Financial Terms Quant

# Definition of Quant

## Quant

A quantitative analyst; someone who does numerical analysis of
financial information in order to detect relationships, disparities, or patterns
that can lead to making money.

# Related Terms:

## QMDM (quantitative marketability discount model)

model for calculating DLOM for minority interests r the discount rate

## Economic order quantity (EOQ)

The order quantity that minimizes total inventory costs.

## Quanto swap

See: differential swap.

## Quantos

Currency options with a guaranteed exchange rate that enable buyers who like the asset, German
bonds for example, but not the asset's pricing currency, to arrange to be paid in a different currency for a fee.

## economic order quantity (EOQ)

an estimate of the number
of units per order that will be the least costly and provide
the optimal balance between the costs of ordering
and the costs of carrying inventory

## material quantity variance

(actual quantity X standard price) - (standard quantity allowed  standard price);
the standard cost saved (favorable) or expended (unfavorable)
due to the difference between the actual quantity
of material used and the standard quantity of material
allowed for the goods produced during the period

## standard quantity allowed

the quantity of input (in hours or some other cost driver measurement) required at standard for the output actually achieved for the period

## Materials quantity variance

The difference between the actual and budgeted quantities
of material used in the production process, multiplied by the standard cost per
unit.

## economic order quantity

Order size that minimizes total inventory costs.

A firm that reacts to excess supply or excess demand by adjusting quantity rather than price. Contrast with price adjuster.

## Quantity Theory of Money

Theory that velocity is constant, and so a change in money supply will change nominal income by the same percentage. Formalized by the equation Mv = PQ.

## Car

A loose quantity term sometimes used to describe a the amount of a commodity underlying one
commodity contract; e.g., "a car of bellies." Derived from the fact that quantities of the product specified in a
contract used to correspond closely to the capacity of a railroad car.

## Debt-service coverage ratio

Earnings before interest and income taxes plus one-third rental charges, divided
by interest expense plus one-third rental charges plus the quantity of principal repayments divided by one
minus the tax rate.

## Price elasticities

The percentage change in the quantity divided by the percentage change in the price.

## Seykota, Ed

Ed Seykota is interviewed by Jack Schwager in Schwager's book, Market Wizards. Seykota was
graduated from MIT in the early 1970s, and went on to develop the first commercially sold commodities trading system. Seykota went into business for himself, and in the years 1974-1989, managed to grow a
\$5,000 trading account to over \$15 million dollars. Mr. Seykota is a trading genius who has been able to
identify robust patterns of price action that repeat themselves in different markets. His quantitative and
systematic approach to trading has been an inspiration for many. Mr. Seykota is also a genius when it comes
to understanding human psychology.

## Variance rule

Specifies the permitted minimum or maximum quantity of securities that can be delivered to
satisfy a TBA trade. For Ginnie Mae, Fannie Mae, and Feddie Mac pass-through securities, the accepted
variance is plus or minus 2.499999 percent per million of the par value of the TBA quantity.

## Z score

Statistical measure that quantifies the distance (measured in standard deviations) a data point is from
the mean of a data set. Separately, z score is the output from a credit-strength test that gauges the likelihood of
bankruptcy.

## Bill of materials

A listing of all the materials and quantities that go to make up a completed product.

## Standard costs

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
routing.

## unit-driven expenses

Expenses that vary in close proportion to changes
in total sales volume (total quantities of sales). Examples of these types of
expenses are delivery costs, packaging costs, and other costs that depend
mainly on the number of products sold or the number of customers
served. These expenses are one of the key factors in a profit model for
decision-making analysis. Segregating these expenses from other types
of expenses that behave differently is essential for management decisionmaking
analysis. The cost-of-goods-sold expense depends on sales volume
and is a unit-driven expense. But product cost (i.e., the cost of
goods sold) is such a dominant expense that it is treated separately from
other unit-driven operating expenses.

