Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

CAPITAL FLIGHT

In economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event that disturbs investors and causes them to lower their valuation of the assets in

CAPITAL INVESTMENT ANALYSIS

The process by which management plans, evaluates and controls long term capital investments involving property, plant and equipment.

CAPITAL MARKET LINE

A relationship within the CAPITAL ASSET PRICING MODEL (CAPM) that relates the expected return of a PORTFOLIO to its expected RISK (as measured through STANDARD DEVIATION). Under CAPM, all investors will choose

CAPITAL NOTE

A NOTE issued by a BANK or bank holding company that can qualify as TIER 2 CAPITAL. To be included in the Tier 2 computation, the security must be structured as a

CAPITAL REORGANIZATION

The act of changing the capital structure of a company by combining or dividing shares to create shares of a different value.

CAPITAL STRUCTURE ARBITRAGE

As a hedge fund strategy it involves structuring trades using different instruments relating to a single issuer. For example taking a long position in the debt of a company while shorting equity

CAPITAL SURPLUS

Capital surplus (also referred to as additional paid in capital, paid in capital in excess of par or share premium, is an accounting term which frequently appears as a balance sheet item

CAPITAL TRANSACTION

A transaction affecting non-current items such as fixed assets, long-term debt, or share capital, rather than revenue transactions.

CAPITALISM

A business simulation computer game first published in 1995 by Interactive Magic, developed by Enlight for the Macintosh and MS-DOS and designed by Trevor Chan.

CAPITALIZATION (CAP)

Writing a word with its first letter as a majuscule (upper-case letter) and the remaining letters in minuscules (lower-case letters), in those writing systems which have a case distinction.

CAPITALIZATION FACTOR

Any multiple or divisor used to convert anticipated economic benefits of a single period into value.

CAPITALIZATION OF EARNINGS

A method of determining the value of an organization by calculating the net present value (NPV) of expected future profits or cash flows. The capitalization of earnings estimate is done by taking

CAPITALIZATION OF PROFITS

Converting a company’s retained earnings, which represent the profits held in the business over time, to capital.

CAPITALIZATION RATE

For example, if a building is purchased for $1,000,000 sale price and it produces $100,000 in positive net operating income (the amount left over after fixed costs and variable costs are subtracted

CAPITALIZATION RATIOS

Also called financial leverage ratios, these ratios compare debt to total capitalization and thus reflect the extent to which a corporation is trading on its equity.

CAPITALIZATION TABLE

A table showing the capitalization of a firm, which typically includes the amount of capital obtained from each source – long-term debt and common equity – and the respective capitalization ratios.

CAPITALIZE

With certain loans, such as subsidized FFEL Loans, the U.S. Department of Education pays the interest that accrues on these loans while the student is enrolled at least halftime and during periods

CAPITALIZED COST

This is the total selling price of the vehicle you are leasing. There are other fees included like taxes, license fees, and title and acquisition fees.

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