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Exercise date

The last day (in America) or the only day (in Europe) when a specific option may be exercised- that is the final or only day when a holder can implement his or her right over an option to buy or sell an underlying security.

Exercise period (options)

The exercise period is determined by the option style and defines what circumstances the holder of an option can exercise it. European-style options can only be exercised on the expiration date. American-style options can be exercised at any point up to the expiration date and Bermudan-style options only on specified dates.

air value

Fair value is the approximate value of a company’s assets and liabilities and is most often used to formulate a financial statement in the event of an acquisition. Fair value encompasses a range of objective and subjective factors in allocating a market price to what ultimately remains an indeterminate asset.

FIFO

First in, first out. A valuation method used by corporations and asset managers that ensures all assets are used or disposed of in the order they were acquired. The FIFO method is often utilised for tax minimisation purposes, as it assumes all assets remaining in inventory match recently acquired assets.

Flexible budget

A budget calculated to reflect different rates of production, sales, revenue based on different levels of output. Flexible budgets often reallocate funds along the year as different expectations are met or missed. A flexible budget will change according to what production or sales are actually achieved.

Footnotes

Footnotes are additional bits of information in financial statements, kept separate from the main bulk of information. This is usually done so that they don’t confuse the key information, but included to ensure full disclosure of information. They also provide context for the financial statements.

Fraud

A wrongful deception made with the intent to obtain personal or financial gain. In the corporate world, this amounts to the reporting of any fraudulent figures or misrepresentations, such as claiming on a false tax deduction, which may give the perpetrating company an unfair economic advantage over its competitors.