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Definition of Spreadsheet
A computer program that organizes numerical data into rows and columns on a terminal screen,
Refers to various techniques and procedures
Refers to recouping, or regaining, invested capital over
An illustration is a computer-generated spreadsheet that takes into account a number of assumptions in order to show how a specific policy might perform for a specific individual.
Schedule of depreciation rates allowed for tax purposes.
A firm's required payout to the bondholders and to the stockholders expressed as a
A method developed by BARRA, a consulting firm in
An analysis of the level of sales at which a project would make zero profit.
Money invested in a firm.
Net result of public and private international investment and lending activities.
decision Allocation of invested funds between risk-free assets versus the risky portfolio.
An economic theory that describes the relationship between risk and
A firm's set of planned capital expenditures.
The process of choosing the firm's long-term capital assets.
Amount used during a particular period to acquire or improve long-term assets such as
The transfer of capital abroad in response to fears of political risk.
When a stock is sold for a profit, it's the difference between the net sales price of securities and
Capital gains yield
The price change portion of a stock's return.
A lease obligation that has to be capitalized on the balance sheet.
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
The market for trading long-term debt instruments (those that mature in more than one year).
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.
Placing one or more limits on the amount of new investment undertaken by a firm, either
The makeup of the liabilities and stockholders' equity side of the balance sheet, especially
Amounts of directly contributed equity capital in excess of the par value.
The debt and/or equity mix that fund a firm's assets.
A method of constructing a replicating portfolio in which the manager purchases a
Also called financial leverage ratios, these ratios compare debt to total capitalization
A table showing the capitalization of a firm, which typically includes the amount of
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures
Interest that is not immediately expensed, but rather is considered as an asset and is then
A statistical technique that identifies clusters of stocks whose returns are highly correlated
The representing of accounting information over multiple years as percentages
Comparative credit analysis
A method of analysis in which a firm is compared to others that have a desired
Complete capital market
A market in which there is a distinct marketable security for each and every
Cost of capital
The required return for a capital budgeting project.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
The process of analyzing information on companies and bond issues in order to estimate the
Total par value (number of shares issued, multiplied by the par value of each share). Also
A statistical process that links the probability of default to a specified set of financial ratios.
Dividend reinvestment plan (DRP)
Automatic reinvestment of shareholder dividends in more shares of a
Efficient capital market
A market in which new information is very quickly reflected accurately in share
Expected return on investment
The return one can expect to earn on an investment. See: capital asset
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Security analysis that seeks to detect misvalued securities by an analysis of the firm's
Future investment opportunities
The options to identify additional, more valuable investment opportunities
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
Hard capital rationing
capital rationing that under no circumstances can be violated.
An analysis of returns using total return to assess performance over some investment horizon.
The process of dividing each expense item of a given year by the same expense item in
The unique capabilities and expertise of individuals.
Related: financial analysts
Financial intermediaries who perform a variety of services, including aiding in the sale of
Decisions concerning the asset side of a firm's balance sheet, such as the decision to
Investment grade bonds
A bond that is assigned a rating in the top four categories by commercial credit
The revenue from a portfolio of invested assets.
Also called a portfolio manager and money manager, the individual who manages a
Investment product line (IPML)
The line of required returns for investment projects as a function of beta
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
A closed-end fund regulated by the investment Company Act of 1940. These funds have a
As a discipline, the study of financial securities, such as stocks and bonds, from the investor's
Issued share capital
Total amount of shares that are in issue. Related: outstanding shares.
Value at which a company's shares are recorded in its books.
investments that a regulated entity is permitted to make under the rules and regulations
Indicator of financial leverage. Shows long-term debt as a proportion of the
The total dollar value of all outstanding shares. Computed as shares times current
Market capitalization rate
Expected return on a security. The market-consensus estimate of the appropriate
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
Multiple-discriminant analysis (MDA)
Statistical technique for distinguishing between two groups on the
Mutually exclusive investment decisions
investment decisions in which the acceptance of a project
Gross, or total, investment minus depreciation.
Net present value of future investments
The present value of the total sum of NPVs expected to result from
Net working capital
Current assets minus current liabilities. Often simply referred to as working capital.
Nondiversifiability of human capital
The difficulty of diversifying one's human capital (the unique
Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in
In the balance of payments, other capital is a residual category that groups all the capital
Outstanding share capital
Issued share capital less the par value of shares that are held in the company's treasury.
Passive investment strategy
See: passive management.
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
Pecking-order view (of capital structure)
The argument that external financing transaction costs, especially
Perfect capital market
A market in which there are never any arbitrage opportunities.
Perfect market view (of capital structure)
analysis of a firm's capital structure decision, which shows the
Performance attribution analysis
The decomposition of a money manager's performance results to explain
Personal tax view (of capital structure)
The argument that the difference in personal tax rates between
Pie model of capital structure
A model of the debt/equity ratio of the firms, graphically depicted in slices of
Planned capital expenditure program
capital expenditure program as outlined in the corporate financial plan.
Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure
An upward movement of prices. Opposite of reaction.
Wealth that can be represented in financial terms, such as savings account balances, financial
A statistical technique that can be used to estimate relationships between variables.
The rate at which an investor assumes interest payments made on a debt security can be
The risk that proceeds received in the future will have to be reinvested at a lower potential
REIT (real estate investment trust)
Real estate investment trust, which is similar to a closed-end mutual
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
Return on investment (ROI)
Generally, book income as a proportion of net book value.
The use of horizon analysis to project bond total returns under different reinvestment rates
analysis of the effect on a project's profitability due to changes in sales, cost, and so on.
Short-term investment services
Services that assist firms in making short-term investments.
"Soft" Capital Rationing
capital rationing that under certain circumstances can be violated or even viewed
Static theory of capital structure
Theory that the firm's capital structure is determined by a trade-off of the
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