Five Cs Of Credit

Loading the player… What are the ‚Five Cs Of Credit‘ The five C’s of credit is a system used by lenders to gauge the creditworthiness of potential borrowers. The system weighs five characteristics of the borrower and conditions of the loan, attempting to estimate the chance of default. The five C’s of credit are character,…

Straddle

Loading the player… What is a ‚Straddle‘ A straddle is an options strategy in which the investor holds a position in both a call and put with the same strike price and expiration date, paying both premiums. This strategy allows the investor to make a profit regardless of whether the price of the security goes…

Trickle-Down Theory

Loading the player… What is the ‚Trickle-Down Theory‘ Trickle-down economics, or “trickle-down theory,” argues for income and capital gains tax breaks or other financial benefits to large businesses, investors and entrepreneurs in order to stimulate economic growth. The argument hinges on two assumptions: all members of society benefit from growth; and growth is most likely…

North American Free Trade Agreement – NAFTA

Loading the player… What is the ‚North American Free Trade Agreement – NAFTA‘ The North American Free Trade Agreement (NAFTA) is a piece of regulation implemented January 1, 1994 simultaneously in Mexico, Canada and the United States that eliminates most tariffs on trade between these nations. The essence of a free trade measure, NAFTA’s purpose…

Agency Theory

Loading the player… What is the ‚Agency Theory‘ The agency theory is a supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving problems that can exist in agency relationships due to unaligned goals or different aversion levels to risk. The most common agency relationship in finance occurs…

Treasury Bill – T-Bill

Loading the player… What is a ‚Treasury Bill – T-Bill‘ A Treasury bill (T-Bill) is a short-term debt obligation backed by the U.S. government with a maturity of less than one year, sold in denominations of $1,000 up to a maximum purchase of $5 million. T-bills have various maturities and are issued at a discount…

Index

Loading the player… What is an ‚Index‘ An index is an indicator or measure of something, and in finance, it typically refers to a statistical measure of change in a securities market. In the case of financial markets, stock and bond market indices consist of a hypothetical portfolio of securities representing a particular market or…

Return on Market Value of Equity – ROME

What is ‚Return on Market Value of Equity – ROME‘ Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate positive returns on book value and trade at otherwise low valuations. The market value of equity is generally accepted to be synonymous with a company’s market…

Majority Shareholder

What is a ‚Majority Shareholder‘ A majority shareholder is a person or entity that owns more than 50% of a company’s outstanding shares. The majority shareholder is often the founder of the company or, in the case of long-established businesses, the founder’s descendants. By virtue of controlling more than half of the voting interests in…

Competitive Advantage

Loading the player… What is ‚Competitive Advantage‘ Competitive advantages are conditions that allow a company or country to produce a good or service at a lower price or in a more desirable fashion for customers. These conditions allow the productive entity to generate more sales or superior margins than its competition. Competitive advantages are attributed…