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Acid Test Ratio ✔✔Current Assets - Inventory / Current Liabilities Agency Costs ✔✔The costs that result from the principle-agent problem. Aggressive Assets ✔✔Companies or securities with betas greater than 1. Annuity Due ✔✔An annuity that pays at the beginning of each period. Asset Manager ✔✔A professional who makes their living managing a portfolio of assets. Asset Pricing ✔✔The process of valuing assets. Beta ✔✔The measure of systematic risk determined by a regression line. Build-Up Method ✔✔A technique to estimate the cost of equity. Business Finance ✔✔Another word for corporate finance. Capital Budgeting Analysis ✔✔The process of deciding what assets to buy. Cash Management ✔✔Managing the day-to-day finance operations of a firm. Compounding ✔✔Figuring out the future value of money you will invest. Compounding Problem ✔✔When the periods, payments, and interest must be adjusted for nonannual time value of money problems. Corporate Finance ✔✔The finance function within a business. One of the three main areas of finance. Corporate Governance ✔✔The structure, rules, and regulations for owners and managers of a firm. Correlation ✔✔How related one asset's returns are to another asset's returns. Cost of Capital ✔✔How much it costs the firm (in percentage terms) to finance its operations through debt and/or equity. Costly Capital ✔✔All interest-bearing debt plus all equity. Coupon Rate ✔✔Another name for coupon yield. Covenants ✔✔Rules set forth in the bond indenture to protect bond investors. Cross-sectional Analysis ✔✔One of the three ways to use ratios by comparing the firm to other firms' ratios or industry averages. Current Market Value ✔✔What someone would pay right now for an asset. Current Yield ✔✔An approximation of the current yield that does not incorporate the time value of money = Annual Coupon/Current Market Value Discretionary Financing Needed (DFN) ✔✔The difference between the firm's total financing need (total projected assets) and the funding it has in place. Equals projected total assets - projected total liabilities - projected owners' equity.
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