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A
Fifth letter of a NASDAQ stock symbol specifying Class A shares.
Abandonment option
The option of terminating an investment earlier than originally planned.
Abnormal returns
The component of the return that is not due to systematic influences (market wide
influences). In other words, abnormal returns are above those predicted by the market
movement alone. Related: excess returns.
ABO
See: Accumulated Benefit Obligation
Absolute priority
Rule in bankruptcy proceedings whereby senior creditors are required to be paid
in full before junior creditors receive any payment.
Absorbed
Used in context of general equities. Securities are absorbed as long as there are
corresponding orders to buy and sell. The market has reached the absorption point
when further assimilation is impossible without an adjustment in price. See: sell
the book.
Accelerated cost recovery system (ACRS)
Schedule of depreciation rates allowed for tax purposes.
Accelerated depreciation
Any depreciation method that produces larger deductions for depreciation in the
early years of a assets life. Accelerated cost recovery system (A.C.R.S.), which
is a depreciation schedule allowed for tax purposes, is one such example.
Accounting earnings
Earnings of a firm as reported on its income statement.
Accounting exposure
The change in the value of a firms foreign currency denominated accounts due to
a change in exchange rates.
Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent
on the books.
Accounting liquidity
The ease and quickness with which assets can be converted to cash.
Accounts payable
Money owed to suppliers.
Accounts receivable
Money owed by customers.
Accounts receivable turnover
The ratio of net credit sales to average accounts receivable, a measure of how quickly
customers pay their bills.
Accretion (of a discount)
In portfolio accounting, a straight-line accumulation of capital gains on a discount
bond in anticipation of receipt of par at maturity.
Accrual bond
A bond on which interest accrues, but is not paid to the investor during the time
of accrual. The amount of accrued interest is added to the remaining principal of
the bond and is paid at maturity.
Accrued interest
Mainly applies to convertible securities. Interest that has accumulated between
the most recent payment and the sale of a bond or other fixed-income security. At
the time of sale, the buyer pays the seller the bonds price plus accrued interest,
calculated by multiplying the coupon rate by the fraction of the coupon period that
has elapsed since the last payment. (If a bondholder receives $40 in coupon payments
per bond semi-annually and sells the bond one quarter of the way into the coupon
period, the buyer pays the seller $10 as the latters proportion of interest earned.)
Accumulated Benefit Obligation (ABO)
An approximate measure of the liability of a pension plan in the event of a termination
at the date the calculation is performed. Related: projected benefit obligation.
ACH
See: Automated Clearing House
Acid-test ratio
Also called the quick ratio, the ratio of current assets minus inventories, accruals,
and prepaid items to current liabilities.
Acquiree
A firm that is being acquired.
Acquirer
A firm or individual that is acquiring something.
Acquisition
When a firm buys another firm.
Acquisition of assets
A merger or consolidation in which an acquirer purchases the selling firms assets.
Acquisition of stock
A merger or consolidation in which an acquirer purchases the acquirees stock.
ACRS
See: Accelerated cost recovery system
Active
A market in which there is frequent trading.
Active portfolio strategy
A strategy that uses available information and forecasting techniques to seek a
better performance versus a portfolio that is simply diversified broadly. Related:
passive portfolio strategy.
Act of state doctrine
This doctrine says that a nation is sovereign within its own borders and its domestic
actions may not be questioned in the courts of another nation.
Actual market
Used in context of general equities. Firm market. Antithesis of subject market.
Actuals
The physical commodity underlying a futures contract. Cash commodity, physical.
ACU
See: Asian currency units
A-D
Refers to Advance-Decline. Measurement of the number of issues trading above their
previous closing prices less the number trading below their previous closing prices
over a particular period. As a technical measure of market breadth, the steepness
of the A-D line graphically shows whether a strong bull or bear market is underway.
Additional hedge
A protection against borrower fallout risk in the mortgage pipeline.
Adjustable rate
Mainly applies to convertible securities. Refers to interest rate or dividend which
is adjusted periodically, usually based on a standard market rate outside the control
of the bank or savings institution, such as that prevailing on Treasury bonds or
notes. Typically, such issues have a set floor or ceiling, called caps and collars
which limit the adjustment.
Adjustable rate mortgage (ARM)
A mortgage that features predetermined adjustments of the loan interest rate at
regular intervals based on an established index. The interest rate is adjusted at
each interval to a rate equivalent to the index value plus a predetermined spread,
or margin, over the index, usually subject to per-interval and to life-of-loan interest
rate and/or payment rate caps.
