APFinancial Insurance

Convention statement
An annual statement filed by a life insurancecompany in each state where it does business in compliance with that state's regulations. The statement and supporting documents show, among other things, the assets, liabilities, and surplus of the reporting company.

Conventional mortgage
A loan based on the credit of the borrower and on the collateral for the mortgage.

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Karachi Stock Exchange
The major securities exchange of Pakistan.

Keiretsu
A network of Japanese companies organized around a major bank. The term is also used outside of Japan to describe how a large corporation with many subsidiaries and associated firms can manipulate revenues. For example, firm A and B are controlled by firm C. Firm A is forced to buy its input from firm B at a high price. As a result, A is unprofitable and B is very profitable.

Keogh plan
A type of pension account in which taxes are deferred. Available to those who are self-employed.

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APFinancial: Market maker
Used in the context of general equities. One who maintains firm bid and offerprices in a given security by standing ready to buy or sell round lots at publicly quoted prices. See: Agent, dealer, specialist.

Market microstructure
The functional setup of a market.

Market model
The market model says that the return on a security depends on the return on the market portfolio and the extent of the security's responsiveness as measured by beta. The return also depends on conditions that are unique to the firm. The market model can be graphed as a line fitted to a plot of asset returns against returns on the market portfolio. This relationship is sometimes called the single-index model.
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Business failure
A business that has terminated operations with a loss to creditors.

Business risk
The risk that the cash flow of an issuer will be impaired because of adverse economic conditions, making it difficult for the issuer to meet its operating expenses.

Business segment reporting
Reporting the results of the separate divisions or subsidiaries of a business.

Busted convertible
Related: Fixed income equivalent. Mainly applies to convertible securities. Convertible bond selling essentially as a straightbond. Assuming the issuer is "money good," or will continue to meet credit obligations, such issues can be highly attractive since the price makes virtually no allowance for the bond's call on the common stock, when most such issues usually carry premiums.

Bust-up takeover
A leveraged buyout in which the buyer sells off the assets of the target company to repay the debt that financed the takeover.

APFinancial Comprehensive Proposals
APFinancial investment products: Level debt service
A municipal charter provision that debt payments must be relatively equal from year to year so that required revenue projections are easier.

Level load
A mutual fund that charges a permanent sales charge, usually at some fixed percentage. See: Front-end loads and back-end loads.

Level pay
Scheduling principal and interest payments (P&I) due under a mortgage so that total monthly payment of P&I is the same. Different from the typical mortgage for which the principal payment component of the monthly payment becomes gradually greater while the monthly interest component shrinks.

Level term insurance
A life insurance policy with a fixed face value and increasing premiums.

Leverage
The use of debt financing, or property of rising or falling at a proportionally greater amount than comparable investments. For example, an option is said to have high leverage compared to the underlyingstock because a given price change in the stock may result in a greater increase or decrease in the value of the option. Also, commonly known as Gearing in Europe.

Leverage clientele
A group of shareholders who, because of their personal leverage, seek to invest in corporations that maintain a compatible degree of corporate leverage.

Leverage ratios
Measures of the relative value of stockholders, capitalization, and creditors obligations, and of the firm's ability to pay financing charges. Value of firm's debt to the total value of the firm (debt plus stockholder capitalization).

APFinancial Investment
In the context of investment banking, refers to the status of securities sold and owned or the relationship between parties to an underwriting syndicate. In the context of securities, the relationship between a client and a broker/dealerfirm allowing the firm's employee to be the client's buying and selling agent. See: Account executive; account statement.

Account Ad Valorem Duty
An imported merchandise tax expressed as a percentage.

Account balance
Creditsminus debits at the end of a reporting period.

APFinancial a wide variety of investment

Availability
The period in which the project financing is available for drawdown.

Availability float
Checks deposited by a company that have not yet been cleared.

Available cash flow
Total cash sources less total cash uses before payment of debt service.

Available on the way in
In context of general equities, stock is available to new customer as trade initiated by another customer is about to be consummated (on the exchangefloor). Usually said to an inquiring salesperson. See: Open.

APFinancial Job Offers

Cash delivery
The provision of some futures contracts that requires not delivery of underlying assets but settlement according to the cash value of the asset.

Cash discount
An incentive offered to purchasers of a firm's product for payment within a specified time period, such as ten days.

Cash dividend
A dividend paid in cash to a company'sshareholders. The amount is normally based on profitability and is taxable as income. A cashdistribution may include capital gains and return of capital in addition to the dividend.

