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Financial Terms | |
Start-up Costs |
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Definition of Start-up CostsStart-up Costscosts related to such onetime activities as opening a new facility, introducing
Related Terms:Agency costsThe incremental costs of having an agent make decisions for a principal. Aggregate SupplyTotal quantity of goods and services supplied. Aggregate Supply CurveCombinations of price level and income for which the labor market is in equilibrium. The short-run aggregate supply curve incorporates information and price/wage inflexibilities in the labor market, whereas the long-run aggregate supply curve does not. Avoidable costscosts that are identifiable with and able to be influenced by decisions made at the business Back-up1) When bond yields and prices fall, the market is said to back-up. BankruptcyState of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from bankruptcyThe reorganization or liquidation of a firm that cannot pay its debts. ![]() Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other Bankruptcy riskThe risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk. Bankruptcy viewThe argument that expected bankruptcy costs preclude firms from being financed entirely Bottom-up equity management styleA management style that de-emphasizes the significance of economic capitalization of costsWhen a cost is recorded originally as an increase Carring costscosts that increase with increases in the level of investment in current assets. carrying costscosts of maintaining current assets, including opportunity cost of capital. Costs Capitalized in StealthA particularly egregious form of aggressive cost capitalization costs of financial distresscosts arising from bankruptcy or distorted business decisions before bankruptcy. CouponThe periodic interest payment made to the bondholders during the life of the bond. CouponDetachable certificate attached to a bond that shows the amount of couponThe interest payments paid to the bondholder. CouponThe annual interest payment associated with a bond. Coupon BondAny bond with a coupon. Contrast with discount bond. Coupon / CouponsThe periodic interest payment(s) made by the issuer of a bond Coupon datesThe dates when the coupons are paid. Typically a bond pays Coupon equivalent yieldTrue interest cost expressed on the basis of a 365-day year. Coupon paymentsA bond's interest payments. Coupon rateIn bonds, notes or other fixed income securities, the stated percentage rate of interest, usually Coupon RateThe rate of interest paid on a debt security. Generally stated on an Coupon rateThe nominal interest rate that the issuer promises to pay the coupon rateAnnual interest payment as a percentage of face value. Current couponA bond selling at or close to par, that is, a bond with a coupon close to the yields currently Current-coupon issuesRelated: Benchmark issues Direct costscosts that are readily traceable to particular products or services. Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms equivalent units of production (EUP)an approximation of the number of whole units of output that could have been Evening upBuying or selling to offset an existing market position. Excess SupplyA situation in which supply exceeds demand. Execution costsThe difference between the execution price of a security and the price that would have Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes Fixed costscosts that do not change with increases or decreases in the volume of goods or services fixed costscosts that do not depend on the level of output. fixed expenses (costs)Expenses or costs that remain the same in amount, Floating supplyThe amount of securities believed to be available for immediate purchase, that is, in the Foreign Corrupt Practices Act (FCPA)a law passed by U.S. Congress in 1977 that makes it illegal for a U.S. company to engage in various “questionable” foreign payments and Friction costscosts, both implied and direct, associated with a transaction. Such costs include time, effort, Full coupon bondA bond with a coupon equal to the going market rate, thereby, the bond is selling at par. Funding CostsThe price of obtaining capital, either borrowed or equity, with intent to carry on business operations. Give upThe loss in yield that occurs when a block of bonds is swapped for another block of lower-coupon Group Life InsuranceThis is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates. Group of five (G5/G-5) The five leading countries (France, Germany, Japan, United Kingdom, and the U.S.) that Group of seven (G7/G-7)The G-5 countries plus Canada and Italy. Group rotation managerA top-down manager who infers the phases of the business cycle and allocates High-coupon bond refundingRefunding of a high-coupon bond with a new, lower coupon bond. Housing StartA new house on which construction has just begun. Incremental costs and benefitscosts and benefits that would occur if a particular course of action were Indirect costscosts that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead. Information costsTransaction costs that include the assessment of the investment merits of a financial asset. Legal bankruptcyA legal proceeding for liquidating or reorganizing a business. Level-coupon bondBond with a stream of coupon payments that are the same throughout the life of the bond. Lock-up CDsCDs that are issued with the tacit understanding that the buyer will not trade the certificate. Long coupons1) Bonds or notes with a long current maturity. Long coupons1) Bonds or notes with a long current maturity. Low-coupon bond refundingRefunding of a low coupon bond with a new, higher coupon bond. Mark-upThe amount added to a lower figure to reach a higher figure, expressed as a percentage of the Market impact costsAlso called price impact costs, the result of a bid/ask spread and a dealer's price concession. Market timing costscosts that arise from price movement of the stock during the time of the transaction markupthe period after an announcement of a takeover bid in which stock prices typically rise until a merger or acquisition is made (or until it falls through). MarkupAn increase in the cost of a product to arrive at its selling price. Menu CostsThe costs to firms of changing their prices. Money supplyM1-A: Currency plus demand deposits Office suppliesThe cost of the supplies used in running an office. Opportunity costsThe difference in the performance of an actual investment and a desired investment overhead costsOverhead generally refers to indirect, in contrast to direct, Paid-Up AdditionsA type of insurance policy or annuity in which the owner receives dividends, typically increases the death. Paid-up CapitalThat part of the issued capital of a company that has been paid up by the shareholders. Pass-through coupon rateThe interest rate paid on a securitized pool of assets, which is less than the rate Pay-upThe loss of cash resulting from a swap into higher price bonds or the need/willingness of a bank or Period costsThe costs that relate to a period of time. PickupThe gain in yield that occurs when a block of bonds is swapped for another block of higher-coupon bonds. Policy Acquisition Costscosts incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium Political CostsThe costs of additional regulation, including higher taxes, borne by large and Preopening CostsA form of start-up cost incurred in preparing for the opening of a new store or facility. Prepackaged bankruptcyA bankruptcy in which a debtor and its creditors pre-negotiate a plan or Price impact costsRelated: market impact costs Pure yield pickup swapMoving to higher yield bonds. Raw material supply agreementAs used in connection with project financing, an agreement to furnish a Real Money SupplyMoney supply expressed in base-year dollars, calculated by dividing the money supply by a price index. Round-trip transactions costscosts of completing a transaction, including commissions, market impact runupthe period before a formal announcement of a takeover bid in which one or more bidders are either preparing to make an announcement or speculating that someone else will. Search costscosts associated with locating a counterparty to a trade, including explicit costs (such as Selling groupAll banks involved in selling or marketing a new issue of stock or bonds Semi-fixed costs costs that are constant within a defined level of activity but that can increase or decrease when Semi-variable costscosts that have both fixed and variable components. Set-upThe time required to make ready a machine or process for production, e.g. changing equipment setup costthe direct or indirect cost of getting equipment Setup costThe cluster of one-time costs incurred whenever a production batch is run, shortage costscosts incurred from shortages in current assets. Standard costsA budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a Step-upTo increase, as in step up the tax basis of an asset. Step-up bondA bond that pays a lower coupon rate for an initial period which then increases to a higher Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |