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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - </span><img src="/site/fr/img/pages/i_lexique.gif" width="18" height="18" align="absmiddle"></td>
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                                        <td style="width:100px;" valign="top"><b>Abandonment risk </b></td>
                                        <td>Abandonment risk arises in project financing. It is the risk that the project will be abandoned, and arises when the interests of the industrial manager and the bankers diverge. The project financing contract must lay down clear rules on how decisions affecting the future of the project are to be taken. </td>
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                                        <td valign="top"><b>Accelerated book-building </b></td>
                                        <td>Accelerated book-building is book-building completed in few hours. Accelerated book-building is often used for block trades. </td>
                                      </tr>
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                                        <td valign="top"><b>Accelerated depreciation </b></td>
                                        <td>Accelerated depreciation is any depreciation method that produces larger depreciation charges in the early years of the life of a fixed asset than would have been case with straight-line depreciation. </td>
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                                        <td valign="top"><b>Account balancing </b></td>
                                        <td>In account balancing process, cash surpluses are pooled on a daily basis into a concentration account (see concentration bank) through interbank transfers and are used to finance accounts in debit. </td>
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                                        <td valign="top"><b>Accounting criteria of value creation </b></td>
                                        <td>These criteria, which appeared first in financial communication, include earnings per share, net income, ROE, CFROI, and ROCE. They in fact measure accounting profitability and not value creation. The problem of these indicators is that they can be easily manipulated, precisely because of their accounting nature. Accounting nature means not taking into account the risk of the company and/or its cost of equity. Only ROCE avoids this bias. This is the reason why ROCE has recently become the main measure of economic performance. </td>
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                                        <td valign="top"><b>Accounting currency risk </b></td>
                                        <td>Accounting currency risk arises from the consolidation of foreign subsidiaries, including equity, dividend flows or financial investments denominated in foreign currencies, and exchange rate discrepancies. See also translation. </td>
                                      </tr>
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                                        <td valign="top"><b>Accounting procedures with an impact on earnings </b></td>
                                        <td>A table analyzing the impact on earnings of all major accounting procedures is presented at the end of chapter 8. </td>
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                                        <td valign="top"><b>Accounts payable </b></td>
                                        <td>Accounts payable are calculated as accounts payable and related accounts less advances and deposits paid on orders. </td>
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                                        <td valign="top"><b>Accounts receivable </b></td>
                                        <td>Receivables are calculated as follows: Customer receivables and related accounts + Outstanding bills discounted (see discounting of bills of exchange) - Advances and deposits on orders being processed. </td>
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                                        <td valign="top"><b>Accretion </b></td>
                                        <td>Accretion is an increase in EPS. </td>
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                                        <td valign="top"><b>Accruals </b></td>
                                        <td>Accruals are used to recognise revenues and expenses booked in one period but relating to another period. Main categories of accruals are prepaid income, prepaid charges, accrued income, and accrued expense. </td>
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                                        <td valign="top"><b>Accrued expense </b></td>
                                        <td>Accrued expenses are charges relating to goods or services supplied in current period, but not yet paid for. See also accruals. </td>
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                                        <td valign="top"><b>Accrued income </b></td>
                                        <td>Accrued income is the income earned in this period, but which will be received in the following periods. See also accruals. </td>
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                                        <td valign="top"><b>Acid test ratio </b></td>
                                        <td>See quick ratio. </td>
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                                        <td valign="top"><b>Acquisitions </b></td>
                                        <td>Expenditure for the purchase of a company or a share in a company.&lt;br&gt;&lt;br&gt;\n&lt;br&gt;\n\n </td>
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                                        <td valign="top"><b>Acquisitions </b></td>
                                        <td>Expenditure for the purchase of a company or a share in a company.&lt;br&gt;\n\n </td>
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                                        <td valign="top"><b>Acquisitions </b></td>
                                        <td>Expenditure for the purchase of a company or a share in a company.\n </td>
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                                        <td valign="top"><b>Adjustable rate preference shares </b></td>
                                        <td>Adjustable rate preference shares have a dividend yield pegged to an index rate (see interest rate), such as Treasury bill or Treasury bond. See also preference shares. </td>
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                                        <td valign="top"><b>Adjustable-rate debt security </b></td>
                                        <td>See variable-rate debt security. </td>
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                                        <td valign="top"><b>Adjusted present value, APV </b></td>
                                        <td>Adjusted present value is a technique for valuing a levered company. It takes into account all sources of value creation and destruction. The adjusted present value is equal to the sum of the value of the unlevered company and the value of tax shield less the present value of financial distress costs. Each of these components is discounted (see discounting) at different rates representing the different risks. Difficult to implement, this method can yield interesting results in the very specific cases: very evolutive financial structure over short-term (this is the case of LBO transactions or project financing), an investment made in foreign markets. </td>
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                                        <td valign="top"><b>Administrative synergy </b></td>
                                        <td>Administrative synergy is a synergy derived from the improvement in the everyday running of the acquired company. See also synergy. </td>
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                                        <td valign="top"><b>ADR </b></td>
                                        <td>See American depositary receipt. </td>
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                                        <td valign="top"><b>Advance dividend </b></td>
                                        <td>Advance dividend consists in paying a fraction of the forthcoming dividend in advance. The decision is taken by the board of directors or the executive board, but does not need to be approved by the OGM. An advance dividend offers a way of smoothing cash inflows to shareholders and cash outflows from the company. In the United States, Canada and the United Kingdom, advance dividends are common. Advance dividends are also called intra-annual dividends. </td>
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                                        <td valign="top"><b>Affirmative covenant </b></td>
                                        <td>See positive covenant. </td>
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                                        <td valign="top"><b>Agency costs </b></td>
                                        <td>The diverging interests of the various stakeholders (shareholders, managers, and creditors) in a company generate a number of costs called agency costs. These comprise: the cost of monitoring managers' efforts (control procedures, audit systems, performance-based compensation); the costs incurred by the agents to vindicate themselves and reassure the principals that their management is effective, such as the publication of annual reports; residual costs. Agency costs are also related to shareholders' behaviour to the detriment to creditors, when the company is in financial difficulties (undertaking of risky projects, sell-off of the assets in place, refusal to invest in NPV-positive projects). </td>
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                                        <td valign="top"><b>Agency theory </b></td>
                                        <td>Agency theory says that a company is not a single, unified entity. Agency theory calls into question the claim that all of the stakeholders in the company (shareholders, managers, and creditors) have a single goal - value creation. Agency theory shows how, on the contrary, their interests may differ and some decisions (related to borrowing for example) or how products (stock options) come out of attempts to achieve convergence between the interests of managers and shareholders to protect creditors. Agency theory analyses the consequences of certain financial decisions in terms of risk, profitability and, more generally, the interests of the various parties. Agency theory is the intellectual basis of corporate governance. See also agency costs. </td>
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                                        <td valign="top"><b>Agent bank </b></td>
                                        <td>An agent bank is responsible for maintaining a fiduciary relationship with the other lenders participating in a syndicated loan. </td>
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                                        <td valign="top"><b>Agent fee </b></td>
                                        <td>An agent fee is an annual fee paid to agent bank for administering the syndicated loan. </td>
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                                        <td valign="top"><b>Agreement in principle </b></td>
                                        <td>The agreement in principle is one of the stages of private negotiations. Agreement in principle spells out the terms and conditions of the sale. The commitments of each party are irrevocable, unless there are conditions precedent, such as approval of the regulatory authorities. </td>
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                                        <td valign="top"><b>Alliance </b></td>
                                        <td>An alliance is a commercial or technology agreement negotiated directly between two companies and that does not involve a transaction on the equity of either of them. </td>
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                                        <td valign="top"><b>All-in cost </b></td>
                                        <td>All-in cost is the total cost of any transaction, taking into account explicit and implicit costs. </td>
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                                        <td valign="top"><b>Allocative efficiency </b></td>
                                        <td>Allocative efficiency of a financial system implies that markets channel resources to their most productive uses. </td>
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                                        <td valign="top"><b>All-share transaction </b></td>
                                        <td>All-share transaction is a merger or acquisition paid for in shares only. All-share transactions exist in three major forms: legal merger, asset contribution, and contribution of shares. </td>
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                                        <td valign="top"><b>Alpha </b></td>
                                        <td>Extra return on an asset compared with its required rate of return. For an investment fund, this is the extra return compared with an index that is representative of the assets held by the fund, for example, the FT 100 for a fund that invests in major English shares. The fund is said to outperform its market. </td>
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                                        <td valign="top"><b>Also called order book. </b></td>
                                        <td></td>
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                                        <td valign="top"><b>Alternative management </b></td>
                                        <td>Alternative management is based on market declines, volatility of volatility, liquidity, time value and abnormal valuations, rather than on rising prices. An example of alternative management is the hedge fund. </td>
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                                        <td valign="top"><b>American Depositary Receipt </b></td>
                                        <td>Foreign companies wishing to be traded in the U.S. markets, most do so through ADRs (American Depositary Receipts). These are are negotiable instruments issued by a US bank and representing the shares that it has acquired in a foreign company listed on a non-US market. There are three levels of ADR, depending on information disclosure requirements of the American regulator (Securities and Exchange Commission), with level 3 corresponding to full listing. </td>
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                                        <td valign="top"><b>American option </b></td>
                                        <td>See US-style option. </td>
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                                        <td valign="top"><b>Amortisation </b></td>
                                        <td>The loss in value of an intangible asset due to its use by the company is accounted for by means of amortisation. Amortisation is a so-called "non-cash" charge insofar as it merely reflects arbitrary accounting assessments of the loss in value. </td>
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                                      <tr>
                                        <td valign="top"><b>Amortisation of the loan </b></td>
                                        <td>Repayment of the loan is called amortisation of the loan. Main repayment modes: bullet repayment, repayment in tranches (or series), also called constant amortisation, and repayment in equal instalments. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Annual effective interest rate </b></td>
                                        <td>When interest is paid more frequently than once a year, the annual effective interest rate is used to evaluate the real cost of the resource on an annual basis. To pass from the nominal interest rate to the annual effective interest rate, the following formula is used: (1 + t) = (1 + ka/n)n, where t is the annual effective interest rate, n is the number of interest payments in the year and ka/n the proportional rate during one period, or t = (1 + ka/n)n - 1. </td>
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                                        <td valign="top"><b>Annuity </b></td>
                                        <td>An annuity is the cash paid out annually for debt reimbursement and interest accrued. A constant annuity means the part of the debt in each annual payment increases, but the interest part decreases, so that the total amount remains the same over the life of the loan. The value of a constant annuity can be calculated as follows: \n PV = F x [1/k - 1/(k x (1+k)n)], where F is the annuity, k - the discounting rate, n - duration of the investments.\n If the annuity grows with the constant rate g for n years, its value is then equal to:\nPV = F0 x [(1+g)/(k-g)] x [1 - (1+g)n/(1+k)n], where F0 is the first annuity. </td>
                                      </tr>
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                                        <td valign="top"><b>Annuity factor </b></td>
                                        <td>Annuity factor is the part [1/k - 1/(k x (1+k)n)] in the annuity formula. </td>
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                                      <tr>
                                        <td valign="top"><b>Apparent dilution </b></td>
                                        <td>Apparent dilution happens after any capital increase with subscription rights (rights issue). It is only apparent because all existing shareholders can partially participate in the capital increase without spending any funds. See also real dilution.\nApparent dilution is also called "overall dilution". </td>
                                      </tr>
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                                        <td valign="top"><b>Appraisal clause </b></td>
                                        <td>Appraisal clause, one of the possible exit clauses in a shareholders' agreement, provides that the price of a transaction between shareholders is to be determined by independent appraisal. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>APT </b></td>
                                        <td>See arbitrage pricing theory. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>APV </b></td>
                                        <td>See Adjusted Present Value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Arbitrage </b></td>
                                        <td>With no overall outlay of funds or assumption of risk (in theory, at least!), arbitrage involves combining several transactions that ultimately yield a profit. Thanks to arbitrage, all prices for a given asset are equal at a given point in time. Arbitrage ensures fluidity between markets and contributes to their liquidity. It is the basic behavior that guarantees the efficient market. </td>
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                                        <td valign="top"><b>Arbitrage pricing theory, APT </b></td>
                                        <td>The Arbitrage Pricing Theory model, proposed by Stephen Ross, assumes that the risk premium is a function of several variables, not just one, i.e. macroeconomic variables (V1, V2,..,Vn), as well as a company "noise". \nSo for security J: rJ = a + b1 * rV1+ b2 * rV2 + ... + bn * rVn + company specific variable. \nThe model does not stipulate which V factors are to be used. They can be the oil price, changes in the yield curve, exchange rates, inflation rate, manufacturing activity indexexes, etc. </td>
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                                        <td valign="top"><b>Arranger </b></td>
                                        <td>An arranger is the global coordinator for issues of fixed income securities. </td>
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                                        <td valign="top"><b>Arranging the deal </b></td>
                                        <td>Arranging the deal is choosing the type of offering on the basis of the offering's desired goals. </td>
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                                        <td valign="top"><b>Asset backed commercial paper </b></td>
                                        <td>Asset backed commercial paper is commercial paper issued to fund the vehicles created to collect trade receivables. </td>
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                                        <td valign="top"><b>Asset beta </b></td>
                                        <td>Asset beta is linked to operating leverage and measures the deviation between its future cash flows and those of the market. Asset beta is the beta of a debt-free company. It is also called unlevered beta or beta of assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Asset contribution </b></td>
                                        <td>In an asset contribution, company B contributes a portion of its assets (and liabilities) to company A in return for shares issued by company A. An asset contribution is an all-share transaction. Also called a contribution of assets or transfer of assets. </td>
                                      </tr>
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                                        <td valign="top"><b>Asset coverage </b></td>
                                        <td>Equity divided by non-current assets; indicates to what percent land, buildings, machinery etc. are covered by equity.\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Asset turnover </b></td>
                                        <td>Asset turnover measures the capital needed to generate a given level of sales and is the inverse to capital intensity.\nAlso called capital turnover. </td>
                                      </tr>
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                                        <td valign="top"><b>Assets </b></td>
                                        <td>Assets represent everything that the company owns and what owed to it. There are two major categories of assets: fixed assets and current assets. Assets represent the uses to which the resources the company raises from all providers of funds (shareholders, creditors, suppliers, tax authorities, etc.) are put. </td>
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                                        <td valign="top"><b>Associate </b></td>
                                        <td>An associate is a company over which a parent company has a significant influence (see also equity method).\n An associate company is also called associated undertaking or equity affiliate. </td>
                                      </tr>
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                                        <td valign="top"><b>Associated undertaking </b></td>
                                        <td>See associate. </td>
                                      </tr>
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                                        <td valign="top"><b>Asymmetry - issuer/investor </b></td>
                                        <td>Information asymmetry means that there is a gap between the quantity and quality of information available to the issuer compared with that available to the investor. To place a security, the issuer must reduce this gap. See also signalling theory. </td>
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                                        <td valign="top"><b>Asymmetry - option </b></td>
                                        <td>An option contract is fundamentally asymmetrical: each part does not have the same rights or the same obligations. The buyer of any option has the right to exercise it, but not the obligation, whereas the seller is obliged to exercise at the buyer's request. </td>
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                                        <td valign="top"><b>Asymmetry - shareholder / creditor </b></td>
                                        <td>There is an asymmetry in status between the shareholder and the creditor of a company: shareholders can lose the their whole investment in the company and at the same time potentially gain unlimited profits, while a creditor at best receives the flows stipulated in the loan contract. See also shareholders' equity and option model. </td>
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                                        <td valign="top"><b>At the money </b></td>
                                        <td>An option is at the money when the price of the underlying asset is equal to the strike price (intrinsic value is zero) </td>
                                      </tr>
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                                        <td valign="top"><b>Auction </b></td>
                                        <td>In an auction, one of the ways of selling (part of) a company, the company is offered for sale, under a predetermined schedule, to several potential buyers, who compete with each other. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Auction clause </b></td>
                                        <td>Auction clause, one of the possible exit clauses in a shareholders' agreement, provides for an auction among the joint venture partners, when one of them is willing to sell its stake. </td>
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                                      <tr>
                                        <td valign="top"><b>Average life of a bond </b></td>
                                        <td>See duration. </td>
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - B</span></td>
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                                        <td style="width:100px;" valign="top"><b>Backdoor equity hypothesis </b></td>
                                        <td>Backdoor equity hypothesis associates the existence of some types of hybrid securities with the real options at the disposal of the issuer that is unwilling to raise equity immediately. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Back-stop </b></td>
                                        <td>Back-stop acts as a floor to underwriting commitment, being a halfway between an initial bought deal and a post-book-building bought deal. The bank guarantees the seller a minimum price, even though it will also go through the book-building process. </td>
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                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Back-up line </b></td>
                                        <td>Back-up line is the bank's commitment to provide financing if the market situation makes it impossible to renew the commercial paper. </td>
                                      </tr>
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                                        <td style="width:100px;" valign="top"><b>Backwardation </b></td>
                                        <td>When commodity makets show futures prices below the spot price this is known as backwardation. The reverse scenario is known as contango.\nBackwardation is unfrequent for a persishable commodity that has a cost of carry, so grains such as corn and wheat, and sugar, are often in contango. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Balance sheet </b></td>
                                        <td>The balance sheet represents a snapshot of the cumulative inflows and outflows previously generated by the business. It lists all the assets of a business and all of its financial resources at a given moment in time. The balance sheet is always at equilibrium, guaranteed by the double-entry accounting practice adopted by all businesses. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bank guarantee </b></td>
                                        <td>A bank guarantee is a bank's commitment to advance funds to a third party should the bank's client default on the guaranteed obligations. The three main types of bank guarantees are documentary credit, customs guarantees and buyer's credit. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bank-based economy </b></td>
                                        <td>In a bank-based economy, the capital market is underdeveloped and only a small portion of corporate financing needs are met through the issuance of securities. Bank financing predominates. Companies borrow heavily from banks, whose refinancing needs are in turn covered by the central bank. A bank-based economy is also called a credit-based economy. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bankruptcy </b></td>
                                        <td>A bankruptcy is triggered when a company can no longer meet its short-term commitments and thus faces a liquidity crisis. Bankruptcy happens because a company does not make enough profits, and not because of significant debts. Nevertheless, the exact definition of financial distress leading to filing for bankruptcy differs from one jurisdiction to another. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bankruptcy costs </b></td>
                                        <td>Bankruptcy generates both direct (court proceedings, lawyers, etc.) and indirect costs (loss of credibility vis-&agrave;-vis customers and suppliers, loss of certain business opportunities, etc.). These costs have an impact on a company's choice of financial structure. Their present value should be deducted from the enterprise value of a firm. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Barrier currency option </b></td>
                                        <td>Barrier currency rate option is a barrier option on exchange rates. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Barrier interest rate option </b></td>
                                        <td>Barrier interest rate option is a barrier option on interest rates. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Barrier option </b></td>
                                        <td>Barrier options are the options that are automatically created (knock-in) or cancelled (knock-out) when a limit price (barrier) is passed. They can be concluded on exchange rates (barrier currency option) or interest rates (barrier interest rate option). </td>
                                      </tr>
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                                        <td style="width:100px;" valign="top"><b>Base </b></td>
                                        <td>Base is the difference between the current spot price and the price of a future </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Basis point </b></td>
                                        <td>Basis point is 1/100 of a percentage point </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bear market </b></td>
                                        <td>Bear market is characterised by falling prices. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bearer bond </b></td>
                                        <td>A bearer bond is a bond for which physical possession of the certificate is proof of ownership. The issuer does not know the identity of the bondholder. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bearer shares </b></td>
                                        <td>Shares that are not issued to a specific person; the rights to these securities accrue to the person who holds them. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Behavio(u)ral finance </b></td>
                                        <td>Behavioral finance takes psychology into account when analysing investor decisions. This field of research provides recent evidence that investors can make systematic errors in processing new information - information that is otherwise profitably exploited by other investors. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Below investment grade </b></td>
                                        <td>See speculative grade. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Benchmark </b></td>
                                        <td>A benchmark is a very good level of performance achieved by players in the sector and used by less well-performing players as a target to achieve, in an effort to improve their own performances. As part of the implementation of best practice procedures, groups may develop a benchmarking policy within their different geographical divisions. \n\nBenchmarks are often used as efficiency ratios: margin on sales, profitability, sales turnover compared with capital employed, sales by sqm, sales by employee, etc. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Benchmark switching </b></td>
                                        <td>Benchmark switching is the interest rate swap of one floating rate for another floating rate. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Benchmarking </b></td>
                                        <td>Organisations (such as Central Banks, Datastream, Standard &amp; Poor's or Moody's, etc) compiling the financial information supplied by a large number of companies publish the main financial characteristics in a standardised format of companies operating in different sectors of activity, as well as the norm (average) for each indicator or ratio in each sector. This is the realm of benchmarking. See also comparative analysis. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Best efforts basis </b></td>
                                        <td>When the bank does not give an undertaking that the deal (issue of securities, organisation of a syndicated loan) will go through, the transaction is said to be on a best efforts basis. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Beta </b></td>
                                        <td>Beta is the measure of the contribution of a single asset to the risk of portfolio. Beta is the covariance of this asset's returns with the returns of the portfolio. Beta measures the volatility of a security. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Beta coefficient </b></td>
                                        <td>See beta. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Beta is also called beta coefficient. </b></td>
                                        <td></td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Beta of assets </b></td>
                                        <td>See asset beta. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bid-ask spread </b></td>
                                        <td>Bid-ask spread is the difference between selling (ask) and buying (bid) prices of a financial security in the market. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bid-ask spread is also called spread. </b></td>
                                        <td></td>
                                      </tr>
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                                        <td style="width:100px;" valign="top"><b>Bill of exchange </b></td>
                                        <td>See paper bill of exchange. </td>
                                      </tr>
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                                        <td style="width:100px;" valign="top"><b>BIMBO </b></td>
                                        <td>BIMBO is the combination of buy-in and MBO. BIMBO transaction brings in outside managers </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Binomial method </b></td>
                                        <td>The binomial method derives the value of an option by assuming that in every next moment there are two possible different prices of an underlying asset. Increasing the number of these moments to infinity will ultimately cover all possible prices. It is then possible to derive the price of an option by creating a replicating portfolio of the underlying asset and the risk-free asset. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Black &amp; Scholes Model </b></td>
                                        <td>Black &amp; Scholes model, one of the most widely used approaches to valuing options, prices the European-style options. It is based on the construction of a portfolio composed of the underlying asset and a certain number of options such that the portfolio is insensitive to fluctuations in the price of the underlying asset. </td>
                                      </tr>
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                                        <td style="width:100px;" valign="top"><b>Black-out period </b></td>
                                        <td>Black-out period is a period during an initial public offering, when no information about the issuer can be disclosed. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Block </b></td>
                                        <td>A block is a large number of shares that a shareholder wishes to sell on the market. See also accelerated book-building. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Block ownership </b></td>
                                        <td>Block ownership corresponds to shares held in long-term strategic holdings. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Blocking minority </b></td>
                                        <td>Blocking minority is the minority needed to veto certain decisions of the extraordinary general meeting of shareholders. A blocking minority represents one quarter or one third of the shares plus one share depending on the country and the legal form of the company. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bolt-on projects </b></td>
                                        <td>Construction of new plants, capacity upgrades or smaller acquisitions, that all carry synergy potential through integration with existing operations. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bond </b></td>
                                        <td>A bond is a negotiable debt security that is issued by corporations, municipalities, and governments. A bond pays a coupon (see coupon rate) and is redeemed in accordance with the prospectus of its issue. Bonds can carry other obligations on the part of the issuer. Bonds are the main medium-term market financing vehicles used by corporations, particularly in the five-to-ten year segment. There are various types of bonds such as convertible bonds, mandatory convertibles, exchangeable bonds, etc. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bond redeemable in shares </b></td>
                                        <td>A bond redeemable in shares is similar to a mandatory convertible. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bond redemption premium </b></td>
                                        <td>A bond redemption premium exists when a bond is reimbursed for the amount higher than its face value. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bond value of the convertible bond </b></td>
                                        <td>The value of a convertible bond is made of three components: value of a straight bond, conversion value of a convertible bond, and time value (this is a value of a call option on shares of the issuer). Bond value of a convertible bond is the value of a straight bond. This value is derived by discounting future cash flows of a convertible bond at a market rate of return for the level of risk of this issuer, as if a convertible bond were a straight bond. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Book </b></td>
                                        <td>The book provides a list of investor's intentions to buy marketed securities. Investors indicate the volumes they intend to buy and at what price. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Book profitability </b></td>
                                        <td>Book profitability is the ratio of the wealth created (i.e. earnings) to the capital invested. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Book value </b></td>
                                        <td>Book value is an accounting measure that gives the net worth of an asset according to its carrying value on the company's balance sheet. Book value sometimes means book value of shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Book value of shareholders' equity </b></td>
                                        <td>The book value of shareholders' equity is equal to everything a company owns less everything it already owes or may owe. Book value of shareholders' equity is thus equal to: Fixed assets + Current assets - All borrowings of any kind. See also book value. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Book-building </b></td>
                                        <td>Book-building is a technique used to place securities on the market. It is the process whereby the bank marketing the offering gets to know investor's intentions regarding the volumes and prices they are prepared to offer for the security. See also book. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bookrunner </b></td>
                                        <td>Bookrunner is the bank in charge of the book. See also lead manager. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bootstrap game </b></td>
                                        <td>The bootstrap game consists in buying undervalued companies and making the market re-rate them (see re-rating) to create value for the shareholders of the acquirer. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bootstrapping model </b></td>
                                        <td>The bootstrapping model creates the yield curve by first calculating the yield on one-year bond and then plugging the result in the two-year bond. The process is repeated for all maturities. The yields obtained at each step represent the points on the yield curve. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bottom-up approach </b></td>
                                        <td>In asset management, in a bottom-up approach, investors choose stocks on the basis of their specific characteristics, not the sector the stocks belong to. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bought deal </b></td>
                                        <td>A bought deal takes place when a bank buys the securities from the seller/issuer and then re-sells them to investors. The remaining unsold securities go onto the bank's balance sheet. Bought deals are used most often for transactions such as block trades of already existing shares or a bond issue. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Brands and market share </b></td>
                                        <td>These are brands or market shares purchased from third parties and valued upon their first-time incorporation in the consolidated accounts of their new parent company. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Breakeven </b></td>
                                        <td>Breakeven is the point at which total revenues cover total charges. With business running at this level, earnings are thus zero. Breakeven depends on the cost structure (split variable costs/fixed costs). There are three different breakevens: operating breakeven, financial breakeven, and total breakeven. Breakeven is affected by company's industrial and financial strategy. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bridge loan </b></td>
                                        <td>Bridge loans are set up to provide funds until permanent financing is raised (capital increases, bond borrowings or the disposal of a subsidiary) that will be used to repay it. Bridge loans are of short duration, expensive and frequently used for large transactions. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bull market </b></td>
                                        <td>A bull market is characterised by rising prices. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bullet bond </b></td>
                                        <td>A bullet bond is a bond with bullet repayment. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Bullet repayment </b></td>
                                        <td>Bullet repayment occurs when the loan is repaid in one single payment at maturity. Bullet repayment is also known as repayment in fine. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Business cycle </b></td>
                                        <td>Business cycle covers the time from the purchase of raw materials till the sale of the finished goods produced from these raw materials. Customer credit and supplier credit influence the length of the business cycle. The business cycle forms the basis of the company's wealth. It consists in both: wealth creation (products and services sold, i.e. products and services whose worth is recognised in the market) and wealth destruction (consumption of raw materials or goods for resale, use of labour, use of external services, such as transportation, taxes and other duties). The very essence of a business is to create wealth by means of its business cycle. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Business loan </b></td>
                                        <td>A business loan is a loan granted to fund the company in general, without any specific purpose. Also called a financial loan. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Buy and hold </b></td>
                                        <td>Buying and holding is a passive investment strategy with which an investor buys stocks and holds them for a long period regardless of fluctuations in the market. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Buyer's credit </b></td>
                                        <td>Buyer's credit, one of the types of bank guarantees, is used to finance export contracts of goods and/or services between an exporter and the buyer importing the goods/services. The banks granting the buyer's credit commit to provide the borrower with the funds needed to pay the supplier directly according to the terms specified by contract. Buyer's credit is also called export credit. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Buy-in </b></td>
                                        <td>Buy-in is the sale of a business to an external management team. Also called management buy-in (MBI). </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Buy-sell provision </b></td>
                                        <td>Under a buy-sell provision, one of various possible exit clauses in a shareholders' agreement. Shareholder A offers to sell its shares at a price X to shareholder B. Either B agrees to buy the shares at price X, or if he refuses, he must offer his stake to A at the same price X. A buy-sell provision is also called Dutch clause or shotgun clause. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>By-category income statement format </b></td>
                                        <td>See by-nature income statement format. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>By-destination income statement format </b></td>
                                        <td>See by-function income statement format. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>By-function income statement format </b></td>
                                        <td>This format is produced according to the way revenues and charges are used in the business cycle and investing cycle. The by-function income statement format shows the cost of goods sold, selling and marketing costs, research and development costs and general and administrative costs. </td>
                                      </tr>
                                      <tr>
                                        <td style="width:100px;" valign="top"><b>By-nature income statement format </b></td>
                                        <td>This format is produced according to the nature of revenues and charges (how they are booked). The by-nature income statement format shows material consumption, staff costs, external costs depreciations. Also known as the by-category income statement format. </td>
                                      </tr>
                                    </table>
                                    <A name="lettreC"></A>
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - C</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Call option </b></td>
                                        <td>A call option is an option to buy an underlying asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Call provision </b></td>
                                        <td>Some bonds are issued with a call provision that allows the issuer to buy them back at a predetermined price. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Callable instrument </b></td>
                                        <td>A callable instrument is a security containing a call provision. See also putable instrument. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cap </b></td>
                                        <td>1. A cap is an interest rate option that allows a borrower to set a ceiling interest rate above which he no longer wants to borrow. On the exercise date he will receive the difference between the market rate and cap rate.\n2. Cap sometimes stands for market capitalisation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital adequacy ratio </b></td>
                                        <td>Capital adequacy ratio is the limit on the risk-weighted credit exposure allowed to each financial institution depending on its capital base. It is also called the Cooke ratio. From 2005, it will be replaced by the McDonough ratios. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital Asset Pricing Model, CAPM </b></td>
                                        <td>The CAPM is based on the assumption that investors act rationally and have at their disposal all relevant information on financial securities. CAPM is the universally used tool for valuing financial securities. CAPM states that all investors should hold the market portfolio, and the risk premium they will demand is proportional to market beta. According to CAPM, the expected return of an asset will then be a linear function of beta: Expected return of a financial security = risk-free rate + ? x (expected return of the market - risk-free rate) </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital decrease </b></td>
                                        <td>Capital decrease is a cancellation of shares repurchased by the company from existing shareholders. Capital decrease is also called capital reduction. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital employed </b></td>
                                        <td>Capital employed is the sum of a company's fixed assets and its working capital (i.e. operating working capital and non-operating working capital). It is therefore equal to the sum of the net amounts devoted by a business to the operating cycle and investment cycle. Also known as operating assets. Capital employed is financed by two main types of funds, shareholders' equity and net debt, sometimes regrouped under the heading of invested capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital expenditures </b></td>
                                        <td>Capital expenditures are acquisitions of tangible fixed assets and intangible fixed assets. They are commonly called capex. See also investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital gain/loss </b></td>
                                        <td>Capital gain/loss is the positive/negative difference between the selling price of an asset, when this asset is sold, and its original purchase price. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital increase </b></td>
                                        <td>From a financial point of view, a capital increase is the sale of shares. Proceeds of this sale go to the company. A capital increase will lead to a change in different indicators: right to dividends, to profits, to liquidation sale proceeds, to equity, to voting rights amongst different funds providers. Capital increases can be made in cash or by asset contribution, following the exercise of warrants or a debt conversion, be reserved or not, and with or without preferential subscription rights. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital intensity </b></td>
                                        <td>Capital intensity measures the level of sales generated by a given amount of capital. Capital intensity is the inverse of asset turnover. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital invested </b></td>
                                        <td>See invested capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital lease </b></td>
                                        <td>See finance lease. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital market economy </b></td>
                                        <td>See market-based economy. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital market line </b></td>
                                        <td>The capital market line links the market portfolio to the risk-free asset. For a given level of risk, no portfolio is "better", i.e. offering better risk/return ratio, than those located on this line. The capital market line is graphically tangent to the efficient frontier containing the market portfolio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital rationing </b></td>
                                        <td>A firm faces capital rationing, when it is not possible to raise capital, even if profitability meets the required rate of return. Two major forms of capital rationing: hard rationing and soft rationing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital reduction </b></td>
                                        <td>See capital decrease. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital structure </b></td>
                                        <td>Capital structure is the proportion of net debt to equity in the company's financing. Capital structure is also called financial structure. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital turn </b></td>
                                        <td>See asset turnover. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capital-employed analysis </b></td>
                                        <td>In the capital-employed analysis, the balance sheet shows all the uses of funds for the company's operating cycle and analyses the origin of its sources of funds. A capital-employed analysis of the balance sheet serves three main purposes: to understand how a company finances its operating assets; to compute the rate of return on capital employed; and as a first step to valuing the equity of a company as a going concern. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capitalisation </b></td>
                                        <td>Capitalisation of income means to forego receipt of it. It then becomes capital and begins itself to produce interest over subsequent periods. The capitalisation formula runs as follows:\nVn = V0 x (1 + t)n, where Vn is the terminal capital, V0 - the initial investment, t - rate of return, n - duration of the investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Capitalisation factor </b></td>
                                        <td>The part (1 + t)n in the capitalisation formula is called the capitalisation factor. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CAPM </b></td>
                                        <td>See Capital asset pricing model </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Captive insurance company </b></td>
                                        <td>A captive insurance company is an insurance company set up by a large group that has adopted a self-hedging policy. A captive insurance company invests the premiums saved as a result of not buying any external insurance to build up reserves in order to meet future claims. In the meantime, some of the risk can be sold on the reinsurance market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Carried interest </b></td>
                                        <td>The general partners' share of the profits made by a private equity fund (often 20%), if the IRR of the fund's investors reaches a given percentage (often 8%) per year. It is a form of performance driven profit sharing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Carrybacks </b></td>
                                        <td>See tax loss carrybacks. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Carryforwards </b></td>
                                        <td>See tax loss carryforwards. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Carveout </b></td>
                                        <td>A carveout is the selling of a stake in a subsidiary on the stock exchange (this can be preceded by the actual creation of the subsidiary). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash (and cash equivalents) </b></td>
                                        <td>Cash, alongside wealth, is one of the two fundamental concepts of corporate finance. In a corporate context, cash includes currency (paper money), coins, cheques, money orders, traveller's cheques, cashier's cheques, bank drafts, balances on current accounts, and receipts from credit card sales. It is important to remember that cash disbursement does not necessarily reduce wealth and that cash receipt does not necessarily increase wealth, although ultimately the wealth created will be reflected in the cash position of the company.\nCash is also called liquidity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash budget </b></td>
