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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
Related Terms:Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' All or noneRequirement that none of an order be executed unless all of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the underwriter is unable 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 At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the AutocorrelationThe correlation of a variable with itself over successive time intervals. Beta coefficientA measurement of the extent to which the returns on a given stock move with stock market. Binomial modelA method of pricing options or other equity derivatives in Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black-Scholes modelThe first complete mathematical model for pricing Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance Capital asset pricing model (CAPM)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 correlationa measure of dispersion that indicates the degree of relative association existing between two variables Coefficient of determinationA measure of the goodness of fit of the relationship between the dependent and coefficient of determinationa measure of dispersion that coefficient of variationa measure of risk used when the standard deviations for multiple projects are approximately Common stock/other equityValue of outstanding common shares at par, plus accumulated retained ComponentRaw materials or subassemblies used to make either finished goods constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. Constant-growth modelAlso called the Gordon-Shapiro model, an application of the dividend discount Continuous random variableA random value that can take any fractional value within specified ranges, as CorrelationSee: correlation coefficient. CorrelationThe simultaneous change in value of two random numeric variables. correlation analysisan analytical technique that uses statistical Correlation coefficientA standardized statistical measure of the dependence of two random variables, Correlation CoefficientA measure of the tendency of two variables to change values Correlation coefficientA statistic in which the covariance is scaled to a decision variablean unknown item for which a linear programming DependentAcceptance of a capital budgeting project contingent on the acceptance of another project. dependent variablean unknown variable that is to be predicted Deterministic modelsLiability-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 variableA random variable that can take only a certain specified set of discrete possible dividend discount modelComputation 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 modelA model wherein dividends are assumed to be at a constant rate in perpetuity. Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Dow Jones Industrial AverageIndex of the investment performance of a portfolio of 30 “blue-chip” stocks. economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. Endogenous variableA value determined within the context of a model. European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies Exogenous variableA variable whose value is determined outside the model in which it is used. Also called 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 Fiat MoneyFiat 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. First-pass regressionA time series regression to estimate the betas of securities portfolios. Garmen-Kohlhagen option pricing modelA widely used model for pricing foreign currency options. Gordon modelpresent value of a perpetuity with growth. High-Powered MoneySee money base. Hot moneyMoney that moves across country borders in response to interest rate differences and that moves In-the-moneyA put option that has a strike price higher than the underlying futures price, or a call option Independent BrokerThis 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. Independent projectA project whose acceptance or rejection is independent of the acceptance or rejection of independent projectan investment project that has no specific Independent ProjectsA situation where an increase (or decrease) in the benefits of one independent variablea variable that, when changed, will Index modelA 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 input-output coefficienta number (prefaced as a multiplier International Monetary FundAn 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 modela model that involves key variablea critical factor that management believes will Law of one priceAn economic rule stating that a given security must have the same price regardless of the law of one priceTheory that prices of goods in all countries should be equal when translated to a common currency. least squares regression analysisa 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 Linear programmingTechnique for finding the maximum value of some equation subject to stated linear constraints. linear programminga 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 Linear regressionA statistical technique for fitting a straight line to a set of data points. Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. one of the log size modelAbrams’ model to calculate discount rates as a function of the logarithm of the value of the firm. Market modelThis relationship is sometimes called the single-index model. The market model says that the Markowitz modelA model for selecting an optimum investment portfolio, method of least squaressee least Squares regression analysis ModelingThe process of creating a depiction of reality, such as a graph, picture, or mathematical MonetarismSchool 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. Monetarist RuleProposal 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. Monetary AggregateAny measure of the economy's money supply. Monetary BaseSee money base. Monetary goldGold held by governmental authorities as a financial asset. Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Monetary policyActions taken by the Board of Governors of the Federal Reserve System to influence the Monetary PolicyActions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity. Monetizing the DebtSee printing money. MoneyAny item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange. Money baseComposed of currency and coins outside the banking system plus liabilities to the deposit money banks. Money BaseCash plus deposits of the commercial banks with the central bank. Money center banksBanks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds. Money LaunderingThis 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. Money managementRelated: Investment management. Money managerRelated: Investment manager. Money marketMoney markets are for borrowing and lending money for three years or less. The securities in Money MarketA market that specializes in trading short-term, low-risk, very liquid money marketMarket for short-term financial assets.
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