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| A report issued annually by a corporation to its stockholders. It contains basic financial statements as well as management's analysis of the firm's past operations and future prospects. |
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| A statement of the firm's financial position at a specific point in time. |
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| That portion of the firm's earnings that has been saved rather than paid out in dividends. |
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| common equity (net worth) |
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| The capital supplied by common stockholders: common stock, paid in capital, retained earnings, and, occassionally certain reserves |
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| defined as current assets minus current liabilities. It is a frequently used measure of liquidity. |
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| A report summarizing the firm's revenues and expenses during an accounting period, generally a quarter or a year. |
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| The charge to reflect the cost of assets used up in the production process. It is not a cash outlay. |
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| Physical assets such as plant and equipment. |
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| A noncash charge similar to depreciation except that is is used to write-off the costs of intangible assets. |
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| Assets such as patents, copyrights, trademarks, and goodwill. |
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| The cash flow actually available for distribution to all investors (stockholders and debtholders) after the company has made all the investments in fixed assets, new products, and working capital necessary to sustain ongoing operations, |
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| The excess of the market value of equity over its book value. |
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| Economic Value Added (EVA) |
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| Excess of NOPAT (net operating profit after taxes) over capital costs. |
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| The risk an investor would face if he or she held onle one asset. |
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| The chance that some unfavorable event willoccur. |
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| The square of the standard deviation. |
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| coefficient of variation (CV) |
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Definition
| Standardized measure of the risk per unit of return; calcualted as the standard deviation divided by the expected return, |
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| The difference between the expected rate of return on a given risky asset and that on a less risky asset. |
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| Expected Return on a Portfolio |
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Definition
| The weighted average of the expected returns on the assets held in the portfolio. |
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| The return that was actually earned during some past period. The actual return. Usually turns out to be different from the expected return except for riskless assets. |
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| A statement reporting the impact of a firms operating, investing, and financing activities on cashflows over an accounting period. |
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| Risk averse investors dislike risk and require higher rates of return as an inducement to buy riskier securities. |
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| A listing of all possible outcomes, or events, with a probability (chance of occurence) assigned to each outcome. |
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| The rate of return expected to be realized from an investment; the weighted average of the probability distribution of possible results. |
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| A statistical measure of the variability of a set of observations. |
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| The risk of a security that cannot be diversified away. This is the risk that affects portfolio risk and thus is relevant to rational investor. |
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| The part of a security's risk that cannot be eliminated by diversification. |
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| That part of a security risk associated with random events; it can be eliminated by proper diversification. |
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| The tendency of two varaibales to move together. |
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| A measure of the degree of relationship between two variables. |
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| A portfolio consisting of all stocks. |
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