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Definition of Residuals
1) Parts of stock returns not explained by the explanatory variable (the market-index return). They
Mutual funds that do not charge an upfront or back-end commission, but instead take out up to
Part of the return that is not due to systematic influences (market wide influences). In
Goods may be returned to the seller by the purchaser without restrictions.
The period of time for which financial statements are produced – see also financial year.
A method of investment appraisal that measures
the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow
A merger or consolidation in which an acquirer purchases the acquiree's stock.
Publicly traded issues that may be collateralized by mortgages and MBSs.
cash flow provided by operating
A bond covenant that specifies certain actions the firm must take.
Money after-tax rate of return minus the inflation rate.
hours, machine hours or volume of production
The second-largest stock exchange in the United States. It trades
For investment companies, the management fee and "other expenses,"
The fund return, for any 12-month period, including changes in unit value and the reinvestment of distributions, but not taking into account sales, redemption, distribution or other optional charges or income taxes payable by any unitholder that would reduce returns.
Annualized holding period return
The annual rate of return that when compounded t times, would have
The time between each payment under an annuity.
Arithmetic average (mean) rate of return
Arithmetic mean return.
Arithmetic mean return
An average of the subperiod returns, calculated by summing the subperiod returns
Also known as a trading index (TRIN)= (number of advancing issues)/ (number of declining
The amount of total risk that can be eliminated by diversification by
markets in which the prevailing price is determined through the free interaction of
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
Average accounting return
The average project earnings after taxes and depreciation divided by the average
Average (across-day) measures
An estimation of price that uses the average or representative price of a
Average Amortization Period
The average useful life of a company's collective amortizable asset base.
Average Collection Period
Average number of days necessary to receive cash for the sale of
Average collection period, or days' receivables
The ratio of accounts receivables to sales, or the total
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
Balanced mutual fund
This is a fund that buys common stock, preferred stock and bonds. The same as a
Any market in which prices are in a declining trend.
A market in which stock or bond prices are generally
A prolonged period of falling stock market prices.
Beta equation (Mutual Funds)
The beta of a fund is determined as follows:
Beta equation (Stocks)
The beta of a stock is determined as follows:
Beta (Mutual Funds)
The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means
An illegal market.
Designing a portfolio so that its performance will match the performance of some bond index.
Amounts owed by the company that have been formalized by a legal document called a bond.
book rate of return
Accounting income divided by book value.
Book yield is the investment income earned in a year on a portfolio of assets purchased over a number of years and at different interest rates, divided by the book value of those assets.
BOOK VALUE OF COMMON STOCK
The theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals:
bonds issued by emerging countries under a debt reduction plan.
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
A market in which stock or bond prices are generally rising.
A prolonged period of rising stock market prices.
The foreign market in the United Kingdom.
Buying the index
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the
Canada Savings Bonds
A bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value.
Purchase by foreigners of our assets (capital inflows) or our purchase of foreign assets (capital outflows).
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a stock Exchange.
A market that specializes in trading long-term, relatively high risk
The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded.
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
markets for long-term financing.
Ownership shares issued by a business corporation. A business
The total amount of plant, equipment, and other physical capital.
CARs (cumulative abnormal returns)
a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock.
The value of assets that can be converted into cash immediately, as reported by a company. Usually
Amounts held in currency and coin (commonly referred to as petty cash) and amounts on deposit in financial institutions.
Currency, coin, and funds on deposit that are available for immediate withdrawal without
A method of accounting in which profit is calculated as the difference between income
Cash and carry
Purchase of a security and simultaneous sale of a future, with the balance being financed
CASH AND CASH EQUIVALENTS
The balance in a company’s checking account(s) plus short-term or temporary investments (sometimes called “marketable securities”), which are highly liquid.
Cash and equivalents
The value of assets that can be converted into cash immediately, as reported by a
A forecasted summary of a firm's expected cash inflows and cash outflows as well as its
cash burn rate
A relatively recent term that refers to how fast a business
The actual physical commodity, as distinguished from a futures contract.
Cash conversion cycle
The length of time between a firm's purchase of inventory and the receipt of cash
cash conversion cycle
period between firm’s payment for materials
The amount of cash expended.
A company that pays out all earnings per share to stockholders as dividends. Or, a company or
Business that produces a lot of cash but few growth prospects.
In general, the time between cash disbursement and cash collection. In net working capital
The length of time between a purchase of materials and collection of accounts receivable generated by the sale of the products made from the materials.
Cash deficiency agreement
An agreement to invest cash in a project to the extent required to cover any cash
The provision of some futures contracts that requires not delivery of underlying assets but
An incentive offered to purchasers of a firm's product for payment within a specified time
A dividend paid in cash to a company's shareholders. The amount is normally based on
Payment of cash by the firm to its shareholders.
A short-term security that is sufficiently liquid that it may be considered the financial
Temporary investments of currently excess cash in short-term, high-quality
Highly liquid, fixed-income investments with original maturities of three months or less.
Instruments or investments of such high liquidity and safety that They are virtually equal to cash.
In investments, it represents earnings before depreciation , amortization and non-cash charges.
An obvious but at the same time elusive term that refers to cash
the receipt or disbursement of cash; when related
cash received and paid over time.
In investments, NET INCOME plus DEPRECIATION and other noncash charges. In this sense, it is synonymous with cash EARNINGS. Investors focus on cash flow from operations because of their concern with a firm's ability to pay dividends.
Cash flow after interest and taxes
Net income plus depreciation.
Cash-flow break-even point
The point below which the firm will need either to obtain additional financing
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash Flow Forecast
An estimate of the timing and amount of a company's inflows and outflows of money measured over a specific period of time typically monthly for one to two years then annually for an additional one to three years.
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
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