Financial Terms Main Page

This site contains comprehensive definitions for a wide range of terms that cover topics such as financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit...

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Monthly Financial Term Picks:

Currency future

A financial future contract for the delivery of a specified foreign currency.

Dividend growth model

A model wherein dividends are assumed to be at a constant rate in perpetuity.

Earnings yield

The ratio of earnings per share after allowing for tax and interest payments on fixed interest
debt, to the current share price. The inverse of the price/earnings ratio. It's the Total Twelve Months earnings
divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is
shown in percentage.

Floating supply

The amount of securities believed to be available for immediate purchase, that is, in the
hands of dealers and investors wanting to sell.

Grantor trust

A mechanism of issuing MBS wherein the mortgages' collateral is deposited with a trustee
under a custodial or trust agreement.

Implied volatility

The expected volatility in a stock's return derived from its option price, maturity date,
exercise price, and riskless rate of return, using an option-pricing model such as Black/Scholes.

Total debt to equity ratio

A capitalization ratio comparing current liabilities plus long-term debt to
shareholders' equity.

Du Pont

model a model that indicates the return on investment
as it is affected by profit margin and asset turnover

globalization

a changeover in market focus from competition
among local or national suppliers to competition
among international suppliers

replacement cost

an amount that a firm would pay to replace an asset or buy a new one that performs the same functions as an asset currently held

Setup cost

The cluster of one-time costs incurred whenever a production batch is run,
which includes the cost to configure a machine for new production and all batchrelated
paperwork.

Transaction

A business event that has a monetary impact on an entity’s financial statements,
and is recorded as an entry in its accounting records.

zero-balance account

Regional bank account to which just enough funds are transferred daily to pay each day’s bills.

Reserve Ratio

See reserve requirement.

Asset-Backed Securities

Bond or note secured by assets of company.