Glossary of Finance Terms

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Off Balance Sheet Financing
Financing in which the assets and liabilities involved do not appear on the firm's balance sheet.
Operating Company
A subsidiary of a holding company operated as a separate legal entity.
Operating Lease
A lease under which the lessor maintains and finances the property; also called a service lease.
Operating Leverage
The extent to which fixed costs are used in a firm's operations.
Operating Merger
A merger in which operations of the firms involved are integrated in hope of achieving synergistic benefits.
Operation Cash Flow
That cash flow which arises from normal operations; the difference between sales revenues and cash operation expenses, after taxes on operation income.
Opportunity Cost
The return on the best alternative use of an asset, or the highest return that will not be earned if funds are invested in a particular project.
Optimal Dividend Policy
The dividend policy that strikes a balance between current dividends and future growth and maximizes the firm's stock price.
Option
A contract which gives its holder the right to buy (or sell) an asset at a predetermined price within a specified period of time.
Ordinary (Deferred) Annuity
An annuity whose payments occur at the end of each period.
Organized Security Exchange
A formal organization, having a tangible physical location, that facilitates trading in designated ("listed") securities. The two major U.S. security exchanges are New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX).
Organized Security Exchanges
Formal organizations having tangible physical locations that conduct auction markets in designated ("listed") securities. The two major U.S. stock exchanges are the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX).
Original Issue Discount Bond
Any bond originally offered at a price below its par value.
Original Maturity
The number of years to maturity at the time a bond is issued.
Out-Sourcing
The practice of purchasing components rather than making them in-house.
Outflow
A cash deposit, cost, or amount paid. Has a minus sign.
Over-the-Counter (OTC) Market
The network of dealers that provides for trading in unlisted securities.
Over-the-Counter Market
A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities.


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