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Definition of Vega
The rate of change in the price of a derivative security relative to the
Collectively, "greeks" refer to the financial measures delta, gamma,
Schedule of depreciation rates allowed for tax purposes.
Any depreciation method that produces larger deductions for depreciation in the
(1) The estimated useful life of the fixed asset being depreciated is
Any of several methods that recognize an increased amount
An alteration in the accounting methodology or estimates used in
A method of investment appraisal that measures
the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow
A strategy that uses available information and forecasting techniques to seek a
Publicly traded issues that may be collateralized by mortgages and MBSs.
Money after-tax rate of return minus the inflation rate.
The discount rate that reflects only the business risks of a project and abstracts from the
The second-largest stock exchange in the United States. It trades
Swap in which the principal or national amount rises (falls) as interest rates
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.
Arithmetic average (mean) rate of return
Arithmetic mean return.
Arm's length price
The price at which a willing buyer and a willing unrelated seller would freely agree to
A dealer's price to sell a security; also called the offer price.
A security that is collateralized by loans, leases, receivables, or installment contracts
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
A debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period.
Average (across-day) measures
An estimation of price that uses the average or representative price of a
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.
A strategy in which the maturities of the securities included in the portfolio are concentrated
Gives the lessee the option to purchase the asset at a price below fair market
Base interest rate
Related: Benchmark interest rate.
Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.
price expressed in terms of yield to maturity or annual rate of return.
Benchmark interest rate
Also called the base interest rate, it is the minimum interest rate investors will
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically
Bill of exchange
General term for a document demanding payment.
Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
book rate of return
Accounting income divided by book value.
Break-even payment rate
The prepayment rate of a MBS coupon that will produce the same CFY as that of
Break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering
Broker loan rate
Related: Call money rate.
A strategy in which a portfolio is constructed so that the maturities of its securities are highly
A passive investment strategy with no active buying and selling of stocks from the
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
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 discount rate used to find the present value of a series of future cash receipts. Sometimes called discount rate.
cash burn rate
A relatively recent term that refers to how fast a business
Cash Flow Provided or Used from Financing Activities
Cash receipts and payments involving
Cash Flow Provided or Used from Investing Activities
Cash receipts and payments involving
Change in Accounting Estimate
A change in accounting that occurs as the result of new information
Change in Accounting Estimate
A change in the implementation of an existing accounting
Change in Accounting Principle
A change from one generally accepted accounting principle to another generally accepted accounting principle—for example, a change from capitalizing expenditures
Change in Reporting Entity
A change in the scope of the entities included in a set of, typically, consolidated financial statements.
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
chief financial officer (CFO)
Officer who oversees the treasurer and controller and sets overall financial strategy.
Bond price excluding accrued interest.
A strategy in which a put and with the same strike price and expiration are either both
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
a foundation for the compensation plan that addresses the role compensation should play in the organization
computer integrated manufacturing (CIM)
the integration of two or more flexible manufacturing systems through the use of a host computer and an information networking system
an organizational strategy in which company management decides to confront, rather than avoid, competition; an organizational strategy in which company management still attempts to differentiate company
A firm engaged in two or more unrelated businesses.
A merger involving two or more firms that are in unrelated businesses.
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a
Consumer Price Index (CPI)
An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation.
The percentage tax charged by a state to an employer to
Conversion parity price
Related:Market conversion price
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Convertible preferred stock
Preferred stock that can be converted into common stock at the option of the holder.
The contractually specified price per share at which a convertible security can be
A security that can be converted into common stock at the option of the security holder,
The acquisition of one firm by anther firm.
Debt obligations issued by corporations.
A legal document creating a corporation.
One of the three areas of the discipline of finance. It deals with the operation of the firm
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
financial planning conducted by a firm that encompasses preparation of both
Corporate processing float
The time that elapses between receipt of payment from a customer and the
Corporate tax view
The argument that double (corporate and individual) taxation of equity returns makes
Corporate taxable equivalent
rate of return required on a par bond to produce the same after-tax yield to
cost leadership strategy
a plan to achieve the position in a
Cost of Preferred Stock
The rate of return required by the investors in the preferred stock of
costs of financial distress
Costs arising from bankruptcy or distorted business decisions before bankruptcy.
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
In bonds, notes or other fixed income securities, the stated percentage rate of interest, usually
The rate of interest paid on a debt security. Generally stated on an
The nominal interest rate that the issuer promises to pay the
Annual interest payment as a percentage of face value.
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
The interest rate offered on an investment type insurance policy.
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates
The return at which two alternative projects have the same net present value.
Cumulative Effect of a Change in Accounting Principle
The change in earnings of previous years
Cumulative Effect of Accounting Change
The change in earnings of previous years assuming
Cumulative preferred stock
Preferred stock whose dividends accrue, should the issuer not make timely
Current rate method
Under this currency translation method, all foreign currency balance-sheet and income
A security representing a debt relationship with an enterprise, including a government
refers to multi-period cash flow matching.
The price fixed by the Clearing house at which deliveries on futures are in invoiced; also the
Also called the hedge ratio, the ratio of the change in price of a call option to the change in price of the
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