Ian Berch

Ian Berch

Post-audit
A set of procedures for evaluating a capital budgeting decision after the fact.

Ultra vires activities
Corporate actions and operations that are not sanctioned by corporate charter, sometimes leading to shareholder lawsuits.

Plan for reorganization
A plan for reorganizing a firm during the Chapter 11bankruptcy process.( - Eric Berch)

Mark Berch: Interlocking directorate
Describes cross-memberships of directors on each other's company Board of Directors.

Market-on-Close (MOC) order
An order to tradestocks, options, or futures as close as possible to the market close. See also MOC.

Fee-only compensation
Payment to a financial adviser of a set hourly rate, or an agreed-upon percentage of assets under management, for a financial plan. ( Eric Berch )

Revenues
Sales or royalty proceeds. Quantity times price sold.

Mark Berch

Organization of Petroleum Exporting Countries (OPEC)
A cartel of oil-producing countries.

Ian Berch: Internal growth rate
Maximum rate a firm can expand without outside sources of funding. Growth generated by cash flows retained by company.

Ian Berch: Consolidation
The combining of two or more firms to form an entirely new entity.

Ian Berch

Ian Berch
National Futures Association (NFA)
The futuresindustryself-regulatory organization established in 1982.

General Agreement on Tariffs and Trade (GATT)
A treaty adopted by the United Nations aimed at elimination of international trade barriers between member countries.

Mortgager
The borrower of a loansecured by property.( - Mark Berch)

Eric Berch: Abusive tax shelter
A limited partnership that the IRS judges to be claiming tax deductions illegally.

Roll forward
To move to an optionposition with a later expiration date.

Bill of lading
A contract between an exporter and a transportation company in which the latter agrees to transport the goods under specified conditions that limit its liability. It is the exporter's receipt for the goods as well as proof that goods have been or will be received. ( Ian Berch )

Biased expectations theories
Related: Pure expectations theory.

Mark Berch

Stockout
Running out of inventory.

Eric Berch: Downside risk
The risk that a security will decline in value including the implications of risk.

Eric Berch: Current/noncurrent method
The translation of all of a foreign subsidiary'scurrent assets and liabilities into home currency at the current exchange rate while noncurrent assets and liabilities are translated at the historical exchange rate; that is, the rate in effect at the time the asset was acquired or the liability incurred.

Mark Berch: Clean

Mark Berch

Escrow receipt
A document provided by a bank in optionstrading to guarantee that the underlying security is on deposit and available for potential delivery.

Best-efforts sale
A method of securitiesdistribution/underwriting in which the securities firm agrees to sell as much of the offering as possible and return any unsold shares to the issuer. As opposed to a guaranteed or fixed-pricesale or bought deal, in which the underwriter agrees to sell a specific number of shares (and holds any unsold shares in its own account if necessary).

Notice Period
The time during which the buyer of a futures contract can be called upon to accept delivery. Typically, the 3 to 6 weeks preceding the expiration of the contract.( - Mark Berch)

Mark Berch: Clean
In the context of general equities, block trade that matches buy or sell orders/interests, sparing the block trader any inventoryrisk (no net position and hence none available for additional customers). Natural. Antithesis of open.

"Put it on "
Used for listed equity securities. "Go to the floor to transact." See: Print.

B2B
An Internet strategy of dealing directly with businesses, rather than consumers, i.e. business to (2) business. ( Mark Berch )

Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.

Mark Berch

Disintermediation
Withdrawal of funds from a financial_institution in order to invest them directly.

Mark Berch: Guaranteed Mortgage Certificates (GMC)
First issued by Freddie Mac in 1975, G.M.C.s, like PCs, represent undivided interest in specified conventional whole loans and participations previously purchased by Freddie Mac.

Mark Berch: Term Fed funds
Fed funds sold for a period of time longer than overnight.

Mark Berch

Irrational call option
The implied call imbedded in a MBS. Irrational because the call is sometimes not exercised when it is in the money (interest rates are below the threshold to refinance), and sometimes exercised when it is not in the money. Option exercise like this affects payments on the MBS.

Prearranged trading
Possibly fraudulent practice whereby commoditiesdealers carry out risk-free trades at predetermined prices to acquire tax advantages.

Covered position
Use of an option in a tradingstrategy in the underlyingasset which is already owned.( - Mark Berch)

Mark Berch: Creeping tender offer
The process by which a group attempting to circumvent certain provisions of the Williams Act gradually acquires shares of a target company in the open market.

