A measure of monetary conditions in the Canadian economy, giving an idea of the relative ease or tightness of monetary policy. MCI gauges the effect that Canada's monetary policy has on the Canadian economy through changes in the exchange rate and interest rates. |||The index looks at interest rates in Canada and the exchange rate Canada has relative to its major trading partners to give an idea of how these factors are working together to influence the economy. It is calculated as the change in the 90-day commercial paper rate since 1987 plus one third of the percentage change in the exchange rate of the Canadian dollar against the currencies of six of Canada's major trading partners (U.S., EU, Japan, U.K., Switzerland and Sweden), each with a different weighting.
A financial theory stating that the market value of a firm is determined by its earning power and the risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends. Remember, a firm can choose between three methods of financing: issuing shares, borrowing or spending profits (as opposed to dispersing them to shareholders in dividends). The theorem gets much more complicated, but the basic idea is that, under certain assumptions, it makes no difference whether a firm finances itself with debt or equity. |||In "Financial Innovations and Market Volatility" Merton Miller explains the concept using the following analogy:"Think of the firm as a gigantic tub of whole milk. The farmer can sell the whole milk as is. Or he can separate out the cream and sell it at a considerably higher price than the whole milk would bring. (That's the analog of a firm selling low-yield and hence high-priced debt securities.) But, of course, what the farmer would have left would be skim milk with low butterfat content and that would sell for much less than whole milk. That corresponds to the levered equity. The M and M proposition says that if there were no costs of separation (and, of course, no government dairy-support programs), the cream plus the skim milk would bring the same price as the whole milk."
While the internal rate of return (IRR) assumes the cash flows from a project are reinvested at the IRR, the modified IRR assumes that postive cash flows are reinvested at the firm's cost of capital, and the intial outlays are financed at the firm's financing cost. Therefore, MIRR more accurately reflects the cost and profitability of a project. The formula for MIRR is: |||For example, say a two-year project with an initial outlay of $195 and a cost of capital of 12%, will return $121 in the first year and $131 in the second year. To find the IRR of the project so that the net present value (NPV) = 0:NPV = 0 = -195 + 121/(1+ IRR) + 131/(1 + IRR)2 NPV = 0 when IRR = 18.66% To calculate the MIRR of the project, we have to assume that the positive cash flows will be reinvested at the 12% cost of capital. So the future value of the positive cash flows is computed as: $121(1.12) + $131 = $266.52 = Future Value of positive cash flows at t = 2 Now you divide the future value of the cash flows by the present value of the initial outlay, which was $195, and find the geometric return for 2 periods. =sqrt($266.52/195) -1 = 16.91% MIRR You can see here that the 16.91% MIRR is materially lower than the IRR of 18.66%. In this case, the IRR gives a too optimistic picture of the potential of the project, while the MIRR gives a more realistic evaluation of the project.
The new accelerated cost recovery system, created after the release of the Tax Reform Act of 1986, which allows for greater accelerated depreciation over longer time periods. |||Faster acceleration allows individuals to deduct greater amounts during the first few years of an asset's life.
A market-capitalization-weighted index maintained by Morgan Stanley Capital International (MSCI) and designed to provide a broad measure of stock performance throughout the world, with the exception of U.S.-based companies. The MSCI All Country World Index Ex-U.S. includes both developed and emerging markets. |||For investors who benchmark their U.S. and international stocks separately, this index provides a way to monitor international exposure apart from U.S. investments. In August of 2008, the MSCI ACWI Ex-U.S. held 23 countries classified as developed markets and 25 classified as emerging markets.
A leading provider of equity, fixed-income and hedge fund indexes. MSCI has been providing global equity indexes for more than 30 years. In 2003, it launched a new family of U.S. equity indexes. |||Morgan Stanley's global equity benchmarks have become the most widely used international indexes by institutional investors across 23 developed and 27 emerging markets. This consistent approach makes it possible to aggregate individual indexes to create meaningful composite, regional, sector and industry benchmarks.For example, MSCI's EAFE Index, which is comprised of 21 major indexes from Europe, Australasia and the Far East serves as the most frequently cited benchmark for the performance of a representative total international stock market.
A measure of the liquid money supply within an economy. MZM represents all money in M2 less the time deposits, plus all money market funds. |||MZM has become one of the preferred measures of money supply because it better represents money readily available within the economy for spending and consumption. This measurement derives its name from its mixture of all the liquid and zero maturity money found within the three "M's."
A facility created by the Federal Reserve board on November 24, 2008, in an effort to stimulate institutional investors to assume investments that have longer terms. The Money Market Investor Funding Facility (MMIFF) is designed to support a private sector initiative to provide liquidity to money market investors. Financial crisis fears caused an influx of institutional investors to assume overnight positions toward the end of 2008, placing a strain on short-term debt markets. Funding is provided by the Federal Reserve Bank of New York through special purpose vehicles (SPVs). |||Eligible investors can sell assets worth no less than $250,000 (such as commercial paper and certificates of deposit (CDs)) with maturities between seven and 90 days to the SPV. The SPV then borrows from the MMIFF and sells asset-backed commercial paper (ABCP) in order to fund the purchase of these assets. The Federal Reserve Bank of New York is repaid by the SPVs as the assets mature.As of February 3, 2009, the MMIFF is authorized to lend a maximum of $600 billion in assets to five SPVs, $540 billion of which is to be funded by the Federal Reserve.
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