Month: November 2020

Net settlement is a bank’s routine resolution of the day’s transactions at the end of the business day.

A deduction is an expense that can be subtracted from an individual or married couple’s gross income in order to reduce the amount that is subject to income tax. It is often referred to as an allowable deduction.

A convertible bond is a fixed-income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares. The conversion from the bond to stock can be done at certain times during the bond’s life and is usually at the discretion of the bondholder.

A lessee is a person who rents land or property from a lessor. The lessee is also known as the tenant and must uphold specific obligations as defined in the lease agreement and by law. The lease is a legally binding document and if the lessee violates its terms he or she could be evicted.

Homemade leverage is used by an individual investor to artificially adjust the leverage of a company. An individual investing in a company with no leverage can recreate the effect of leverage using homemade leverage, which includes taking out personal loans on the investment. However, differences in the tax rate between the corporation and the individual will likely disrupt the ability of the investor to construct the leveraging scenario accurately.

First introduced in 1983 as the Nasdaq Quotation Dissemination Service (NQDS), Level 2 is a subscription-based service that provides real-time access to the NASDAQ order book. It is intended to display market depth and momentum to traders and investors.

A negative interest rate environment exists when the nominal overnight interest rate falls below zero percent for a particular economic zone. This means that banks and other financial institutions would have to pay to keep their excess reserves stored at the central bank rather than receive positive interest income.

Bancassurance is an arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank’s client base. This partnership arrangement can be profitable for both companies. Banks earn additional revenue by selling insurance products, and insurance companies expand their customer bases without increasing their sales force or paying agent and broker commissions.

The after-tax real rate of return is the actual financial benefit of an investment after accounting for the effects of inflation and taxes. It is a more accurate measure of an investor’s net earnings after income taxes have been paid and the rate of inflation has been adjusted for. Both of these factors will impact the gains an investor receives, and so must be accounted for. This can be contrasted with the gross rate of return and the nominal rate of return of an investment.

When producing goods and services, businesses require labor and capital as inputs to their production process. The demand for labor is an economics principle derived from the demand for a firm’s output. That is, if demand for a firm’s output increases, the firm will demand more labor, thus hiring more staff. And if demand for the firm’s output of goods and services decreases, in turn, it will require less labor and its demand for labor will fall, and less staff will be retained. read more