|R squared (R^2)|
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Definition of R squared (R^2)
R squared (R^2)
Square of the correlation coefficient proportion of the variability explained by the linear
R squared (R^2)
Square of the correlation coefficientthe proportion of the variability in one series that can be
Cumulative gains or losses reported in shareholders'
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
Yield curve option-pricing models.
A model for determining the required rate of return on an asset.
A model, such as the Capital Asset Pricing model (CAPM), that determines the required
An option is at-the-money if the strike price of the option is equal to the market price of the
The correlation of a variable with itself over successive time intervals.
A measurement of the extent to which the returns on a given stock move with stock market.
A method of pricing options or other equity derivatives in
An option pricing model in which the underlying asset can take on only two
The first complete mathematical model for pricing
A model for pricing call options based on arbitrage arguments that uses
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An economic theory that describes the relationship between risk and
Capital Asset Pricing Model (CAPM)
A model for estimating equilibrium rates of return and values of
capital asset pricing model (CAPM)
Theory of the relationship between risk and return which states that the expected risk
coefficient of correlation
a measure of dispersion that indicates the degree of relative association existing between two variables
Coefficient of determination
A measure of the goodness of fit of the relationship between the dependent and
coefficient of determination
a measure of dispersion that
coefficient of variation
a measure of risk used when the standard deviations for multiple projects are approximately
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Raw materials or subassemblies used to make either finished goods
constant-growth dividend discount model
Version of the dividend discount model in which dividends grow at a constant rate.
Also called the Gordon-Shapiro model, an application of the dividend discount
Continuous random variable
A random value that can take any fractional value within specified ranges, as
See: correlation coefficient.
The simultaneous change in value of two random numeric variables.
an analytical technique that uses statistical
A standardized statistical measure of the dependence of two random variables,
A measure of the tendency of two variables to change values
A statistic in which the covariance is scaled to a
an unknown item for which a linear programming
Acceptance of a capital budgeting project contingent on the acceptance of another project.
an unknown variable that is to be predicted
Liability-matching models that assume that the liability payments and the asset cash
Discounted dividend model (DDM)
A formula to estimate the intrinsic value of a firm by figuring the
Discrete random variable
A random variable that can take only a certain specified set of discrete possible
dividend discount model
Computation of today’s stock price which states that share value equals the present value of all expected future dividends.
Dividend discount model (DDM)
A model for valuing the common stock of a company, based on the
Dividend growth model
A model wherein dividends are assumed to be at a constant rate in perpetuity.
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Dow Jones Industrial Average
Index of the investment performance of a portfolio of 30 “blue-chip” stocks.
economic components model
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
A value determined within the context of a model.
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
A variable whose value is determined outside the model in which it is used. Also called
Extrapolative statistical models
models that apply a formula to historical data and project results for a
A way of decomposing the factors that influence a security's rate of return into common and
Fiat Money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category.
A time series regression to estimate the betas of securities portfolios.
Garmen-Kohlhagen option pricing model
A widely used model for pricing foreign currency options.
present value of a perpetuity with growth.
See money base.
Money that moves across country borders in response to interest rate differences and that moves
A put option that has a strike price higher than the underlying futures price, or a call option
This is a provincial government licensed independent businessperson who usually represents five or more life insurance companies in a sales and service capacity and who is paid a commission by those life insurance companies for sales and service of life insurance products. We for example, have been in business for 12 years and regularly place new business with over twenty different life insurance companies.
A project whose acceptance or rejection is independent of the acceptance or rejection of
an investment project that has no specific
A situation where an increase (or decrease) in the benefits of one
a variable that, when changed, will
A model of stock returns using a market index such as the S&P 500 to represent common or
Information Coefficient (IC)
The correlation between predicted and actual stock returns, sometimes used to
a number (prefaced as a multiplier
International Monetary Fund
An organization founded in 1944 to oversee exchange arrangements of
International Monetary Fund (IMF)
Organization originally established to manage the postwar fixed exchange rate system.
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
Internet business model
a model that involves
a critical factor that management believes will
Law of one price
An economic rule stating that a given security must have the same price regardless of the
law of one price
Theory that prices of goods in all countries should be equal when translated to a common currency.
least squares regression analysis
a statistical technique that investigates the association between dependent and independent variables; it determines the line of "best fit" for a set of observations by minimizing the sum of the Squares
Technique for finding the maximum value of some equation subject to stated linear constraints.
a method of mathematical programming used to solve a problem that involves an objective function and multiple limiting factors or constraints long-term variable cost a cost that was traditionally viewed as a fixed cost
A statistical technique for fitting a straight line to a set of data points.
Log-linear least-squares method
A statistical technique for fitting a curve to a set of data points. one of the
log size model
Abrams’ model to calculate discount rates as a function of the logarithm of the value of the firm.
This relationship is sometimes called the single-index model. The market model says that the
A model for selecting an optimum investment portfolio,
method of least squares
see least Squares regression analysis
The process of creating a depiction of reality, such as a graph, picture, or mathematical
School of economic thought stressing the importance of the money supply in the economy. Adherents believe that the economy is inherently stable, so that policy is best undertaken through adoption of a policy rule.
Proposal that the money supply be increased at a steady rate equal approximately to the real rate of growth of the economy. Contrast with discretionary policy.
Any measure of the economy's money supply.
See money base.
Gold held by governmental authorities as a financial asset.
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Actions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity.
Monetizing the Debt
See printing money.
Any item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange.
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Cash plus deposits of the commercial banks with the central bank.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
This is the process by which "dirty money" generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to their illegal origins.
Related: Investment management.
Related: Investment manager.
Money markets are for borrowing and lending money for three years or less. The securities in
A market that specializes in trading short-term, low-risk, very liquid
Market for short-term financial assets.
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