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A
1. A symbol appearing next to a stock listed on NASDAQ indicating that the stock is a class A share. All NASDAQ listings use a four-letter abbreviation; if an "A" follows the abbreviation, this indicates that the security being traded is class A. Publicly-traded companies sometimes issue common shares of different classes, which usually affects the shares' voting rights. Class A shares usually, but not always, carry more voting rights than class B shares.2. Indicating a class of mutual fund with a front-end load. In this case, a certain amount of one's investment is deducted for the mutual fund's salesperson's commission. This lowers the size of the investment in the mutual fund. For example, if one invests $50,000 in a mutual fund, a certain amount, say $1,000, is deducted for the commission, resulting in an investment of only $49,000 in the fund.
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A Classification of Residential Neighborhoods
In marketing, a program that analyzes and attempts to understand the demographics of individual neighborhoods in the United Kingdom and their demand for goods and services. It utilizes nearly 300 lifestyle variables to break down all British postcodes into about 50 kinds of households.
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A Priori Probability
In statistics, the use of logic to estimate the probability of an event. For example, when considering a company's earnings, the company can make a profit, suffer a loss, or break even in a given year. All other things being equal, there is a 1/3 a priori probability of each scenario occurring.
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A Random Walk Down Wall Street
A 1973 book by Burton Malkiel arguing that security prices are completely unpredictable, especially in the short term. The book sets forth the idea that both fundamental analysis and technical analysis are wastes of time, as securities behave randomly. Thus, Malkiel holds that it is impossible to outperform the market by choosing the "correct" securities; it is only possible to outperform the market by taking on additional risk. Malkiel cites the fact that many actively managed mutual funds do not outperform the market over time, and in many cases revert to the mean. Critics of this idea contend that empirical evidence shows that security prices do indeed follow particular trends that can be predicted with a fair degree of accuracy. The title of the book gave birth to the term random walk theory. See also: Efficient markets theory.
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A Rating
The third-highest bond rating by S&P and Fitch. An A rating is subdivided (in decreasing order) into A+, A, and A-. Bonds with A ratings are investment-grade, meaning that banks are allowed to hold them. Bonds with A ratings are low-risk and low-return, though not as much as AA and AAA ratings. The rating is equivalent to the A1, A2, and A3 ratings by Moody's.
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A-B Split
A way to test the effectiveness of direct contact marketing. In an A-B split, the marketer will send, for example, different types of direct mail pieces to potential customers. For instance, it may send two sets of direct mail with different images, wording, or even colors. The marketer will determine which direct mail grouping receives the highest response rate and begin to concentrate its direct mail efforts on that grouping. An A-B split is used in a variety of different media, including banner ads, e-mails, and landing pages. It is also called A-B testing.
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A-D
In technical analysis, a line plotting the advance-decline index over a period of time. The advance-decline index takes the total of stock issues increasing on a trading day and subtracts the number of stock issues declining on the same day. Technical analysts use the index as an indicator of market movements, and use the advance-decline line to confirm a movement. If the line slopes upward over time, it indicates an upward trend, and, if it slopes downward, the opposite is true.
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A-Network
A service some brokerage firms and cable news channels carry; it reports price and trading volume on the New York Stock Exchange and regional exchanges. It also reports on over-the-counter trades for stocks listed on the NYSE. While it is a private reporting service, its overall regulation is governed by NYSE Alternext. It is less commonly called A-Network. See also: Network B.
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A.G. Becker Paribas
An investment bank that resulted from the acquisition of A.G. Becker by Banque Paribas in 1984. This acquisition was short-lived, as Banque Paribas sold A.G. Becker to Merrill Lynch later that same year. A.G. Becker was especially desirable to both companies for its knowledge and expertise in the commercial paper markets.
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A.M. Best and Company
A company known for its ratings of the credit quality of insurance companies. A rating issued by A.M. Best and Company measures an insurance company's ability to pay claims that might be made. The ratings can be between A and F, with A being the highest rating. Best's ratings have historically been issued for insurance companies exclusively, but, more recently, they have been applied to a few small banks.
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A/D
In technical analysis, a line plotting the advance-decline index over a period of time. The advance-decline index takes the total of stock issues increasing on a trading day and subtracts the number of stock issues declining on the same day. Technical analysts use the index as an indicator of market movements, and use the advance-decline line to confirm a movement. If the line slopes upward over time, it indicates an upward trend, and, if it slopes downward, the opposite is true.
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A1
A subset of the third-highest bond rating by Moody's. The other subsets are A2 and A3, both of which are slightly lower. Bonds with an A1 rating are investment-grade, meaning that banks are allowed to hold them. Bonds with A1 ratings are low-risk and low-return, though not as much as Aa and Aaa ratings. The rating is equivalent to the A+ rating by S&P and Fitch.
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AA
The second-highest bond rating by S&P and Fitch. AA is subdivided (in decreasing order) into AA+, AA, and AA-. Bonds with AA ratings are investment-grade, meaning that banks are allowed to hold them. AA bonds are low-risk and low-return. The rating is equivalent to an Aa rating by Moody's.
