Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
Main Page: financial, payroll, money, finance, investment, tax advisor, business, inventory,
Definition of Scale enhancing
Describes a project that is in the same risk class as the whole firm.
The decrease in the marginal cost of production as a plant's scale of operations increases.
A bank that offers to pay different rates of interest on CDs of varying rates is said to "post a scale."
When a trader or investor gradually takes a position in a security or market over time.
A scale in which equal proportions are shown as equal distances so that, for example, a doubling from 2 to 4 is represented by one inch, as is a doubling from 4 to 8.
See logarithmic scale.
Scope economies exist whenever the same investment can support multiple profitable
the combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor.
Schedule of depreciation rates allowed for tax purposes.
Money owed to suppliers.
The accumulated coupon interest earned but not yet paid to the seller of a bond by the
A bond covenant that specifies certain actions the firm must take.
A form of organization commonly used by foreign banks to enter the U.S. market. An agency
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Total costs, explicit and implicit.
Amortizing interest rate swap
Swap in which the principal or national amount rises (falls) as interest rates
Categories of assets, such as stocks, bonds, real estate and foreign securities.
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
BAN (Bank anticipation notes)
Notes issued by states and municipalities to obtain interim financing for
Bank collection float
The time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank.
Bank discount basis
A convention used for quoting bids and offers for treasury bills in terms of annualized
A draft addressed to a bank.
Line of credit granted by a bank to a customer.
A computer message system linking major banks. It is used not for effecting payments, but as a
A short-term credit investment created by a non-financial firm and guaranteed by a
Bank for International Settlements (BIS)
An international bank headquartered in Basel, Switzerland, which
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
The risk that a firm will be unable to meet its debt obligations. also referred to as default or insolvency risk.
The argument that expected bankruptcy costs preclude firms from being financed entirely
Base interest rate
Related: Benchmark interest rate.
The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for
Benchmark interest rate
also called the base interest rate, it is the minimum interest rate investors will
The requirement that a claim holder voting against a plan of reorganization
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
The risk that the cash flow of an issuer will be impaired because of adverse economic
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
interest that is not immediately expensed, but rather is considered as an asset and is then
costs that increase with increases in the level of investment in current assets.
Cash flow after interest and taxes
Net income plus depreciation.
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
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
Demand for payment.
Short-term unsecured promissory notes issued by a corporation. The maturity of
The risk that a foreign debtor will be unable to pay its debts because of business events,
Related: Unsystematic risk
The risk that a project will not be brought into operation successfully.
interest paid on previously earned interest as well as on the principal.
he written statement that follows any "trade" in the securities markets. Confirmation is issued
A merchant banking subsidiary set up by several banks that may or may not be of the
Contingent deferred sales charge (CDSC)
The formal name for the load of a back-end load fund.
A project with a negative initial cash flow (cash outflow), which is expected to be
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
Cost of capital
The required return for a capital budgeting project.
Cost of carry
Related: Net financing cost
Cost of funds
interest rate associated with borrowing money.
Cost of lease financing
A lease's internal rate of return.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
The net present value of an investment divided by the investment's initial cost. also called
The risk that the other party to an agreement will default. In an options contract, the risk
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
A bond's interest payments.
Covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates
Refers to the volatility of returns on international investments caused by events associated
Related: Exchange rate risk
Currency risk sharing
An agreement by the parties to a transaction to share the currency risk associated with
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Date of payment
Date dividend checks are mailed.
also referred to as credit risk (as gauged by Commercial rating companies), the risk that an
Delivery versus payment
A transaction in which the buyer's payment for securities is due at the time of
Devaluation A decrease in the spot price of the currency
The practice of reporting conflicting or markedly different information in official
Swap between two LIBO rates of interest, e.g. yen LIBOR for dollar LIBOR. payments are
Commercial paper sold directly by the issuer to investors.
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an
Related: unsystematic risk.
Dividend payout ratio
Percentage of earnings paid out as dividends.
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
In project financing, the risk that the project's output will not be salable at a price that will
Effective annual interest rate
An annual measure of the time value of money that fully reflects the effects of
Eligible bankers' acceptances
In the BA market, an acceptance may be referred to as eligible because it is
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
Equilibrium rate of interest
The interest rate that clears the market. also called the market-clearing interest
Equivalent annual cost
The equivalent cost per year of owning an asset over its entire life.
CDs issued by a U.S. bank branch or foreign bank located outside the U.S. Almost all Euro CDs
A bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans.
Short-term notes with maturities up to 360 days that are issued by companies in
The risk that the ability of an issuer to make interest and principal payments will change because
Ex post return
Related: Holding period return
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
The difference between the execution price of a security and the price that would have
Export-Import Bank (Ex-Im Bank)
The U.S. federal government agency that extends trade credits to U.S.
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Feasible target payout ratios
payout ratios that are consistent with the availability of excess funds to make
Federal Financing Bank
A federal institution that lends to a wide array of federal credit agencies funds it
Federal Home Loan Banks
The institutions that regulate and lend to savings and loan associations. The
FHA prepayment experience
The percentage of loans in a pool of mortgages outstanding at the origination
Financial distress costs
Legal and administrative costs of liquidation or reorganization. also includes
Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.