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Insider ring

Default admin account — Tue, 13 May 2008 10:41:02 +0100

An insider ring is a group of people who collaborate to profit from insider trading.

Risk arbitrage/merger arbitrage

Default admin account — Sat, 10 May 2008 09:34:17 +0100

Risk arbitrage, also called merger arbitrage, is a form of speculation on the outcome of takeover bids.

Statistical arbitrage

Default admin account — Thu, 08 May 2008 09:42:59 +0100

Statistical arbitrage is not true arbitrage because it does not deliver a guaranteed profit — in fact many statistical arbitrageurs have made large losses. The term is often shortened to statarb.

Arbitrageur

Default admin account — Wed, 07 May 2008 15:21:37 +0100

An arbitrageur can simply be defined as a person who engages in arbitrage. However, this rather oversimplifies the term, which can cover a range of activities that include true (riskless) arbitrage, and activities that are similar but which carry some level of risk.

Cost of capital

Default admin account — Tue, 06 May 2008 09:02:34 +0100

The cost of capital is the rate of return that providers of capital demand to compensate them for both the time value of their money, and risk.

The cost of capital is specific to each particular type of capital a company uses.

J-curve

Default admin account — Sun, 04 May 2008 07:40:41 +0100

A J-curve is an initial drop followed by a rise that is greater and more sustained than the fall, which may look a little like a J. J-curves can occur in a wide variety of contexts, including finance and economics.

BIMBO

Default admin account — Thu, 01 May 2008 09:15:45 +0100

A buy-in management buy-out is a compromise between a MBO and a MBI.

Management buy-in (MBI)

Default admin account — Thu, 01 May 2008 08:30:46 +0100

A management buy-in (MBI) is the purchase of a business by a new management team, usually with private equity funding. Unlike a management buy-out (MBO), there is a complete change of management.

Liquidity premium

Default admin account — Wed, 30 Apr 2008 11:53:04 +0100

A liquidity premium is the extra return investors demand for holding a security that is less liquid.

Indirect beneficial interest

Default admin account — Tue, 29 Apr 2008 11:24:36 +0100

The issue of indirect beneficial interests most often occurs in reporting contexts when declarations of interest must be made. The term itself is not often used in the UK. It is standard terminology in other countries including the US and South Africa.

Dutch disease/resource curse

Default admin account — Thu, 24 Apr 2008 12:51:47 +0100

Dutch disease, called the resource curse or the “curse of oil”, is the damaging effect on an economy as a result of the exploitation and export of natural resources.

Mortgage backed security (MBS/RMBS/CMBS)

Default admin account — Thu, 24 Apr 2008 09:49:59 +0100

Mortgage backed securities (MBS) are a type of asset backed security.

De-equitisation/re-equitisation

Default admin account — Mon, 21 Apr 2008 11:24:19 +0100

De-equitisation is the substitution of debt for equity, especially at the level of markets.

Analysing pharmaceutical companies

Default admin account — Sat, 12 Apr 2008 12:27:51 +0100

The best start to understanding the pharmaceutical sector lies in the main revenue driver, and sources of shareholder value, in a pharmaceutical company:

existing, marketed, products,
pipelines.

Assessing pipelines is harder, because sal

Credit default swap (CDS)

Default admin account — Mon, 24 Mar 2008 07:12:48 +0000

This page explains credit default swaps. CDS is also an abbreviation of central depositary system.

A credit default swap (CDS) is a derivative that serves as a way of transferring some of the risk in a debt instrument.

New business margin

Default admin account — Tue, 18 Mar 2008 13:11:06 +0000

New business margin in a profit measure used by insurers. The measurement of new business (the equivalent of sales when calculating profit margins in other industries) is less straightforward than similar numbers in other industries.

Bullet bond

Default admin account — Tue, 18 Mar 2008 09:21:12 +0000

A bullet bond, also called a vanilla bond, is the simplest and commonest type of bond. It has no special features.

A bullet bond is redeemed on a fixed maturity date and pays a fixed rate of interest.

Quality of earnings

Default admin account — Mon, 11 Feb 2008 10:22:33 +0000

Quality of earnings is usually a rather ill defined idea of how good or real earnings are, although some academics have attempted to devised numerical measures of it.

Earnings are typically considered high quality if they:

are sustainable, rather than the results of one offs,
reflect the performanc

Monoline insurer

Default admin account — Thu, 17 Jan 2008 20:55:39 +0000

A monoline insurer, in the context of financial markets, guarantees the repayment of bonds. In other contexts the term may merely mean a specialist insurer. The word “monoline” by itself may also simply mean a company with a narrow range of business.

Double entry

Default admin account — Thu, 17 Jan 2008 12:40:02 +0000

Double entry bookkeeping requires that every transaction is entered into the accounts twice. For example, if cash is used to pay a debt, then the amount in the cash account decreases, and so does account tracking the amount owed.