- Abnormal returns
- Related: Excess returns
- Accounts receivable turnover
- The ratio of net credit sales to average account
receivable, a measure of how quickly customers pay their bills.
- Accrued interest
- The accumulated coupon interest, paid to the seller of a bond by
the buyer (unless the bond is in default).
- Accumulated benefit obligation (ABO)
- An approximate measure of the liability of the
plan in the event of a termination at the date the calculation is performed. Related: Projected
- Acid-test ratio
- Also called the quick ratio, the ratio of current assets minus
inventories, accruals, and prepaid items to current liabilities.
- Active portfolio strategy
- A strategy that uses available information and forecasting
techniques to seek a better performance than a portfolio that is simply diversified
broadly. Related: Passive portfolio strategy
- The physical commodity underlying a futures contract.
- Cash commodity,
- After-tax profit margin
- The ratio of net income to net sales.
- 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 incentive arrangement A means of compensating the broker of a program
trade using benchmark prices for issues to be traded in determining commissions or
- 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
- In a Jensen Index, a factor to represent the portfolio's performance that
diverges from its beta, representing a measure of the manager's performance.
- American Depositary Receipt (ADR)
- The U.S. version of the International Depositary
- American option
- An option that may be exercised at any time up to and including
the expiration date. Related: European option
- 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 included.
- A regular periodic payment made by an insurance company to a
policyholder for a specified period of time.
- 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.
- Arbitrage-free option-pricing models
- Yield curve option-pricing models
- Arbitrage pricing theory (APT)
- An alternative model to the capital asset pricing
model developed by Stephen Ross and based purely on arbitrage arguments.
- Arithmetic mean return
- An average of the subperiod returns, calculated by summing
the subperiod returns and dividing by the number of subperiods.
- Arithmetic average (mean) rate of return
- Arithmetic mean return
- Ask price
- A dealer's price to sell a security
- Bid price
- Any possession that has value in an exchange.
- Asset allocation decision
- The decision regarding how the institution's funds should
be distributed among the major classes of assets in which it may invest.
- Asset-backed securities
- Securities backed by assets that are not mortgage loans.
Examples include assets backed by automobile loans and credit card receivables.
- Asset classes
- Categories of assets, such as stocks, bonds, real estate, and foreign
- Asset/equity ratio
- The ratio of total assets to stockholders' equity.
- Asset/liability management
- Also called surplus management, the task of managing
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 swap
- An interest rate swap used to alter the cash flow characteristics of an
institution's assets so as to provide a better match with its liabilities.
- Asset turnover
- The ratio of net sales to total assets.
- An option which has a strike price that is nearest to the underlying
- 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.
- Auditor's report
- A section of an annual report containing the auditor's opinion about
the veracity of the financial statements.
- Average (across-day) measures
- An estimation of price that uses the average or
representative price of a large number of trades.
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