G-1 Flashcards
A priori probability
A probability based on logical analysis rather than on observation or personal judgment
Abnormal return
The amount by which a security’s actual return differs from its expected return, given the security’s risk and the market’s return
Absolute dispersion
The amount of variability present without comparison to any reference point or benchmark
Absolute frequency
The number of observations in a given interval (for grouped data)
Accelerated book build
An offering of securities by an investment bank acting as principal that is accomplished in only one or two days
Accelerated methods
Depreciation methods that allocate a relatively large proportion of the cost of an asset to the early years of the asset’s useful life
Accounting costs
Monetary value of economic resources used in performing an activity. These can explicit, out-of-pocket, current payments, or an allocation of historical payments (depreciation) for resources. They do not include opportunity costs.
Accounting profit
Income as reported on the income statement, in accordance with prevailing accounting standards, before the provisions for income tax expense. Also called income. before taxes or pretax income
Accounts payable
Amounts that a business owes to its vendors for goods and services that were purchased from them but which have not yet been paid
Accounts receivable turnover
Ratio of sales on credit to the average balance in accounts receivable
Accrued expenses
Liabilities related to expenses that have been incurred but not yet paid as of the end of an accounting periods
Acid-test ratio
A stringent measure of liability that indicates a company’s ability to satisfy current liabilities with its most liquid assets;
Formula: [cash + short-term marketable investments + receivables] / current liabilities
Acquisition method
A method of accounting for a business combination where the acquirer is required to measure each identifiable asset and liability at fair value. This method was the result of a joint project of the IASB and FASB aiming at convergence in standards for the accounting business combinations
Action lag
Delay from policy decisions to implementation
Active investment
An approach to investing in which the investor seeks to outperform a given benchmark
Active return
The return on a portfolio minus the return on the portfolio’s benchmark
Active strategy
In reference to short-term cash management, an investment strategy characterized by monitoring and attempting to capitalize on market conditions to optimize the risk and return relationship of short-term investments
Activity ratio
Ratios that measure how effectively a company performs day-to-day tasks, such as the collection of receivables and management of inventory; also called asset utilization ratios or operating efficiency ratios
Add-on rates
Bank certificates of deposit, repos and indexes such as Libor and Euribor are quoted on an add-on rate basis (bond equivalent yield basis)
Addition rule for probabilities
A principle stating that A or B, occurs (both occur) equals the probability that A occurs, plus the probability that B occurs, minus the probability that both A and B occur
P(A or B) = P(A) + P(B) - P(A and B)
Agency bonds
See quasi-government bond
Agency RMBS
In the U.S., securities backed by residential mortgage loans and guaranteed by a federal agency or guaranteed by either of the two GSEs (Fannie Mae or Freddie Mac)
Aggregate demand
The quantity of goods and services that households, businesses, government, and foreign customers want to buy at any given level of prices
Aggregate demand curve
Inverse relationship between the price level and real output
Aggregate income
The value of all the payments earned by the suppliers of factors used in the production of goods and services
Aggregate output
The value of all the goods and services producers are willing to supply at any given level of price
Aggregate supply
The quantity of goods and services producers are willing to supply at any given level of price
Aggregate supply curve
The level of domestic output that companies will produce at each price level
Aging schedule
A breakdown of accounts into categories of days outstanding
All-or-nothing (AON) orders
An order that includes the instruction to trade only if the trade fills the entire quantity (size) specified
Allocationally efficient
A characteristic of a market, a financial system, or an economy that promotes the allocation of resources to their highest value uses
Alternative data
Non-traditional data types generated by the use of electronic devices, social media, satellite and sensor networks, and company exhaust
Alternative investment markets
Markets for investments other than traditional securities investments (i.e. traditional common and preferred shares and traditional fixed income instruments).
The term usually encompasses direct and indirect investment in real estate (including timberland and farmland) and commodities (including precious metals); hedge funds, private equity, and other investments requiring specialized due diligence
Alternative trading systems
Trading venues that function like exchanges but that do not exercise regulatory authority over their subscribers except with respect to the conduct of the subscribers’ trading in their trading systems. Also called electronic communications networks or multilateral trading facilities.
American depository receipt
A U.S. dollar-denominated security that trades like a common share on U.S. exchanges