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may becollateralized by mortgages and M.B.S.s.
Adjusted present value (APV)
The net present value analysis of an asset if financed solely by equity (present
value of un-levered cash flows), plus the present value of any financing decisions
(levered cash flows). In other words, the various tax shields provided by the deductibility
of interest and the benefits of other investment tax credits are calculated separately.
This analysis is often used for highly leveraged transactions such as a leveraged
buy-out.
Administrative pricing rules
IRS rules used to allocate income on export sales to a foreign sales corporation.
ADR
See: American Depository Receipt
ADR Fees
Fees associated with the creating or releasing of A.D.R.s from ordinary shares,
charged by the commercial banks with correspondent banks in the international sites.
ADR Ratio
The number of ordinary shares into which an A.D.R. can be converted.
ADS
See: American Depository Share
Advance commitment
A promise to sell an asset before the seller has lined up purchase of the asset.
This seller can offset risk by purchasing a futures contract to approximately fix
the sales price.
Adverse selection
A situation in which market participation is a negative signal.
AEX
See: Amsterdam Exchange
Affirmative covenant
A bond covenant that specifies certain actions the firm must take.
AFM
See: Amman Financial Market
After-tax profit margin
The ratio of net income to net sales.
After-tax real rate of return
The after-tax rate of return minus the inflation rate.
Agencies
See: Federal agency securities.
Agency
Used in context of general equities. Act of buying or selling for the account and
risk of a customer. Generally, an agent, or broker, acts as intermediary between
buyer and seller, taking no financial risk personally or as a firm, and charging
a commission for the service. The broker represents a customer buyer/seller to a
customer seller/buyer and does not act as principal for the firms own trading account.
Antithesis of principal. See: dealer.
Agency bank
A form of organization commonly used by foreign banks to enter the U.S. market.
An agency bank cannot accept deposits or extend loans in its own name; it acts as
agent for the parent bank. It is also the financial institution that issues A.D.R.s
to the general market.
Agency basis
A means of compensating the broker of a program trade solely on the basis of commission
established through bids submitted by various brokerage firms.
Agency costs
The incremental costs of having an agent make decisions for a principal.
Agency incentive arrangement
A means of compensating the broker of a program trade using benchmark prices for
issues to be traded in determining commissions or fees.
Agency pass-throughs
Mortgage pass-through securities whose principal and interest payments are guaranteed
by government agencies, such as the Government National Mortgage Association (Ginnie
Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National
Mortgage Association(Fannie Mae).
Agency problem
Conflicts of interest among stockholders, bondholders, and managers.
Agency theory
The analysis of principal-agent relationships, wherein one person, an agent, acts
on behalf of another person, a principal.
Agent
The decision-maker in a principal-agent relationship.
Aggregation
Process in corporate financial planning whereby the smaller investment proposals
of each of the firms operational units are aggregated and effectively treated as
a whole.
Aggressively
Used in context of general equities. For a customer it means working to buy or sell
ones stock, with an emphasis on execution over price. For a trader it means acting
in a way that puts the firms capital at higher risk through paying a higher price,
selling cheaper, or making a larger short sale or purchase than the trader would
under normal circumstances.
Aging schedule
A table of accounts receivable broken down into age categories (such as 0-30 days,
30-60 days, and 60-90 days), which is used to determine if customer payments are
keeping close to schedule.
Ahead of itself
Used in context of general equities. Refers to equities that are overbought or oversold
on a fundamental basis.
Ahead of you
Used for listed equity securities. At the same price but entered ahead of your order/interest,
usually referring to the specialists book. See: behind, matched orders, priority,
stock ahead.
AIBD
Association of International Bond Dealers
AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMRs) Performance Presentation
Standards Implementation Committee is charged with the responsibility to interpret,
revise and update the AIMR Performance Presentation Standards (AIMR-PPS(TM) for
portfolio performance presentations.
All equity rate
The discount rate that reflects only the business risks of a project, distinct from
the effects of financing.
All-in cost
Total costs, explicit and implicit.
All or none order (AON)
Used in context of general equities. A limited price order which is to be executed
in its entirety or not at all (no partial transaction), and thus is testing the
strength/conviction of the counterparty. Unlike an F.O.K. order, an A.O.N. order
is not to be treated as cancelled if not executed as soon as it is represented in
the trading crowd, but instead remains alive until executed or cancelled. The making
of all or none bids or offers in stocks is prohibited and the making of all or none
bids or offers in bonds is subject to the restrictions of Rule 61. A.O.N. orders
are not shown on the specialists book because they can not be traded in pieces.