                                        <td>See cash flow budget. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash certificate </b></td>
                                        <td>Cash certificates are time deposits that take the physical form of a bearer (for the notion of a bearer security see bearer bond) or registered certificate (for the notion of a registered security see registered bond). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow </b></td>
                                        <td>Cash flow is financing that is internally generated by the company. Cash flow is equal to EBITDA less net financial expense less corporate income tax. Cash flow can also be calculated by adding to net income depreciation, amortisation, and impairment losses, the net result of asset disposals, and the net result of extraordinary events (see extraordinary items and exceptional items). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow budget </b></td>
                                        <td>Cash flow budget is a document projecting future trends in the cash flow of the company. It is a forward-looking management chart showing supply and demand for liquidity within the company. Cash flow budget allows the treasurer to manage interest expense as efficiently as possible by harnessing competition not only among different banks, but also with investors in the financial markets. Cash flows are usually classified by different category. One of the possible classifications deals with business cycle and investment cycle, which form industrial and commercial life of the company, and with debt cycle and equity cycle, which form the financing life (see financing cycle) of the company. Cash flow budget is also called cash budget or cash flow plan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow fade model </b></td>
                                        <td>The cash flow fade model is a valuation model based on DCF that takes into account the phenomenon of gradual convergence of ROCE to WACC after the end of the explicit forecast period. In this model, free cash flow decreases gradually after the end of the explicit forecast period. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow from operating activities </b></td>
                                        <td>See operating cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow from operations </b></td>
                                        <td>See operating cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow matching approach </b></td>
                                        <td>See matching principle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow plan </b></td>
                                        <td>See cash flow budget. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow return on investment, CFROI </b></td>
                                        <td>Cash Flow Return on Investment (CFROI) in its simplified version compares EBITDA with gross capital employed: CFROI = EBITDA/ Capital employed. This ratio is used particularly in business sectors in which charges to depreciation do not necessarily reflect the normal deterioration of fixed assets, e.g. in the hotel business. Cash flow return on investment is one of the accounting indicators of value creation. \nThe original version of CFROI corresponds to the average of the internal rates of return on the company's existing investments. It measures IRR earned by a firm's existing projects in order to compare it with WACC and thus estimate the value creation. This version is one of the economic indicators of value creation. It requires a lot of adjustments and is thus much less popular than the simplified version. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow statement </b></td>
                                        <td>Cash flow statement is a document containing the information about past trends in the cash flow of the company. Cash flows are usually classified by different category. One of the possible classifications deals with the business cycle and the investment cycle, which form the industrial and commercial life of the company, and with the debt cycle and the equity cycle, which form the financing life (see financing cycle) of the company. The cash flow statement is also called statement of changes in financial position. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash flow value </b></td>
                                        <td>The term cash flow value groups together the valuations of a company derived from the DCF and multiples methods, which are based on the anticipation of future profits. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash management </b></td>
                                        <td>Cash management is the traditional role of the treasury function. It handles cash inflows and outflows, as well as intra-group fund transfers. Cash management tools: cash pooling, notional pooling. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash mutual fund </b></td>
                                        <td>See money market fund. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash pooling </b></td>
                                        <td>Cash pooling balances the accounts of a group's subsidiaries, thereby saving on interest expense deriving from the market's inefficiencies. It is one of the cash management tools used on a group-wide basis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash ratio </b></td>
                                        <td>Cash ratio is calculated by dividing cash and cash equivalents by current liabilities (due in less than one year). The cash ratio is generally very low. Its fluctuations often do not lend themselves to easy interpretation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cash Value Added </b></td>
                                        <td>EBITDA - (historical capital employed x hurdle rate). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CBO </b></td>
                                        <td>See Collateralised debt obligation </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CD </b></td>
                                        <td>See certificate of deposit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CDO </b></td>
                                        <td>See collateralised debt obligation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Certificate of deposit, CD </b></td>
                                        <td>Certificates of deposit are time deposits represented by a dematerialised negotiable debt security in the form of a bearer certificate (for the notion of bearer see bearer bond) or order issued by an authorised financial institution. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CFROI </b></td>
                                        <td>See cash flow return on investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Characteristic line </b></td>
                                        <td>The characteristic line of the security is the graphically presented regression of the security's return versus that of the market. The slope of this line is equal to the beta of the security. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Charges </b></td>
                                        <td>See costs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Chart analysis </b></td>
                                        <td>See technical analysis </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Chartist </b></td>
                                        <td>Chartist is an analyst using the methods of technical analysis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Chirographic creditor </b></td>
                                        <td>Chirographic creditor is an unsecured creditor. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Claw-back clause </b></td>
                                        <td>Claw-back clause allows the securities allocated to one class of investors to be reallocated to the other class of investors, should the structure of actual market demand (retail, institutional, etc) differ from that planned originally. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Claw-back commitment </b></td>
                                        <td>A claw-back commitment is an arrangement to use dividends received earlier to cover project funding shortfalls later. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Claw-back provision </b></td>
                                        <td>A claw-back provision stipulates that the principal initially foregone during the restructuring process will be repaid if the company's future profits exceed a certain level. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Clearing house, clearinghouse </b></td>
                                        <td>A clearing house is the central counterparty of all operators in organised markets. It guarantees that all contracts will be honoured. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Clientele effect </b></td>
                                        <td>Clientele effect is generated by the different dividend taxation of different categories of investors. High-dividend stocks are sought out by investors who face low tax rates, whereas stocks that offer low dividends and large capital gains are preferred by investors in the highest tax brackets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CLO </b></td>
                                        <td>See Collateralised debt obligation </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Closing rate method </b></td>
                                        <td>Under the closing rate method, all assets and liabilities, as well as income statement items are translated at the closing rate which is the rate of exchange at the balance sheet date. This method of currency translation is used when the subsidiary is economically and financially independent of its parent company. The closing rate method is also called the current rate method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Club deal </b></td>
                                        <td>A club deal is a small syndicated loan (for amounts less than $250 million) pre-marketed within a group of banks with which the borrower has a long-term relationship </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Co-lead managers </b></td>
                                        <td>See co-leads. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Co-leads </b></td>
                                        <td>Co-leads underwrite (see underwriting) a significant portion of the securities but have no role in structuring the deal. See also lead manager. Co-leads are also called co-lead managers. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Collar </b></td>
                                        <td>A collar involves both the purchase of a cap and the sale of a floor, thus setting a zone of fluctuation in interest rates, below which the operator must pay the difference in rates between the market rate and the floor rate and above which his counterparty pays the difference between the market rate and the cap rate. This combination reduces the cost of hedging, as the premium of the cap is paid partly or totally by the sale of the floor. Also called rate tunnel. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Collateralised bond obligation </b></td>
                                        <td>See Collateralised debt obligation </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Collateralised debt obligation, CDO </b></td>
                                        <td>Debt securities issued by a special purpose vehicle, often a securitisation vehicle, which buys and holds bonds issued by corporations or banks (collateralised bond obligation) or bank loans (collateralised loan obligation). \n\nCDOs provide liquidity for securities that aren't automatically liquid. It is used by banks to refinance themselves with investors wanting to take a risk on a debt portfolio. The level of the risk will depend on the nature and quality of the debts held by the vehicle and on the level of the ranking of the different debt instruments issued by the vehicle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Collateralised loan obligation </b></td>
                                        <td>See Collateralised debt obligation </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Co-managers </b></td>
                                        <td>Co-managers play a limited role in a placing transaction, normally just underwriting a small portion of securities. For the definition of co-managers in a syndicated loan see manager. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Combined leverage </b></td>
                                        <td>Combined leverage is the product of operating leverage and financial leverage. It is a proxy for the total risk of a company. \nCombined leverage represents an important principle of finance. As it is the product of financial leverage and operating leverage, companies should be reluctant to increase financial leverage if the operating leverage is already high. Conversely, companies with low operating leverage (and therefore operating a stable business) can afford to be more highly geared. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Commercial currency risk </b></td>
                                        <td>Commercial currency risk arises in the course of the operating cycle of the company. It represents the currency risk on the daily balance of commercial receipts and disbursements in every currency in which the company operates. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Commercial interest rate risk </b></td>
                                        <td>The commercial interest rate risk depends on the level of inflation of the currencies in which the company's goods are bought and sold. See also interest rate risk </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Commercial loan </b></td>
                                        <td>Commercial loans are short-term business loans. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Commercial paper </b></td>
                                        <td>Commercial papers are debt securities issued on the money market by companies for maturities ranging from one day to one year. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Commercial synergy </b></td>
                                        <td>Commercial synergy is a synergy derived from the improvement in the commercial activities (most importantly, in sales process) of the acquired company. See also synergy. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Commitment fee </b></td>
                                        <td>A commitment fee is paid annually on the undrawn portion of the syndicated loan, if the borrower reserves the right to draw funds when necessary. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Committed facility </b></td>
                                        <td>A committed facility is one of the types of credit facilities. It is a legally enforceable agreement that binds the bank to lend up to the stated amounts. Credit lines are one of the widely used types of committed facilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Common equity </b></td>
                                        <td>Common equity is the part of shareholders' equity attributable to common stock. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Common stock </b></td>
                                        <td>Common stock is an ordinary share, i.e. which gives voting rights but no guarantee of dividend payment (unlike preference shares). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Company-friendly bankruptcy process </b></td>
                                        <td>See debtor-friendly bankruptcy process. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Comparables model </b></td>
                                        <td>The comparables model is a valuation model that compares all the observable values of assets that can be rationally compared, i.e. which have the same level of risk and growth. More often referred to as the multiples method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Comparative analysis </b></td>
                                        <td>Comparative analysis consists of evaluating a company's key profit indicators and ratios so that they can be compared with the typical indicators and ratios of companies operating in the same sector of activity. See also benchmarking. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Competitive bidding </b></td>
                                        <td>Competitive bidding is a tender among banks. The issuer chooses the establishment that will lead the offering on the basis of the terms offered, with price being a key determinant. This technique is used for bond issues. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Completed contract method </b></td>
                                        <td>Completed contract method consists in recognising the revenues at the end of the construction contract only. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Compound interest </b></td>
                                        <td>When interest is capitalised (see capitalisation) and itself produces interest, it is called compound interest. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Concentration bank </b></td>
                                        <td>A concentration bank is a bank providing the cash pooling or notional pooling to a group. See also overlay bank. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Confirmed credit line </b></td>
                                        <td>See credit line. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conglomerate </b></td>
                                        <td>A conglomerate is an industrial group active in several, diverse businesses. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conglomerate discount </b></td>
                                        <td>A conglomerate discount exists when a conglomerate is worth less than the sum of its parts. Conglomerate discount is usually due to investor fears of poor allocation of resources and to the administrative costs incurred by the conglomerate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Consolidated accounts </b></td>
                                        <td>Consolidated accounts are the aggregation of accounts of a group of companies. The purpose of consolidated accounts is to present the financial situation of a group of companies as if they formed one single entity. See also scope of consolidation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Consolidation </b></td>
                                        <td>Consolidation is the process of creating the consolidated accounts. Consolidation sometimes stands for full consolidation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Consolidation methods </b></td>
                                        <td>There are three consolidation methods, which are used depending on the strength of the parent company's control or influence (see also significant influence): full consolidation, proportionate consolidation, and the equity method. The basic principle consists in replacing the historical cost of the parent's investment in the company being consolidated with its assets, liabilities and equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Constant amortisation </b></td>
                                        <td>See repayment in tranches. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Construction contracts </b></td>
                                        <td>Construction contracts may sometimes take more than one year to complete (construction of ships, dams, etc), leading to specific accounting treatment (percentage of completion method, completed contract method). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contango </b></td>
                                        <td>When commodity makets show futures prices above the spot price this is known as contango. The reverse scenario is known as backwardation.\nContango is normal for a persishable commodity that has a cost of carry, so grains such as corn and wheat, and sugar, are often in contango. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contingent assets </b></td>
                                        <td>If the off-balance sheet commitments have a positive impact on the financial position of the company, they give rise to contingent assets. These assets are recorded in the notes to the accounts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contingent claims model </b></td>
                                        <td>The contingent claims model states that the creditors of a "risky" business are able to appropriate most of the increase in the company's value due to an injection of additional funds by shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contingent liabilities </b></td>
                                        <td>If off-balance sheet commitments have a negative impact that causes a provision to be set aside if likely to be realised, they give rise to contingent liabilities. These liabilities are recorded in the notes to the accounts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contingent tax liabilities </b></td>
                                        <td>Sometimes, if the company were to take certain decisions, it would have to pay additional tax. These taxes are the result of contingent taxation. They represent contingent tax liabilities, e.g. stemming from the distribution of reserves on which tax has not been paid at the standard rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contingent taxation </b></td>
                                        <td>See contingent tax liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contingent value rights, CVR </b></td>
                                        <td>Contingent value rights are listed financial instruments (see listed security) issued during an acquisition to persuade shareholders to tender (or dissuade them from tendering) their shares to the takeover bid. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contribution margin </b></td>
                                        <td>Contribution margin is the difference between sales and variable costs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contribution of assets </b></td>
                                        <td>See asset contribution. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Contribution of shares </b></td>
                                        <td>An investor (a legal entity or an individual) exchanges its shares of company B for the shares of company A. In this case, companies A and B continue to exist, with B becoming a subsidiary of A and the shareholders of B becoming shareholders of A. Contribution of shares is an all-share transaction. For listed companies (see listed security), contribution of shares most commonly takes place in the form of a share exchange offer. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Control premium </b></td>
                                        <td>The control premium is a price that must be paid to take control over a company. Increased protection of minority shareholders means that today in Europe it has become virtually impossible to pay the control premium to the majority shareholders only. See also majority value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conventional convertible preferred stock </b></td>
                                        <td>Conventional convertible preferred stock is typically structured as either perpetual or 30-year preference share. See also convertible preferred stock. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conversion option into shares of the target company </b></td>
                                        <td>Mezzanine debt can sometimes be converted into shares of the company - object of an LBO transaction, thus increasing the attractiveness to mezzaniners. This possibility is known as the conversion option into shares of the target company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conversion premium </b></td>
                                        <td>The conversion premium is the amount by which the conversion price exceeds the current market price of the share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conversion price </b></td>
                                        <td>The conversion price of a convertible bond is calculated as the ratio of the face value of the bond to the conversion ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conversion ratio </b></td>
                                        <td>The conversion ratio is the number of shares that can be received for one convertible bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Conversion value of the convertible bond </b></td>
                                        <td>The conversion value of a convertible bond is what this bond would be worth if it were immediately converted to stock at the current market price. See also bond value of the convertible bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Convertible bonds </b></td>
                                        <td>Convertible bonds are bonds that may be converted at the request of their holders into shares of the issuing company. Conversion is thus initiated by the investor. See also bond value of the convertible bond and conversion value of the convertible bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Convertible preferred stock </b></td>
                                        <td>Convertible preferred stock combines the characteristics of convertible debt (see convertible bond) and preference shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Convexity </b></td>
                                        <td>Convexity measures the relative change in a bond's modified duration for a small fluctuation in interest rates. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cooke ratio </b></td>
                                        <td>See capital adequacy ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Corporate governance </b></td>
                                        <td>Corporate governance attempts to regulate the decision-making power of executives to ensure that they do not serve their own vested interests to the detriment mainly of shareholders, but also of creditors, employees and the company in general. See also agency theory. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Corporate social responsibility </b></td>
                                        <td>Voluntary activities of a company that support social interests and environmental issues. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cost </b></td>
                                        <td>Cost is a measure (cash and non-cash) of the amount of resources used to ensure the everyday running of the company (production process, selling process, etc). Cost is also called charge or expense. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cost of capital </b></td>
                                        <td>See weighted average cost of capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cost of debt </b></td>
                                        <td>Cost of debt for the company is the after-tax interest rate on the company's debts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cost of equity </b></td>
                                        <td>Cost of equity is equal to the risk-free rate plus a risk premium that reflects the stock's systematic risk: ke = rf + ? x (rm - rf), where ke is the cost of equity, rf is the risk-free rate, rm is the expected market return, and ? is the beta of the share. Cost of equity is also called cost of shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cost of refunding </b></td>
                                        <td>Market yield to maturity for the bonds of an issuer represent the cost of refunding, should the issuer decide to substitute the already contracted debt. The cost of refunding is the opportunity cost for the issuer. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cost of shareholders' equity </b></td>
                                        <td>See cost of equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Counterparty risk </b></td>
                                        <td>See solvency risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Coupon payment </b></td>
                                        <td>Coupon payment is a remuneration of the lender, which is paid regularly throughout the life of the bond. It is calculated by multiplying the coupon rate by the face value of the bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Coupon rate </b></td>
                                        <td>Coupon rate is the interest rate on a bond, also called nominal rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Coupon reinvestment risk </b></td>
                                        <td>The coupon reinvestment risk is the risk of change in interest rate at which the investment proceeds must be reinvested, as compared to the interest rate of the original investment. See also interest rate risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Covariance </b></td>
                                        <td>Covariance measures the degree to which securities fluctuate together. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Covenants </b></td>
                                        <td>Covenants are special clauses accompanying the bank loan. There are positive covenants, negative covenants, pari passu covenants, and cross-default covenants. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Covered warrant </b></td>
                                        <td>Covered warrants are warrants on existing securities issued independently of the company that had issued the underlying shares. They are "covered", because the issuing institution protects itself by buying the underlying securities on the market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit default swap </b></td>
                                        <td>Credit default swap, the most conventional form of credit derivatives, allows one side to buy the protection against the default of its counterparty by regularly paying a third part a premium and receiving from it the pre-determined amount in the event of default. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit derivative </b></td>
                                        <td>Credit derivatives offer protection against the risk of default or rating downgrade. The most conventional form of credit derivative is the credit default swap. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit facility </b></td>
                                        <td>Credit facility is the notion encompassing all types of loans marketed to all sorts of borrowers by lenders. There are four major types of credit facilities: committed facilities; revolving credits; term loans (business loans, syndicated loans); and letters of credit, equipment lines. Also called lending facility. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit insurance </b></td>
                                        <td>Insurance companies specialising in appraising default risk (Euler-Sfac, Gerling, Coface, etc.) guarantee companies reimbursement of a debt in exchange for a premium equivalent to about 0.3% of the nominal. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit line </b></td>
                                        <td>Credit line is a commitment of the bank to provide funds at the request of the borrower. In return for this commitment, the borrower pays an additional fee. A credit line can be seen as an option to raise a loan on predetermined terms and conditions. See also committed facilities. Credit line can be also called confirmed credit line. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit ratings </b></td>
                                        <td>Credit ratings are the result of a continuous assessment of a borrower's solvency by a specialised rating agency (Moody's, Standard &amp; Poor's, Fitch), by banks for internal purposes to ensure that they meet prudential ratios, and by credit insurers (e.g. Coface, Hermes, etc.; see credit insurance). This assessment leads to the award of a credit rating reflecting an opinion about the risk of a borrowing. Credit ratings can be investment grade or speculative grade. Credit ratings are also called ratings. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit risk </b></td>
                                        <td>See solvency risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit scoring </b></td>
                                        <td>Credit scoring is an analytical technique used for carrying out a pre-emptive check-up of a company. The basic idea is to prepare ratios from companies' accounts that are leading indicators (i.e. two or three years ahead) of potential difficulties. Once the ratios have been established, they merely have to be calculated for a given company and cross-checked against the values obtained for companies that are known to have run into problems or have failed. The ratios are combined in a function known as the Z-score that yields a score for each company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit spread </b></td>
                                        <td>Credit spread is the part of yield spread, which is due to the difference in credit ratings assigned to different debt securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Credit-based economy </b></td>
                                        <td>See bank-based economy. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Creditor-friendly bankruptcy process </b></td>
                                        <td>A creditor-friendly bankruptcy process clearly sets the reimbursement of creditors as the main target of the bankruptcy process. In addition, the seniority of debt is of high importance and is therefore recognised in the procedure. In this type of procedure, creditors gain control or at least retain a large amount of power in the process. This type of process usually results in the liquidation of the firm. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Creditors (U.K.) </b></td>
                                        <td>See payables. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Cross default covenant </b></td>
                                        <td>Cross default covenants specify that if the company defaults on another loan, the loan which has a cross default clause will become payable even if there is no breach of covenant or default of payment on this loan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CSR </b></td>
                                        <td>Corporate Social Responsibility: voluntary activities of a company that support social interests and environmental issues. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Currency at (forward) premium/at discount </b></td>
                                        <td>Currency is at (forward) premium/discount vis-&agrave;-vis another currency if it offers lower/higher interest rates than another currency during the period of the forward currency transaction. Premium/discount will result in forward exchange rate being higher/lower than the spot rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Currency option </b></td>
                                        <td>A currency option allows its holder to lock in an exchange rate in a particular currency, while retaining the choice of realising a transaction at the spot rate if it is more favourable on the exercise date. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Currency risk </b></td>
                                        <td>Currency risk is due to fluctuations in exchange rates that can lead to a loss in value of assets denominated in foreign currencies. The variuos currency risks include commercial currency risk, financial currency risk, and accounting currency risk. Similarly, higher exchange rates can increase the value of debt denominated in foreign currencies when translated (see translation) into the company's reporting currency base. Currency risk is also called exchange risk, foreign exchange risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Currency swap (with principal) </b></td>
                                        <td>Currency swap, one of the currency risk management techniques, is the simultaneous purchase of an amount of a currency (principal amount) for a spot date and the sale of the same amount of the same currency for forward settlement. The difference in exchange rates reflects the difference in interest rates paid on each currency participating in the currency swap. See also swap points. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Currency swap without principal </b></td>
                                        <td>Currency swap without principal is a currency swap with the exchange of principal taking placed at maturity only. At the outset of the transactions, the principals are not exchanged. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Currency translation </b></td>
                                        <td>See translation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Current assets </b></td>
                                        <td>Current assets consist of inventories, receivables (debtors in the UK), marketable securities and cash. This term reflects the fact that these assets tend to "turn over" during the operating cycle, as opposed to fixed assets, which are not destroyed by the operating cycle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Current liabilities </b></td>
                                        <td>Current liabilities consist of payables and short-term financial borrowings (due in less than one year). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Current rate method </b></td>
                                        <td>See closing rate method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Current ratio </b></td>
                                        <td>This liquidity ratio measures whether the assets to be converted into cash in less than one year exceed the debts to be paid in less than one year. It is obtained by dividing current assets (less than one year) by current liabilities (due in less than one year). Current ratio above 1 is considered to be protecting the creditors from the uncertainty of the assets' monetisation as opposed to the contractually fixed liabilities repayment schedule. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Customer credit </b></td>
                                        <td>Customer credit is the credit granted by the company to its customers, allowing them to pay several days, weeks or in some countries, even several months, after receiving the invoice. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CVA </b></td>
                                        <td>Cash Value Added: EBITDA - (historical capital employed x hurdle rate). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>CVR </b></td>
                                        <td>See contingent value rights. </td>
                                      </tr>
                                    </table>
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - D</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Data room </b></td>
                                        <td>When a company is sold, a data room is usually set up, where all economic, financial and legal information concerning the target company is available. Access to the data room is strictly controlled. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dated date </b></td>
                                        <td>The dated date is the date when interest begins to accrue. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days of finished goods inventory ratio </b></td>
                                        <td>Days of finished goods inventory ratio reflects the time it takes the company to sell the products it manufactures, and calculated with respect to cost of goods sold. This ratio is obtained by dividing the inventory of finished goods by daily cost of goods sold. If cost of goods sold is not available, then daily sales exclusive of VAT can be used to calculate this ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days of goods held for resale ratio </b></td>
                                        <td>Days of goods held for resale ratio reflects the period between the time the company purchases goods and the time it resells them. This ratio is obtained by dividing the inventory of goods held for resale by daily purchases of goods for resale (VAT exclusive). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days of raw material ratio </b></td>
                                        <td>Days of raw material ratio reflects the number of days of purchases the inventory represents, or viewed the other way round, the number of days necessary for raw material on the balance sheet to be consumed. This ratio is obtained by dividing inventory of raw material by daily purchases of raw material (VAT exclusive). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days of work-in-process ratio </b></td>
                                        <td>Days of work-in-process ratio reflects the time required for work-in-process, semi-finished goods and work-in-progress to be completed, in other words, the length of the production cycle. This ratio is obtained by dividing work-in-process, semi-finished goods and work-in-progress by daily cost of goods sold. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days purchases outstanding </b></td>
                                        <td>See days' purchases ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days sales outstanding </b></td>
                                        <td>See days' receivables ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days' inventory ratio </b></td>
                                        <td>Days' inventory ratio is the overall inventory turnover ratio, not meaningful in an absolute sense, but useful in analysing trends. It is calculated by dividing inventories and work in process by average daily sales (VAT exclusive). If information is available, the turnover ratios should be calculated in days of raw material ratio, days of goods held for resale ratio, days of finished goods inventory ratio, and days of work-in-process ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days' payables ratio </b></td>
                                        <td>The days' payables ratio measures the average payment terms granted to the company by its suppliers (or the average actual payment period). It is calculated by dividing accounts payable by average daily purchases (VAT inclusive) or by sales, if the amount of purchases is not shown in the accounts. Days' payables ratio is also called days purchases outstanding. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Days' receivables ratio </b></td>
                                        <td>The days' receivables ratio measures the average payment terms the company grants to its customers (or the average actual payment period). It is calculated by dividing the receivables balance by the company's average daily sales (VAT inclusive). Days' receivables ratio is also called days' sales outstanding. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>DCF model </b></td>
                                        <td>See discounted cash flow model. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>DDM </b></td>
                                        <td>See dividend discount model. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debit </b></td>
                                        <td>Debit is a payment method, whereby a debtor asks its creditor to issue standing orders and its bank to pay the standing orders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt </b></td>
                                        <td>Debt is the financing mode, which has the contractually fixed remuneration (see interest rate) and repayment date (see also maturity). Debt is paid before equity, if and when the company is liquidated. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt capital </b></td>
                                        <td>Debt capital is the capital provided by lenders. They expect to be repaid in time and receive interest, but do not want to run a business risk. The near certainty of their being repaid explains the lower cost of debt compared with the cost of shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt cycle </b></td>
                                        <td>Debt cycle is the following: the business arranges borrowings in return for a commitment to repay the capital on (a) contractually stipulated date(s) and make interest payments regardless of trends in its operating cycle and investment cycle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt financing </b></td>
                                        <td>Debt financing is the financing through borrowing capital that must be repaid with interest accrued. See also debt cycle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt securitisation fund </b></td>
                                        <td>A debt securitisation fund is one of the types of SPVs, which receives the flows of interest and principal payments emanating from the loans it bought from the banks (or non-banking companies). The fund uses the proceeds to cover its obligations on the securities it issued. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt security </b></td>
                                        <td>A debt security is a financial instrument representing the borrower's obligation to the lender which provided the funds. This obligation provides for a schedule of financial flows defining the terms of repayment of the funds and the lender's remuneration during the period of their use. Bonds represent the most developed type of debt securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt service </b></td>
                                        <td>See total debt service. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt service </b></td>
                                        <td>See total debt service. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt service ratio </b></td>
                                        <td>Debt service ratio is the ratio of EBIT to net interest expense. A ratio of 3:1 is considered the critical level if the company is to meet its debt repayment obligations. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debt warrant </b></td>
                                        <td>A debt warrant allows the holder to subscribe to a debt product. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Debtor-friendly bankruptcy process </b></td>
                                        <td>A debtor-friendly bankruptcy process will provide the company with the best possible chances to restructure. These procedures will generally allow management to stay in place and give it adequate time to draw up a restructuring plan. Also called a company-friendly bankruptcy process. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Decapitalisation </b></td>
                                        <td>Decapitalisation is the return of excess cash to shareholders. It takes the form of an extraordinary dividend or a share buy-back. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Default risk </b></td>
                                        <td>Default risk is the risk that the borrower will be unable to service and repay its debts. See also solvency risk. Also called risk of default. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Defeasance </b></td>
                                        <td>In defeasance, one of the off-balance sheet financing techniques, the borrower simultaneously sells debt and a portfolio of assets to a special-purpose vehicle. The portfolio of assets is designed to meet interest payments and repay the principal of the debt. The assets of the SPV are risk-free assets or low risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Deferred income </b></td>
                                        <td>Deferred income is the income received in the current period, but which will be earned in the following periods. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Deferred redemption period </b></td>
                                        <td>A deferred redemption period is a grace period, generally at the beginning of the bond's life, during which the issuer does not have to repay the principal. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Deferred tax assets </b></td>
                                        <td>See deferred tax assets and liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Deferred tax assets and liabilities </b></td>
                                        <td>Deferred taxation giving rise to deferred tax assets or liabilities stems from differences in periods in which the income or expense is recognised for tax and accounting purposes (timing difference) or from differences between the taxable and book values of assets and liabilities (temporary difference). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Deferred tax liabilities </b></td>
                                        <td>See deferred tax assets and liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Deferred taxation </b></td>
                                        <td>See deferred tax assets and liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Defined benefit plans </b></td>
                                        <td>Defined benefit plans are pension plans where the employer commits to the amount or guarantees the level of benefits defined by the agreement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Defined contribution plans </b></td>
                                        <td>Defined contribution plans are pension plans where the employer commits to making regular payments to an external organisation. Those payments are paid back to employees when they retire in the form of pensions together with the corresponding investment returns. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Delisting </b></td>
                                        <td>Delisting is the removal of a company's shares from listing on the stock exchange. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Delta </b></td>
                                        <td>Delta is the ratio between the variation in the option's value and the variation in the price of the underlying asset. Delta measures how much the option's value varies in currency units when the price of the underlying asset varies by one currency unit. Delta is used to determine the number of units of the underlying asset to buy (for a call option) or to sell (for a put option) to duplicate the corresponding option payout profile. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Demerger </b></td>
                                        <td>A demerger involves the separation of several business divisions of a diversified group into distinct companies and the distribution of the shares of the new companies to shareholders in return for shares in the parent group. See also split-off, spin-off, split-up. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Depositary receipt, DR </b></td>
                                        <td>A depositary receipt is a generic name for ADRs, GDRs and similar securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Depreciation </b></td>
                                        <td>Depreciation is the accounting recognition of the loss in value of a tangible fixed asset due to its use or its holding/ownership by the company. It thus covers two different phenomena: wear due to the use of a product (machines, fittings, careers, vehicles, buildings, etc.) and obsolescence, due to the fact that fixed assets used by the company can become obsolete taking into account technological advances in the industry. Depreciation is a so-called "non-cash" charge insofar as it merely reflects arbitrary accounting assessments of the loss in value. See also amortisation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Depreciation and amortisation </b></td>
                                        <td>The loss in value of a fixed asset due to its use by the company is accounted for by means of depreciation and amortisation. Depreciation pertains to tangible assets, amortisation - to intangible assets. Depreciation and amortisation are so-called "non-cash" charges insofar as they merely reflect arbitrary accounting assessments of the loss in value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Depreciation ratio </b></td>
                                        <td>Depreciation (excluding amortization of goodwill if any) as a percentage of revenues.&lt;br&gt;\n\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Depreciation ratio </b></td>
                                        <td>Depreciation (excluding amortization of goodwill if any) as a percentage of revenues.\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>De-rating </b></td>
                                        <td>De-rating is the downward adjustment of multiples ascribed to a company by the market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Derivative </b></td>
                                        <td>Derivative is a financial instrument, the price of which is directly dependent upon (i.e. &quot;derived from&quot;) the value of one or more underlying securities, equity indices, commodities, other derivative instruments, or any agreed upon pricing index or arrangement. Derivatives are used to hedge (see hedging) risk, by transferring it to those willing to assume it. Derivatives cannot eliminate risk. Major classes of derivatives are: forward transactions, swaps, futures, options. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dilution - EPS </b></td>
                                        <td>Dilution is the decrease in EPS. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dilution - shareholders </b></td>
                                        <td>Dilution is the decline in the percentage of a current shareholder interest in the company, i.e. a decrease in his/her current voting rights. Dilution occurs when a capital increase is cash-neutral for a shareholder. Also called dilution of control or real dilution. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dilution loss </b></td>
                                        <td>Where a parent company does not subscribe, either at all or only partially, to a capital increase by one of its subsidiaries that takes place below the subsidiary's book value, the parent company records a dilution loss. It is a non-cash expense. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dilution of control </b></td>
                                        <td>See dilution-shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dilution profit </b></td>
                                        <td>Where a parent company does not subscribe, either at all or only partially, to a capital increase by one of its subsidiaries that takes place above the subsidiary's book value, the parent company records a dilution profit. This is a non-cash profit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Direct finance </b></td>
                                        <td>See financial system. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Direct method </b></td>
                                        <td>The direct method consists in valuing the equity directly. Also called direct valuation method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Direct valuation method </b></td>
                                        <td>See direct method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discontinuing operations </b></td>
                                        <td>Discontinuing operations are a dinstinct part of financial statements for recording gains or losses related to disposals of some segments of a company's activity or entire sections of a business. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discount rate </b></td>
                                        <td>Discount rate is the rate of return required for a project to compensate for its risk. Also called rate of discount. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discounted average life of all the cash flows of a bond </b></td>
                                        <td>Discounted average life of all the cash flows of a bond is similar to the duration of a bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discounted cash flow model, DCF model </b></td>
                                        <td>The discounted cash flow model calculates an enterprise value on the basis of its ability to generate free cash flow. To compute the enterprise value, the free cash flows are discounted (see discounting) at a rate that reflects the risk carried by the operating assets. The DCF model gives the intrinsic value (called intrinsic value - share) of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discounted payback period </b></td>
                                        <td>Discounted payback period measures the time needed for the project to have positive NPV. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discounting </b></td>
                                        <td>Discounting is the calculation of the present value of a future sum. Discounting is thus the inverse to capitalisation. Discounting makes it possible to compare sums received or paid out at different dates. Discounting is calculated with the required rate of return of the investor. The discounting formula runs as follows: V0 = Vn / (1 + k)n, where Vn is the future cash flow, V0 - the initial investment, t - discount rate, n - duration of the investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discounting factor </b></td>
