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A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on
an established glossary. The interest rate is adjusted at each interval to a rate equivalent to the glossary value
plus a predetermined spread, or margin, over the glossary, usually subject to per-interval and to life-of-loan
interest rate and/or payment rate caps.
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may becollateralized by mortgages and M.B.S.s.
Adjusted present value (APV)
The net present value analysis of an asset if financed solely by equity (present value of un-levered cash
flows), plus the present value of any financing decisions (levered cash flows). In other words, the various tax
shields provided by the deductibility of interest and the benefits of other investment tax credits are calculated
separately. This analysis is often used for highly leveraged transactions such as a leveraged buy-out.
Administrative pricing rules
IRS rules used to allocate income on export sales to a foreign sales corporation.
ADR
See: American Depository Receipt
ADR Fees
Fees associated with the creating or releasing of A.D.R.s from ordinary shares, charged by the commercial
banks with correspondent banks in the international sites.
ADR Ratio
The number of ordinary shares into which an A.D.R. can be converted.
ADS
See: American Depository Share
Advance commitment
A promise to sell an asset before the seller has lined up purchase of the asset. This seller can offset risk by
purchasing a futures contract to approximately fix the sales price.
Adverse selection
A situation in which market participation is a negative signal.
AEX
See: Amsterdam Exchange
Affirmative covenant
A bond covenant that specifies certain actions the firm must take.
AFM
See: Amman Financial Market
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