Sunday, August 12, 2007

FINANCE TERMS III

Return on capital employed

A fundamental financial performance measure. A percentage figure representing profit before interest against the money that is invested in the business. (profit before interest and tax/capital employed x 100)

Zero-coupon bond

A bond where no periodic interest payments are made, it issued at discount. The investor receives one payment, which includes principal and interest, at redemption (call or maturity)

Market Capitalization

Value of a corporation as determined by the market price of its issued and outstanding common stock. It is calculated by multiplying the number of outstanding shares by the current market price.

Mark to the Market

Adjust the valuation of a security or portfolio to reflect current market values.

Oversubscribed

Underwriting term describing a new stock issue where there are more buyers than available shares.

Amalgamation

When two or more existing companies go into liquidation and a new company is formed to take over the business is known as amalgamation.

Absorption

When one or more existing companies go into liquidation and some existing company buys the business is known as absorption.

Arbitrage

Buying a currency or securities in one market and selling it another to make profit is known as arbitrage.

Peculiar Word

Credit Crunch: Supply of Credit falls though there is sufficient demand

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