Page 726 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 711

purchase accounting The full cost of the acquisition, including goodwill (purchase price less fair
market value of the acquired company), must be put on the balance sheet.
purchase option Optionee pays the company on date of grant an amount equal to the discount on
the stock option.
put option The right to sell a share of stock at a stated price before a stated date. An in-the-money
put option is one in which the option is above the current fair market value. An out-of-the-money put
option is when option price is below the current fair market value.
pyramiding Investing paper profits to gain additional profits.

QPRT See qualified personal residence trust.
qualified domestic relations order (QDRO) A legal decree that a specified portion of a person’s pay
and/or benefits must be turned over to another identified person, typically for child support, alimony,
or other related events.
qualified pension plan See qualified plan as well as defined-benefit pension plan and defined-
contribution pension plan.
qualified personal residence trust (QPRT) Home is transferred to a trust for a limited period
of time, during which the transferee lives there and pays rent. At the end of the period, ownership
transfers to a designated beneficiary.
qualified plan A plan meeting the requirements of a section within the 400 series (deferred
compensation) of the Internal Revenue Code, providing certain tax advantages.
qualified stock option See qualified plan and incentive stock option.
qualifying disposition Stock has been held for prescribed period of time to qualify for long-term
capital gains tax treatment.
qualitative target See objective.
quantitative target See goal.
quartile Twenty-five percentiles.
quick assets Cash, short-term investments, short-term loans, and accounts receivable.
quick ratio Current liquid assets (cash and those assets that are readily convertible to cash) divided
by current liabilities. Also called acid test ratio.
quick test ratio See quick ratio.
quotation Typically, the range of highest bid to sell and lowest offer to sell a specific security.

rabbi trust A nonqualified irrevocable trust that stipulates the financial obligation of the company to
an individual but does not put the individual ahead of general creditors of the company unless the trust
is funded.
rabincular trust See springing rabbi trust.
range The difference between the high and low values. Also called the spread.
ranking method of job evaluation A nonquantitative method or arranging jobs in order of impor-
tance by comparing each job with each other job to determine which is the most important to the
organization. See also classification method and point factor method of job evaluation.
ransom insurance See kidnap and ransom insurance.
rate of interest The percentage charged by the lender to the borrower for use of the money.
rate of return Amount received from an investment as a percentage of the total investment.
rater error Influenced by particular event, personal appearance or personality, and prior or recent
history.