Market capitalization rate

Similar financial terms

Mark-to-market
The practice of revaluing an instrument ot reflect the current values of the relevant market variables.

Inverted Market
A market where futures prices decrease with maturity.

Gray market
An unofficial market where new share issues are bought and sold before they officially become available for trading on the stock exchange. The same logic applies to the forward market for newly issued bonds market - bonds are traded before the final terms on the bond are negotiated.

Bull market
General market condition characterized by optimism, rising prices in stocks, and a belief that near-term future will see higher market prices for stocks.

Bear Market
An extended period of general price decline in an individual security, an asset, or a market.

Market Close
The term market close refers to the time of day that a market closes. In the 24h foreign exchange market, there is no official market close. 5:00 PM EST is often referred to and understood as the market close because value dates for spot transactions change to the next new value date at that time.

Efficient market
A theory about the stock market stating that the current prices of stocks reflect all that is known about the company at that moment, and that new information is reflected immediately in changes to that stock's market price.

Yankee market
The foreign market in the United States.

Middle East dollar market
A Middle East dollar market exists in Bahrain where eurodollars and other currencies are intermediated in by a number of Arab and non-Arab banks. Collectively these various regional banking centres make the eurocurrency market one of the largest moneymarkets in the world.

Upstairs market
A network of trading desks for the major brokerage firms and institutional investors that communicate with each other by means of electronic display systems and telephones to facilitate block trades and program trades.

Two-sided market
A market in which both bid and asked prices, good for the standard unit of trading, are quoted.

Tight market
A tight market, as opposed to a thin market, is one in which volume is large, trading is active and highly competitive, and spreads between bid and ask prices are narrow.

Third market
Exchange-listed securities trading in the OTC market.

Thin market
A market in which trading volume is low and in which consequently the bid-ask spread are wide and the liquidity of the instrument traded is low.

Technical condition of a market
Demand and supply factors affecting price, in particular the net position, either long or short, of the dealer community.

Stock market
Also called the equity market, the market for trading equities.

Specific issues market
The market in which dealers reverse in securities they wish to short.

Security market plane
A plane that shows the equilibrium between expected return and the beta coefficient of more than one factor.

Security market line
Line representing the relationship between expected return and market risk.

Secondary market
The market where securities are traded after they are initially offered in the primary market. Most trading is done in the secondary market. The New York stock Exchange, as well as all other stock exchanges, the bond markets, etc., are secondary markets. Seasoned securities are traded in the secondary market.

Samurai market
The foreign market in Japan.

Rembrandt market
The foreign market in the Netherlands.

Real market
The bid and offer prices at which a dealer could do "size." Quotes in the brokers market may reflect not the real market, but pictures painted by dealers playing trading games.

Primary market
The first buyer of a newly issued security buys that security in the primary market. All subsequent trading of those securities is done in the secondary market.

Market-to-Book
Compares a stock's market value to the value of total assets less total liabilities (book value). Determined by dividing current stock price by common stockholder equity per share (book value), adjusted for stock splits. Also called Price/book ratio

Perfectly competitive financial markets
Markets in which no trader has the power to change the price of goods or services. Perfect capital markets are characterized by the following conditions: a) trading is costless, and access to the financial markets is free, b) information about borrowing and lending opportunities is freely available, c) there are many traders, and no single trader can have a significant impact on market prices.

Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital market environment, that shows the irrelevance of dividend policy in a perfect capital market.

Perfect market view (of capital structure)
Analysis of a firm's capital structure decision, which shows the irrelevance of capital structure in a perfect capital market.

Perfect capital market
A market in which there are never any arbitrage opportunities.

Over-the-counter market (OTC)
A decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked together by telephones and computer screens. The market is for securities not listed on a stock or bond exchange. The NASDAQ market is an OTC market for U.S. stocks.

Operationally efficient market
Also called an internally efficient market, one in which investors can obtain transactions services that reflect the true costs associated with furnishing those services.

Open-market purchase operation
A systematic program of repurchasing shares of stock in market transactions at current market prices, in competition with other prospective investors.

Open-market operation
Purchase or sale of government securities by the monetary authorities to increase or decrease the domestic money supply.

One-way market
(a) A market in which only one side, the bid or asked, is quoted or firm. (b) A market that is moving strongly in one direction.

Nonmarketed claims
Claims that cannot be easily bought and sold in the financial markets, such as those of the government and litigants in lawsuits.

