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Equity investment |
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Definition of Equity investmentEquity investmentThrough equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.
Related Terms:All equity rateThe discount rate that reflects only the business risks of a project and abstracts from the Asset/equity ratioThe ratio of total assets to stockholder equity. Bottom-up equity management styleA management style that de-emphasizes the significance of economic Common stock/other equityValue of outstanding common shares at par, plus accumulated retained Debt/equity ratioIndicator of financial leverage. Compares assets provided by creditors to assets provided Deferred equityA common term for convertible bonds because of their equity component and the Dividend reinvestment plan (DRP)Automatic reinvestment of shareholder dividends in more shares of a Dual syndicate equity offeringAn international equity placement where the offering is split into two EquityRepresents ownership interest in a firm. Also the residual dollar value of a futures trading account, Equity capAn agreement in which one party, for an upfront premium, agrees to compensate the other at Equity claimAlso called a residual claim, a claim to a share of earnings after debt obligation have been Equity collarThe simultaneous purchase of an equity floor and sale of an equity cap. Equity contribution agreementAn agreement to contribute equity to a project under certain specified Equity floorAn agreement in which one party agrees to pay the other at specific time periods if a specific Equity kickerUsed to refer to warrants because they are usually issued attached to privately placed bonds. Equity marketRelated:Stock market Equity multiplierTotal assets divided by total common stockholders' equity; the amount of total assets per Equity optionsSecurities that give the holder the right to buy or sell a specified number of shares of stock, at Equity swapA swap in which the cash flows that are exchanged are based on the total return on some stock Equity-linked policiesRelated: Variable life EquityholdersThose holding shares of the firm's equity. Euroequity issuesSecurities sold in the Euromarket. That is, securities initially sold to investors Expected return on investmentThe return one can expect to earn on an investment. See: capital asset Foreign direct investment (FDI)The acquisition abroad of physical assets such as plant and equipment, with Foreign equity marketThat portion of the domestic equity market that represents issues floated by foreign companies. Future investment opportunitiesThe options to identify additional, more valuable investment opportunities GEMs (growing-equity mortgages)Mortgages in which annual increases in monthly payments are used to Guaranteed investment contract (GIC)A pure investment product in which a life company agrees, for a Investment analystsRelated: financial analysts Investment bankFinancial intermediaries who perform a variety of services, including aiding in the sale of Investment decisionsDecisions concerning the asset side of a firm's balance sheet, such as the decision to Investment grade bondsA bond that is assigned a rating in the top four categories by commercial credit Investment incomeThe revenue from a portfolio of invested assets. Investment managerAlso called a portfolio manager and money manager, the individual who manages a Investment product line (IPML)The line of required returns for investment projects as a function of beta Investment tax creditProportion of new capital investment that can be used to reduce a company's tax bill Investment trustA closed-end fund regulated by the investment Company Act of 1940. These funds have a Investment valueRelated:straight value. InvestmentsAs a discipline, the study of financial securities, such as stocks and bonds, from the investor's Investor's equityThe balance of a margin account. Related: buying on margin, initial margin requirement. Legal investmentsinvestments that a regulated entity is permitted to make under the rules and regulations Leveraged equityStock in a firm that relies on financial leverage. Holders of leveraged equity face the Long-term debt to equity ratioA capitalization ratio comparing long-term debt to shareholders' equity. Mutually exclusive investment decisionsinvestment decisions in which the acceptance of a project Net investmentGross, or total, investment minus depreciation. Net present value of future investmentsThe present value of the total sum of NPVs expected to result from Passive investment strategySee: passive management. Passive investment managementBuying a well-diversified portfolio to represent a broad-based market Preferred equity redemption stock (PERC)Preferred stock that converts automatically into equity at a Reinvestment rateThe rate at which an investor assumes interest payments made on a debt security can be Reinvestment riskThe risk that proceeds received in the future will have to be reinvested at a lower potential REIT (real estate investment trust)Real estate investment trust, which is similar to a closed-end mutual REMIC (real estate mortgage investment conduit)A pass-through tax entity that can hold mortgages Return on equity (ROE)Indicator of profitability. Determined by dividing net income for the past 12 Return on investment (ROI)Generally, book income as a proportion of net book value. Shareholders' equityThis is a company's total assets minus total liabilities. A company's net worth is the Short-term investment servicesServices that assist firms in making short-term investments. Stockholder equityBalance sheet item that includes the book value of ownership in the corporation. It Stockholder's equityThe residual claims that stockholders have against a firm's assets, calculated by Stratified equity indexingA method of constructing a replicating portfolio in which the stocks in the index Top-down equity management styleA management style that begins with an assessment of the overall Total debt to equity ratioA capitalization ratio comparing current liabilities plus long-term debt to Underinvestment problemThe mirror image of the asset substitution problem, wherein stockholders refuse Unit investment trustMoney invested in a portfolio whose composition is fixed for the life of the fund. Zero-investment portfolioA portfolio of zero net value established by buying and shorting component RATE OF RETURN ON STOCKHOLDERS’ EQUITYThe percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it: RATIO OF DEBT TO STOCKHOLDERS’ EQUITYA ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company: RETURN ON INVESTMENT (ROI)In its most basic form, the rate of return equals net income divided by the amount of money invested. It can be applied to a particular product or piece of equipment, or to a business as a whole. STOCKHOLDERS’ (OR OWNERS’) EQUITYThe value of the owners’ interests in a company. EquityFunds raised from shareholders. Investment centreA division or unit of an organization that is responsible for achieving an adequate return on Return on investment (ROI)The net profit after tax as a percentage of the shareholders’ investment in the business. Contra-equity accountAn account that reduces an equity account. An example is Treasury stock. EquityAmounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings). Shareholders' equityThe total amount of contributed capital and retained earnings; synonymous with stockholders' equity. Stockholders' equityThe total amount of contributed capital and retained earnings; synonymous with shareholders’ equity. capital investment analysisRefers to various techniques and procedures debt-to-equity ratioA widely used financial statement ratio to assess the equityRefers to one of the two basic sources of capital for a business, the owners' equityRefers to the capital invested in a business by its shareowners return on equity (ROE)This key ratio, expressed as a percent, equals net return on investment (ROI)A very general concept that refers to some stockholders' equity, statement of changes inAlthough often considered Cost of EquitySame as the cost of common stock. Sometimes viewed as the InvestmentThe commitment of funds (capital) in anticipation of an increased Return on Common Equity RatioA measure of the percentage return earned on the value of the investment centera responsibility center in which the manager investment decisiona judgment about which assets will be postinvestment auditthe process of gathering information reinvestment assumptionan assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR return on investmenta ratio that relates income generated EquityThe difference between the total of all recorded assets and liabilities on the balance Owners' equityThe total of all capital contributions and retained earnings on a business’s investment gradeBonds rated Baa or above by Moody’s or BBB or above by Standard & Poor’s. EquityOwnership. Common stock represents equity in a corporation. Investment BankerMiddleman between a corporation issuing new securities and the public. The middleman buys the securities issue outright and then resells it to customers. Also called an underwriter. Investment SpendingExpenditures on capital goods including new housing. Financial ''investments" and sales of existing assets are not included. Investment Tax CreditA reduction in taxes offered to firms to induce them to increase investment spending. Net Investmentinvestment spending minus depreciation. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |