Guide to Analysing Companies

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ANNUALISED PERCENTAGE RATE
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 Perpetual annuity. The payments go on forever (to
survivors, that is).
Buy an annuity cheap and make your life interesting to yourself and
everybody else that watches the speculation.
Charles Dickens, 
Martin Chuzzlewit 
APR
See annualised percentage rate.
Arbitrage
The buying and selling of financial instruments on dif-
ferent markets in order to take advantage of different prices
between the markets. Before markets became truly interna-
tional, the game usually involved dealing in different countries
(for example, the foreign-exchange markets in New York
or London). Today, arbitrageurs (the name given to those who
practise it) are more likely to trade between baskets of different
instruments and between the physical and futures markets.
For example, a trader might swap euros for dollars and lock in
a gain by selling the dollars forward in the futures market. A
similar trade could involve buying and selling interest-rate
contracts for one or more currencies. An investor could also
profit by buying a block of shares in one market and repackag-
ing them for sale in another. In theory, as information travels
more quickly, the opportunities for arbitrage should diminish
because markets operate more efficiently. In practice, however,
the growing diversity of financial instruments (particularly
derivatives of one sort or another) is increasing the opportu-
nity for arbitrage, especially for sophisticated investors.
ARM
See adjustable-rate mortgage.
A
ARM
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Asset
More or less anything owned by an individual or an organisa-
tion that has a monetary value, which is usually recorded at its
cost or market worth. An asset can be tangible, such as the title
to a property or land, or intangible, like a brand or franchise.
loans or claims against other financial institutions account for
the largest proportion of assets held by banks. Otherwise,
assets are usually categorised according to their role or form. For
example, current assets are cash and any short-term items that
can easily be turned into cash; fixed assets cover plant and ma-
chinery owned by a firm; capital assets may include the former
and cover long-term assets such as land or buildings which are
not bought and sold in the normal course of business. (See also
depreciation.)