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Definition of scattergraph
a graph that plots all known activity observations
The sum of cash, accounts receivable, and short-term marketable
a repetitive action performed in fulfillment of business functions
the process of detailing the various repetitive actions that are performed in making a product or
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
A method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers.
A relatively new method advocated for the
a process using multiple cost drivers to predict and allocate costs to products and services;
A cost allocation system that compiles costs and assigns
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
a segment of the production or service
a measure of the demands on activities and,
The incremental costs of having an agent make decisions for a principal.
The discount rate that reflects only the business risks of a project and abstracts from the
Total costs, explicit and implicit.
All or none
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
assign based on the use of a cost driver, a cost predictor,
the systematic assignment of an amount to a recipient
The process of storing costs in one account and shifting them to other
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
Allowance for bad debts
An offset to the accounts receivable balance, against which
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
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
approximated net realizable value at split-off allocation
a method of allocating joint cost to joint products using a
Asset activity ratios
Ratios that measure how effectively the firm is managing its assets.
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
costs that are identifiable with and able to be influenced by decisions made at the business
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 activity that is necessary for the operation of the business but for which a customer would not want to pay
An option that gives the right to buy the underlying futures contract.
a. An option to buy a certain quantity of a stock or commodity for a
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
A contract that gives the holder the right to buy an asset for a
Right to buy an asset at a specified exercise price on or before the exercise date.
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
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.
decision allocation of invested funds between risk-free assets versus the risky portfolio.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
capitalization of costs
When a cost is recorded originally as an increase
costs that increase with increases in the level of investment in current assets.
costs of maintaining current assets, including opportunity cost of capital.
Cash Flow Provided or Used from Financing Activities
Cash receipts and payments involving
Cash Flow Provided or Used from Investing Activities
Cash receipts and payments involving
Communication barrier between financiers (investment bankers) and traders. This barrier is
Continuous random variable
A random value that can take any fractional value within specified ranges, as
the assignment, using some reasonable basis,
Costs Capitalized in Stealth
A particularly egregious form of aggressive cost capitalization
costs of financial distress
costs arising from bankruptcy or distorted business decisions before bankruptcy.
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
an unknown item for which a linear programming
A provision that prohibits the company from calling the bond before a certain date. During this
an unknown variable that is to be predicted
Tax deductions that businesses can claim when they spend money on investment goods.
costs that are readily traceable to particular products or services.
Discrete random variable
A random variable that can take only a certain specified set of discrete possible
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
economic components model
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
when the incremental revenue from the sale of reworked defective units is greater than
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
A value determined within the context of a model.
The difference between the execution price of a security and the price that would have
A variable whose value is determined outside the model in which it is used. Also called
Fallacy of Composition
The incorrect conclusion that something that is true for an individual is necessarily true for the economy as a whole.
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
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
With CMOs, the start of the cash flow cycle for the cash flow window.
Annuity contracts in which the insurance company or issuing financial institution pays a
Long-lived property owned by a firm that is used by a firm in the production of its income.
An item with a longevity greater than one year, and which exceeds a company’s
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Things that the business owns and are part of the business infrastructure – fixed assets may be
An informal term that refers to the variety of long-term operating
Land, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation.
Fixed Assets Turnover Ratio
A measure of the utilization of a company's fixed assets to
Fixed-charge coverage ratio
A measure of a firm's ability to meet its fixed-charge obligations: the ratio of
Fixed Charge Coverage Ratio
A measure of how well a company is able to meet its fixed
A cost that is fixed in total for a given period of time and for given production levels.
a cost that remains constant in total within a specified
A cost that does not vary in the short run, irrespective of changes in any
costs that do not change with increases or decreases in the volume of goods or services
costs that do not depend on the level of output.
In the Euromarket the standard periods for which Euros are traded (1 month out to a year out) are
Conventional bonds for which the coupon rate is set as a fixed percentage of the par value.
A nonnegotiable debt security that can be redeemed at some fixed price or according to
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