New-issues market
The market in which a new issue of securities is first sold to investors.

Negotiated markets
Markets in which each transaction is separately negotiated between buyer and seller (i.e. an investor and a dealer).

Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.

Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the home currency value of a foreign currency transaction.

Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances, commercial paper, repurchase agreements and government bills. The net asset value per share is maintained at $1. 00. Such funds are not federally insured, although the portfolio may consist of guaranteed securities and/or the fund may have private insurance protection.

Money market demand account
An account that pays interest based on short-term interest rates.

Money market
Money markets are for borrowing and lending money for three years or less. The securities in a money market can be U.S.government bonds, treasury bills and commercial paper from banks and companies.

Marketplace price efficiency
The degree to which the prices of assets reflect the available marketplace information. Marketplace price efficiency is sometimes estimated as the difficulty faced by active management of earning a greater return than passive management would, after adjusting for the risk associated with a strategy and the transactions costs associated with implementing a strategy.

Marketed claims
Claims that can be bought and sold in financial markets, such as those of stockholders and bondholders.

Marketability
A negotiable security is said to have good marketability if there is an active secondary market in which it can easily be resold.

Market-if-touched (MIT)
A price order, below market if a buy or above market if a sell, that automatically becomes a market order if the specified price is reached.

Market value-weighted index
An index of a group of securities computed by calculating a weighted average of the returns on each security in the index, with the weights proportional to outstanding market value.

Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial statement items.

Market value
(a) The price at which a security is trading and could presumably be purchased or sold. (b) The value investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares.

Market timing costs
Costs that arise from price movement of the stock during the time of the transaction which is attributed to other activity in the stock.

Market timing
Asset allocation in which the investment in the market is increased if one forecasts that the market will outperform T-bills.

Market timer
A money manager who assumes he or she can forecast when the stock market will go up and down.

Market segmentation or preferred habitat theory
A biased expectations theory that asserts that the shape of the yield curve is determined by the supply of and demand for securities within each maturity sector.

Market sectors
The classifications of bonds by issuer characteristics, such as state government, corporate, or utility.

Market risk
Risk that cannot be diversified away.

Market return
The return on the market portfolio.

Market prices
The amount of money that a willing buyer pays to acquire something from a willing seller, when a buyer and seller are independent and when such an exchange is motivated by only commercial consideration.

Market price of risk
A measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-risk ratio of the market portfolio.

Market portfolio
A portfolio consisting of all assets available to investors, with each asset held -in proportion to its market value relative to the total market value of all assets.

Market overhang
The theory that in certain situations, institutions wish to sell their shares but postpone the share sales because large orders under current market conditions would drive down the share price and that the consequent threat of securities sales will tend to retard the rate of share price appreciation. Support for this theory is largely anecdotal.

Market order
This is an order to immediately buy or sell a security at the current trading price.

Market model
This relationship is sometimes called the single-index model. The market model says that the return on a security depends on the return on the market portfolio and the extent of the security's responsiveness as measured, by beta. In addition, the return will also depend on conditions that are unique to the firm. Graphically, the market model can be depicted as a line fitted to a plot of asset returns against returns on the market portfolio.

Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.

Market cycle
The period between the 2 latest highs or lows of the S&P 500, showing net performance of a fund through both an up and a down market. A market cycle is complete when the S&P is 15% below the highest point or 15% above the lowest point (ending a down market). The dates of the last market cycle are: 12/04/87 to 10/11/90 (low to low).

Market conversion price
Also called conversion parity price, the price that an investor effectively pays for common stock by purchasing a convertible security and then exercising the conversion option. This price is equal to the market price of the convertible security divided by the conversion ratio.

Market clearing
Total demand for loans by borrowers equals total supply of loans from lenders. The market, any market, clears at the equilibrium rate of interest or price.

Market capitalization
The total dollar value of all outstanding shares. Computed as shares times current market price. It is a measure of corporate size.

Marked-to-market
An arrangement whereby the profits or losses on a futures contract are settled each day.

Make a market
A dealer is said to make a market when he quotes bid and offered prices at which he stands ready to buy and sell.

Locked market
A market is locked if the bid = ask price. This can occur, for example, if the market is brokered and brokerage is paid by one side only, the initiator of the transaction.

Open market purchase
An order placed by an insider, after all appropriate documentation has been filed, to buy restricted securities openly on an exchange.

TMWX (Wilshire 5000 Total Market Index)
The TMWX measures the performance of all U.S. headquartered equity securities with readily available price data.

