Вы находитесь на странице: 1из 19

1

A
Accretive Acquisition
An acquisition that will increase the acquiring company's EPS

Accrued Expense
An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection.

Acquisition
When one company purchases a majority interest in the acquired.

Ad Valorem Tax
A tax based on the assessed value of real estate or personal property. In other words ad valorem taxes can be property tax or even duty on imported items. Property ad valorem taxes are the major source of revenues for state and municipal governments.

Affiliated Companies
A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way.

Alpha
A measure of a mutual fund's risk relative to the market. The abnormal rate of return on a security or portfolio in excess of what would be predicted by an equilibrium model like the Capital Asset Pricing Model (CAPM).

Anchoring
The use of irrelevant information as a reference for evaluating or estimating some unknown value or information. When anchoring, people base decisions or estimates on events or values known to them, even though these facts may have no bearing on the actual event or value.

Ankle Biter
Stock issues with a market capitalization worth less than $500 million. Also known as "small cap" stocks.

Aging
A method used by accountants and investors to evaluate and identify any irregularities within a company's account receivables. Aging is achieved by sorting and inspecting the accounts according to their length outstanding.

Created by Suresh

2 Arbitrage
The simultaneous purchase and selling of an asset in order to profit from a differential in the price. This usually takes place on different exchanges or marketplaces. Also known as a "riskless profit".

Articles of Incorporation
set of documents filed with a government body for the purpose of legally documenting the creation of a corporation. Also referred to as the "corporate charter."

Amortization
1. The paying off of debt in regular installments over a period of time. 2. The deduction of capital expenses over a specific period of time. Similar to depreciation, it is a method of measuring the consumption of the value of long-term assets like equipment or buildings.

Above Water
The condition of an asset's actual value when it is greater than the asset's book value.

Active Bond
A term used to describe fixed-income securities that trade frequently on the floor of the NYSE.

At Risk Rules
Tax laws limiting the amount of losses an investor (usually a limited partner) can claim. Only the amount actually at risk can be deducted.

Aged Fail
A fail that has occurred between two or more parties to a securities transactions and has lasted for over 30 days.

Audit Trail
A step-by-step record by which accounting data can be traced to their source. The SEC and NYSE will use this method for the explicit reconstruction of trades when there are questions as to the validity or accuracy of an accounting figure.

Assignable Contract
A futures contract with a provision permitting the contract holder to convey his or her rights of assignment to a third party.

Created by Suresh

B Backpricing
A pricing method used in specific futures contracts whereby the price of the commodity to be delivered is priced by the purchaser at some future date after entering into the position.

Balloon Option
An option whose notional payments increase significantly after a set threshold is broken.

Bankruptcy
The state of a person or firm unable to repay debts.

Bear
An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

Benchmark
A standard against which the performance of a security, index, or investor can be measured.

Beta
A measure of a security's or portfolio's volatility, or systematic risk, in comparison to the market as a whole. Also known as "beta coefficient."

Black Knight
A company that makes a hostile takeover offer on a target company.

Bond
A debt investment with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate.

Created by Suresh

Book Building
The process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors. An underwriter "builds a book" by accepting orders from fund managers indicating the number of shares they desire and the price they are willing to pay.

Book Closure
A company's announcement of a dividend or bonus to investors.

Brand Equity
An intangible value-added aspect of particular goods otherwise not considered unique.

Break-Even Point BEP


1. In general, the point at which gains equal losses. 2. In options, the market price that a stock must reach for option buyers to avoid a loss if they exercise. For a call, it is the strike price plus the premium paid. For a put, it is the strike price minus the premium paid.

Bridge Financing
A method of financing, used by companies before their IPO, to obtain necessary cash for the maintenance of operations.

Bull Market
A financial market of a certain group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used in respect to the stock market, but really can be applied to anything that is traded, such as bonds, currencies, commodities, etc.

Bull
An investor who thinks the market, a specific security or an industry will rise. Bulls are optimistic investors who are presently predicting good things for the market, and are attempting to profit from this upward movement. For example if you are bullish on the S&P 500 you will attempt to profit from a rise in the index by going long on it. Bulls are are the exact opposite of the market's bears, who are pessimistic and believe that a particular security, commodity or entity will suffer a decline in price.

Created by Suresh

Business Risk
The risk that a company will not have adequate cash flow to meet its operating expenses.

Busted Takeover
A highly leveraged takeover that, to go through, requires a selling off of some of the acquired company's assets.

Buyout
The purchase of a company or a controlling interest of a corporation's shares.

Bermuda Option
A type of option that can only be exercised on predetermined dates, usually every month.

Bullion
Gold and silver that is officially recognized as high quality (at least 99.5% pure), and is in the form of bars rather than coins.