                                        <td>The part 1/(1 + k)n in the discounting formula is called the discounting factor. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discounting of bills of exchange </b></td>
                                        <td>Discounting of bills of exchange is a financing transaction wherein a company remits an unexpired commercial bill of exchange to the bank in return for an advance of the amount of the bill, less interest and fees. Depending on the accounting principles and the exact form of discounting, this financing can be off or on balance sheet. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Discounting with recourse </b></td>
                                        <td>Discounting with recourse is the discounting of bills of exchange, when a risk of the issuer of the bill is run by the company: if the bill is not paid at maturity, the bank receives the amount thereof from the company which had discounted the bill of exchange. See also non-recourse discounting. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Disintermediation </b></td>
                                        <td>Disintermediation is the process of the rise of direct finance as opposed to indirect finance. Disintermediation is characterised by the following phenomena: more companies are obtaining financing directly from capital markets; and more companies and individuals are investing directly in capital markets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Distribution system </b></td>
                                        <td>A distribution system usually plays three roles: logistics (displaying, delivering and storing products); advice and services (providing details about and promoting the product, providing after-sales service and circulating information between the producer and consumers, and vice versa); financing (making firm purchases of the product, i.e. assuming the risk of poor sales). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Diversification </b></td>
                                        <td>Diversification is an investment strategy consisting in acquiring a number of assets to minimise the risk of every single asset. Diversification can reduce risk for a given level of return and/or improve the return for a given level of risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Divestiture </b></td>
                                        <td>Divestiture is a sale of assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dividend </b></td>
                                        <td>Dividend is a part of net income distributed in cash to shareholders of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dividend discount model, DDM </b></td>
                                        <td>The dividend discount model is based on the assumption that the value of a company is determined by the stream of dividends the investor expects to receive over a period of time. This model is one of the fundamental valuation methods. The dividends are discounted at the cost of equity. The DDM model gives the intrinsic value (called intrinsic value - share) of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dividend per share, DPS </b></td>
                                        <td>Dividend per share is the dividend payment for each share. See also dividend yield. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dividend recapitalisation </b></td>
                                        <td>A dividend recapitalisation is a transaction in which the existing shareholders of a company alter its financial structure by paying out a dividend that is financed by debt. \n\nSuch transactions are frequently done by companies owned by private equity firms when the LBO is successfull and as an alternative to an IPO or a secondary LBO or a trade sale. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dividend tax credit </b></td>
                                        <td>The advantage of debt financing is the deductibility of interest expenses against the income tax borne by the company. However, income tax on investors significantly decreases this benefit. As they are non-deductible, dividends are taxed once by corporate income tax and again by the personal income tax on the shareholder (in most European countries). To avoid this double taxation, some countries have instituted an offsetting mechanism called the dividend tax credit. This is intended to neutralise the effect of corporate income tax at the level of the investor. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dividend yield </b></td>
                                        <td>Dividend yield per share is the ratio of the last dividend paid out to the current share price. Dividend yield can be either gross (including the dividend tax credit) or net (without the dividend tax credit). Dividend yield is based on market value, never on book value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Documentary credit </b></td>
                                        <td>Documentary credit, one of the types of bank guarantees, ensures the fulfillment and settlement of trade contracts between importers and exporters. The banks of the two parties to the contract guarantee their respective clients, thus limiting the risk that goods will be delivered but not paid, or paid but not delivered. Also called letter of credit (L/C). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Domiciliation </b></td>
                                        <td>Domiciliation is the choice of the account to which a payment will be credited or from which it will be debited. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Double-entry accounting </b></td>
                                        <td>A company's assets and liabilities must be exactly equal. This is the fundamental principle of double-entry accounting. When an item is purchased, it is either capitalised or expensed. If it is capitalised, it will appear on the asset side of the balance sheet, and if expensed, it will lead to a reduction in earnings and thus shareholders' equity. The double-entry for this purchase is either a reduction in cash (i.e. a decrease in an asset) or a commitment (i.e. a liability) to the vendor (i.e. an increase in a liability) </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>DPS </b></td>
                                        <td>See dividend per share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>DR </b></td>
                                        <td>See depositary receipt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dual class shares </b></td>
                                        <td>Dual class shares are ordinary shares in a company which carry different voting rights. These are shares issued against the common principle - one share equals one voting right. Companies can issue multiple voting shares, subordinate voting shares, restricted voting shares and non-voting shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Due diligence </b></td>
                                        <td>Due diligence is a comprehensive and exhaustive analysis of the business of the company. The aim of due diligence is to confirm the validity and integrity of all the financial and accounting documents of the company. Due diligence is a vital procedure in mergers and acquisitions as well as in IPOs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Duration </b></td>
                                        <td>Duration is the period, during which the bond is immunized (see immunisation). Duration also measures the average life of the assets falling due as well as the sensitivity of their value to the change in interest rates. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dutch auction </b></td>
                                        <td>A Dutch auction can be used for a tender offer. In a Dutch auction, the firm no longer offers to repurchase shares at a single price, but rather announces a range of prices. Each shareholder thus must specify an acceptable selling price within the prescribed range set by the company. If he chooses a high selling price, he will increase the proceeds provided the shares are accepted by the company. But he also reduces the probability that shares will be accepted for repurchase. At the end of the offer period, the firm tabulates 'the book' of received offers, and determines the lowest price that will enable it to repurchase the desired number of shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Dutch clause </b></td>
                                        <td>See buy-sell provision. </td>
                                      </tr>
                                    </table>
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - E</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Earnings </b></td>
                                        <td>Earnings represent the difference between revenues and charges, leading to a change in net worth during a given period. Earnings are positive when wealth is created or negative when wealth is destroyed.\n Revenues gross wealth creation\n - Charges - gross wealth destruction\n = Earnings = net wealth creation (destruction) \n Earnings are also called profit or net income. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Earnings Before Interest and Taxes </b></td>
                                        <td>See EBIT. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Earnings before interest, taxes, depreciation and amortisation </b></td>
                                        <td>See EBITDA. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Earnings per share, EPS </b></td>
                                        <td>Earnings per share represent one of the most widely used indicators measuring the performance of a company (see accounting indicators of value creation). It is calculated by dividing net income by the book value of shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Earnings retention ratio </b></td>
                                        <td>Earnings retention ratio is equal to (1-dividend payout ratio). This ratio is used to evaluate the internal financing policy of a company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Earnings yield </b></td>
                                        <td>Earnings yield is the inverse of P/E ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Earn-out clause </b></td>
                                        <td>An earn-out clause links part of the transaction price (during private negotiations) to the acquired company's future financial performance. The clause can take one of two forms: the buyer takes full control of the target company at a minimum price, which can only be revised upwards; or he buys a portion of the company at a fixed price and the rest at a future date, with the price dependent on the company's future profits. The index can be a multiple of EBIT, EBITDA or pre-tax profit. </td>
                                      </tr>
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                                        <td valign="top"><b>EASDAQ </b></td>
                                        <td>EASDAQ stands for European Association of Securities Dealers Automated Quotation. Also called the NASDAQ of Europe and lists (see listing) similar companies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBIT multiple </b></td>
                                        <td>EBIT multiple is one of the enterprise value multiples. The EBIT multiple is the ratio of the value of capital employed (enterprise value) to EBIT. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBIT, Earnings Before Interest and Tax </b></td>
                                        <td>EBIT, or operating profit, represents the earnings generated by investment cycle and operating cycle for a given period. The term "operating" contrasts with the term "financial", reflecting the distinction between the real world and the realms of finance. Operating income is the product of the company's industrial and commercial activities before its financing operations are taken into account. EBIT may also be called operating income, trading profit, or operating result. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBIT, Earnings Before Interest and Taxes </b></td>
                                        <td>EBIT represents the earnings generated by the investment cycle and business cycle for a given period. The term &quot;business&quot; contrasts with the term "financial", reflecting the distinction between the real world and the realms of finance. EBIT is the product of the company's industrial and commercial activities before its financing operations are taken into account. Also called operating income, trading profit, operating profit or operating result. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBITDA margin </b></td>
                                        <td>EBITDA margin is the EBITDA/sales ratio. Trends in EBITDA margin form a central part in the financial analysis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBITDA multiple </b></td>
                                        <td>EBITDA multiple is one of the enterprise value multiples. The EBITDA multiple is the ratio of the value of capital employed (entreprise value) to EBITDA. EBITDA multiple eliminates the sometimes significant differences in depreciation methods and periods. It is very frequently used by financial analysts for companies in capital-intensive industries. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBITDA, Earnings before interest, tax, depreciation and amortisation </b></td>
                                        <td>EBITDA is the result of the operating cycle, which is equal to the balance of operating revenues and cash operating charges incurred to obtain these revenues. EBITDA is also called gross operating profit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBITDAR </b></td>
                                        <td>See EBITDA before rents. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EBITDAR, Earnings before interest, taxes, depreciation, amortisation and rent </b></td>
                                        <td>EBITDAR is used to evaluate companies in sectors, which rely heavily on such techniques as leases, sale-leasebacks etc. This is often the case of cinema theatres or haulage companies. EBITDAR is relevant when companies with different rental policies are compared. When analysing the enterprise value derived on the basis of the EBITDAR multiple, it is important to remember that lease commitments should be treated as debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Economic analysis </b></td>
                                        <td>Economic analysis concentrates on examining the functioning of a company from its market standing, production models, competitive positions, etc standpoints. The purpose of the economic analysis is to put the company in the context of its business environment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Economic indicators of value creation </b></td>
                                        <td>Economic indicators emerged with the realisation that profitability (see accounting criteria of value creation) per se cannot fully measure value because they do not factor in risks. To measure value, returns must also be compared with the cost of capital employed. Using the weighted average cost of capital, it is possible to assess whether value has been created (i.e. when return on capital employed is higher than the cost of capital employed) or destroyed (i.e. return on capital employed is lower than the cost of capital employed). Also the absolute amount of value creation is used under the name of economic value added. The best indicator, though, is the NPV (see net present value), with the problem of calculating it over several periods. These indicators measure the past year's performance. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Economic profit </b></td>
                                        <td>See economic value added. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Economic rent </b></td>
                                        <td>Economic rent is the return in excess of the cost of capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Economic risk </b></td>
                                        <td>Economic risk is characterised by bull or bear markets, anticipation of acceleration or slowdown in business activity, or changes in labour productivity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Economic value added, EVA, EVA Model </b></td>
                                        <td>The concept of economic value added is used to measure value creation over the period in the absolute amount. It is obtained by multiplying the capital employed at the beginning of the period by the difference between ROCE and WACC. Economic value added is related to net present value, because NPV is the sum of the economic values added discounted (see discounting) at the weighed average cost of capital. Economic value added is one of the economic indicators of value creation. Also called economic profit </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Economy of scale </b></td>
                                        <td>Economy of scale is the gain on unit cost due to higher overall physical volume produced. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Efficient frontier </b></td>
                                        <td>Efficient frontier is a graph representing all securities portfolios that maximise expected return for any level of expected risk or that minimise expected risk for any level of expected return. See also efficient portfolio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Efficient market </b></td>
                                        <td>An efficient market is one in which the prices of financial securities at any time rapidly reflect all available relevant information. In such a market, future returns are unpredictable and prices of securities are always at their "right" value. An efficient market can be weak, semi-strong or strong. Also called perfect market or market in equilibrium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Efficient market hypothesis </b></td>
                                        <td>The efficient market hypothesis states that technical analysis has no practical value nor do investing tricks, for example the notion that "if a stock rises three consecutive times, buy it; if it declines two consecutive times, sell it". Similarly, the efficient market hypothesis states that models relating future returns to interest rates, dividend yields, the spread between short- and long-term interest rates or other parameters are equally worthless. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Efficient portfolio </b></td>
                                        <td>Efficient portfolio offers the best possible risk/return ratio, i.e. minimal risk for a given return or maximal return for a given risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EGM </b></td>
                                        <td>See extraordinary general meeting of shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Electronic bill of exchange </b></td>
                                        <td>Electronic bill of exchange is a bill of exchange on a magnetic strip. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Electronic promissory note </b></td>
                                        <td>Electronic promissory note is a promissory note on a magnetic strip. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Employee stock ownership program, ESOP </b></td>
                                        <td>An employee stock ownership program consists in granting shares to employees as a form of compensation. Alternatively the shares are acquired by shareholders but the firm will offer free shares so as to encourage employees to invest in the shares of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Employee-shareholders </b></td>
                                        <td>Many companies have invited their employees to become shareholders. In most of these cases, employees hold a small proportion of the shares, and in a few cases the majority. This shareholder group, loyal and non-volatile, lends a degree of stability to the capital and in general, strengthens the position of the majority shareholder, if any, and of the management. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EMTN, Euro MTN </b></td>
                                        <td>EMTN is a Euro MTN, serving the same purpose as an MTN (see medium term note) programme. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Enhancement </b></td>
                                        <td>To boost the rating of securities, the SPV, created as a part of a securitisation deal, buys more loans than the volume of securities to be issued, the excess serving as enhancement. \nAlternatively, the SPV can take out an insurance policy with an insurance company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>ENPV </b></td>
                                        <td>See expanded net present value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Enterprise value </b></td>
                                        <td>Enterprise value, or the value of capital employed, corresponds to the market value of the enterprise's machines and commercial activities. Enterprise value is equal to the market value of the shareholders' equity (stock market capitalisation if a company is quoted) plus the market value of the net financial debt. Also called firm value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Enterprise value multiples </b></td>
                                        <td>Enterprise value multiples, i.e. the multiples expressing the value of capital employed, are multiples of operating balances before subtracting interest expense. NOPAT (net operating profit after tax) is the best denominator, i.e. EBIT less corporate income taxes. However, the EBIT and EBITDA multiples are most commonly used in the financial community. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EONIA, Euro Overnight Index Average </b></td>
                                        <td>EONIA is one of the main reference interest rates. This is an average rate weighted by the volume of overnight transactions reported by a representative sample of banks (the same as for EURIBOR). EONIA is published by the European Banking Federation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EPOS </b></td>
                                        <td>See Eurozone Public Offering of Securities </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EPS </b></td>
                                        <td>See earnings per share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equalisation tax </b></td>
                                        <td>Equalisation tax must be paid when dividends are paid out of earnings that are either not subject to corporate income tax or if they are taxed at a lower rate than normal, such as capital gains. It is payable only on payouts eligible for dividend tax credit. Equalisation tax is also owed when dividends are paid out of the earnings of accounting periods closed more than a fixed number of years before the dividend payout. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equilibrium value </b></td>
                                        <td>Equilibrium value of a security in an efficient market is always equal to the present value of the cash flows it give rights to. If there is a disequilibrium, arbitrage operations will move the value of the security to its equilibrium value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity </b></td>
                                        <td>See shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity affiliate </b></td>
                                        <td>See associate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity beta </b></td>
                                        <td>Equity beta reflects both the operating (see economic risks) and financial risks of a company. Equity beta is also called levered beta. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity capital multiples </b></td>
                                        <td>Equity capital multiples, i.e. the multiples expressing the value of equity capital, are multiples of operating balances after interest expense, principally net income (P/E multiple), as well as multiples of cash flow and multiples of underlying income, i.e. before exceptional items. Most commonly used equity capital multiples are price-to-book ratio, the cash flow multiple and the P/E multiple (see P/E ratio). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity credit </b></td>
                                        <td>Equity credit is the portion of a hybrid security that is qualified, especially by rating agencies, as the part corresponding to equity capital, which will accordingly be treated as equity capital when calculating prudential ratios. The other part, ie, the portion excluding equity credit, is treated as debt. \n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity cycle </b></td>
                                        <td>Equity cycle comprises inflows from capital increases and outflows in the form of dividend payments to the shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity in drag </b></td>
                                        <td>Equity in drag is a term proposed by Bulow, Summers and Summers to describe some of the hybrid securities, which function like equity but for tax purposes are treated as debt (for example, high-yield bonds). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity kicker </b></td>
                                        <td>Equity kicker is a kicker in the form of equity warrants, also called an equity sweetener. In an LBO transaction equity kickers give potential additional returns to mezzanine financersif the transaction is successful </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity line </b></td>
                                        <td>Equity lines are a means of issuing capital. They are transacted between a company and banks. The company issues warrants to a bank. When the company requires equity, it requests the bank to exercise the warrants. The bank then immediately resells the shares bought. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity method </b></td>
                                        <td>In the process of drawing up consolidated accounts, the equity method consists in replacing the carrying amount of the shares held in an associate (also known as an equity affiliate or associated undertaking) with the corresponding portion of the associate's shareholders' equity (including net income). This method is used when the parent company exercises significant influence over the operating and financial policy of its associate. This method is purely financial. Both the group's investments and aggregate profit are thus reassessed on an annual basis. Accordingly, the IASB regards the equity method as being more of a valuation method than a consolidation method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity premium puzzle </b></td>
                                        <td>Equity premium puzzle comes from the fact that historical equity premia are very high compared to the actual risk taken by investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity ratio </b></td>
                                        <td>Equity divided by total assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity risk premium </b></td>
                                        <td>See market risk premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity sweetener </b></td>
                                        <td>See equity kicker. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity warrant </b></td>
                                        <td>An equity warrant is a warrant allowing the holder to subscribe to a share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity-for-debt swap </b></td>
                                        <td>Equity-for-debt swaps are designed to reduce leverage with debt agreements. Lenders take an equity stake in the firm in exchange for a portion of their debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equity-linked securities </b></td>
                                        <td>Equity-linked securities are hybrid securities paying a fixed coupon rate. Equity-linked securities are debt securities whose realised rate will depend on the performance of the shares of the issuer (like convertible bonds) or of a third company (like exchangeable bonds). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Equivalent annual cost method </b></td>
                                        <td>When a company has to choose between two projects of two different lengths and with different operating costs, it should reason on an equal-life basis. This choice can be made using the equivalent annual cost method, a technique based on the following steps: calculate the present value of the costs of each of the two projects; determine the equivalent annual cost of the single payment represented by the PV of the costs of the two projects; choose the project with the lower equivalent annual cost. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Escrow account </b></td>
                                        <td>An escrow account is a special bank account for the deposit of funds, to which the beneficiary's access is a subject of the fulfillment of certain conditions. An escrow agreement setting out these conditions is usually drawn up. See also holdback. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>ESOP </b></td>
                                        <td>See employee stock ownership program. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>ETF </b></td>
                                        <td>ETF or Exchange Traded Fund is a fund listed on the Stock Exchange which duplicates an index. It allows an investor to get an exposure to an index without having to buy a share in every company included in the index. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EURIBOR, Euribor </b></td>
                                        <td>EURIBOR is one of the main reference rates. This is the European money-market rate corresponding to the arithmetic mean of offered rates on the European banking market for a given maturity (between 1 and 12 months). The EURIBOR is published by the European Central Bank based on daily quotes provided by 64 European banks. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Eurimean </b></td>
                                        <td>Eurimean, one of the reference rates, is the average monthly money market rate, represented by EONIA. Eurimean is calculated by the French Banking Association. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Euro MTN </b></td>
                                        <td>See EMTN. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Euro Overnight Index Average </b></td>
                                        <td>See EONIA. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Eurobond </b></td>
                                        <td>Eurobond is a bond issued outside the country of the currency of issue. Also called international bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Euronext </b></td>
                                        <td>Euronext is a pan-European stock exchange grouping the Paris, Brussels, Amsterdam and Lisbon stock exchanges. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Euro-NM </b></td>
                                        <td>The Euro-NM (NM stands for New Market, meaning the TMT companies) network includes the Nouveau March&eacute; (France), the Neuer Markt (Germany, but which closed in June 2003), the NMAX (Netherlands), Euro.NM Belgium and the Nuovo Mercato (Italy). This network is based on common admission and listing rules, allowing European companies to list their shares (see listed security) on their market of choice regardless their national origin. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>European Interbank Offered Rate </b></td>
                                        <td>See EURIBOR. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>European option </b></td>
                                        <td>See European-style option. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>European-style option </b></td>
                                        <td>The holder of a European-style option can only exercise his right on the exercise date. European-style option is also called European option. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Eurozone Public Offering of Securities </b></td>
                                        <td>Eurozone Public Offering of Securities (EPOS) are public issues of securities in the euro zone. These offerings are carried out under the European Prospectus Directive, which allows an issuer which has had a prospectus approved in an EU member state to use the same prospectus to place the securities in any other EU member state - the euro zone in the case of EPOS - without having to go through the approval process a second time (the so-called &quot;passport" mechanism). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EVA </b></td>
                                        <td>See economic value added </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>EVA model </b></td>
                                        <td>See economic value added. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Event-study analysis </b></td>
                                        <td>Event-study analysis is based on the estimate of abnormal returns, which is obtained by subtracting the daily return of the market (RM) from the return of the company (R) in the same day: AR = R - RM. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exceptional items </b></td>
                                        <td>Many events are classified under exceptional items. Predominantly they deal with disinvestment activity of businesses. For large groups, closure of plants, provisions for restructuring, etc. tend to happen every year in different divisions or countries. In some sectors, exceptional items are an intrinsic part of the business. In these cases, exceptional items should be analysed as recurrent items and as such be included in operating profit. For smaller companies, exceptional items tend to be one-off items and as such should be seen as non-recurrent items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exchange ratio </b></td>
                                        <td>Exchange ratio is the ratio of the number of shares of company A to be tendered for each company B share received. The exchange ratio is determined on the basis of the relative value ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exchange risk </b></td>
                                        <td>See currency risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exchange traded fund </b></td>
                                        <td>An exchange traded fund or ETF is a fund listed on the Stock Exchange which duplicates an index. It allows an investor to get an exposure to an index without having to buy a share in every company included in the index. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exchangeable bonds </b></td>
                                        <td>Exchangeable bonds are bonds issued by a company that may be redeemed at the request of their holders into shares of a company other than the issuer of the bonds or in cash. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exclusive negotiations </b></td>
                                        <td>Exclusive negotiations can be used for the sale of a company. For a given period of time, the potential buyer is the only candidate. At the end of the exclusive period, the buyer must submit a binding offer (above a certain figure) or withdraw from negotiations </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exercise date </b></td>
                                        <td>Exercise date is the date, on which the holder of an option can exercise it. See also European-style option and exercise period. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exercise period </b></td>
                                        <td>Exercise period is the period, during which the holder of an option can exercise it. See also US-style option and exercise date. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Exit clause </b></td>
                                        <td>Exit clauses govern the transactions between the parties to a joint venture, when one of the partners wants to sell its stake. Such clauses include buy-sell provisions, auction clauses, and appraisal clauses. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expanded net present value, ENPV </b></td>
                                        <td>Expanded net present value factors the value of real options into the valuation of an investment. It is equal to the net present value of an investment plus the value of real options. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expected equity risk premium </b></td>
                                        <td>Expected equity risk premium is not directly observable. However, it can be calculated by estimating the future cash flows of all companies, and then finding the discount rate that equates those cash flows with current share prices. It is this expected equity risk premium that is used in the CAPM. See also equity risk premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expected outcome </b></td>
                                        <td>See expected return. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expected return </b></td>
                                        <td>Since the actual return is not known in advance, investors use the concept of expected return. Expected return is the average of possible returns, weighted by their likelihood of occurring:\n , where rt is a possible return and pt - its probability.\nExpected return is also called expected outcome. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expected return of a market portfolio </b></td>
                                        <td>Expected return of a market portfolio is equal to the risk-free rate, plus a premium called the market risk premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expected return on assets - pensions </b></td>
                                        <td>Expected return on assets is what management expects to earn on pension plan assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expenses </b></td>
                                        <td>See costs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expert systems </b></td>
                                        <td>Expert systems comprise software developed to carry out financial analysis using a knowledge base consisting of rules of financial analysis, enriched with the result of each analysis performed. The goal of expert systems is to develop lines of reasoning akin to those used by human analysts. This is the realm of artificial intelligence. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Explicit forecast period </b></td>
                                        <td>The explicit forecast period is a period of projecting cash flows when the company is valued by the discounted cash flow model. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Export credit </b></td>
                                        <td>See buyer's credit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Expropriation effect </b></td>
                                        <td>The expropriation effect designs the transfer of some of the value of claims from one party to another (usually between shareholders and creditors) without any exchange of cash flows. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Extended trade-off model </b></td>
                                        <td>The extended trade-off model is a trade-off model that takes into account financial distress costs, agency costs, costs associated with the loss of the financial flexibility as a result of exhausted borrowing capacity and the tax shield generated by debt. According to the extended trade-off model, optimal leverage is obtained where the weighted average cost of capital reaches the minimum point, reflecting the balance between the tax shield and all the above mentioned costs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>External capital </b></td>
                                        <td>External capital is all capital raised outside the firm. It can be either financial debt from lenders or equity from new or existing shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>External projects </b></td>
                                        <td>Acquisitions of larger competitors or companies with leading market positions or the construction of plants in new markets.\n\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Extraordinary general meeting of shareholders, EGM </b></td>
                                        <td>At extraordinary general meetings of shareholders, shareholders vote on matters that require a change in the company's operating and financial policies: changes in the articles of association, capital increases, mergers, asset contributions, demergers, capital decreases, etc. These decisions require a qualified majority (1/4 or 1/3 of voting shareholders depending on the legislation). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Extraordinary items </b></td>
                                        <td>Such events as earthquakes, other natural disasters or the expropriation of assets by a government give rise to unpredictable financial consequences. These events are not expected to recur frequently or regularly and are beyond the control of a company's management. Hence, a separate extraordinary items category was created for precisely such extraordinary items. Extraordinary items should be separated from exceptional items. </td>
                                      </tr>
                                    </table>
                                    <A name="lettreF"></A> 
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - F</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Face value </b></td>
                                        <td>The face value of a loan is a relatively formal value used to calculate interest payments. In the simplest cases, it equals the amount of money the issuer received for each bond and the amount that it will repay upon redemption. Also called nominal value or par value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Facility fee </b></td>
                                        <td>A facility fee is paid annually on the entire amount of a syndicated loan, regardless of the amount already drawn, if the borrower reserves the right to draw funds when necessary. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Factor </b></td>
                                        <td>A factor is a company providing factoring services. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Factoring </b></td>
                                        <td>Factoring, one of the off-balance sheet financing techniques, is a credit transaction whereby a company holding an outstanding commercial bill of exchange transfers it to its bank or a specialised financial institution in exchange for the payment of the bill, less interest and commissions &amp; fees. Factoring companies, also called factors, specialise in mobilising a part of the receivables, which they discount (see discounting of bills of exchange) or buy. These companies handle the recovery of bad debts in exchange for a commission. Factoring is the discounting of bills of exchange packaged with one of four services: financing at a competitive cost; outsourcing of the recovery function; bad debt insurance; removal of assets from the balance sheet. Depending on the type of service rendered, the receivable may or may not remain on the balance sheet of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fairness opinion </b></td>
                                        <td>A fairness opinion is an opinion given by a third independent party (investment bank, valuation firm, auditors) on the financial terms of a transaction (disposal, contribution, merger) which could create a conflict of interest between the parties to this transaction (sale by a parent company of one of its assets to its listed subsidiary, which also has outside shareholders). This opinion is submitted in the form of a letter and is most frequently based on detailed valuation work. The aim is to provide the shareholders or directors who will have to make the decision with deeper insight into financial aspects of the transaction. \n\nIn complex transactions and in situations of conflict of interest, directors may want to rely on a fairness opinion to help them make an informed decision and/or to be able to disclaim responsibility vis-&agrave;-vis their shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fallen angels </b></td>
                                        <td>See junk bonds. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fama-French model </b></td>
                                        <td>The Fama-French model, as well as other offshoots from APT, tries to explain historical return by company-specific factors rather than the general macroeconomic factors in APT. This model isolates three factors: market return, price-to-book ratio, and the gap in returns between large caps and small caps. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Family-owned company </b></td>
                                        <td>A family-owned company is a company whose shareholders have for several generations been members of the same family . Often, through a holding company, these shareholders exert significant influence on management. Still the dominant model in Europe, but on the decline. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>FCFF </b></td>
                                        <td>See free cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>FFO </b></td>
                                        <td>Funds from operation or FFO are calculated by adding depreciation and amortization expenses to net earnings. They are equal to cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>FIFO, First in, first out </b></td>
                                        <td>FIFO is one of the inventories valuation methods, which values inventory withdrawals at the cost of the item that has been held in inventory for the longest. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Finance lease </b></td>
                                        <td>A finance lease is a lease that transfers substantially all the risk and rewards incident to ownership of an asset. Title may or may not eventually be transferred. Called capital lease in the U.S. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial analysis </b></td>
                                        <td>Using economic and accounting information, financial analysis aims at discovering a company's real situation, based on coded data. It also makes it possible to make a full assessment of the analysed company and its future prospects. On a practical level, financial analysis first places the company in its economic environment: market, sector, production processes, distribution channels, motivations of the people working for the company. Then, the analyst progressively studies wealth creation, investment and financing policies, and concludes on the profitability of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial analysis techniques </b></td>
                                        <td>These include trend analysis, comparative analysis (benchmarking), normative analysis </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial analyst </b></td>
                                        <td>A financial analyst specialises in valuing the securities issued by companies with a view to selection for inclusion in investment portfolios. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial assets </b></td>
                                        <td>Financial assets include all types of securities, bank balances, and insurance contracts. They are long-term non-production investments. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial breakeven </b></td>
                                        <td>Financial breakeven takes into account the interest costs incurred by a company that determine the stability of profit before tax and non-recurring items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial buyer </b></td>
                                        <td>A financial buyer is an acquirer, which has no operations in the industry. Also called capital investor. Often a venture capitalist. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial communication </b></td>
                                        <td>Financial communication is an important factor in reducing the cost of capital, provided the company discloses full, timely, and relevant information about its financial situation. The cornerstone of financial communications policy is the signal the managers of a company send to investors (see also signalling theory). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial cost </b></td>
                                        <td>Financial cost represents the rate of return required by investors which provide a company with funds. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial currency risk </b></td>
                                        <td>Financial currency risk arises in the course of the financing cycle of the company. It represents the currency risk on daily balance of financial receipts and disbursements in every currency in which the company operates. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial distress </b></td>
                                        <td>Financial distress covers both the difficulty a firm has in meeting its debt obligations and the consequences of these difficulties, which may take the form of restrictions imposed by creditors on a company's behavior (for example, a company may find it impossible to raise new funds). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial distress cost </b></td>
                                        <td>Financial distress costs are the costs related to financial distress, and include not only the possibly increased cost of debt, but also the opportunities of profitable investments foregone due to the inability to raise new funding, revenues lost due to R&amp;D cuts, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial expense </b></td>
                                        <td>Financial expense includes: interest and related charges; foreign exchange losses on debt; net expense on the disposal of marketable securities; amortisation of bond redemption premiums; additions to provisions for financial liabilities and charges and impairment losses on investments. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial income </b></td>
                                        <td>Financial income is the revenue generated by the temporary surplus cash invested in short-term investments and marketable securities. It also includes foreign exchange gains on debt and write-backs on provisions and charges related to financial operations. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial interest rate risk </b></td>
                                        <td>Financial interest rate risk is tied directly to the terms a company has obtained for its borrowings and investments. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial investor </b></td>
                                        <td>Financial investors operate in financial markets and have a choice of three different behaviours: speculation, hedging, and arbitrage. The position financial investors take depends on their market forecasts, and they can adopt all three behaviours, even simultaneously. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial leverage </b></td>
                                        <td>See gearing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial leverage - dynamic </b></td>
                                        <td>Financial leverage is the change in the earnings per share relative to changes in earnings. It is affected by the capital structure policy of the company and thus is highly firm-specific. An increase in financial leverage increases the risk (and the beta) of the equity in a firm, because its earnings become more volatile. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial loan </b></td>
                                        <td>See business loan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial resources </b></td>
                                        <td>Financial resources are the cash funds that fill the deficit arising from the timing differences between a company's cash receipts and cash disbursements. Financial resources are provided by different investors (shareholders, lenders, debtholders) in exchange for remuneration (dividends, interests, capital gains). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial risk </b></td>
                                        <td>Financial risks include market risk, liquidity risk - company, counterparty risk, and political risk </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial risk management </b></td>
                                        <td>Financial risk management comes in four forms: self-hedging, locking in future prices or rates, insurance, and immediate disposal of a risky asset or liability. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial security </b></td>
                                        <td>Financial security is a contract whereby the issuer of the security commits to pay to the investor that lends the money today, a stream of cash flows in accordance with a given timetable. Also called security. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial structure </b></td>
                                        <td>See capital structure. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial sweetener </b></td>
                                        <td>Financial sweeteners are specific financial arrangements needed to get over psychological, tax, legal or financial barriers during private negotiations. These arrangements do not change the value of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial synergy </b></td>
                                        <td>Financial synergy is the apparent reduction in cost of capital following an increase in gearing or a diversification/restructuring move. In fact, financial synergies do not exist - there are only industrial synergies, administrative synergies, and commercial synergies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financial system </b></td>
                                        <td>The primary role of a financial system is to bring together economic agents with surplus financial resources, such as households, and those with net financial needs, such as companies and governments. The parties can be brought together directly or indirectly. In the first case, known as direct finance, the parties with excess financial resources directly finance those with financial needs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Financing cycle </b></td>
                                        <td>Financing cycle is the counterpart to the investment cycle and business cycle. It covers the period from raising financial resources to their repayment. This cycle includes capital increases in cash, the payment of dividends (i.e. payment out of the previous year's net profit) and share buy-backs, change in net debt resulting from the repayment of (short-, medium- and long-term) borrowings, new borrowings, changes in marketable securities (short-term investments) and changes in cash and cash equivalents. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Firm underwriting </b></td>
                                        <td>Firm underwriting is a commitment by the bank to buy the securities if the offering fails to attract sufficient investor interest. See also underwriting. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Firm value </b></td>
                                        <td>See enterprise value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>First in, first out </b></td>
                                        <td>See FIFO. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>First mover advantage </b></td>
                                        <td>First mover advantage consists in ensuring a leadership position in a market by virtue of having been one of the first companies in the sector. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fisher formula </b></td>
                                        <td>Fisher formula deduces the real yield from the nominal yield/return: Real yield/return = (1 + Nominal yield/return) / (1 + Annual inflation) - 1. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fixed assets </b></td>
                                        <td>Fixed assets include everything required for the operating cycle that is not destroyed as part of it, as opposed to the current assets. The decrease in the value of fixed assets is accounted for through depreciation, amortisation and impairment losses. A distinction is drawn between tangible fixed assets (land, buildings, machinery, etc, - known as property, plant and equipment in the U.S.), intangible fixed assets (brands, patents, goodwill, etc) and investments. When a business holds shares in another company (in the long term), they are accounted for under investments. Accounting policy for fixed assets can significantly affect the accounting and financial criteria of the financial health of a company (profits, solvency, etc). The state of a company's fixed assets is measured the ratio net fixed assets/gross fixed assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fixed costs </b></td>
