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Financial Terms | |
Term |
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Definition of TermTermSee term to maturity. TermThis is usually the duration of a loan. termThe period of time during which a financial contract – such as a GIC or a loan – is in force. TermThe time period during which a policy is in force, or the time it takes for a policy to reach maturity.
Related Terms:Coefficient of determinationA measure of the goodness of fit of the relationship between the dependent and coefficient of determinationa measure of dispersion that Credit TermsConditions under which credit is extended by a lender to a borrower. Deterministic modelsLiability-matching models that assume that the liability payments and the asset cash ![]() DisintermediationWithdrawal of funds from a financial institution in order to invest them directly. Euro-medium term note (Euro-MTN)A non-underwritten Euronote issued directly to the market. Euro- Financial intermediariesInstitutions that provide the market function of matching borrowers and lenders or financial intermediaryFirm that raises money from many small investors and provides financing to businesses or other Financial IntermediaryAny institution, such as a bank, that takes deposits from savers and loans them to borrowers. Financial IntermediationThe process whereby financial intermediaries channel funds from lender/savers to borrower/spenders. Flexible TermOptional periods of time which the conditions of a contract will be carried out. Intermarket sectorspread The spread between the interest rate offered in two sectors of the bond market for Intermarket spread swapsAn exchange of one bond for another based on the manager's projection of a ![]() IntermediaryAn independent third party that may act as a mediator during negotiations. Intermediate GoodA good used in producing another good. Intermediate-termTypically 1-10 years. IntermediationInvestment through a financial institution. Related: disintermediation. Liquidity theory of the term structureA biased expectations theory that asserts that the implied forward Long-termIn accounting information, one year or greater. Long-term assetsValue of property, equipment and other capital assets minus the depreciation. This is an Long-term debtAn obligation having a maturity of more than one year from the date it was issued. Also Long-term debtA debt for which payments will be required for a period of more than Long Term DebtLiability due in a year or more. Long-term debt/capitalizationIndicator of financial leverage. Shows long-term debt as a proportion of the ![]() Long-term debt ratioThe ratio of long-term debt to total capitalization. Long-term debt to equity ratioA capitalization ratio comparing long-term debt to shareholders' equity. Long-term financial planFinancial plan covering two or more years of future operations. Long-term liabilitiesAmount owed for leases, bond repayment and other items due after 1 year. LONG-TERM LIABILITIESBills that are payable in more than one year, such as a mortgage or bonds. Long-term liabilitiesAmounts owing after more than one year. Longer-Term Fixed AssetsAssets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied. Medium-term noteA corporate debt instrument that is continuously offered to investors over a period of Other long term liabilitiesValue of leases, future employee benefits, deferred taxes and other obligations predetermined overhead ratean estimated constant charge per unit of activity used to assign overhead cost to production or services of the period; it is calculated by dividing total budgeted annual overhead at a selected level of volume or activity by that selected measure of volume or activity; it is also the standard overhead application rate Repayment TermsThe length of time given a borrower by a lender to repay a debt and the frequency of principal payments which the borrower has to meet. Short-term financial planA financial plan that covers the coming fiscal year. Short-term investment servicesServices that assist firms in making short-term investments. Short-term solvency ratiosRatios used to judge the adequacy of liquid assets for meeting short-term Short-term tax exemptsShort-term securities issued by states, municipalities, local housing agencies, and Term bondsOften referred to as bullet-maturity bonds or simply bullet bonds, bonds whose principal is Term DepositAn interest-earning bank deposit that cannot be withdrawn without penalty until a specific time. Term Fed FundsFed Funds sold for a period of time longer than overnight. Term insuranceProvides a death benefit only, no build-up of cash value. Term LifeA product that provides life coverage for a specified duration typically not beyond the age of 75. Term life insuranceA contract that provides a death benefit but no cash build-up or investment component. Term Life InsuranceA plan of insurance which covers the insured for only a certain period of time and not necessarily for his or her entire life. The policy pays a death benefit only if the insured dies during the term. Term loanA bank loan, typically