Definition of Section 482

Section 482

United States Department of Treasury regulations governing transfer prices.

Cross-sectional approach

A statistical methodology applied to a set of firms at a particular point in time.

Section 83(b) Election

The decision by an employee to recognize taxable income
on the purchase price of an incentive stock option within 30 days following
the date when an option is exercised and withhold taxes at the ordinary
income tax rate at that time.

Adverse selection

A situation in which market participation is a negative signal.

Average (across-day) measures

An estimation of price that uses the average or representative price of a
large number of trades.

Country selection

A type of active international management that measures the contribution to performance
attributable to investing in the better-performing stock markets of the world.

Cross default

A provision under which default on one debt obligation triggers default on another debt
obligation.

Cross hedging

The practice of hedging with a futures contract that is different from the underlying being
hedged.

Cross holdings

One corporation holds shares in another firm.

Cross rates

The exchange rate between two currencies expressed as the ratio of two foreign exchange rates
that are both expressed in terms of a third currency.

Cross-border risk

Refers to the volatility of returns on international investments caused by events associated
with a particular country as opposed to events associated solely with a particular economic or financial agent.

Crossover rate

The return at which two alternative projects have the same net present value.

Currency selection

Asset allocation in which the investor chooses among investments denominated in
different currencies.

Debt service parity approach

An analysis wherein the alternatives under consideration will provide the firm
with the exact same schedule of after-tax debt payments (including both interest and principal).

Optimization approach to indexing

An approach to indexing which seeks to Optimize some objective, such
as to maximize the portfolio yield, to maximize convexity, or to maximize expected total returns.

Residual dividend approach

An approach that suggests that a firm pay dividends if and only if acceptable
investment opportunities for those funds are currently unavailable.

Risk premium approach

The most common approach for tactical asset allocation to determine the relative
valuation of asset classes based on expected returns.

Security selection decision

Choosing the particular securities to include in a portfolio.

Self-selection

Consequence of a contract that induces only one group (e.g. low risk individuals) to participate.

Signaling approach

approach to the determination of the optimal capital structure asserting that insiders in a
firm have information that the market does not have; therefore, the choice of capital structure by insiders can
signal information to outsiders and change the value of the firm. This theory is also called the asymmetric
information approach.

Stock selection

An active portfolio management technique that focuses on advantageous selection of
particular stocks rather than on broad asset allocation choices.

Stratified sampling approach to indexing

An approach in which the index is divided into cells, each
representing a different characteristic of the index, such as duration or maturity.

Variance minimization approach to tracking

An approach to bond indexing that uses historical data to
estimate the variance of the tracking error.

net realizable value approach

a method of accounting for by-products or scrap that requires that the net realizable value of these products be treated as a reduction in the cost of the primary products; primary product cost may be reduced by decreasing either
(1) cost of goods sold when the joint products are sold or
(2) the joint process cost allocated to the joint products

realized value approach

a method of accounting for byproducts or scrap that does not recognize any value for these products until they are sold; the value recognized
upon sale can be treated as other revenue or other income

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