variable components. Variable costA cost that increases or decreases in proportion with increases or decreases in the volume of production of goods or services. Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. variable expensesExpenses that change with changes in either sales volume decision variablean unknown item for which a linear programming dependent variablean unknown variable that is to be predicted independent variablea variable that, when changed, will key variablea critical factor that management believes will net cost of normal spoilagethe cost of spoiled work less the estimated disposal value of that work normal capacitythe long-run (5â€“10 years) average production normal cost systema valuation method that uses actual normal lossan expected decline in units during the production process normal spoilagespoilage that has been planned or foreseen; is a product cost slack variablea variable used in a linear programming problem surplus variablea variable used in a linear programming problem that represents overachievement of a minimum requirement; it is associated with greater-than-or-equal-to constraints variable costa cost that varies in total in direct proportion variable costinga cost accumulation and reporting method variable cost ratiothe proportion of each revenue dollar variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity Normal (bell-shaped) distributionIn statistics, a theoretical frequency Spoilage, abnormalSpoilage arising from the production process that exceeds the normal Spoilage, normalThe amount of spoilage that naturally arises as part of a production Variable costA cost that changes in amount in relation to changes in a related activity. random walk theorySecurity prices change randomly, with no predictable trends or patterns. variable costsCosts that change as the level of output changes. Random-location storageThe technique of storing incoming inventory in any Variable AnnuityA form of annuity policy under which the amount of each benefit is not guaranteed or specified. The amounts fluctuate according to the earnings of a separate investment account.
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