Month: October 2020

An event study is an empirical analysis performed on a security that examines the impact of a significant catalyst occurrence or contingent event on the value of that security.

Economic rent is an amount of money earned that exceeds that which is economically or socially necessary. This can occur, for example, when a buyer working to attain a good or service that is considered exclusive makes an offer prior to hearing what a seller considers an acceptable price. Market imperfections thus lead to the rise of economic rents; it would not exist if markets were perfect since competitive pressures would drive down prices.

The fiscal multiplier measures the effect that increases in fiscal spending will have on a nation’s economic output, or gross domestic product (GDP).

The equity capital market (ECM) is where financial institutions help companies raise equity capital and where stocks are traded. It consists of the primary market for private placements, initial public offerings (IPOs) and warrants; and the secondary market, where existing shares are sold, and futures, options and swaps are traded.

Delinquency rate refers to the percentage of loans within a financial institution’s loan portfolio whose payments are delinquent. When analyzing and investing in loans, the delinquency rate is an important metric to follow; it is easy to find comprehensive statistics on the delinquencies of all types of loans.

Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. During deflation, the purchasing power of currency rises over time.

An instrument is a means by which something of value is transferred, held, or accomplished. In the field of finance, an instrument is a tradable asset, or negotiable item, such as a security, commodity, derivative, or index, or any item that underlies a derivative.

Withholding allowance refers to an exemption that reduces how much income tax an employer deducts from an employee’s paycheck. In practice, employees in the United States use Internal Revenue Service (IRS) Form W-4, Employee’s Withholding Allowance Certificate to calculate and claim their withholding allowance. The employer then uses the W-4 information to determine how much of an employee’s pay to subtract from their paycheck to remit to the tax authorities. The total number of allowances you are claiming is important—the more tax allowances you claim, the less income tax will be withheld from a paycheck; the fewer allowances you claim, the more tax will be withheld. read more

John Maynard Keynes was an early 20th-century British economist, known as the father of Keynesian economics. His theories of Keynesian economics addressed, among other things, the causes of long-term unemployment. In a paper titled The General Theory of Employment, Interest and Money, Keynes became an outspoken proponent of full employment and government intervention as a way to stop economic recession. His career spanned academic roles and government service.

Consumer credit is personal debt taken on to purchase goods and services. A credit card is one form of consumer credit.