## activity-based budgeting (ABB)

planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
quality of production

a price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased

## bill of materials

a document that contains information about
the product materials components and their specifications
(including quality and quantities needed)

## budget

a financial plan for the future based on a single level
of activity; the quantitative expression of a company’s commitment
to planned activities and resource acquisition and use

## cost driver analysis

the process of investigating, quantifying,
and explaining the relationships of cost drivers and
their related costs

## engineered cost

a cost that has been found to bear an observable
and known relationship to a quantifiable activity base

## incremental cost

the cost of producing or selling an additional
contemplated quantity of output

## job order costing system

a system of product costing used
by an entity that provides limited quantities of products or
services unique to a customer’s needs; focus of recordkeeping
is on individual jobs

## material price variance

total actual cost of material purchased
minus (actual quantity of material  standard
price); it is the amount of money spent below (favorable)
or in excess (unfavorable) of the standard price for the
quantity of materials purchased; it can be calculated based
on the actual quantity of material purchased or the actual
quantity used

## material requisition form

a source document that indicates
the types and quantities of material to be placed into production
or used in performing a service; it causes materials
and its cost to be released from the Raw Material Inventory
warehouse and sent to Work in Process Inventory

## material mix variance

(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice);
it computes the monetary effect of substituting a nonstandard mix of material

## material yield variance

(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price);
it computes the difference between the
actual total quantity of input and the standard total quantity
allowed based on output and uses standard mix and
standard prices to determine variance

## non-negativity constraint

a restriction in a linear programming
problem stating that negative values for physical
quantities cannot exist in a solution

## objective

a desired quantifiable achievement for a period of time

## open purchase ordering

a process by which a single purchase
order that expires at a set or determinable future
date is prepared to authorize a supplier to provide a large
quantity of one or more specified items on an as-requested
basis by the customer

## process costing system

a method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products;
it accumulates costs by cost component in each production department and assigns costs to units using equivalent units of production

## sales mix

the relative combination of quantities of sales of the various products that make up the total sales of a company

## scarce resource

a resource that is essential to production
activity, but is available only in some limited quantity

## standard cost card

a document that summarizes the direct
material, direct labor, and overhead standard quantities and
prices needed to complete one unit of product

## usage

the quantity of inventory used or sold each time interval

## yield

the quantity of output that results from a specified input

## Call

a. An option to buy a certain quantity of a stock or commodity for a
specified price within a specified time. See Put.
b. A demand to submit bonds to the issuer for redemption before the maturity date.
c. A demand for payment of a debt.
d. A demand for payment due on stock bought on margin.

## Regression analysis

Statistical analysis techniques that quantify the
relationship between two or more variables. The intent is quantitative
prediction or forecasting, particularly using a small population to forecast the
behavior of a large population.

## Budget

A set of interlinked plans that quantitatively describe a company’s projected
future operations.

## Direct materials mix variance

The variance between the budgeted and actual mixes of
direct materials costs, both using the actual total quantity used. This variance isolates
the unit cost of each item, excluding all other variables.

## Process costing

A costing methodology that arrives at an individual product cost through the calculation of average costs for large quantities of identical products.

## Aggregate Demand

Total quantity of goods and services demanded.

## Aggregate Supply

Total quantity of goods and services supplied.

## Equation of Exchange

The quantity theory equation Mv = PQ.

## Import Quota

Restriction on the quantity of a foreign good that can be imported.

A firm that reacts to excess supply or excess demand by adjusting price rather than quantity. Contrast with quantity adjuster.

The quantity of imports that can be obtained for a unit of exports, measured by the ratio of an export price index to an import price index.

## LIFO Dipping

Reducing LIFO inventory quantities and, as a result, including older and lower
costs in the computation of cost of sales, resulting in an increase in earnings.

## LIFO Liquidation

A reduction in the physical quantity of an inventory that is accounted for
using the LIFO inventory method.

The purchase of items exceeding the quantity levels indicated
by current manufacturing requirements.

## Materials requisition

A document listing the quantities of specific parts to be withdrawn
from inventory.

## On-hand balance

The quantity of inventory currently in stock, based on inventory
records.

## Overrun

A manufactured or received quantity exceeding the planned amount.

## Packing slip

A document attached to a customer shipment, describing the contents
of the items shipped, as well as their part number and quantity.

## Pallet ticket

A document attached to a pallet, showing the description, part number,
and quantity of the item contained on the pallet.

## Parts requisition

An authorization to move a specific quantity of an item from
stock.

## Record accuracy

The variance between book and on-hand quantities, expressed
as a percentage.

## Split delivery

The practice of ordering large quantities on a single purchase order,
but separating the order into multiple smaller deliveries.

## Surplus inventory

Parts for which the on-hand quantity exceeds forecasted
requirements.

## Unplanned receipt

A stock receipt for which no order was placed or for which an

## Visual review system

Inventory reordering based on a visual inspection of on-hand
quantities.