Cash earnings
A firm'scash revenues less cash expenses, which excludes the costs of depreciation.

Cash-equivalent items
Examples include Treasury bills and Banker's Acceptances.

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APFinancial Job Offers: Perfect market assumptions
Conditions under which the law of one price holds. The assumptions include frictionless markets, rational investors, and equal access to market prices and information.

Perfect market view (of capital structure)
Analysis of a firm'scapital structure decision, which shows the irrelevance of capital structure in a perfect capital market.

Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital market environment, that shows the irrelevance of dividend policy.
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Regulation G
Federal Reserve Boardregulation of lenders other than commercial banks, brokers, or dealers that provide credit for the purchase of or carrying of securities. This regulation was discontinued by a 1998 amendment.

Regulation M
Federal Reserve Boardregulation that currently requires member banks to holdreserves against theirnetborrowings from their foreign branches over a 28-day averaging period. Reg M has also required member banks to hold reserves against Eurodollars lent by their foreign branches to domestic corporations for domestic purposes.

Regulation Q
Federal Reserve Boardregulation imposing caps on the rates that banks may pay on savings and time deposits. Currently time deposits with a denomination of $100,000 or more are exempt from Reg Q.

APFinancial Asociates
APFinancial investment products: The ISO 4217 currency code for Bahamas Dollar.

BT
The two-character ISO 3166 country code for BHUTAN.

BTM
See: Book to market.

BTN
The ISO 4217 currency code for Bhutan Ngultrum.

BV
The two-character ISO 3166 country code for BOUVET ISLAND.

BW
The two-character ISO 3166 country code for BOTSWANA.

BWP
The ISO 4217 currency code for Botswanan Pula.

APFinancial Net
Contractual Intermediary
Holder of an indirect claim through a legal agreement that specifies that the individual must make periodic, fixed payments to the intermediary in exchange for the right to receive payments from the intermediary in the future.

Contractual plan
A plan in which fixed dollar amounts of mutual fundshares are purchased through periodic investments, usually featuring some sort of additional incentive for the fixed period payments.

Contramarket stock
In the context of general equities, stock that tends to go against the trend of the market as a whole, such as a commodities-related stock or one in an industry out of favor with investors in a bull market.

APFinancial traditional bank instruments

Nexus (of contracts)
A set or collection of something.

Nifty Fifty
Institutional investor's 50 most popular stocks.

Nikkei
The common term for the Nihon Keizai newspaper, Japan's leading financial newspaper. The Nikkei usually refers to the price-weighted average of 225 stocks of the first section of the Tokyo Stock Exchange.

Nikkei stock average
Applies mainly to international equities. Price-weighted average of 225 stocks of the first section of the Tokyo Stock Exchange started on May 16, 1949. Japanese equivalent of the US Dow.

Nine-bond rule
An NYSE rule requiring that orders for nine bonds or fewer stay on the floor for one hour to seek a market.

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Selling, general, and administrative (SG&A) expenses
Expenses such as salespersons' salaries and commissions, advertising and promotion, travel and entertainment, office payroll and expenses, and executives' salaries.

Selling on the good news
A strategy of selling stock shortly after a company announces good news and the stock price rises. Investors believe that the price is as high as it can go and is on the brink of going down.

Selling group
All banks involved in selling or marketing a new issue of stock or bonds.

APFinancial Careers

APFinancial Seminars & Workshops: Multiples
Another name for price/earnings ratios.

Multiplier
The investment multiplier which quantifies the overall effects of investment spending on total income. The deposit multiplier which shows the effects of a change in bank deposits on the total amount of outstandingcredit and the money supply.

Multirule system
A technicaltradingstrategy that combines mechanical rules, such as the CRISMA (cumulative volume, relative strength, moving average) Trading System of Pruitt and White.

Municipal bond
State or local governments offer muni bonds or municipals, as they are called, to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes.
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Roth IRA
Individual Retirement Account that allows contributors to make annual contributions and to withdraw the principal and earnings tax-free under certain conditions. Maximum annual contributions are $3,000 per year (phasing up to $4,000 per year in 2005 and $5,000 per year in 2008.

Round lot
A tradingorder typically of 100 shares of a stock or some multiple of 100. Related: odd lot.

Round-trip trade
The purchase and sale of a security within a short period of time.

Round-trip transactions costs
Costs of completing a transaction, including commissions, marketimpact costs, and taxes.

APFinancial Net
APFinancial Contact: Intermediation
Investment through a financial institution. Related: Disintermediation.

Intermittency
When a non-linear dynamical system alternates between periodic and chaotic behavior. See: Chaos, Dynamical Systems.

Internal auditor
An employee of a company who analyzes the company's accounting records to that the company is following and complying with all regulations.

Internal expansion
Growth of assets resulting from internal financing or internally generated cash flow.

Internal finance
Finance generated within a firm by retained earnings and depreciation.

Internal growth rate
Maximum rate a firm can expand without outside sources of funding. Growth generated by cash flows retained by company.

Internal market
The mechanisms for issuing and trading securities within a nation, including its domestic market and foreign market. Compare: External market.

Internal measure
The number of days that a firm can finance operations without additional cash income.

Internal rate of return (IRR)
Dollar-weighted rate of return. Discount rate at which net present value (NPV) investment is zero. The rate at which a bond's future cash flows, discounted back to today, equal its price.

Internal Revenue Code
The various statutes and regulations making up federal tax law.

APFinancial Asociates
Personal income
Total income received from all sources, including wages, salaries, or rents, and the like.

Personal inflation rate
The inflation rate as it affects a specific individual.

Personal property
Any assets other than real estate.

APFinancial a wide variety of investment

Capital rationing
Placing limits on the amount of new investment undertaken by a firm, either by using a higher cost of capital, or by setting a maximum on the entire capital budget or parts of it.

Capital requirements
Financing required for the operation of a business, composed of long-term and working capital plus fixed assets.

Capital shares
One of two types of shares in a dual-purpose investmentcompany, which entitle the holder to the appreciation or depreciation in the value of a portfolio, as well as the gains from trading in the portfolio. Antithesis of income shares.

Capital stock
Stock authorized by a firm'scharter and having par value, stated value, or no par value. The number and the value of issued shares are usually shown, together with the number of shares authorized, in the capital accounts section of the balance sheet. See: Common stock.

APFinancial traditional bank instruments

Net assets
The difference between total assets on the one hand and current liabilities and noncapitalizedlong-termliabilities on the other hand.

Net benefit to leverage factor
A linear approximation of a number, that enables one to operationalize the total impact of leverage on firm value in the capital market imperfections view of capital structure.

Net book value
The current book value of an asset or liability; that is, its original book value net of any accounting adjustments such as depreciation.

Net capital requirement
SEC requirement that member firms and nonmember securitiesbroker-dealers maintain a maximum ratio of indebtedness to liquidcapital of 15 to 1.

Net cash balance
Beginning cash balance plus cashreceiptsminus cash disbursements.

APFinancial mutual funds

: Collection policy
Procedures a firm follows in attempting to collectaccounts receivables.

Collection ratio
The ratio of a company'saccounts receivable to its average daily sales, which gives the average number of days it takes the company to convert receivables into cash.

Collective wisdom
The combination of all the individual opinions about a stock's or security's value.

Colombo Stock Exchange
Established in 1984, the only public stock exchange of Sri Lanka.
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Span
To cover all contingencies within a specified range.

SPDRs
SPDRs (Spiders) are designed to track the value of the Standard & Poor's 500 Composite Price Index. Stands for Standard & Poor's Depositary Receipt. They trade on the American Stock Exchange under the symbol SPY. SPDRs are similar to closed-end funds but are formally known as, a unit investment trust. One SPDR unit is valued at approximately one-tenth (1/10) of the value of the S&P 500. Dividends are disbursed quarterly, and are based on the accumulatedstock dividends held in trust, less any expenses of the trust. See: Mid-cap SPDR.

Special arbitrage account
A margin account with lower cash requirements, reserved for transactions that are hedged by an offsettingposition in futures or options.

APFinancial Careers
APFinancial Contact: American Stock Exchange (AMEX)
Stock exchange with the third highest volume of trading in the US. Located at 86 Trinity Place in downtown Manhattan. The bulk of trading on AMEX consists of index options (computer technology index, institutional index, major market index) and shares of small to medium-sized companies are predominant. Recently merged with Nasdaq See: Curb.

American-style option
An optioncontract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded equity options are American style.

APFinancial Comprehensive Proposals
Pure expectations theory
A theory that asserts that forward rates exclusively represent the expected future rates. In other words, the entire term structure reflects the market's expectations of future short-term rates. For example, an increasing slope to the term structure implies increasing short-term interest rates. Related: Biased expectations heories.

