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Definition of Revaluation
An increase in the foreign exchange value of a currency that is pegged to other currencies or gold.
In the balance of payments, counterpart items are analogous to unrequited transfers in the
Temporary investments of currently excess cash in short-term, high-quality
The parties to an interest rate swap.
on the other side of a trade or transaction.
The risk that the other party to an agreement will default. In an options contract, the risk
Revenues or gains and expenses or losses that are not expected to recur
Significant credits or charges resulting from transactions or events that, in the
Abramsâ€™ model for calculating DLOM based on the interaction of discounts from four economic components.
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in todayâ€™s dollars of cash flows that occur in different time periods.
Schedule of depreciation rates allowed for tax purposes.
The change in the value of a firm's foreign currency denominated accounts due to a
Earnings of a firm as reported on its income statement.
total liabilities exceed total assets. A firm with a negative net worth is insolvent on
The ease and quickness with which assets can be converted to cash.
Money owed to suppliers.
Money owed by customers.
Accounts receivable turnover
The ratio of net credit sales to average accounts receivable, a measure of how
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may be collateralized by mortgages and MBSs.
Adjusted present value (APV)
The net present value analysis of an asset if financed solely by equity
American Stock Exchange (AMEX)
The second-largest stock exchange in the United States. It trades
Asian currency units (ACUs)
Dollar deposits held in Singapore or other Asian centers.
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
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 age of accounts receivable
The weighted-average age of all of the firm's outstanding invoices.
Balance of payments
A statistical compilation formulated by a sovereign nation of all economic transactions
Balance of trade
Net flow of goods (exports minus imports) between countries.
Also called the statement of financial condition, it is a summary of the assets, liabilities, and
Balance sheet exposure
Balance sheet identity
total Assets = total Liabilities + total Stockholders' Equity
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
In a balance of payments, the basic balance is the net balance of the combination of the current
Bill of exchange
General term for a document demanding payment.
A currency that is not freely convertible to other currencies due to exchange controls.
With respect to convertible bonds, the value the security would have if it were not convertible
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
The Treasury and federal agencies are moving to a book-entry system in which securities are not represented by engraved pieces of paper but are maintained in computerized records at the
Net result of public and private international investment and lending activities.
decision allocation of invested funds between risk-free assets versus the risky portfolio.
An amount the insurance company will pay if the policyholder ends a whole life
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
Clearing House Automated Payments System (CHAPS)
A computerized clearing system for sterling funds
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
Common stock/other equity
value of outstanding common shares at par, plus accumulated retained
An excess balance that is left in a bank to provide indirect compensation for loans
A single centralized account into which funds collected at regional locations
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
Also called parity value, the value of a convertible security if it is converted immediately.
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Convertible preferred stock
Preferred stock that can be converted into common stock at the option of the holder.
A bond's interest payments.
Cumulative preferred stock
Preferred stock whose dividends accrue, should the issuer not make timely
Cumulative Translation Adjustment (CTA) account
An entry in a translated balance sheet in which gains
Taking advantage of divergences in exchange rates in different money markets by
The value of a portfolio of specific amounts of individual currencies, used as the basis for
A financial future contract for the delivery of a specified foreign currency.
An option to buy or sell a foreign currency.
Related: exchange rate risk
Currency risk sharing
An agreement by the parties to a transaction to share the currency risk associated with
Asset allocation in which the investor chooses among investments denominated in
An agreement to swap a series of specified payment obligations denominated in one currency
Net flow of goods, services, and unilateral transactions (gifts) between countries.
value of cash, accounts receivable, inventories, marketable securities and other assets that
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently
Amount owed for salaries, interest, accounts payable and other debts due within 1 year.
In Treasury securities, the most recently auctioned issue. Trading is more active in current
current time to maturity on an outstanding debt instrument.
Current rate method
Under this currency translation method, all foreign currency balance-sheet and income
Indicator of short-term debt paying ability. Determined by dividing current assets by current
For bonds or notes, the coupon rate divided by the market price of the bond.
Related: Benchmark issues
Devaluation A decrease in the spot price of the currency
accounts over which an individual or organization, other than the person in whose
Method of accelerated depreciation.
A cross-border lease in which the disparate rules of the lessor's and lessee's countries let
Agreement between two countries that taxes paid abroad can be offset against
Eurobonds that pay coupon interest in one currency but pay the principal in a different
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Electronic depository transfers
The transfer of funds between bank accounts through the Automated
A short-term fixed rate time deposit denominated in a currency other than the local
The money market for borrowing and lending currencies that are held in the form of
European Currency Unit (ECU)
An index of foreign exchange consisting of about 10 European currencies,
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
Any excess of actual reserves above required reserves.
The marketplace in which shares, options and futures on stocks, bonds, commodities and indices
A nickname for the New York stock exchange. Also known as the Big Board. More than
Governmental restrictions on the purchase of foreign currencies by domestic citizens or
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
The price of one country's currency expressed in another country's currency.
Exchange Rate Mechanism (ERM)
The methodology by which members of the EMS maintain their
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Security that grants the security holder the right to exchange the security for the
The amount of advantage over a current market transaction provided by an in-the-money
The weighted average of a probability distribution.
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
Extraordinary positive value
A positive net present value.
See: Par value.
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