|Asset allocation decision|
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Definition of Asset allocation decision
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
A management style that begins with an assessment of the overall
A merger or consolidation in which an acquirer purchases the selling firm's assets.
the systematic assignment of an amount to a recipient
The process of storing costs in one account and shifting them to other
hours, machine hours or volume of production
a method of allocating joint cost to joint products using a
Any possession that has value in an exchange.
A resource, recorded through a transaction, that is expected to yield a benefit to a
Something that is owned; a financial claim or a piece of property that is a store of value.
Probable future economic benefit that is obtained or controlled by an entity as a result of
Anything owned by, or owed to, an individual or business which has commercial or exchange value (e.g., cash, property, etc.).
All things of value owned by an individual or organization.
Ratios that measure how effectively the firm is managing its assets.
Bond or note secured by assets of company.
A security that is collateralized by loans, leases, receivables, or installment contracts
Methods of financing in which lenders and equity investors look principally to the
Loans granted usually by a financial institution where the asset being financed constitutes the sole security given to the lender.
Categories of assets, such as stocks, bonds, real estate and foreign securities.
Extent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position.
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
The ratio of total assets to stockholder equity.
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another
Also called surplus management, the task of managing funds of a financial
The weighting of assets in an investment portfolio among different asset classes (e.g. shares, bonds, property, cash, overseas investments.
Asset pricing model
A model for determining the required rate of return on an asset.
Asset pricing model
A model, such as the Capital asset Pricing Model (CAPM), that determines the required
The amount of total risk that can be eliminated by diversification by
A firm's investing in assets that are riskier than those that the debtholders expected.
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firm's existing
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to
The ratio of net sales to total assets.
a ratio measuring asset productivity and showing the number of sales dollars generated by each dollar of assets
asset turnover ratio
A broad-gauge ratio computed by dividing annual
A firm's productive resources.
Anything of value that a company owns.
Things that the business owns.
Items owned by the company or expenses that have been paid for but have not been used up.
A common element of a financial plan that describes projected capital spending and the
decision allocation of invested funds between risk-free assets versus the risky portfolio.
an asset used to generate revenues or cost savings
A fixed asset, something that is expected to have long-term usage within
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
Capital Asset Pricing Model (CAPM)
A model for estimating equilibrium rates of return and values of
capital asset pricing model (CAPM)
Theory of the relationship between risk and return which states that the expected risk
capital budgeting decision
decision as to which real assets the firm should acquire.
Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against
An offset to an asset account that reduces the balance of the asset account.
the assignment, using some reasonable basis,
Typically the cash, accounts receivable, and inventory accounts on the
Value of cash, accounts receivable, inventories, marketable securities and other assets that
Cash, things that will be converted into cash within a year (such as accounts receivable), and inventory.
Amounts receivable by the business within a period of 12 months, including bank, debtors, inventory and prepayments.
Current refers to cash and those assets that will be turned
Cash and other company assets that can be readily turned into cash within one year.
the process of choosing among the alternative
Method of representing alternative sequential decisions and the possible outcomes from these decisions.
Diagram of sequential decisions and possible outcomes.
an unknown item for which a linear programming
Deferred Tax Asset
Future tax benefit that results from (1) the origination of a temporary difference
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Claims on real assets.
Claims to the income generated by real assets. Also called securities.
a judgment made regarding the method
decision as to how to raise the money to pay for investments in real assets.
decisions concerning the liabilities and stockholders' equity side of the firm's balance
Long-lived property owned by a firm that is used by a firm in the production of its income.
An item with a longevity greater than one year, and which exceeds a company’s
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Things that the business owns and are part of the business infrastructure – fixed assets may be
An informal term that refers to the variety of long-term operating
Land, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation.
Fixed Assets Turnover Ratio
A measure of the utilization of a company's fixed assets to
A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual
A nonphysical asset with a life greater than one year. Examples are
assets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises.
Intangible fixed assets
Non-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks).
a judgment about which assets will be
decisions concerning the asset side of a firm's balance sheet, such as the decision to
Limitation on asset dispositions
A bond covenant that restricts in some way a firm's ability to sell major assets.
asset that is easily and cheaply turned into cash - notably cash itself and short-term securities.
Value of property, equipment and other capital assets minus the depreciation. This is an
Longer-Term Fixed Assets
assets 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.
a decision that compares the cost of
decisions concerning the operation of the firm, such as the choice of firm size, firm
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project
net asset value
The value of all the holdings of a mutual fund, less the fund's liabilities.
Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share
The difference between total assets on the one hand and current liabilities and noncapitalized longterm
net realizable value at split-off allocation
a method of allocating joint cost to joint products that uses, as the proration base, sales value at split-off minus all costs necessary
A tangible asset with unique physical properties, like a parcel of land, a mine, or a
A cluster of accounts that are listed after fixed assets on the balance sheet,
Other current assets
Value of non-cash assets, including prepaid expenses and accounts receivable, due
see make-or-buy decision
The process of spreading production overhead equitably over the volume of production of goods or services.
assets, the title of which are held personally rather than in the name of some other legal entity.
physical measurement allocation
a method of allocating a joint cost to products that uses a common physical characteristic as the proration base
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
the second decision made in capital project evaluation in which projects are ranked according to their impact on the achievement of company objectives
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