Buyback
The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may be looking for a controlling stake.

Bubble
1. An economic cycle characterized by rapid expansion followed by a contraction. 2. A surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive selloff occurs. 3. A theory that security prices rise above their true value and will continue to do so until prices go into freefall and the bubble bursts.

Created by Suresh

Book Value
1. The value at which an asset is carried on a balance sheet. In other words, the cost of an asset minus accumulated depreciation. 2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Blue-Chip Stock
Stock of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times.

Big Three
The three largest automobile manufacturers in North America: 1. General Motors 2. Daimler Chrysler 3. Ford Motor Co.

C Call Option
An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

Capital Budgeting
The process of determining whether or not projects such as building a new plant or investing in a long-term venture are worthwhile.

Capital Employed
1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities.

Created by Suresh

Capital Gain
An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year), and must be claimed on income taxes.

Capital Risk
1. The risk an investor faces that he or she may lose all or part of the principal amount invested. 2. The risk a company faces that it may lose value on its capital. The capital of a company can include equipment, factories and liquid securities.

Capital Structure
The means by which a firm is financed. A firm can finance operations through common and preferred stock, with retained earnings, or with debt. Usually a firm will use a combination of these financing instruments.

Capitalization Rate
According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate.

Capping
1. The practice of selling large amounts of a commodity or security close to the options expiry date in order to prevent a rise in market price. 2. An attempt to keep a stock's price low or move its price lower by putting selling pressure on it.

Cash Cow
1. One of the four categories (quadrants) in the BCG growth-share matrix that represents the division within a company that has a large market share within a mature industry. 2. A business, product or asset that, once acquired and paid off will produce consistent cash flow over its lifespan.

Created by Suresh

Cash Flow
The amount of cash a company generates and uses during a period, calculated by adding noncash charges (such as depreciation) to the net income after taxes. Cash flow can be used as an indication of a company's financial strength.

Cash Market
The market for a cash commodity or actual, as opposed to the market for its futures contract.

Cats and Dogs


A slang term referring to speculative stocks that have short or suspicious histories for sales, earnings, dividends, etc.

Charter
A legal document that provides for the creation of a corporate entity. A corporation's charter is issued by either a federal or a regional government and effectively creates a legal entity out of the business, which existed only as a partnership, sole proprietorship or similar business before incorporating. Also referred to as "articles of incorporation".

Commodities Exchange
An entity, usually an incorporated non-profit association, that determines and enforces rules and procedures for the trading of commodities and related investments, such as commodity futures. Commodities exchange also refers to the physical center where trading takes place.

Conduit Financing
A financing arrangement involving a government or other qualified agency using its name in an issuance of fixed income securities for a non-profit organization's large capital project.

Cost Of Capital
The required return necessary to make a capital budgeting project worthwhile, such as building a new factory. Cost of capital would include the cost of debt and the cost of equity.

Coverage Ratio
A type of accounting ratio that helps measure a company's ability to meet its obligations satisfactorily.

Created by Suresh

Credit Rating
An assessment of the credit worthiness of individuals and corporations. It is based upon the history of borrowing and repayment, as well as the availability of assets and extent of liabilities.

Corporate Bond
A debt security issued by a corporation, as opposed to those issued by the government.

Commercial Paper
An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities on commercial paper rarely range any longer than 270 days. The debt is usually issued at a discount, reflecting prevailing market interest rates.

D Dalal Street
A term that refers to the Bombay Stock Exchange, the major stock exchange in India. The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions.

De-merger
A corporate strategy to sell off subsidiaries or divisions of a company.

Debenture
An unsecured certificate of debt backed by the credit of the borrower, not by any physical assets. A T-bill is a type of debenture. Governments often issue debentures because they cant guarantee debt with assets - government assets are considered public property.

Debt Financing
When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay principal and interest on the debt.

Created by Suresh

10

Debt Ratio
A ratio that indicates what proportion of debt a company has relative to its assets. It is calculated by dividing total debts by total assets.

Debt Restructuring
A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage.

Debt/Equity Ratio
A measure of a company's financial leverage calculated by dividing long-term debt by stockholder equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Note: Sometimes only interest-bearing long-term debt is used instead of total liabilities in the calculation.

Deer Market
A flat market. Neither a bull or bear market, a deer market is characterized by low activity, with timid investors waiting for a sign of which way the market is going to end up moving.

Defensive Acquisition
The act of firms acquiring other firms and assets as a defense against market downturns or possible takeovers. A defensive acquisition contrasts with the normal impetus for an acquisition, which is usually increased market share or revenue.

Deferred Revenue
A liability account used to collect deposits and other cash receipts prior to the completion of the sale.

