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Financial Terms | |
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Definition of Opening, theOpening, theThe period at the beginning of the trading session officially designated by the exchange during
Related Terms:Accounting periodThe period of time for which financial statements are produced – see also financial year. acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable All equity rateThe discount rate that reflects only the business risks of a project and abstracts from the All-in costTotal costs, explicit and implicit. 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 allocateassign based on the use of a cost driver, a cost predictor, ![]() allocationthe systematic assignment of an amount to a recipient AllocationThe process of storing costs in one account and shifting them to other Allocation base A measure of activity or volume such as labourhours, machine hours or volume of production Allowance for bad debtsAn offset to the accounts receivable balance, against which Allowance for doubtful accountsA contra account related to accounts receivable that represents the amounts that the company expects will not be collected. Allowance for Doubtful AccountsAn estimate of the uncollectible portion of accounts receivable Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. American Stock Exchange (AMEX)The second-largest stock exchange in the United States. It trades Annualized holding period returnThe annual rate of return that when compounded t times, would have ![]() Annuity PeriodThe time between each payment under an annuity. approximated net realizable value at split-off allocationa method of allocating joint cost to joint products using a Asset allocation decisionThe decision regarding how an institution's funds should be distributed among the Average Amortization PeriodThe average useful life of a company's collective amortizable asset base. Average Collection PeriodAverage number of days necessary to receive cash for the sale of Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Balloon maturityAny large principal payment due at maturity for a bond or loan with or without a a sinking Bill of exchangeGeneral term for a document demanding payment. Borrower falloutIn the mortgage pipeline, the risk that prospective borrowers of loans committed to be Buy on closeTo buy at the end of the trading session at a price within the closing range. Buy on openingTo buy at the beginning of a trading session at a price within the opening range. ![]() CallAn option that gives the right to buy the underlying futures contract. Call a. An option to buy a certain quantity of a stock or commodity for a Call an optionTo exercise a call option. Call dateA date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance Call optionAn option contract that gives its holder the right (but not the obligation) to purchase a specified Call OptionA contract that gives the holder the right to buy an asset for a call optionRight to buy an asset at a specified exercise price on or before the exercise date. Call priceThe price, specified at issuance, at which the issuer of a bond may retire part of the bond at a Call priceThe price for which a bond can be repaid before maturity under a call provision. Call protectionA feature of some callable bonds that establishes an initial period when the bonds may not be Call provisionAn embedded option granting a bond issuer the right to buy back all or part of the issue prior Call riskThe combination of cash flow uncertainty and reinvestment risk introduced by a call provision. Call swaptionA swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The CallableA financial security such as a bond with a call option attached to it, i.e., the issuer has the right to Callable bondA bond that allows the issuer to buy back the bond at a callable bondBond that may be repurchased by the issuer before maturity at specified call price. Capital allocationdecision allocation of invested funds between risk-free assets versus the risky portfolio. Capital Consumption AllowanceSee depreciation. 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 Chinese wallCommunication barrier between financiers (investment bankers) and traders. This barrier is Close, theThe period at the end of the trading session. Sometimes used to refer to closing price. Related: Closed EconomyAn economy in which imports and exports are very small relative to GDP and so are ignored in macroeconomic analysis. Contrast with open economy. Closed-end fundAn investment company that sells shares like any other corporation and usually does not Closed-end mortgageMortgage against which no additional debt may be issued. Commodities Exchange Center (CEC)The location of five New York futures exchanges: Commodity Compounding periodThe length of the time period (for example, a quarter in the case of quarterly compounding periodthe time between each interest computation Convertible exchangeable preferred stockConvertible preferred stock that may be exchanged, at the cost allocationthe assignment, using some reasonable basis, Covered callA short call option position in which the writer owns the number of shares of the underlying Covered call writing strategyA strategy that involves writing a call option on securities that the investor Credit periodThe length of time for which the customer is granted credit. Critical Growth PeriodsTimes in a company's history when growth is essential and without which survival of the business might be in jeopardy. Day tradingRefers to establishing and liquidating the same position or positions within one day's trading. Debtor in possessionA firm that is continuing to operate under Chapter 11 bankruptcy process. Debtor-in-possession financingNew debt obtained by a firm during the Chapter 11 bankruptcy process. Deferred callA provision that prohibits the company from calling the bond before a certain date. during this Depreciation AllowancesTax deductions that businesses can claim when they spend money on investment goods. Discount periodThe period during which a customer can deduct the discount from the net amount of the bill Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an Dynamic asset allocationAn asset allocation strategy in which the asset mix is mechanistically shifted in economically reworkedwhen the incremental revenue from the sale of reworked defective units is greater than Effective call priceThe strike price in an optional redemption provision plus the accrued interest to the Effective Exchange RateThe weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country. Equation of ExchangeThe quantity theory equation Mv = PQ. Evaluation periodThe time interval over which a money manager's performance is evaluated. ExchangeThe marketplace in which shares, options and futures on stocks, bonds, commodities and indices Exchange controlsGovernmental restrictions on the purchase of foreign currencies by domestic citizens or Exchange of assetsAcquisition of another company by purchase of its assets in exchange for cash or stock. Exchange of stockAcquisition of another company by purchase of its stock in exchange for cash or shares. Exchange offerAn offer by the firm to give one security, such as a bond or preferred stock, in exchange for Exchange rateThe price of one country's currency expressed in another country's currency. exchange rateAmount 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, NominalThe price of one currency in terms of another, in this book defined as number of units of foreign currency per dollar. Exchange Rate, RealThe nominal exchange rate corrected for price level differences. Exchange rate riskAlso called currency risk, the risk of an investment's value changing because of currency Exchange riskThe variability of a firm's value that results from unexpected exchange rate changes or the Exchangeable SecuritySecurity that grants the security holder the right to exchange the security for the expectations theory of exchange ratesTheory that expected spot exchange rate equals the forward rate. Extended Amortization PeriodAn amortization period that continues beyond a long-lived asset's economic useful life. Extended Amortization PeriodsAmortizing capitalized expenditures over estimated useful lives that are unduly optimistic. Fallacy of CompositionThe incorrect conclusion that something that is true for an individual is necessarily true for the economy as a whole. Fallout riskA type of mortgage pipeline risk that is generally created when the terms of the loan to be Federally related institutionsArms of the federal government that are exempt from SEC registration and First-callWith CMOs, the start of the cash flow cycle for the cash flow window. Fixed-exchange rateA country's decision to tie the value of its currency to another country's currency, gold Fixed Exchange RateAn exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign exchange market. Flexible Exchange RateAn exchange rate whose value is determined by the forces of supply and demand on the foreign exchange market. Floating exchange rateA country's decision to allow its currency value to freely change. The currency is not Floating Exchange RateSee flexible exchange rate. 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