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Definition of Pre-trade benchmarks
Prices occurring before or at the decision to trade.
the additional value inherent in the control interest as contrasted to a minority interest, which reflects its power of control
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in today’s dollars of cash flows that occur in different time periods.
Any depreciation method that produces larger deductions for depreciation in the
Publicly traded issues that may be collateralized by mortgages and MBSs.
The net present value analysis of an asset if financed solely by equity
Floating rate preferred stock, the dividend on which is adjusted every
Net flow of goods (exports minus imports) between countries.
Related: Program trades.
A large trading order, defined on the New York Stock Exchange as an order that consists of
A spread strategy in which an investor buys an out-of-the-money put option, financing it by
The Association for Investment Management and Research (AIMR)'s Performance presentation Standards Implementation
The investigation of a firm's business in conjunction with a
The percentage by which the conversion price in a convertible security exceeds the
Convertible preferred stock that may be exchanged, at the
Convertible preferred stock
preferred stock that can be converted into common stock at the option of the holder.
The exchange of goods for other goods rather than for cash; barter.
Cumulative preferred stock
preferred stock whose dividends accrue, should the issuer not make timely
A benchmark that is designed to meet a client's requirements and long-term
A differential in promised yield that compensates the investor for the risk inherent in
To allocate the purchase cost of an asset over its life.
A non-cash expense that provides a source of free cash flow. Amount allocated during the
Depreciation tax shield
The value of the tax write-off on depreciation of plant and equipment.
Method of accelerated depreciation.
The gross underwriting spread adjusted for the impact of the announcement of the common
FHA prepayment experience
The percentage of loans in a pool of mortgages outstanding at the origination
That portion of the media devoted to reporting financial news.
1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid,
preferred stock paying dividends that vary with short-term interest rates.
A member who generally trades only for his own account, for an account controlled by him or
A currency trades at a forward premium when its forward price is higher than its spot price.
A transaction in which the settlement will occur on a specified date in the future at a price
The fraction of the gross proceeds of an underwritten securities offering that is paid as
The simultaneous purchase and sale of two options that differ only in their exercise date.
trades that are the result of either a reallocation of wealth or an implementation of an
trades in which an investor believes he or she possesses pertinent
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
Intramarket sector spread
The spread between two issues of the same maturity within a market sector. For
Involuntary liquidation preference
A premium that must be paid to preferred or preference stockholders if
Lag response of prepayments
There is typically a lag of about three months between the time the weighted
Liquidity preference hypothesis
The argument that greater liquidity is valuable, all else equal. Also, the
Forward rate minus expected future short-term interest rate.
Market segmentation theory or preferred habitat theory
A biased expectations theory that asserts that the
The spread between any two maturity sectors of the bond market.
Monthly income preferred security (MIP)
preferred stock issued by a subsidiary located in a tax haven.
Net adjusted present value
The adjusted present value minus the initial cost of an investment.
Net present value (NPV)
The present value of the expected future cash flows minus the cost.
Net present value of growth opportunities
A model valuing a firm in which net present value of new
Net present value of future investments
The present value of the total sum of NPVs expected to result from
Net present value rule
An investment is worth making if it has a positive NPV. Projects with negative NPVs
Non-cumulative preferred stock
preferred stock whose holders must forgo dividend payments when the
The option price.
Option-adjusted spread (OAS)
1) The spread over an issuer's spot rate curve, developed as a measure of
Prices after the decision to trade.
Preauthorized checks (PACs)
hecks that are authorized by the payer in advance and are written either by
Preauthorized electronic debits (PADs)
Debits to its bank account in advance by the payer. The payer's
Precautionary demand (for money)
The need to meet unexpected or extraordinary contingencies with a
A desire to hold cash in order to be able to deal effectively with unexpected events
Common stockholder's right to anything of value distributed by the company.
Preferred equity redemption stock (PERC)
preferred stock that converts automatically into equity at a
A security that ranks junior to preferred stock but senior to common stock in the right to
Preferred habitat theory
A biased expectations theory that believes the term structure reflects the
preferred shares give investors a fixed dividend from the company's earnings. And more
A security that shows ownership in a corporation and gives the holder a claim, prior to the
Preferred stock agreement
A contract for preferred stock.
A preliminary version of a prospectus.
1) Amount paid for a bond above the par value.
A bond that is selling for more than its par value.
A bankruptcy in which a debtor and its creditors pre-negotiate a plan or
Also called speed, the estimated rate at which mortgagors pay off their loans ahead of
Payments made in excess of scheduled mortgage principal repayments.
The amount of cash today that is equivalent in value to a payment, or to a stream of payments,
Present value factor
Factor used to calculate an estimate of the present value of an amount to be received in
Present value of growth opportunities (NPV)
Net present value of investments the firm is expected to make
Presold issue An issue
that is sold out before the coupon announcement.
The limitation of the price appreciation potential for a callable bond in a declining interest
Also called basket trades, orders requiring the execution of trades in a large number of
Publicly traded assets
Assets that can be traded in a public market, such as the stock market.
Also called credit spread, the spread between Treasury securities and non-Treasury securities
A person registered with the CFTC who is employed by, and soliciting business
A member of the exchange who executes frequent trades for his or her own account.
Relative yield spread
The ratio of the yield spread to the yield level.
Entering the opposite side of a currently held futures position to close out the position.
The reward for holding the risky market portfolio rather than the risk-free asset. The spread
Risk premium approach
The most common approach for tactical asset allocation to determine the relative
Single-premium deferred annuity
An insurance policy bought by the sponsor of a pension plan for a single
The purchase and sale of a foreign currency, commodity, or other item for immediate delivery.
1) The gap between bid and ask prices of a stock or other security.
Also called margin income, the difference between income and cost. For a depository
A strategy that involves a position in one or more options so that the cost of buying an
A computer program that organizes numerical data into rows and columns on a terminal screen,
Straight line depreciation
An equal dollar amount of depreciation in each accounting period.
Method of accelerated depreciation.
Difference between U.S. Treasury bill rate and eurodollar rate; used by some traders as a
Tender offer premium
The premium offered above the current market price in a tender offer.
Excess of the yields to maturity on long-term bonds over those of short-term bonds.
Terms of trade
The weighted average of a nation's export prices relative to its import prices.
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