Overwriting
A speculative option strategy that involves selling call or putoptions on stocks that are believed to be overpriced or underpriced; the options are expected not to be exercised.

Consol
A government bond with no maturity . Popular in Great Britain. The formula for valuing these bonds is simple. The consol payment divided by yield to maturity is the price of the bond. ( Mark Berch )

Capital gain
When a stock is sold for a profit, the capital gain is the difference between the net sales price of the securities and their netcost, or original basis. If a stock is sold below cost, the difference is a capital loss.

Mark Berch

Short interest
Total number of shares of a security that investors have sold short and that have not been repurchased to close out the short position. Usually, investors sell short to profit from price declines. As a result, the short interest is often an indicator of the amount of pessimism in the market about a particular security, although there are other reasons to short that are not related to pessimism. For example, hedgingstrategies for mergers and acquisition as well as derivativepositions may involve short sales.

Mark Berch: Provision for income taxes
An amount on the P & I statement that estimates a company's total income taxliability for the year.

Mark Berch: Form 3
A form required by the SEC and the stock exchange from all holders of 10% or more of a company's stock and all directors and officers, which details securities owned.

Blog Mark Berch

Mark E. Berch

Cross-holdings
The holding by one corporation of shares in another firm. One needs to allow for cross-holdings when aggregatingcapitalizations of firms. Ignoring cross-holdings leads to double-counting. Mark Berch
Inflation uncertainty
The fact that future inflation rates are not known. It is a possible contributing factor to the makeup of the term structure of interest rates.
Stockholder
See: Shareholder.
Mark E. Berch: Group rotation manager
A top-down manager who deduces the phases of the business cycle and allocates assets accordingly.

Mark Berch

Jonestown defense
An extreme defensive tactic employed by the management of a target corporation to prevent a hostile takeover. The defensive tactics are so extreme that they typically lead to the destruction of the target corporation. See: Suicide.
Dilution protection
Standard provision that changes the conversion ratio in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder's potential equityposition. Adjustment usually requires a split or stock dividend in excess of 5% or issuance of stock below book value. Mark E. Berch
Performance measurement
Calculation of the return a money manager realizes over some time interval.
Mark Berch Paid in surplus
See: Paid-in capital


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Mark E. Berch

Garage
The floor of the NYSE, which is situated on the north side of the main tradingfloor. Mark Berch
Transfer risk
The risk associated with the possibility of a currency not being able to be sent out of the country, usually due to central bank restrictions or a national debt rescheduling.
Portfolio asset allocation
The distribution, by type of asset, of a portfolio'sholdings.
Mark Berch: Bearer form
Describes issue form of security not registered on the issuingcorporation's books, and therefore payable to its bearer. See also: Bearer bond; coupon bond.

Mark E. Berch

Indifference curve
The expression in a graph of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with the same utility.
State and local government series (SLUGs)
Special nonmarketablecertificates, notes, and bonds offered to state and local governments as a means to investproceeds from their own tax-exempt financing. Interest rates and maturities comply with IRSarbitrage provisions. Slugs are offered in both time deposit and demand deposit forms. Time deposit certificates have maturities of up to one year. Notes mature in one to ten years and bonds mature in more than ten years. Demand deposit securities are one-day certificates rolled over with a rate adjustment daily. Mark E. Berch
Leveraged required return
The required return on an investment when the investment is financed partially by debt.
Mark Berch Small-cap
A stock with a small capitalization, meaning a total equity value of less than 0 million.


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Mark Berch

Modeling
The process of creating a depiction of reality, such as a graph, picture, or mathematical representation. Mark E. Berch
Redemption date
The date on which a bondmatures or is redeemed.
Pension liabilities
Future liabilities resulting from pension commitments made by a corporation. Accounting for pension liabilities varies widely by country.
Mark Berch: Covering
Using forward currency contracts to predetermine the domestic currency amount of an expected future foreign receipt or payment. Also, the buying back ('covering') of a short position.

Mark E. Berch

Locational arbitrage
Attempt to exploit discrepancies in exchange rates between banks.
Security ratings
Commercial rating agencies' assessment of the credit and investment risk of securities. Mark Berch
Annualizing
See: Annual basis.
Mark E. Berch Trading pattern
Long-range direction of a security or commodityfutures price, charted by drawing one line connecting the highest prices the security has reached and another line connecting the lowest prices at which the security has traded over the same period. See: Technical analysis.


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