An Introduction to Corporate Finance: Transactions and Techniques, Second Edition

GLOSSARY

Adjusted Present Value (APV) A project or corporate valuation method that separates the components of the project’s value into its operational value and the value of its financing side-effects.

American Depository Receipts (ADRs) Certificates issued by a bank stating that a specific number of a company’s shares have been deposited with it. These certificates are denominated in dollars and traded on American exchanges as if they were American securities. However, ADRs represent stock in companies outside America.

Allotment letter Allocation of shares from a New issue is made by means of an allotment letter. This entitles the recipient to a certain number of shares, subject to payment. When demand for a new issue exceeds the shares available, allotment is made either on a random (see Ballot) or proportional basis.

Allotment price Price at which stock is allotted to successful applicants in a New issue or other offer.

Alternative Investment Market (AIM) AIM was established in 1995 as a market for companies unable to join the Official List of the London Stock Exchange. It has less onerous requirements for listing than the Official List.

American option An Option which may be exercised any time between its initiation and expiration dates (inclusive).

Annualised return The rate of return for any given period expressed as the equivalent average return per year.

Arbitrage Seeking to exploit price differences between different markets in similar instruments. An early example of ...