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- 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 benefit obligation.
- 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
- Actuals
- The physical commodity underlying a futures contract.
- Cash commodity, Physical
- 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 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").
- Alpha
- 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 Receipt.
- 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.
- Annuity
- A regular periodic payment made by an insurance company to a policyholder
for a specified period of time.
- 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.
- 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
- Asset
- 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
securities.
- 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.
- At-the-Money
- An option which has a strike price that is nearest to the underlying
futures price.
- 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.
Options Glossary
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