Market Mix
The description of the four P's of marketing - i.e. Price, Place (Distribution), Product, and Promotion as it applies to a particular commercialization plan.

• Product. The product is the full bundle of goods and services offered to the customer. This includes the appearance, functionality, and support or non-tangibles the customer will receive. The physical product itself is part of product as well as any packaging it arrives in.
• Place. This is where and how your product is di ...
  
  Kerb market
  In the US, trading in shares of companies not listed on the main stock exchange board is reffered to as kerb trading.
  
  In the UK, kerb trading is trading in commodities outside official market hours.
  
  In Australia the term 'kerb market' has been applied to 'junior' shares which have little turnover.
  
  Black market
  An illegal market.
  
  Brokered market
  A market where an intermediary offers search services to buyers and sellers.
  
  Bulldog market
  The foreign market in the United Kingdom.
  
  Capital market
  The market for trading long-term debt instruments (those that mature in more than one year).
  
  Capital market efficiency
  Reflects the relative amount of wealth wasted in making transactions. An efficient capital market allows the transfer of assets with little wealth loss.
  
  Capital market imperfections view
  The view that issuing debt is generally valuable but that the firm's optimal choice of capital structure is a dynamic process that involves the other views of capital structure (net corporate/personal tax, agency cost, bankruptcy cost, and pecking order), which result from considerations of asymmetric information, asymmetric taxes, and transaction costs.
  
  Capital market line (CML)
  The line defined by every combination of the risk-free asset and the market portfolio.
  
  Cash markets
  Also called spot markets, these are markets that involve the immediate delivery of a security or instrument.
  
  Common market
  An agreement between two or more countries that permits the free movement of capital and labor as well as goods and services.
  
  Common stock market
  The market for trading equities, not including preferred stock.
  
  Complete capital market
  A market in which there is a distinct marketable security for each and every possible outcome.
  
  Corner A Market
  To purchase enough of the available supply of a commodity or stock in order to manipulate its price.
  
  Interactive marketing
  Any marketing method that uses electronic communication between the marketer and customer. Web sites, and consumer electronic kiosks are examples of interactive marketing.
  
  Away from the market
  In context of general equities, out of line with the inside market at this 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 fill-or-kill.
  
  Equilibrium market price of risk
  The slope of the capital market line (CML). Since the CML represents the expected return offered to compensate for a perceived level of risk, each point on the line is a balanced market condition, or equilibrium. The slope of the line determines the additional expected return needed to compensate for a unit change in risk. The equation of the CML is defined by the Capital Asset Pricing Model (CAPM).
  
  Factor market
  The place where inputs or resources are bought or sold. Factor markets usually refer to labor or capital.
  
  Free market economy
  A system where resources are owned by households: markets allocate resources through the price mechanism; and income depends upon the value of resources owned by an individual.
  
  CARICOM (Caribbean Common Market)
  Caribbean Common Market. Consists of 14 sister-member countries of the Caribbean community. Members include: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent, Surinam, Trinidad and Tobago. They have set as a goal that in 1997 there will be a single market allowing for the free movement of labor. Conspicuous by their absence are the Cayman Islands and the British Virgin Islands, two major players in interna ...
  
  Kerb market
  Kerb market is in fact an unofficial name for an unofficial activity - the trading of securities outside a recognized stock exchange. The name derives from the historical practice of dealers continuing to trade on the pavement after the exchange's hours of business.
  
  Marketed Deal
  An arrangement in a public share distribution whereby the price at which the shares are sold is determined after a period of marketing activities. During the marketing period, the underwriters are able to contact potential purchasers to assess potential demand and price sensitivity. Shares continue to be publicly traded, if they had been previously listed. The underwriters minimize the price risk on resale (thereby lowering the discount to market), but the seller bears a risk of a price decline ...
  
  London Gold Market
  Refers to the five dealers who set (fix) the gold price in London: Mocatta & Goldsmid, N. Rothschild & Sons, Johnson Matthey, Sharps Pixley, and Samuel Montagu & Co.
  
  Terminal Market
  Usually synonymous with commodity exchange or futures market, specifically in the United Kingdom.
  
  Efficient Market
  A market in which new information is immediately available to all investors and potential investors. A market in which all information is instantaneously assimilated and therefore has no distortions.
  
  Market Index Deposits (MIDs)
  Bank certificates of deposit or deposit notes with a return linked to the performance of an index, usually a stock market index.
  
