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Absolute Rate
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The fixed portion of an interest-rate swap, expressed as a percentage rather than as a premium or a discount to a reference rate.
The absolute rate is a combination of the reference rate and the premium or discounted fixed percentage. For example, if the LIBOR is 3% and the fixed interest portion of the swap is at a 7% premium, the absolute rate is 10%. It is sometimes also referred to as an absolute swap yield.
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Absolute Return
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The return that an asset achieves over a period of time. This measure simply looks at the appreciation or depreciation (expressed as a percentage) that an asset - usually a stock or a mutual fund - faces over a period of time. Absolute return differs from relative return because it is concerned with the return of the asset being looked at and does not compare it to any other measure.
Absolute return funds look to make positive returns whether the overall market is up or down, while index tracking funds try to beat the index they are tracking. For example, if there has been a 5% increase in the price of Ford stock over the past year, then the holders of Ford stock have achieved an absolute return of 5% over the past year.
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Account
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The period during which days in a period varies in different countries.
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Account Limits
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A financial and contractual relationship whereby an investor is allowed to use the services of a bank or an deals on a stock exchange are done for settlement on the due account day. The number of exchange dealer for investment or speculative purposes and agrees to a set maximum amount off credit and possibly a defined period
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Accounting Rate of Return - ARR
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ARR provides a quick estimate of a projects worth over its useful life. ARR is derived by finding profits before taxes and interest.
ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cashflows, and it does not account for the time value of money.
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Accrued Interest
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The interest accruing on a security since the previous coupon payment date. Coupons are paid to the holder of the security on the payment date so if it is sold between times the buyer must usually compensate the seller for the interest accrued until the value date, either calculated within the price or as a separate payment. A bond can trade with negative accrued interest from the ex dividend date until the next coupon payment (in the case of a new buyer). See Simple Interest
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Acid-Test Ratio
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A stringent test that indicates if a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets.
Calculated by:
Companies with ratios less than 1 cannot pay their current liabilities and should be looked at with extreme caution. Furthermore, if the acid-test ratio is much lower than the working capital ratio, it means current assets are highly dependent on inventory. Retail stores are examples of this type of business.
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Acre
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Land measurement used in the U.S. and the U.K. which equals 43,560 square feet. One square mile has 940 acres. A hectare measures 2.471 acres.
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Across the Board
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In tariff negotiations this involves uniform percentage reductions or increases in duties on major categories of items. The opposite position is item by item tariff negotiation.
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Acting in Concert
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Investors working together to achieve the same goal, e.g. to buy all the stock they need to take over a company or purchase sufficient shares to hold a majority or to buy the minimum needed where they can legitimately make an open bid to shareholders to buy outstanding shares. Sometimes acting in concert can be considered illegal. Also known colloquially as concert party. See Warehousing.
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