Business / Finance Glossary

Asset Depreciation Range System: A range of depreciable lives the IRS allows for particular classes of assets.

Asset For Asset Swap: Creditors exchange the debt of one defaulting borrower for the debt of another defaulting borrower.

Asset Management Account: Account at a brokerage house, bank, or savings institution that integrates banking services and brokerage features.

Asset Play: A company with assets that are not believed to be accurately reflected in its stock price, making it an attractive buy or play.

Asset Pricing Model: A model for determining the required or expected rate of return on an asset. Related: Capital asset pricing model and arbitrage pricing theory.

Asset Stripper: A corporate raider (company A) that takes over a target company (company B) in order to sell large assets of company B to repay debt. Company A calculates that the net selling of the assets . . . View Full Definition

Asset Substitution: Occurs when a firm invests in assets that are riskier than those that the debtholders expected.

Asset Substitution Problem: Arises when the stockholders substitute riskier assets for the firm's existing assets and expropriate value from the debtholders.

Asset Swap: An interest rate swap used to alter the cash flow characteristics of an institution's assets in order to provide a better match with its liabilities.

Asset Turnover: The ratio of net sales to total assets.

Asset Value: The net market value of a corporation's assets on a per-share basis, not the market value of the shares. A company is undervalued in the market when asset value exceeds market value.

Asset-Backed Security: A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate.

Asset-Based Financing: Methods of financing in which lenders and equity investors look principally to the cash flow from a particular asset or set of assets for a return on, and the return of, their financing.

Asset-Coverage Test: A bond indenture restriction that permits additional borrowing if the ratio of assets to debt does not fall below a specified minimum.

Asset-Equity Ratio: The ratio of total assets to stockholder equity.

Asset-Liability Management: The task of managing the funds of a financial institution to accomplish the two goals of a financial institution: (1) to earn an adequate return on funds invested and (2) to maintain a comfo . . . View Full Definition

Assets: A firm's productive resources.

Assets Requirements: A common element of a financial plan that describes projected capital spending and the proposed uses of net working capital.

Assignment: The receipt of an exercise notice by an options writer that requires the writer to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified st . . . View Full Definition

Assimilation: The public absorption of a new issue of stocks once the stock has been completely sold by underwriter. See: Absorbed.

Assumed Interest Rate: Rate of interest used by an insurance company to calculate the payout on an annuity contract.

Assumption: Becoming responsible for the liabilities of another party.

ASX Derivatives And Options Market (ASXD): Options market trading options on more than 50 of Australia's and New Zealand's leading companies.

Asymmetric Information: Information that is known to some people but not to other people.

Asymmetric Taxes: When participants in a transaction have different net tax rates.

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