and collars that limits the adjustment. Adjustable-rate mortgage (ARM) A mortgage that features predetermined adjustments of the loaninterest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or margin, over the index, usually subject to per-interval and to life-of-loaninterest rate and/or payment rate caps. Adjustable-rate preferred stock (ARPS) Publicly tradedissues that may be collateralized by mortgages and MBS Adjusted balance method Method of calculating finance charges that uses the account balance remaining after adjusting for all transactions posted during the given billing period as its basis. Related: Average daily balance method, previous balance method, past due balance method. Adjusted basis Price from which to calculate and derive capital gains or losses upon sale of an asset. Account actions such as any stock splits that have occurred since the initial purchase must be accounted for. Adjusted debit balance (ADB) The account balance for a margin account that is calculated by combining the balance owed to a broker with any outstanding balance in the special miscellaneous account, and any paper profits on short accounts. Adjusted exercise price Term used in options on Ginnie Mae (Government National Mortgage Association) contracts. The final exercise price of the option accounts for the coupon rates carried on Ginnie Maemortgages. For example, if the standard GNMA mortgage has an 9% yield, the price of GNMA pools with 13% mortgages in them is altered so that the investor receives the same yield. Adjusted gross income (AGI) Gross income less allowable adjustments, which is the income on which an individual is taxed by the federal government. Adjusted present value (APV) The net present value analysis of an asset if financed solely by equity (present value of unlevered cash flows), plus the present value of any financing decisions (levered cash flows). In other words, the various tax shields provided by the deductibility of interest and the benefits of other investment tax credits are calculated separately. This analysis is often used for highly leveraged transactions such as a leveraged buyout. Adjustment bond A bondissued in exchange for outstanding bonds when a corporation facing bankruptcy is recapitalized. Administrative pricing rules IRS rules used to allocate income on export sales to a foreign sales corporation. Advance Increase in the market price of stocks, bonds, commodities, or other assets. Advance commitment A promise to sell an asset before the seller has lined up purchase of the asset. This seller can offsetrisk by purchasing a futures contract to fix the sales price approximately. Advance Computerized Execution System (ACES) Refers to the Advance Computerized Execution System, run by Nasdaq. ACES automates trades between order entry and market makerfirms that have established trading relationships with each other. Securities are designated as specified for automatic execution. Advance funded pension plan A pension plan in which funds are set aside in advance of the date of retirement. Advance refunding In the context of municipal bonds, refers to the sale of new bonds (the refundingissue) before the first call date of old