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Definition of Novation
Defeasance whereby the firm's debt is canceled.
An innovation that has a positive impact on one or more of a firm's existing products.
An innovation that has a negative impact on one or more of a firm's existing assets.
A system of non-financial performance measurement that links innovation, customer and process measures to financial performance.
an approach to performance
The term for several manufacturing innovations that
Purchase of the financial guarantee of a large insurance company to raise funds.
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
A merger or consolidation in which an acquirer purchases the selling firm's assets.
A bond covenant that specifies certain actions the firm must take.
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
A firm's productive resources.
A common element of a financial plan that describes projected capital spending and the
An option is at-the-money if the strike price of the option is equal to the market price of the
Gives the lessee the option to purchase the asset at a price below fair market
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
A transaction in which the purchaser's intention is to reduce or eliminate a short position in
he written statement that follows any "trade" in the securities markets. Confirmation is issued
Value of cash, accounts receivable, inventories, marketable securities and other assets that
Indicator of financial leverage. Compares assets provided by creditors to assets provided
Ability to borrow. The amount a firm can borrow up to the point where the firm value no
The amount of borrowing that leasing displaces. firms that do a lot of leasing will be
An asset requiring fixed dollar payments, such as a government or corporate bond.
The amplification of the return earned on equity when an investment or firm is financed
A bond covenant that restricts in some way the firm's ability to incur additional indebtedness.
The market for trading debt instruments.
Total debt divided by total assets.
Reducing the principal and/or interest payments on LDC loans.
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
Interest payment plus repayments of principal to creditors, that is, retirement of debt.
Debt service parity approach
An analysis wherein the alternatives under consideration will provide the firm
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
A set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank
Debtor in possession
A firm that is continuing to operate under Chapter 11 bankruptcy process.
New debt obtained by a firm during the Chapter 11 bankruptcy process.
Practice whereby the borrower sets aside cash or bonds sufficient to service the borrower's debt.
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
See: in-substance Defeasance.
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Extraordinary positive value
A positive net present value.
Claims on real assets.
Refers to an order to buy or sell that can be executed without confirmation for some fixed period. Also,
Firm commitment underwriting
An undewriting in which an investment banking firm commits to buy the
Firm's net value of debt
Total firm value minus total firm debt.
See:diversifiable risk or unsystematic risk.
debt maturing after more than one year.
Good 'til canceled
Sometimes simply called "GTC", it means an order to buy or sell stock that is good until
A phase of development in which a company experiences rapid earnings growth as it produces
Money that moves across country borders in response to interest rate differences and that moves
Interest rate on debt
The firm's cost of debt capital.
International Monetary Fund
An organization founded in 1944 to oversee exchange arrangements of
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
A put option that has a strike price higher than the underlying futures price, or a call option
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
Defeasance whereby debt is removed from the balance sheet but not cancelled.
Junior debt (subordinate debt)
debt whose holders have a claim on the firm's assets only after senior
Law of one price
An economic rule stating that a given security must have the same price regardless of the
The deposit of cash and permitted securities, as specified in the bond indenture, into an
Value of property, equipment and other capital assets minus the depreciation. This is an
An obligation having a maturity of more than one year from the date it was issued. Also
Indicator of financial leverage. Shows long-term debt as a proportion of the
Long-term debt ratio
The ratio of long-term debt to total capitalization.
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
A phase of company development in which earnings continue to grow at the rate of the
For mutual funds, the amount required to open a new account (Minimum Initial
Gold held by governmental authorities as a financial asset.
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
Related: Investment management.
Related: Investment manager.
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.
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Money rate of return
Annual money return as a percentage of asset value.
M1-A: Currency plus demand deposits
A loan repayment schedule in which the outstanding principal balance of the loan
Related: net financing cost
A bond characteristic such that the price appreciation will be less than the price
A bond covenant that limits or prohibits altogether certain actions unless the bondholders agree.
A situation in which the price of the MBS moves in the same direction as interest rates.
Negative pledge clause
A bond covenant that requires the borrower to grant lenders a lien equivalent to any
Neglected firm effect
The tendency of firms that are neglected by security analysts to outperform firms that
The difference between total assets on the one hand and current liabilities and noncapitalized longterm
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of
A tangible asset with unique physical properties, like a parcel of land, a mine, or a
One man picture
The picture quoted by a broker is said to be a one-man picture if both the bid and offered
A special case of the arbitrage pricing theory that is derived from the one-factor model by
1) A market in which only one side, the bid or asked, is quoted or firm.
Open-market purchase operation
A systematic program of repurchasing shares of stock in market
A transaction in which the purchaser's intention is to create or increase a long position in
Original issue discount debt (OID debt)
debt that is initially offered at a price below par.
Other current assets
Value of non-cash assets, including prepaid expenses and accounts receivable, due
A call option is out-of-the-money if the strike price is greater than the market price
In mutual funds, the ability to transfer shares between funds in the same family by
Related:net financing cost
property of option-free bonds whereby the price appreciation for a large upward change
Positive covenant (of a bond)
A bond covenant that specifies certain actions the firm must take. Also called
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