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Abandonment
The act of surrendering a claim to, or interest in, a particular asset.
The permitted withdrawal from a forward contract that is made for the purchase of deliverable securities.
The act of allowing an option to expire unexercised.

Abandonment Option
A clause granting parties the option of withdrawing from the contract before the fulfillment or completion of all contractual duties. This clause adds value by giving the parties the ability to end the obligation if it is unprofitable. A type of "real option"

Abandonment Value
The value of a project or asset if it were immediately liquidated. Also referred to as the liquidation value.

Abatement
In general, a decrease in the amount of taxation faced by an individual or company.

Accretion
Asset growth through addition or expansion. In reference to discount bonds, it describes the accumulation of value until maturity.

Accounting Rate of Return - ARR
ARR provides a quick estimate of a project's worth over its useful life. ARR is derived by finding profits before taxes and interest.

Accruals
Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense.

Accumulated Dividend
A dividend which is due to holders of cumulative preference shares but which has not yet been paid. The amount is carried forward on the company's books as a liability until it is paid.

Acid-Test Ratio (Quick Ratio)
A stringent test that indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets. Calculated by: (Current Assets - Closing Stock)/Current Liabilities

Acquisition
When one company purchases a majority interest in the acquired. The acquiring of control of one corporation by another. In "unfriendly" takeover attempts, the potential buying company may offer a price well above current market values, new securities and other inducements to stockholders. The management of the subject company might ask for a better price or try to join up with a third company

Active Bond
A term used to describe fixed-income securities that trade frequently on the floor of the NYSE.

Actuary
A professional statistician working for an insurance company. They evaluate your application and medical records to project how long you will live.

Adjusted Earnings
If a company's earnings figures are distorted either positively or negatively by exceptional one-off occurrences in the year, its directors can choose to clarify the performance by releasing adjusted earnings. In other words, earnings with the exceptional items stripped out which they believe are more representative of its underlying performance.

Affidavit
A written statement signed on oath and witnessed by a commissioner for oaths, usually a qualified solicitor

Aging
A method used by accountants and investors to evaluate and identify any irregularities within a company's account receivables. Aging is achieved by sorting and inspecting the accounts according to their length outstanding.

Allotment
The distribution of shares to applicants in a new issue. Applicants may get all the shares they applied for or, if the new issue is oversubscribed, the allotment will be scaled down either pro rata to the amount which each person applied for or, in some cases, using a random ballot.

Amortisation
The process of gradual liquidation of a future obligation or capital outlay, such as paying off a mortgage with periodic payments.
Annual Report
A statement of results issued by a company to its shareholders at the end of the fiscal year (the company's year-end) containing reports on company operations and formal audited financial statements.

Arbitrage
The process by which investors exploit the price difference between two exactly alike securities by simultaneously buying one at a lower price and selling the other at a higher price (therby avoiding risk). This action locks in a risk-free profit for the arbitrageur (arb) (person engaging in arbitrage) and brings the prices back into equilibrium.

Asset
A resource having economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. A balance sheet item representing what a firm owns.

Averaging Down
Buying more of a security at a lower price than the original investment. This is usually done to reduce the average cost per unit of the investment. For example if the initial purchase happens at 75 cents per share and the stock drops to 25 cents per share and you purchase the same amount at that price as your original purchase then your average cost for the stock is only 50 cents per share.