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Financial Terms | |
Security selection decision |
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Definition of Security selection decisionSecurity selection decisionChoosing the particular securities to include in a portfolio.
Related Terms:Security market lineLine representing the relationship between expected return and market risk. Adverse selectionA situation in which market participation is a negative signal. Asset allocation decisionThe decision regarding how an institution's funds should be distributed among the Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts Available-for-Sale SecurityA debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period. capital budgeting decisiondecision as to which real assets the firm should acquire. Convertible securityA security that can be converted into common stock at the option of the security holder, ![]() Country selectionA type of active international management that measures the contribution to performance Currency selectionAsset allocation in which the investor chooses among investments denominated in Debt SecurityA security representing a debt relationship with an enterprise, including a government decision makingthe process of choosing among the alternative Decision treeMethod of representing alternative sequential decisions and the possible outcomes from these decisions. decision treeDiagram of sequential decisions and possible outcomes. decision variablean unknown item for which a linear programming Derivative securityA financial security, such as an option, or future, whose value is derived in part from the Employee Retirement Income Security Act of 1974 (ERISA)A federal Act that sets minimum operational and funding standards for employee benefit Equity SecurityAn ownership interest in an enterprise, including preferred and common stock. Exchangeable Securitysecurity that grants the security holder the right to exchange the security for the financing decisiona judgment made regarding the method financing decisiondecision as to how to raise the money to pay for investments in real assets. Financing decisionsdecisions concerning the liabilities and stockholders' equity side of the firm's balance Fixed-dollar securityA nonnegotiable debt security that can be redeemed at some fixed price or according to Fixed-income securityA security that pays a specified cash flow over a floating-rate securitysecurity paying dividends or interest that vary with short-term interest rates. Held-to-Maturity SecurityA debt security for which the investing entity has both the positive Host securityThe security to which a warrant is attached. Hybrid securityA convertible security whose optioned common stock is trading in a middle range, causing investment decisiona judgment about which assets will be Investment decisionsdecisions concerning the asset side of a firm's balance sheet, such as the decision to make-or-buy decisiona decision that compares the cost of Managerial decisionsdecisions concerning the operation of the firm, such as the choice of firm size, firm Marketable securityAn easily traded investment, such as treasury bills, which is Monthly income preferred security (MIP)Preferred stock issued by a subsidiary located in a tax haven. Mortgage pass-through securityAlso called a passthrough, a security created when one or more mortgage Mutually exclusive investment decisionsInvestment decisions in which the acceptance of a project Nonmarketable SecurityA debt or equity security for which there is no posted price or bidand- outsourcing decisionsee make-or-buy decision preference decisionthe second decision made in capital project evaluation in which projects are ranked according to their impact on the achievement of company objectives Primitive securityAn instrument such as a stock or bond for which payments depend only on the financial screening decisionthe first decision made in evaluating capital SecurityPiece of paper that proves ownership of stocks, bonds and other investments. SecurityEither the collateral on a loan, or some type of equity ownership or debt, such SecurityA share or an interest in a property or an enterprise such as a stock certificate or a bond. SecurityCollateral offered by a borrower to a lender to secure a loan. Security characteristic lineA plot of the excess return on a security over the risk-free rate as a function of Security deposit (initial)Synonymous with the term margin. A cash amount of funds that must be deposited Security deposit (maintenance)Related: Maintenance margin security market line (SML). A description of Security Market LineA graph illustrating the equilibrium relationship between the security market lineRelationship between expected return and beta. Security ValueThe monetary value placed on security by a lender in determining the extent to which it can make loans against such security. Self-selectionConsequence of a contract that induces only one group (e.g. low risk individuals) to participate. Social Security Act of 1935A federal Act establishing Old Age and Survivor’s special order decisiona situation in which management must determine a sales price to charge for manufacturing or service jobs outside the company’s normal production/service market Stock selectionAn active portfolio management technique that focuses on advantageous selection of Trading SecurityA debt or equity security bought and held for sale in the near term to generate income on short-term price changes. Underlying securityOptions: the security subject to being purchased or sold upon exercise of an option Variable price securityA security, such as stocks or bonds, that sells at a fluctuating, market-determined price. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |