Financial Glossary india - Rupeedesk: April 2016

Basic Course - share Market Classes

Advance/Decline Line

Each day's declining issues are subtracted from the day's advancing issues. The difference is added to (subtracted from if negative) a running total or sum.

The number of stocks or bonds or commodities which have advanced in a given time period compared to the number which have declined. The difference (breadth) is considered important in gauging the strength or weakness of the market. Daily observations are the most common.

Advance-Decline Line

Each day's number of declining issues is subtracted from the number of advancing issues. The net difference is added to a running sum if the difference is positive or subtracted from the running sum if the difference is negative.

Advance ruling

A letter ruling, which is a written statement, issued to a taxpayer by tax authorities, that interprets and applies the tax law to a specific set of facts

Advance pricing arrangement (apa)

An arrangement that determines, in advance of controlled transactions, an appropriate set of criteria (e.g. method, comparables and appropriate adjustments thereto, critical assumptions as to future events) for the determination of the transfer pricing for those transactions over a fixed period of time. An advance pricing arrangement may be unilateral involving one tax administration and a taxpayer or multilateral involving the agreement of two or more tax administrations.

Advance payment guarantee/bond

This is a guarantee that advance payments will be returned if the party having received such payments does not perform its part of the contract.

Advance EMI

Number of equated installment(s) paid in advance at the time of disbursement in the form of post dated cheques.

ADR - American Depository Receipt

ADR

An acronym for American Depository Receipt. Currently popular because of the rush of Indian firms to issue ADRs. Technically, it is an instrument traded at exchanges in the US representing a fixed number of shares of a foreign company that is traded in the foreign country. By trading in ADRs, U.S. investors manage to avoid some of the problems of dealing in foreign securities markets. The ADR route enables companies to raise funds in the U.S. financial markets, provided they meet the stringent regulatory norms for disclosure and accounting.

Admitted company

An insurance company licensed and authorized to do business in a particular state or country.

Administrative Fee

The fee you pay for meeting the overheads of the administrative work handled by the housing finance firm. Usually to be paid while giving the acceptance letter.

Administrative expenses

Taxes
Expenses that are not as easily associated with a specific function as are the direct costs of manufacturing and selling. It typically includes expenses of the headquarters office and accounting expenses.

Adjuster

Insurance
An individual employed by a property/cas-ualty insurer to evaluate losses and settle policyholder claims. These adjusters differ from public adjusters, who negotiate with insurers on behalf of policyhold-ers, and receive a portion of a claims settlement. Inde-pendent adjusters are independent contractors who adjust claims for different insurance companies.

Adjusted Gross Income

Retirement Planning

An interim calculation used in computing income tax liability. It is computed by subtracting certain allowable adjustments from gross income.

Adjusted Futures Price

Futures and Options

The cash-price equivalent reflected in the current futures price. This is calculated by taking the futures price times the conversion factor for the particular financial instrument (e.g., bond or note) being delivered.

Adjustable Life Insurance

A facility allowing a life insurance policy owner to change the insurance plan, increase or decrease the premium and make changes in the protection period.

Additional living expenses

Additional living expenses Insurance

Extra charges covered by homeowners policies over and above the policy-holder?s customary living expenses. They kick in when the insured requires temporary shelter due to damage by a covered peril that makes the home temporarily uninhabitable.

Additional insureds - Insurance

Persons who have an insurable interest in the property/person covered in a policy and who are covered against the losses outlined in the policy. They usually receive less coverage than the pri-mary named insured.

Add-on Method

A method of paying interest where the interest is added onto the principal at maturity or interest payment dates.

Add-On Card

As the term suggests, an add-on card is a privilege offered to the spouse, parents or children of the primary credit card holder. The fee for an add-on card varies between Rs. 125 to Rs. 1,000 depending on the type of card and all expenses incurred on an add-on card are billed to the primary cardholder.

Add on offering

When a publicly traded company issues additional shares to the public.

Adaptive Filter

Smoothing and/or forecasting prices with continuously updated weighting of past prices.

AD&D

Accidental Death and Dismemberment Benefits

Actuary

An insurance professional skilled in the analysis, evaluation, and management of statistical information. Evaluates insurance firms? reserves, determines rates and rating methods, and determines other business and financial risks.

Actuarial Cost Method

A method that determines contributions that would be made under an insurance plan.

