An interim dividend is a dividend payment made before a company’s annual general meeting (AGM) and the release of final financial statements. This declared dividend usually accompanies the company’s interim financial statements. The interim dividend is issued more frequently in the United Kingdom where dividends are often paid semi-annually. The interim dividend is typically the smaller of the two payments made to shareholders.
Nationalization refers to the action of a government taking control of a company or industry, which generally occurs without compensation for the loss of the net worth of seized assets and potential income. The action may be the result of a nation’s attempt to consolidate power, resentment of foreign ownership of industries representing significant importance to local economies or to prop up failing industries.
Risk analysis is the process of assessing the likelihood of an adverse event occurring within the corporate, government, or environmental sector. Risk analysis is the study of the underlying uncertainty of a given course of action and refers to the uncertainty of forecasted cash flow streams, the variance of portfolio or stock returns, the probability of a project’s success or failure, and possible future economic states. Risk analysts often work in tandem with forecasting professionals to minimize future negative unforeseen effects.
Money laundering is the illegal process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from the criminal activity is considered dirty, and the process launders it to make it look clean.
The power-distance index (PDI) is a measurement of the acceptance of a hierarchy of power and wealth by the individuals who make up the general population of a nation, culture, or business. Developed by Dutch social psychologist Geert Hofstede, the PDI ultimately provides insight into the extent to which regular citizens, or subordinates, accept or challenge the authority of the person or people in charge.
An optimal currency area (OCA) is the geographic area in which a single currency would create the greatest economic benefit. While traditionally each country has maintained its own separate, national currency, work by Robert Mundell in the 1960s theorized that this might not be the most efficient economic arrangement. In particular, countries that share strong economic ties may benefit from a common currency. This allows for closer integration of capital markets and facilitates trade. However, a common currency results in a loss of each country’s ability to direct fiscal and monetary policy interventions to stabilize their individual economies.
An evergreen contract automatically renews after the expiry date. The parties involved in the contract agree that it rolls over automatically until one gives the notice to terminate it.
An equated monthly installment (EMI) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly installments are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full. With most common types of loans—such as real estate mortgages, auto loans, and student loans—the borrower makes fixed periodic payments to the lender over the course of several years with the goal of retiring the loan.
Continuous compounding is the mathematical limit that compound interest can reach if it’s calculated and reinvested into an account’s balance over a theoretically infinite number of periods. While this is not possible in practice, the concept of continuously compounded interest is important in finance. It is an extreme case of compounding, as most interest is compounded on a monthly, quarterly, or semiannual basis.
An equated monthly installment (EMI) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly installments are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full. With most common types of loans—such as real estate mortgages, auto loans, and student loans—the borrower makes fixed periodic payments to the lender over the course of several years with the goal of retiring the loan.