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126 Cards in this Set

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  • Back
regressive tax
a tax whose rate declines as the tax base increases
regular dividends
steady dividend payments that are distributed at regular intervals
reinvestment rate risk
the risk associated with reinvesting earnings or principal at a lower rate than was initially earned
renegotiable-rate mortgage loan
a mortgage loan in which the parties have the option to renegotiate the interest rate charged on the loan
risk
the possibility of a loss;
the uncertainty of future returns
round lot
the general unit of trading in a security, such as 100 shares
right
an option given to stockholders to buy additional shares at a specified price during a specified time period before the offer is made to the general public
rights offering
sale of new securities to stockholders
revaluation
an increase in the value of one currency relative to other currencies
revenue bond
a bond whose interest is paid only if the debtor earns sufficient revenue
revaluation
an increase in the value of one currency relative to other currencies
revenue bond
a bond whose interest is paid only if the debtor earns sufficient revenue
return
the sum of income plus capital gains earned on an investment in an asset.

INCOME + CAP. GAINS = ?
return on assets
the ratio of earnings to total assets

earnings / total assets = ROA
return on equity
the ratio of earnings to equity

earnings / equity = ?
quick ratio (acid test)
current assets excluding inventory divided by current liabilities;

a measure of liquidity
rate of return
the annual percentage return realized on an investment
rate of return (internal rate of return, or IRR)
the discount rate that equates the cost of an investment with the cash flows generated by the investment
real estate investment trust (REIT)
closed-end investment company that specializes in real estate or mortgage investments
repurchase agreement (repo)
sale of short-term security in which the seller agrees to buy back the security at a specified price
required return
the return necessary to induce the investor to purchase an asset
reserve requirement
the percentage of cash that banks must hold against their deposit liabilities
reset bond
bond whose coupon is periodically reset
retention ratio
the ratio of earnings not distributed to earnings
realized return
the sum of income and capital gains earned on an investment
realized returns
the sum of income and capital gains earned on an investment
recapitalization
an alteration in a firm's source of finance, such as the substitution of long-term debt for equity
receivables turnover
the speed with which a firm collects its accounts receivable
recession
a period of rising unemployment and declining national output
refunding
the act of issuing new debt and using the proceeds to retire existing debt
registered representative
a person who buys and sells securities for customers;

a broker.
registration
process of filing information with the SEC concerning a proposed sale of securities to the general public.
regional funds
mutual funds that specialize in a particular geographic area.
registered bond
a bond whose ownership is registered with the commercial bank that distributes interest payments and principal repayments.
private placement
the non-public sale of securities.
pro forma financial statement
a projected or forecasted financial statement.
programmed trading
coordinated buying or selling of portfolios triggered by computers.
progressive tax
a tax whose rate remains constant as the tax base changes.
property tax
a tax levied against the value of real or financial assets.
present value
the current worth of an amount to be received in the future.
present value of an annuity
the present worth of a series of equal payments.
primary market
the initial sale of securities.
principal
the amount owed;

the face value of a debt.
preliminary prospectus
(red herring)
initial document detailing the financial condition of a firm that must be filed with the SEC to register a new issue of securities.
premium
the market price of an option.
premium (of a bond)
the extent to which a bond's price exceeds the face amount of the debt.
premium (over net asset value)
the extent to which the price of a closed-end investment company's stock exceeds the share's net asset value.
proportionate tax
a tax whose rate remains constant as the tax base changes.
purchasing power risk
the uncertaintly that future inflation will erode the purchasing power of assets and income.
put bond
a bond that the holder may redeem (i.e., sell back to the issuer) at a specified price and a specified time.
put option
an option to sell stock at a specified price within a specified time period.
secondary market
a market for buying and selling previously issued securities.
Securities and Exchange Commission (SEC)
government agency that enforces the federal securities laws.
Securities Investor Protection Corporation (SIPC)
the agency that insures investors against failures by brokerage firms.
securitization
the process of converting an illiquid asset into a marketable security.
semiannual compounding
the payment of interest twice a year.
semiannual compounding
the payment of interest twice a year.
serial bond
a bond issue in which specified bonds mature each year.
series EE (Patriot) bonds
savings bonds issued in small denominations by the federal government.
share averaging
a system for the accumulation of shares in which the investor periodically buys the same number of shares.
Sharpe performance index
a risk-adjusted measure of performance that standardizes the return in excess of the risk-free rate by the standard deviation of the portfolio's return.
short position
selling borrowed assets for possible price deterioration;

being short in a security or a commodity.
short sale
the sale of borrowed securities in anticipation of a price decline;

a contract for future delivery.
sinking fund
a series of periodic payments to retire a bond issue.
specialist
a market maker on the New York Stock Exchange who maintains an orderly market in the security.
speculation
an investment that offers a potentially large return but is also very risky;

a reasonable probability that the investstment will produce a loss.
split coupon bond
bond with a zero or low initial coupon followed by a period with a high coupon.
spot price
the current price of a commodity.
spread
the difference between the bid and the ask prices.
Standard & Poor's 500 stock index
a value-weighted index of 500 stocks.
statement of cash flows
an accounting statement that enumerates a firm's cash inflows and cash outflows.
stock
a security representing ownership in a corporation.
stock dividend
a dividend paid in stock.
stock index futures
a contract based on an index of security prices.
stock index options
rights to buy and sell based on an aggregate measure of stock prices.
stock repurchase
the buying of stock by the issuing corporation.
stock split
recapitalization that affects the number of shares outstanding, their par value, the earnings per share, and the price of the stock.
stop order
a purchase or sell order designed to limit an investor's loss or to assure a profit on a position in a security.
straight-line depreciation
the allocation of the cost of plant and equipment by equal annual amounts over a period of time.
street name
the registration of securities in a brokerage firm's name instead of in the buyer's name.
surplus
receipts exceeding disbursements.
swap
an agreement to exchange payments.
syndicate
a selling group assembled to market an issue of securities.
systematic risk
risk from fluctuations in security prices; (e.g., market risk).
tax anticipation note
short-term government security secured by expected tax revenues.
tax-deferred annuity
a contract sold by an insurance company in which the company guarantees a series of payments and whose earnings are not taxed until they are distributed.
tax-exempt bond
a bond whose interest is excluded from federal income taxation.
tax shelter
an asset or investment that defers, reduces, or avoids taxation.
technical analysis
an analysis of past volume and/or price behavior to identify which assets to purchase or sell and the best time to purchase or sell them.
10-K report
a required annual report filed with the SEC by publicly held firms.
10-Q report
a required quarterly report filed with the SEC by publicly held firms.
term insurance
life insurance with coverage for a specified time and excluding a savings plan.
third market
over-the-counter market for securities listed on an exchange.
time premium
the amount by which an option's price exceeds the option's intrinsic value.
time-series analysis
an analysis of a firm over a period of time.
time-weighted rate of return
average of individual holding period returns.
times-dividend-earned ratio
earnings divided by preferred dividend requirements.
times-interest-earned ratio
ratio of earnings before interest and taxes divided by interest expense;

a coverage ratio that measures the safety of debt.
13-D report
document filed with the SEC by an individual who acquires 5 percent of a publicly held firm's stock.
total return
the sum of dividend yield and capital gains.
trader
an investor who frequently buys and sells.
tranche
subdivision of a bond issue.
Treasury bills
short-term federal government securities
Treasury bonds
the long-term debt of the federal government
Treasury notes
the intermediate-term debt of the federal government.
Treynor index
a risk-adjusted measure of performance that standardizes the return in excess of the rik-free rate by the portfolio's systematic risk.
trustee
an appointee, usually a commercial bnak, responsible for upholding the terms of a bond's indenture.
12b-1 fees
fees that a mutual fund may charge to cover marketing and advertising expenses.
two-step mortgage loan
a mortgage loan in which the interest rate is changed once at a predetermined time.
undercapitalized
having insufficient equity financing.
underwriting
the process by which securities are sold to the general public and in which the investment banker buys the securities from the issuing firm.
unimproved land
land that has not been cleared and that lacks improvements, such as curbs and gutters.
unit trust
a passive investment company with a fixed portfolio of assets that are self-liquidating.
unsystematic risk
the risk associated with individual events that affect a particular security.
U.S. Treasury bill
short-term debt of the federal government.
valuation
the process of determining the current worth of an asset.
value
what something is worth;

the present value of future benefits.
variable interest rate bonds
a long-term bond with a coupon rate that varies with changes in short-term rates.
venture capitalist
firm specializing in investing in the securities, especially stock, of small, emerging companies.
Veterans Administration (VA)
an agency of the federal government that will guarantee mortgages granted to qualified veterans.
voting rights
the rights of stockholders to vote their shares.
warrant
an option issued by a company to buy its stock at a specified price within a specified time period.
yield curve
the relationship between time to maturity and yields for debt in a given risk class.
yield to call
the yield earned on a bond from the time it is acquired until the time it is called and retired by the firm.
yield to maturity
the yield earned on a bond from the time it is acquired until the maturity date.
zero coupon bond
a bond on which interest accrues and is paid at maturity, and is intially sold at a discount.