                                        <td>Fixed costs are the costs that do not change with a change in the level of business activity (usually expressed by sales). Costs are fixed for a given period of time only. In the long-term, all costs should become variable costs, if the company is to survive. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fixed income securities </b></td>
                                        <td>Fixed income securities are all debt obligations issued by corporations, governments, or government agencies which pay a fixed interest rate over a defined time period. All types and classes of bonds represent the biggest part of fixed income securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fixed-price offering </b></td>
                                        <td>Under a fixed-price offering, a certain number of shares are offered to retail investors at a pre-set price, which is generally identical to the price offered to institutional investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fixed-rate debt security </b></td>
                                        <td>Fixed-rate debt securities have the cash flow schedule clearly laid down at the time of issue, because their coupon rate does not change throughout their life. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Floating-rate debt security </b></td>
                                        <td>The coupon (see coupon rate) of a floating-rate debt security is not fixed, but is indexed to the reference rate (generally a short-term rate), usually more than once a year. Investors know the actual payments they will receive for the next payment date only. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Floor </b></td>
                                        <td>A floor is an interest rate option that allows a lender to set a minimum interest rate below which he does not wish to lend; on exercise date he will receive the difference between the floor rate and the market rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Floor plan loan </b></td>
                                        <td>A floor plan loan is a loan for financing products with a high unit value sold by specialised retailers, such as cars, furniture, electrical goods, boats, etc. and bought by consumers who often finance these purchases using consumer loans. \n\nBanks or specialised lending institutions grant these loans to retailers for a percentage of the value of the retail goods and the loan is repaid as the goods are sold to the end user. \n\nBecause the banks do not always earn enough interest on floor plan loans, they request priority access to the retailers' customers in order to offer them consumer loans, which provides the banks with an additional source of revenue. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Flow-back </b></td>
                                        <td>Flow-back is the excessive sale of securities immediately after their placement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Foreign bond </b></td>
                                        <td>A foreign bond is a bond issued by a foreign government or corporation in a single market under regulations of that country. Some foreign bonds have special names: Yankee bond, Samurai bond, Matador bond, Bulldog bond, Rembrandt bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Foreign currency advances </b></td>
                                        <td>Foreign currency advances help finance commercial operations abroad. They are advances granted to exporters of goods and services until the payment date stipulated in the contract. Advances are repaid after receipt of foreign currency linked to the contract. Advances are thus a mode of financing as well as a currency risk hedging technique. This instrument is now used less often, because companies prefer to issue debt in the currency which enjoys the highest rating. Funds thus raised are then used in accordance with the company's needs in different foreign currencies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Foreign currency hedging </b></td>
                                        <td>Foreign currency hedging is hedging of all types of currency risks run by the company. Forward transactions, futures, options, self-hedging - are the techniques that can be used in foreign currency hedging. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Foreign exchange gains and losses </b></td>
                                        <td>Foreign exchange gains and losses appear when the temporal method of translation is used. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Foreign exchange risk </b></td>
                                        <td>See currency risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Forward currency transaction </b></td>
                                        <td>A forward currency transaction is a forward transaction with a currency pair at a forward exchange rate determined at the time a deal is concluded. Tantamount to borrowing today the present value in the currency to be sold at maturity of this transaction, exchanging it at the current rate and investing for the same maturity the corresponding amount in the other currency of the currency pair. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Forward exchange rate </b></td>
                                        <td>The forward exchange rate of a currency is the rate that can be fixed today to buy (or sell) a currency at a future date. It is based on the spot price and the interest rate differential between the foreign currency and the benchmark currency during the period covered by the transaction. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Forward rate agreement, FRA </b></td>
                                        <td>Forward Rate Agreements are used to lock in an interest rate for a future transaction. They represent the agreement concluded today between two parties to pay the pro rata difference between the agreed interest rate and the actual market interest rate at the beginning of the forward rate agreement. This difference is paid on notional amount for the length of the forward rate agreement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Forward transaction </b></td>
                                        <td>A forward transaction consists in buying or selling an asset for any date different from the spot date. The price, the amounts, and the date are all fixed today, i.e. at the date of concluding a forward transaction. Can be forward currency transactions or forward interest rate transactions. Also called forward contracts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Forward-forward rate </b></td>
                                        <td>Forward-forward rate is the (anticipated) interest rate for investments starting in future. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>FRA </b></td>
                                        <td>See forward rate agreement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Free cash flow </b></td>
                                        <td>Free cash flow is the difference between operating cash flow and capital expenditure net of fixed assets disposals. Free cash flow can be calculated before or after tax. It also forms the basis for some company valuation techniques. If free cash flow turns negative, additional financial resources will have to be raised to cover the company's cash flow requirements. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Free cash flow </b></td>
                                        <td>Free cash flow is the difference between operating cash flow and capital expenditure net of fixed assets disposals. Free cash flow can be calculated before or after tax. It also forms the basis for some company valuation techniques. If free cash flow turns negative, additional financial resources will have to be raised to cover the company's cash requirements. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Free cash flow to the firm, FCFF </b></td>
                                        <td>See free cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Free float </b></td>
                                        <td>The free float is the proportion of shares available to purely financial investors, for them to buy when the price looks low and to sell when it looks high. Free float does not include shares that are kept for other reasons, i.e. control, sentimental attachment or "buy and hold" strategies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Free float factor </b></td>
                                        <td>The free float factor is the percentage of shares remaining after the block ownership and restricted shares are subtracted from the total number of shares: Free Float Factor (%) = 100% - [Larger or Block Ownership and Restricted Shares Adjustments (%)]. See also free float. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Free rider </b></td>
                                        <td>The term &quot;free rider&quot; is used to describe the behaviour of an investor who benefits from transactions carried out by other investors in the same category (shareholders, preferred shareholders, bondholders, etc) without participating in these transactions himself. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Free share </b></td>
                                        <td>Free shares are awarded when there is a capital increase by incorporation of reserves. Each shareholder receives free shares in proportion to his/her current stake in the company. Such transaction results in a mechanical downward adjustment of the share price, so that the product of the number of shares before the operation by unit value of share is equal to the new number of shares (thus increased) by new unit value of share. This operation is often carried out to increase the liquidity of the share by decreasing its unit value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Friendly offer </b></td>
                                        <td>See recommended offer. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Full commitment </b></td>
                                        <td>Full commitment is the commitment of a mandated lead arranger(s) for the entire amount of the syndicated loan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Full consolidation </b></td>
                                        <td>Full consolidation consists in transferring all the subsidiary's assets, liabilities and equity to the parent company's balance sheet and all the revenues and expenses to the parent company's income statement. The accounts of a subsidiary are fully consolidated if it is controlled by its parent. Control is presumed to exist when the parent company: holds, directly or indirectly, over 50% of the voting rights in its subsidiary; holds, directly or indirectly less than 50% of the voting rights but has power over more than 50% of the voting rights by virtue of an agreement with other investors; has power to govern the financial and operating policies of the subsidiary under a statute or an agreement; has power to cast majority of votes at meetings of the board of directors, or; has power to appoint or remove the majority of the members of the board. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fully-diluted EPS </b></td>
                                        <td>Fully-diluted EPS is the EPS if all securities convertible into the shares of the company (convertible bonds, stock options or warrants) were exercised. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fundamental analysis </b></td>
                                        <td>Fundamental analysis seeks to determine the intrinsic value of a stock. Investors believing in fundamental analysis invest over the medium or long term and wait patiently for market value to converge towards intrinsic value. Fundamental analysis is one of the stock-picking approaches. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fundamental valuation method </b></td>
                                        <td>The fundamental valuation method determines the company's intrinsic value - share, in accordance with financial theory, by discounting cash flows to their present value using the required rate of return. Two basic methods are used: the dividend discount model and the discounted cash flow model. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Funds from operation ( FFO) </b></td>
                                        <td>Funds from operation or FFO are calculated by adding depreciation and amortization expenses to net earnings. They are equal to cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Fungibility </b></td>
                                        <td>Fungibility is the possibility for the issuer to issue at a later stage, other bonds with the same features (time to maturity, coupon rate, coupon payment schedule, redemption price and guarantees, etc.). Fungibility, or interchangeability, enables the various issues to be grouped as one, for a larger total amount. Fungible bonds offer two advantages: administrative expenses are reduced, since there is just one issue; and more importantly, the bonds are more liquid and therefore more easily traded on the secondary market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Future </b></td>
                                        <td>A future is a firm commitment traded on an organised market to buy or sell an agreed upon quantity of an asset at an agreed upon price on an agreed upon date. The actual delivery of an asset almost never takes place, with parties paying the difference between the agreed upon price and the current market price for the asset. </td>
                                      </tr>
                                    </table>
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - G</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>GAAP </b></td>
                                        <td>General agreed accounting principles set the rules for accounting in a specific country. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gamma </b></td>
                                        <td>Gamma measures the delta's sensitivity to variations in the value of the underlying asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>GARP </b></td>
                                        <td>Growth at a reasonable price; investor who aimes to identify only those growth stocks that meet his/her criteria for buying at reasonable prices.\n\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>GDR </b></td>
                                        <td>See global depositary receipt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gearing </b></td>
                                        <td>Gearing is the ratio of net debt to equity. Also called leverage or financial leverage. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Global coordinator </b></td>
                                        <td>Global coordinator coordinates all aspects of an offering. Global coordinators usually also serve as lead manager and book-runner. See also arranger. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Global Depositary Receipt, GDR </b></td>
                                        <td>Global Depositary Receipt is an ADR available in different foreign markets, and not only on the U.S. market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Golden share </b></td>
                                        <td>Golden shares are special shares that enable governments to prevent another shareholder from increasing its stake above a certain threshold in certain recently privatised companies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Goodwill </b></td>
                                        <td>Goodwill is the positive difference between the purchase cost and the fair market value of the assets and liabilities acquired with a company. Goodwill may exist due to one of the following: the assets recorded on the acquired company's balance sheet are worth more than their historical cost; some assets such as patents, licenses and market share that the company has accumulated over the years without wishing to or even being able to account for them, may not appear on the balance sheet; the merger between the two companies may create synergies, either in the form of cost reductions and / or revenue enhancement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Goodwill amortisation </b></td>
                                        <td>Goodwill is assessed each year to verify whether its value is at least equal to its net book value as shown on the group's balance sheet. This assessment is carried out by means of impairment tests. If the market value of goodwill is below its book value, goodwill is written down (see write-down) to its fair market value and a corresponding impairment loss is recorded on the income statement. More than impoverishing a company, goodwill amortisation is linked to the profits paid at the moment of acquisition, so that the company does not forget that a part of those profits was already paid or. If there is negative goodwill (badwill), under IAS rules it should be booked as deferred income over a maximum of 20 years, or allocated to various non-monetary assets subject to depreciation and amortisation that are acquired in proportion to its fair value. Also called purchase method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gordon-Shapiro formula </b></td>
                                        <td>The Gordon-Shapiro formula calculates the value of a perpetuity growing at a constant rate g: PV = F/(k-g), where PV is the present value of this perpetuity, F - the perpetuity, k - cost of capital. (k&gt;g) </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Greenshoe </b></td>
                                        <td>A greenshoe is an option granted by the seller/issuer to the bank to buy at the price of offering a number of supplementary shares over and above the number offered to investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Grey market </b></td>
                                        <td>The grey market is the period between the setting of the price and the effective delivery of bonds. Bonds are traded on the grey market even though they do not technically exist. Transactions on the grey market are unwound after settlement, delivery and the first official quotations. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gross capital employed </b></td>
                                        <td>Gross capital employed is the capital employed before amortisation and depreciation of fixed assets and adjusted for inflation. See also CFROI. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gross debt </b></td>
                                        <td>The company's gross debt comprises debt financing, irrespective of its maturity, i.e. medium- and long-term (various borrowings due in more than one year that have not yet been repaid) and short-term bank or financial borrowings (portion of long-term borrowings due in less than one year, discounted notes (same technique as discounting of bills of exchange), bank overdrafts, etc.). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gross dividend </b></td>
                                        <td>Gross dividend is the sum of the dividend and dividend tax credit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gross margin </b></td>
                                        <td>There is absolutely no clear cut definition of what gross margin should cover, and everyone tends to include whatever they fancy under this heading. \n\nLogically, the cost of making products should be deducted from sales. So, on the mass market retail sector, expenses (wholesale purchases of retail products which account for around 80% of sales) should be deducted, and the gross margin will be equal to a sales margin or a margin on raw materials used. \n\nOn the movie theatre sector, the figure will be sales less the payments made to distributors who supply the product - the film.\n\nAt a bank, it's the difference between interest earned and interest paid. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gross operating profit </b></td>
                                        <td>See EBITDA. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gross trading profit </b></td>
                                        <td>Gross trading profit is the difference between the selling price of goods for resale and their purchase cost. This indicator is useful only in the retail and wholesale sectors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Gross yield to maturity </b></td>
                                        <td>The gross yield to maturity, before taxation and intermediaries' fees, represents: for investors, the rate of return they would receive by holding the bonds until maturity, assuming that interest payments are reinvested at the same yield to maturity; for the issuer, the pre-tax discounted cost of the loan (see cost of debt). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Growth at a reasonable price </b></td>
                                        <td>Investor who aimes to identify only those growth stocks that meet his/her criteria for buying at reasonable prices. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Growth potential </b></td>
                                        <td>In equilibrium, shareholders' equity, debt, capital employed, net profit, book value per share, earnings per share and dividend per share all grow at the same rate. This equilibrium growth rate is called the company's growth potential. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Growth stock </b></td>
                                        <td>Growth stocks have a low, often even a zero, dividend payout ratio. Profits must be reinvested in order to sustain growth. These companies usually have a high price-to-book ratio and price-to-earnings ratio. </td>
                                      </tr>
                                    </table> 
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									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - H</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Hard capital rationing </b></td>
                                        <td>When a firm has limited resources for the number of worthwhile projects it has, capital rationing occurs. Soft rationing means that capital cannot be raised within the firm and hard rationing means that C1242capital cannot be raised on the external markets. This happens in when markets are not efficient. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hard currency </b></td>
                                        <td>Hard currency is a currency that is stronger than the currency of the parent company's home country. See also soft currency. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hedge fund </b></td>
                                        <td>A hedge fund is a speculative fund seeking high returns and relying heavily on derivatives, and in particular options. Hedge funds use leverage and commit capital in excess of their equity. See also alternative management. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hedging </b></td>
                                        <td>When an investor attempts to protect himself from risks he does not wish to assume he is said to be hedging. The term "to hedge" describes a general concept that underlies certain investment decisions, for example, the decision to match a long-term investment with long-term financing, to finance a risky industrial investment with equity capital rather than borrowed capital, etc. See also hedging principle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hedging principle </b></td>
                                        <td>See matching principle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Herding instinct, herding behavior </b></td>
                                        <td>The herding instinct is the desire to follow the crowd, i.e. the tendency of individuals to mould their thinking to the prevailing opinion. Similarly, economists call this decision-making process an information cascade and believe that it happens in financial markets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hidden assets </b></td>
                                        <td>Hidden assets are assets that are not valued or incorrectly valued by the market, because of under-utlisation by their owners or because of poor communication or lack of information. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hidden option </b></td>
                                        <td>See real option. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>High-yield bonds </b></td>
                                        <td>High-yield bonds represent subordinated debt, typically taking the form of five to ten-year bonds. These bonds are issued by companies in the process of being turned around or with a weak financial base, in particular for LBOs. High yields correspond to the level of risk involved, making these bonds a very speculative investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Historical equity risk premium </b></td>
                                        <td>The historical equity risk premium is based on a comparison of annual performance of equity markets (including dividends) versus the long-term risk-free rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Historical value </b></td>
                                        <td>See nominalism. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Holdback </b></td>
                                        <td>The representations and warranties clause (see this term) is often accompanied by a holdback, which consists in putting a part of the purchase price in an escrow account. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Holding company </b></td>
                                        <td>A holding company owns minority or majority investments in listed (see listing) or unlisted companies either for purely financial reasons or for control purposes. It is a structure which enables the majority shareholder to maintain control of a company, because minority shareholders are dispersed. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Holding company discount </b></td>
                                        <td>Holding company discount means that the holding company's market capitalisation is less than the sum of investments it holds. This discount is due to: limited free float of a holding company, tax inefficiencies associated with the holding company, and the additional administrative costs any holding company incurs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Holding-period return </b></td>
                                        <td>The holding-period return is calculated from the total sum of cash flows for a given investment, i.e. income, in the form of interest or dividends earned on the funds invested and the resulting capital gain or loss when the security is sold: F1/V0 + (V1 - V0)/V0 = income + capital gain or loss, where F1 is the income received by the investor during the period, V0 is the value of the security at the beginning of the period, and V1 is the value of the security at the end of the period. This formula holds for one period. If there is more than one period, the equation should take into account the number of periods. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hostile offer </b></td>
                                        <td>A hostile offer is an unsolicited offer to buy the shares of a company, rejected by the management. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hurdle rate </b></td>
                                        <td>Return that must be earned to cover the cost of capital (WACC).\n\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hybrid securities </b></td>
                                        <td>Hybrid securities typically come in the form of bonds with an equity component or "non-ordinary" shares. Hybrid securities encompass convertible bonds, mandatory convertibles, reverse convertibles, preferred shares, LYONs, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Hyperinflationary country </b></td>
                                        <td>A hyperinflationary country is one where inflation is both chronic and out of control. In such circumstances, the special method of translation is used. </td>
                                      </tr>
                                    </table> 
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									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - I</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>IAS </b></td>
                                        <td>IAS stands for International Accounting Standards. IAS are used outside the U.S., predominantly in continental Europe. See also US GAAP. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>IASB </b></td>
                                        <td>IAS stands for International Accounting Standards Board, the organisation governing the IAS. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Identified purchase cost </b></td>
                                        <td>Identified purchase cost is one of the inventories valuation methods. The identified purchase cost is used for non-interchangeable items and goods or services produced and assigned to specific projects. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Idiosyncratic risk </b></td>
                                        <td>See specific risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>IFRS </b></td>
                                        <td>International Financial Reporting Standards published by the IASB and adopted by most countries but the USA. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Ijara </b></td>
                                        <td>This is a leasing agreement whereby a financial institution buys property or capital goods and leases them back to a company. \nIjara can take the form of an Ijara-wa-Iqtina (a leasing agreement with a promise to buy). This is similar to Ijara but includes a promise on the part of the client to buy the asset when the agreement terminates. \nFinally, a third form of Ijara is an Ijara with diminishing Musharaka. This contract can be used for the purchase of real estate. The financial institute's share in the rented asset diminishes with each payment of capital made by the client that exceeds the amount of the rent, with the final goal being the transfer of the property to the client. \n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Ijara-wa-Iqtina </b></td>
                                        <td>See Ijara </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Immunisation </b></td>
                                        <td>The immunisation of a bond means that its overall market value (price of principal plus the interest accrued) does not change in response to the change in market interest rates. See also duration. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Impairment losses </b></td>
                                        <td>Impairment losses recognise the loss in value of a fixed asset not related to its day-to-day use. They cover mainly depreciation for doubtful receivables, inventories and/or amortisation of goodwill and other intangible fixed assets. Also called write-downs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Impairment test </b></td>
                                        <td>The annual goodwill assessment is carried out by means of impairment tests. If the market value of goodwill is below its book value, goodwill is written down (see write-down) to its fair market value and a corresponding impairment loss is recorded on the income statement. See also goodwill amortisation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Implicit rating </b></td>
                                        <td>Implicit rating is the rating assigned by the financial analyst to the company after performing the type of analysis used by the rating agencies. Necessary when the company is not rated by a rating agency. Also called synthetic rating. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>In the money </b></td>
                                        <td>An option is in the money when the price of the underlying asset is above/below the strike price for call option and put option respectively (meaning there is some intrinsic value). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Incentive contracting </b></td>
                                        <td>Incentive contracting hypothesis tries to link the maturity structure of debt with a company's growth prospects. Specifically, some researchers find that high-growth companies tend to have more short-term debts, while others do not find enough evidence for that. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Income </b></td>
                                        <td>See sales. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Income statement </b></td>
                                        <td>The income statement is a document showing all wealth-creating revenues and wealth-destroying charges. There are two major income statement formats: the by-nature income statement format and the by-function income statement format. Also called profit and loss account (or P&amp;L). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Income stock </b></td>
                                        <td>Income stocks are stocks with relatively stable prices and with returns mostly from dividends. Also called yield stock. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Incoterms </b></td>
                                        <td>Incoterms are the standardised trade terms used in import/export contracts. Incoterms are published by the International Chamber of Commerce. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Incremental project </b></td>
                                        <td>An incremental project is an imaginary project with cash flows equal to the difference between the cash flows generated by a large-scale project and by a small-scale project. The NPV and IRR of an incremental project are looked at when choosing between a large and small project. If NPV is positive and/or IRR is higher than the required rate of return, then the large project should be chosen. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Indenture </b></td>
                                        <td>Indenture is the issue contract for a financial security. It is usually drafted by an investment bank (see investment banking). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Index management </b></td>
                                        <td>Index management seeks to replicate the performance of a market index. Index trackers seek to replicate an index as closely as possible. This is the preferred investment of those who believe in efficient markets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Index trackers </b></td>
                                        <td>See index management. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Index-linked securities </b></td>
                                        <td>Index-linked securities are securities with coupons (see coupon rate) indexed to any index or price, provided that it is clearly defined from a contractual standpoint. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Indirect finance </b></td>
                                        <td>See financial system. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Indirect method </b></td>
                                        <td>When using the indirect method, the firm is first valued as a whole, to arrivae at the enterprise value. The value of equity is then obtained by subtracting net debt from the enterprise value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Indirect valuation method </b></td>
                                        <td>See indirect method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Industrial synergy </b></td>
                                        <td>Industrial synergy is a synergy derived from the improvement in the manufacturing activities of the acquired company. See also synergy. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Industry risk </b></td>
                                        <td>Industry risk refers to the impact that the state's industrial policy can have on the performance of a specific industry. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Inflation </b></td>
                                        <td>Inflation is a general rise in prices. Particularly when it is high, inflation distorts company earnings because it acts as an incentive for them to overinvest and overproduce. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Inflation risk </b></td>
                                        <td>Inflation risk is the risk that the investor will recover his investment with a depreciated currency, i.e. that he will receive a return below the inflation rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Information cascade </b></td>
                                        <td>See herding instinct. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Informational efficiency </b></td>
                                        <td>Informational efficiency of a financial system refers to the ability of a market to fully and rapidly reflect new relevant information. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Informational mimicry </b></td>
                                        <td>Informational mimicry means imitating others because they supposedly know more. It constitutes a rational response to a problem of dissemination of information, provided the proportion of imitators in the group is not too high. See also mimicry. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Initial public offering, IPO </b></td>
                                        <td>Initial public offering consists in selling the shares of a company to the market for the first time, i.e. to a very large pool of investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Inside shareholders </b></td>
                                        <td>Inside shareholders are shareholders who also perform a role within the company, usually with management responsibilities. See also outside shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Institutional investors </b></td>
                                        <td>Institutional investor is an organisation whose primary purpose is to invest assets owned by the organisation or entrusted to it by others. Typical institutional investors are banks, pension funds, insurance companies, mutual funds and university endowments. See also retail investors and investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Insurance </b></td>
                                        <td>Insurance, one of the financial risk management forms, allows companies to pay a premium to a third party, which assumes the risk if that risk materialises. If it does not, companies can benefit from a favourable trend in the parameter covered (exchange rate, interest rates, solvency of a debtor, etc.). Conceptually, insurance is based on the technique of options; the insurance premium paid corresponds to the value of the option purchased. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intangible asset </b></td>
                                        <td>See intangible fixed asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intangible capital </b></td>
                                        <td>Intangible capital is the sum of the company's intangible assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intangible fixed asset </b></td>
                                        <td>An intangible fixed asset is a non-physical fixed asset. Intangible fixed assets include goodwill, patents, brands, market shares, etc. Can also be called intangible assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interchangeability </b></td>
                                        <td>See fungibility. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest </b></td>
                                        <td>Interest is the cost of borrowing money; the price that a lender charges a borrower for the use of the lender's money. See also interest rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest charge </b></td>
                                        <td>An interest charge is a charge incurred by the company to service its debt over the a period. It is calculated pro rata to the amount of debts outstanding at the interest rate on every category of borrowing. See also financial expense. Also called interest expense. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest cost - pensions </b></td>
                                        <td>Interest cost is the increase in the present value of the pension payments due at the balance sheet closing date since last year due to the passage of time. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest cover </b></td>
                                        <td>EBIT divided by net financing costs; indicates the number of times operating income will cover net financing costs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest expense </b></td>
                                        <td>See interest charge. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest rate </b></td>
                                        <td>The interest rate is interest expressed as an annual percentage rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest rate option </b></td>
                                        <td>An interest rate option is an option on the interest rate on a specific borrowing. Main forms of interest rate options: caps, floors, collars. They are used to hedge interest rate risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest rate risk </b></td>
                                        <td>The holder of financial securities is exposed to the risk of interest rate fluctuations (when interest rates fall/rise, the price of a financial security usually rises/falls). Even if the issuer fulfils his commitments entirely, there is still the risk of a capital loss, or at the very least, an opportunity loss. See also coupon reinvestment risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest rate swap rate, IRS rate </b></td>
                                        <td>The Interest Rate Swap rate is one of the main reference rates. The convention in the market is for the swap market makers to set the floating side - normally at EURIBOR - and then quote the fixed rate that is payable for that maturity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest rate swap, IRS </b></td>
                                        <td>An interest rate swap contract consists in exchanging two types of borrowings (different currencies, fixed-rate versus floating rate, etc), usually without the actual exchange of the principals. The most common interest rate swap contract indicates the fixed interest rate that will equate the present value of the fixed-rate payments (see fixed-rate debt security) with the present value of the floating-rate payments (see floating-rate debt security). An interest rate swap can be seen as a portfolio of long-term forward rate agreements. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interest-bearing current account </b></td>
                                        <td>An interest-bearing current account is the simplest way to earn interest on cash. Nevertheless interest paid by banks on such accounts is usually significantly lower than what the money market offers. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Interim interest payments </b></td>
                                        <td>These are interest expenses on capital borrowed to finance production. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intermediated debt </b></td>
                                        <td>Intermediated debt is a debt raised from the banks. See also intermediation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intermediation </b></td>
                                        <td>Intermediation supposes the existence of financial institutions like banks, mutual funds, insurance companies, etc, that collect excess financial resources from various economic agents to invest them in the securities issued by the economic agents with the financing needs. See also financial system. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Internal capital </b></td>
                                        <td>Internal capital is represented by the cash flows generated internally. Generally speaking, it is the periodical income that is not distributed to shareholders. See also internal financing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Internal financing </b></td>
                                        <td>A company is financed internally when it ensures its development without using external financial resources. Even if internal financing is perceived favourably by the partners of the company, and protects the latter from risks related to an excessive debt burden, internal financing can become harmful when it is used abusively. Its explicit cost being zero, internal financing can encourage not very profitable investment projects and thus cause the impoverishment of shareholders. Only the reinvestment of profits at a rate of return at least equal to cost of equity makes it possible to preserve the value of the reinvested profits. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Internal growth model </b></td>
                                        <td>The internal growth model establishes a direct link between the business' growth rate and the growth rate of capital employed: g= (ROCE + (ROCE-i) x D/E) x (1-d), where g is the growth rate of company's capital employed at constant capital structure (defined by D (debt) divided by equity (E)) and constant ROCE (return on capital employed), with d being the dividend payout ratio. In the formula above the i represents the after-tax cost of debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Internal rate of return, IRR </b></td>
                                        <td>The discounting rate that makes net present value equal to zero is called the internal rate of return or yield to maturity (the IRR is applied to capital expenditure and the YTM - to financial securities). IRR is used in investment choice: if the IRR of the investment is higher than the required rate of return, then the investment should be realised. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>International bond </b></td>
                                        <td>See Eurobond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intra-annual dividend </b></td>
                                        <td>See advance dividend. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intra-group transactions </b></td>
                                        <td>Intra-group transactions are the transactions between the companies of the group. These transactions must be removed from the consolidated accounts, so as not to inflate the net income of parent company and of the companies of the group. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intrinsic risk </b></td>
                                        <td>See specific risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intrinsic value </b></td>
                                        <td>The positive difference between the price of the underlying asset and the option's strike price is called the intrinsic value of an option. For a put option, it is the opposite. By definition, intrinsic value is never negative. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intrinsic value - option </b></td>
                                        <td>The difference between the price of the underlying asset and the option's strike price is called the intrinsic value of an option. For a put option, it is the opposite. By definition, intrinsic value is never negative. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Intrinsic value - share </b></td>
                                        <td>Intrinsic value is the value derived from the DCF model or DDM model. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Inventories </b></td>
                                        <td>Inventories represent the temporary assets created as part of the business cycle. Businesses may transfer to inventories purchases made in the current period for consumption in future operating cycles. Inventories are shown on the balance sheet. There are inventories of raw materials, goods for resale, products and work in progress, finished products. See also days' inventory ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Inventories valuation methods </b></td>
                                        <td>Inventories valuation methods include weighted average cost, LIFO, FIFO, and identified purchase cost. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Inverse floaters </b></td>
                                        <td>Inverse floaters are floating-rate debt securities (or variable-rate debt securities) with the coupon rate changing in the opposite direction to the change in market interest rates (those are usually called reference rates). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Invested capital </b></td>
                                        <td>Invested capital is the sum of shareholders' equity and net financial debt. Also called capital invested. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment </b></td>
                                        <td>Investment is an outlay expected to increase operating cash flows in the future. Investments are carried out from a long-term perspective and have a longer life than that of the operating cycle. Unlike charges, investments are not destroyed in the operating cycle. Investment represents abstinence with a view of increasing future receipts. The increase must be sufficient to ensure the forecasted return on investment. Investment is a fundamental process in the life of a company, engaging it for a long period. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment banking </b></td>
                                        <td>Investment banking facilitates companies' direct access to capital markets. Performs three essential functions: access to equity and debt markets; merger and acquisition advisory services; and asset management. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment cycle </b></td>
                                        <td>Investment cycle covers the period, usually spanning several business cycles, from the investment till it stops generating cash flows. It includes capital expenditures, disposals of fixed assets, and changes in long-term investments (i.e. financial assets). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment decision principles </b></td>
                                        <td>Any well-advised investment decision must comply with the following six principles: consider cash flows rather than accounting data; reason in terms of incremental cash flows, considering only those associated with the project; reason in terms of opportunity; disregard the type of financing; consider taxation; and is above all, be consistent. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment grade </b></td>
                                        <td>Ratings between AAA and BBB are referred to as investment grade. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment of funds method </b></td>
                                        <td>Investment of funds method is one of two methods of adjusting the number of shares outstanding for warrants exercise (to compute fully-diluted EPS). This technique assumes that all investors will exercise their warrants, and that the company will place the proceeds in a financial investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment outflows </b></td>
                                        <td>Investment outflows are the cash outflows financing the investments of the company. Investment outflows are also called investment outlays. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investment outlay </b></td>
                                        <td>See investment outflows. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Investors </b></td>
                                        <td>Investors are all entities or people who put money at risk and who expect a return. Retail investors are ordinary people trading for their own account and institutional investors are organisations such as banks, insurance companies, mutual funds, pension funds, etc. that trade large volumes of securities. See also financial investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>IPO </b></td>
                                        <td>See initial public offering. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>IPO discount </b></td>
                                        <td>IPO discount is the phenomenon of a rise in a share price in the days following an IPO and the price that is paid for a negative signal (see signalling theory) sent by the selling shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>IRR </b></td>
                                        <td>See internal rate of return. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>IRS </b></td>
                                        <td>See interest rate swap. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>IRS rate </b></td>
                                        <td>See interest rate swap rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Islamic finance </b></td>
                                        <td>Sharia law is not opposed to the centuries old principle of earning a return on money that is lent, but rather on the fixed and predetermined nature of the return (Riba). Under Islamic law, the basis of any return on invested money should be the profitability of the asset being financed by the investment. This should be the sole basis for any earnings. As a matter of principle, it excludes the idea of fixed returns that are disconnected from the performance of the asset financed. \n\nIn other words, Islamic finance is based on the principle of sharing both losses and profits. The main obligation for a financial transaction is that it must be based on a tangible asset so that the losses and profits generated by this asset can be shared. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Issue at a discount </b></td>
                                        <td>An issue at a discount takes place when the issue price is lower than the nominal value of a financial security. This notion is especially important for debt securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Issue at a premium </b></td>
                                        <td>Issue at premium takes place when the issue price is higher than the nominal value of a financial security. This notion is especially important for debt securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Issue at par </b></td>
                                        <td>Issue at discount takes place when the issue price is equal to the nominal value of a financial security. This notion is especially important for debt securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Issue discount </b></td>
                                        <td>An issue discount is a discount on the fair price offered with the placement of securities on the market. It is reflected in the almost immediate rise of the security price following the placement. Issue discounts are large for IPOs and nil for bonds. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Issue price </b></td>
                                        <td>The issue price is the price at which a financial security is issued. It is the price investors pay for each bond, share, warrant, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Issuers and holders prefer the term High yield bonds. </b></td>
                                        <td></td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Istisna'a </b></td>
                                        <td>This is an agreement under which one of the parties (Moustasni'i) requests the other party (Snai'i) to manufacture or build an asset which is paid for in advance, in instalments or on completion. This is a variation which is similar to the Salam contract, except that the object of the transaction is the delivery of finished products that have undergone a transformation process, and not goods purchased as is. \nIstisna'a thus provides medium-term financing to cover financing requirements for the manufacture, construction or supply of finished products. \n </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreJ"></A>
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - J</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>January effect </b></td>
                                        <td>January effect is the systematic outperformance of small stocks with respect to large stocks during January. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Joint lead manager </b></td>
                                        <td>Joint lead managers play an important role, but do not usually serve as bookrunners. See also lead manager. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Joint venture </b></td>
                                        <td>A joint venture is the company controlled jointly by a limited number of partners. The key factors determining joint control are: i) a limited number of partners sharing control (without any partner able to claim exclusive control), and ii) a contractual arrangement outlining and defining how this joint control is to be exercised. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Joint-lead </b></td>
                                        <td>See joint lead manager. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Junior bond </b></td>
                                        <td>Junior bonds are high-yield bonds issued to finance LBOs, provided the LBO transaction is sufficiently large (in practice the lower limit is around &euro;100m). See also junior debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Junior debt </b></td>
