Business / Finance Glossary

Advance Refunding: In the context of municipal bonds, refers to the sale of new bonds (the refunding issue) before the first call date of old bonds (the issue to be refunded). The refunding issue usually speci . . . View Full Definition

Adverse Opinion: An independent auditor's opinion expressing that a firm's financial statements do not reflect the company's position accurately. See also: Qualified opinion.

Adverse Selection: Refers to a situation in which sellers have relevant information that buyers lack (or vice versa) about some aspect of product quality.

Advisory Letter: A newsletter offering financial advice to its readers.

Affiliate: Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of . . . View Full Definition

Affiliated Corporation: A corporation that is an affiliate to the parent company.

Affiliated Person: An individual who possesses enough influence and control in a corporation as to be able to alter the actions of the corporation.

Affirmative Covenant: A bond covenant that specifies certain actions the firm must take.

Affordability Index: An index that measures the financial ability of consumers to purchase a home.

After Acquired Clause: A contractual clause in a mortgage agreement stating that any additional mortgageable property attained by the borrower after the mortgage is signed will be regarded as additional security f . . . View Full Definition

After Tax Income: Another term for net income.

After-Hours Dealing Or Trading: Securities trading after regular trading hours on organized exchanges.

After-Tax Basis: The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond.

After-Tax Profit Margin: The ratio of net income to net sales.

After-Tax Real Rate Of Return: The after-tax rate of return minus the inflation rate.

Aged Fail: An account between two broker/dealers that remains intact after 30 days after the settlement date. The receiving firm must adjust its capital as it can no longer treat this account as an assets.

Agency: In context of general equities, buying or selling for the account and risk of a customer. Generally, an agent, or broker, acts as intermediary between buyer and seller, taking no financial r . . . View Full Definition

Agency Bank: A form of organization commonly used by foreign banks to enter the U.S. market. An agency bank cannot accept deposits or extend loans in its own name; it acts as agent for the parent bank. I . . . View Full Definition

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