  Capitalization
  The combined sources of capital, consisting of dept capital (liabilities) and equity capital (capital stock and retained earnings).
  
  Long-term debt/capitalization
  Indicator of financial leverage. Shows long-term debt as a proportion of the capital available. Determined by dividing long-term debt by the sum of long-term debt, preferred stock and common stockholder equity.
  
  Capitalization method
  A method of constructing a replicating portfolio in which the manager purchases a number of the largest-capitalized names in the index stock in proportion to their capitalization.
  
  Capitalization ratios
  Also called financial leverage ratios, these ratios compare debt to total capitalization and thus reflect the extent to which a corporation is trading on its equity. Capitalization ratios can be interpreted only in the context of the stability of industry and company earnings and cash flow.
  
  Capitalization table
  A table showing the capitalization of a firm, which typically includes the amount of capital obtained from each source - long-term debt and common equity - and the respective capitalization ratios.
  
  Corporate sector
  Securities issued by U.S. corporations and non-U.S. corporations in the United States. Includes bonds, MTNs, structured notes and commercial paper. The corporate sector is divided into investment grade and non-investment grade sectors by rating agencies such as Moody’s and S&P.
  
  Coupon rate
  The interest rate that the issuer of a bond agrees to pay each year to the bondholder. The coupon rate multiplied by the principal of a bond provides the nominal amount of the coupon. For example, a bond with a 5.1% coupon rate and a principal of $1,000 provides an annual interest of $51. The coupon rate is also referred to as the nominal rate.
  
  Interest-rate risk on bonds
  The price of a typical bond will change in the opposite direction from a change in interest rates. As interest rates rise, the price of a bond will fall; as interest rates fall, the price of a bond will rise. The actual degree of sensitivity of a bond’s price to changes in market interest rates depends on various characteristics of the issue maturity, coupon and special provisions.
  
  Exchange-rate risk on bonds
  A non-domestic-currency nominated bond has unknown domestic currency cash flows. The domestic currency cash flows are dependent on the exchange rate at the time the payments are received. For example, suppose that a German investor purchases a bond whose payments are in British pounds (GBP). If pounds depreciate relative to euros (EUR), fewer euros will be received and vice versa. This risk is also referred to currency risk.
  
  Conglomerate merger
  Involve firms engaged in unrelated types of business activity. Among conglomerate mergers, three types have been distinguished: (a) product extensions which broaden the product lines of firms (concentric mergers), (b) geographic market exentions which involves two firms whose operations have been conducted in non-overlapping geographic areas and (c) pure conglomerate mergers which involve unrelated business activities.
  
  Zero-coupon interest rate
  The interest rate that would be earned on a bond that provides no coupons.
  
  Term structure of interest rates
  The relationship between interest rates and their maturities.
  
  Swap rate
  The fixed rate in an interest rate swap that causes the swap to have a value of zero. It can be thought of as the Internal Rate of Return (IRR) of a swap.
  
  Drift rate
  The average increase per unit of time in a stochastic process.
  
  Repo rate
  The interest rate in a repo transaction.
  
  Indirect exchange rate
  The required amount of foreign currency required to purchase on unit of domestic currency.
  
  Internal Rate of Return (IRR)
  The internal rate of Return (IRR) is the discount rate that equals the present value of a future steam of cash flows to the initial investment. The IRR can be thought of as the annualized rate of return (in percent) of an investment using compound interest rate calculations. The IRR calculation is very useful when a number of future cash flows on which an interest rate needs to be calculated.
  
  Current intrest rate
  The rate being earned on a bond based on its current market value; that value varies with the degree of premium or discount value of the bond.
  
  Discount rate
  The loan intrest rate charged by the Federal Reserve Bank to its member banks.
  
  Federal funds rate
  The rate charged by the Federal Reserve to member banks when excess reserve loans are made from one bank to another.
  
  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 project's life. Accelerated cost recovery system (ACRS), which is a depreciation schedule allowed for tax purposes, is one such example.
  
  Yield spread strategies
  Strategies that involve positioning a portfolio to capitalize on expected changes inyield spreads between sectors of the bond market.
  
  Yield curve strategies
  Positioning a portfolio to capitalize on expected changes in the shape of the Treasury yield curve.
  
  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.
  
  Adjustable rate preferred stock (ARPS)
  Publicly traded issues that may be collateralized by mortgages and MBSs.
  
