Financial and Business Terms - from Al to Am
Thursday, April 23, 2009
- All equity rate: The discount rate that reflects only the business risks of a project and abstracts from the effects of financing.
- All-or-none underwriting: An arrangement whereby a security issue is canceled if the underwriter is unable to re-sell the entire issue.
- Alpha: A measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A positive alpha is the extra return awarded to the investor for taking a risk, instead of accepting the market return. For example, an alpha of 0.4 means the fund outperformed the market-based return estimate by 0.4%. An alpha of -0.6 means a fund's monthly return was 0.6% less than would have been predicted from the change in the market alone. In a Jensen Index, it is factor to represent the portfolio's performance that diverges from its beta, representing a measure of the manager's performance.
Alpha equationThe alpha of a fund is determined as follows:
[ (sum of y) -((b)(sum of x)) ] / n
where: n =number of observations (36 months)
b = beta of the fund
x = rate of return for the S&P 500
y = rate of return for the fund - Alternative mortgage instruments: Variations of mortgage instruments such as adjustable-rate and variable-rate mortgages, graduated-payment mortgages, reverse-annuity mortgages, and several seldom-used variations.
- American Depositary Receipts (ADRs): Certificates issued by a U.S. depositary bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADR's are "sponsored," the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADRs. "Unsponsored" ADRs do not receive such assistance. ADRs carry the same currency, political and economic risks as the underlying foreign share; the prices of the two, adjusted for the SDR/ordinary ratio, are kept essentially identical by arbitrage. American depositary shares(ADSs) are a similar form of certification.
- American option: An option that may be exercised at any time up to and including the expiration date.
- 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): The second-largest stock exchange in the United States. It trades mostly in small-to medium-sized companies.
- 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.
- 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 national amount rises (falls) as interest rates rise (decline).
Labels: Financial and Business Terms / Dictionary
posted @ 11:03 AM,
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