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Cover ratio |
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Cover ratioThe number of warrants required to exercise into one share, or one unit of the underlying asset. Also known as the subscription ratio, exercise ratio, conversion ratio, entitlement ratio, parity ratio, multiplier, or set. Take care when applying the cover ratio: some issuers express the ratio as an inverse, so that a cover ratio of 100 will be written as 0.01.Similar MatchesDividend coverDividend coverThe ratio between a company's earnings (net profit after tax) and the net dividend paid to shareholders, calculated as earnings per share divided by the dividend per share.So if a company has earnings per share of 8p and it pays out a dividend of 2.1p, the dividend cover is 8 / 2.1 = 3.80Generally speaking, a ratio of 2 or higher is considered safe (in the sense that the company can well afford the dividend), but anything below 1.5 is risky. If the ratio is under 1, the company is using its retained earnings from a previous year to pay this year's dividend. Rally (recovery)Rally (recovery)An upward movement of prices. Opposite of reaction. Covered interest rateCovered interest rateThe covered interest rate, in a currency other than your own, is the nominal interest rate plus the forward premium on the currency; thus the percent you will earn holding the foreign asset while protecting against exchange-rate change by selling the foreign currency forward. Forward coverForward coverThe purchase in the cash market of the difference between what you are obligated to deliver in a forward contract and the amount of the asset you own. For example, if you agreed to sell 100,000 bushels of corn in September in a forward contract, but you only have 60,000, you need to purchase 40,000 to cover your obligation. Covered interest arbitrageCovered interest arbitrageOccurs when a portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges the resulting foreign exchange risk by selling the proceeds of the investment forward for dollars. Further SuggestionsAsset coverage testEuropean Recovery Program Cost Recovery Period Covered option critical illness cover cover note covered combination Covered position Covered extended coverage Debt service coverage Covered call Uncovered call writing covered warrant Preferred dividend coverage short covering Adequacy of coverage Bid to cover ratio uncovered Uncovered options Covered Straddle Price discovery process Short covering Overall market price coverage Accelerated cost recovery system (ACRS) |
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