  After-tax real rate of return
  Money after-tax rate of return minus the inflation rate.
  
  All equity rate
  The discount rate that reflects only the business risks of a project and abstracts from the effects of financing.
  
  Amortizing interest rate swap
  Swap in which the principal or national amount rises (falls) as interest rates rise (decline).
  
  Annual percentage rate (APR)
  The periodic rate times the number of periods in a year. For example, a 5% quarterly return has an APR of 20%.
  
  Variable rate loan
  Loan made at an interest rate that fluctuates based on a base interest rate such as the Prime Rate or LIBOR.
  
  Variable rated demand bond
  Variable rated demand bond (VRDB) is a floating rate bond that can be sold back periodically to the issuer.
  
  Variable rate CDs
  Short-term certificate of deposits that pay interest periodically on roll dates. On each roll date, the coupon on the CD is adjusted to reflect current market rates.
  
  Unemployment rate
  The ratio of the number of people classified as unemployed to the total labor force.
  
  Theoretical spot rate curve
  A curve derived from theoretical considerations as applied to the yields of actually traded Treasury debt securities because there are no zero-coupon Treasury debt issues with a maturity greater than one year. Like the yield curve, this is a graphical depiction of the term structure of interest rates.
  
  Sustainable growth rate
  Maximum rate of growth a firm can sustain without increasing financial leverage.
  
  Structured portfolio strategy
  A strategy in which a portfolio is designed to achieve the performance of some predetermined liabilities that must be paid out in the future.
  
  Stopping curve refunding rate
  A refunding rate that falls on the stopping curve.
  
  Stock replacement strategy
  A strategy for enhancing a portfolio's return, employed when the futures contract is expensive based on its theoretical price, involving a swap between the futures, treasury bills portfolio and a stock portfolio.
  
  Stated annual interest rate
  The interest rate expressed as a per annum percentage, by which interest payment is determined.
  
  Spread strategy
  Spreading is a strategy that involves a position in one or more options so that the cost of buying an option is funded entirely or in part by selling another option in the same underlying.
  
  Spot rate curve
  The graphical depiction of the relationship between the spot rates and maturity.
  
  Spot rate
  The theoretical yield on a zero-coupon Treasury security.
  
  Spot interest rate
  Interest rate fixed today on a loan that is made today.
  
  Spot exchange rates
  Exchange rate on currency for immediate delivery.
  
  Split-rate tax system
  A tax system that taxes retained earnings at a higher rate than earnings that are distributed as dividends.
  
  Settlement rate
  The rate suggested in Financial Accounting Standard Board (FASB) 87 for discounting the obligations of a pension plan. The rate at which the pension benefits could be effectively settled off the pension plan wished to terminate its pension obligation.
  
  Risk-free rate
  The rate earned on a riskless asset.
  
  Riskless rate of return
  The rate earned on a riskless asset.
  
  Retention rate
  The percentage of present earnings held back or retained by a corporation, or one minus the dividend payout rate. Also called the retention ratio.
  
  Reinvestment rate
  The rate at which an investor assumes interest payments made on a debt security can be reinvested over the life of that security.
  
  Reference rate
  A benchmark 'interest rate (such as LIBOR), used to specify conditions of an interest rate swap or an interest rate agreement.
  
  Real interest rate
  The rate of interest excluding the effect of inflation; that is, the rate that is earned in terms of constant-purchasing-power dollars. Interest rate expressed in terms of real goods, i.e. nominal interest rate adjusted for inflation.
  
  Real exchange rates
  Exchange rates that have been adjusted for the inflation differential between two countries.
  
  Rate risk
  In banking, the risk that profits may decline or losses occur because a rise in interest rates forces up the cost of funding fixed-rate loans or other fixed-rate assets.
  
  Rate of return ratios
  Ratios that are designed to measure the profitability of the firm in relation to various measures of the funds invested in the firm.
  
  Rate of interest
  The rate, as a proportion of the principal, at which interest is computed.
  
  Rate lock
  An agreement between the mortgage banker and the loan applicant guaranteeing a specified interest rate for a designated period, usually 60 days.
  
  Rate anticipation swaps
  An exchange of bonds in a portfolio for new bonds that will achieve the target portfolio duration, based on the investor's assumptions about future changes in interest rates.
  
  Randomized strategy
  A strategy of introducing into the decision-making process a random element that is designed to reduce the information content of the decision-maker's observed choices.
  
