VIEWS: 24 PAGES: 8 CATEGORY: Statistics POSTED ON: 6/14/2011
78. Efficient market: An investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. 79. Emerging market: Emerging markets are sought by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP. 80. Efficient Set: - A graphical representation of the set of portfolios giving the highest level of expected return at different levels of risk.
E 78. Efficient market: An investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. 79. Emerging market: Emerging markets are sought by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP. 80. Efficient Set: - A graphical representation of the set of portfolios giving the highest level of expected return at different levels of risk. 81. Event Study: - A study to determine what affect the release of information or its timing has on a security's price. Most analysts believe that information should be released in portions so that the market can price out good or bad information and reduce volatility. 82. Efficient market hypothesis: A hypothesis which states that the price of a security is a reflection of all available information about it and thus represents its true value. It states also that the current price of a security is the most appropriate measure of future returns 83. Economic order quantity: An inventory-related equation that determines the optimum order quantity that a company should hold in its inventory given a set cost of production, demand rate and other variables. 84. Ex-dividend: A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be given ex-dividend status if a person has been confirmed by the company to receive the dividend payment. 85. Efficient portfolio: A portfolio that provides the greatest expected return for a given level of risk (i.e., standard deviation), or, equivalently, the lowest risk for a given expected return. 86. Euro dollar: A U.S.-dollar denominated bond issued by an overseas company and held in a foreign institution outside both the U.S. and the issuer's home nation. 87. Euro market: In some instances it may be more attractive for a U.S. bank to borrow or place funds in the Euro market rather than buying or selling Federal funds. However rates on both Fed funds and overnight Eurodollars are closely related. 88. Earning per share: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. 89. Exchange risk: The uncertainty in the return on foreign financial asset owing to unpredictability regarding the rate which the foreign currency can be exchanged into the investors own currency. 90. Electronic money & digital currency Electronic money is money which exists only in banking computer systems and is not held in any physical form. 91. Exchange rate: - The price of one currency expressed in terms of another currency. The value of two currencies relative to each other. For example, on a given day, one may trade one U.S. dollar for a certain number of British pounds. A currency's exchange rates may be floating (that is, they may change from day to day) or they may be pegged to another currency. 92. Effective Interest Rate: The effective interest rate, effective annual interest rate, annual equivalent rate (AER) or simply effective rate is the interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears. The effective interest rate differs in two important respects from the annual percentage rate (APR): 1. the effective interest rate generally does not incorporate one-time charges such as front-end fees; 2. The effective interest rate is (generally) not defined by legal or regulatory authorities (as APR is in many jurisdictions). 93. Euro bond: Eurobond is issued by an international syndicate and categorized according to the currency in which it is denominated. F 94. Finance: The science that describes the management of money, banking, credit, investments, and assets. 95. Factor market: A marketplace where factors of production such as labor, capital, and resources are purchased and sold 96. Financial market: Broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. 97. Fourth market: The trading of exchange-listed securities between institutions on a private over-the-counter computer network, rather than over a recognized exchange 98. Forward market: The over-the-counter trading of forward contracts. The forward market is a general term used to refer to the informal market in which these contracts are entered and exited. 99. Forward Rate: The rate at which a particular currency or commodity may be purchased on a forward contract. 100. Financial assets: An asset that derives value because of a contractual claim. Stocks, bonds, bank deposits, and the like are all examples of financial assets. 101. Face value: The nominal value or dollar value of a security stated by the issuer. 102. Flotation cost: The selling cost or distribution cost of issuing new securities 103. Financial intermediary An institution that acts as the middleman between investors and firms raising funds. Often referred to as financial institutions. 104. Financial risk: Financial risk is the additional risk a shareholder bears when a company uses debt in addition to equity financing. 105. Financial leverage: Financial leverage involves using fixed costs to finance the firm, and will include higher expenses before interest and taxes (EBIT). 106. Financial lease: A long-term lease in which the lessee must record the leased item as an asset on his/her balance sheet and record the present value of the lease payments as debt. 107. FRICTO: The acronym stands for Flexibility, Risk, Income, Control, Timing, and Others which are considered in choosing alternative financing sources. 108. Fill or kill order: A trading order that is canceled if the broker is unable to execute it immediately. 109. Financial statement Any list of the assets and liabilities of a company designed to show its financial health, profits or losses, and/or other variables. 110. Flexible budget: A set of revenue and expense projections at various production or sales volumes. The cost allowances for each expense are able to vary as sales or productions vary. 111. Fixed assets: Fixed asset, also known as a non-current asset or as property, plant, and equipment (PP&E), is a term used in accounting for assets and property which cannot easily be converted into cash. 112. Fixed cost: Fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. 113. Filter rule: A technical trading rule in which an investor buys and sells stocks if their price movement reverses direction by a minimally acceptable percentage. 114. Financial engineering: The process of creating a new investment vehicle. Financial engineering is often mathematically intensive, as a number of risks and other factors must be considered before the new product is marketable. 