                                        <td>Junior debt is one of the types of debt used to finance an LBO transaction. It is repaid after the senior debt has been amortised (see amortisation of the loan). Also called subordinated debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Junk bonds </b></td>
                                        <td>Junk bonds are the corporate securities that in the mid-1970s lost their investment grade status due to a fundamental deterioration in the quality of the operating and financial performance of their issuers (also known as "fallen angels"). Since the late 1970s, this market has begun to include more newly issued or original issues of emerging or continuing growth companies, with a credit rating of BB or lower. </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreK"></A> 
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - K</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Key performance indicators </b></td>
                                        <td>Key performance indicators help measure the value drivers of the company. Can be either operating or strategic measures, for example in:\npharmaceutical companies: R&amp;D pipeline; \n-packaged food division: market share; \n-retailers: number of stores opened in a given year or number of new product categories introduced. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Kicker </b></td>
                                        <td>Kicker is a right (see subscription right), warrant, or some other feature added to a debt instrument to make it more desirable to potential investors. Also called sweetener. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Knock-in/out </b></td>
                                        <td>See barrier option. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>KPI </b></td>
                                        <td>See key performance indicators. </td>
                                      </tr>
                                    </table>
                                    <A name="lettreL"></A>
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - L</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>L/C </b></td>
                                        <td>See letter of credit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Large cap </b></td>
                                        <td>Large caps (short for capitalisation) are the biggest companies by market capitalisation in a given market. See also micro-cap, mid-cap and small cap. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Last in, first out </b></td>
                                        <td>See LIFO. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LBO </b></td>
                                        <td>See leveraged buy-out. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LBU </b></td>
                                        <td>See leveraged build-up. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lead </b></td>
                                        <td>See lead manager. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lead arranger </b></td>
                                        <td>See lead manager. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lead bank </b></td>
                                        <td>The lead bank is the bank in charge of arranging the syndicated loan and organising a syndicate of five to twenty banks that will each lend part of the amount </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lead manager </b></td>
                                        <td>The lead manager is responsible for preparing and executing the deal. The lead manager helps choose the member institutions of the syndicate. One (or two) lead managers also serve as bookrunners. The lead manager also takes part in allocating the securities to investors. Can simply be called the lead. For syndicated loans, the lead manager is responsible for the deal design and the structuring of the syndicate. Also called lead arranger/bookrunner. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lease </b></td>
                                        <td>See leasing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leasing </b></td>
                                        <td>Leasing, one of the financing techniques, allows a company to use some of its operating fixed assets (i.e. buildings, plant and other fixed assets) under a rental system. In certain cases, the company may purchase the asset at the end of the contract for a pre-determined and usually very low amount. A leasing transaction is called a lease. There are finance leases and operating leases. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Legal merger </b></td>
                                        <td>A legal merger is a combination of the assets and liabilities of two or more companies into a single legal entity. Very rarely take place between listed companies (see listed security). See also merger. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lending facility </b></td>
                                        <td>See credit facility. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lessee </b></td>
                                        <td>Lessee is an entity using the lease. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lessor </b></td>
                                        <td>Lessor is an entity providing the rental services under the lease. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Letter of comfort </b></td>
                                        <td>Letter of comfort is a letter, in which the parent company commits (or partially commits) to repay on behalf of its subsidiary if the latter is in default. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Letter of credit, L/C </b></td>
                                        <td>See documentary credit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Letter of intent, LOI </b></td>
                                        <td>A letter of intent is essentially the same as a memorandum of understanding (see this term). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Level of control </b></td>
                                        <td>The level of control measures the strength of direct or indirect dependence that exists between the parent company and its subsidiaries, joint venture or associates. This level reflects the percentage of voting rights held by the parent company in these companies. To calculate the level of control, the percentage of voting rights held by all group companies in the subsidiary, the joint venture or the associates are added together, provided that the group companies are controlled directly or indirectly by the parent company. Control is assumed when the percentage of voting rights held is 50% or higher or when a situation of de facto control exists at each link in the chain. It is important not to confuse the level of control with the level of ownership. Level of control is also called percentage control. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Level of ownership </b></td>
                                        <td>The level of ownership is used to calculate the parent company's claims on its subsidiaries, joint ventures or associates. It reflects the proportion of their capital held directly or indirectly by the parent company. It is a financial concept, unlike the level of control, which is a power-related concept. Level of ownership is also called percentage interest. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leverage </b></td>
                                        <td>See gearing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leverage effect </b></td>
                                        <td>The leverage effect explains a company's return on equity in terms of its return on capital employed and cost of debt. The leverage effect is the difference between return on equity and return on capital employed. Leverage effect explains how it is possible for a company to deliver a return on equity exceeding the rate of return on all the capital invested in the business, i.e. its return on capital employed. When a company raises debt and invests the funds it has borrowed in its industrial and commercial activities, it generates operating profit that normally exceeds the interest expense due on its borrowings. The company generates a surplus consisting of the difference between the return on capital employed and the cost of debt related to the borrowing. This surplus is attributable to shareholders and is added to shareholders' equity. The leverage effect of debt thus increases the return on equity. If the return on capital employed falls below the cost of debt, then the leverage effect of debt shifts into reverse and reduces the return on equity, which in turn falls below return on capital employed.\nLeverage effect is expressed in the following formula: ROE = ROCE + (ROCE - i) ? D/E, where ROE is the return on equity, ROCE is the after-tax return on capital employed, i is the after-tax cost of debt, D- net debt, E - equity. The leverage effect itself is the (ROCE-i) x D/E. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leveraged build-up, LBU </b></td>
                                        <td>A leveraged build-up is a situation of a company bought out via a leveraged buy-out that raises even more debt to acquire the companies in the same sector in order to reinforce the strategic positions. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leveraged buy-out, LBO </b></td>
                                        <td>A leveraged buy-out is the acquisition of all a company's shares financed largely by the borrowed funds. There are different types of LBOs: management buy-out; BIMBO; leveraged build-up. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leveraged lease </b></td>
                                        <td>Leveraged lease is a three-sided arrangement among the lessor, the lessee and the lenders. The principal difference with other leases is that the lender supplies a part of the financing to the lessor - who will use this amount to co-finance the acquisition of the asset - and receive interest payments from the lessor. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leveraged management buy-out </b></td>
                                        <td>See management buy-out. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leveraged recapitalisation </b></td>
                                        <td>A leveraged recapitalisation is a share buyback funded with new debt. Leveraged recapitalisation is also called a leveraged share buyback. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Leveraged share buyback </b></td>
                                        <td>See leveraged recapitalisation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Levered beta </b></td>
                                        <td>See equity beta. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Levered cost of equity </b></td>
                                        <td>Levered cost of equity is the cost of equity of a company with non-zero net debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liabilities </b></td>
                                        <td>Liabilities are the borrowings of any kind that the business may have arranged, e.g. bank loans, supplier credits, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LIBOR, London Interbank Offered Rate </b></td>
                                        <td>LIBOR is one of the main reference rates. LIBOR is the money-market rate observed in London, which corresponds to the arithmetic mean of offered rates on the London banking market for a given maturity (between 1 and 12 months) and given currency (euro, pound sterling, U.S. dollar, etc.). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Life of the bond </b></td>
                                        <td>The life of the bond extends from its issue date to its final redemption date. The life of the bond is called life of the loan when a debt raised from a bank. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Life of the loan </b></td>
                                        <td>See life of the bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lifecycle of financing sources </b></td>
                                        <td>The lifecycle of financing resources reflects the relative importance of different funding sources throughout the life of the company: an industrial venture is initially financed with equity; as the company becomes institutionalised and its risk diminishes, debt financing takes over; this in turn frees up equity capital to be invested in emerging new sectors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LIFFE, Liffe </b></td>
                                        <td>LIFFE stands for London International Financial Futures Exchange. LIFFE is part of the Euronext group. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LIFO, Last in, first out </b></td>
                                        <td>LIFO is one of the inventories valuation methods, which inventory withdrawals at the cost of the most recent addition to the inventory. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Limited share partnerships, LSP </b></td>
                                        <td>A limited share partnership is a company whose share capital is divided into shares, but with two types of partners: several limited partners with the status of shareholders, whose liability is limited to the amount of their investment in the company; and one or more general partners (they are usually senior managers of the LSP), who are jointly and severally liable, to an unlimited extent, for the debts of the company. A limited share partnership introduces a complete separation between management and financial ownership of the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquid Yield Option Notes </b></td>
                                        <td>See LYON. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity </b></td>
                                        <td>1. Liquidity is the ability of a company to meet its payment obligations on time. Liquidity also measures the speed at which assets turn over compared with liabilities. \n2. Liquidity also means cash. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity - assets </b></td>
                                        <td>Assets are regarded as liquid where, as part of the normal operating cycle, they will be monetized in the same year. Thus they comprise (unless the operating cycle is unusually long) inventories and trade receivables. Assets that regardless of their nature (head office, plant, etc.) are not intended for sale during the normal course of business are regarded as fixed and not liquid. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity - balance sheet </b></td>
                                        <td>Liquidity of balance sheet derives from the fact that the turnover of assets is faster than the turnover of liabilities. The maturity schedule of liabilities is known in advance because it is defined contractually. However, the liquidity of current assets is unpredictable (risk of sales flops or inventory write-downs, etc.). Consequently, the clearly defined maturity structure of company's liabilities contrasts with the unpredictable liquidity of its assets. Balance sheet is liquid when for each maturity, there are more assets being converted into cash (inventories sold, receivables paid, etc.) than there are liabilities coming due. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity - investments </b></td>
                                        <td>Liquidity of investments is measured by the classification of their maturity dates. Investments are classified into the short term (less than one year), the medium and long term (i.e. in more than one year) and those that are perpetual. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity - liabilities </b></td>
                                        <td>Liquidity of liabilities is measured by the classification of their due dates. Liabilities are classified into those due in the short term (less than one year), in the medium and long term (i.e. in more than one year) and those that are not due for repayment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity - security </b></td>
                                        <td>Liquidity - security means that the security can be sold and bought in large quantities on the market without significantly influencing the price of a security. Liquidity - security is mainly measured by free float and trading volumes. See also liquidity premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity discount </b></td>
                                        <td>Liquidity discount is a lower valuation applied to illiquid shares. Lack of liquidity may increase volatility of the share price. Therefore investors will discount (see discounting) an illiquid investment at a higher rate than a liquid one. This higher discounting rate will result in the liquidity discount. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity preference theory </b></td>
                                        <td>Liquidity preference theory develops the preferred habitat theory by saying that all investors prefer short-term securities. Therefore, any longer-dated security will necessitate paying a premium to investors buying it. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity premium </b></td>
                                        <td>Among factors used in determining risk, the criteria by which liquidity can be measured (size, free float, transaction volumes, bid-ask spread) are often statistically significant. In other words, liquidity often appears to be one of the factors determining the required return on a security. Liquidity premium due to free float, transaction volumes, bid-ask spread should be separated from the so-called 'size premium'. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity ratios </b></td>
                                        <td>These ratios measure the liquidity of the company. They compare the maturities of assets and liabilities. Most commonly used ratios are current ratio, quick ratio (acid test ratio), and cash ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity risk - company </b></td>
                                        <td>Liquidity risk - company is a risk of an impossibility to meet debt payments at a given point of time. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Liquidity risk - market </b></td>
                                        <td>Liquidity risk - market is the risk of not being able to sell a security at its fair value, as a result either of a liquidity discount or the complete absence of a market or buyers. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Listed security </b></td>
                                        <td>Listed security is a security that has been accepted for trading purposes by a recognised and regulated exchange. See also listing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Listing </b></td>
                                        <td>Listing is the process and rules to be complied with if a security is to be traded on an exchange. See also listed security. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LMBO </b></td>
                                        <td>See management buy-out. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lock up period </b></td>
                                        <td>A shareholder who has sold a large number of shares or a company which has issued new shares is frequently required not to proceed with a supplementary sale/issue of shares for a given period called the lock up period. Most of the time it lasts between 3 and 9 months.\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lockbox system </b></td>
                                        <td>The lockbox system is a cash management technique. Under a lockbox system, the creditor asks its debtors to send their payments directly to a post office box that is emptied regularly by the creditor's bank. The funds are immediately paid into the banking system, without first being processed by the creditor's accounting department. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Locking in future prices or rates </b></td>
                                        <td>Locking in future prices or rates, one of the financial risk management forms, consists in concluding forward transactions, thus eliminating the uncertainty about future prices of the exposed assets or liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LOI </b></td>
                                        <td>See letter of intent. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>London Interbank Offered Rate </b></td>
                                        <td>See LIBOR. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Long (position) </b></td>
                                        <td>When an operator has bought more in an underlying asset than he has sold, he is long (in long position). The market risk on a long position is the risk of a fall in market value of the underlying asset (or an increase in interest rates). See also short (position). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Lookback option </b></td>
                                        <td>Lookback options can be used to buy or sell currencies on the basis of the average exchange rate during the life of the option. The premium is thus lower, as less risk is taken by the seller and the volatility of the underlying is below its average. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Loss rate </b></td>
                                        <td>The difference between the promised rate and the realised rate is called the loss rate attributable to default. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LSP </b></td>
                                        <td>See limited share partnership. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>LYON, Liquid Yield Option Notes </b></td>
                                        <td>LYON - type of hybrid security - is a zero coupon bond that is callable (by the issuer), putable (by the investor), and convertible (see convertible bonds). </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreM"></A> 
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - M</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Majority value </b></td>
                                        <td>Majority value is the value including the control premium for synergies. See also strategic value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Management buy-in </b></td>
                                        <td>See buy-in. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Management buy-out, MBO </b></td>
                                        <td>A management buy-out is a leveraged buy-out undertaken by the existing management together with some or all of the company's employees. See also buy-in. Also called leveraged management buy-out (LMBO). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Management fee </b></td>
                                        <td>1. In a syndicated loan transaction, the management fee is a front-end, flat percentage fee, determined as a percentage of the syndicated loan proceeds. It is split into categories that are proportional to the amounts given by the banks of the syndicate. This fee is divided into a pr&aelig;cipium, underwriting fee, and a residual pool. \n2. In a group, the management fee is the fee charged by a parent company to its subsidiaries in exchange for administrative (or other) services provided to them. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Manager, managing bank </b></td>
                                        <td>Managers (or managing banks) are appointed by the lead bank. The role of managing banks is to help identify and organise a wider contingent of participating banks, or participants, as the final bank lenders. Some of the lending banks contributing major amounts are referred to as co-managers. Also called managing bank. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Managing bank </b></td>
                                        <td>See manager. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mandated lead arranger, MLA </b></td>
                                        <td>Mandated lead arranger is a bank in charge of organising a syndicated loan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mandatory convertible bonds </b></td>
                                        <td>Mandatory convertible bonds are bonds always redeemed in shares of the issuing company; their coupon rate, however, is not linked to the company's earnings performance. Also called bonds redeemable in shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mandatory convertible preferred stock </b></td>
                                        <td>Mandatory convertible preferred stock is a short-maturity preferred security that automatically converts into common stock at maturity. See also convertible preferred stock. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mandatory offer </b></td>
                                        <td>In most countries, when an acquiring company passes a certain threshold or acquires control of the target, it is required by stock exchange regulation to offer to buy back the shares of all shareholders. Such an offer is called a mandatory offer. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Margin </b></td>
                                        <td>Margins represent the ratio of earnings to business volumes (i.e. sales or production). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Margin analysis </b></td>
                                        <td>An analysis of a company's margins is the first step in any financial analysis. It is a key stage because a company that does not manage to sell its products or services for more than the corresponding production costs will ultimately go bankrupt (see bankruptcy). Positive margins alone, however, are not sufficient on their own to create value or to escape bankruptcy (see value creation). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Margin call </b></td>
                                        <td>A clearing house in the derivatives market makes a margin call, i.e. a demand for additional payment, when an operator looks like it may make a loss. The operator's account is thus always in the black by at least the amount of initial deposit. If the operator does not meet a margin call, the clearing house closes out the operator's position and uses the deposit to cover the loss. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Marginal rate of return </b></td>
                                        <td>Marginal rate of return is the rate of return generated by every currency unit of new investments. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market </b></td>
                                        <td>A market is a niche or space in which a business has some industrial, commercial or service-oriented expertise. It is the arena in which the business competes. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market capitalisation </b></td>
                                        <td>Market capitalisation is the market value of a company's equity. It is obtained by multiplying the total number of shares outstanding by the share price. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market expansion </b></td>
                                        <td>Market expansion is the increase in the overall market, as measured in sales of all players in this particular market. Market expansion is one of the phases of the product life cycle. Market expansion is also called market growth. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market financing </b></td>
                                        <td>Market financing solicits funds directly from investors in the financial markets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market growth </b></td>
                                        <td>See market expansion. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market in equilibrium </b></td>
                                        <td>See efficient market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market indicators of value creation </b></td>
                                        <td>Stock market value creation is reflected in two major indicators: Market Value Added and Total Shareholder Return; hence, they are highly sensitive to stock market fortunes. A major weakness with these two measures is that they may show destruction in value because of declining investor expectations about future profits, even though the company's return on capital employed is higher than its cost of capital (see value creation). In the long-term, these indicators converge to economic indicators of value creation. Market indicators of value creation reflect the anticipations of future value creation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market maker </b></td>
                                        <td>A market maker is a market operator which supplies prices for an asset traded on a particular financial market (oil, gold, currencies, financial securities, etc) and is prepared to buy or sell at those stated bid and ask prices. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market multiples </b></td>
                                        <td>Market multiples are the multiples based on a sample of comparable, listed companies that have not only similar sector characteristics, but also similar operating characteristics, such as ROCE and expected growth rates. Given that the multiple is usually calculated on short-term projections, the comparable companies should be listed (see listed security); shares must be liquid and covered by a sufficient number of financial analysts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market plane </b></td>
                                        <td>The market plane model says that the expected return on a security is a linear equation with two parameters (unlike security market line): the market premium and the liquidity premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market portfolio </b></td>
                                        <td>The market portfolio includes all stocks at their market value. The market portfolio is thus weighted proportionally to the market capitalisation of a particular market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market premium </b></td>
                                        <td>See market risk premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market return </b></td>
                                        <td>Market return is the return on market portfolio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market risk </b></td>
                                        <td>Market risk is due to trends in the entire economy, tax policy, interest rates, inflation, etc., and affects all securities. Market risk is the exposure to unfavourable trends in product prices, interest rates, exchange rates, raw material prices or stock prices. Market risk of a security is covariance of the returns on the security and the market return. Market risk represents the portion of risk that cannot be eliminated even after taking advantage of diversification. To varying degrees, market risk affects all securities. Only market risk is remunerated by the stock market. The market risk of a financial security is frequently expressed in terms of its sensitivity to market fluctuations. Market risk is also called systematic risk or undiversifiable risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market risk - strategic positioning of the company </b></td>
                                        <td>Market risk measures the risk of fall in sales of the company's product. Market risk varies according to whether the product in question is original equipment or a replacement item, the latter characterised by higher risk. Market risk also depends on the nature of barriers to entry to the company's market and whether or not alternative products exist. The analysis of market risk is very important in a project financing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market risk premium </b></td>
                                        <td>Market risk premium is the excess return over the risk-free rate (expected return on the market - risk-free rate) expected by the investors investing in the market portfolio. Market risk premium is also called equity risk premium or market premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market share </b></td>
                                        <td>The position held by a company in its market is reflected by its market share, which indicates the share of business in the market (in volume or value terms) achieved by the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market value </b></td>
                                        <td>Market value is the current price at which investors buy or sell a given asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market value added, MVA </b></td>
                                        <td>Market value added represents the difference between the value of equity and net debt, and the book value of capital employed. With net debt often taken at its book value, the MVA becomes the difference between the market capitalisation and the book value of shareholders' equity. MVA is expressed in currency units. Market value added is one of the market indicators of value creation. MVA, and particularly any change in MVA, constitutes a more relevant measure of value than just developments in share price. MVA assesses increase in value with regard to the capital invested. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Marketable securities </b></td>
                                        <td>Marketable securities are securities that are easily sold or that can be readily converted into cash such as government bonds or commercial paper. Marketable securities are short-term financial investments of a company. They are usually traded on the money market, with stock market being much riskier, given the requirement of easy selling without capital losses. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Market-based economy </b></td>
                                        <td>In a market-based economy, companies cover most of their financing needs by issuing financial securities (shares, bonds, commercial paper, etc.) directly to investors. Thus, a market-based economy is characterised by direct solicitation of investors' funds. Also called capital market economy. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mass production </b></td>
                                        <td>Mass production, one of the production models, is suitable for products with a low unit cost, but gives rise to very high working capital owing to the inventories of semi-finished goods that provide its flexibility. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Master credit agreement </b></td>
                                        <td>Master credit agreement is a confirmed credit line between several banks offering a group (and by extension its subsidiaries) a raft of credit facilities covering: overdrafts, commercial credit lines, back-up lines, foreign currency advances, etc. These master credit agreements take the form of a contract and give rise to an engagement commission (see also commitment fee) on all credits committed by banks, in addition to the contractual remuneration on each line drawn down. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Matching hypothesis </b></td>
                                        <td>Matching hypothesis explains the existence of some hybrid securities by associating the profile of operating cash flows with that of financial outflows on these securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Matching principle </b></td>
                                        <td>Matching principle consists of matching the profile of assets (duration, currencies, fixed rate / floating rate) with the profile of liabilities, so that cash outflows are matched by the cash inflows. Matching principle is also called hedging principle or cash flow matching approach. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Material adverse change clause </b></td>
                                        <td>Material adverse change clause, a part of every merger or acquisition transaction, is intended to protect buyers from a dramatic short-term deterioration in the target company's business. Gives a buyer the right to terminate the agreement before its completion or at least to renegotiate its terms, if events occur that are detrimental to the business/assets of the target company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Maturity </b></td>
                                        <td>Maturity is the redemption date of a financial security. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Maturity mismatch </b></td>
                                        <td>If, for a given maturity, cumulative assets are less than cumulative liabilities, the company will be unable to meet its obligations unless it finds a new source of funds. This deficiency is called the company's maturity mismatch, similar to that of a financial institution that borrows short-term funds to finance long-term assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MBI </b></td>
                                        <td>See buy-in. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MBO </b></td>
                                        <td>See management buy-out. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>McDonough ratios </b></td>
                                        <td>See capital adequacy ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Medium term note, MTN </b></td>
                                        <td>Medium term note is essentially a plain vanilla debt security, generally with a fixed coupon (see coupon rate) and maturity date. MTNs represent senior, unsecured, investment grade debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Memorandum of understanding, MOU </b></td>
                                        <td>When a framework for private negotiations has been defined, a memorandum of understanding is often signed to open the way to a transaction. A memorandum of understanding is usually a non-binding agreement. Also called letter of intent. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Merger </b></td>
                                        <td>A merger consists in combining two or more companies, generally by offering the shareholders of one company securities of the other company in exchange for the surrender of their shares. Often called mergers, these business combinations are, however, almost always acquisitions. Can take form of a legal merger, asset contribution, and contribution of shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mezzanine debt </b></td>
                                        <td>Mezzanine debt is the highly subordinated debt that fits between subordinated debt and equity. Mezzaniners are repaid only after all other subordinated debt claims have been settled. Mezzaniners are often members of management. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mezzaniner </b></td>
                                        <td>Mezzaniner is an investor or lender in/of mezzanine debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Micro-Cap </b></td>
                                        <td>Micro cap stands for micro capitalisation. These are the smallest companies by market capitalisation in a given market. See also large cap, mid-cap and small cap. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Microcredit </b></td>
                                        <td>Micro-finance is thus aimed at people who do not have access to traditional financial system, in other words, at the very poorest members of society. This definition covers a large section of the population of emerging economies as well as the most underprivileged members of western societies. Micro-finance works on the basis of the same logic as the traditional system. The difference lies in the size of the loans granted. The average amount of a micro-loan in Asia or Africa is around &euro;300 (and can be for as little as &euro;10), in Eastern Europe it is usually just over &euro;1,000 and in Western Europe around &euro;2,500. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Microfinance </b></td>
                                        <td>Micro-finance is aimed at people who do not have access to traditional financial system, in other words, at the very poorest members of society. This definition covers a large section of the population of emerging economies as well as the most underprivileged members of western societies. Micro-finance works on the basis of the same logic as the traditional system. The difference lies in the size of the loans granted. The average amount of a micro-loan in Asia or Africa is around &euro;300 (and can be for as little as &euro;10), in Eastern Europe it is usually just over &euro;1,000 and in Western Europe around &euro;2,500. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mid-Cap </b></td>
                                        <td>Mid-cap stands for middle capitalisation. These are average-sized companies by market capitalisation in a given market, smaller than large caps but larger than small caps. See also micro-cap and small cap. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mimicry </b></td>
                                        <td>Mimicry is the tendency to imitate the behaviour of other investors. There is normative mimicry, whose impact is limited, informational mimicry, and self-mimicry. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Minimum-price offering </b></td>
                                        <td>Under minimum-price offering a number of shares are offered to retail investors at a certain price. The shares will not be sold below this set price. Buyers place orders and specify a floor price. The shares are then allocated according to these orders </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Minority discount </b></td>
                                        <td>Minority discount is the discount sometimes applied to the valuation of minority shareholders' stakes. This discount is theoretically unjustified, because all categories of shareholders have the same right to cash flows of the company. Nonetheless, a majority value does exist. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Minority interests </b></td>
                                        <td>Minority interests represent the share attributable to minority shareholders in the shareholders' equity and net income of subsidiaries consolidated by full consolidation method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Minority shareholder </b></td>
                                        <td>Shareholders holding less than the blocking minority (if such a concept exists in the country) of a company that has another large shareholder have a limited number of options open to them. They cannot change the company objects or the way it is managed. At best, they can force compliance with disclosure rules, call for an audit or an extraordinary general meeting of shareholders. Minority shareholders can protect their interests by concluding a shareholders' agreement with other shareholders. Under these contracts, the sale of the shares of one shareholder will be coordinated with the others (pre-emptive rights, call/put agreements, etc). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Minority value </b></td>
                                        <td>Minority value is a term sometimes used to describe the value of a company without the value of synergies. Minority value is in the fact the value obtained after the stand-alone valuation. See also majority value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MIRR </b></td>
                                        <td>See modified internal rate of return. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MLA </b></td>
                                        <td>See mandated lead arranger. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Model risk </b></td>
                                        <td>Model risk arises when the model's assumptions do not exactly correspond to reality. For example, the Black &amp; Scholes model is based on log-normal distribution. Such assumption eliminates the possibility of a market crash almost completely, making it necessary to adjust the model for the probabilities of extreme market developments. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Modified duration </b></td>
                                        <td>The modified duration of a bond measures the percentage change in its price for a given change in interest rates. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Modified internal rate of return, Modified IRR, MIRR </b></td>
                                        <td>MIRR is the rate of return that yields an NPV of zero when the initial outlay is compared with the terminal value of the project's net cash flows reinvested at the required rate of return. MIRR can be used to compare projects of different length. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Modified IRR </b></td>
                                        <td>See modified internal rate of return. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Modigliani-Miller theorem </b></td>
                                        <td>Modigliani-Miller theorem, put forward in 1958, showed that in perfect markets and in the absence of taxation there is no such thing as an optimal capital structure; the overall cost of capital remains the same regardless of the firm's debt policy. Thus, the value of the levered company is equal to the value of the unlevered company. This is the first proposition of the Modigliani-Miller theorem. Second proposition of the Modigliani-Miller theorem states that the cost of equity in a world without taxes rises with the increase in leverage. It can be computed as follows: KE = K0 + (K0-KD) x VD/VE, where KE is the cost of equity, K0 is the cost of equity of an all-equity financed company, KD is the cost of debt, VD is the value of debt, and VE is the value of equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Momentum </b></td>
                                        <td>When the positive news about a company's share is reflected only gradually, a pattern of ever increasing share price forms. This pattern is called a stock-price momentum, since positive initial returns are followed by the other positive returns in the mid-term. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Monetary items </b></td>
                                        <td>Monetary items are cash and receivables or payables denominated in foreign currency and determined in advance. See also temporal method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Money market funds </b></td>
                                        <td>Money market is the financial market in which funds are borrowed or lent for short periods (usually for less than one year). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Money-market funds </b></td>
                                        <td>Money-market funds are mutual funds that issue or buy back their shares at the request of investors at prices that must be published daily. The return on a money-market fund arises on the daily appreciation in the net asset value of a fund. This return is similar to that of the money market. Money market funds are also called cash mutual funds. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Monte Carlo simulation </b></td>
                                        <td>Monte Carlo simulation is an elaborate variation of scenario analysis, based on sophisticated mathematical tools and software. It consists of isolating a number of the project's key variables or value drivers, such as asset turnover or margins, and allocating a probability distribution to each. All the assumptions about distributions of possible outcomes are entered into a spreadsheet. The model then randomly samples from a table of pre-determined probability distributions in order to identify the probability of each result. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Moral hazard </b></td>
                                        <td>Moral hazard is a situation of a totally unbalanced group corporate structure, when debt no longer acts as an incentive for management. Corporate managers will be tempted to continue expanding using debt until the group becomes too big to fail. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MOU </b></td>
                                        <td>See memorandum of understanding. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MTN </b></td>
                                        <td>See medium term note. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MTN programme </b></td>
                                        <td>MTNs are usually issued as a part of an MTN programme, which is a series of issues spread out over time, matching the issuer's funding requirements. An MTN programme gives the issuer the right to issue in a given period of time with a standardised single legal documentation (such as shelf registry) </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Mudharaba </b></td>
                                        <td>This is an agreement between a financial institution and a company, with the financial institution acting as provider of funds and the company as the manager, for investing in a pre-determined activity or class of assets, which grants each party a share of the earnings which is determined at the time of the investment. The manager does not share in any financial losses which are borne solely by the provider of capital. The manager's losses are deemed to be the opportunity cost of the manager's workforce which has failed to generate sufficient revenues. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Multiple voting shares </b></td>
                                        <td>As an exception to the general rule, under which the number of votes attributed to each share must be directly proportional to the percentage of the capital it represents (principle of one share, one vote), in some countries companies have the right to issue multiple voting shares. Multiple voting shares give the right to more votes than is warranted by the amount of capital represented by these shares. Issue of such shares allows existing shareholders to strengthen their control over the company. See also dual class shares. Also called shares with multiple voting rights. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Multiple(s) </b></td>
                                        <td>See multiples method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Multiples method </b></td>
                                        <td>The multiples method for valuing a company is based not on the value of operating assets and liabilities per se, but on the overall returns they are expected to generate. The value of a company is derived by applying a certain multiplier to the company's profitability parameters. There are two multiples methods: based on market multiples and based on transaction multiples. Multiples method is also called the peer comparison method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Multiplier effect </b></td>
                                        <td>Multiplier effect, when applied to shareholders' structure, makes it possible to build control over a company with small cash investments. This effect is used by creating holding companies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Murabaha </b></td>
                                        <td>The issuing financial institution plays a role of sales intermediary, buying goods needed by clients and then selling them on later at a profit. This is similar to securitisation and nominee agreements </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Musharaka </b></td>
                                        <td>This is a partnership between a financial institution and a company under which both the financial institution and the company invest in the project. The financial institution and its partner share the profits and the losses on the basis of pre-agreed ratios. This is very similar to the way industrial and financial players pool their resources in order to launch new ventures. \nThere is a second type of Musharaka known as diminishing Musharaka under which the company agrees to buy back the share of the financial institution after a given period. This is very similar to a nominee arrangement. \n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>MVA </b></td>
                                        <td>See market value added. </td>
                                      </tr>
                                    </table>
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - N</span></td>
										  </tr>

                                      <tr>
                                        <td valign="top"><b>NASDAQ </b></td>
                                        <td>NASDAQ stands for the National Association of Securities Dealers Automated Quotation, which is the electronic quotation system behind the eponymous market for innovative American SMEs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Natural disaster risks </b></td>
                                        <td>Natural disaster risks include storms, earthquakes, volcanic eruptions, cyclones, tidal waves, etc., which destroy assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Natural hedge </b></td>
                                        <td>Natural hedge consists in creating conditions in which an exposure to a risk is offset or partly offset by an opposite exposure to that same risk (for example, shifting production facilities, working capital, or borrowing arrangements to an alternative currency area to offset undesirable cash flow exposures). See also self-hedging. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>NAV </b></td>
                                        <td>See net asset value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Negative capital employed </b></td>
                                        <td>Companies with negative capital employed usually have a highly negative working capital exceeding the size of their net fixed assets. This type of company typically posts a very high return on equity. Return on capital employed of these companies should take into account income from short-term financial investments (included in earnings) and the size of these investments (included in capital employed): ROCE = (EBIT + Financial income) ? (1 - corporate income tax) / (Capital employed + Short-term financial investments). Such companies factor their financial income into the selling price of their products and services. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Negative covenant </b></td>
                                        <td>Negative covenants can limit the dividend payout, prevent the company from pledging certain assets to third parties (negative pledges) or from taking out new loans or engaging in certain equity transactions, such as share buybacks. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Negative working capital </b></td>
                                        <td>The operating cycles of companies with negative working capital are such that, thanks to a favourable timing mismatch, they collect funds prior to disbursing certain payments. There are two basic scenarios: 1) supplier credit is much greater than inventory turnover (see days' inventory ratio), while at the same time, customers pay quickly, in some cases in cash; 2) customers pay in advance. A low or negative working capital is a boon to a company looking to expand without recourse to external capital. Efficient companies, in particular in mass-market retailing, all benefit from low or negative working capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net asset value </b></td>
                                        <td>This is a solvency-oriented concept that attempts to compute the funds invested by shareholders by valuing (see also valuation) the company's various assets after deduction of liabilities. Net asset value is an accounting and in some instances tax-related term, rather than a financial one. Synonymous with book value of shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net asset value of a fund, NAV </b></td>
                                        <td>The net asset value of a fund is a value of one share of the fund. It is equal to the total value of assets (less charges and expenses) divided by the number of shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net assets </b></td>
                                        <td>Net assets are an accounting figure, obtained by subtracting all debts (both existing and potential) from all assets. Net assets are a synonym for the book value of shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net assets per share </b></td>
                                        <td>See shareholders' equity per share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net debt </b></td>
                                        <td>See net financial debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net financial debt </b></td>
                                        <td>Net financial debt is the total financial debt net of short-term financial investments. Net financial debt and shareholders' equity together represent the capital invested in the company (see invested capital). Also called net debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net financial expense/income </b></td>
                                        <td>Net financial expense is financial expense net of financial income. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net fixed assets </b></td>
                                        <td>Net fixed assets are gross fixed assets minus cumulative depreciation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net income </b></td>
