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Definition of reinvestment assumption
an assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR
Automatic reinvestment of shareholder dividends in more shares of a
Economic environment in which the firm expects to reside over the life of the
An assumption of Markowitz portfolio construction that investors
The rate at which an investor assumes interest payments made on a debt security can be
The risk that proceeds received in the future will have to be reinvested at a lower potential
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
A plan by U.S. Treasury Secretary James Baker under which 15 principal middle-income debtor
A dividend paid in cash to a company's shareholders. The amount is normally based on
Financial planning conducted by a firm that encompasses preparation of both
A requirement that any missed preferred or preference stock dividends be paid
A pension plan in which the sponsor agrees to make specified dollar payments to
A pension plan in which the sponsor is responsible only for making specified
A formula to estimate the intrinsic value of a firm by figuring the
A dividend is a portion of a company's profit paid to common and preferred shareholders. A stock
With respect to a project financing, an arrangement under which the sponsors of a project
A group of shareholders who prefer that the firm follow a particular dividend policy. For
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.
A bond covenant that restricts in some way the firm's ability to pay cash dividends.
Dividend payout ratio
Percentage of earnings paid out as dividends.
Dividends per share
Amount of cash paid to shareholders expressed as dollars per share.
An established guide for the firm to determine the amount of money it will pay as dividends.
The fixed or floating rate paid on preferred stock based on par value.
A shareholders' rights to receive per-share dividends identical to those other shareholders receive.
Dividend yield (Funds)
Indicated yield represents return on a share of a mutual fund held over the past 12
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
Dividends per share
dividends paid for the past 12 months divided by the number of common shares
See: in-substance defeasance.
Exists when the costs and/or revenues of one project depend on those of another.
The real flow of cash that a firm could pay out forever in the absence of any change in
The extent to which the value of the firm will change because of an exchange rate change.
Cash flow plus change in present value.
Economic order quantity (EOQ)
The order quantity that minimizes total inventory costs.
Profits in excess of the competitive level.
In project financing, the risk that the project's output will not be salable at a price that will
For any entity, the difference between the market value of all its assets and the market
An agreement between two or more countries that allows the free movement of capital,
Employee stock ownership plan (ESOP)
A company contributes to a trust fund that buys stock on behalf of
Extra or special dividends
A dividend that is paid in addition to a firm's "regular" quarterly dividend.
This literally means "without dividend." The buyer of shares when they are quoted ex-dividend
The first day of trading when the seller, rather than the buyer, of a stock will be entitled to
A financial blueprint for the financial future of a firm.
The process of evaluating the investing and financing options available to a firm. It
Arrangement used to finance inventory. A finance company buys the inventory, which is then
Sale of some shares of stock to get cash that would be similar to receiving a cash dividend.
Total amount of dividends that would be paid on a share of stock over the next 12 months
Defined benefit pension plans that are guaranteed by life insurance products. Related: noninsured plans
Leading economic indicators
economic series that tend to rise or fall in advance of the rest of the economy.
Long-term financial plan
Financial plan covering two or more years of future operations.
Payment by a firm to its owners from capital rather than from earnings.
Materials requirement planning
Computer-based systems that plan backward from the production schedule
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Defined benefit pension plans that are not guaranteed by life insurance products. Related:
Overfunded pension plan
A pension plan that has a positive surplus (i.e., assets exceed liabilities).
A fund that is established for the payment of retirement benefits.
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
Plan for reorganization
A plan for reorganizing a firm during the Chapter 11 bankruptcy process.
The entities that establish pension plans, including private business entities acting for their
Planned amortization class CMO
1) One class of CMO that carries the most stable cash flows and the
Planned capital expenditure program
Capital expenditure program as outlined in the corporate financial plan.
Planned financing program
Program of short-term and long-term financing as outlined in the corporate
The length of time a model projects into the future.
Residual dividend approach
An approach that suggests that a firm pay dividends if and only if acceptable
Short-term financial plan
A financial plan that covers the coming fiscal year.
Signaling view (on dividend policy)
The argument that dividend changes are important signals to investors
Also referred to as an extra dividend. dividend that is unlikely to be repeated.
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend
Tax differential view ( of dividend policy)
The view that shareholders prefer capital gains over dividends,
Tax-deferred retirement plans
Employer-sponsored and other plans that allow contributions and earnings to
Traditional view (of dividend policy)
An argument that "within reason," investors prefer large dividends to
Underfunded pension plan
A pension plan that has a negative surplus (i.e., liabilities exceed assets).
Purchase of shares in which the buyer is entitled to the forthcoming dividend. Related: exdividend.
The ability to establish automatic periodic mutual fund redemptions and have proceeds
A payment a company makes to stockholders. Earnings before income tax. The profit a company made
The payment of after-tax profits to shareholders as their share of the profits of the business for an accounting period.
Economic Value Added (EVA)
Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
Planning, programming and budgeting system (PPBS)
A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres.
Income that a company receives in the form of dividends on stock in other companies that it holds.
Amounts paid to the owners of a company that represent a share of the income of the company.
dividend payout ratio
Computed by dividing cash dividends for the year
dividend yield ratio
Cash dividends paid by a business over the most
property, plant, and equipment
This label is generally used in financial
cafeteria plan a “menu” of fringe benefit options that include
cash or nontaxable benefits
dividend growth method
a method of computing the cost
the creation of multi-country markets
economic order quantity (EOQ)
an estimate of the number
economic production run (EPR)
an estimate of the number
when the incremental revenue from the sale of reworked defective units is greater than
economic value added (EVA)
a measure of the extent to which income exceeds the dollar cost of capital; calculated
Employee Stock Ownership Plan (ESOP)
a profit-sharing compensation program in which investments are made in
enterprise resource planning (ERP) system
a packaged software program that allows a company to
manufacturing resource planning (MRP II)
a fully integrated materials requirement planning system that involves
materials requirements planning (MRP)
a computerbased information system that simulates the ordering and
a formulation of the details of implementing
the process of creating the goals and objectives for
the process of developing a statement of
the process of determining the specific
A payment made to shareholders that is proportional to the number of shares
The period over which a company expects to be able to use an asset.
Manufacturing resource planning (MRP II)
An expansion of the material requirements planning concept, with additional computer-based capabilities in the areas of
Material requirements planning (MRP)
A computer-driven production methodology
A formal agreement between an entity and its employees, whereby the
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