Finance Terminologies- Cont.
6.Accruals
Liabilities for services received for which payment has yet to be made. Examples include accrued wages, accrued taxes, and accrued interest.
7.Accrued expenses
Amounts owed but not yet paid for wages, taxes, interests, and dividends. The accrued expenses account is a short-term or current liability.
8.Active management
Attempts to identify mispriced securities, or to forecast broad market trends.
9.Active portfolio strategy
A strategy that uses available information and forecasting techniques to seek better performance than a buy and hold portfolio.
10.Agency costs
Costs of resolving the conflicts of interest among stockholders, bondholders, and managers. They include the costs of providing managers with an incentive to maximize shareholders’ wealth and then monitoring their behaviour, and the cost of protecting bondholders from shareholders. Agency costs borne by stockholders.
11.Agency problem
Conflicts of interest among stockholders, bondholders, and managers.
12.Agency theory
The theory of the relationship between principals and agents. It involves the nature of the costs of resolving conflicts of interest between principals and agents.
13.Alpha
In a nutshell, alpha is the difference between a fund's expected returns based on its beta and its actual returns. Alpha is sometimes interpreted as the value that a portfolio manager adds, above and beyond a relevant index's risk/reward profile.
14.Amortization
Process of writing off or liquidating an asset or loan periodically on an installment basis.
15.Analyst
Employee of a brokerage or fund management house who studies companies and makes buy-and-sell recommendations on stocks of these companies.
16.Angel investor
A private wealthy individual that has no association with a venture capital firm, investment fund, etc. The "angel" invests private money into what he/she believes to be promising opportunities i.e. normally start-up companies.
17.Annual report
Yearly record of a publicly held company's financial condition. It includes a description of the firm's operations, as well as balance sheet, income statement, and cash flow statement information. SEC rules require that it will be distributed to all shareholders.
18.Annuity
A series of uniform receives (payments) for a specific number of years, which results from an initial deposit (receipts).
19.Appreciation
Increase in the value of an asset.
20.Arithmetic mean or Average
A measure of mean annual rates of return equal to the sum of annual holding period rates of return divided by the number of years.