Antithesis of any-part-of order. See: F.O.K. order.
All-or-none underwriting
An arrangement whereby a security issue is canceled if the underwriter is unable
to re-sell the entire issue.
Alpha
Measure of risk adjusted performance. An alpha is usually generated by regressing
the security or mutual funds excess return on the S&P 500 excess return. The beta
adjusts for the risk (the slope coefficient). The alpha is the intercept. Example:
Suppose the mutual fund has a return of 23% and the short-term interest rate is
5% (excess return is 20%). During the same time the market excess return is 9%.
Suppose the beta of the mutual fund is 2.0 (twice as risky as the S&P 500). The
expected return given the risk is 2x9%=18%. The actual excess return is 20%. Hence,
the alpha is 2% or 200 basis points. Alpha is also know as Jensen Index. Related:
Risk adjusted return.
Alternative mortgage instruments
Variations of mortgage instruments such as adjustable-rate and variable-rate mortgages,
graduated-payment mortgages,0 reverse-annuity mortgages, and several seldom-used
variations.
Alternative order
Used in context of general equities. Order giving a broker a choice between two
courses of action either to buy or sell, never both. Execution of one course automatically
eliminates the other. An example is a combination buy limit/buy stop order, wherein
the buy limit is below the current market and the buy stop is above. If the order
is for one unit of trading when one part of the order is executed on the occurrence
of one alternative, the order on the other alternative is to be treated as cancelled.
If the order is for an amount larger than one unit of trading, the number of units
executed determine the amount of the alternative order to be treated as cancelled.
Either-or order.
American Depository Receipts (ADRs)
Certificates issued by a U.S. depositary bank, representing foreignshares held by
the bank, usually by a branch or correspondent in the country of issue. One A.D.R.
may represent a portion of a foreign share, one share or a bundle of shares of a
foreign corporation. If the A.D.R.s are sponsored, the corporation provides financial
information and other assistance to the bank and may subsidize the administration
of the A.D.R.s. Unsponsored A.D.R.s do not receive such assistance. A.D.R.s carry
the same currency, political and economic risks as the underlying foreign share.
Arbitrage keeps the prices of A.D.R.s and underlying foreign shares, adjusted for
the SDR/ordinary ration essentially equal. American depository shares(A.D.S.s) are
a similar form of certification.
American depository share (ADS)
Foreign stock issued in the U.S. and registered in the A.D.R. system.
American option
An option that may be exercised at any time up to and including the expiration date.
Related: European option
American shares
Securities certificates issued in the U.S. by a transfer agent acting on behalf
of the foreign issuer. The certificates represent claims to foreign equities.
American Stock Exchange (AMEX)
Stock exchange with the third largest volume of trading in the U.S. Located at 86
Trinity Place in downtown Manhattan. The bulk of trading on A.M.E.X. consists of
index options (computer technology index, institutional index, major market index)
and shares of small to medium-size companies is predominant. Recently merged with
N.A.S.D.A.Q. See: Curb.
American-style option
An option contract that can be exercised at any time between the date of purchase
and the expiration date. Most exchange-traded options are American style.
AMEX
See: American Stock Exchange
Amman Financial Market (AFM)
Established in 1976, the A.F.M. is the only stock exchange in Jordan.
Amortization
The repayment of a loan by installments.
Amortization factor
The pool factor implied by the scheduled amortization assuming no prepayemts.
Amortizing interest rate swap
Swap in which the principal or notional amount rises (falls) as interest rates rise
(decline).
Amsterdam Exchanges (AEX)
Exchange that comprises the A.E.X.-Effectenbeurs, the A.E.X.-Optiebeurs (formerly
the European Options Exchange or E.O.E.) and the A.E.X.-Agrarische Termijnmarkt.
A.E.X.-Data Services is the operating company responsible for the dissemination
of data from the Amsterdam Exchanges via its integrated Mercury 2000 system.
AMTEL
Used in context of general equities. In-house message system entered and displayed
through Quotron A page.
Analyst
Employee of a brokerage or fund management house who studies companies and makes
buy-and-sell recommendations on stocks of these companies. Most specialize in a
specific industry.
Angels
Individuals providing venture capital.
Announcement date
Date on which particular news concerning a given company is announced to the public.
Used in event studies, which researchers use to evaluate the economic impact of
events of interest.
Annual effective yield
See: annual percentage yield.
