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Definition of Unencumbered
Property free and clear of all liens (creditors' secured claims).
The discount rate that reflects only the business risks of a project and abstracts from the
Requirement that none of an order be executed unless all of it can be executed at the specified price.
Total costs, explicit and implicit.
An arrangement whereby a security issue is canceled if the underwriter is unable
Yield curve option-pricing models.
The decision regarding how an institution's funds should be distributed among the
A collection of 32 regional electronic interbank networks used to
Any large principal payment due at maturity for a bond or loan with or without a a sinking
The requirement that a claim holder voting against a plan of reorganization
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
The large clearing banks that dominate deposit taking and short-term lending in the domestic
An option that gives the right to buy the underlying futures contract.
To exercise a call option.
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An option contract that gives its holder the right (but not the obligation) to purchase a specified
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
decision allocation of invested funds between risk-free assets versus the risky portfolio.
Communication barrier between financiers (investment bankers) and traders. This barrier is
A trade is carried out by the seller delivering securities and the buyer delivering funds in proper form.
Clear a position
To eliminate a long or short position, leaving no ownership or obligation.
Clearing House Automated Payments System (CHAPS)
A computerized clearing system for sterling funds
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value
A member firm of a clearing house. Each clearing member must also be a member of the
Clearing house / Clearinghouse
An adjunct to a futures exchange through which transactions executed its floor are settled by a
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
A provision that prohibits the company from calling the bond before a certain date. During this
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
One of two principal clearing systems in the Eurobond market. It began operations in 1968, is
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
Federally related institutions
Arms of the federal government that are exempt from SEC registration and
With CMOs, the start of the cash flow cycle for the cash flow window.
Free cash flows
Cash not required for operations or for reinvestment. Often defined as earnings before
An exchange rate system characterized by the absence of government intervention. Also known as
Free on board
Implies that distributive services like transport and handling performed on goods up to the
Excess reserves minus member bank borrowings at the Fed.
A follower who avoids the cost and expense of finding the best course of action and by simply
Generally Accepted Accounting Principals (GAAP)
A technical accounting term that encompasses the
A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal in
The right of the homeowner to prepay, or call, the mortgage at any time.
The sale of an asset in exchange for a specified series of payments (the installments).
Internally efficient market
Operationally efficient market.
In the mortgage pipeline, risk that occurs when the originator commits loan terms to the
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
Joint clearing members
Firms that clear on more than one exchange.
Limitation on liens
A bond covenant that restricts in some way a firm's ability to grant liens on its assets.
A demand for additional funds because of adverse price movement. Maintenance margin
Total demand for loans by borrowers equals total supply of loans from lenders. The market,
claims that can be bought and sold in financial markets, such as those of stockholders and
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project
Non-parallel shift in the yield curve
A shift in the yield curve in which yields do not change by the same
claims that cannot be easily bought and sold in the financial markets, such as those of
Operationally efficient market
Also called an internally efficient market, one in which investors can obtain
A process whereby two companies in different countries borrow each other's currency for a
Parallel shift in the yield curve
A shift in the yield curve in which the change in the yield on all maturities is
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
Rights of individuals and companies to own and utilize Property as they see fit and to receive
Provisional call feature
A feature in a convertible issue that allows the issuer to call the issue during the noncall
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
An upward movement of prices. Opposite of reaction.
Riskless or risk-free asset
An asset whose future return is known today with certainty. The risk free asset is
An asset whose future return is known today with certainty.
The rate earned on a riskless asset.
Debt that, in the event of default, has first claim on specified assets.
The Property that portfolio choice can be separated into two independent tasks: 1)
The risk of falling short of any investment target.
The tendency of small firms (in terms of total market capitalization) to outperform the
Small issues exemption
Securities issues that involve less than $1.5 million are not required to file a
Tactical Asset Allocation (TAA)
An asset allocation strategy that allows active departures from the normal
Tax free acquisition
A merger or consolidation in which 1) the acquirer's tax basis in each asset whose
A short call option position in which the writer does not own shares of underlying stock
Debt that does not identify specific assets that can be taken over by the debtholder in case of default.
Generic term for firms that buy, sell, and underwrite securities.
Wall Street analyst
Related: Sell-side analyst.
Stock that has fallen out of favor with investors; tends to have a low P/E (price to earnings ratio).
Yield to call
The percentage rate of a bond or note, if you were to buy and hold the security until the call date.
PROPERTY AND EQUIPMENT
Assets such as land, buildings, machinery, and equipment that the business will use for several
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
Purchases of goods or services from suppliers on credit to whom the debt is not yet paid. Or a
The process of spreading production overhead equitably over the volume of production of goods or services.
Allowance for doubtful accounts
A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
acid test ratio (also called the quick ratio)
The sum of cash, accounts receivable, and short-term marketable
free cash flow
Generally speaking, this term refers to cash flow from
generally accepted accounting principles (GAAP)
This important term
net income (also called the bottom line, earnings, net earnings, and net
property, plant, and equipment
This label is generally used in financial
A contract that gives the holder the right to buy an asset for a
Free Cash Flow
The funds available for distribution to the capital providers of the
The rate of return on an investment with known future benefits; a
assign based on the use of a cost driver, a cost predictor,
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