Test 1 Cfa Glossary F

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FX swap

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the combination of a spot and forward FX transaction

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face value

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the amount of cash payable by a company to the bondholders when the bonds mature, the promised payment at maturity separate from any coupon payment

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factor

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a common or underlying element with which several variables are correlated

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factor markets

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markets for the purchase and sale of factors of production

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fair value

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the amount at which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

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fed funds rate

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the US interbank lending rate on overnight borrowing of reserves

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fiat money

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money that is not convertible into any other commodity

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fibonacci sequence

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a sequence of numbers starting with 0 and 1 and then each subsequent number in the sequence is the sum of the two preceding numbers.

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How i elliott wave theory related to fibonacci sequence

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it is believed that market waves follow patterns that are the ratios of numbers n the Fibonacci sequence

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fiduciary call

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a combination of a european call and a risk-free bond that matures on the option expiration day and has a face value equal to the exercise price of the call

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financial account

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a component of the balance of payments account that records investment flows

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financial flexibility

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the ability to react and adapt to financial adversities and opportunities

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financial leverage

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the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income

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what is financial leverage short for

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financial levera ratio

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financial leverage ratio

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a measure of financial leverage calculated as averge total assets divided by total equity

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financial risk

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the risk that environmental, social or governance risk factors will result in significant costs or other losses to a company and its shareholders, the risk arising from a company's obligation to meet required payments under its financing agreements

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financing activities

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activities related to obtaining or repaying capital to be used in the business

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first lien debt

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debt secured by a pledge of certain assets that could include building,s but may also include property, equipment licenses, patents, brands etc

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first mortgage debt

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debt secured by a pledge of a specific property

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first price sealed bid auction

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an auction in which envelopes containing bids are opened simultaneously and the item is sold to the highest bidder

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first degree price discrimination

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where a monopolist is able to charge each customer the highest price the customer is willing to pay

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fiscal multiplier

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the ratio of a change in national income to a change in government spending

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fiscal policy

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the use of taxes and government spending to affect the level of aggregate expenditures

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fischer effect

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the thesis that the real rate of interest in an economy is stable over time so that changes in nominal interest rates are the result of changes in expected inflation

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fisher index

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the geometric mean of laspeyres index

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fixed charge coverage

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a solvency ratio measuring the number of times interest and least payments are covered by operating income, calculated as (EBIT + Lease payments) divided by (interest payments +lease payments)

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fixed costs

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costs that remain at the same level regardless of a company's level of production and sales

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fixed price tender offer

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offer made by a company to repurchase a specific number of shares at a fixed price that is typically at a premium to teh current market price

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fixed rate perpetual preferred stock

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nonconvertible non callable preferred stock that has a fixed dividend rate and no maturity date

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fixed for floating interest rate swap

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an interest rate swap in which one party pays a fixed rate and the other pays a floating rate, which both sets of payments in the same currency

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what is a fixed for floating interest rate swap also called (2)

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plain vanilla swap
vanilla swap

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flags

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technical analysis continuation patter formed by parallel treadlines, typically over a short period

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flat price

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the full price of a bond minus the accrued interest

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what is flat price also called

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also called the quoted or clean price

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float

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in the context of customer receipts, the amount of money that is in transit between payments made by customers and funds that are usable by the company

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float factor

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an estimate of the average number of days it takes deposited checks to clear

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formula for float factor

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average daily float divided by average daily deposit

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float-adjusted market capitalization weighting

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an index weighting method in which the weight assigned to each constituent security is determined by adjusting its market capitalization for its market float

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floating rate notes

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a note on which interest payments are not fixed but instead vary from period to period depending on the current level of a reference interest rate

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floor

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a series of put options on a interest rate with each option expiring at the date on which the floating loan rate will be reset and with each option havng the same exercise rate

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floor traders

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market makers that buy and sell by quoting a bid and an ask price, who provide liquidity to the market

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floorlet

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each component put option in a floor

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flotation cost

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fees charged to companies by investment bakers and other costss associated with raising new capital

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foreign currency reserves

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holding by the central band of non-domestic currency deposits and non-domestic bonds

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foreign direct investment

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direct investment by a firm in one country (the source country) in productive assets in a foreign country (the host country)

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foreign exchange gains or losses

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gains or losses that occur when the exchange rate changes between the investors currency and the currency that foreign securities are denominated in

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foreign portfolio investment

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shorter-term investment by individuals, firms and institutional investors (pension funds) in foreign financial instruments such as foreign stocks and foreign government bonds

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forward commitments

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class of derivatives that provides the ability to lock in a price to transact in the future at a previously agreed upon price

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forward contract

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an agreement between two parties in which one party, the buyer, agrees to buy from the other party, the seller, an underlying asset at a later date for a price established at the start of a contract

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forward curve

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a series of forward rates each having the same timeframes

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forward market

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for future delivery, beyond the usual settlement time period in the cash market

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forward price

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the fixed price or rate at which the transaction scheduled to occur at expiration of a forward contract will take place, this price is agreed on at the initiation date of the contract

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forward rate

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the itnerest rate on a bond or money market instrument traded in a forward market a forward rate can be interpreted as incremental, or marginal, return for extending the time to maturity for an additional time period

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forward rate agreement

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a forward contract calling for one party to make a fixed interest payment and the other to make an interest payment at a rate to be determined at the contract expiration

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fractile

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a value at or below which a stated fraction of the data lies

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fractional reserve banking

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banking in which reserves constitute a fraction of deposits

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free cash flow

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the actual cash that would be available to the company's investors after making all investments necessary to maintain the company as an ongoing enterprise,
- the internally generated funds that can be distributed to the company's investors without impairing the value of the company

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free cash flow to equity

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the cash flow available to a company's common shareholders after all operating expenses, interest, and principal payments have been made, and necessary investments in working and fixed capital have been made.

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free cash flow to the firm

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the cash flow available to the company's suppliers of capital after all operating expenses have ben paid and necessary investments in working capital and fixed capital have been made

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free float

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the number of shares that are readily and freely tradable in the secondary market

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free trade

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when there are no government restrictions on a country's ability to trade

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free trade areas

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one of the most prevalent forms of regional integration in which all barriers to the flow of goods and services among members have been eliminated

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free-cash-flow-to- equity models

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valuations models based on discounting expected future free cash flow to equity

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frequency distribution

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a tabular display of data summarized into a relatively small number of intervals

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frequency polygon

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graph of a frequency distribution obtained by drawing straight lines joining successive points representing the class frequencies

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full price

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the price of a security with accrued interest

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what is full price also called

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invoice
dirty price

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fundamental value

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the underlying or true value of an asset based n an analysis of its qualitative and quantitative characteristics

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what is fundamental value also called

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intrinsic value

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fundamental weighting

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an index weighting method in which the weight assigned to each constituent security is based on its underlying company's size. It attempts to address the disadvantages of market capitalization weighting by using measures that are independent of consittuent securities price

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funds of hedge funds

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funds that hold a portfolio of hedge funds

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future value

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the amount to which a payment or series of payments will grow by stated future date

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futures commision merchants

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- individuals or companies that execute futures transactions for other parties off the exchange

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futures contract

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a variation of a forward contract that has essentially the same basic definition but with some addition features such as clearing house guarantee against credit losses, a daily settlement of gains and losses and an organized electronic floor trading facility

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futures price

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the agreed-upon price of a futures contract.