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Glossary of Investment Terms


Aaa Corporate Bond Rate—the average yield on corporate bonds rated Aaa by Moody's Investors Service. Bonds that are rated Aaa are judged to be of the best quality.

After-Tax Corporate Profitssee Corporate Profits.

AFUDCsee Allowance for Funds Used During Construction.

Allowance for Funds Used During Construction (Electric Utility Industries)—a non cash credit to income consisting of equity and debt components. This non cash income results from construction work in progress and is expected to be converted into cash income at a future date.

American Depository Receipts (ADRs)—since most other nations do not allow stock certificates to leave the country, a foreign company will arrange for a trustee (typically a large bank) to issue ADRs (sometimes called American Depositary Shares, or ADSs) representing the actual, or underlying, shares. Each ADR is equivalent to a specified number of shares (the ratio is shown in a footnote on the Value Line page).

American Stock Exchange Composite—a market-capitalization weighted index of the prices of the stocks traded on the American Stock Exchange.

Amortization—an accounting method that reduces the value of an asset on a regular basis over time.

Analyst's Commentary—an approximate 350-word report on each company page in Ratings & Reports on recent developments and prospects-issued every three months on a preset schedule.

Annual Change D-J Industrials (Investment Companies)—the annual change from year end to year end in the Dow Jones Industrial Average, expressed as a percentage.

Annual Change in Net Asset Value (Investment Companies)—the change in percentage terms of the net asset value per share at the end of any given year from what it was at the end of the preceding year, adjusted for any capital gains distributions made during the year.

Annual Rates of Change (Per Share)—compound yearly rates of change of per-share sales, cash flow, earnings, dividends, and book value, or other industry-specific, per-share figures, over the past 10 years and five years and estimated for the coming three to five years. Historical rates of change are computed from the average figures for a past three-year period to the most recent actual three-year period. Forecasted rates of change are computed from the average figure for the most recent three-year period to an average for a future three-year period. If data for a three-year period are not available, a two- or one-year base may be used.

Annual Total Return—a compound yearly return to shareholders that includes both stock price appreciation and dividend returns.

Annuity—a form of contract sold by life insurance companies that guarantees a fixed or variable payment at some future time.

Arithmetic Average—a simple mean. Items to be averaged are added and their sum is divided by the number of items. The result is an arithmetic, or simple, average (or mean).

Asset Quality (Bank and Thrift Industries)—an indicator of problem loans and other assets relative to total assets. A bank with good asset quality, for example, has a lower percentage of problem loans than the average bank.

Asset Value Per Share Year End (Investment Companies)—total common equity at year end, with securities valued at market rather than cost, divided by the number of shares outstanding at year end.

Assets—for a corporation, the total of current assets (normally cash and short-term investments, inventories, and receivables) and long-term assets (normally including property and equipment and good will).

Assets Year end (Investment Companies)—total investment company assets at market value, including stocks, bonds, government securities, and cash, at year end.

Available Seat Miles (ASM) (Air Transport Industry)—a measure of the airline seating capacity available for sale. Each ASM is one seat flown one mile.

Average Annual Dividend Yield—dividends declared per share for a year divided by the average annual price of the stock in the same year, expressed as a percentage.

Average Annual P/E ratio—is calculated by dividing the average price for a year with the actual reported earnings for that year and is shown in the Statistical Array.

Average Annual Price Earnings (P/E) Ratio—the average price of the stock for the year divided by earnings per share (excluding nonrecurring items, as determined by Value Line) reported by the company for the year. In the case of fiscal-year companies, all data are for the fiscal year. (See also Price/Earnings ratio.)

Average Interest Rate Paid (Financial Services Industries)—the interest paid during the year divided by the average debt outstanding.

Average Price for the Year—the sum of the 52 Wednesday closing prices for the year divided by 52.

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