managing its assets. Asset allocation decision The decision regarding how an institution's funds should be distributed among the major classes of assets in which it may invest. Asset allocation mutual fund A mutual fund that rotates among stocks, bonds, and money marketsecurities to maximize return on investment and minimize risk. Asset-backed security A security that is collateralized by loans,leases, receivables, or installmentcontracts on personal property, not real estate. Asset-based financing Methods of financing in which lenders and equity investors look principally to the cash flow from a particular asset or set of assets for a return on, and the return of, their financing. Asset classes Categories of assets, such as stocks, bonds, real estate, and foreign securities. Asset-coverage test A bond indenture restriction that permits additional borrowing if the ratio of assets to debt does not fall below a specified minimum. Asset Depreciation Range System A range of depreciable lives the IRS allows for particular classes of assets. Asset/equity ratio The ratio of total assets to stockholder equity. Asset for asset swap Creditors exchange the debt of one defaultingborrower for the debt of another defaulting borrower. Asset/liability management The task of managing the funds of a financial institution to accomplish two goals: (1) to earn an adequate return on funds invested and (2) to maintain a comfortable surplus of assets beyond liabilities. Also called surplus management. Asset management account Account at a brokerage house, bank, or savings institution that integrates banking services and brokerage features. Asset play A company with assets that are not believed to be accurately reflected in its stock price, making it an attractive buy or play. Asset pricing model A model for determining the required or expected rate of return on an asset. Related: Capital asset pricing model and arbitrage pricing theory. Asset stripper A corporate raider (company A) that takes over a target company (company B) in order to sell large assets of company B to repay debt. Company A calculates that the net, selling off the assets and paying off the debt, will leave the raider with assets that are worth more than what it paid for company B. Asset substitution Occurs when a firm invests in assets that are riskier than those that the debtholders expected. Asset substitution problem Arises when the stockholders substitute riskierassets for the firm's existing assets and expropriate value from the debtholders. Asset swap An interest rate swap used to alter the cash flow characteristics of an institution's assets in order to provide a better match with its liabilities. Asset turnover The ratio of net sales to total assets. Asset value The net market value of a corporation'sassets on a per-share basis, not the market value of the shares. A company is undervalued in the market when asset value exceeds market value. Assets A firm's productive resources. Assets-in-place Property in which a firm has already invested. Assets requirements A common element of a financial plan that describes projected capital spending and the proposed uses of net working capital. Assignment The receipt of an exercise notice by an optionswriter that requires the