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AAA
The highest bond rating by S&P and Fitch. A rating of AAA is considered to carry virtually no risk; U.S. Treasury securities, for example, always receive the AAA rating. A bond with an AA is investment-grade, meaning that banks are allowed to hold them. AA bonds are low risk and low return. The rating is equivalent of an Aaa rating by Moody's.
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AAAA Spot Contract
A standardized contract between an advertising agency and a television or radio station. The contract specifies the number of commercials the agency will air over what time, at what price, and under what conditions. The AAAA spot contract is published by the American Association of Advertising Agencies.
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AAII
An organization that provides information by and for small investors. Its website provides much of its information; it also publishes a monthly journal. Local chapters provide information pertinent to individual members. Founded in 1979, the AAII has over 150,000 members and is based in Chicago.
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AATPO
An international organization that promotes trade between countries in Africa. Specifically, it seeks to encourage member states to bring their trade laws into line with each other, and it provides training and research services. It was established in 1975 by the Organization for African Unity and the African Development Bank. Its headquarters are in Tangiers.
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ABA Transit Number
A nine-digit code at the bottom of a check indicating the bank that issued the check. The ABA transit number is issued and published by the American Bankers Association. It is also called the routing transit number or the association number.
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Abacus
An instrument allowing one to quickly add and subtract numbers. Generally, an abacus is composed of a rectangular frame in which horizontal rods are partially covered with beads. The beads may be moved one way or the other to make calculations. It was invented in China in the 2nd century CE and is considered the earliest calculator.
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Abandon
1. To decide not to exercise an option. This occurs when an option is out-of-the-money on the exercise date. That is, one may abandon an option if it is currently unprofitable and thus highly unlikely to become profitable.2. To withdraw one's claim to an asset, especially an unprofitable one. Corporations must file appropriate paperwork with the government to abandon assets. Alternatively, an individual may abandon both real and personal property. For example, a homeowner may leave his/her house and never intend to return. A squatter may then come to possess the home through adverse possession. An important component of abandonment is the owner's intent never to return or otherwise possess the property again.3. To opt out of a forward contract according to the procedure specified therein. When one abandons a forward contract, one does not buy or sell the underlying asset and it is not delivered.
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Abandon Rate
The number of phone calls a telemarketer makes that the potential customer or contact hangs up on automatically without listening, expressed as a percentage of total phone calls made. A high abandon rate may indicate the telemarketer is not performing his/her job efficiently.
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Abandoned Property
Property that appears as if the owner deliberately left it with no apparent intention to return and claim it. For example, a car left on the side of the road for several days may be considered abandoned property. In general, abandoned property becomes the property of its finder, though, in some cases, it may become the property of the state. See also: Abandonment, Mislaid Property, Lost Property.
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abandonment
1. The act of fully and completely relinquishing ownership of some property or asset. One may abandon both tangible assets, such as tools or real estate, or intangible assets, such as patents or leases. For example, abandonment occurs when someone leaves his/her house empty, never intending to return or otherwise use the property. Legal abandonment sometimes requires filing declaration of intent to do so with the appropriate authorities. Sometimes, a person may obtain abandoned property for free, though this does not apply to real estate. See also: Adverse possession.2. See: Expiration.
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Abandonment and Salvage
A clause in a contract allowing one party to abandon (or forfeit ownership to) a property and thereby transfer ownership to another party, assuming the second party accepts. Abandonment and salvage clauses are most common in insurance covering goods being shipped overseas. That is, if the ship sinks and the owner does not wish to attempt to recover the goods, he may declare them abandoned, which would transfer ownership to his insurance company (though the insurance company may refuse to accept ownership). It is also present in some homeowner's insurance contracts. It should not be confused with an abandonment option.
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Abandonment Option
A clause in some contracts allowing one party or the other to terminate the contract before completion. The abandonment option adds value to a contract that can be traded because it allows both parties a great deal of flexibility in case the contract proves unprofitable. However, the clause is most common in contracts between financial advisers and their clients.
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Abandonment Value
The value of an asset if it were sold immediately and all debts associated with it were repaid. That is, the abandonment value is what would be left over after an asset is sold and all the bills were paid. It is also called the liquidation value. See also: Market Price.
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abatement
A decrease in the amount one owes in taxes. Abatement may come from a tax cut, a rebate, or a reduction in penalties or interest one owes on previous taxes.
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Abatement Cost
The expense a business incurs as a result of cleaning or removing an undesired byproduct of its goods and services. Abatement cost is often associated with large manufacturing plants that must abide by environmental standards or city noise ordinances. However, it may apply to a small business also. For example, a dental office must bear the cost of disposing of medically hazardous material.
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Abbrochment
The purchase of all goods in a market in order to control all retail sales of those goods in that market. Abbrochment is one way to create a monopoly.
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ABC
1. See: Associated Builders and Contractors.2. See: American Business Center.3. See: Activity-Based Costing.4. See: ABC Agreement.5. See: Audit Bureau of Circulations.
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