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Definition of Subrogation
Conditional payments may be made by an insurance company to a disability insurance claimant who has a loss of income claim against a third party who caused or contributed to their disability, however, the insurance company has a right to seek reimbursement of any payments they made to the claimant either from the third party or from any judgement or settlement received by the claimant from the third party.
A right of shareholders in a merger to demand the payment of a fair price for their shares, as
A statistical compilation formulated by a sovereign nation of all economic transactions
An international bank headquartered in Basel, Switzerland, which
Gives the lessee the option to purchase the asset at a price below fair market
The probability of not achieving a portfolio expected return.
Large and creditworthy company.
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
Futures contracts, such as stock index futures, that settle for cash, not involving
A reduction in the likelihood one or more of the firm's claimants will be fully repaid,
A party to an explicit or implicit contract.
A computerized clearing system for sterling funds
An international wire transfer system for high-value
A transaction in which the purchaser's intention is to reduce or eliminate a short position in
Refers to the fact that the merger of two firms decreases the probability of default on
Related: Unsystematic risk
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
A claim that can be made only if one or more specified outcomes occur.
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
on the other side of a trade or transaction.
The risk that the other party to an agreement will default. In an options contract, the risk
A bond's interest payments.
Depository Trust Company (DTC)
DTC is a user-owned securities depository which accepts deposits of
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
Disclaimer of opinion
An auditor's statement disclaiming any opinion regarding the company's financial
A shareholders' rights to receive per-share dividends identical to those other shareholders receive.
Cash flow plus change in present value.
An agreement permitting a bank customer to borrow either domestic dollars from the
In the interbank Eurodollar deposit market, an either-way market is one in which the bid
Also called a residual claim, a claim to a share of earnings after debt obligation have been
In connection with a rights offering, shares of stock that are trading without the rights attached.
The date on which a share of common stock begins trading ex-rights.
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
Also called a busted convertible, a convertible security that is trading like a straight
Assets that pay a fixed-dollar amount, such as bonds and preferred stock.
The market for trading bonds and preferred stock.
Good delivery and settlement procedures
Refers to PSA Uniform Practices such as cutoff times on delivery
A phase of development in which a company experiences rapid earnings growth as it produces
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time
A corporation that owns enough voting stock in another firm to control management and
Sale of some shares of stock to get cash that would be similar to receiving a cash dividend.
Idea that as long as individuals borrow (or lend) on the same terms as the firm, they can
Delivery and settlement of securities within five business days.
One who receives income from a trust.
A bond on which the payment of interest is contingent on sufficient earnings. These bonds are
A mutual fund providing for liberal current income from investments.
Income statement (statement of operations)
A statement showing the revenues, expenses, and income (the
Common stock with a high dividend yield and few profitable investment opportunities.
The law of averages. The average outcome for many independent trials of an experiment
Loan made by one unit of a corporation to another unit of the same corporation.
Transaction carried out between two units of the same corporation.
Contractual debt payments based on the coupon rate of interest and the principal amount.
The revenue from a portfolio of invested assets.
Lag response of prepayments
There is typically a lag of about three months between the time the weighted
The rights of a firm's securityholders in the event the firm liquidates.
claims that can be bought and sold in financial markets, such as those of stockholders and
A phase of company development in which earnings continue to grow at the rate of the
For mutual funds, the amount required to open a new account (Minimum Initial
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Monthly income preferred security (MIP)
Preferred stock issued by a subsidiary located in a tax haven.
The company's total earnings, reflecting revenues adjusted for costs of doing business,
Net operating losses
losses that a firm can take advantage of to reduce taxes.
claims that cannot be easily bought and sold in the financial markets, such as those of
Open-market purchase operation
A systematic program of repurchasing shares of stock in market
A transaction in which the purchaser's intention is to create or increase a long position in
Actual forward rate expressed in dollars per currency unit, or vice versa.
Paper gain (loss)
Unrealized capital gain (loss) on securities held in portfolio, based on a comparison of
Reducing fund transfers between affiliates to only a netted amount. Netting can be done on
escribes the lagged collection pattern of receivables, for instance the probability that a
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put
Common stockholder's right to anything of value distributed by the company.
payments made in excess of scheduled mortgage principal repayments.
rights of individuals and companies to own and utilize property as they see fit and to receive
To buy, to be long, to have an ownership position.
Method of accounting for a merger in which the acquirer is treated as having purchased
As used in connection with project financing, an agreement to purchase a specific
Purchase and sale
A method of securities distribution in which the securities firm purchases the securities
Resembles a sinking fund except that money is used only to purchase bonds if they are selling
Accounting for an acquisition using market value for the consolidation of the two entities'
Purchasing power parity
The notion that the ratio between domestic and foreign price levels should equal
Related: inflation risk
Regular way settlement
In the money and bond markets, the regular basis on which some security trades are
Relative purchasing power parity (RPPP)
Idea that the rate of change in the price level of commodities in
An agreement with a commitment by the seller (dealer) to buy a security back from
Repurchase of stock
Device to pay cash to firm's shareholders that provides more preferable tax treatment
Related: equity claim
Lost wealth of the shareholders due to divergent behavior of the managers.
A short-lived (typically less than 90 days) call option for purchasing additional stock in a firm, issued
Issuance of "rights" to current shareholders allowing them to purchase additional shares,
Shares trading with rights attached to them.
When payment is made for a trade.
The date on which payment is made to settle a trade. For stocks traded on US exchanges,
A figure determined by the closing range which is used to calculate gains and losses in
The rate suggested in Financial Accounting Standard Board (FASB) 87 for discounting the
Program by which a corporation buys back its own shares in the open market. It is usually
The trade is settled one business day beyond what is normal.
Special drawing rights (SDR)
A form of international reserve assets, created by the IMF in 1967, whose
Also called margin income, the difference between income and cost. For a depository
Liability-matching models that assume that the liability payments and the asset cash flows
A firm's repurchase of outstanding shares of its common stock.
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