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Definition of Subordination clause
A provision in a bond indenture that restricts the issuer's future borrowing by
clause causing repayment of a debt, if specified events occur or are not met.
This clause in regular life insurance policy provides for voiding the contract of insurance for up to two years from the date of issue of the coverage if the life insured has failed to disclose important information or if there has been a misrepresentation of a material fact which would have prevented the coverage from being issued in the first place. After the end of two years from issue, a misrepresentation of smoking habits or age can still void or change the policy.
A clause in a contract providing for increases or decreases in inflation based on
Such a clause on a Euro loan permits the borrower to switch from one currency to
A bond covenant that requires the borrower to grant lenders a lien equivalent to any
Generally, a suicide clause in a regular life insurance policy provides for voiding the contract of insurance if the life insured commits suicide within two years of the date of issue of the coverage.
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
The ability to produce a good or service with fewer resources than competitors. See also comparative advantage.
The use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result.
A characterization used by the Securities and Exchange
provides additional financial security should an insured person be dismembered or lose the use of a limb as the result of an accident.
A monetary policy of matching wage and price increases with money supply increases so that the real money supply does not fall and push the economy into recession.
An alteration in the accounting methodology or estimates used in
Intentional misstatements or omissions of amounts or disclosures in
A bond on which interest accrues, but is not paid to the investor during the time of accrual.
activity-based management (ABM)
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
ADF (annuity discount factor)
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
Advance material request
Very early orders for materials before the completion
A bond covenant that specifies certain actions the firm must take.
After-tax profit margin
The ratio of net income to net sales.
After-tax real rate of return
Money After-tax rate of return minus the inflation rate.
Federal agency securities.
A grouping of sales producers according to region. Compare with Branch.
A form of organization commonly used by foreign banks to enter the U.S. market. An agency
A means of compensating the broker of a program trade solely on the basis of commission
Agency cost view
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Mortgage pass-through securities whose principal and interest payments are
Conflicts of interest among stockholders, bondholders, and managers.
Conflicts of interest between the firm’s owners and managers.
The analysis of principal-agent relationships, wherein one person, an agent, acts on behalf of
The decision-maker in a principal-agent relationship.
One who represents Canada life when providing services to clients
Aggregate Expenditure Curve
Aggregate demand for goods and services drawn as a function of the level of national income.
Total quantity of goods and services supplied.
Aggregate Supply Curve
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.
a process of service department cost allocation
Allowance for bad debts
An offset to the accounts receivable balance, against which
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
Alternative mortgage instruments
Variations of mortgage instruments such as adjustable-rate and variablerate
American Stock Exchange (AMEX)
The second-largest stock exchange in the United States. It trades
Amortization (Credit Insurance)
Refers to the reduction of debt by regular payments of interest and principal in order to pay off a loan by maturity.
The pool factor implied by the scheduled amortization assuming no prepayemts.
date on which particular news concerning a given company is announced to the public.
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5%
annual percentage rate (APR)
Interest rate that is annualized using simple interest.
Annual percentage yield (APY)
The effective, or true, annual rate of return. The APY is the rate actually
Present value of $1 paid for each of t periods.
Present value of an annuity of $1 per period.
A clause in a shareholders agreement preventing a company from issuing additional shares, without allowing the current shareholders the opportunity to participate in the offering to avoid dilution of their percentage ownership.
Specific sections and rules of the 1933 Act and 1934 Act that are
The simultaneous buying and selling of a security at two different prices in two different markets,
The purchase of securities on one market for immediate resale on
Transactions designed to make a sure profit from inconsistent prices.
Arbitrage-free option-pricing models
Yield curve option-pricing models.
Arbitrage Pricing Theory (APT)
An alternative model to the capital asset pricing model developed by
People who search for and exploit arbitrage opportunities.
Arithmetic average (mean) rate of return
Arithmetic mean return.
Arithmetic mean return
An average of the subperiod returns, calculated by summing the subperiod returns
Extent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position.
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
Also called surplus management, the task of managing funds of a financial
information that is known to some people but not to other people.
A situation wherein participants in a transaction have different net tax rates.
A lack of equivalence between two things, such as the unequal tax treatment of interest expense
Automated storage/retrieval system
A racking system using automated systems
Elements of spending that do not vary systematically with variables such as GDP that are explained by the theory. See also exogenous expenditure.
An arithmetic mean of selected stocks intended to represent the behavior of the market or some
Average accounting return
The average project earnings After taxes and depreciation divided by the average
Average (across-day) measures
An estimation of price that uses the average or representative price of a
Average age of accounts receivable
The weighted-average age of all of the firm's outstanding invoices.
Average Amortization Period
The average useful life of a company's collective amortizable asset base.
Average Collection Period
Average number of days necessary to receive cash for the sale of
Average collection period, or days' receivables
The ratio of accounts receivables to sales, or the total
Average-Cost Inventory Method
The inventory cost-flow assumption that assigns the average
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
The beginning inventory for a period, plus the amount at the end of
Also referred to as the weighted-average life (WAL). The average number of years that each
The average time to maturity of securities held by a mutual fund. changes in interest rates
Average Propensity to Consume
Ratio of consumption to disposable income. See also marginal propensity to consume.
Average Propensity to Save
Ratio of saving to disposable income. See also marginal propensity to save.
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
Average tax rate
Taxes as a fraction of income; total taxes divided by total taxable income.
average tax rate
Total taxes owed divided by total income.
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.
An account receivable that cannot be collected.
The amount of accounts receivable that is not expected to be collected.
Refers to accounts receivable from credit sales to customers
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.
Bankruptcy cost view
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
Gives the lessee the option to purchase the asset at a price below fair market
bonds that are not registered on the books of the issuer. Such bonds are held in physical form by
A policy designed to increase an economy's prosperity at the expense of another country's prosperity.
Also called on-the-run or current coupon issues or bellwether issues. In the secondary
Beneficiary (Credit Insurance)
The person or party designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. In the case of credit insurance, the beneficiary will always be the creditor.
Benefit Ratio Method
The proportion of unemployment benefits paid to a company’s
Benefit Wage Ratio Method
The proportion of total taxable wages for laid off
Bill of exchange
General term for a document demanding payment.
Bill of materials
A listing of all the materials and quantities that go to make up a completed product.
bill of materials
a document that contains information about
Bill of materials
An itemization of the parts and subassemblies required to create a
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