with a floating interest rate, for a specified amount that matures in between Term LoanA secured loan made to business concerns for a specific period (normally three to ten years). It is repaid with interest, usually with periodical payments. Term premiumsExcess of the yields to maturity on long-term bonds over those of short-term bonds. Term repoA repurchase agreement with a term of more than one day. Term SheetA list of the major points of the proposed financing being offered by an investor. Term structureThe relationship between the yields on fixed-interest Term Structure of Interest RatesRelationship among interest rates on bonds with different terms to maturity. Term to maturityThe time remaining on a bond's life, or the date on which the debt will cease to exist and Term to MaturityPeriod of time from the present to the redemption date of a bond. Term trustA closed-end fund that has a fixed termination or maturity date. Terminal Illness Insurance (Credit Insurance)Coverage that provides a lump-sum payment should you become terminally ill. The payment is made to your creditors to pay off your debt owing. Terminal valueThe value of a bond at maturity, typically its par value, or the value of an asset (or an entire TerminateCease all legal obligations under a contract. Termination PayAdditional pay due to an employee whose employment is Terms of saleConditions on which a firm proposes to sell its goods services for cash or credit. terms of saleCredit, discount, and payment terms offered on a sale. Terms of tradeThe weighted average of a nation's export prices relative to its import prices. Terms of TradeThe quantity of imports that can be obtained for a unit of exports, measured by the ratio of an export price index to an import price index. Yearly Renewable Term InsuranceSometimes, simply called YRT, this is a form of term life insurance that may be renewed annually without evidence of insurability to a stated age. Abandonment optionThe option of terminating an investment earlier than originally planned. ABC TestA test used to determine the status of an employee under a state unemployment AccountAn explanation or report in financial terms about the transactions of an organization. accountingA broad, all-inclusive term that refers to the methods and procedures Accounting IrregularitiesIntentional misstatements or omissions of amounts or disclosures in accounts payableShort-term, non-interest-bearing liabilities of a business Accounts payableAcurrent liability on the balance sheet, representing short-term obligations accounts receivableShort-term, non-interest-bearing debts owed to a Accounts receivableA current asset on the balance sheet, representing short-term accrual-basis accountingWell, frankly, accrual is not a good descriptive accrued expenses payableThe account that records the short-term, noninterest- Accumulated Benefit Obligation (ABO)An approximate measure of the liability of a plan in the event of a accumulated depreciationA contra, or offset, account that is coupled acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable actual cost systema valuation method that uses actual direct Agency basisA means of compensating the broker of a program trade solely on the basis of commission Aggregate Production FunctionAn equation determining aggregate output as a function of aggregate inputs such as labor and capital. algorithma logical step-by-step problem-solving technique Alpha equationThe alpha of a fund is determined as follows: amortizationThis term has two quite different meanings. First, it may AmortizationReduction in value of an asset over some period for accounting AmortizationThe write-off of an asset over the period when the asset is used. This term AnnuityPeriodic payments made to an individual under the terms of the policy. Appraisal rightsA right of shareholders in a merger to demand the payment of a fair price for their shares, as ARMAdjustable rate mortgage. A mortgage that features predetermined adjustments of the loan interest rate Asset pricing modelA model for determining the required rate of return on an asset. Asset pricing modelA model, such as the Capital Asset Pricing Model (CAPM), that determines the required AssurisAssuris is a not for profit organization that protects Canadian policyholders in the event that their life insurance company should become insolvent. Their role is to protect policyholders by minimizing loss of benefits and ensuring a quick transfer of their policies to a solvent company where their benefits will continue to be honoured. Assuris is funded by the life insurance industry and endorsed by government. If you are a Canadian citizen or resident, and you purchased a product from a member life insurance company in Canada, you are protected by Assuris. Auction marketsMarkets in which the prevailing price is determined through the free interaction of AverageAn arithmetic mean of selected stocks intended to represent the behavior of the market or some Back To Back AnnuityThis term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application. 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