Pure index fund
A portfolio that is managed so as to perfectly replicate the performance of the market portfolio.

Pure monopoly
A market in which only one firm has total control over the entire market for a product due to some sort of barrier to entry for other firms, often a patent held by the controlling firm.

APFinancial Investment

Market segmentation theory or preferred habitat theory
A biased expectations theory that asserts that the shape of the yield curve is determined by the supply of and demand for securities within each maturitysector.

Market share
The percentage of total industrysales that a particular companycontrols.

Market sweep
A second offering following a tender offer, allowing institutional investors to obtain a controllinginterest at a price higher than the original offer.

Market timer
A money manager who assumes he or she can forecast when the stock market will go up and down.

APFinancial Work places

Net transaction
A securitiestransaction in which no commissions or extra fees are paid, such as in an initial public offering.

Net transaction exposure
Offsetting inflows against outflows in a given currency to determine extent of exposure to risk.

Net Weight
The weight of goods being shipped that does not include the weight of wrapping material, container, or other packaging.

Net working capital
Current assetsminuscurrent liabilities. Often simply referred to as working capital.

APFinancial Job Offers

: Alpha equation
Regression usually run over 36-60 months of data: Return-Treasury bill= alpha + beta (S&P 500 - Treasury bill) + error. The alpha is the intercept. Note that the benchmark does not necessarily have to be the S&P 500. A mutual fund specializing in international investment might be benchmarked to a broader world market index, such as the MSCI World Index.
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Release
Relieve party to a trade of any previously made obligation concerning that trade, hence allowing the would-be transactor to show the inquiry/order to a new broker.

Release clause
A mortgage provision that releases a pledged asset after a certain portion of the total payments has been made.

Reload Stock Option
A replacement stock option granted by some companies to optionees upon a stock swap. The number of reload shares granted is equal to the number of shares delivered to exercise the option plus, in some cases, any shares withheld for tax withholding obligations. The exercise price of the new option is the current market price. The option generally expires on the same date that the original option would have.

APFinancial Personal
APFinancial Contact: Bond power
A form used in the transfer of registered bonds from one owner to a different owner.

Bond premium
See: Bond discount

Bond rating
A rating based on the possibility of default by a bondissuer. The ratings range from AAA (highly unlikely to default) to D (in default). See: Rating, investment grade.

APFinancial Investments
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value payments operated by a group of major banks.

Clearinghouse
An adjunct to a futures exchange through which transactionsexecuted on its floor where trades are settled by a process of matching purchases and sales. A clearing organization is also charged with the proper conduct of delivery procedures and the adequate financing of the entire operation.

Clearing member
A member firm of a clearing house. Each clearing member must also be a member of the exchange. Not all members of the exchange, however, are members of the clearing organization. All trades of a non-clearing member must be registered with, and eventually settled through, a clearing member.

APFinancial Contact

Concave
Property that a curve is below a straight line connecting two end points. If the curve falls above the straight line, it is called convex.

Concentration account
A single centralized account into which funds collected at regional locations (lockboxes) are transferred.

Concentration Banks
A small number of large banks a firm contracts with to periodically collect the firm's deposit balances from a group of smaller banks.

Concentration services
Movement of cash from different lockbox locations into a single concentration account from which disbursements and investments are made.

Concession
The per-share or per- bondcompensation of a selling group for participating in a corporate underwriting.

APFinancial Seminars & Workshops

Participating dividend
Dividend received from ownership of participating preferred stock.

Participating fees
The portion of total fees in a syndicatedcredit that go to the participating banks.

Participating GIC
A guaranteed investment contract whose policyholder is not guaranteed a crediting rate, but instead receives a return based on the actual experience of the portfolio managed by the life insurance company.

Participating life insurance policies
Life insurance that pays dividends to policyholders depending on the company's success as provided by few claims and profitableunderwritings and investments.

APFinancial investment products

: Budget
A detailed pro forma schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget.

Budget authority
Broad responsibility conferred by Congress that empower government agencies to spend federal funds. Congress can specify criteria for the spending of these funds. For example, it may stipulate that a given agency must spend within a specific year, number of years, or any time in the future.

The basic forms of budget authority are; appropriations, authority to borrow, contract authority, and authority to obligate and expend offsettingreceipts and collections. The period of time during which Congress makes funds available may be specified as one-year, multiple years or no year. The available amount may be classified as either definite or indefinite; a specific amount or an unspecified amount can be made available. Authority may also be classified as current or permanent. Permanent authority requires no current action by Congress.