Actuarial cost assumptions

Assumptions about rates of investment earnings, mortality, turnover, salpatterns, probable expenses, and distribution or actual ages at which employees are likely to retire.

Actuals

Refers to actual physical commodities, as distinguished from futures.

Actual loss ratio

The ratio of losses incurred to premiums earned actually experienced in a given line of insurance activity in a previous time period.

Actual cash value

A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation.

Acts of god

Perils that cannot reasonably be guarded against, such as floods and earthquakes.

Activities of daily living

Activities-such as eating, bathing, toileting, dressing, and continence-that trig-ger payment in a long-term care insurance policy, if at least some of them cannot be performed by the insured.

Acid Test Ratio

It is the ratio indicated by dividing a company's current assets by current liabilities. It reflects the financial strength of a company and hence called Acid test ratio.

Accumulation/distribution

The Accumulation/Distribution is a momentum indicator that associates changes in price and volume. The indicator is based on the premise that the more volume that accompanies a price move, the more significant the price move. Accumulation/Distribution attempts to confirm changes in prices by comparing the volume associated with prices. When the Accumulation/Distribution moves up, it shows that the security is being accumulated, as most of the volume is associated with upward price movement. When the indicator moves down, it shows that the security is being distributed, as most of the volume is associated with downward price movement. Divergences between the Accumulation/Distribution and the security's price imply a change is imminent. When a divergence does occur, prices usually change to confirm the accumulation/distribution. For example, if the indicator is moving up and the security's price is going down, prices will probably reverse. If the days price change is positive then the difference in the daily high and low price is added to the total, and conversely if the daily change is negative then the daily range is subtracted from the total.

Accumulation Period

The time interval between the commencement of the policy and the time when benefits are paid out. It is established by the insured.

Accumulation

Process by which, over a period of time, a large or excess supply of stock or futures contracts is absorbed by increasing demand from buyers. Generally, there is little price action until the sellers have been exhausted. Then buyers dominate and price tends to rise.

Accrued Interest

Interest earned between the most recent interest payment and the present date but not yet paid to the lender.

Accrued Expenses

Expenses shown on the income statement but not yet paid.

Accrual basis (accrual method)

An accounting method whereby income and expense items are included in taxable income or expense as they are earned or incurred, rather than when they are received or paid

Accrual Basis

A method of accounting that allows revenues and expenses to be accrued, even if cash had not been received or paid during the accrual period.

Accounts receivable (debtors) insurance

Indemnifies for losses that are due to an inability to collect from open commercial account debtors because records have been destroyed by an insured peril.

Accounts receivable

A list of the money owed on current account to a creditor, which is kept in the normal course of the creditor's business and represents unsettled claims and transactions

Accounts payable

A list of the debts currently owed by a person or business, mainly for the purchase of services, inventory, and supplies

Accounting records

All documents and books used in the preparation of the tax return and all financial statements, including general ledger, subsidiary ledgers, sales slips, and invoices.

Accounting period

A period of time used by taxpayer for the determination of tax liability

Accounting basis

Method of calculating amounts subject to income tax and VAT. In respect of VAT, tax would be computed as a percentage levy on the excess of sales over purchases. This is a theoretical concept and no country uses it.

Accidental Death Insurance

Accidental Death Insurance provides coverage in the event of death due to accidental injuries, but not illness. In the event of death, payment is made to the insured's beneficiary. And most of these covers provide for cases for bodily injury (e.g., the loss of a limb), where the insured receives a specificed sum.

Accidental death benefit

An endorsement that pays the beneficiary an additional benefit if the insured dies from an accident.

Accident and health insurance

Coverage for acci-dental injury, accidental death, and related health expenses. Benefits will pay for preventative services, medical expenses, and catastrophic care, with limits.

Accident & Accidental Death Benefit

In the context of life insurance, accident or accidental death is defined as a sudden and unforeseen happening that causes disability or death of the policyholder.

Acceptor

The person who accepts a bill of exchange drawn on them. Until they accept, they are called the drawee. By accepting the bill the acceptor undertakes to pay the person presenting the bill the face value of that bill. On payment the acceptor retires the bill. Where the acceptor is the initial provider of the credit, by arrangement, on maturity of the bill, they require the borrower to place their funds on an amount equivalent to the face value of the bill.