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Definition of One-factor APT
A special case of the arbitrage pricing theory that is derived from the one-factor model by
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
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
The pool factor implied by the scheduled amortization assuming no prepayemts.
Present value of $1 paid for each of t periods.
Present value of an annuity of $1 per period.
An alternative model to the capital asset pricing model developed by
An option is at-the-money if the strike price of the option is equal to the market price of the
Also called the broker loan rate , the interest rate that banks charge brokers to finance
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A licensed insurance agent who sells insurance for only one company.
Raw materials or subassemblies used to make either finished goods
Rules set by the Chicago Board of Trade for determining the invoice price of each
any item (such as quality, customer
Present value of $1 received at a stated future date.
Present value of a $1 future payment.
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Dow Jones Industrial Average
Index of the investment performance of a portfolio of 30 “blue-chip” stocks.
economic components model
Abrams’ 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
A financial institution that buys a firm's accounts receivables and collects the debt.
An agent who buys and sells goods on behalf of others for a commission.
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
A way of decomposing the factors that influence a security's rate of return into common and
Factor of Production
A resource used to produce a good or service. The main macroeconomic factors of production are capital and labor.
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of
Sale of a firm's accounts receivable to a financial institution known as a factor.
The sale of accounts receivable to a third party, with the third party bearing
The discounting, or sale at a discount, of receivables on a nonrecourse, notification
Type 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.
All the costs incurred during the manufacturing process, minus the
Fiat 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.
See money base.
Money that moves across country borders in response to interest rate differences and that moves
A put option that has a strike price higher than the underlying futures price, or a call option
Numbers found in compound interest and annuity tables. Usually called the FVIF or PVIF.
International Monetary Fund
An 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 price
An economic rule stating that a given security must have the same price regardless of the
law of one price
Theory that prices of goods in all countries should be equal when translated to a common currency.
The production resource that, as a result of scarce resources, limits the production of goods
factoring arrangement that provides collection and insurance of accounts receivable.
School 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.
Proposal 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.
Any measure of the economy's money supply.
See money base.
Gold held by governmental authorities as a financial asset.
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Actions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity.
Monetizing the Debt
See printing money.
Any item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange.
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Cash plus deposits of the commercial banks with the central bank.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
This 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.
Related: Investment management.
Related: Investment manager.
Money markets are for borrowing and lending money for three years or less. The securities in
A market that specializes in trading short-term, low-risk, very liquid
Market for short-term financial assets.
A financial market in which short-term (maturity of less than a year) debt instruments such as bonds are traded.
Financial 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 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 fund
A 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 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.
Change in the money supply per change in the money base.
A 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 plan
A defined benefit contribution plan in which the participant contributes some part and
Money Rate of Interest
See interest rate, nominal.
Money rate of return
Annual money return as a percentage of asset value.
M1-A: Currency plus demand deposits
A version of the capital asset pricing model derived by Merton that includes extramarket
Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the
Neutrality of Money
The doctrine that the money supply affects only the price level, with no long-run impact on real variables.
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of
factoring arrangement that provides collection, insurance, and finance for accounts receivable.
One man picture
The picture quoted by a broker is said to be a one-man picture if both the bid and offered
1) A market in which only one side, the bid or asked, is quoted or firm.
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
The outstanding principal balance divided by the original principal balance with the result
The 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 factor
factor used to calculate an estimate of the present value of an amount to be received in
Sale of bonds by the government to the central bank.
A financial tool in which the buyer has the right, or option, to enter into a swap as a floatingrate
Quantity Theory of Money
Theory 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 Supply
Money supply expressed in base-year dollars, calculated by dividing the money supply by a price index.
The pool factor as reported by the bond buyer for a given amortization period.
Willing to pay money to transfer risk from others.
An anticipated loss percentage included in the bill of material and
Extended credit for customers who order goods in periods other than peak seasons.
Issue of a security for which there is an existing market. Related: Unseasoned issue.
Seasoned new issue
A new issue of stock after the company's securities have previously been issued. A
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