  Protective put buying strategy
  A strategy that involves buying a put option on the underlying security that is held in a portfolio.
  
  Prime rate
  The interest rate at which banks lend to their best (prime) customers. Much more often than not, a bank's most creditworthy customers borrow at rates below the prime rate.
  
  Portfolio turnover rate
  For an investment company, an annualized rate found by dividing the lesser of purchases and sales by the average of portfolio assets.
  
  Portfolio internal rate of return
  The rate of return computed by first determining the cash flows for all the bonds in the portfolio and then finding the interest rate that will make the present value of the cash flows equal to the market value of the portfolio.
  
  PIBOR (Paris Interbank Offer Rate)
  The deposit rate on interbank transactions in the Eurocurrency market quoted in Paris.
  
  Pass-through coupon rate
  The interest rate paid on a securitized pool of assets, which is less than the rate paid on the underlying loans by an amount equal to the servicing and guaranteeing fees.
  
  Pass-through rate
  The net interest rate passed through to investors after deducting servicing, management, and guarantee fees from the gross mortgage coupon.
  
  Passive portfolio strategy
  A strategy that involves minimal expectational input, and instead relies on diversification to match the performance of some market index. A passive strategy assumes that the marketplace will reflect all available information in the price paid for securities, and therefore, does not attempt to find mispriced securities.
  
  Pac-Man strategy
  Takeover defense strategy in which the prospective acquiree retaliates against the acquirer's tender offer by launching its own tender offer for the other firm.
  
  Overlay strategy
  A strategy of using futures for asset allocation by pension sponsors to avoid disrupting the activities of money managers.
  
  Outright rate
  Actual forward rate expressed in dollars per currency unit, or vice versa.
  
  Nominal interest rate
  The interest rate unadjusted for inflation.
  
  Nominal exchange rate
  The actual foreign exchange quotation in contrast to the real exchange rate that has been adjusted for changes in purchasing power.
  
  Nominal annual rate
  An effective rate per period multiplied by the number of periods in a year.
  
  Naked option strategies
  An unhedged strategy making exclusive use of one of the following: Long call strategy (buying call options ), short call strategy (selling or writing call options), Long put strategy (buying put options ), and short put strategy (selling or writing put options). By themselves, these positions are called naked strategies because they do not involve an offsetting or risk-reducing position in another option or the underlying security.
  
  Multiple rates of return
  More than one rate of return from the same project that make the net present value of the project equal to zero. This situation arises when the IRR method is used for a project in which negative cash flows follow positive cash flows. For each sign change in the cash flows, there is a rate of return.
  
  Mortgage rate
  The interest rate on a mortgage loan.
  
  Money rate of return
  Annual money return as a percentage of asset value.
  
  Marginal tax rate
  The tax rate that would have to be paid on any additional dollars of taxable income earned.
  
  Liability funding strategies
  Investment strategies that select assets so that cash flows will equal or exceed the client's obligations.
  
  Lease Rate
  The payment per period stated in a lease contract.
  
  Ladder strategy
  A bond portfolio strategy in which the portfolio is constructed to have approximately equal amounts invested in every maturity within a given range.
  
  Computer-Intergrated Manufacturing (CIM)
  The intergration of computer control and monitoring into a manufacturing process.
  
  Hurdle Rate
  The minimum rate of investment that is acceptable to an investor. It is also used in the context of achieving a certain rate before other events can take place. For example, a fund manager has to achieve a certain hurdle rate for his investors before he is paid a bonus.
  
  Exit strategy
  Refers to the way in which investors and founders can "exit", i.e. leave their company, with a cash return on their investment - e.g. by going public or being acquired or being bought out by other shareholders.
  
  Burn Rate
  This term is particularly applicable to start up companies or to companies which do not yet have substantial revenues. It refers to the monthly rate of consumption of cash. For example, if total monthly operating costs for rent, salaries, etc are $50K, one would say that the burn rate is $50K/month. When compared to available cash-on-hand it tells us how much time the company has before it will run into serious cash flow difficulties and "flame-out".
  
  Barbell strategy
  A strategy in which the maturities of the securities included in the portfolio are concentrated at two extremes.
  
  Basic business strategies
  Key strategies a firm intends to pursue in carrying out its business plan.
  
  Benchmark interest rate
  Also called the base interest rate, it is the minimum interest rate investors will demand for investing in a non-Treasury security. It is also tied to the yield to maturity offered on a comparable-maturity Treasury security that was most recently issued ("on-the-run").
  
