Normal annuity form

Similar financial terms

Abnormal return
In event studies, the part of the return that is not predicted; the change in value caused by the event. Also referred to as excess return, benchmark adjusted.

Lognormal distribution
A varaible has a lognormal distribution when the logarithm of the variable has a normal distribution.

Abnormal returns
Part 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.

Standardized normal distribution
A normal distribution with a mean of 0 and a standard deviation of 1.

Normalizing method
The practice of making a charge in the income account equivalent to the tax savings realized through the use of different depreciation methods for shareholder and income tax purposes, thus washing out the benefits of the tax savings reported as final net income to shareholders.

Normal random variable
A random variable that has a normal probability distribution.

Normal portfolio
A customized benchmark that includes all the securities from which a manager normally chooses, weighted as the manager would weight them in a portfolio.

Normal probability distribution
A probability distribution for a continuous random variable that is forms a symmetrical bell-shaped curve around the mean.

Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected spot price.

Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the actual return that comes from the release of news to the market.

Annuity
A regular periodic payment made by an insurance company to a policyholder for a specified period of time.

Single-premium deferred annuity
An insurance policy bought by the sponsor of a pension plan for a single premium. In return, the insurance company agrees to make lifelong payments to the employee (the policyholder) when that employee retires.

RAMs (Reverse-annuity mortgages)
Mortgages in which the bank makes a loan for an amount equal to a percentage of the appraisal value of the home. The loan is then paid to the homeowner in the form of an annuity.

Performance Related Pay
Performance Related pay is a remuneration system whereby the employee's pay is based on his or her performance. It is basically a payments by results system that is designed to give incentive to the employee to work harder or more productively. In its simplest form, this may be an annual bonus based on subjective assessment of performance. In many larger organisations this can be more structured, based on a set of pre-agreed objectives or targets. Performance related pay is becoming increasingly ...

Weak form efficiency
According to the Efficient Markets Hypothesis (EMH) the weak form is a form of pricing efficiency where the price of the security reflects the past price and trading history of the security. In such a market, security prices follow a random walk.

Unit benefit formula
Method used to determine a participant's benefits in a defined benefit plan by multiplying years of service by the percentage of salary.

Underperform
When a security is expected to appreciate at a slower rate than the overall market.

Tax Reform Act of 1986
A 1986 law involving a major overhaul of the U.S. tax code.

Strong-form efficiency
Pricing efficiency, where the price of a, security reflects all information, whether or not it is publicly available.

Semi-strong form efficiency
A form of pricing efficiency where the price of the security fully reflects all public information (including, but not limited to, historical price and trading patterns). Compare weak form efficiency and strong form efficiency.

Pro forma financial statements
Financial statements as adjusted to reflect a projected or planned transaction.

Pro forma statement
A financial statement showing the forecast or projected operating results and balance sheet, as in pro forma income statements, balance sheets, and statements of cash flows.

Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure choices on a firm's credit statistics and reported financial results, especially to determine whether the firm will be able to use projected tax shield benefits fully.

Performance shares
Shares of stock given to managers on the basis of performance as measured by earnings per share and similar criteria. A control device used by shareholders to tie management to the self-interest of shareholders.

Performance measurement
The calculation of the return realized by a money manager over some time interval.

Performance evaluation
The evaluation of a manager's performance which involves, first, determining whether the money manager added value by outperforming the established benchmark (performance measurement) and, second, determining how the money manager achieved the calculated return (performance attribution analysis).

Performance attribution analysis
The decomposition of a money manager's performance results to explain the reasons why those results were achieved. This analysis seeks to answer the following questions: (a) What were the major sources of added value? (b) Was short-term factor timing statistically significant? (c) Was market timing statistically significant? And (d), Was security selection statistically significant?

Overperform
When a security is expected to appreciate at a rate faster than the overall market.

American Standard Code for Information Interchange
American Standard Code for Information Interchange (ASCII) is the most common format for text files in computers and on the internet.

BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in Berkeley, California. It is commonly used by institutional investors applying performance attribution analysis to evaluate their money managers' performances.

Formica parachute
Unemployment compensation

Financial Institutions Reform (FIRREA)
In August of 1989 the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) was created. FIRREA abolishes the Federal Home Loan Bank Board and FSLIC, switches Savings & Loan regulation to newly created Office of Thrift Supervision. Deposit insurance function shifted to the FDIC. A new entity, the Resolution Trust Corporation is created to resolve the insolvent S&Ls.

Other major provisions of FIRREA include: $50 billion of new borrowing authority, with most financed from ...

Proforma
This term is normally used in connection with invoices, whereby a company issues a pro-forma invoice in advance of services or goods being provided to speed up payment. Small, new companies are often asked to pay for goods or services in advance as security against non-payment. In these instances, the service or goods provider raises a pro-forma invoice.