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Definition of Opportunity costs
The difference in the performance of an actual investment and a desired investment
Optimal amount of cash for a firm to hold, considering the trade-off between the
The incremental costs of having an agent make decisions for a principal.
costs that are identifiable with and able to be influenced by decisions made at the business
When a cost is recorded originally as an increase
costs that increase with increases in the level of investment in current assets.
costs of maintaining current assets, including opportunity cost of capital.
A particularly egregious form of aggressive cost capitalization
costs arising from bankruptcy or distorted business decisions before bankruptcy.
costs that are readily traceable to particular products or services.
The difference between the execution price of a security and the price that would have
Legal and administrative costs of liquidation or reorganization. Also includes
costs that do not change with increases or decreases in the volume of goods or services
costs that do not depend on the level of output.
Expenses or costs that remain the same in amount,
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
The price of obtaining capital, either borrowed or equity, with intent to carry on business operations.
opportunity to invest in profitable projects.
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
Transaction costs that include the assessment of the investment merits of a financial asset.
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
The costs to firms of changing their prices.
The lost opportunity of not doing something, which may be financial or non-financial, e.g. time.
a potential benefit that is foregone because
Lost revenue that would otherwise have been realized if a different
Benefit or cash flow forgone as a result of an action.
The forgone value of an alternative not chosen, usually the most profitable alternative.
Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in
opportunity cost of capital
the highest rate of return that
opportunity cost of capital
Expected rate of return given up by investing in a project.
The possible expected return and standard deviation pairs of all portfolios that can be
Overhead generally refers to indirect, in contrast to direct,
The costs that relate to a period of time.
Personal Responsibility and Work Opportunity Reconciliation Act
A federal Act requiring the reporting of new hires into a national database.
Policy Acquisition Costs
costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
The costs of additional regulation, including higher taxes, borne by large and
Portfolio opportunity set
The expected return/standard deviation pairs of all portfolios that can be
A form of start-up cost incurred in preparing for the opening of a new store or facility.
Price impact costs
Related: market impact costs
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
costs associated with locating a counterparty to a trade, including explicit costs (such as
costs that are constant within a defined level of activity but that can increase or decrease when
costs that have both fixed and variable components.
costs incurred from shortages in current assets.
A budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a
costs related to such onetime activities as opening a new facility, introducing
costs that have been incurred and cannot be reversed.
costs that have been incurred in the past.
costs that have been incurred and cannot be recovered.
costs of buying and selling marketable securities and borrowing. Trading costs include
The time, effort, and money necessary, including such things as commission fees and the
Undepreciated Capital Costs
The tax definition of the value of an asset that is eligible for tax deprecation.
costs that change as the level of output changes.
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