Introduction to Finance

f
Diversification, 358
decision, 359–360
defined, 360
example, 362
t
Dividend-paying common stock, current 
price, 284
Dividend payout ratio
calculation, 271
defined, 271, 580
Dividend reinvestment plans (DRIPs), 
defined, 270
Dividends, 270–274
dollar amount, corporate decision, 271–272
growth rates, knowledge, 287
payment
strategies, problems, 271–272
timing, 272
policy, 581
DMMs. 
See
Designated market makers
Documentary draft, defined, 145
Dodd-Frank Wall Street Reform and 
Consumer Protection Act (2010), 52, 
71, 109
defined, 59
Dollar, adoption, 28
Dollar return, calculation, 343–344
Domestic economies, linkage, 151
Double taxation, escape, 388
Dow Jones Industrial Average (DJIA)
basis, 324–325
levels
change, 320
decrease, 352–353
stocks, 325
t
Draft (bill of exchange), defined, 145
Drafts
acceptance
Board of Governors, authorization, 149
example, 149–150
clean draft, 146
collection, bank assistance, 146–147
documentary draft, 145
types, 145–146
Degree of financial leverage (DFL), defined, 
586
Degree of operating leverage (DOL), 446–448
calculation, 587
defined, 447
Delivery float, 476
Demand, supply (relationship), 138–139
Demand deposits, 32
checking accounts, 36
impact, 122
Demand-pull inflation, 210–211
defined, 210
Dent, Jr., Harry, 179
Deposit insurance, existence, 61
Deposit money, defined, 32–33
Depositors, funds (protection), 59
Depository financial institutions, careers, 16
Depository institutions
cash/balances due, 63–64
defined, 47
deposits, expansion, 195
deregulation, 57–59
transactions, 122–123
Depository Institutions Deregulation 
and Monetary Control Act of 1980 
(DIDMCA), 57, 88
Deposits, 66
acceptance, 53
contraction, 115, 120–121
creation, 115–116
expansion, 115, 195
FSLIC insurance, 60
multiple expansion, 20 percent reserve 
ratio, 119
t
offsetting/limiting factors, 119–120
Depreciation
basics, 419–421
capital consumption adjustment, defined, 176
defined, 395
expense, impact, 545
methods, 420–421
noncash expense, 543
tax shield, 545–546
defined, 546
value reduction, 392
Derivative deposit, 115
defined, 115
Derivatives, existence (reasons), 334–335
Derivative securities
defined, 182, 334
markets, defined, 15
Derivative securities markets, defined, 15
Designated market makers (DMMs), 320
defined, 315
Development capital, flow (impact), 174
Development stage, defined, 524
Deviations, defined, 345
Digital currency, defined, 40
Direct quotation method, defined, 136
Disbursement float, 476
components, reduction methods, 478
t
Discount bond, defined, 279
Discount brokerages, usage, 324
Discounted cash flow (DCF)
managerial flexibility/options, 540
techniques, conflicts, 538–540

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624
INDEX
Federal income taxation, 417–419
Federal National Mortgage Association 
(FNMA) (Fannie Mae), 108
creation, 185
defined, 78
Federal obligations, tax status, 200
Federal Open Market Committee (FOMC), 
84, 90, 92, 93
liquidity, provision, 92
Federal Reserve Act of 1913, 30, 57
compromise, 80
Federal Reserve Bank of New York, year-end 
interest rates, 91
Federal Reserve Note. 
See also
United States
changes, 31
Federal Reserve System (Fed), 12, 13, 105
advisory committees, 80, 81