                                        <td>Net income is profit after non recurrent items and tax. Net income is one of the most widely used accounting indicators of value creation. Net income is also called profit or earnings or net profit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net pension costs </b></td>
                                        <td>Net pension costs on the income statement for a given year are mainly composed of a service cost; an interest cost; an expected return on assets; an amortisation of unrecognised profit or loss on the pension plan assets if they exceed 10% of the projected benefit obligation or the fair value of plan assets, whichever is greater. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net present value </b></td>
                                        <td>Net present value, or NPV, of a financial security is the difference between present value of this security and its market value; NPV changes in the direction opposite to the change of the discounting rate. In an efficient market, NPVs are zero. NPV can be applied to investment projects also. It represents the value of cash flows linked to the investment discounted (see discounting) at the rate of return required by the market for the level of risk of the investment. Hence, NPV represents the amount of value creation anticipated for this investment.\nNPV formula runs as follows:\n n\nNPV = - V0 + ? Fi/(1 + k)n ,\ni=1\nwhere Fi is the cash flow of each period, V0 - the initial investment, t - discounting rate, n - duration of the investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net profit </b></td>
                                        <td>See net income. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net worth </b></td>
                                        <td>Net worth is the difference between total assets and total liabilities, i.e. shareholders' equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Net worth test </b></td>
                                        <td>The net worth test consists in checking the amount of net worth of a company to qualify it as a qualified institutional buyer under Rule 144A. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Netting </b></td>
                                        <td>Netting is the setting off intra-group transactions in order to avoid booking the same operations twice. For operations that do not impact on the net income of the group. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>New equity puzzle </b></td>
                                        <td>New equity puzzle is the phenomenon of underperformance of IPOs and SEOs over a 3- to 5-year period compared to the rest of the market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Nominal rate </b></td>
                                        <td>See coupon rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Nominal value </b></td>
                                        <td>See face value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Nominee agreement </b></td>
                                        <td>Under a nominee agreement, the "real" shareholder sells his shares to a "nominee" and makes a commitment to repurchase them at a specific price, usually in an effort to remain anonymous. Also called warehousing agreement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non core-assets </b></td>
                                        <td>Assets no longer used in the ordinary business operations of a company. They are likely to be sold in the near future, so the need for cash arise. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non investment grade, non-investment grade </b></td>
                                        <td>See speculative grade. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non recurrent items </b></td>
                                        <td>Non recurrent items are one-off events not expected to be repeated in a normal course of the company's operating cycle, investment cycle, and financing cycle. These items include results of discontinuing operations and all extraordinary items. Also called non recurring items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non recurring items </b></td>
                                        <td>See non recurrent items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non-monetary items </b></td>
                                        <td>Non-monetary items are fixed assets and the corresponding depreciation and amortisation, goodwill, inventories, prepayments, shareholders' equity, investments, etc. See also temporal method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non-operating assets </b></td>
                                        <td>Non-operating assets are the assets not used in the company's business activities, e.g. land, buildings and subsidiaries active in significantly different or non-core businesses. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non-operating working capital </b></td>
                                        <td>Non-operating working capital is due to the timing differences between purchase and payment for capital expenditures, for non-recurrent items, etc. In practice, non-operating working capital is a catch-all category for items that cannot be classified anywhere else. It includes amounts due on fixed assets, dividends to be paid, extraordinary items, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non-recourse discounting </b></td>
                                        <td>Non-recourse discounting is a straight sale of customer receivables, wherein the bank has no recourse to its customer if the bill remains unpaid at maturity. See also discounting with recourse. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Non-voting shares </b></td>
                                        <td>Non-voting shares are shares with no voting right attached to them. As compensation for giving up their voting rights holders of non voting shares usually get preferential treatment regarding dividends (fixed dividend, increased dividend compared to ordinary shareholders). See also dual class shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>NOPAT </b></td>
                                        <td>NOPAT is net operating profit after tax (EBIT after tax). When return on capital employed is calculated on after tax basis, NOPAT is divided by capital employed. The tax rate is a theoretical tax rate, calculated on the base of the company's normalised tax rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>NOPAT multiple </b></td>
                                        <td>The NOPAT multiple is calculated by dividing enterprise value by NOPAT. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Normalised cash flow </b></td>
                                        <td>Normalised cash flow is the cash flow that will be taken as a reference (it can be assumed to be flat or growing) to infinity after the explicit forecast period. Also called normative cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Normalised earnings </b></td>
                                        <td>Normalised earnings are the earnings a given company should generate for its volume of sales on the basis of the normative margin of the company's sector. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Normative analysis </b></td>
                                        <td>Normative analysis represents an extension of comparative analysis. It is based on a comparison of certain company ratios or indicators with rules or standards derived from a vast sample of companies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Normative cash flow </b></td>
                                        <td>See normalised cash flow. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Normative margin </b></td>
                                        <td>Normative margin is an operating margin of x% that a given company in a given sector should achieve. This concept is based on financial theory, which states that in each sector profitability should be commensurate with the sector's risks and that sooner or later, normative margins will be achieved, even though adjustments may take some considerable time. Normative margin gives rise to normalised earnings. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Notes to the accounts </b></td>
                                        <td>Notes to the accounts detail and comment on the information presented in the balance sheet, income statement, and cash flow statement. Notes to the accounts reflect the accounting principles and the facts that can have a significant impact on the judgment of the reader of accounting information. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Notional amount </b></td>
                                        <td>The notional amount is the theoretical amount to which the difference between the guaranteed rate and the floating rate is applied. The notional amount is never exchanged between the buyer and seller of an FRA (see forward rate agreement). The interest rate differential is not paid at the maturity of the underlying loan but is discounted and paid at the maturity of the FRA. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Notional pooling </b></td>
                                        <td>Notional pooling provides a relatively flexible way of exploiting the benefits of cash pooling. With notional pooling, subsidiaries' account balances are never actually balanced, but the group's bank (see concentration bank) recalculates credit or debit interest based on the fictitious balance of the overall entity. This method yields exactly the same result as if the accounts had been perfectly balanced, but the fund transfers are never carried out in practice. As a result, this method leaves subsidiaries' some room for manoeuvre and does not impact on their independence. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>NPV </b></td>
                                        <td>See Net Present Value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>NYSE </b></td>
                                        <td>NYSE stands for New York Stock Exchange. </td>
                                      </tr>
                                    </table> 
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - O</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Off-balance sheet commitments </b></td>
                                        <td>Off-balance sheet commitments are commitments that are not accounted for on the balance sheet. These commitments most often arise on transactions that have not yet been realised. See also contingent assets and contingent liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Off-balance sheet financing </b></td>
                                        <td>Off-balance sheet financing consists in removing assets and/or liabilities from the balance sheet in order to reduce the apparent debt burden or base financing on specific assets, thereby reducing, theoretically, the overall cost of debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Off-balance sheet financing techniques </b></td>
                                        <td>Off-balance sheet financing techniques include discounting of bills of exchange, non-recourse discounting, factoring, leasing and sale-leasebackd, defeasance securitisation and outsourcing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Offering </b></td>
                                        <td>Offering refers to the methods, private or public, by which companies offer or sell securities to investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>OGM </b></td>
                                        <td>See ordinary general meeting of shareholders </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>One on one </b></td>
                                        <td>Private meeting between the CEO or the CFO of a company and one of its (large) shareholders or potential investors. Most of them take place during roadshows.\n\n\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>One to one </b></td>
                                        <td>Private meeting between the CEO or the CFO of a company and one of its (large) shareholders or potential investors. Most of them take place during roadshows.\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating assets </b></td>
                                        <td>Operating assets are all assets used in the company's business activities. See also capital employed. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating balance </b></td>
                                        <td>Operating balances are indicators of the financial and manufacturing performances of a company. These indicators represent the stages of formation of net profit and are very important for financial analysis. They include production, value added, EBIT, EBITDA, cash flow, and net profit itself. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating breakeven </b></td>
                                        <td>Operating breakeven is a function of the company's fixed costs and variable costs that determine the stability of operating profit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating cash flow </b></td>
                                        <td>Operating cash flow is the balance of operating outflows and operating inflows generated by the business cycle of the business. Operating cash flow reflects the cash flows generated by operations during a given period. It represents the cash flow generated by the company's day-to-day operations. Operating cash flow differs from EBITDA by the amount of change in the working capital. It is also equal to cash flow less the change in the operating working capital. Operating cash flow is a concept that depends on how expenditure is classified between operating outlays and investment outlays. Since this distinction is not always clear-cut, operating cash flow is not widely used in practice, with free cash flow being far more popular. Also called cash flow from operating activities or cash flow from operations. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating charges </b></td>
                                        <td>Operating charges represent everything consumed as part of the business cycle to create a product or a service. Also called operating expenses. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating expenses </b></td>
                                        <td>See operating charges. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating income </b></td>
                                        <td>See EBIT. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating inflows </b></td>
                                        <td>Operating inflows represent the cash receipts collected by the company as part of its operating cycle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating lease </b></td>
                                        <td>Operating lease is a lease, which is not a finance lease. The length of an operating lease is shorter than the economic life of the asset. Operating leases are restated as financial debt in consolidated accounts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating leverage </b></td>
                                        <td>Operating leverage links chabge in activity (measured by sales) with change in result (either operating profit or net income). Operating leverage depends on the level and nature of the breakeven point. Higher operating leverage will lead to greater risk for the company. The unlevered beta, or asset beta and the operating leverage are linked because the unlevered beta is determined by both the business in which the firm operates and the operating leverage of the firm. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating liabilities </b></td>
                                        <td>Operating liabilities are a part of operating working capital and are made up of trade payables. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating margin </b></td>
                                        <td>Operating margin is the operating profit (EBIT)/sales ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating outflows </b></td>
                                        <td>Operating outflows represent the cash disbursements made by the company as part of its operating cycle. Also called operating outlay. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating outlay </b></td>
                                        <td>See operating outflows. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating payments </b></td>
                                        <td>Operating payments are equal to perating expenses, except depreciation, amortisation and impairment losses plus the change in inventories of raw materials and goods for resale plus change in trade payables. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating profit </b></td>
                                        <td>See EBIT. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating receipts </b></td>
                                        <td>See operating revenues. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating receipts </b></td>
                                        <td>See operating revenues </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating result </b></td>
                                        <td>See EBIT. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating revenues </b></td>
                                        <td>Operating receipts are equal to Sales for the period + Change in trade receivables over the period. Also called operating receipts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operating working capital </b></td>
                                        <td>Operating working capital is made of: Inventories + Trade receivables - Trade payables. Only the normal amount of operating sources of funds is included in calculations of operating working capital. Unusually long payment periods granted by suppliers should not be included as a component of normal operating working capital. Inventories of raw materials and goods for resale should be included only at their normal amount. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Operational efficiency </b></td>
                                        <td>Operational efficiency of a financial system will enable a company to function on its market with minimal operating costs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Opportunity cost </b></td>
                                        <td>See cost of refunding. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Opportunity cost of capital </b></td>
                                        <td>Opportunity cost of capital is the expected return required by investors from similar investments and companies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Optimal capital structure </b></td>
                                        <td>Optimal capital structure is a capital structure that minimises the cost of capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option </b></td>
                                        <td>An option is a contract between two parties, under which one party gives the other party the right (but not the obligation) to buy from it (a call option) or to sell to it (a put option) an underlying asset at a predetermined price (see strike price), in exchange for the payment of a premium. Options can be in the money, at the money, and out of the money (see these terms). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option model </b></td>
                                        <td>An option model used for valuing a company is based on the asymmetry of rights of creditors and shareholders (see asymmetry - shareholder/creditor). The shareholders' equity of a levered company can be seen as a call option, granted by creditors to shareholders, on the company's operating assets. The strike price is the value of the debt and its maturity is the exercise date. Using this options-based approach, the value of equity can be split into intrinsic value and time value. Intrinsic value is the difference between the present value of capital employed and the debt to be repaid upon maturity. Time value is the hope that when the debt matures, enterprise value will have risen to exceed the amount of the debt to be repaid. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option on option </b></td>
                                        <td>An option on an option gives the holder the right to buy another option. As the value of an option is below the value of the underlying asset, the price of an option on an option will be low. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option to abandon </b></td>
                                        <td>An option to abandon is one of the real options (see this term). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option to defer progress of the project </b></td>
                                        <td>An option to defer progress of the project is one of the real options (see this term). Also called wait and see option. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option to develop or extend the business </b></td>
                                        <td>An option to develop or extend the business is one of the real options (see this term). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option to launch a new project </b></td>
                                        <td>An option to launch a new project is one of the real options (see this term). It can be analysed as a call option on a new business, with the exercise price being the start-up investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option to postpone a project </b></td>
                                        <td>An option to postpone a project is one of the real options (see this term). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Option to reduce or contract business </b></td>
                                        <td>An option to reduce or contract business is one of the real options (see this term). This option can be described as a put option on a fraction of the project, even if the investment never actually materialised. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Order book </b></td>
                                        <td>See book. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Ordinary general meeting of shareholders, OGM </b></td>
                                        <td>At ordinary general meetings of shareholders, shareholders vote on matters requiring a simple majority of voting shares. These include decisions regarding the ordinary course of the company's business: approving the financial statements, payment of dividends, appointment and removal of members of the board of directors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Organised market </b></td>
                                        <td>The term organised market covers all types of exchanges (stock exchange, commodity exchange, currency exchange, etc). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>OTC </b></td>
                                        <td>See over-the-counter market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>OTC market </b></td>
                                        <td>See over-the-counter market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Other operating expenses </b></td>
                                        <td>Other operating expenses comprise outsourcing costs, property or equipment rental charges, the cost of raw materials and supplies that cannot be held in inventory (i.e. water, energy, small items of equipment, maintenance-related items, administrative supplies, etc.), maintenance and repair work, insurance premiums, studies and research costs, external personnel charges, fees payable to intermediaries and professional expenses, advertising costs, transportation charges, travel expenses, the cost of meetings and receptions, postal charges, bank charges (i.e. not interest on bank loans, which is booked under interest expense) and other items of expenditure. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Other operating income </b></td>
                                        <td>Other operating income includes payments received in respect of patents, licences, concessions, representation agreements, directors' fees, operating subsidies received, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Out of the money </b></td>
                                        <td>An option is out of the money when the price of the underlying asset is below or above the strike price for a call option and a put option respectively (intrinsic value is zero). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Outside shareholders </b></td>
                                        <td>Outside shareholders have no links with the company but have a financial interest in its operating performance. See also inside shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Outsourcing </b></td>
                                        <td>Outsourcing, considered as one of the off-balance sheet financing techniques, consists in the company's deliberately reducing itself to a service provider that designs products and finds customers, while assigning production to third parties. In reality, outsourcing is more a change of the business model of the company than an off-balance sheet technique. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Over the counter </b></td>
                                        <td>See over-the-counter market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Overall dilution </b></td>
                                        <td>See apparent dilution. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Overhang </b></td>
                                        <td>Overhang is a problem caused by fear that the arrival of a large number of shares on the market will depress the share price. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Overlay bank </b></td>
                                        <td>Overlay bank is an international banking group providing cash pooling or notional pooling on a multi-national company level. An overlay bank works with local concentration banks in each country. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Over-the-counter market, Over the counter, OTC, OTC market </b></td>
                                        <td>The over-the-counter market is the market outside an organised market, in which transactions are conducted through a telephone or computer network connecting the dealers. </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreP"></A>
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - P</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>P/E ratio, PER, Price-to-earnings ratio </b></td>
                                        <td>P/E ratio, one of the tools most commonly used for valuing a share, is the ratio of the share price to EPS. It can be also obtained by dividing the market capitalisation by the net income. Also called trailing ratio.\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Paper </b></td>
                                        <td>Paper, in financial parlance, means financial securities traded on the market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Paper bill of exchange </b></td>
                                        <td>A paper bill of exchange, one of the payment methods, is a written document, in which the supplier asks the customer to pay the amount due to its bank on the due date. Also called bill of exchange. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Paper promissory note </b></td>
                                        <td>Paper promissory note, one of the payment methods, is a written document, in which the customer acknowledges its debt and undertakes to pay the supplier on the due date. Paper promissory note is a physical proof of the existence of a receivable in the accounts of a supplier. Also called promissory note. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Par value </b></td>
                                        <td>See face value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Parent company regime </b></td>
                                        <td>Under the parent company regime for dividends, dividends received from the associate are not subject to corporate income tax, if a parent company holds a relevant equity stake in an associated undertaking. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pari passu covenant </b></td>
                                        <td>Pari passu covenants are clauses whereby the borrower agrees that the lender will benefit from any additional guarantees the borrower may give on future loans it raises. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Partial commitment </b></td>
                                        <td>Partial commitment is a commitment of a mandated lead arranger(s) contingent on market interest for the syndicated loan in question. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Participant </b></td>
                                        <td>See selling groupe. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Participating preference shares </b></td>
                                        <td>In participating preference shares, the dividend is divided into a fixed and a variable component. The latter is generally set as a function of earnings. See also preference shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Path of wealth, POW </b></td>
                                        <td>Path of wealth measures the growth of one currency unit invested in any given asset, assuming that all proceeds are reinvested in the same asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Payables </b></td>
                                        <td>See trade payables. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Payback period </b></td>
                                        <td>The payback period is the time necessary to recover the initial outlay on an investment. Where annual cash flows are identical, the payback period is equal to: investment/annual cash flow. Payback period criterion emphasises the liquidity of an investment, but not its value. See also discounted payback period. Payback period is also called payback ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Payback ratio </b></td>
                                        <td>See payback period. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pay-in-kind securities (PIK securities) </b></td>
                                        <td>Pay-in-kind or payment-in-kind securities involve investors receiving more bonds in place of cash interest, valued at par value. Those bonds are issued to help fund the big leveraged buy-outs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Payment method </b></td>
                                        <td>Payment methods are used to settle the contractual commitments between suppliers and customers. These methods include: cheque, paper bill of exchange, paper promissory note, electronic bill of exchange, electronic promissory note, transfer, and debit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Payout ratio </b></td>
                                        <td>Payout ratio is the percentage of earnings from a given year that is distributed to shareholders in the form of dividends. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>PBR </b></td>
                                        <td>See price-to-book ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>PDS </b></td>
                                        <td>See priority dividend share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pecking order theory </b></td>
                                        <td>Pecking order theory states that companies prioritise their sources of financing (from internal financing to equity) according to the law of least effort, or of least resistance, preferring to raise equity as a financing means "of last resort". </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Peer comparison method </b></td>
                                        <td>See multiples method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>PER </b></td>
                                        <td>See P/E ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Percentage control </b></td>
                                        <td>See level of control. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Percentage interest </b></td>
                                        <td>See level of ownership. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Percentage of completion method </b></td>
                                        <td>Percentage of completion method consists in recognising at the end of each financial year the sales and profit/loss anticipated on the project in proportion to the percentage of the construction contract completed at that time. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Perfect market </b></td>
                                        <td>See efficient market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Perfect markets theory of capital structure </b></td>
                                        <td>The perfect markets theory of capital structure states that, barring any distortions, there is no such thing as one optimal capital structure. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Permanent financing </b></td>
                                        <td>Permanent financing refers to sources of funds with maturities longer than one year. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Perpetual subordinated loans and notes </b></td>
                                        <td>Perpetual subordinated loans and notes are never redeemable and thus continue to pay interest as long as the borrower remains solvent (see solvency). They have no duration because there is no contractual undertaking for repayment, which may take place when the issuer so wishes. If the issuer is liquidated, noteholders rank for repayment after other creditors (as they are subordinated debts) but before shareholders. Perpetual subordinated loans and notes are also called perpetuals. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Perpetuals </b></td>
                                        <td>See perpetual subordinated loans and notes. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Perpetuity </b></td>
                                        <td>Perpetuity is a constant stream of cash flows without end. Its value can be calculated as follows: PV = F/k, where F is the amount of cash flow, k - the discounting rate.\n The value of a perpetuity growing at a constant rate g can be calculated as follows: PV = F/(k-g), as long as k &gt; g. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pitch </b></td>
                                        <td>Marketing approach by bank of potential client, in order to suggest a possible transaction (capital increase, disposal or acquisition of a business, bond issue, etc.). Generally a meeting is held during which the bank will set out its ideas using a formal presentation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Plain vanilla </b></td>
                                        <td>Plain vanilla is the most basic form of any financial instrument (straight bond, for example). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Poison pill </b></td>
                                        <td>Poison pills are takeover defence measures designed to make the target prohibitively expensive (for example, issuance of new shares at a steep discount to current market price with only existing shareholders allowed to buy them). See also strategic assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Political risk </b></td>
                                        <td>Political risk includes risks created by a particular political situation or decisions by political authorities, such as nationalisation without sufficient compensation, revolution, exclusion from certain markets, discriminatory tax policies, inability to repatriate capital, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pooling of interest method </b></td>
                                        <td>This method has now been abolished by both the U.S. authorities and IASB. It allowed the assets and liabilities of the newly acquired company to be included in the group's accounts at their book value without any goodwill being recorded. The difference between the price paid for the shares and their book value was deducted from the acquiror's equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pooling on demand </b></td>
                                        <td>Pooling on demand is another name for cash pooling. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Portable alpha </b></td>
                                        <td>A fund management technique which seeks to transfer to a portfolio of low risk assets the outperformance (alpha) of another portfolio made up of a high risk asset and put options on the market index of this high risk asset, structured in such a way as to capture only the alpha achieved through the management of this second portfolio (outperformance) </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Portfolio insurance </b></td>
                                        <td>A technique refined by Harry Leland and Mark Rubinstein in 1976 to provide partial protection for a portfolio of shares against a drop in value due to a drop in the market, while at the same time, allowing the portfolio to increase in value when share prices rise. \n\nIt is based on the use of put options on market indices (or a combination of risk-free assets and shares in order to create a synthetic put option) which will hedge the portfolio against risk. \n\nPortfolio insurance requires ongoing mechanical and automated adjustment of the hedging in line with market fluctuations and is based on the assumption that it will always be possible to buy or sell shares, which was not the case at the time of the 1987 crash which it was accused of aggravating. \n\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Position </b></td>
                                        <td>Position is the residual market exposure on a market operator's balance sheet at any given moment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Positive covenant </b></td>
                                        <td>Positive covenants are a borrower's commitments to comply with certain capital structure or earnings ratios, to adopt a given legal structure or even to restructure. Positive covenants are also called affirmative covenants. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>POW </b></td>
                                        <td>See path of wealth. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pr&aelig;cipium </b></td>
                                        <td>The pr&aelig;cipium is the part of the management fee that the lead manager reserves as its remuneration. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pragmatic valuation approach </b></td>
                                        <td>Pragmatic valuation approach values the company by analogy with other assets or companies of the same type. This is the peer comparison method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pre-emption (right of) </b></td>
                                        <td>The right of pre-emption clause gives a category of existing shareholders or all existing shareholders a priority right to acquire any shares offered for sale. Pre-emption right is also called pre-emptive right or pre-emptive subscription right. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pre-emptive action </b></td>
                                        <td>Pre-emptive action takes place when a company immediately reflects expectations of an increase in the cost of a production factor by charging higher selling prices. Pre-emptive action is particularly rapid where no alternative products exist in the short to medium term and competition in the sector is not very intense. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pre-emptive right </b></td>
                                        <td>See pre-emption (right of). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pre-emptive subscription rights </b></td>
                                        <td>See pre-emption (right of). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Preference share </b></td>
                                        <td>Preference share, one of the categories of privileged shares, confers pecuniary advantages in exchange for the total or partial lack of voting rights. These advantages can include: a claim to a greater proportion of earnings than is paid out on other shares, a higher priority in dividend distribution, a cumulative dividend (case of the non-voting PDS), etc. Also called preferred share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Preferential dividend </b></td>
                                        <td>Preferential dividend is an increased dividend, paid out by some companies to reward shareholders who have held shares for a long period. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Preferred habitat theory </b></td>
                                        <td>Preferred habitat theory, proposed in the mid-1960s by Franco Modigliani and Richard Sutch, states that investors prefer certain investment timeframes. Companies that wish to issue securities whose timeframe is considered undesirable, will thus have to pay a premium to attract investors. See also liquidity preference theory. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Preferred securities </b></td>
                                        <td>Preferred securities are broad in scope and refer to convertible bonds, subordinated debt securities, and preference shares without voting rights. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Preferred share </b></td>
                                        <td>See preference share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Premium </b></td>
                                        <td>Premium is the price of an option, paid by the buyer of an option to the seller of an option. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Prepaid expenses </b></td>
                                        <td>Prepaid expenses are charges relating to goods or services to be supplied later. See also accruals. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Prepaid income </b></td>
                                        <td>Prepaid income is the income accounted for before the corresponding goods or services have been delivered or carried out. See also accruals. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Present value </b></td>
                                        <td>See value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Present Value Index, PVI </b></td>
                                        <td>Sometimes there is a strict capital constraint (see capital rationing) imposed on the firm, and it is faced with more NPV positive projects than it can afford. In order to determine which project to pursue, the best formula to use is the Present Value Index. This is the present value of cash inflows divided by the present value of cash outflow: PVI = PV of inflows/PV of outflows. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Price adjustment </b></td>
                                        <td>Price adjustment of a share takes place mechanically during transactions on the capital, which modify its value, such as a free share award or a capital increase with a discount to the value. Price adjustments are necessary to compare share prices before and after operations on the capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Price-To-Book ratio, PBR </b></td>
                                        <td>Price-to-book ratio is the ratio linking the price of the share with equity per share. It is the ratio of market value to book value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Price-to-earnings ratio </b></td>
                                        <td>See P/E ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Principal </b></td>
                                        <td>Principal is the amount of the loan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Principle of prudence </b></td>
                                        <td>The principle of prudence is a key accounting principle. Potential gains in the accounts should not be shown unless they are realised through asset disposals, sales of finished goods, etc, and potential losses should be registered through provisions for the loss in value of inventories, equity and property investments, etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Priority dividend shares (non-voting) (PDS) </b></td>
                                        <td>In compensation for abandoning their voting rights, the holders of priority dividend shares are entitled to a dividend that is paid out before the ordinary dividend, and also sometimes larger than the ordinary dividend. Their reduced liquidity (see liquidity - shares) often results in a discount on their price compared to ordinary shares. Priority dividend chares are one of the categories of privileged shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Private negotiation </b></td>
                                        <td>Private negotiation is one of the methods of selling a (part) of a company. In private negotiation, the seller or his advisor contacts a small number of potential acquirers and then confidentially talk to every acquirer who expresses potential interest in transaction. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Private placement </b></td>
                                        <td>Private placement takes place when the issue is targeted to specific categories of investors. Private placement is chosen when the issuer wants to avoid complexities (regulation, information disclosure) of a public offering. See also Rule 144-A. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Privileged share </b></td>
                                        <td>Privileged shares are shares giving some advantages in compensation for reduced voting rights. See also preference share or priority dividend shares (non-voting). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Pro forma, pro forma statements </b></td>
                                        <td>Changes in the scope of consolidation require the preparation of pro forma financial statements. Pro forma statements enable analysts to compare the company's performances on a consistent basis. In these pro forma statements, the company may either: restate past accounts to make them comparable with the current scope of consolidation; or remove from the current scope of consolidation any items that were not present in the previous period to maintain its previous configuration. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Process-oriented production </b></td>
                                        <td>Process-oriented production, one of the production models, is a continuous production process from the raw material to the end product, which requires the suppliers, subcontractors and producers to be located close to each other and to work on a just-in-time basis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Product life cycle </b></td>
                                        <td>Product life cycle is a period covering the introduction, expansion, maturity, decline phases of the market evolution. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Production </b></td>
                                        <td>In accounting, production represents what the company has produced during the year. Production is the sum of net sales, changes in inventories in work in progress and finished goods at cost price and production for own use, reflecting the work performed by the company for itself and carried at cost. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Production models </b></td>
                                        <td>There are four major production models: project-type organisation; workshop; mass production; process-oriented production. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Profit </b></td>
                                        <td>See earnings or net income. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Profit and loss account/statement, P&amp;L </b></td>
                                        <td>See income statement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Profit before tax and non recurrent items </b></td>
                                        <td>See profit before tax and non-recurring items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Profit before tax and non recurring items </b></td>
                                        <td>Profit before tax and non-recurring items is the difference between operating profit and net financial expense. Also called profit before tax and non-recurrent items or profit on ordinary activities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Profit generating capacity </b></td>
                                        <td>Profit generating capacity is a central element of the multiples method. Profit generating capacity is the normalised operating profitability a company can generate year after year, excluding exceptional gains and losses and other non-recurring items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Profit on ordinary activities </b></td>
                                        <td>See profit before tax and non recurring items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Profitability </b></td>
                                        <td>Profitability is the ratio of profits to the capital that had to be invested to generate these profits (see Return on Capital Employed and Return on Equity). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Program trading </b></td>
                                        <td>Program trading is based on the computer software used by some traders that rely on pre-programmed buy or sell decisions. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Project financing </b></td>
                                        <td>Project financing is used to raise funds for large-scale projects with very high costs, such as oil extraction, mining, oil refineries, purchase of methane tankers, the construction of power plants or works of art. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Projected benefit obligation, PBO </b></td>
                                        <td>A defined benefit plan gives rise to a liability corresponding to the actuarial present value of all the pension payments due at the balance sheet closing date. This liability is called projected benefit obligation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Promissory note </b></td>
                                        <td>See paper promissory note. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Proportional rate </b></td>
                                        <td>Rates are proportional rates if they are in the same proportion to each other as the periods to which they apply. Proportional rates are of interest only in calculating the interest actually paid. In no way can they be compared to other proportional rates, as they are not comparable by definition. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Proportionate consolidation </b></td>
                                        <td>Proportionate consolidation is used to consolidate the accounts of joint ventures. Assets and liabilities are transferred to the parent company's balance sheet only in proportion to the parent company's interest in the joint venture. Likewise, the joint venture's revenues and charges are added to those of the parent company on the consolidated income statement only in proportion to its participation in the joint venture. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Prospectus </b></td>
                                        <td>The prospectus is a written document providing information about the deal marketed by an investment bank (see investment banking). It contains the description of the deal, of the business and risks of the company and is in fact a formal offer to sell the securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Provision </b></td>
                                        <td>The term provision covers a wide range of different items: impairment losses; provisions that reflect an increase in the company's liabilities in the shorter or longer term relating to a charge that has not yet been incurred by the financial year-end, but is likely to arise and is connected with operations carried out during the year; tax-regulated provisions (strictly speaking they are not provisions). Aside from tax-regulated provisions, provisions are set-aside in anticipation of a charge. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Provision for employee benefits and pensions </b></td>
                                        <td>Pension and related commitments include severance payments, early retirement and related payments, special retirement plans, top-up plans providing guaranteed resources and healthcare benefits, life insurance and similar entitlements that, in some cases, are granted under employment contracts and collective labour agreements. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Public offer </b></td>
                                        <td>A public offer is an offer to buy a listed company (see listed security). Payment may be in cash or shares (or a mix). The offer may be voluntary or mandatory (see this term) and hostile or recommended (see these terms). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Public offering </b></td>
                                        <td>A public offering takes place when the security (share, bond) is traded in the regulated market or when there is a public retail issue or sale accompanied by an advertising campaign, by prospecting funds providers, such as institutional investors or credit institutions. Public offerings must be authorised by market authorities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Public-to-Private, P to P </b></td>
                                        <td>A public-to-private transaction is the delisting of the company's shares. A P to P can be done through an LBO. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Purchase method </b></td>
                                        <td>The purchase method is the method of goodwill accounting known as goodwill amortisation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Purchase warrant </b></td>
                                        <td>A purchase warrant is the warrant on already existing securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Purchases </b></td>
                                        <td>Purchases are valued inclusive of VAT. They are calculated as the sum of purchase of goods held for resale (VAT inclusive), purchase of raw materials (VAT inclusive), and other external costs (VAT inclusive). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Put on the seller </b></td>
                                        <td>A put on the seller is the right to re-sell the asset to the original seller. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Put option </b></td>
                                        <td>A put option is an option to sell an underlying asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Put provision </b></td>
                                        <td>A put provision is the right offered by a putable instrument. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Put warrant </b></td>
                                        <td>A put warrant gives the holder the right to sell one share to the company at a specified price. Such warrant is a put option issued by the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Putable instrument </b></td>
                                        <td>A putable instrument contains the right to request redemption of a debt security when certain conditions are met. This right is the same as that offered by any put option. See also callable instrument. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Put-call parity </b></td>
                                        <td>Buying a call option and selling a put option at the same strike price for the same exercise date is a forward purchase of the underlying asset, or put-call parity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>PV </b></td>
                                        <td>See present value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>PVI </b></td>
                                        <td>See present value index. </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreQ"></A> 
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - Q</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Q ratio </b></td>
                                        <td>See Tobin's Q. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>QIB </b></td>
                                        <td>See qualified institutional buyers. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Qualified Institutional Buyers, QIB </b></td>
                                        <td>Qualified institutional buyers are the U.S. institutional investors that under Rule 144A, are allowed to buy securities issued by a non-American issuer. To qualify as a qualified institutional buyer a financial institution must own and manage $100 million ($10 million in the case of a registered broker-dealer) or more in qualifying securities. For a banking institution to qualify, a $25 million minimum net worth test must also be satisfied. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Qualified majority </b></td>
                                        <td>Depending on the country and on the legal form of the company a qualified majority is generally two thirds or three quarters of outstanding voting rights. See also extraordinary general meeting of shareholders. A qualified majority is required for very important corporate decisions (amendment of articles of association) </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Queuing </b></td>
