Month: October 2020

Reflexivity in economics is the theory that a feedback loop exists in which investors’ perceptions affect economic fundamentals, which in turn changes investor perception. The theory of reflexivity has its roots in sociology, but in the world of economics and finance, its primary proponent is George Soros. Soros believes that reflexivity disproves much of mainstream economic theory and should become a major focus of economic research, and even makes grandiose claims that it gives rise to a new morality as well as a new epistemology. read more

An augmented product has been enhanced by its seller with added features or services to distinguish it from the same product offered by its competitors. Augmenting a product involves including intangible benefits or add-ons that go beyond the product itself.

A tax refund is a reimbursement to a taxpayer of any excess amount paid to the federal government or a state government.

A mortgage holder issues a deed of reconveyance to indicate that the borrower has been released from the mortgage debt. The deed transfers the property title from the lender, also called the beneficiary, to the borrower.

The reinvestment rate is the amount of interest that can be earned when money is taken out of one fixed-income investment and put into another. For example, the reinvestment rate is the amount of interest the investor could earn if he purchased a new bond while holding a callable bond called due because of an interest rate decline.

An offsetting transaction cancels out the effects of another transaction. Offsetting transactions can occur in any market, but typically offsetting transactions refer to the options, futures, and exotic instrument markets. An offsetting transaction can mean closing a transaction or taking another position in the opposite direction to cancel the effects of the first.

Under various forms of state legislation, dissenting shareholders of a corporation are entitled to receive a cash payment for the fair value of their shares, in the event of a share-for-share merger or acquisition (M&A) to which the shareholders do not consent. Dissenters’ rights allow dissenting shareholders an easy way out of the company if they do not want to be a part of the merger.

A step-up in basis is the readjustment of the value of an appreciated asset for tax purposes upon inheritance.1 The higher market value of the asset at the time of inheritance is considered for tax purposes. When an asset is passed on to a beneficiary, its value is typically more than what it was when the original owner acquired it. The asset receives a step-up in basis so that the beneficiary’s capital gains tax is minimized. A step-up in basis is applied to the cost basis of property transferred at death. read more

Aggregation in the futures markets is a that combines of all futures positions owned or controlled by a single trader or group of traders into one aggregate position. Aggregation in a financial planning sense, however, is a time-saving accounting method that consolidates an individual’s financial data from various institutions.

Cash equivalents are investments securities that are meant for short-term investing; they have high credit quality and are highly liquid.