Guide to Analysing Companies

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ASSET MANAGEMENT
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because its profits have shrunk or because the management
has lost its way. Later refinements of the practice, particularly in
the United States, involved selling off enough bits of the
company to pay off the debt and thus place the business on a
more even keel. The remaining assets may then be worth
more than they were when the company, or a controlling inter-
est in it, was acquired. If a company’s shares do fall in value but
the underlying business is sound, the existing management may
be able to persuade the shareholders to sell it to them as part of
a management buy-out. If so, they may seek to raise
finance from banks and from firms specialising in private
equity.
Asset value
The value of a company’s assets compared with the valuation
placed on them by the company’s share price. So a company
is undervalued by the stockmarket when its net assets
(after deducting any debt) are worth more than its stockmarket
capitalisation.
Association of International Bond Dealers
See international securities market association.
Assurance
A type of insurance taken out against an event that will defi-
nitely occur (that is “assured” of happening) but whose timing is
uncertain. The term is applied in particular to life assurance: the
risk that is being insured is not the event itself (the death of the
assured is not in question) but the timing of it.
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ASSURANCE
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At best
An order from a customer to a broker to buy or sell a certain
security at the best current price available. In such cases,
brokers should use their experience and discretion to secure the
best possible deal for the client.
At the money
At or equal to the current price of a security; most commonly
used with options. An option is at the money if it is equal to
the price of the stock or other instrument on which it is
written or to the underlying futures contract. Not to be con-
fused with in the money, which denotes that the price has
moved to the point where it becomes profitable for the holder –
that is, above the exercise or strike price of a call option
or below that of a put option.