|Roth IRA. An IRA account whose earnings are not taxable at all under certain|
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Definition of Roth IRA. An IRA account whose earnings are not taxable at all under certain
Roth IRA. An IRA account whose earnings are not taxable at all under certain
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.
The ratio of net credit sales to average accounts receivable, a measure of how
The discount rate that reflects only the business risks of a project and abstracts from the
Requirement that none of an order be executed unless all of it can be executed at the specified price.
Total costs, explicit and implicit.
An arrangement whereby a security issue is canceled if the underwriter is unable
The decision regarding how an institution's funds should be distributed among the
The average project earnings after taxes and depreciation divided by the average
The weighted-average age of all of the firm's outstanding invoices.
Any large principal payment due at maturity for a bond or loan with or without a a sinking
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
An option that gives the right to buy the underlying futures contract.
Call an option
To exercise a call option.
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An option contract that gives its holder the right (but not the obligation) to purchase a specified
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
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 that would be accepted in lieu of a chance at a possible higher, but
Communication barrier between financiers (investment bankers) and traders. This barrier is
An undertaking either (1) to complete a project such that it meets certain specified
A single centralized account into which funds collected at regional locations
Corporate taxable equivalent
Rate of return required on a par bond to produce the same after-tax yield to
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
Cumulative Translation Adjustment (CTA) account
An entry in a translated balance sheet in which gains
Net flow of goods, services, and unilateral transactions (gifts) between countries.
A provision that prohibits the company from calling the bond before a certain date. During this
accounts over which an individual or organization, other than the person in whose
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Net income for the company during the period.
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
Earnings per share (EPS)
EPS, as it is called, is a company's profit divided by its number of outstanding
Earnings retention ratio
Positive or negative differences from the consensus forecast of earnings by institutions
The ratio of earnings per share after allowing for tax and interest payments on fixed interest
The real flow of cash that a firm could pay out forever in the absence of any change in
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Equivalent taxable yield
The yield that must be offered on a taxable bond issue to give the same after-tax
The time when the option contract ceases to exist (expires).
An expiration cycle relates to the dates on which options on a particular security expire. A
The last day (in the case of American-style) or the only day (in the case of European-style)
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
Firm commitment underwriting
An undewriting in which an investment banking firm commits to buy the
With CMOs, the start of the cash flow cycle for the cash flow window.
Fully diluted earnings per shares
earnings per share expressed as if all outstanding convertible securities
Generally Accepted Accounting Principals (GAAP)
A technical accounting term that encompasses the
A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal in
The right of the homeowner to prepay, or call, the mortgage at any time.
The fact that future inflation rates are not known. It is a possible contributing factor to
The sale of an asset in exchange for a specified series of payments (the installments).
Internally efficient market
Operationally efficient market.
In the mortgage pipeline, risk that occurs when the originator commits loan terms to the
Special accounts where you can save and invest, and the taxes are deferred until money
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
An agreement between two or more firms to share risk and financing responsibility in
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
Margin account (Stocks)
A leverageable account in which stocks can be purchased for a combination of
A demand for additional funds because of adverse price movement. Maintenance margin
Money market demand account
An account that pays interest based on short-term interest rates.
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project
Non-parallel shift in the yield curve
A shift in the yield curve in which yields do not change by the same
An account carried by one futures commission merchant with another futures commission
Arrangement whereby sales are made with no formal debt contract. The buyer signs a receipt,
Operationally efficient market
Also called an internally efficient market, one in which investors can obtain
A process whereby two companies in different countries borrow each other's currency for a
Parallel shift in the yield curve
A shift in the yield curve in which the change in the yield on all maturities is
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
Price/earnings ratio (PE ratio)
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current
Provisional call feature
A feature in a convertible issue that allows the issuer to call the issue during the noncall
Method of accounting for a merger in which the acquirer is treated as having purchased
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
An upward movement of prices. Opposite of reaction.
Regulatory accounting procedures
accounting principals required by the FHLB that allow S&Ls to elect
accounting earnings that are retained by the firm for reinvestment in its operations;
The risk of falling short of any investment target.
The tendency of small firms (in terms of total market capitalization) to outperform the
Small issues exemption
Securities issues that involve less than $1.5 million are not required to file a
Statement of Financial Accounting Standards No. 8
This is a currency translation standard previously in
Statement of Financial Accounting Standards No. 52
This is the currency translation standard currently
account in which the bank takes all of the excess available funds at the close of each business
Tactical Asset Allocation (TAA)
An asset allocation strategy that allows active departures from the normal
A merger or consolidation that is not a tax-fee acquisition. The selling shareholders are
Gross income less a set of deductions.
Any transaction that is not tax-free to the parties involved, such as a taxable acquisition.
Time until expiration
The time remaining until a financial contract expires. Also called time to maturity.
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