Annual fund operating expenses
For investment companies, the management fee and other expenses, including the expenses
for maintaining shareholder records, providing shareholders with financial statements,
and providing custodial and accounting services. For 12b-1 funds, selling and marketing
costs are also included.
Annualized gain
If stock X appreciates 1.5% in one month, the annualized gain for that stock over
a twelve month period is 12*1.5% = 18%. Compounded over the twelve month period,
the gain is (1.015)^12 -1 = 19.6%.
Annualized holding period return
The annual rate of return that when compounded t times, generates the same t-period
holding return as actually occurred from period 1 to period t.
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5% quarterly
return has an A.P.R. of 20%.
Annual percentage yield (APY)
The effective, or true, annual rate of return. The A.P.Y. is the rate actually earned
or paid in one year, taking into account the affect of compounding. The A.P.Y. is
calculated by taking one plus the periodic rate and raising it to the number of
periods in a year. For example, a 1% per month rate has an A.P.Y. of 12.68% (1.01^12
-1).
Annual rate of return
There are many ways of calculating the annual rate of return. If the rate of return
is calculated on a monthly basis, we sometimes multiply this by 12 to express an
annual rate of return. This is often called the annual percentage rate (A.P.R.).
The annual percentage yield annual percentage yield (A.P.Y.), described above, is
used to include the affect of compounding interest.
Annuity
A regular periodic payment made by an insurance company to a policyholder for a
specified period of time.
Annuity due
An annuity with n payments, wherein the first payment is made at time t = 0 and
the last payment is made at time t = n - 1.
Annuity factor
Present value of $1 paid for each of t periods.
Annuity in arrears
An annuity with a first payment one full period hence, rather than immediately.
Anticipation
Arrangements whereby customers who pay before the final date may be entitled to
deduct a normal rate of interest.
Antidilutive effect
Result of a transaction that increases earnings per common share (e.g. by decreasing
the number of shares outstanding).
Any-or-all bid
Often used in risk arbitrage. Takeover bid where the acquirer offers to pay a set
price for all outstanding shares of the target company, or any part thereof; contrasts
with two tier bid.
Any-part-of order
Used in context of general equities. Order to buy or sell a quantity of stock in
pieces if necessary. Antithesis of an all-or-none order (A.O.N.).
AON
See: All or none order
AOS
See: Automated Order System
Appraisal ratio
The signal-to-noise ratio of an analysts forecasts. The ratio of alpha to residual
standard deviation.
Appraisal rights
A right of shareholders in a merger to demand the payment of a fair price for their
shares, as determined independently.
Appropriation request
Formal request for funds for capital investment project.
APR
See: Annual Percentage Rate
APT
See: Arbitrage Pricing Theory
APT
See: Automated Pit Trading
APV
See: Adjusted Present Value
APY
See: Annual Percentage Yield
Arbitrage
The simultaneous buying and selling of a security at two different prices in two
different markets, resulting in profits without risk. Perfectly efficient markets
present no arbitrage opportunities. Perfectly efficient markets seldom exist. However,
arbitrage opportunities are often precluded because of transactions costs.
Arbitrage Pricing Theory (APT)
An alternative model to the capital asset pricing model developed by Stephen Ross
and based purely on arbitrage arguments. The A.P.T. implies that there are multiple
risk factors that need to be taken into account when calculating risk adjusted performance
or alpha.
Arbitrageur
Often used in risk arbitrage. One who profits from the differences in price when
the same, or extremely similar, security, currency, or commodity is traded on two
or more markets. He does so by simultaneously purchasing and selling these securities
to take advantage of pricing differentials (spreads) created by market conditions.
See: risk arbitrage, convertible arbitrage, index arbitrage, and international arbitrage.
Are you open
Used in context of general equities. Can a new customer still participate on opposing
side of the trade from that which the first customer initiated?, thus inquiring
as to whether or not any portion of that trade is still available (i.e., If asking
customer on buy side, is there stock still available from the block sold by the
initial customer?). See: open.
Arithmetic average (mean) rate of return
Arithmetic mean return.
Arithmetic mean return
An average of the subperiod returns, calculated by summing the subperiod returns
and dividing by the number of subperiods.
ARM
See: Adjustable rate mortgage
Arms index
Also known as a trading index (TRIN)= (number of advancing issues)/(number of declining
issues)(Total up volume )/(total down volume). An advance/decline market indicator.
Less than 1.0 indicates bearish demand, while above 1.0 is bullish. The index often
is smoothed with a simple moving average.
