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Definition of Restrictive covenants
Provisions that place constraints on the operations of borrowers, such as restrictions on
Provisions in a bond indenture or preferred stock agreement that require the bond or preferred
Promise usually made in a contract whereby a party to the contract promises to do or not to do specified things.
A promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism.
Express stipulations included in loan agreements that are designed to monitor
Loan covenants designed to limit a corporate borrower's behavior
Loan covenants expressing minimum and maximum financial measures
capital rationing that under certain circumstances can be violated or even viewed
The option of terminating an investment earlier than originally planned.
A bond on which interest accrues, but is not paid to the investor during the time of accrual.
A merger or consolidation in which an acquirer purchases the selling firm's assets.
A merger or consolidation in which an acquirer purchases the acquiree's stock.
This doctrine says that a nation is sovereign within its own borders and its domestic
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par.
Any payment received from investors for stock that exceeds
Difference between issue price and par value of stock. Also called capital surplus.
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may be collateralized by mortgages and MBSs.
Adjusted Cash Flow Provided by Continuing Operations
Cash flow provided by operating
A bond covenant that specifies certain actions the firm must take.
Aggressive Capitalization Policies
capitalizing and reporting as assets significant portions of
Aggressive Cost Capitalization
Cost capitalization that stretches the flexibility within generally
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
Allowance for doubtful accounts
A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
Allowance for Doubtful Accounts
An estimate of the uncollectible portion of accounts receivable
American Stock Exchange (AMEX)
The second-largest stock exchange in the United States. It trades
A clause in a shareholders agreement preventing a company from issuing additional shares, without allowing the current shareholders the opportunity to participate in the offering to avoid dilution of their percentage ownership.
Specific sections and rules of the 1933 Act and 1934 Act that are
A firm's productive resources.
Anything of value that a company owns.
things that the business owns.
Items owned by the company or expenses that have been paid for but have not been used up.
A common element of a financial plan that describes projected capital spending and the
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
authorized share capital
Maximum number of shares that the company is permitted to issue, as specified in the firm’s articles of incorporation.
Automatic Benefits Payment
Automatic payment of moneys derived from a benefit.
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
Balance of payments
A statistical compilation formulated by a sovereign nation of all economic transactions
Balance of Payments
The difference between the demand for and supply of a country's currency on the foreign exchange market.
Balance of Payments Accounts
A statement of a country's transactions with other countries.
bonds that are not registered on the books of the issuer. such bonds are held in physical form by
Beta equation (Stocks)
The beta of a stock is determined as follows:
bonds are debt and are issued for a period of more than one year. The U.S. government, local
A long-term, interest-bearing promissory note that companies may use to borrow money for periods of time such as five, ten, or twenty years.
A long-term debt instrument in which the issuer (borrower) is
Security that obligates the issuer to make specified payments
A financial asset taking the form of a Promise by a borrower to repay a specified amount (the bond's face value) on a maturity date and to make fixed periodic interest payments.
usually a fixed interest security under which the issuer contracts to pay the lender a fixed principal amount at a stated date in the future, and a series of interest payments, either semi-annually or annually. Interest payments may vary through the life of bond.
A debt security issued by a government or company. You receive regular interest payments at specified rates while you hold the bond and you receive the face value when it matures. Short-term bonds mature in less than five years; medium-term bonds mature in six to ten years; and long-term bonds mature in eleven years or greater.
fixed interest security issued by a corporation or government, having a specific maturity date.
A contract for privately placed debt.
A contractual provision in a bond indenture. A positive covenant requires certain actions, and
The method used for computing the bond-equivalent yield.
Bond equivalent yield
bond yield calculated on an annual percentage rate method. Differs from annual
The annualized yield to maturity computed by doubling the semiannual yield.
Bond Equivalent Yield
bond yield calculated on an annual percentage rate method
The contract that sets forth the Promises of a corporate bond issuer and the rights of
Designing a portfolio so that its performance will match the performance of some bond index.
A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face
With respect to convertible bonds, the value the security would have if it were not convertible
A system that monitors and evaluates the performance of a fixed-income portfolio , as well as the
Amounts owed by the company that have been formalized by a legal document called a bond.
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.
Break-even lease payment
The lease payment at which a party to a prospective lease is indifferent between
Break-even payment rate
The prepayment rate of a MBS coupon that will produce the same CFY as that of
Bretton Woods Agreement
An agreement signed by the original United Nations members in 1944 that
Builder buydown loan
A mortgage loan on newly developed property that the builder subsidizes during the
bond whose principal repayment is linked to the price of another security. The bonds are
Foreign bond issue made in London.
The foreign market in the United Kingdom.
A guaranteed investment contract purchased with a single (one-shot) premium. Related:
This is an agreement entered into by the owners of a business to define the conditions under which the interests of each shareholder will be bought and sold. The agreement sets the value of each shareholders interest and stipulates what happens when one of the owners wishes to dispose of his/her interest during his/her lifetime as well as disposal of interest upon death or disability. Life insurance, critical illness coverage and disability insurance are major considerations to help fund this type of agreement.
Mortgages in which monthly payments consist of principal and interest, with portions of these
A bond that allows the issuer to buy back the bond at a
bond that may be repurchased by the issuer before maturity at specified call price.
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.
Money invested in a firm.
The money, raised by selling stock or bonds or taking out loans, that you use to start, operate, and grow a business.
The shareholders’ investment in the business; the difference between the assets and liabilities
A very broad term rooted in economic theory and referring to
The investment by a company’s owners in a business, plus the impact of any
a) Physical capital: buildings, equipment, and any materials used to produce other goods and services in the future rather than being consumed today.
Expenditures Purchases of productive long-lived assets, in particular, items of property,
Any asset or stock of assets, financial or physical, capable of producing income.
Net result of public and private international investment and lending activities.
That part of the balance of payments accounts that records demands for and supplies of a currency arising from purchases or sales of assets.
decision Allocation of invested funds between risk-free assets versus the risky portfolio.
an asset used to generate revenues or cost savings
A fixed asset, something that is expected to have long-term usage within
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
A firm's set of planned capital expenditures.
management’s plan for investments in longterm
List of planned investment projects.
The process of choosing the firm's long-term capital assets.
Refers generally to analysis procedures for ranking
The process of ranking and selecting investment alternatives and
a process of evaluating an entity’s proposed
The series of steps one follows when justifying the decision to purchase
capital budgeting decision
Decision as to which real assets the firm should acquire.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
The total of debt and equity, i.e. the total funds in the business.
Amount used during a particular period to acquire or improve long-term assets such as
Refers to investments by a business in long-term
The transfer of capital abroad in response to fears of political risk.
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