Uninsurable Peril are Events or situations that insurance coverage is not available for, or which insurance companies are unlikely to provide policies for. An uninsurable peril is typically something that has a high risk of occurrence, meaning that the probability of a payout by the insurance company is high and expected. Perils that are not covered are typically catastrophic in nature.
An interest rate derivative is a financial instrument with a value that is linked to the movements of an interest rate or rates. These may include futures, options, or swaps contracts. Interest rate derivatives are often used as hedges by institutional investors, banks, companies, and individuals to protect themselves against changes in market interest rates, but they can also be used to increase or refine the holder’s risk profile or to speculate on rate moves.
A growth and income fund is class of mutual fund or exchange-traded fund (ETF) that has a dual strategy of both capital appreciation (growth) and current income generated through dividends or interest payments. A growth and income fund may invest only in equities or in a combination of stocks, bonds, real estate investment trusts (REIT) and other securities.
Vanguard exchange-traded funds (ETFs) are a class of funds offered by Vanguard.
The NYSE Composite Index is an index that measures the performance of all stocks listed on the New York Stock Exchange. The NYSE Composite Index includes more than 1,900 stocks, of which over 1,500 are U.S. companies. Its breadth, therefore, makes it a much better indicator of market performance than narrow indexes that have far fewer components. The weights of the index constituents are calculated on the basis of their free-float market capitalization. The index itself is calculated on the basis of price return and total return, which includes dividends.
A gain is an increase in the value of an asset or property. A gain arises if the selling price of the asset is higher than the original purchase price. A gain can occur anytime in the life of an asset. If an investor owns a stock purchased for $15 and the market now prices that stock at $20, then the investor is sitting on a five dollar gain. That said, a gain only truly matters when the asset is sold and the gains are realized as profit. An asset may see many unrealized gains and losses between purchase and sale because the market is constantly reassessing the value of assets.
Gross national product (GNP) is an estimate of total value of all the final products and services turned out in a given period by the means of production owned by a country’s residents. GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services.
Proration is a situation that can arise during a specific corporate action, such as an acquisition. In certain situations, the acquiring firm will offer a combination of cash and equity, and shareholders of the firm being acquired can elect to take either. Following the shareholder election, the remaining stock is prorated if available cash or shares are not sufficient to satisfy the offers that shareholders tender. If this occurs, the company grants a proportion of both cash and shares for each offer tendered so that everyone still gets its fair share of the deal. Pell grants can also be prorated under specific circumstances, allowing someone to be paid to go to college.
A knock-in option is a latent option contract that begins to function as a normal option (knocks in) only once a certain price level is reached before expiration. Knock-ins are a type of barrier option that are classified as either a down-and-in or an up-and-in. A barrier option is a type of contract in which the payoff depends on the underlying security’s price and whether it hits a certain price within a specified period.
The Heckscher-Ohlin model is an economic theory that proposes that countries export what they can most efficiently and plentifully produce. Also referred to as the H-O model or 2x2x2 model, it’s used to evaluate trade and, more specifically, the equilibrium of trade between two countries that have varying specialties and natural resources.