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Definition of Start-up Costs
costs related to such onetime activities as opening a new facility, introducing
the 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).
the 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.
The incremental costs of having an agent make decisions for a principal.
1) When bond yields and prices fall, the market is said to back-up.
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from
The argument that expected indirect and direct bankruptcy costs offset the other
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
The argument that expected bankruptcy costs preclude firms from being financed entirely
A management style that de-emphasizes the significance of economic
costs that increase with increases in the level of investment in current assets.
The periodic interest payment made to the bondholders during the life of the bond.
True interest cost expressed on the basis of a 365-day year.
A bond's interest payments.
In bonds, notes or other fixed income securities, the stated percentage rate of interest, usually
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently
Related: Benchmark issues
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
Buying or selling to offset an existing market position.
The difference between the execution price of a security and the price that would have
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
The amount of securities believed to be available for immediate purchase, that is, in the
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
Full coupon bond
A bond with a coupon equal to the going market rate, thereby, the bond is selling at par.
The loss in yield that occurs when a block of bonds is swapped for another block of lower-coupon
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 manager
A top-down manager who infers the phases of the business cycle and allocates
High-coupon bond refunding
Refunding of a high-coupon bond with a new, lower coupon bond.
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
Transaction costs that include the assessment of the investment merits of a financial asset.
A legal proceeding for liquidating or reorganizing a business.
Bond with a stream of coupon payments that are the same throughout the life of the bond.
CDs that are issued with the tacit understanding that the buyer will not trade the certificate.
1) Bonds or notes with a long current maturity.
Low-coupon bond refunding
Refunding of a low coupon bond with a new, higher coupon bond.
1) Bonds or notes with a long current maturity.
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
M1-A: Currency plus demand deposits
The difference in the performance of an actual investment and a desired investment
Pass-through coupon rate
The interest rate paid on a securitized pool of assets, which is less than the rate
The loss of cash resulting from a swap into higher price bonds or the need/willingness of a bank or
The gain in yield that occurs when a block of bonds is swapped for another block of higher-coupon bonds.
A bankruptcy in which a debtor and its creditors pre-negotiate a plan or
Price impact costs
Related: market impact costs
Pure yield pickup swap
Moving to higher yield bonds.
Raw material supply agreement
As used in connection with project financing, an agreement to furnish a
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
costs associated with locating a counterparty to a trade, including explicit costs (such as
All banks involved in selling or marketing a new issue of stock or bonds
To increase, as in step up the tax basis of an asset.
A bond that pays a lower coupon rate for an initial period which then increases to a higher
costs that have been incurred and cannot be reversed.
Provision in a company's charter requiring a majority of, say, 80% of shareholders to approve
n event that influences production capacity and costs in an economy.
A price level below which it is supposedly difficult for a security or market to fall.
A fee paid to an underwriter in connection with an underwritten rights offering or an
costs of buying and selling marketable securities and borrowing. Trading costs include
The time, effort, and money necessary, including such things as commission fees and the
A network of trading desks for the major brokerage firms and institutional investors that
A term used to describe a transaction that took place at a higher price than the preceding transaction
New muni bond issues scheduled to come to market within the next 30 days.
Weighted average coupon
The weighted average of the gross interest rate of the mortgages underlying the
Zero coupon bond
Such a debt security pays an investor no interest. It is sold at a discount to its face price
Related: tick-test rules.
A bond in which no periodic coupon is paid over the life of the contract. Instead, both the
costs that are identifiable with and able to be influenced by decisions made at the business
costs that are readily traceable to particular products or services.
costs that do not change with increases or decreases in the volume of goods or services
costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
The amount added to a lower figure to reach a higher figure, expressed as a percentage of the
The costs that relate to a period of time.
costs that are constant within a defined level of activity but that can increase or decrease when
costs that have both fixed and variable components.
The time required to make ready a machine or process for production, e.g. changing equipment
A 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
costs that have been incurred in the past.
The cost of the supplies used in running an office.
capitalization of costs
When a cost is recorded originally as an increase
fixed expenses (costs)
Expenses or costs that remain the same in amount,
Overhead generally refers to indirect, in contrast to direct,
Coupon / Coupons
The periodic interest payment(s) made by the issuer of a bond
The rate of interest paid on a debt security. Generally stated on an
A security that makes no interest payments; it is sold at a discount
equivalent units of production (EUP)
an approximation of the number of whole units of output that could have been
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
the direct or indirect cost of getting equipment
the cooperative strategic planning,
units started and completed
the difference between the number of units completed for the period and the units in beginning inventory; it can also be computed as the number of units started during the period minus the units in ending inventory
Detachable certificate attached to a bond that shows the amount of
The dates when the coupons are paid. Typically a bond pays
The nominal interest rate that the issuer promises to pay the
Zero curve, zero-coupon yield curve
A yield curve for zero-coupon bonds;
Zero-coupon bond, or Zero
A bond that, instead of carrying a coupon, is sold
An increase in the cost of a product to arrive at its selling price.
The cluster of one-time costs incurred whenever a production batch is run,
The reorganization or liquidation of a firm that cannot pay its debts.
costs of maintaining current assets, including opportunity cost of capital.
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