G-2 Flashcards
American depository share
The underlying shares on which American depository receipts are based. They trade in the issuing company’s domestic market
American-style
Type of option contract that can be exercised at any time up to the option’s expiration data
Amortization
The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods;
the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity
Amortized cost
The historical cost (initially recognized cost) of an asset, adjusted for amortization and impairment
Amortizing bond
Bond with a payment schedule that calls for periodic payments of interests and repayments of principal
Amortizing loan
Loan with a payment schedule that calls for periodic payments of interest and repayments of principal
Annual percentage rate
The cost of borrowing expressed as a yearly rate
Annuity
A finite set of level sequential cash flows
Annuity due
An annuity having a first cash flow that is paid immediately
Anticipation stock
Excess inventory that is held in anticipation of increased demand, often because of seasonal patterns of demand
Antidilutive
With reference to a transaction or a security, one that would increase earnings per share (EPS) or result in EPS higher than the company’s basic EPS; are not included in the calculation of diluted EPS
Arbitrage
1) The simultaneous purchase of an undervalued asset or portfolio and sale of an overvalued but equivalent asset or portfolio, in order to obtain a risk-less profit on the price differential. Taking advantage of a market inefficiency in a risk-free manner.
2) The condition in a financial market in which equivalent assets or combinations of assets sell for two different prices, creating an opportunity to profit at no risk with no commitment of money.
3) A risk-free operation that earns an expected positive net profit but requires no investment of money
Arbitrage-free pricing
The overall process of pricing derivatives by arbitrage and risk neutrality; also called the principle of no arbitrage.
Arbitrageurs
Traders who engage in arbitrage
Arithmetic mean
The sum of the observations divided by the number of observations
Arms index
A flow of funds indicator applied to a broad stock market index to measure the relative extent to which money is moving into or out of rising and declining stocks
Artifical intelligence
Computer systems that exhibit cognitive and decision-making ability comparable (or superior) to that of humans
Asian call option
A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option, or $0, whichever is greater
Ask
The price at which a dealer or trader is willing to sell an asset, typically qualified by a maximum quantity (ask size)
Ask size
The maximum quantity of an asset that pertains to a specific ask price from a trader (i.e.) if the ask for a share issue is $30 for a size of 1,000 shares, the trader is offering to sell at $30 up to a 1,000 shares.
Asset allocation
The process of determining how investment funds should be distributed among asset classes
Asset-backed securities
A type of bond issued by a legal entity called a “special purpose entity” (SPE) on a collection of assets that the SPE owns; also, securities backed by receivables and loans other than mortgages
Asset-based loan
A loan that is secured with company assets
Asset-based valuation models
Valuation based on estimates of the market value of a company’s assets
