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Definition of Start-up Costs
costs related to such onetime activities as opening a new facility, introducing
The incremental costs of having an agent make decisions for a principal.
Total quantity of goods and services supplied.
Combinations 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.
costs that are identifiable with and able to be influenced by decisions made at the business
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 reorganization or liquidation of a firm that cannot pay its debts.
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
When a cost is recorded originally as an increase
costs that increase with increases in the level of investment in current assets.
costs of maintaining current assets, including opportunity cost of capital.
A particularly egregious form of aggressive cost capitalization
costs of financial distress
costs arising from bankruptcy or distorted business decisions before bankruptcy.
The periodic interest payment made to the bondholders during the life of the bond.
Detachable certificate attached to a bond that shows the amount of
The interest payments paid to the bondholder.
The annual interest payment associated with a bond.
Any bond with a coupon. Contrast with discount bond.
Coupon / Coupons
The periodic interest payment(s) made by the issuer of a bond
The dates when the coupons are paid. Typically a bond pays
Coupon equivalent yield
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
The rate of interest paid on a debt security. Generally stated on an
The nominal interest rate that the issuer promises to pay the
Annual interest payment as a percentage of face value.
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently
Related: Benchmark issues
costs that are readily traceable to particular products or services.
Dupont system of financial control
Highlights 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
Buying or selling to offset an existing market position.
A situation in which supply exceeds demand.
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
costs that do not change with increases or decreases in the volume of goods or services
costs that do not depend on the level of output.
fixed expenses (costs)
Expenses or costs that remain the same in amount,
The 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
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 price of obtaining capital, either borrowed or equity, with intent to carry on business operations.
The loss in yield that occurs when a block of bonds is swapped for another block of lower-coupon
Group Life Insurance
This 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 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.
A new house on which construction has just begun.
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
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.
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.
The amount added to a lower figure to reach a higher figure, expressed as a percentage of the
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
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).
An increase in the cost of a product to arrive at its selling price.
The costs to firms of changing their prices.
M1-A: Currency plus demand deposits
The cost of the supplies used in running an office.
The difference in the performance of an actual investment and a desired investment
Overhead generally refers to indirect, in contrast to direct,
A type of insurance policy or annuity in which the owner receives dividends, typically increases the death.
That part of the issued capital of a company that has been paid up by the shareholders.
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 costs that relate to a period of time.
The gain in yield that occurs when a block of bonds is swapped for another block of higher-coupon bonds.
Policy Acquisition Costs
costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
The costs of additional regulation, including higher taxes, borne by large and
A form of start-up cost incurred in preparing for the opening of a new store or facility.
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
Real Money Supply
Money supply expressed in base-year dollars, calculated by dividing the money supply by a price index.
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
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.
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
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
the direct or indirect cost of getting equipment
The cluster of one-time costs incurred whenever a production batch is run,
costs incurred from shortages in current assets.
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
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
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