Deferred Share
1. A share that does not have any rights to the assets of a company undergoing bankruptcy
until all common and preferred shareholders are paid. 2. A method of stock payment to directors and executives of a company through the deposit of shares into a locked account. The value of these shares fluctuate with the market and cannot be accessed by the beneficiary for the purpose of liquidation until they are no longer employees of the company. 3. A share generally issued to company founders that restricts their receipt of dividends until dividends have been distributed to all other classes of shareholders.

Created by Suresh

11

Deflation
A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.

Depletion
An accounting term describing the amortization of assets that can be physically reduced.

Depreciation
1. An expense recorded to reduce the value of a long-term tangible asset. Since it is a noncash expense, it increases free cash flow while decreasing reported earnings. 2. A decrease in the value of a particular currency relative to other currencies.

Dilution
A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities.

Direct Public Offering DPO


Where a company raises capital by marketing its shares directly to its own customers, employees, suppliers, distributors and friends in the community. DPOs are an alternative to underwritten public offerings by securities broker-dealer firms where a company's shares are sold to the broker's customers and prospects.

Dirty Price
A bond price that includes accrued interest.

Disinflation
A slowing of the rate at which prices increase. Typically, this occurs during a recession as sales drop and retailers are not able to pass on higher prices to customers.

Divestment
The process of selling an asset. Also known as divestiture, it is made for either financial or social goals. Divestment is the opposite of investment.

Divestiture
Refers to the sale of a subsidiary company, also called "spin-off."

Created by Suresh

12

Dog Eat Dog


When the market for a good or service is ruthlessly competitive.

E Eating Stock
Purchasing stock not because you desire it but because you are forced to do so.

Elasticity
A measure of sensitivity of one variable to another. More specifically, the degree to which consumers respond to price changes.

Electronic Filing - e-File


The process of submitting your tax forms over the Internet, using computers and tax preparation software.

Elephants
Slang for large institutions that make trades in very high volumes.

Ending Inventory
A book value of goods, inputs, or materials available for use or sale at the end of an inventory accounting period.

Enterprise Resource Planning ERP


A process by which a company (often a manufacturer) manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, human resources, etc.

Equity Financing
The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation.

Created by Suresh

13

Equity Accounting
A method of accounting whereby a corporation will document a portion of the undistributed profits for an affiliated company in which they own a position.

Equity Market
The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.

Event Risk
1. The risk due to unforeseen events partaken by or associated with a company. 2. The risk associated with a changing portfolio value due to large swings in market prices. Also referred to as "jump risk" or "fat-tails".

Extrinsic Value
The difference between an option's price and the intrinsic value.

Explicit Cost
A cost that is represented by lost opportunity in actual cash payments.

Exotic Option
Any non-standard option.

Exit Strategy
1.
The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past. In other words, the exit strategy is a way of "cashing out" an investment. Examples include an initial public offering (IPO) or being bought out by a larger player in the industry. Also referred to as a "harvest strategy" or "liquidity event". 2. In the context of an active trader, a plan as to when a trade will be closed out.

F
Created by Suresh

14

Factor
1.
A financial intermediary that purchases receivables from companies. 2. In terms of mortgages, the ratio of principal outstanding to the original balance.

Fair Value
1.
The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies. 2. In the futures market, fair value is the equilibrium price for a futures contract. This is equal to the spot price after taking into account compounded interest (and dividends lost because the investor owns the futures contract rather than the physical stocks) over a certain period of time.

Fallen Angel
1.
A bond that was once investment grade but has since been reduced to junk bond status. 2. A stock that has fallen substantially from its all time highs.

Falling Knife
A stock whose price has fallen significantly in a short period of time.

Fast Market
A financial market that has a combination of high volatility and heavy trading.

Featherbedding
Term used to describe the practice of a labor union requiring an employer to hire more workers than necessary for a particular task.

Fiat Money
Money that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves.

Created by Suresh

15

Financial Instrument
A real or virtual document representing a legal agreement involving some sort of monetary value. In today's financial marketplace, financial instruments can be classified generally as equity based, representing ownership of the asset, or debt based, representing a loan made by an investor to the owner of the asset. Foreign exchange instruments comprise a third, unique type of instrument. Different subcategories of each instrument type exist, such as preferred share equity and common share equity, for example.

First Call
A company that gathers research notes and earnings estimates from brokerage analysts. The estimate is compared to the actual reported earnings, and then the difference between the two is the earnings surprise.

Flash Price
Ticker tape display designation used when volume on an exchange is so heavy that the tape runs more than five minutes behind. The "flash price" interrupts the delayed prices to show the current price of a heavily traded stock.

Flipper
A short-term investor or day trader who buys pre IPO shares, swiftly spinning them out into public markets for a quick profit.

Float
The total number of shares publicly owned and available for trading. The float is calculated by subtracting restricted shares from outstanding shares. Also known as "free float".

Flotation
The process of changing a private company into a public company by issuing shares and soliciting the public to purchase them.

Forbearance
A postponement of loan payments, granted by a lender or creditor, for a temporary period of time. This is done to give the borrower time to make up for overdue payments.

Forced Liquidation
An action taken by brokerage houses that offsets and closes all positions within delinquent customer accounts in order to reduce exposure.

Created by Suresh

16

Forensic Accounting
Forensic Accounting utilizes accounting, auditing, and investigative skills to conduct an examination into a company's financial statements. Thus, providing an accounting analysis that is suitable for court.

Forfeiture
The loss of an asset, or rights to an asset, as a result of defaulting on contractual obligations or conditions.

Forward Price
The predetermined price for an underlying asset decided upon by the long (the buyer) and the short (the seller) entering a forward agreement.

Fourth Market
The trading of exchange-listed securities between institutions on a private over-the-counter computer network, rather than over a recognized exchange such as the New York Stock Exchange (NYSE) or Nasdaq. Trades between institutions will often be made in large blocks and without a broker, allowing the institutions to avoid brokerage fees.

Franked Dividend
An arrangement in Australia that elimintates the double taxation of dividends. Dividends are dispersed with tax imputations attached to them. The shareholder is able to reduce the tax paid on the dividend by an amount equal to the tax imputation credits. Basically taxation of dividends has been partially paid by the company issuing the dividend.

Free Market
A market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sells are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.

Friction Cost
The implicit and explicit costs associated with market transactions.

Fulcrum Fee
An additional, performance-based fee an advisor charges a client. The advisor charges the fee when he or she achieves a return above a specified benchmark.

Created by Suresh

17

Futures
A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets. Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures.

Futures Market
An auction market in which participants buy and sell commodity/future contracts for delivery on a specified future date. Trading is carried on through open yelling and hand signals in a trading pit.

G Gamma
The rate of change for delta with respect to the underlying asset's price.

Gatekeeper
Requirements that must be met before an individual can qualify for a long-term care plan. A person must qualify for the plan's benefits before he or she can be paid out.

Gearing Ratio
A general term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds.

Ghosting
An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. Ghosting is used by corrupt companies to affect stock prices so they can profit from the price movement.

Created by Suresh

18

Gibson's Paradox
An economic observation made by J. M. Keynes during the period of the gold standard that there is a correlation between interest rates and the general price level. Keynes' finding, which he discusses in "A Treatise on Money" (1930), is a paradox because it is contrary to the view generally held by economists at the time, which was that interest rates are correlated to the rate of inflation.

Gilts
Risk-free bonds issued by the British government. They are the equivalent of U.S. Treasury securities.

Global Depository Receipt GDR


1.
A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares, but are offered for sale globally through the various bank branches. 2. A financial instrument used by private markets to raise capital denominated in either U.S. dollars or euros.

Godfather Offer
An irrefutable takeover offer made to a target company by an acquiring company.

Going Concern
A term for a company that has the resources needed in order to continue to operate. If a company is not a going concern, it means the company has gone bankrupt.

Golden Handcuffs
An incentive given to existing employees in hopes that they will decide to stay with the company.

Good Faith Money


The deposit of money into an account by a buyer to show that they have the intention of completing the deal. In most cases, the deposit amount will be a percent of the amount owed. The money in an account can also be known as "margin" or a "performance bond", depending on the type of transaction.

Created by Suresh

19

Gorilla
A company that dominates an industry without having a complete monopoly.

Graveyard Market
The period near the end of a prolonged bear market. In a graveyard market, long-time investors have taken large losses, while new investors prefer to stay liquid by sitting on the sidelines and keeping their money in cash or cash-equivalent securities until market conditions improve.

Gray Knight
A second, unsolicited bidder in a corporate takeover. A gray knight enters the scene in order to take advantage of any problems between the first bidder and the target company.

Gray Market
1.
An unofficial market where new issues of shares are bought and sold before they become officially available for trading on the stock exchange. 2. The sale or import of goods by unauthorized dealers.

Greenmail
A situation in which a large block of stock is held by an unfriendly company. This forces the target company to repurchase the stock at a substantial premium to prevent a takeover. It is also known as a "Bon Voyage Bonus" or a "Goodbye Kiss".

Greenshoe Option
An option that allows the underwriting of an IPO to sell additional shares to the public if the demand is high.

Guilt-Edged Investment
A transaction that makes money by unethical means. Culprits supposedly feel guilty having made money in such an unscrupulous way.

Created by Suresh

Вам также может понравиться