115. Financial distress: A stage before bankruptcy where a company's creditors are not being paid or are paid with significant difficulty. While a company can avoid moving from financial distress to bankruptcy, it can be very difficult. Often, financial distress can come with its own costs, such as fees paid to lawyers or the costs of extra interest for late payments. 116. Financial analyst: An individual who analyzes financial assets in order to determine the investment characteristics of those assets and to identify mispricing among that asset. An analyst uses technical or fundamental signals to determine which securities are likely to be profitable, and which are not. Financial analysts help persons and organizations in making investment decisions. 117. Financial manager: - Financial manager play an important role in mergers and consolidations and in global expansion and related financing. These areas require extensive, specialized knowledge to reduce risks and maximize profit. 118. Financial structure:- The way in which a company's assets are financed, such as short-term borrowings, long-term debt, and owners equity. Financial structure differs from capital structure in that capital structure accounts for long-term debt and equity only. G 119. Golden parachute: is an agreement between a company and an employee (usually upper executive) specifying that the employee will receive certain significant benefits if employment is terminated 120. Greenmail: is the practice of acquiring a large portion of the shares of a company and then forcing the issuing company to buy enough of the shares back to avoid a hostile takeover. It is similar to blackmail and can be effective because a company wishing to thwart the takeover may have to pay the holder of the shares an inflated price to get buy the shares back. H 121. Hybrid financing: A hybrid of debt and equity financing that is is typically used to finance the expansion of existing companies. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. 122. Holding company: A parent corporation that owns enough voting stock in another corporation to control its board of directors 123. Hard money or soft money: Governments and organizations prefer hard money because it provides a predictable stream of funds. Soft money 1. The "one-time" funding from governments and organizations for a project or special purpose. 2. Paper currency, as opposed to gold, silver, or some other coined metal. 124. Hire Purchase: - The right to purchase an asset by the user of the asset according to a pre-agreed method. The user may be the owner for tax purposes. 125. Homemade Dividend: A form of investment income that comes from the sale of a portion of shares held by a shareholder. This differs from dividends that shareholders receive from a company according to the number of shares the shareholder has. I 126. International finance: International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes the study of futures, options and currency swaps. International finance is a branch of international economics. 127. Investment: Investment is putting money into something with the expectation of profit. More specifically, investment is the commitment of money or capital to the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest, dividends, or appreciation of the value of the instrument (capital gains). It is related to saving or deferring consumption. 128. Income bond: Generally, an income bond promises to repay principal but only to pay interest when the company earns a certain amount of money. In some cases, if the interest is unpaid on an income bond, it may accumulate as a claim against the company when the bond matures. 129. Initial public offering: An initial public offering (IPO), referred to simply as an "offering" or "flotation", is when a company (called the issuer) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately owned companies looking to become publicly traded. 130. Immunization: Protection against interest rate risk by holding assets and liabilities of equal durations. 131. Inflation: In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. 132. Internal rate of return: The internal rate of return (IRR) is a rate of return used in capital budgeting to measure and compare the profitability of investments. It is also called the discounted cash flow rate of return. 133. Investment banker: An individual or institution which acts as an underwriter or agent for corporations and municipalities issuing securities. Most also maintain broker/dealer operations, maintain markets for previously issued securities, and offer advisory services to investors. 134. Income statement: Income statement is a company's financial statement that indicates how the is transformed into the net income. 135. Income tax: An income tax is a tax levied on the income of individuals or businesses (corporations or other legal entities). 136. Inventory management:- Inventory management is primarily about specifying the size and placement of stocked goods. . Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. 137. Interim Dividend: - A dividend declared before a firm's annual earnings and dividend-paying ability are accurately known by its management. An interim dividend is ordinarily paid in each of the first three quarters of the fiscal year. 138. Inside information: - Relevant information on a company that has not been released to the public. For example, a person may have access to a company's financial state prior to its official announcement. 139. Investment opportunity schedule: a) A determination of the weighted average cost of capital at various increments of financing. b) A list of investment opportunities available to the firm. c) An internal rate of return ranking of capital projects from best to worst. d) A set of decision criteria for determining the acceptability of capital projects. 140. Intrinsic value: The value of a security, justified by factors such as assets, dividends, earnings, and management quality. Intrinsic value is at the core of fundamental analysis since it is used in an attempt to calculate the value for an individual stock and then compare it with the market price. 141. Investment policy statement: A formal description of the investment philosophy that will be utilized for a given fund, retirement plan, or other investment vehicle. 142. Interest rate parity: is a non-arbitrage condition which says that the returns from borrowing in one currency, exchanging that currency for another currency and investing in interest-bearing instruments of the second currency, while simultaneously purchasing futures contracts to convert the currency back at the end of the holding period, should be equal to the returns from purchasing and holding similar interest-bearing instruments of the first currency.
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