  Break-even payment rate
  The prepayment rate of a MBS coupon that will produce the same CFY as that of a predetermined benchmark MBS coupon. Used to identify for coupons higher than the benchmark coupon the prepayment rate that will produce the same CFY as that of the benchmark coupon; and for coupons lower than the benchmark coupon the lowest prepayment rate that will do so.
  
  Break-even tax rate
  The tax rate at which a party to a prospective transaction is indifferent between entering into and not entering into the transaction.
  
  Bullet strategy
  A strategy in which a portfolio is constructed so that the maturities of its securities are highly concentrated at one point on the yield curve.
  
  Buy-and-hold strategy
  A passive investment strategy with no active buying and selling of stocks from the time the portfolio is created until the end of the investment horizon.
  
  Call money rate
  Also called the broker loan rate , the interest rate that banks charge brokers to finance margin loans to investors. The broker charges the investor the call money rate plus a service charge.
  
  Combination strategy
  A strategy in which a put and with the same strike price and expiration are either both bought or both sold.
  
  Conglomerate
  A firm engaged in two or more unrelated businesses.
  
  Corporate acquisition
  The acquisition of one firm by anther firm.
  
  Corporate bonds
  Debt obligations issued by corporations.
  
  Corporate charter
  A legal document creating a corporation.
  
  Corporate finance
  One of the three areas of the discipline of finance. It deals with the operation of the firm (both the investment decision and the financing decision) from that firm's point of view.
  
  Corporate financial management
  The application of financial principals within a corporation to create and maintain value through decision making and proper resource management.
  
  Corporate financial planning
  Financial planning conducted by a firm that encompasses preparation of both long- and short-term financial plans.
  
  Corporate processing float
  The time that elapses between receipt of payment from a customer and the depositing of the customer's check in the firm's bank account; the time required to process customer payments.
  
  Corporate tax view
  The argument that double (corporate and individual) taxation of equity returns makes debt a cheaper financing method.
  
  Corporate taxable equivalent
  Rate of return required on a par bond to produce the same after-tax yield to maturity that the premium or discount bond quoted would.
  
  Covered call writing strategy
  A strategy that involves writing a call option on securities that the investor owns in his or her portfolio. See covered or hedge option strategies.
  
  Covered or hedge option strategies
  Strategies that involve a position in an option as well as a position in the underlying stock, designed so that one position will help offset any unfavorable price movement in the other, including covered call writing and protective put buying.
  
  Crediting rate
  The interest rate offered on an investment type insurance policy.
  
  Cross rates
  The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency.
  
  Crossover rate
  The return at which two alternative projects have the same net present value.
  
  Current rate method
  Under this currency translation method, all foreign currency balance-sheet and income statement items are translated at the current exchange rate.
  
  Corporate Social Responsibility
  CSR stands for corporate social responsibility. Some companies defines corporate social responsibility as open and transparent business practices based on ethical values and respect for its stakeholders.
  
  Exchange rate overshooting
  A phenomenon whereby the exchange rate changes by more in the short run than it does in the long run when the money supply changes.
  
  Separate Trading of Registered Interest (STRIPS)
  Separate Trading of Registered Interest and Principal Securities (STRIPS) are securities that have their periodic interest payments separated from the final maturity payment and the two cash flows are sold to different investors.
  
  Inverted block rate
  A cost structure for energy in which each additional block or unit of energy above a given level is charged at a higher rate than preceding blocks. Inverted block rates are most commonly applied to energy delivered to clients who require large portions of their energy during peak demand periods when energy costs are typically higher, or when additional system capacity has to be brought online to meet that client's needs.
  
  Forward exchange rate
  The forward exchange rate is a rate for buying foreign exchange at a fixed point in the future. Taking out a forward contract for foreign exchange means that you are agreeing to buy foreign exchange at an agreed rate in the future. The existence of the forward market leads to a considerable amount of speculation.
  
  Fixed exchange rates
  A fixed exchange rate system is one where the value of the currency against other currencies remains exactly the same. A fixed exchange rate doesn't stay fixed on its own. Governments have to hold large stocks of foreign exchange, so that they can actively intervene to hold the value of the currency stable. Monetary and fiscal policies will also have to be directed to keeping the rate constant.
  
  Nominal rate of interest
  The annual return form lending money expressed as a percentage, without having taken account of the rate of inflation.