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Financial Terms | |
One-factor APT |
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Definition of One-factor APTOne-factor APTA special case of the arbitrage pricing theory that is derived from the one-factor model by
Related Terms:ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. All or noneRequirement that none of an order be executed unless all of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the underwriter is unable Amortization factorThe pool factor implied by the scheduled amortization assuming no prepayemts. Annuity factorPresent value of $1 paid for each of t periods. annuity factorPresent value of an annuity of $1 per period. Arbitrage Pricing Theory (APT)An alternative model to the capital asset pricing model developed by ![]() At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance Call swaptionA swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The Captive AgentA licensed insurance agent who sells insurance for only one company. ComponentRaw materials or subassemblies used to make either finished goods Conversion factorsRules set by the Chicago Board of Trade for determining the invoice price of each critical success factors (CSF)any item (such as quality, customer Discount factorPresent value of $1 received at a stated future date. discount factorPresent value of a $1 future payment. ![]() Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Dow Jones Industrial AverageIndex of the investment performance of a portfolio of 30 “blue-chip” stocks. economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies FactorA financial institution that buys a firm's accounts receivables and collects the debt. FactorAn agent who buys and sells goods on behalf of others for a commission. Factor analysisA statistical procedure that seeks to explain a certain phenomenon, such as the return on a Factor modelA way of decomposing the factors that influence a security's rate of return into common and Factor of ProductionA resource used to produce a good or service. The main macroeconomic factors of production are capital and labor. Factor portfolioA well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of FactoringSale of a firm's accounts receivable to a financial institution known as a factor. FactoringThe sale of accounts receivable to a third party, with the third party bearing FactoringThe discounting, or sale at a discount, of receivables on a nonrecourse, notification FactoringType of financial service whereby a firm sells or transfers title to its accounts receivable to a factoring company, which then acts as principal, not as agent. Factory overheadAll the costs incurred during the manufacturing process, minus the Fiat MoneyFiat Money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category. High-Powered MoneySee money base. Hot moneyMoney that moves across country borders in response to interest rate differences and that moves In-the-moneyA put option that has a strike price higher than the underlying futures price, or a call option Interest FactorNumbers found in compound interest and annuity tables. Usually called the FVIF or PVIF. International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Fund (IMF)Organization originally established to manage the postwar fixed exchange rate system. International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Law of one priceAn economic rule stating that a given security must have the same price regardless of the law of one priceTheory that prices of goods in all countries should be equal when translated to a common currency. Limiting factorThe production resource that, as a result of scarce resources, limits the production of goods Maturity factoringfactoring arrangement that provides collection and insurance of accounts receivable. MonetarismSchool of economic thought stressing the importance of the money supply in the economy. Adherents believe that the economy is inherently stable, so that policy is best undertaken through adoption of a policy rule. Monetarist RuleProposal that the money supply be increased at a steady rate equal approximately to the real rate of growth of the economy. Contrast with discretionary policy. Monetary AggregateAny measure of the economy's money supply. Monetary BaseSee money base. Monetary goldGold held by governmental authorities as a financial asset. Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Monetary policyActions taken by the Board of Governors of the Federal Reserve System to influence the Monetary PolicyActions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity. Monetizing the DebtSee printing money. MoneyAny item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange. Money baseComposed of currency and coins outside the banking system plus liabilities to the deposit money banks. Money BaseCash plus deposits of the commercial banks with the central bank. Money center banksBanks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds. Money LaunderingThis is the process by which "dirty money" generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to their illegal origins. Money managementRelated: Investment management. Money managerRelated: Investment manager. Money marketMoney markets are for borrowing and lending money for three years or less. The securities in Money MarketA market that specializes in trading short-term, low-risk, very liquid money marketMarket for short-term financial assets. Money MarketA financial market in which short-term (maturity of less than a year) debt instruments such as bonds are traded. Money MarketFinancial market in which funds are borrowed or lent for short periods. (The money market is distinguished from the capital market, which is the market for long term funds.) Money market demand accountAn account that pays interest based on short-term interest rates. Money market fundA mutual fund that invests only in short term securities, such as bankers' acceptances, money market fundA type of mutual fund that invests primarily in short-term debt securities maturing in one year or less. These include treasury bills, bankers’ acceptances, commercial paper, discount notes and guaranteed investment certficates. Money market hedgeThe use of borrowing and lending transactions in foreign currencies to lock in the Money market notesPublicly traded issues that may be collateralized by mortgages and MBSs. Money MultiplierChange in the money supply per change in the money base. money orderA guaranteed form of payment in amounts up to and including $5,000. You might request a money order in order to pay for tuition fees at a university or a college, or for a magazine subscription. Money purchase planA defined benefit contribution plan in which the participant contributes some part and Money Rate of InterestSee interest rate, nominal. Money rate of returnAnnual money return as a percentage of asset value. Money supplyM1-A: Currency plus demand deposits Multifactor CAPMA version of the capital asset pricing model derived by Merton that includes extramarket Net benefit to leverage factorA linear approximation of a factor, T*, that enables one to operationalize the Neutrality of MoneyThe doctrine that the money supply affects only the price level, with no long-run impact on real variables. New moneyIn a Treasury auction, the amount by which the par value of the securities offered exceeds that of Old-line factoringfactoring arrangement that provides collection, insurance, and finance for accounts receivable. One man pictureThe picture quoted by a broker is said to be a one-man picture if both the bid and offered One-way market1) A market in which only one side, the bid or asked, is quoted or firm. Out-of-the-money optionA call option is out-of-the-money if the strike price is greater than the market price Phone switchingIn mutual funds, the ability to transfer shares between funds in the same family by Pool factorThe outstanding principal balance divided by the original principal balance with the result Postponement optionThe option of postponing a project without eliminating the possibility of undertaking it. PPF (periodic perpetuity factor)a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity. Precautionary demand (for money)The need to meet unexpected or extraordinary contingencies with a Present value factorfactor used to calculate an estimate of the present value of an amount to be received in Printing MoneySale of bonds by the government to the central bank. Put swaptionA financial tool in which the buyer has the right, or option, to enter into a swap as a floatingrate Quantity Theory of MoneyTheory that velocity is constant, and so a change in money supply will change nominal income by the same percentage. Formalized by the equation Mv = PQ. Real Money SupplyMoney supply expressed in base-year dollars, calculated by dividing the money supply by a price index. Reported factorThe pool factor as reported by the bond buyer for a given amortization period. Risk proneWilling to pay money to transfer risk from others. Scrap factorAn anticipated loss percentage included in the bill of material and Seasoned datingsExtended credit for customers who order goods in periods other than peak seasons. Seasoned issueIssue of a security for which there is an existing market. Related: Unseasoned issue. Seasoned new issueA new issue of stock after the company's securities have previously been issued. A Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |