Finance Definitions

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Subject

Date Published

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File Name

Finance

14th February 2009

Sanchi

USA

95

wbe25.zip

 

       

 
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Sample of contents

 

12b-1 fees

Annual fees charged by a mutual fund to pay for marketing and distribution costs

Active management

Attempting to identify mis-priced securities or to forecast broad market trends

Agency problem

Conflicts of interest between managers and stockholders

Arithmetic average

The sum of returns in each period divided by the number of periods

Ask price

Price at which a dealer will sell a security

Asset allocation

Allocation of an investment portfolio across broad asset classes

Auction market

A market where all traders meet at one place to buy or sell an asset

Bankers’ acceptance

An order to a bank by a customer to pay a sum of money at a future date

Bid price

Price at which a dealer is willing to purchase a security

Bid-ask spread

The difference between a dealer’s bid and asked price

Block transactions

Large transactions in which at least 10,000 shares of stock are bought or sold

Bundling, unbundling

Creation of new securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes

Call option

The right to buy an asset at a specified price on or before a specified expiration date

Capital allocation line

Plot of risk-return combinations available by varying portfolio allocation between a risk-free asset and a risky portfolio

Capital Market line

Capital allocation line using the market index portfolio as the risky asset