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QMDM (quantitative marketability discount model) |
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Definition of QMDM (quantitative marketability discount model)QMDM (quantitative marketability discount model)model for calculating DLOM for minority interests r the discount rate
Related Terms:ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. DLOC (discount for lack of control)an amount or percentage deducted from a pro rata share of the value of 100% of an equity interest in a business, to reflect the absence of some or all of the powers of control. DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. discount ratethe rate of return on investment that would be required by a prudent investor to invest in an asset with a specific level risk. Also, a rate of return used to convert a monetary sum, payable or receivable in the future, into present value. fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor. Gordon modelpresent value of a perpetuity with growth. log size modelAbrams’ model to calculate discount rates as a function of the logarithm of the value of the firm. Accretion (of a discount)In portfolio accounting, a straight-line accumulation of capital gains on discount Arbitrage-free option-pricing modelsYield curve option-pricing models. Asset pricing modelA model for determining the required rate of return on an asset. Asset pricing modelA model, such as the Capital Asset Pricing model (CAPM), that determines the required Bank discount basisA convention used for quoting bids and offers for treasury bills in terms of annualized Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and Cash discountAn incentive offered to purchasers of a firm's product for payment within a specified time Constant-growth modelAlso called the Gordon-Shapiro model, an application of the dividend discount Deep-discount bondA bond issued with a very low coupon or no coupon and selling at a price far below par Deterministic modelsLiability-matching models that assume that the liability payments and the asset cash DiscountReferring to the selling price of a bond, a price below its par value. Related: premium. Discount bondDebt sold for less than its principal value. If a discount bond pays no interest, it is called a Discount factorPresent value of $1 received at a stated future date. Discount periodThe period during which a customer can deduct the discount from the net amount of the bill Discount rateThe interest rate that the Federal Reserve charges a bank to borrow funds when a bank is Discount securitiesNon-interest-bearing money market instruments that are issued at a discount and Discount windowFacility provided by the Fed enabling member banks to borrow reserves against collateral Discounted basisSelling something on a discounted basis is selling below what its value will be at maturity, Discounted cash flow (DCF)Future cash flows multiplied by discount factors to obtain present values. Discounted dividend model (DDM)A formula to estimate the intrinsic value of a firm by figuring the Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an DiscountingCalculating the present value of a future amount. The process is opposite to compounding. Dividend discount model (DDM)A model for valuing the common stock of a company, based on the Dividend growth modelA model wherein dividends are assumed to be at a constant rate in perpetuity. Documented discount notesCommercial paper backed by normal bank lines plus a letter of credit from a Extrapolative statistical modelsmodels that apply a formula to historical data and project results for a Factor modelA way of decomposing the factors that influence a security's rate of return into common and Forward discountA currency trades at a forward discount when its forward price is lower than its spot price. Garmen-Kohlhagen option pricing modelA widely used model for pricing foreign currency options. Index modelA model of stock returns using a market index such as the S&P 500 to represent common or Market modelThis relationship is sometimes called the single-index model. The market model says that the MarketabilityA negotiable security is said to have good marketability if there is an active secondary market ModelingThe process of creating a depiction of reality, such as a graph, picture, or mathematical Original issue discount debt (OID debt)Debt that is initially offered at a price below par. Pie model of capital structureA model of the debt/equity ratio of the firms, graphically depicted in slices of Pure-discount bondA bond that will make only one payment of principal and interest. Also called a zerocoupon Single factor modelA model of security returns that acknowledges only one common factor. Single index modelA model of stock returns that decomposes influences on returns into a systematic factor, Simple linear trend modelAn extrapolative statistical model that asserts that earnings have a base level and Single-index modelRelated: market model Stochastic modelsLiability-matching models that assume that the liability payments and the asset cash flows Two-factor modelBlack's zero-beta version of the capital asset pricing model. Two-state option pricing modelAn option pricing model in which the underlying asset can take on only two Value-at-Risk model (VAR)Procedure for estimating the probability of portfolio losses exceeding some Yield curve option-pricing modelsmodels that can incorporate different volatility assumptions along the Discounted cash flow (DCF)A method of investment appraisal that discounts future cash flows to present value using a discount rate, which is the risk-adjusted cost of capital. Purchase discountsA contra account that reduces purchases by the amount of the discounts taken for early payment. Sales discountsA contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales. discounted cash flow (DCF)Refers to a capital investment analysis technique Capital Asset Pricing Model (CAPM)A model for estimating equilibrium rates of return and values of Continuous DiscountingThe process of calculating the present value of a stream of future Discount RateThe rate of interest used to calculate the present value of a stream DiscountingThe process of calculating the present value of a stream of future ad hoc discounta price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased discountingthe process of reducing future cash flows to present value amounts discount ratethe rate of return used to discount future cash Internet business modela model that involves risk-adjusted discount rate methoda formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk Binomial modelA method of pricing options or other equity derivatives in Black-Scholes modelThe first complete mathematical model for pricing Discount curveThe curve of discount rates vs. maturity dates for bonds. Markowitz modelA model for selecting an optimum investment portfolio, Discounted cash flowA technique that determines the present value of future cash Sales discountA reduction in the price of a product or service that is offered by the capital asset pricing model (CAPM)Theory of the relationship between risk and return which states that the expected risk constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. discount factorPresent value of a $1 future payment. discount rateInterest rate used to compute present values of future cash flows. dividend discount modelComputation of today’s stock price which states that share value equals the present value of all expected future dividends. percentage of sales modelsPlanning model in which sales forecasts are the driving variables and most other variables are DiscountThe percentage amount at which bonds sell below their par value. Also the percentage amount at which a currency sells on the forward market below its current rate on the spot market. Discount BondA bond with no coupons, priced below its face value; the return on this bond comes from the difference between its face value and its current price. DiscountingCalculating the present value of a future payment. Discount RateThe interest rate at which the Fed is prepared to loan reserves to commercial banks. Discount WindowThe Federal Reserve facility at which reserves are loaned to banks at the discount rate. Non-Smoker DiscountIn October 1996 it was announced in the international news that scientists had finally located the link between cigarette smoking and lung cancer. In the early 1980's, some Canadian Life Insurance Companies had already started recognizing that non-smokers had a better life expectancy than smokers so commenced offering premium discounts for life insurance to new applicants who have been non-smokers for at least 12 months before applying for coverage. Today, most life insurance companies offer these discounts. Discount RateA rate of return used to convert a monetary sum, payable or receivable in the future, into present value. Discounted Cash FlowTechniques for establishing the relative worth of a future investment by discounting (at a required rate of return) the expected net cash flows from the project. DiscountingThe process of finding the present value of a series of future cash flows. discounting is the reverse of compounding. Discounting of Accounts ReceivableShort-term financing in which accounts receivable are used as collateral to secure a loan. The lender does not buy the accounts receivable but simply uses them as collateral for the loan. Also called pledging of accounts receivable. Supplier DiscountAn amount deducted from an invoice by a supplier in exchange for quick payment (a typical example might be a 2% discount if paid in 10 days or the full amount of the invoice in 30 days).
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