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Definition of Self-selection
Consequence of a contract that induces only one group (e.g. low risk individuals) to participate.
A situation in which market participation is a negative signal.
A type of active international management that measures the contribution to performance
Asset allocation in which the investor chooses among investments denominated in
The firm makes a tender offer for a given amount of its own stock while excluding
Choosing the particular securities to include in a portfolio.
A federal Act requiring self-employed business owners to pay the same total tax rates for Social Security and
Loan to finance current assets, The sale of the current assets provides the cash to repay
An active portfolio management technique that focuses on advantageous selection of
Covariance of a national economy's rate of return and the rate of return the world economy
The ability of the national economy to generate enough foreign exchange to meet
Level of political and economic uncertainty in a country affecting the value of loans or
A mutual fund that invests in individual countries outside the United States.
The use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result.
A characterization used by the Securities and Exchange
A merger or consolidation in which an acquirer purchases the acquiree's stock.
A market in which there is much trading.
Active portfolio strategy
A strategy that uses available information and forecasting techniques to seek a
activity-based management (ABM)
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may be collateralized by mortgages and MBSs.
Adjusted Cash Flow Provided by Continuing Operations
Cash flow provided by operating
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
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.
American Stock Exchange (AMEX)
The second-largest stock exchange in the United States. It trades
Also called surplus management, the task of managing funds of a financial
The amount of total risk that can be eliminated by diversification by
An option is at-the-money if the strike price of the option is equal to the market price of the
markets in which the prevailing price is determined through the free interaction of
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
Average (across-day) measures
An estimation of price that uses the average or representative price of a
Bank for International Settlements (BIS)
An international bank headquartered in Basel, Switzerland, which
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in
The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for
Any market in which prices are in a declining trend.
A market in which stock or bond prices are generally
A prolonged period of falling stock market prices.
Beta equation (Stocks)
The beta of a stock is determined as follows:
risk of a firm measured from the standpoint of an investor who holds a highly diversified portfolio.
An illegal market.
A steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen
BOOK VALUE OF COMMON STOCK
The theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals:
Bottom-up equity management style
A management style that de-emphasizes the significance of economic
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
A market in which stock or bond prices are generally rising.
A prolonged period of rising stock market prices.
The foreign market in the United Kingdom.
A guaranteed investment contract purchased with a single (one-shot) premium. Related:
The risk that the cash flow of an issuer will be impaired because of adverse economic
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
Purchase by foreigners of our assets (capital inflows) or our purchase of foreign assets (capital outflows).
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a stock Exchange.
A market that specializes in trading long-term, relatively high risk
The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded.
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
markets for long-term financing.
Ownership shares issued by a business corporation. A business
The total amount of plant, equipment, and other physical capital.
In investments, it represents earnings before depreciation , amortization and non-cash charges.
An obvious but at the same time elusive term that refers to cash
the receipt or disbursement of cash; when related
Cash received and paid over time.
In investments, NET INCOME plus DEPRECIATION and other noncash charges. In this sense, it is synonymous with CASH EARNINGS. Investors focus on cash flow from operations because of their concern with a firm's ability to pay dividends.
Cash flow after interest and taxes
Net income plus depreciation.
Cash-flow break-even point
The point below which the firm will need either to obtain additional financing
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash Flow Forecast
An estimate of the timing and amount of a company's inflows and outflows of money measured over a specific period of time typically monthly for one to two years then annually for an additional one to three years.
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash flow matching
Also called dedicating a portfolio, this is an alternative to multiperiod immunization in
Cash flow per common share
Cash flow from operations minus preferred stock dividends, divided by the
Cash Flow Provided by Operating Activities
With some exceptions, the cash effects of transactions
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
A statement that shows where a company’s cash came from and where it went for a period of time, such as a year.
Cash Flow statement
A financial report that shows the movement in cash for a business during an accounting period.
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Cash Flow–to–Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
CASH FLOWS FROM FINANCING ACTIVITIES
A section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations.
CASH FLOWS FROM INVESTING ACTIVITIES
A section on the cashflow statement that shows how much cash came in and went out because of various investing activities like purchasing machinery.
CASH FLOWS FROM OPERATIONS
A section on the cash-flow stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash
Also called spot markets, these are markets that involve the immediate delivery of a security
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
Certified Management Accountant (CMA)
a professional designation in the area of management accounting that
Income payments to factors of production are spent to buy output. The receipts from these sales are used to pay factors of production, creating a circular flow of income.
The risk that a foreign debtor will be unable to pay its debts because of business events,
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment management and Research (AIMR)'s performance Presentation Standards Implementation
An agreement between two or more countries that permits the free movement of capital
These are securities that represent equity ownership in a company. Common shares let an
Shares of ownership sold to the public.
A financial security that represents an ownership claim on the
Ownership shares in a publicly held corporation.
That part of the capital stock of a corporation that carries voting rights and represents
Common stock equivalent
A convertible security that is traded like an equity issue because the optioned
Common stock market
The market for trading equities, not including preferred stock.
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Common stock ratios
Ratios that are designed to measure the relative claims of stockholders to earnings
Related: Unsystematic risk
See asset-specific risk
Complete capital market
A market in which there is a distinct marketable security for each and every
A contract accounting method that recognizes contract revenue
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