Budget deficit
The amount by which government spending exceeds government revenues.
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Class A/Class B shares
See: Classified stock

Class action
A legal complaint filed by a lawyer or group of lawyers for a group of petitioners with an identical grievance, often with an award proportionate to the number of shareholders involved.

Class of Options
Option contracts of the same type (call or put) and Style (American, European or Capped) that cover the same underlying security.

Classified Board
Also known as Staggered Board: is one in which the directors are placed into different classes and serve overlapping terms. Since only part of the board can be replaced each year, an outsider who gains control of a corporation may have to wait a few years before being able to gain control of the board. This slow replacement makes a classified board an effective delays of takeovers. Sometimes known as a delay provision.

APFinancial Work places
APFinancial Personal: Late trading
Late trading of mutual fund shares occurs when investors placing trades after 4 PM receive the 4 PM price. These late traders can use the information revealed after 4 PM to guide their trades: buying funds when their current value is greater than their 4 PM value and selling the funds when the reverse is true. Doing so allows them to earn expected abnormal returns at the expense of the fund's long-term shareholders.

Latent default
A potential default that may have always been present but unidentified.

Launder
To move illegally acquired cash through financial systems so that it appears to be legally acquired.

APFinancial Asociates
Taxable event
An event or transaction that has a tax consequence, such as the sale of stockholding that is subject to capital gains taxes.

Taxable income
Gross income less a variety of deductions.

Taxable municipal bond
Taxed private-purpose bonds issued by the state or local government to finance prohibited projects such as sports stadiums.

Taxable transaction
Any transaction that is not tax-free to the parties involved, such as a taxable acquisition.

APFinancial Representatives

Limited-tax general obligation bond
A general obligationbond of a government backed by specified or constrained revenue sources.

Limited warranty
A warranty with certain conditions and limitations on the parts covered, type of damage covered, and/or time period for which the agreement is good.

Line of credit
An informal loan arrangement between a bank and a customer allowing the customer to borrow up to a prespecified amount.

Linear programming
Technique for finding the maximum value of some equation, subject to stated linear constraints.

Linear regression
A statistical technique for fitting a straight line to a set of data points.

Linking method
Method for calculating rates of return that multiplies one plus the interim rate of return.

Lintner's observations
John Lintner's work (1956) suggests that dividend policy is related both a target level, and to the speed of adjustment of change in dividends.

Lipper Mutual Fund Industry Average
The average level of performance for all mutual funds, as reported by Lipper Analytical Services.

Liquid
Easily traded or converted to cash.

APFinancial Interests

OPM
Stands for "other people's money," which refers to borrowed funds used to increase the return on invested capital.

Oporto
Portugal's derivatives exchange (Bolsa de Derivados do Oporto) trading futures on the ten-year government bond, Portuguese stock index, and three-month interbank deposit rate LISBOR (Lisbon Interbank Offered Rate).

Opportunity cost of capital
Expected return that is forgone by investing in a project rather than in comparable financial securities.

Opportunity costs
The difference in the actual performance of a particular investment and some other desired investment adjusted for fixed costs and execution costs. It often refers to the most valuable alternative that is given up.

Opportunity line
Slope of a graph representing portfolios achieved by combining different levels of borrowing and lending with a single risky portfolio. Sometimes called investment opportunity set.

APFinancial traditional bank instruments

: Limited liability
Limitation of loss to what has already been invested.

Limited-liability instrument
A security, such as a call option, in which the owner can lose only the initial investment.

Limited partner
A partner who has limited legal liability for the obligations of the partnership.

Limited partnership
A partnership that includes one or more partners who have limited liability.

Limited payment policy
Life insurance providing full life protection but requiring premiums for only part of the customer's lifetime.

Limited recourse
A term describing a type of loan in which the lender has limited or no claim against the parent company if the collateral is insufficient to repay the debt. See:Nonrecourse.

Limited risk
The risk inherent in optionscontracts, which is much lower than that of a futures contract, which has unlimited risk. The maximum loss in buying a call option, for example, is the premium paid for the option.

Limited price order
Used in the context of general equities. See: Limit order.
APFinancial a wide variety of investment
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Air Freight Consolidator
An air freight carrier that does not own or operate its own aircraft but ships its cargo with actual equipment operating carriers. Consolidators issue house air waybills to their customers and receive master air waybills from the actual carriers.

Air pocket stock
A stock whose price drops precipitously, often on the unexpected news of poor results.



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