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Small-firm effect |
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Definition of Small-firm effectSmall-firm effectThe tendency of small firms (in terms of total market capitalization) to outperform the
Related Terms:Affirmative covenantA bond covenant that specifies certain actions the firm must take. Antidilutive effectResult of a transaction that increases earnings per common share (e.g. by decreasing the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit CommitteesA committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial Calendar effectThe tendency of stocks to perform differently at different times, including such anomalies as Clientele effectThe grouping of investors who have a preference that the firm follow a particular financing Coinsurance effectRefers to the fact that the merger of two firms decreases the probability of default on Confirmationhe written statement that follows any "trade" in the securities markets. Confirmation is issued Cumulative-Effect AdjustmentThe cumulative, after-tax, prior-year effect of a change in accounting Cumulative Effect of a Change in Accounting PrincipleThe change in earnings of previous years Cumulative Effect of Accounting ChangeThe change in earnings of previous years assuming Dilutive effectResult of a transaction that decreases earnings per common share. Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of effective annual interest rateInterest rate that is annualized using compound interest. Effective annual yieldAnnualized interest rate on a security computed using compound interest techniques. Effective Annual YieldAnnualized rate of return on a security computed using compound Effective call priceThe strike price in an optional redemption provision plus the accrued interest to the Effective convexityThe convexity of a bond calculated with cash flows that change with yields. Effective dateIn an interest rate swap, the date the swap begins accruing interest. Effective durationThe duration calculated using the approximate duration formula for a bond with an Effective Exchange RateThe weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country. Effective Interest RateThe rate of interest actually earned on an investment. It is Effective margin (EM)Used with SAT performance measures, the amount equaling the net earned spread, or Effective rateA measure of the time value of money that fully reflects the effects of compounding. Effective spreadThe gross underwriting spread adjusted for the impact of the announcement of the common Effective Tax RateThe total tax provision divided by pretax book income from continuing effectivenessa measure of how well an organization’s goals FirmRefers to an order to buy or sell that can be executed without confirmation for some fixed period. Also, Firm commitment underwritingAn undewriting in which an investment banking firm commits to buy the Firm's net value of debtTotal firm value minus total firm debt. Firm-specific riskSee:diversifiable risk or unsystematic risk. Fisher effectA theory that nominal interest rates in two or more countries should be equal to the required real High-Risk Small Businessfirm viewed as being particularly subject to risk from an investors perspective. Information-content effectThe rise in the stock price following the dividend signal. International Fisher effectStates that the interest rate differential between two countries should be an international Fisher effectTheory that real interest rates in all countries should be equal, with differences in nominal rates reflecting differences in expected inflation. Intrinsic value of a firmThe present value of a firm's expected future net cash flows discounted by the Low price-earnings ratio effectThe tendency of portfolios of stocks with a low price-earnings ratio to Neglected firm effectThe tendency of firms that are neglected by security analysts to outperform firms that P/E effectThat portfolios with low P/E stocks have exhibited higher average risk-adjusted returns than high P/E stocks. Panel on Audit EffectivenessA special committee of the Public Oversight Board that was created Policy-Ineffectiveness PropositionTheory that anticipated policy has no effect on output. Small issues exemptionSecurities issues that involve less than $1.5 million are not required to file a Synergistic effectA violation of value-additivity whereby the value of the combination is greater than the Target firmA firm that is the object of a takeover by another firm. Wealth EffectThe effect on spending of a change in wealth caused by a change in the overall price level. Weekend effectThe common recurrent low or negative average return from Friday to Monday in the stock market. AggregationProcess in corporate financial planning whereby the smaller investment proposals of each of the
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