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Variance rule |
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Definition of Variance ruleVariance ruleSpecifies the permitted minimum or maximum quantity of securities that can be delivered to
Related Terms:48-hour ruleThe requirement that all pool information, as specified under the PSA Uniform Practices, in a Administrative pricing rulesIRS rules used to allocate income on export sales to a foreign sales corporation. Attribution RulesLegislation under which interest, dividends, or capital gains earned on assets you transfer to your spouse will be treated as your own for tax purposes. Interest or dividends relating to property transferred to children under 18 also will be attributed back to you. The exception to this rule is that capital gains relating to property transferred to children under 18 will not be attributed back to you. Basic IRR ruleAccept the project if IRR is greater than the discount rate; reject the project is lower than the budget variancethe difference between total actual overhead controllable variancethe budget variance of the two variance approach to analyzing overhead variances CovarianceA statistical measure of the degree to which random variables move together. CovarianceA measure of the degree to which returns on two assets move in Direct materials mix varianceThe variance between the budgeted and actual mixes of Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an fixed overhead spending variancethe difference between the total actual fixed overhead and budgeted fixed overhead; fixed overhead volume variancesee volume variance labor efficiency variancethe number of hours actually worked minus the standard hours allowed for the production Labor efficiency varianceThe difference between the amount of time that was budgeted labor mix variance(actual mix X actual hours X standard rate) - (standard mix X actual hours X standard rate); labor rate variancethe actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period; Labor rate varianceThe difference between the actual and standard direct labor rates labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); material mix variance(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice); material price variancetotal actual cost of material purchased material quantity variance(actual quantity X standard price) - (standard quantity allowed standard price); material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); Materials price varianceThe difference between the actual and budgeted cost to Materials quantity varianceThe difference between the actual and budgeted quantities Mean-variance analysisEvaluation of risky prospects based on the expected value and variance of possible outcomes. Mean-variance criterionThe selection of portfolios based on the means and variances of their returns. The Mean-variance efficient portfolioRelated: Markowitz efficient portfolio Minimum-variance frontierGraph of the lowest possible portfolio variance that is attainable for a given Minimum-variance portfolioThe portfolio of risky assets with lowest variance. Monetarist RuleProposal that the money supply be increased at a steady rate equal approximately to the real rate of growth of the economy. Contrast with discretionary policy. Multirule systemA technical trading strategy that combines mechanical rules, such as the CRISMA Net present value ruleAn investment is worth making if it has a positive NPV. Projects with negative NPVs noncontrollable variancethe fixed overhead volume variance; overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual Policy RuleA formula for determining policy. Contrast with discretionary policy. Portfolio varianceWeighted sum of the covariance and variances of the assets in a portfolio. Production yield varianceThe difference between the actual and budgeted proportions RuleSee monetarist rule. Rule 144aSEC rule allowing qualified institutional buyers to buy and trade unregistered securities. Rule 415rule enacted in 1982 that permits firms to file shelf registration statements. Rule of 72This is a very important rule to know. The rule is that the number 72 divided by the rate of return of your investment equals the number of years it takes for your investment to double. Rules-versus-Discretion DebateArgument about whether policy authorities should be allowed to undertake discretionary policy action as they see fit or should be replaced by robots programmed to set policy by following specific formulas. See discretionary policy, policy rule. Selling price varianceThe difference between the actual and budgeted selling price for Serial covarianceThe covariance between a variable and the lagged value of the variable; the same as Tick-test rulesSEC-imposed restrictions on when a short sale may be executed, intended to prevent investors total overhead variancethe difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead total variancethe difference between total actual cost incurred variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity VarianceA measure of dispersion of a set of data points around their mean value. The mathematical VarianceThe weighted average of the squared deviations from the variancea difference between an actual and a standard or VarianceThe dispersion of a variable. The square of the standard deviation. varianceAverage value of squared deviations from mean. A measure of volatility. Variance analysisA method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved. variance analysisthe process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences Variance minimization approach to trackingAn approach to bond indexing that uses historical data to volume variancea fixed overhead variance that represents
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