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Definition of Pre-trade benchmarks
Prices occurring before or at the decision to trade.
Any depreciation method that produces larger deductions for depreciation in the
(1) The estimated useful life of the fixed asset being depreciated is
Any of several methods that recognize an increased amount
A contra-fixed asset account representing the portion of the cost of a fixed asset that has been previously charged to expense. Each fixed asset account will have its own associated accumulated depreciation account.
A contra, or offset, account that is coupled
The sum total of all deprecation expense recognized to date
Cumulative gains or losses reported in shareholders'
Publicly traded issues that may be collateralized by mortgages and MBSs.
The net present value analysis of an asset if financed solely by equity
Yearly amount payable by a client for a policy or component.
An increase in the perceived or actual value of an asset.
Increase in the value of a currency.
Floating rate preferred stock, the dividend on which is adjusted every
A benefit that automatically forfeits premium payments.
The difference between exports and imports of goods.
Balance of trade
Net flow of goods (exports minus imports) between countries.
Balance of Trade
See balance of merchandise trade.
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
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s Performance presentation Standards Implementation
Comprehensive due diligence investigation
The investigation of a firm's business in conjunction with a
the additional value inherent in the control interest as contrasted to a minority interest, which reflects its power of control
The percentage by which the conversion price in a convertible security exceeds the
Convertible exchangeable preferred stock
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.
Cost of Preferred Stock
The rate of return required by the investors in the preferred stock of
the approach to product costing that determines
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
Difference in promised yields between a default-free bond and a riskier bond.
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
A technique by which a company recovers the high cost of its plant-and-equipment assets gradually during the number of years they’ll be used in the business. Depreciation can be physical, technological, or both.
An expense that spreads the cost of an asset over its useful life.
Refers to the generally accepted accounting principle of allocating
Reduction in value of fixed or tangible assets over some period
Both the decline in value of an asset over time, as well as the gradual
a) Of capital stock: decline in the value of capital due to its wearing out or becoming obsolete.
The systematic and rational allocation of the cost of property, plant, and equipment
Amortization of fixed assets, such as plant and equipment, so as to allocate the cost over their depreciable life.
Tax deductions that businesses can claim when they spend money on investment goods.
An expense account that represents the portion of the cost of an asset that is being charged to expense during the current period.
Depreciation tax shield
The value of the tax write-off on depreciation of plant and equipment.
depreciation tax shield
Reduction in taxes attributable to the depreciation allowance.
A prolonged period of very low economic activity with large-scale unemployment.
Method of accelerated depreciation.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
The operating profit before deducting interest, tax, depreciation and amortization.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working
EBDDT - Earnings before depreciation and deferred taxes
This measure is used principally by
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 absence of any government restrictions, such as tariffs or quotas, on imports or exports.
The period of very high unemployment during the early 1930s.
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 in which an investor believes he or she possesses pertinent
trades that are the result of either a reallocation of wealth or an implementation of an
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
A premium that remains unchanged throughout the life of a policy
Level Premium Life Insurance
This is a type of insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than actual cost of protection in the earlier years of the policy and less than the actual cost of protection in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years.
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 risk premium
Risk premium of market portfolio. Difference between market return and return on risk-free Treasury bills.
Market segmentation theory or preferred habitat theory
A biased expectations theory that asserts that the
Extra average return from investing in longversus short-term Treasury securities.
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
A discounted cash flow methodology that uses a required rate of
net present value method
a process that uses the discounted
Net present value (NPV)
The present value of the expected future cash flows minus the cost.
Net present value (NPV)
A discounted cash flow technique used for investment appraisal that calculates the present value of future cash flows and deducts the initial capital investment.
net present value (NPV)
Equals the present value (PV) of a capital investment
Net Present Value (NPV)
The present value of all future cash inflows minus the present value
net present value (NPV)
the difference between the present values of all cash inflows and outflows for an investment project
net present value (NPV)
present value of cash flows minus initial investment.
Net Present Value (NPV) Method
A method of ranking investment proposals. NPV is equal to the present value of the future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment.
Net present value of future investments
The present value of the total sum of NPVs expected to result from
Net present value of growth opportunities
A model valuing a firm in which net present value of new
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
North American Free Trade Agreement (NAFTA)
an agreement among Canada, Mexico, and the United States establishing the North American Free trade Zone, with a resulting reduction in trade barriers
NPV (net present value of cash flows)
Same as PV, but usually includes a subtraction for an initial cash outlay.
Option-adjusted spread (OAS)
1) The spread over an issuer's spot rate curve, developed as a measure of
The option price.
Prices after the decision to trade.
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