FASB
#13
The statement
of the Financial Accounting Standards Board that details the conditions
and procedures for capitalizing leases.
FVAn
The future
value of an annuity over n periods.
Fair
(Equilibrium) Value
The price
at which investors are indifferent between buying or selling a security.
Financial
Futures
A contract
that is used to hedge against fluctuating interest rates, stock prices,
and exchange rates.
Financial
Intermediaries
Specialized
financial firms that facilitate the transfer of funds from savers to
demanders of capital.
Financial
Lease
A lease
that does not provide for maintenance services, is not cancelable, and
is fully amortized over its life; also called a capital lease.
Financial
Leverage
The use
of debt financing.
Financial
Leverage
The extent
to which fixed-income securities (debt and preferred stock) are used
in a firm's capital structure.
Financial
Merger
A merger
in which the firms involved will not be operated as a single unit and
from which no operating economies are expected.
Financial
Risk
An increase
in stockholders' risk, over and above the firm's basic business risk,
resulting from the use of financial leverage.
Financial
Service Corporation
A firm
which offers a wide range of financial services, including investment
banking, brokerage operations, insurance, and commercial banking.
Fixed
Assets Turnover Ratio
The ratio
of sales to net fixed assets.
Fixed
Charge Coverage Ratio
This ratio
extends the TIE ratio to include the firm's annual long-term lease and
sinking fund obligations.
Fixed
Exchange Rate System
The world
monetary system in existence after World War II until 1971, under which
the value of the U.S. dollar was tied to gold, and the values of the
other currencies were pegged to the U.S. dollar.
Floating
Exchange Rates
A system
under which exchange rates are not fixed by government policy but are
allowed to float up or down in accordance with supply and demand.
Floating
Rate Bond
A bond
whose interest rate fluctuates with shifts in the general level of interest
rates.
Flotation
Cost, F
The percentage
cost of issuing new common stock.
Foreign
Bond
A bond
sold by a foreign borrower but denominated in the currency of the country
in which it is sold.
Foreign
Bonds
Bonds
issued by either foreign governments or foreign corporations.
Formula
Value
The value
of an option calculated at the current stock price minus the strike,
or exercise, price.
Forward
Contract
A contract
under which one party agrees to buy a commodity at a specific price
on a specific future date and the other party agrees to make the sale.
Physical delivery occurs.
Forward
Exchange Rate
An agreed-upon
price at which two currencies will be exchanged at some future date.
Founders'
Shares
Stock
owned by the firms' founders that has sole voting rights but restricted
dividends for a specified number of years.
Free
Cash Flows
The firm's
operating cash flows less mandatory equity investments.
Free
Trade Credit
Credit
received during the discount period.
Friendly
Merger
A merger
whose terms are approved by the managements of both companies.
Future
Value (FV)
The amount
to which a cash flow or series of cash flows will grow over a given
period of time when compounded at a given interest rate.
Future
Value Interest Factor for an Annuity (FVIFAi,n)
The future
value interest factor for an annuity of n periods compounded at i percent.
Future
Value Interest Factor for i and n (FVIFi,n)
The future
value of $1 left on deposit for n periods at a rate of i percent per
period.
Futures
Contract
Standardized
contracts that are traded on exchanges and are "marked to market" daily,
but where physical delivery of the underlying asset is virtually never
taken.
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