Arms length price
The price at which a willing buyer and a willing unrelated seller would freely agree
to transact.
Around us
Used in context of general equities. See: away from us.
ARPS
See: Adjustable rate preferred stock
ARPS
See: Auction rate preferred stock
ARR
See: Average rate of return
Articles of incorporation
Legal document establishing a corporation and its structure and purpose.
Asian currency units (ACUs)
Dollar deposits held in Singapore or other Asian centers.
Asian option
Option based on the average price of the underlying assets during the life of the
option.
Ask
This is the quoted ask, or the lowest price an investor will accept to sell a stock.
Practically speaking, this is the quoted offer at which an investor can buy shares
of stock; also called the offer price.
Asked price
Used in context of general equities. Price at which a security or commodity is offered
for sale on an exchange or in the O.T.C. Market.
Asked to bid/offer
Used in context of general equities. Usually a seller (buyer) looking to aggressively
sell (buy) stock, usually asking for a capital commitment from an investment bank.
Asset
Any possession that has value in an exchange.
Asset/equity ratio
The ratio of total assets to stockholder equity.
Asset/liability management
Also called surplus management, the task of managing the funds of a financial institution
to accomplish the two goals of a financial institution: (1) to earn an adequate
return on funds invested and (2) to maintain a comfortable surplus of assets beyond
liabilities.
Asset activity ratios
Ratios that measure how effectively the firm is managing its assets.
Asset allocation decision
The decision regarding how an institutions funds should be distributed among the
major classes of assets in which it may invest.
Asset-backed security
A security that is collateralized by loans, leases, receivables, or installment
contracts on personal property, not real estate.
Asset-based financing
Methods of financing in which lenders and equity investors look principally to the
cash flow from a particular asset or set of assets for a return on, and the return
of, their financing.
Asset classes
Categories of assets, such as stocks, bonds, real estate and foreign securities.
Asset-coverage test
A bond indenture restriction that permits additional borrowing on if the ratio of
assets to debt does not fall below a specified minimum.
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another defaulting
borrower.
Asset pricing model
A model for determining the required or expected rate of return on an asset. Related:
Capital asset pricing model and arbitrage pricing theory.
Assets
A firms productive resources.
Assets requirements
A common element of a financial plan that describes projected capital spending and
the proposed uses of net working capital.
Asset substitution
Occurs when a firm invests in assets that are riskier than those that the debtholders
expected.
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firms existing assets
and expropriate value from the debtholders.
Asset swap
An interest rate swap used to alter the cash flow characteristics of an institutions
assets in order to provide a better match with its liabilities.
Asset turnover
The ratio of net sales to total assets.
Assignment
The receipt of an exercise notice by an options writer that requires the writer
to sell (in the case of a call) or purchase (in the case of a put) the underlying
security at the specified strike price.
ASX
See: Australian Stock Exchange
Asymmetric information
Information that is known to some people but not to other people.
Asymmetric taxes
A situation wherein participants in a transaction have different net tax rates.
Asymmetric volatility
Phenomenon that volatility is higher in down market than in up markets
Asymmetry
A lack of equivalence between two things, such as the unequal tax treatment of interest
expense and dividend payments.
At/for
Used in context of general equities. Paramount terms used to differentiate an offering
(offer stock at) and bid (bid for stock), respectively. In an offering, the trading
syntax followed is Quantity-at-Price; however, in a bid, the syntax followed is
Price-for-Quantity.
At the bell
Used in context of general equities. At the opening or close.
At the figure
Used in context of general equities. At the whole integer price (excluding the fraction)
closest to the side of the market (bid/ask) being discussed. At the full.
At the full
Used in context of general equities. At the figure.
At-the-money
An option is at-the-money if the strike price of the option is equal to the market
price of the underlying security. For example, if xyz stock is trading at 54, then
the xyz 54 option is at-the-money.
At the opening order
Used in context of general equities. Market order or limited price order which is
to be executed at the opening (and corresponding price) of the stock or not at all,
and any such order or the portion thereof not so executed is to be treated as cancelled.
Attribute bias
The tendency of stocks preferred by the dividend discount model to share certain
equity attributes such as low price-earnings ratios, high dividend yield, high book-value
ratio or membership in a particular industry sector.
Auction markets
Markets in which the prevailing price is determined through the free interaction
of prospective buyers and sellers, as on the floor of the stock exchange.
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every seven weeks
through a Dutch auction.
Auditors report
A section of an annual report containing the auditors opinion about the veracity
of the financial statements.
Australian Stock Exchange (ASX)
Established in 1987 following the amalgamation of the six independent stock exchanges
operating in the Australian State capitals. The A.S.X. is the tenth largest stock
exchange in the world on the basis of domestic capitalization.
Autex
Used in context of general equities. Video communication network through which brokerage
houses alert institutional investors of their desire to transact block business
(a purchase or sale) in a given security. Indications transmit small, medium, and
large sizes only, with occasional limits mentioned. Supers are messages with specific
size and price included. Both indications and supers can only be seen by customers
(institutional subscribers to Autex). Trade recaps, advertised block trades entered
by the dealer/subscribers, are also displayed, but can be seen by both institutions
and dealers. See: expunge, size.
Authorized shares
Number of shares authorized for issuance by a firms corporate charter.
Autocorrelation
The correlation of a variable with itself over successive time intervals. Sometimes
called serial correlation
Automated Clearing House (ACH)
A collection of 32 regional electronic interbank networks used to process transactions
electronically with a guaranteed one-day bank collection float.
Automated Order System (AOS)
Investment banks computerized order-entry system which sends single order entries
to D.O.T. (Odd-Lot) or to investment banks floor brokers on the exchange. (Round
lot, G.T.C. orders)
Automated Pit Trading (APT)
Introduced in 1989, A.P.T. is the L.I.F.F.E. screen-based trading system that replicates
the open outcry method of trading on screen. A.P.T. is used to extend the trading
day for the major futures contracts as well as to provide a daytime trading environment
for non-floor trading products.
Automatic stay
The restricting of liability holders from collection efforts related to collateral
seizure. Automatically imposed when a firm files for bankruptcy under Chapter 11.
Autoquote
Autoquote indicative prices are generated for many of the financial options contracts
traded at LIFFE using standard mathematical models as derived by Black and Scholes
and Cox-Ross-Rubenstein. Autoquote calculates prices for all series by processing
variables captured in real-time from other systems and trading members each time
the underlying price changes. Autoquotes indicate where a series may trade given
the current level of the underlying instrument.
Autoregressive
Using past data or variable of interest to predict future values of the same variable.
Availability float
Checks deposited by a company that have not yet been cleared.
Available on the way in
Used in context of general equities. Stock is available to new customer as trade
initiated by another customer is about to be consummated (on the exchange floor).
Usually said to an inquiring salesman. See: open.
Average
An arithmetic mean return of selected stocks intended to represent the behavior
of the market or some component of it. One good example is the widely quoted Dow
Jones Industrial Average, which adds the current prices of the 30 DJIAs stocks,
and divides the results by a predetermined number, the divisor.
Average (across-day) measures
An estimation of price that uses the average or representative price of a large
number of trades.
Average accounting return
The average project earnings after taxes and depreciation divided by the average
book value of the investment during its life.
Average age of accounts receivable
The weighted-average age of all of the firms outstanding invoices.
Average collection period, or days receivables
The ratio of accounts receivables to sales, or the total amount of credit extended
per dollar of daily sales (average AR/sales * 365).
Average cost of capital
A firms required payout to the bondholders and to the stockholders expressed as
a percentage of capital contributed to the firm. Average cost of capital is computed
by dividing the total required cost of capital by the total amount of contributed
capital.
Average life
Also referred to as the weighted-average life (W.A.L.). The average number of years
that each dollar of unpaid principal due on the mortgage remains outstanding. Average
life is computed as the weighted average time to the receipt of all future cash
flows, using as the weights the dollar amounts of the principal paydowns.
Average maturity
The average time to maturity of securities held by a mutual fund. Changes in interest
rates have greater impact on funds with longer average life.
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.
Away
A trade, quote, or market that does not originate with the dealer in question, e.g.,
the bid is 98-10 away from me.
Away from the market
Used in context of general equities. Out of line with the inside market at this
point in time, such as when a bid on a limit order is lower or the offer price is
higher than the current market price for the security; held by the specialist for
later execution unless F.O.K. Antithesis of in-line.
Away from us
Used in context of general equities. Involving a competing broker/dealer. Trading
away from us signifies that stock was being bought and/or sold with institutions
using other trading firms. Markets away signify that the bid or offering being quoted
is from another firm, but the Investment bank may be getting a preference call.
Away from you
Used for listed equity securities. See: outside of you.
Axe to grind
Used in context of general equities. Involvement in a security, whether through
a position, order, or inquiry.
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