                                        <td>Queuing is the phenomenon of having to wait for the issue to be accepted by the market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Quick ratio </b></td>
                                        <td>The quick ratio is one of the liquidity ratios. It is the same as the current ratio, except that inventories are excluded from the calculation. This exclusion recognises that a portion of inventories corresponds to the minimum the company requires for its ongoing activity. Some inventory items have value only to the extent they are used in the production process. This ratio is calculated by dividing current assets (less than one year) excluding inventories by current liabilities (due in less than one year). Also called acid test ratio. </td>
                                      </tr>
                                    </table>
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - R</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>R&amp;D </b></td>
                                        <td>See research and development costs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Range note </b></td>
                                        <td>Range notes are securities whose coupon rate is equal to the reference rate as long as the reference rate is within a contractually specified range. Come the date of the coupon rate calculation, if the reference rate is outside this specified range, the coupon rate is zero for that single period. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Ratchet effect </b></td>
                                        <td>The ratchet effect of the dividend is a commitment to prospective earnings implied by a rise of the payout ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rate of discount </b></td>
                                        <td>See discounting rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rate of return </b></td>
                                        <td>Rate of return is the annual return expressed as a percentage of the total amount invested. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rate tunnel </b></td>
                                        <td>See collar. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rating </b></td>
                                        <td>See credit ratings. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rating agency </b></td>
                                        <td>Rating agency is an organisation that evaluates the probability of default on debt securities traded in the market. There are three major rating agencies: Standard &amp; Poor's, Moody's, and Fitch. See also credit ratings. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rating outlook </b></td>
                                        <td>Rating outlook (neutral, positive, negative) indicates the likely rating trend over the two to three years ahead. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Raw material prices risk </b></td>
                                        <td>Raw material prices risk is linked to the fluctuations in commodities markets (oil, sugar, metals, etc) and their impact on the profitability of the companies dependent on these markets (both for their revenues and costs). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>RCF </b></td>
                                        <td>Retained Cash Flow: FFO - dividends. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Real dilution </b></td>
                                        <td>See dilution - shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Real interest rate </b></td>
                                        <td>The real interest rate is the inflation-adjusted return on invested funds. It can be calculated using the Fisher formula. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Real options </b></td>
                                        <td>Classic methods of investment analysis disregard the flexibility managers have even after starting the project. They can abandon it, expand it, etc. Real options measure this flexibility. Real options give the right, but not the obligation, to change an investment project and in particular, when new information on its prospective returns becomes available. Real options include (non-exhaustive list): option to launch a new project, option to develop or extend the business, option to reduce or contract business, option to postpone a project, option to defer progress of the project, option to abandon. A real option is often called a hidden option, because many investors do not explicitly admit its existence. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Realised rate </b></td>
                                        <td>The realised rate is the rate of discount that equates all payments actually received by investors, including the final principal payment, with the market price of the security at the time the security was purchased. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Recapitalisation </b></td>
                                        <td>Recapitalisation is the injection of cash into the equity of a company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Receivables </b></td>
                                        <td>See trade receivables. Receivables are called debtors in the U.K. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Recommended offer </b></td>
                                        <td>When the terms of an offer to buy a listed company (see listing) are negotiated with management prior to the announcement of the offer, and then recommended by the board of the company, such offer is called a recommended offer. Also called a friendly offer. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Recoverable value </b></td>
                                        <td>Recoverable value is defined as the highest of: the value in use, i.e. the present value of the cash flows expected to be realised from the asset; the net selling price, i.e. the amount obtainable from the sale of an asset in an arm's length transaction, less the costs of disposal. Recoverable value is of particular importance for intangible fixed assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Recurrent items </b></td>
                                        <td>Recurrent items are the everyday operations of the company relating to its business cycle, investment cycle, and financing cycle. Also called recurring items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Recurring items </b></td>
                                        <td>See recurrent items. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Redemption </b></td>
                                        <td>Redemption of a debt instrument (debt security or a loan) takes place when the debt instrument is fully amortised (see amortisation of the loan). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Reference rate </b></td>
                                        <td>The reference rate is the observable market rate for benchmark funds, used for the coupon rate calculation in all debt securities with a changing coupon rate (see also floating-rate debt security). Most commonly used reference rates are EONIA, LIBOR, EURIBOR, and the Interest Rate Swap rate. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Registered bond </b></td>
                                        <td>A registered bond is a bond for which the issuer keeps a record (register) of ownership. Transfer of ownership must be notified and recorded in the register. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Regulatory changes </b></td>
                                        <td>Regulatory changes are controls imposed on a company by an authority (usually the government) that generally restricts the "natural" direction in which the company is moving. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Regulatory risk </b></td>
                                        <td>Regulatory changes can directly affect the return expected in a particular sector. Pharmaceuticals, banks and insurance companies, among others, tend to be the most exposed to this kind of risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Relative value ratio </b></td>
                                        <td>Relative value ratio is the ratio of shareholders' equity value of company A / shareholders' equity value of company B. The relative value must be determined for an all-share transaction to proceed. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rendez-vous clause </b></td>
                                        <td>Rendez-vous clause is a clause (see covenants) whose nature forces the company to meet its creditors and negotiate the restructuring plan, should the clause be breached. See also restrictive covenant. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Repayment by equal instalments </b></td>
                                        <td>Repayment by equal instalments takes place when on every payment date the lender receives the same amount. This amount consists of a part of principal and of interest accrued between two payment dates. The proportion of principal rises throughout the life of the loan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Repayment by tranches (or series) </b></td>
                                        <td>Repayment by tranches takes place when the principal of a loan is repaid in equal instalments. Also called constant amortisation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Repayment in fine </b></td>
                                        <td>See bullet repayment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Replacement cost </b></td>
                                        <td>Replacement cost is the price that will have to be paid to replace an existing asset with a similar asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Replicating portfolio </b></td>
                                        <td>Replicating portfolio is a portfolio of assets for which changes in value match those of a target asset. The technique of replicating portfolio is widely used for finding the arbitrage opportunities in the market or to price the complex instruments. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Repo, repurchase agreement </b></td>
                                        <td>Repos are agreements under which institutional investors or companies can exchange cash for securities for a fixed period of time. At the end of the contract, which can take various legal forms, the securities are returned to their initial owner. All title and rights to the securities are transferred to the buyer of the securities for the duration of the contract. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Representations and warranties, Reps &amp; warranties </b></td>
                                        <td>Representations and warranties, one of the important clauses in the final contract when a (part of a) company is sold, are particularly important because they give confidence to the buyer that the profitability of the company has not been misrepresented. It is a way to secure the value of assets and liabilities of the target company as the contract cannot provide a detailed valuation. Representations and warranties are not intended to protect the buyer against an overvaluation of the company. They are intended to certify that all of the means of production are indeed under the company's control and that there are no hidden liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Reps &amp; warranties </b></td>
                                        <td>See representations and warranties. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Repurchase agreement </b></td>
                                        <td>See repo. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Required rate of return </b></td>
                                        <td>Required rate of return is the rate of return the providers of funds can reasonably ask for given the level of risk of the project, company, venture, etc, they invest in. According to the CAPM (see this term), the required rate of return is equal to: risk-free rate + ? (beta) x market risk premium. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Requirements in working capital </b></td>
                                        <td>Requirements in working capital is one of the synonyms of working capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Re-rating </b></td>
                                        <td>Re-rating is the upward adjustment of multiples ascribed to a company by the market </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Research and development costs, R&amp;D </b></td>
                                        <td>These costs are those incurred by a company on research and development for its own benefit. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Reserved capital increase </b></td>
                                        <td>A reserved capital increase is the issue of capital for a specified investor. In some countries, a company can issue new shares on terms that are highly dilutive (see dilution - shareholders) for existing shareholders. The new shares can be purchased either for cash or for contributed assets (see asset contribution). For example, a family holding company can contribute assets (see asset contribution) to the operating company to strengthen its control over this company. In the strongest form of poison pill, shares can be issued at a discount to the current share price. </td>
                                      </tr>
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                                        <td valign="top"><b>Residual pool </b></td>
                                        <td>Residual pool is the remaining management fee, if any, net of the pr&aelig;cipium and of the underwriting fee. Normally it is distributed to the lead and the co-leads. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Residual value </b></td>
                                        <td>Evaluation of any investment project entails forecasting not only all cash flows over a given period with an explicit forecast period, but also the residual value beyond that horizon. Residual value is the expected value of the assets at the end of their life, in current values. Although the discounted (see discounting) residual value is frequently very low since it is very far off in time, it should not be neglected. Its book value is generally zero, but its economic value may be quite significant since accounting depreciation may differ from economic depreciation. The residual value reflects the flows extending beyond the explicit investment horizon, and on into infinity. Residual value is also called salvage value. </td>
                                      </tr>
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                                        <td valign="top"><b>Resistance level </b></td>
                                        <td>In technical analysis, the resistance level is the level above which the price has very little chance of rising. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Restated net asset value, RNAV </b></td>
                                        <td>Restated net asset value is the value of assets used in the sum-of-the-parts method. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Restrictive covenant </b></td>
                                        <td>Restrictive covenant is a clause that the creditors impose on shareholders so that the latter cannot increase the creditors' risk. These clauses force management / shareholders to approach creditors to renegotiate loan agreements if they wish to exceed the limits set in the restrictive covenants. See also rendez-vous clause. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Restructuring charges </b></td>
                                        <td>See restructuring provisions. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Restructuring provisions </b></td>
                                        <td>Restructuring provisions consist in taking a heavy upfront charge against earnings in a given year to cover a restructuring programme (site closures, redundancies, etc.). The future costs of this restructuring program are eliminated through the gradual write-back of the provision, thereby smoothing future earnings performance. Restructuring provisions are also called restructuring charges. </td>
                                      </tr>
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                                        <td valign="top"><b>Retail investor </b></td>
                                        <td>A retail investor is an investor who buys and sells securities on his/her own behalf - not for an organisation. Retail investors are usually private individuals. See also institutional investors and investors. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Retail public offering </b></td>
                                        <td>In a retail public offering, marketed to retail investors, a price range is set before the offering, but the exact price is set after the offering has gone through. </td>
                                      </tr>
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                                        <td valign="top"><b>Retained Cash Flow </b></td>
                                        <td>They are computed as:FFO - dividends. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Retained earnings </b></td>
                                        <td>Retained earnings is the term frequently used to designate the portion of earnings not distributed as a dividend. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Return </b></td>
                                        <td>See return on investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Return on capital employed, ROCE </b></td>
                                        <td>Return on capital employed measures the profitability of capital. It is calculated by dividing operating profit (NOPAT, if ROCE is to be measured on an after-tax basis) by capital employed. Return on capital employed can also be considered as the return on equity if net debt is zero. The capital employed can be taken for the beginning of the period in question, for the end of the period, or the average over the year; ROCE can be calculated on a before- or after-tax basis. \nReturn on capital employed can be calculated by combining operating margin and asset turnover as follows: Operating profit/Capital employed = Operating profit/Sales x Sales/Capital employed. The first ratio, i.e. operating profit after tax/sales, corresponds to the operating margin generated by the company, while the second, sales/capital employed, reflects asset turnover, which indicates the amount of capital (capital employed) required to generate a given level of sales. Return on capital employed is the most important accounting indicator of value creation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Return on equity, ROE </b></td>
                                        <td>Return on equity measures the profitability of equity invested in the business. Return on equity is calculated by dividing net income by equity. Return on equity is equal to return on capital employed plus leverage effect. Return on equity is one of the accounting indicators of value creation </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Return on investment </b></td>
                                        <td>Return on investment is the expected increase in the cash flows generated by the operating cycle as a result of investment outlays. Return on investment is the compensation for forsaking instant consumption. Return on investment can simply be called return. </td>
                                      </tr>
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                                        <td valign="top"><b>Revenues </b></td>
                                        <td>See sales. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Reverse flex </b></td>
                                        <td>A technique which involves the downward revising of the margins on a loan offered on the banking syndicate market when demand for such a loan is much greater than supply. Very often used for LBO syndications. \n\nThe opposite is the upward flex when margins have to be revised upwards due to low demand at the time of syndication. </td>
                                      </tr>
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                                        <td valign="top"><b>Reverse repo </b></td>
                                        <td>A reverse repo is a deal that works in the opposite direction to a repo transaction: securities are exchanged for cash. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Revolving credit </b></td>
                                        <td>Revolving credit is one of the types of credit facilities. Revolving credit gives the borrower the right to borrow or 'draw down' on demand, re-pay, and then draw-down again. The borrower is charged a commitment fee on unused amounts. </td>
                                      </tr>
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                                        <td valign="top"><b>Right of approval </b></td>
                                        <td>The right of approval, written into a company's articles of association, enables a company to avoid "undesirable" shareholders. The right of approval clause requires every partner to obtain the approval of the company prior to selling any shares. The company must render its decision within a specified time period. If no decision is rendered, approval is deemed to be granted. </td>
                                      </tr>
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                                        <td valign="top"><b>Right of first refusal </b></td>
                                        <td>Right of first refusal is the right to be offered something before somebody else. For example, the goods manufactured by an outsourced (see outsourcing) production entity are first offered to the company. If the company refuses to buy the finished goods, the SPV set up in an outsourcing scheme will sell them to a third party. </td>
                                      </tr>
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                                        <td valign="top"><b>Rights issue </b></td>
                                        <td>Rights issue is a fixed-price share issue with pre-emptive subscription rights. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Risk </b></td>
                                        <td>Risk is the uncertainty over future asset values and future returns. Risk is always present in any investment project. All risks lead to fluctuations in the value of a financial security. In a market economy, the risk is measured by the volatility of the price and/or rate of return of a security. The degree of risk depends on the investment timeframe and tends to diminish over the long-term. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Risk of a fraud </b></td>
                                        <td>Risk of a fraud is the risk that some parties to an investment will lie or cheat, i.e. by exploiting asymmetries of information in order to gain unfair advantage over other investors. </td>
                                      </tr>
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                                        <td valign="top"><b>Risk of default </b></td>
                                        <td>See default risk. </td>
                                      </tr>
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                                        <td valign="top"><b>Risk of illiquidity </b></td>
                                        <td>The risk of illiquidity is the risk that assets will become liquid at a slower pace than the rate at which the liabilities will have to be paid, because the maturity of assets is longer. </td>
                                      </tr>
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                                        <td valign="top"><b>Risk premium </b></td>
                                        <td>Risk premium is the difference between the expected return on a financial security and the return on the risk-free asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Risk/return ratio </b></td>
                                        <td>Risk/return ratio is the fundamental ratio, measuring the relationships between the risk of an investment and its expected return. From risk/return ratio standpoint, an investment is "better", if for a given level of risk it gives the maximum expected return or for a given expected return implies the minimum risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Risk-free assets </b></td>
                                        <td>By definition, risk-free assets are those that offer a certain return, i.e. the risk-free rate (rF). These assets are free of the default risk of the issuer and of the coupon reinvestment risk. This is the case with a government bond, assuming of course that the government does not go bankrupt (see bankruptcy). The standard deviation and variance of its return are thus zero. </td>
                                      </tr>
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                                        <td valign="top"><b>Risk-free rate </b></td>
                                        <td>Risk-free rate is the rate of return offered by risk-free assets. The risk-free rate is fundamental in the determination of the required rate of return of any financial security. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>RNAV </b></td>
                                        <td>See restated net asset value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Roadshow </b></td>
                                        <td>A roadshow is a meeting of the company's management with potential investors. It usually takes place as a part of a placement of a company's securities. </td>
                                      </tr>
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                                        <td valign="top"><b>ROCE </b></td>
                                        <td>See return on capital employed. </td>
                                      </tr>
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                                        <td valign="top"><b>ROE </b></td>
                                        <td>See return on equity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Rule 144A </b></td>
                                        <td>Rule 144A often governs private placements to the U.S. investors. </td>
                                      </tr>
                                    </table>
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - S</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Salam </b></td>
                                        <td>This is a short-term agreement under which a financial institution pays, in advance, amounts corresponding to the future delivery of a defined quantity of goods. A Salam is mainly used for financing goods. It is similar to forward selling where delivery is at a future date in exchange for cash payment. </td>
                                      </tr>
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                                        <td valign="top"><b>Sale-leaseback </b></td>
                                        <td>In a sale-leaseback transaction, one of the off-balance sheet financing techniques, a company that owns equipment or other industrial or commercial assets sells the asset to a leasing company, which then immediately makes it available to the company through a leasing transaction. </td>
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                                        <td valign="top"><b>Sales </b></td>
                                        <td>Sales represent what the company has been able to sell to its customers. Also called revenues or income. </td>
                                      </tr>
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                                        <td valign="top"><b>Salvage value </b></td>
                                        <td>See residual value. </td>
                                      </tr>
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                                        <td valign="top"><b>Samurai bond </b></td>
                                        <td>A samurai bond is a foreign bond issued by non-Japanese companies on the Japanese market and denominated in yen. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Scale problem </b></td>
                                        <td>The problem of choosing between two projects of very different size is called the scale problem. It is solved using the incremental project the technique. </td>
                                      </tr>
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                                        <td valign="top"><b>Scenario analysis </b></td>
                                        <td>In a scenario analysis, the project NPV is calculated assuming a whole set of new assumptions, rather than adjusting one assumption at a time, as for a sensitivity analysis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Scissors effect </b></td>
                                        <td>The scissors effect is what takes place when revenues and expenses move in different or diverging directions. It accounts for trends in profits. </td>
                                      </tr>
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                                        <td valign="top"><b>Scope of consolidation </b></td>
                                        <td>The scope of consolidation is the list of companies to be included in the preparation of consolidated accounts. The scope of consolidation includes the parent company and the companies in which the parent company holds directly or indirectly at least 20% of the voting rights. To determine the scope of consolidation, one needs to establish the level of control exercised by the parent company over each of the companies in which it owns shares. See also pro forma statements. </td>
                                      </tr>
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                                        <td valign="top"><b>Seasoned equity offering, SEO </b></td>
                                        <td>A seasoned equity offering is the sale of additional shares by a company whose shares are already publicly traded. Also called secondary share offering. </td>
                                      </tr>
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                                        <td valign="top"><b>SEC </b></td>
                                        <td>SEC stands for Securities and Exchange Commission, main market regulator in the U.S. </td>
                                      </tr>
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                                        <td valign="top"><b>Second proposition of the Modigliani-Miller theorem </b></td>
                                        <td>See Modigliani-Miller theorem. </td>
                                      </tr>
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                                        <td valign="top"><b>Secondary market </b></td>
                                        <td>The secondary market is the market for trading previously issued securities. Most trading is done on the secondary market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Secondary share offering </b></td>
                                        <td>See seasoned equity offering. </td>
                                      </tr>
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                                        <td valign="top"><b>Securities lending </b></td>
                                        <td>The principle of securities lending is similar to that of repos. Securities lending enables a company with a large cash surplus or listed (see listed security) investments to improve the return on its financial instruments by entrusting them to institutional investors. These investors use them in the course of forward transactions while paying to the original owner (the company) the income arising on the securities and a borrowing fee. </td>
                                      </tr>
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                                        <td valign="top"><b>Securitisation </b></td>
                                        <td>Securitisation, one of the off-balance sheet financing techniques, consists in first choosing some assets (receivables, inventories, buildings, consumer loans, mortgages, etc) based on the quality of the collateral they offer or their level of risk. To reduce risk, the assets are then grouped into an SPV so as to pool risks and take advantage of the law of large numbers. The SPV buys the assets and finances itself by issuing securities to outside investors. </td>
                                      </tr>
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                                        <td valign="top"><b>Securitisation buy-out </b></td>
                                        <td>A securitisation buy-out is similar to the standard securitisation of receivables, but aims to securitise the cash flows from the entire business cycle. </td>
                                      </tr>
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                                        <td valign="top"><b>Securitisation vehicle </b></td>
                                        <td>Securitisation vehicles are special-purpose vehicles created to take over the claims sold by a credit institution or company engaging in a securitisation transaction. In exchange, these vehicles issue securities that the institution sells to investors. </td>
                                      </tr>
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                                        <td valign="top"><b>Security </b></td>
                                        <td>See financial security. </td>
                                      </tr>
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                                        <td valign="top"><b>Security market line </b></td>
                                        <td>Security market line links the expected return on the Y-axis and the beta coefficient of each stock on the X-axis. See also market plane. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Seed capital </b></td>
                                        <td>Seed capital is capital used for financing projects during their start up phase, before production commences (research, market studies, etc.). It is provided by specialised funds, business angels, etc. </td>
                                      </tr>
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                                        <td valign="top"><b>Self-control </b></td>
                                        <td>There is self-control when one company controls another company, which holds a stake in the capital of the first company. To limit the effects of self-control, voting rights of shares thus held are cancelled. During a public offer any modification of the structure of self-control of the target (increase, transfer to friendly hands) is prohibited. </td>
                                      </tr>
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                                        <td valign="top"><b>Self-hedging </b></td>
                                        <td>Self-hedging, one of the financial risk management tools, consists in not hedging a risk. This is a reasonable strategy only for very large groups. Such groups assume that the law of averages applies to them and that they are therefore certain to experience some negative events on a regular basis, such as devaluations, customer bankruptcy, etc. Risk thus becomes a certainty and, hence, a cost. As a part of self-hedging, companies sometimes set up captive insurance companies. See also natural hedge. </td>
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                                        <td valign="top"><b>Self-mimicry </b></td>
                                        <td>Self-mimicry means predicting the behaviour of the majority in order to imitate it. See also mimicry. </td>
                                      </tr>
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                                        <td valign="top"><b>Selling group </b></td>
                                        <td>A selling group consists of all lenders taking part in a syndicated loan that are not lead managers, managers, or agent banks. Also called participants. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Semi-strong efficient market </b></td>
                                        <td>A semi-strong efficient market reflects all publicly available information, as found in annual reports, newspaper and magazine articles, prospectuses, announcements of new contracts, of a merger, of an increase in the dividend, etc. A semi-strong efficient market is better than a weak-form efficient market because current prices have to include historical information (as assumed by the weak-form efficient market) and publicly available information. See also efficient market. </td>
                                      </tr>
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                                        <td valign="top"><b>Senior debt </b></td>
                                        <td>Senior debt is the debt held by creditors with either a security claim or a priority claim on repayment of the principal and the interest. Senior debt is also one of the types of debts used in LBO transactions. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Sensitivity analysis </b></td>
                                        <td>Sensitivity analysis, an important part of investment analysis, consists in determining how sensitive the investment is to different economic assumptions. This is done by holding all other assumptions fixed and then calculating the present value to each different economic assumption. It is a technique that highlights the impact of changes in prices, volumes, rising costs or additional investments on the value of projects. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>SEO </b></td>
                                        <td>See seasoned equity offering. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Separation theorem </b></td>
                                        <td>The separation theorem states that a rational investor will not take a position on individual stocks in the hope of obtaining a big return, but rather on the market as a whole. He will then choose his risk level by adjusting his debt level or by investing in risk-free assets. </td>
                                      </tr>
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                                        <td valign="top"><b>Service cost </b></td>
                                        <td>Service cost is the present value of pension benefits earned by employees during the year. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Settlement date </b></td>
                                        <td>Settlement date is the date of payment for purchased securities or, in general, any assets. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Shadow rating </b></td>
                                        <td>Shadow rating is the rating, which by request of the rated company is not immediately published by the rating agency and is kept confidential. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Share </b></td>
                                        <td>A share is a unit of equity ownership in a company. Shares thus constitute a source of financing for the company, just as debt instruments (or debts) do, even though there is clear and well-defined difference between the two. \nShares have unlimited maturity (exit is only by transfer/sale of the share, there is no contractually fixed repayment date or value), and shareholders incur the same risks as the company (they receive no income if the company is in poor health and in the event of liquidation, shareholders are paid out after creditors when the proceeds of asset sales are distributed. In other words, most of the time, shareholders recovers nothing after liquidation proceedings). In exchange for this risk, a share entitles shareholders to a share in the company's profits and gives them a say in managing the company via voting rights. See also shareholders' equity. Also called stock. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Share buyback </b></td>
                                        <td>A share buyback is the repurchase of the company's shares by itself on the open market. If shares are then cancelled, then the share buyback amounts to capital decrease. Share buybacks are also used to control the shareholder structure by buying out "undesirable" shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Share cum debt warrant </b></td>
                                        <td>Share cum debt warrant is a hybrid security composed of a classic share and one or several options to subscribe to new bonds (subscription warrant) or to buy existing bonds (purchase warrant). After the issue, two components are split up and are traded separately. The validity period and the purchase terms of the option are fixed in advance. </td>
                                      </tr>
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                                        <td valign="top"><b>Share exchange offer </b></td>
                                        <td>A share exchange offer consists in offering shares of the company bidding for another company (see takeover bid) in exchange for the shares of the target company. See also contribution of shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Share purchase agreement, SPA </b></td>
                                        <td>The share Purchase Agreement (or Sale and Purchase Agreement) is the disposal agreement that sets the terms of a transaction between the buyer and the seller of a company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Shareholder return </b></td>
                                        <td>Shareholder return is the total shareholder return received over one year. </td>
                                      </tr>
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                                        <td valign="top"><b>Shareholder structure </b></td>
                                        <td>Shareholder structure is the percentage ownership and the percentage of voting rights held by different shareholders. Shareholder structure is the study of how power is distributed among the various existing shareholders, potential shareholders and managers. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Shareholders </b></td>
                                        <td>Shareholders are individuals or entities that provide a company with capital by buying shares (see this term) in the company. Inside shareholders and outside shareholders are two major categories of shareholder. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Shareholders' agreement </b></td>
                                        <td>A shareholders' agreement is a means of protecting the interests of minority shareholders. Under these agreements, action taken by one shareholder will be coordinated with that taken by others (pre-emptive rights, call/put agreements, etc.). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Shareholders' equity </b></td>
                                        <td>Shareholders' equity is the capital that incurs the risk of the business. This type of financial resource forms the cornerstone of the entire financial system. Its importance is such that shareholders providing it are granted decision-making powers and control over the business in various different ways. Dividends are a way of apportioning earnings voted on the ordinary general meeting of shareholders once the company's accounts have been approved. Shareholders' equity is not contractually remunerated, does not have a repayment date, and in case of the liquidation of the company is paid off only after the debts were paid off. Shareholders' equity is equal to the sum of capital increases by shareholders and annual net income for past years not distributed in the form of dividends plus the original share capital. </td>
                                      </tr>
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                                        <td valign="top"><b>Shares with multiple voting rights </b></td>
                                        <td>See multiple voting shares. </td>
                                      </tr>
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                                        <td valign="top"><b>Short (position) </b></td>
                                        <td>When an operator has sold more of the asset than he has bought, he is said to be short (in a short position). The market risk on a short position is the risk of an increase in market value of the asset (or a fall in interest rates). See also long (position). </td>
                                      </tr>
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                                        <td valign="top"><b>Short Term European Paper </b></td>
                                        <td>The Short Term European Paper (STEP) initiative aims to foster the integration of the European markets for short term paper through the convergence of market standards and practices. The ACI The Financial Markets Association (ACI) and the F&eacute;d&eacute;ration Bancaire Europ&eacute;enne (FBE) are the main promoters of the STEP initiative.\n\nSTEP relies on STEP Market Convention. The STEP Market Convention lays down the criteria which short-term paper programmes must fulfil to be STEP compliant and the procedures for granting and withdrawing the STEP label. The STEP criteria and requirements relate to the disclosure of information, the format for documentation, settlement, and the provision of data for the production of STEP statistics. A STEP label does not relate to the creditworthiness of issuers or the accuracy of the information provided. In order to obtain and maintain the STEP label for a short term paper programme, the issuer, the features of the programme and the Notes issued under the programme must comply with the requirements of the Convention, including its Annexes.\n\nFor more see www.stepmarket.org which provided us with this definition.\n </td>
                                      </tr>
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                                        <td valign="top"><b>Shotgun clause </b></td>
                                        <td>See buy-sell provision. </td>
                                      </tr>
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                                        <td valign="top"><b>Signal </b></td>
                                        <td>A signal is real financial decision, taken deliberately (e.g. dividend pay-out) and which may have negative financial consequences for the decision-maker if the decision turns out to be wrong. See also signalling theory. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Signalling theory </b></td>
                                        <td>Signalling theory is based on the assumption that information is not equally available to all parties at the same time, and that information asymmetry is the rule. Information asymmetries (see also asymmetry - issuer/investor) can result in very low valuations or a sub-optimum investment policy. Signalling theory states that corporate financial decisions are signals sent by the company's managers to investors in order to shake up these asymmetries. These signals are the cornerstone of financial communications policy. </td>
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                                        <td valign="top"><b>Significant influence </b></td>
                                        <td>Significant influence over the operating and financial policy of a company is assumed when the parent holds, directly or indirectly, at least 20% of the voting rights. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Size premium </b></td>
                                        <td>Size premium is the additional remuneration due to the higher risk and therefore, the higher cost of capital, associated with the smaller size of the company and of the lower trading volume. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Small cap </b></td>
                                        <td>Small cap stands for small capitalisation. These are the companies between mid-caps and micro-caps. See also large cap. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Soft currency </b></td>
                                        <td>A soft currency is a currency that tends to fall in value because of political or economic uncertainty (high inflation rate). A soft currency is also called weak currency. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Soft rationing </b></td>
                                        <td>If financial constraints are imposed by internal management, such capital rationing is called soft rationing. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Solvency </b></td>
                                        <td>Solvency reflects the ability of a company to honour its commitments in the event of liquidation, i.e. if its operations are wound up and assets are put up for sale. A company may be regarded as insolvent once its shareholders' equity turns negative. This means that it owes more than it owns. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Solvency risk </b></td>
                                        <td>Solvency risk is the risk that a creditor will lose his entire investment if a debtor cannot repay him in full, even if all the debtor's assets are liquidated. Traders call this counterparty risk. See also default risk. Solvency risk is also called credit risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Solvency-and-liquidity analysis </b></td>
                                        <td>In a solvency-and-liquidity analysis, a business is regarded as a set of assets and liabilities, the difference between which represents the book value of the equity provided by shareholders. From this perspective, the balance sheet lists everything that a company owns and everything that it owes. A solvency-and-liquidity analysis of the balance sheet serves three purposes: to measure the solvency of a company; to measure the liquidity of a company; and as a first step to valuing its equity in a bankruptcy scenario. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Sovereign spread </b></td>
                                        <td>The sovereign spread represents the difference between bond yields issued on international markets by the country in question versus those offered by governments with AAA ratings. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>SPA </b></td>
                                        <td>See share purchase agreement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>SPAC </b></td>
                                        <td>SPAC: Special purpose acquisition vehicles are companies with no asset which are IPOed on the Stock Market through a share issue. They are in fact shell companies with cash. they wait for opportunities to buy assets or other companies using the cash raised during the IPO and debt raised on the acquisition date. \n\nThey then usually go largely into debt and are equivalent to a listed firm under LBO. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Special method </b></td>
                                        <td>A special method of translation is used for subsidiaries located in hyperinflationary countries. The special method is based on restatements made by applying a general price index. Items such as monetary items that are already stated at the measuring unit at the balance sheet date are not restated. Other items are restated based on the change in the general price index between the date those items were acquired or incurred and the date of producing the consolidated accounts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Special purpose acquisition vehicles </b></td>
                                        <td>Special purpose acquisition vehicles are companies with no asset which are IPOed on the Stock Market through a share issue. They are in fact shell companies with cash. they wait for opportunities to buy assets or other companies using the cash raised during the IPO and debt raised on the acquisition date. \n\nThey then usually go largely into debt and are equivalent to a listed firm under LBO. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Special-purpose vehicle, SPV </b></td>
                                        <td>The SPV is a separate legal entity created specially to handle a venture on behalf of a company. In many cases, the SPV belongs from a legal standpoint to banks or to investors rather that to the company. The IASB has however stipulated that the company should consolidate the SPV if it enjoys the majority of the benefits or if it incurs the residual risks arising from the SPV even if it does not own a single share of the SPV. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Specific risk </b></td>
                                        <td>Specific risk is independent of market-wide phenomena and is due to factors affecting just the one company, such as mismanagement, a factory fire, an invention that renders a company's main product line obsolete, etc. Specific risk is not remunerated in the stock market. Specific risk is also called intrinsic risk or idiosyncratic risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Speculation </b></td>
                                        <td>Speculation is the assumption of risk. Speculators play a fundamental role in the market by assuming risks that other participants do not want to accept. In this way, speculators minimise the risk borne by others. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Speculative grade </b></td>
                                        <td>Ratings between BB and D are called speculative grade. See also investment grade. Speculative grade is also called non-investment grade or below investment grade. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Spin-off </b></td>
                                        <td>A spin-off is a demerger with the distribution of shares a newly created company in the form of dividends. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Split </b></td>
                                        <td>A split involves dividing the face value of a share in order to reduce its unit value. For example, dividing the face value by 5 results in the total number of shares being multiplied by 5, and the value of the share being divided by 5.\n\nIt can technically facilitate mergers and it does make it much easier for small shareholders to buy the share. \n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Split rating </b></td>
                                        <td>A split rating is the phenomenon of different ratings assigned by the different rating agencies to the same issue of securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Split-off </b></td>
                                        <td>A split-off is a voluntary exchange of shares of a parent company for the shares of a subsidiary. If all shares are tendered, the split-off becomes a demerger. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Split-up </b></td>
                                        <td>A split-up is a demerger carried out by dissolving the parent company and distributing the shares of the ex-subsidiaries to the shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Spot date </b></td>
                                        <td>The spot date is the settlement date of immediate delivery, according to conventions of a given market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Spot price </b></td>
                                        <td>The spot price is the price of an asset for immediate delivery. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Spread </b></td>
                                        <td>A spread is the difference between the rate of return on a given bond and that on a benchmark used by the market. Spread can be used in the sense of bid-ask spread. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>SPV </b></td>
                                        <td>See special-purpose vehicle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Squeeze-out </b></td>
                                        <td>A squeeze-out is the possibility for the majority shareholder to force the buy-back (see share buy-back) of minority shareholders and delist (see delisting) the company if minority shareholders represent only a small part of the capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Stability principle </b></td>
                                        <td>The stability principle holds that a company's earnings are much more stable than usually expected prior to performing the trend analysis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Stakebuilding </b></td>
                                        <td>Stakebuilding is an accumulation of shares of a listed company (see listed security) in an open market. In most countries, once a certain threshold has been exceeded, the size of the accumulated stake must be declared. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Stand-alone valuation </b></td>
