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Definition of Opening, the
The period at the beginning of the trading session officially designated by the exchange during
The period of time for which financial statements are produced – see also financial year.
The sum of cash, accounts receivable, and short-term marketable
The discount rate that reflects only the business risks of a project and abstracts from the
Total costs, explicit and implicit.
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
assign based on the use of a cost driver, a cost predictor,
the systematic assignment of an amount to a recipient
The process of storing costs in one account and shifting them to other
hours, machine hours or volume of production
An offset to the accounts receivable balance, against which
A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
An estimate of the uncollectible portion of accounts receivable
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
The second-largest stock exchange in the United States. It trades
Annualized holding period return
The annual rate of return that when compounded t times, would have
The time between each payment under an annuity.
approximated net realizable value at split-off allocation
a method of allocating joint cost to joint products using a
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
Average Amortization Period
The average useful life of a company's collective amortizable asset base.
Average Collection Period
Average number of days necessary to receive cash for the sale of
Average collection period, or days' receivables
The ratio of accounts receivables to sales, or the total
Any large principal payment due at maturity for a bond or loan with or without a a sinking
Bill of exchange
General term for a document demanding payment.
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
Buy on close
To buy at the end of the trading session at a price within the closing range.
Buy on opening
To buy at the beginning of a trading session at a price within the opening range.
An option that gives the right to buy the underlying futures contract.
a. An option to buy a certain quantity of a stock or commodity for a
Call an option
To exercise a call option.
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An option contract that gives its holder the right (but not the obligation) to purchase a specified
A contract that gives the holder the right to buy an asset for a
Right to buy an asset at a specified exercise price on or before the exercise date.
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
A bond that allows the issuer to buy back the bond at a
Bond that may be repurchased by the issuer before maturity at specified call price.
decision allocation of invested funds between risk-free assets versus the risky portfolio.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
Communication barrier between financiers (investment bankers) and traders. This barrier is
The period at the end of the trading session. Sometimes used to refer to closing price. Related:
An economy in which imports and exports are very small relative to GDP and so are ignored in macroeconomic analysis. Contrast with open economy.
An investment company that sells shares like any other corporation and usually does not
Mortgage against which no additional debt may be issued.
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
The length of the time period (for example, a quarter in the case of quarterly
the time between each interest computation
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
the assignment, using some reasonable basis,
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
The length of time for which the customer is granted credit.
Critical Growth Periods
Times in a company's history when growth is essential and without which survival of the business might be in jeopardy.
Refers to establishing and liquidating the same position or positions within one day's trading.
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.
A provision that prohibits the company from calling the bond before a certain date. during this
Tax deductions that businesses can claim when they spend money on investment goods.
The period during which a customer can deduct the discount from the net amount of the bill
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
when the incremental revenue from the sale of reworked defective units is greater than
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Effective Exchange Rate
The weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country.
Equation of Exchange
The quantity theory equation Mv = PQ.
The time interval over which a money manager's performance is evaluated.
The marketplace in which shares, options and futures on stocks, bonds, commodities and indices
Governmental restrictions on the purchase of foreign currencies by domestic citizens or
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
The price of one country's currency expressed in another country's currency.
Amount of one currency needed to purchase one unit of another.
Exchange Rate Mechanism (ERM)
The methodology by which members of the EMS maintain their
Exchange Rate, Nominal
The price of one currency in terms of another, in this book defined as number of units of foreign currency per dollar.
Exchange Rate, Real
The nominal exchange rate corrected for price level differences.
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Security that grants the security holder the right to exchange the security for the
expectations theory of exchange rates
Theory that expected spot exchange rate equals the forward rate.
Extended Amortization Period
An amortization period that continues beyond a long-lived asset's economic useful life.
Extended Amortization Periods
Amortizing capitalized expenditures over estimated useful lives that are unduly optimistic.
Fallacy of Composition
The incorrect conclusion that something that is true for an individual is necessarily true for the economy as a whole.
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
With CMOs, the start of the cash flow cycle for the cash flow window.
A country's decision to tie the value of its currency to another country's currency, gold
Fixed Exchange Rate
An exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign exchange market.
Flexible Exchange Rate
An exchange rate whose value is determined by the forces of supply and demand on the foreign exchange market.
Floating exchange rate
A country's decision to allow its currency value to freely change. The currency is not
Floating Exchange Rate
See flexible exchange rate.
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