                                        <td>Stand-alone valuation is a valuation of a company without taking into account the value of any synergies. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Standard deviation </b></td>
                                        <td>The standard deviation in returns is the most often used measure to evaluate the risk of an investment. Standard deviation is expressed as the square root of the variance. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Start-up costs </b></td>
                                        <td>Start-up costs are expenses incurred in relation to the creation and the development of a company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Statement of changes in financial position </b></td>
                                        <td>See cash flow statement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>STEP </b></td>
                                        <td>The Short Term European Paper (STEP) initiative aims to foster the integration of the European markets for short term paper through the convergence of market standards and practices. The ACI The Financial Markets Association (ACI) and the F&eacute;d&eacute;ration Bancaire Europ&eacute;enne (FBE) are the main promoters of the STEP initiative.\n\nSTEP relies on STEP Market Convention. The STEP Market Convention lays down the criteria which short-term paper programmes must fulfil to be STEP compliant and the procedures for granting and withdrawing the STEP label. The STEP criteria and requirements relate to the disclosure of information, the format for documentation, settlement, and the provision of data for the production of STEP statistics. A STEP label does not relate to the creditworthiness of issuers or the accuracy of the information provided. In order to obtain and maintain the STEP label for a short term paper programme, the issuer, the features of the programme and the Notes issued under the programme must comply with the requirements of the Convention, including its Annexes.\n\nFor more see www.stepmarket.org which provided us with this definition.\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Stock </b></td>
                                        <td>See share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Stock options </b></td>
                                        <td>Stock options are options to buy existing or to subscribe to new shares at a fixed price. Their maturity is generally between 3 and 10 years after their issuance. They are often granted free of charge to company employees - usually senior executives. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Stock-picking approach </b></td>
                                        <td>See bottom-up approach. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Straight bond </b></td>
                                        <td>Straight bond is a bond paying back the principal on its maturity date, paying a coupon rate on specific dates, and not carrying any special features. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Straight line depreciation </b></td>
                                        <td>Straight line depreciation is a depreciation method producing a regular charge linearly proportional to the estimated life of the fixed asset. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Strategic assets (poison pills) </b></td>
                                        <td>Strategic assets can be patents, brand names, or subsidiaries comprising most of the business or generating most of the profits of a group. In some cases the company does not actually own the assets but simply uses them under license. In other cases these assets are located in a subsidiary with a partner who automatically gains control should control of the parent company change hands. Often contested as misuse of corporate property, poison pill arrangements are very difficult to implement, and in practice are generally ineffective. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Strategic value </b></td>
                                        <td>Strategic value is the value a trade buyer is prepared to pay for a company. It includes the value of projected free cash flows of the target on a stand alone basis (see stand-alone valuation), plus the value of synergies from combining the company's businesses with those of the trade buyer. It also includes the value of expected improvement in the company's profitability compared to the business plan provided, if any. See also majority value. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Strike price </b></td>
                                        <td>Strike price is the price at which the underlying asset of an option can be bought or sold. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Strip financing </b></td>
                                        <td>Strip financing is a technique of issuing securities whereby all lenders buy a portion of each issue. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Strong-efficient market </b></td>
                                        <td>In a strong-efficient financial market, investors with privileged or insider information or with a monopoly on certain information are unable to influence prices of securities. This situation can be true only when financial market regulators have the power to prohibit and punish the use of insider information. See also efficient market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Structural basis of debt </b></td>
                                        <td>Structural basis of debt determines the fixed/floating rate ratio of all debts of a company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Structured product </b></td>
                                        <td>This is a customised product designed a bank to meet its clients' need. It is a combination of complex options, swaps... often based on non-quoted parameters. For example, an investment yielding 5% per year plus 1/10 th of the rise of the Eurostoxx 50 index if any. \n\nAs it cannot be found in any listed market, its price is determined using a mathematical model, i.e. a process that modelises the behaviour of the product with time and considering different market evolution.\n\nMargins for this kind of products are generally high for banks who create them. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Structurer </b></td>
                                        <td>Investment banker responsible for designing and arranging structured products. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Stub equity </b></td>
                                        <td>Stub equity enables investors to take shares in a quoted investment vehicle that owns part or all of the acquired company. Stub equity allows former shareholders of the acquired company to have a new ride taking advantage of an improvment in profitability of the acquired company due to synergies created by the acquirer or of its releverage. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Subordinated debt </b></td>
                                        <td>Subordinated debt is the debt repaid after the claims of the other creditors, in particular the senior creditors (see senior debt), have been settled. Subordinated debt is also called junior debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Subscription parity </b></td>
                                        <td>Subscription parity is the number of subscription rights necessary to buy one new share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Subscription right </b></td>
                                        <td>A subscription right is the right attached to each existing share allowing its holder to subscribe to the new share issue. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Subscription warrant </b></td>
                                        <td>A subscription warrant is the warrant for the securities that will be issued. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Subsidiary </b></td>
                                        <td>A subsidiary is a company controlled by the parent company (see also full consolidation). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Sukuk </b></td>
                                        <td>Islamic bond products are represented by Sukuks. The Sukuk is to Islamic finance what Asset Backed Securities (ABS) are to conventional finance. It has a maturity that is determined in advance and is backed by an asset which makes it possible for the investment to earn a return without the payment of interest. Unsurprisingly, Sukuks are structured in such a way that their holders run a credit risk and receive part of the profit and not a fixed interest payment in advance, like for an ABS. \n\nThe products underlying Sukuks could be represented by contracts such as the Ijara, Musharaka or the Mudharaba. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Sum-of-the-parts method </b></td>
                                        <td>The sum-of-the-parts method consists in valuing (see valuation) the company's various assets and liabilities separately and then adding them together. This method is more a combination of the techniques used in the direct method and indirect method rather than a method in its own right. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Supplier credit </b></td>
                                        <td>Supplier credit is the credit granted by suppliers to the company, allowing it to pay for its purchases several days, weeks or in some countries, even several months, after receiving the invoice. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Supply chain </b></td>
                                        <td>Supply chain comprises all the companies involved in the manufacturing process, from the raw materials to the end product. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Support level </b></td>
                                        <td>In technical analysis, the support level is the level below which the price has very little chance of falling. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Survivorship bias </b></td>
                                        <td>Survivorship bias is the tendency of a market that has never experienced an interruption in trading to exhibit a higher historical return. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Swap </b></td>
                                        <td>Swap is an exchange of financial assets or flows between two entities during a certain period of time. Major forms of swap contracts: currency swap without principal, interest rate swap, currency swap (with principal). Unlike financial assets, financial flows under swap contracts are traded over the counter, with no impact on the balance sheet and allow the parties to modify the exchange or interest rate terms (or both simultaneously) on current or future assets or liabilities. The market value of positions is normally indicated off the balance sheet. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Swap point </b></td>
                                        <td>Swap points are the difference between the forward exchange rate and spot rate. Swap points represent the compensation for the difference between the interest rates on currencies of the currency pair. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Swap-driven Eurobond </b></td>
                                        <td>A swap-driven Eurobond issue is a bond arranged in the currencies in which the issuer maintains a comparative advantage (usually reflected in the credit rating), and converted into other currencies which are equally advantageous to the borrower. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Swaption </b></td>
                                        <td>A swaption is an option on a swap, and can be used to buy or sell the right to conclude a swap over a certain period. The underlying swap is stated at the outset and is defined by its notional amount, maturity and the fixed and floating rate that are used as reference rates. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Sweetener </b></td>
                                        <td>See kicker. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Syndicated loan </b></td>
                                        <td>A syndicated loan is a relatively large loan to a single borrower structured by a lead manager (or managers) and the borrower. Funds are provided by a group of banks, rather than by a single lender. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Synergy </b></td>
                                        <td>Synergy is the improvement of a risk/return ratio of a company following the improvement of the quality of its earnings as a result of a merger/acquisition/diversification move (creation of barriers to entry, decrease of risk of operating cash flows, etc). There are commercial synergies, industrial synergies, and administrative synergies (it should be noted that financial synergies do not exist). Synergy results from a reduction in charges or an improvement in sales that leads to the value of the whole being greater than the sum of the values of the parts. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Synthetic lease </b></td>
                                        <td>Synthetic leases limit the amount of the lease payments to little more than the financing costs. In such structures, the asset must be repurchased at the end of the lease period at a price close to the initial price of the asset when the structure is put together. Conceptually, this is tantamount to a nominee agreement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Synthetic rating </b></td>
                                        <td>See implicit rating. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Systematic risk </b></td>
                                        <td>See market risk. </td>
                                      </tr>
                                    </table>
                                    
                                    <A name="lettreT"></A>                                    
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										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - T</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Take and pay contract </b></td>
                                        <td>Take and pay contracts, which are less restrictive than take or pay contracts, consist in clients' agreeing to take delivery of the products or to use the installations if they have been delivered and are in perfect operating condition. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Take or pay contract </b></td>
                                        <td>Take or pay contracts link the owner of the production facilities (typically for the extraction and/or transformation of energy products) and the future users whose need for the product is more or less urgent. The users agree to pay a certain amount that will cover both interest and principal payments, irrespective of whether the product is delivered and of any cases of force majeure. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Takeover </b></td>
                                        <td>A takeover is the acquisition of one company by another. Takeovers often lead to the removal of current management. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Takeover bid </b></td>
                                        <td>A takeover bid is the attempt of one company to buy another company, either in a hostile or friendly manner. The potential acquirer usually offers to buy the target's shares at a higher price than the market price during a limited period. See also takeover. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tangible fixed asset </b></td>
                                        <td>A tangible fixed asset is a physical fixed asset. Tangible fixed assets are land, buildings, machinery (in the U.S. known as property, plant, equipment), etc. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tapping the reserves </b></td>
                                        <td>Tapping reserves is the practice of distributing more dividends than the earnings in the current year (the payout ratio exceeds 100%). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tax loss carrybacks </b></td>
                                        <td>Tax loss carrybacks are tax benefits which make it possible to reduce current tax liability against the losses of past periods. Also called carrybacks. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tax loss carryforwards </b></td>
                                        <td>Tax loss carryforwards are tax benefits which make it possible to reduce future tax liability against the losses of the current period. Also called carryforwards. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tax shield </b></td>
                                        <td>A tax shield is a gain on taxes due to the tax deductibility of interest expenses on debt. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Technical analysis </b></td>
                                        <td>Technical analysis consists in studying the price history of financial securities in the hope of spotting the short-term trends. Technical analysis is based more on psychology than mathematics. It believes that while investors are not perfectly rational, they at least are fixed in their way of reasoning, with predictable reactions to certain situations. Chartists look for these patterns of behavior in price trends. This approach is often used by traders who take positions for short periods, from several hours to several days. Technical analysis is one of the stock-picking approaches. Technical analysis is also called chart analysis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Technical dilution </b></td>
                                        <td>Technical dilution is apparent dilution less real dilution. It is due to the distribution of "free" bonus shares that automatically accompanies any capital increase via a rights issue. Technical dilution represents the additional dilution (see dilution - shareholders) attributable to the sale of subscription rights by shareholders who use the occasion of the capital increase to reduce their investment in the company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Temporal method </b></td>
                                        <td>The temporal method consists in translating monetary items at the closing rate; non-monetary items at the exchange rate at the date to which the historical cost or valuation pertains; revenues and charges on the income statement theoretically at the exchange rate prevailing on the transaction date. In practice, however, they are usually translated at an average exchange rate for the period. Under the temporal method, the difference between the net income on the balance sheet and that on the income statement is recorded on the income statement under foreign exchange gains and losses. This method is used when the subsidiary is not independent of its parent company, because its operations are an integral part of another company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Temporary differences </b></td>
                                        <td>The historical cost of an asset or liability may not be the same as its tax base. Such a situation creates a temporary difference. See also deferred tax assets and liabilities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tender offer </b></td>
                                        <td>A tender offer for shares is a public share repurchase offer made by the company for its own shares. In practice, an extraordinary general meeting of shareholders must grant the board of directors the authority to make an offer to all shareholders to buy all or part of their shares at a certain price during a certain period, typically about one month. If too many shares are tendered under the offer, the company scales back all the surrender requests in proportion. If too few are tendered, the company cancels the shares that are tendered. See also Dutch auction. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Term sheet </b></td>
                                        <td>Term sheet is the list of terms of a syndicated loan agreed between the borrower and the mandated lead arranger before the latter starts to market the loan. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Terminal value </b></td>
                                        <td>When a company is valued using the DCF method, the final, or terminal, value of the company at the end of the explicit horizon is estimated. Terminal value can be derived either from capital employed, revalued or not, or by using the multiples of operating balances, or by discounting to infinity the normative cash flows. </td>
                                      </tr>
                                      <tr>
                                        <td colspan="2" valign="top"><b>The bottom-up approach is also called the stock-picking approach. </b></td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Theory of markets in equilibrium </b></td>
                                        <td>The theory of markets in equilibrium states that markets are efficient. See also efficient market and the efficient market hypothesis. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Theta </b></td>
                                        <td>Theta measures the sensitivity of the price of an option to the passage of time </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Time deposit </b></td>
                                        <td>Time deposits are fixed term deposits on an interest-bearing bank account that are governed by a letter signed by the account holder. The interest on deposits with maturity of at least one month is negotiated between the bank and the client. It can be fixed or indexed to the money market. No interest is paid if the client withdraws the funds before the agreed maturity date. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Time diversification </b></td>
                                        <td>Time diversification is the phenomenon of decreasing volatility with the passage of time. For riskier instruments, like shares, volatility decreases faster than for less risky securities, like bonds. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Time value </b></td>
                                        <td>The time value of an option is an anticipation of an increase in intrinsic value. Time value diminishes with the passage of time, as the closer the option gets to the exercise date, the less likely it is that the price of the underlying asset will exceed or fall below the strike price for a call option and put option respectively. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Time value of money </b></td>
                                        <td>The time value of money reflects the fact that any sum received later is worth less than the same sum received today. The time value of money is accounted for by discounting the future cash flows or by capitalisation of today's cash flows. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Timing differences </b></td>
                                        <td>Some revenues and charges are recognised in different periods for the purpose of calculating pre-tax accounting profit and taxable profit. Such differences are known as timing differences. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Timing problem </b></td>
                                        <td>Timing problems arise when projects have very different cash flows profiles, i.e. one project starts generating positive cash flows much earlier than the other project, but they start disappearing much more rapidly. To solve this problem, the NPV criterion should be used. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>TMT </b></td>
                                        <td>TMT stands for Telecom, Media, Technology. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tobin's Q </b></td>
                                        <td>Tobin's Q is a ratio devised by James Tobin of Yale University, Nobel Laureate in Economics, who hypothesised that the combined market value of all the companies on the stock market should be about equal to their replacement costs. Tobin's Q ratio is calculated by dividing the market value of assets by their replacement value. Also called the Q ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Toogle notes </b></td>
                                        <td>A debt represented by bonds, where issuers have the choice either to pay cash interest or to issue new bonds instead.\n\nIt is like a payement-in-kind note with an option to pay cash interest. These notes are used to help fund the big leveraged buy-outs. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Top-down approach </b></td>
                                        <td>In a top-down approach, investors focus on the asset class (shares, bonds, money-market funds) and the international markets wherein they wish to invest; the choice of individual securities is of little importance. See also bottom-up approach. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Total breakeven </b></td>
                                        <td>Total breakeven takes into account all the returns required by the company's lenders and shareholders. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Total debt service </b></td>
                                        <td>Total debt service is the annual sum of interest and principal to be paid back by the company to its lenders. Total debt service is also called debt service. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Total return swap </b></td>
                                        <td>Total return swap consists in payment of all cash flows generated by the asset in exchange for payments based on a reference rate such as EURIBOR. See also swap. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Total shareholder return, TSR </b></td>
                                        <td>Total shareholder return is expressed as a percentage and corresponds to the addition of the return on the share (dividends / value of the share) and the capital gains rate (capital gains during the period divided by the initial share value). It is the return earned by a shareholder who bought the share at the beginning of a period, earned dividends, and then sold the share at the end of the period. TSR measures the past year's performance. Total shareholder return is one of the market indicators of value creation. To smoothen out market volatility TSR is usually measured over long periods, like 5 or 10 years. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Tracking stock </b></td>
                                        <td>Performance of a tracking stock is indexed to the financial results of a subsidiary or division. Technically a share of the parent company, a tracking stock confers no voting right on the decisions of the subsidiary that it represents. If the business is sold, however, the holder of the tracking stock has the right to receive a portion of the capital gain. Tracking stocks enable a company to retain full control of a subsidiary while allowing the market to establish a value for it and providing a ready currency for acquisitions. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trade buyer </b></td>
                                        <td>Trade buyer is an acquirer, which already has industrial operations. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trade payables </b></td>
                                        <td>Trade payables are the amounts owed to trade suppliers and other suppliers, social security and tax payables, prepayments by customers and other similar non-financial commitments. See also accounts payable. Can simply be called payables. They are called creditors in the UK. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trade receivables </b></td>
                                        <td>Trade receivables are the amounts owed by customers, prepayments to suppliers and other similar non-financial claims. See also accounts receivable. Trade receivables can be called simply receivables. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trade-off model </b></td>
                                        <td>Trade-off model states that the optimal capital structure of a company is where benefits and costs of debt are best balanced. See also extended trade-off model. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trading profit </b></td>
                                        <td>See EBIT. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trailing ratio </b></td>
                                        <td>See P/E ratio </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Transaction multiples </b></td>
                                        <td>Transaction multiples are based on the multiples implied by transactions in the same sector as the company being valued (see valuation). The transactions should not be too old or they would reflect different market conditions. In addition, size and geographical characteristics of the deals should be similar to the one contemplated. There is often a trade off between retaining a sufficient number of transactions and having deals that can be qualified as similar. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Transaction multiples method </b></td>
                                        <td>The transaction multiples method is a method of valuing a company (see valuation) by assigning to its operating balances the transaction multiples of retained comparable transactions. See also transaction multiples. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Transfer </b></td>
                                        <td>A transfer, one of the payment methods, is on order given by the customer to its bank to debit a sum from a customer's account and to credit another account. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Transfer of assets </b></td>
                                        <td>See asset contribution. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Translation </b></td>
                                        <td>Translation is the conversion of the accounts of foreign subsidiaries into the currency of the parent company. Fluctuations in exchange rates and differences in inflation rates may lead to the distorted presentation of foreign accounts in consolidated accounts. The major methods of translation are the closing rate method, temporal method, and special method. Also called currency translation. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Translation risk </b></td>
                                        <td>Arises from the conversion of foreign currency items on the balance sheet; these foreign exchange fluctuations are not offset by balance sheet items in the same currency. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Treasury </b></td>
                                        <td>Staff function to safeguard the financing, cash management and financiel risk management of a company.\n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Treasury method </b></td>
                                        <td>Treasury method is one of two methods of adjusting the number of shares outstanding for warrants exercise. This method consists of assuming that investors will exercise their warrants, but that the company does not invest the proceeds. Instead, the company uses the proceeds to buy back some of its shares on the market. In this manner, the company can offset some of the dilution (see dilution - shareholders) caused by the exercise of the warrants. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Treasury shares </b></td>
                                        <td>Treasury shares are shares that a company or subsidiaries that it controls own in the company after buying these shares either for the purpose of stabilising the share price (i.e. for listed companies (see listed security), or of being granted to employees (see employee - shareholders), i.e. as part of a stock option plan (see also ESOP), or simply because they were considered at a given moment to be a good investment. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trend analysis </b></td>
                                        <td>Financial analysis always takes into account trends over several years because its role is to look at the past to assess the present situation and to forecast the future. It may also be applied to projected financial statements prepared by the company. The only way of analysing the trends is to look at performance over several years (usually three where the information is available). </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Trust preference shares </b></td>
                                        <td>In trust preference shares the dividend is tax deductible like an interest expense. See also preference shares. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>TSR </b></td>
                                        <td>See total shareholder return. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Turnover - assets </b></td>
                                        <td>Turnover of assets is the speed at which they are monetized within the business cycle. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Turnover - liabilities </b></td>
                                        <td>Turnover of liabilities is the time when they fall due. </td>
                                      </tr>
                                    </table> 
                                    
                                    <A name="lettreU"></A>                                    
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - U</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Underlying asset </b></td>
                                        <td>Each option represents an asset that can either be bought or sold. This asset is called the underlying asset. The underlying asset can be either a financial asset (e.g. a stock, a bond, a Treasury bond, a forward contract, currency, a stock index, etc.) or a commodity (for example a raw material or mining asset). Underlying asset is in general the asset of any derivative contract. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Underwriting </b></td>
                                        <td>Underwriting is the guarantee provided by the bank to the issuer (or seller) that the deal (be it an issue of securities or a syndicated loan) will find buyers/lenders at the agreed upon price. By underwriting an issue, the bank assumes a risk of a failure of the transaction. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Underwriting fee </b></td>
                                        <td>An underwriting fee is a fee paid by a company issuing equity, bonds or raising bank debt to banks which agree to underwrite part ot the funds. If banks are unable to sell or place the securities among investors or other banks at the agreed price, they will be forced to buy thenselves the securities at the agreed price. The agreement may specify an equal amount among all participants or different amounts in proportion to the efforts of each bank. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Underwritten deal </b></td>
                                        <td>Underwritten deal is a deal with a guarantee (of varying degree) of the deal going through. See also underwriting. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Undiversifiable risk </b></td>
                                        <td>See market risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Unit credit method </b></td>
                                        <td>The method used to assess actuarial value (see also the projected benefit obligation) is the projected unit credit method that models the benefits vested with the entire workforce of the company at the assessment date. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Unlevered beta </b></td>
                                        <td>See asset beta. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Unlevered cost of equity </b></td>
                                        <td>The unlevered cost of equity is the cost of equity of a debt-free company. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Unsolicited offer </b></td>
                                        <td>An unsolicited offer is an offer to buy a listed company (see listing) launched without the target's management being aware of the offer before it is actually announced. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Upward flex </b></td>
                                        <td>A technique which involves the upward revising of the margins on a loan offered on the banking syndicate market when demand for such a loan is smaller than supply. Very often used for LBO syndications. \n\nThe opposite is the reverse flex when margins have to be revised downwards due to a demand larger than the offer at the time of syndication. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>US GAAP </b></td>
                                        <td>US GAAP stands for the U.S. Generally Accepted Accounting Principles, which are used mostly in Anglo-Saxon countries. See also IAS. US GAAP are also called GAAP. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>US-style option </b></td>
                                        <td>The holder of a US-style option can exercise his right at any moment during the exercise period. Also called American option. </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreV"></A>  
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - V</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Value </b></td>
                                        <td>The present value, or value of a financial security is the present value of the expected future flows discounted (see discounting) at the rate of return required by investors. Value creation is the objective of any manager. This objective is reached when the investments of company yield more than the return required by providers of funds. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Value added </b></td>
                                        <td>The value added by the company to goods and services purchased from third parties through its activities. On the by-nature income statement format, value added is equivalent to the sum of gross trading profit and profit on raw materials used, less other goods and services purchased from third parties by-nature. For the by-function income statement format, value added is equivalent to the sum of EBIT, depreciation, amortisation and impairment losses on fixed assets, personnel expenses, and taxes other than corporate income tax. Value added is useful in understanding the sector and constitutes a measure of the integration of company in the sector. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Value and financial securities </b></td>
                                        <td>From a financial standpoint, the objective of any company is to create value. It means being able to invest at a rate of return that is higher than the required rate of return for a given level of risk. If this condition is met, the price or value of a financial security will rise; if not - the price will fall. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Value at risk </b></td>
                                        <td>Value at risk (VAR) represents an investor's maximum potential loss on the value of an asset or a portfolio of financial assets and liabilities, based on the investment timeframe and a confidence interval. This potential loss is calculated on the basis of historical data or deduced from normal statistical laws. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Value creation </b></td>
                                        <td>A company will be able to create value during a given period if the return on capital employed (after tax) that it generates exceeds the cost of capital (i.e. equity and net debt) that it has raised to finance capital employed. It leads to enterprise value being higher than the book value of the capital employed. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Value drivers </b></td>
                                        <td>Aside from accounting indicators of value creation, economic indicators of value creation and market indicators of value creation, companies frequently adopt a fourth category of performance variables known as value drivers. These are measured with a class of associated metrics called key performance indicators (KPIs). Value drivers are at the root of business performance because they are frequently leading indicators of performance, while financial results (such as ROCE, for example) are lagging indicators. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Value stock </b></td>
                                        <td>Value stock is a company at the maturity stage of its development, which has limited investment needs. Such companies tend to pay out an increasingly larger share of their profits in the form of dividends. These companies usually exhibit a low price-to-book ratio and price-to-earnings ratio. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>VAR </b></td>
                                        <td>See value at risk. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Variable costs </b></td>
                                        <td>Variable costs are osts that are proportional to the level of business activity (usually expressed by sales). In the long-term, all costs should be variable, if the company is to survive. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Variance </b></td>
                                        <td>Variance is a statistical tool measuring the dispersion of a variable from its mean. Variance is equal to the sum of the squares of the deviation of each return from expected outcome, weighted by the likelihood of each of the possible returns occurring. Applied to financial profitability, variance measures the risk of a financial security. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Variance Swap </b></td>
                                        <td>A Variance Swap is a contract between two parties, A and B, in which they reach agreement on a reference level for the variance of a given asset, let's say 12% and a notional amount, let's say $100,000.\n\nWhen the contract reaches its term, the real variance of the asset in question is looked at. If it's more than 12%, let's say 15%, the 3% on the notional amount of the swap is paid by A to B, ie, $30,000. If the variance is lower, say 8%, the 4% difference is paid by B to A.\n\nIn this operation, if B owns the asset question, B will get the future variance on the asset (12% in this case) since B will receive monetary compensation if it is higher and will pay monetary compensation if it is lower. A, on the other hand, is taking a risk on a fluctuation of the variance and only wins if it falls. \n\nVariance Swaps make it possible to take advantage of the future volatility of an asset, whether this future volatility results in a fall or a rise in the value of the asset.\n\nIt is possible to benefit from this volatility by buying put or call options on the asset, but in this case, a bet should also be made on the price rising or falling, and consequently, put or call options should be bought and two risks taken: a risk that the price will rise or fall and a volatility risk. In a Variance Swap this hedging is unnecessary. We're not betting on the share price rising or falling, but on the level of the share price's volatility. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Vega </b></td>
                                        <td>The vega can be defined as the rate of change in the derivative of the theoretical value of the option vis-&agrave;-vis implied volatility. All other factors being equal, the closer an option is to being in the money (with maximum time value), the greater is the impact of an increase in volatility. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Venture capital </b></td>
                                        <td>The providing of equity or equity equivalents to start-ups and recently established companies. \n\nNot to be confused with investment capital, which involves buying more mature companies (leveraged buy-outs). The major difference between the European and US markets can be seen in this split between venture capital and investment capital - investment capital dominates the European market of which venture capital has a relatively small share. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Volatility </b></td>
                                        <td>Volatility of the value (or the rate of return) of a financial security characterises the amplitude of the fluctuations of this value (or return). Mathematically, volatility is the variance or the standard deviation. In a market economy, volatility measures the risk: the riskier a financial security, the higher its volatility, and vice versa. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Volatility - bonds </b></td>
                                        <td>The volatility of bonds is mainly due to the interest rate risk, affecting almost solely fixed-rate instruments. The value of a fixed-rate instrument is actually not fixed. It varies inversely to market rates. This sensitivity is stronger when the nominal interest rate of the bond and market interest rates are low. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Volatility - dividends </b></td>
                                        <td>A high payout ratio implies low price volatility, all other things being equal. A low payout ratio will result in capital gains, which will be realised by selling the shares. At the same time, the share price of a company that pays out all its earnings in dividends will behave much like the price of a bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Volume growth </b></td>
                                        <td>Volume growth is the growth in physical volume of sales. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Volume-weighted average price </b></td>
                                        <td>Volume-weighted average price or VWAP reflects the total value of transactions in a share divided by the number of shares traded in a particular session.\nIt is used by investors to appreciate the quality of the execution of a buy or sell order on the market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Vulture fund </b></td>
                                        <td>A vulture fund is an investment fund that buys the debt of companies in difficulty or subscribes to equity issues with the aim of taking control of the company at a very low price. </td>
                                      </tr>
                                    </table>
                                    <A name="lettreW" id="lettreW"></A>
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - W</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>VWAP </b></td>
                                        <td>Volume-weighted average price reflects the total value of transactions in a share divided by the number of shares traded in a particular session.\nIt is used by investors to appreciate the quality of the execution of a buy or sell order on the market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>WACC </b></td>
                                        <td>See weighted average cost of capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Wait and see option </b></td>
                                        <td>See option to defer progress of the project. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Wakala </b></td>
                                        <td>This is an agency contract which generally includes expert's fees. Banks often use Wakala for large deposit accounts. The client has invested capital, it appoints an Islamic bank as its agent and pays an expert's fee to the bank for managing the fund. \n </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Warehousing agreement </b></td>
                                        <td>See nominee agreement. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Warm up </b></td>
                                        <td>Warm up sessions are meetings of investment banks with investors to test the latters' sentiment. Warm up meetings are especially important when the size of an issue is large. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Warrant </b></td>
                                        <td>A warrant is a security that allows the holder to subscribe to another security such as a share, a bond, or even another warrant. The subscriber holds the warrant during a given period, in a proportion and at a price that are fixed in advance. Warrants can be used to control the shareholder structure, when the "desirable" shareholders exercise their warrants. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Warrant kicker </b></td>
                                        <td>Warrant kicker is a kicker in the form of warrant. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Weak currency </b></td>
                                        <td>See soft currency </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Weak-form efficient market </b></td>
                                        <td>In a weak-form efficient market, it is impossible to predict future returns. Existing prices already reflect all the information that can be gleaned from studying past prices and trading volumes, interest rates and returns. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Wealth </b></td>
                                        <td>Wealth is one of the two fundamental concepts in corporate finance. When business revenues are higher than business costs, then wealth is created. Wealth creation is the main aim of any business. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Weekend effect </b></td>
                                        <td>Weekend effect is the tendency of the stock market to perform much better on Friday than on Monday. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Weighted average cost </b></td>
                                        <td>Weighted average cost is one of the inventories valuation methods. It consists in valuing items withdrawn from the inventory at their weighted average cost, which is equal to the total purchase cost divided by quantities purchased. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Weighted Average Cost of Capital, WACC </b></td>
                                        <td>Weighted Average Cost of Capital is the rate of return required by the providers of funds (shareholders and creditors) to finance the company's investment projects. Weighted Average Cost of Capital is the overall cost of financing of a company. According to the theory of markets in equilibrium, and provided there are no tax distortions, this cost is independent of the capital structure of the company; hence, optimal capital structure does not exist. Weighted Average Cost of Capital can be also called cost of capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>White knight </b></td>
                                        <td>A white knight is a counter-bidder welcomed by the management of a company which is the target of a hostile takeover bid. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Window dressing </b></td>
                                        <td>The practice of massaging EPS is called &quot;window dressing&quot;, or improving the look of the accounts by adjusting exceptional items, provisions, etc. Since the date of closing the yearly accounts is totally arbitrary, a firm can delay or hasten the accounting records of some expenses or revenues, to affect profits. It is obvious that the profit is only moved in time, and is in no case changed. The expenses and revenues recorded in advance also constitute a source of adjustment: a more or less restrictive recognition has direct consequences on yearly profits. In the same way the company can unload some of its debts between December 30 and January 2 to show a lower indebtedness. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Winners' curse </b></td>
                                        <td>Winners' curse is when the winner of a sale by auction ends up paying more than the item was worth. It is assumed that some buyers will underestimate and others overestimate the value of the item up for auction, and accordingly, the winner will be one of those who have overestimated the value and thus has paid too much. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Working capital </b></td>
                                        <td>The net balance of operating uses and sources of funds is called the working capital. If uses of funds exceed sources of funds, the balance is positive and working capital needs to be financed. This is the most frequent case. If negative, it represents a source of funds generated by the business cycle. It is described as "working capital" because the figure reflects the cash required to cover financing shortfalls arising from day-to-day operations. Working capital is totally independent of the methods used to value fixed assets, depreciation, amortisation and impairment losses on fixed assets. However, it is influenced by: inventory valuation methods; deferred income and expense (over one or more years); the company's provisioning policy for current assets and operating liabilities and expenses.\n Working capital can be also called working capital needs, working capital requirements, and requirements for working capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Working capital needs </b></td>
                                        <td>Working capital needs is one of the synonyms for working capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Working capital requirements </b></td>
                                        <td>Working capital requirements is one of the synonyms for working capital. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Working capital turnover ratios </b></td>
                                        <td>Working capital turnover ratios include: days' receivables, days' payables, days' inventory, days of raw material, days of goods held for resale, days of finished goods inventory, and days of work-in-process. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Write-downs </b></td>
                                        <td>See impairment losses. </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreY"></A>
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - Y</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>Yankee bond </b></td>
                                        <td>A Yankee bond is a foreign bond issued by non-American borrowers on the American market. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Yield </b></td>
                                        <td>See yield to maturity. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Yield curve </b></td>
                                        <td>By charting the interest rate for the same categories of risk at all maturities, the investor obtains the yield curve that reflects anticipations of all financial market operators </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Yield spread </b></td>
                                        <td>Yield spread is the difference in yields on different types of debt securities. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Yield stock </b></td>
                                        <td>See income stock. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Yield to maturity, YTM </b></td>
                                        <td>Yield to maturity is the internal rate of return of a debt security. Yield to maturity is also called yield. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>YTM </b></td>
                                        <td>See yield to maturity. </td>
                                      </tr>
                                    </table> 
                                    <A name="lettreZ"></A> 
                                    <table cellspacing="0" cellspadding="0" class="tabLexique">
									<tr>
										  <td colspan="2" valign="top" style="padding-bottom:10px;"><span class="titreactucom">Glossary - Z</span></td>
										  </tr>

                                      <tr>
                                        <td style="width:100px;" valign="top"><b>ZBA </b></td>
                                        <td>See zero balance account. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Zero balance account, ZBA </b></td>
                                        <td>The zero balance account concept requires subsidiaries to balance their position (i.e. the balance of their bank accounts) each day by using concentration accounts (see concentration bank) managed at group or sub-group level. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Zero coupon </b></td>
                                        <td>See zero-coupon bond. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Zero-coupon bond </b></td>
                                        <td>Zero-coupon bond is a bond that has only one final stream with both capital and capitalised (see capitalisation) interest. Can simply be called zero coupon. </td>
                                      </tr>
                                      <tr>
                                        <td valign="top"><b>Z-score </b></td>
                                        <td>See credit scoring. </td>
                                      </tr>
                                    </table>
                                    
                                    
                                    
                                    
                                    
                                    
                                    
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