Category: Investments glossary

Variable overhead efficiency variance refers to the difference between the true time it takes to manufacture a product and the time budgeted for it, as well as the impact of that difference. It arises from variance in productive efficiency.

An interest rate swap is a forward contract in which one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps usually involve the exchange of a fixed interest rate for a floating rate, or vice versa, to reduce or increase exposure to fluctuations in interest rates or to obtain a marginally lower interest rate than would have been possible without the swap.

An international depository receipt (IDR) is a negotiable certificate that banks issue. It represents ownership in the stock of a foreign company that the bank holds in trust. International depository receipts are also known as American Depository Receipt (ADR) in the U.S. ADRs represent stocks of quality issuers in a number of developed and emerging markets. In Europe, IDRs are known as Global Depository Receipts, and trade on the London, Luxembourg, and Frankfurt exchanges. IDR can also specifically refer to Indian Depository Receipts (IDRs). read more

A private equity firm buys all the stock in a troubled public company, thus taking the company private with the intention of revamping its operations and re-selling it at a profit. This process is called repackaging.

Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation and is calculated by subtracting depreciation from the gross domestic product (GDP).

Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation and is calculated by subtracting depreciation from the gross domestic product (GDP).

Illiquid refers to the state of a stock, bond, or other assets that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets may also be hard to sell quickly because of a lack of ready and willing investors or speculators to purchase the asset. Additionally, a company may be illiquid if it is unable to obtain the cash necessary to meet debt obligations. Illiquidity is the opposite of liquidity.

Open source refers to a program with source code that can be modified or enhanced by anyone. Open source grants users of an application permission to fix broken links, enhance the design, or improve the original code. Open source software (OSS) is an example of a kind of open collaboration that can broaden design perspectives far more than a single company or design work group. Open source practices can also lead to considerable savings.

In the world of finance, speculation, or speculative trading, refers to the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value. With speculation, the risk of loss is more than offset by the possibility of a substantial gain or other recompense.

Greenwashing is the process of conveying a false impression or providing misleading information about how a company’s products are more environmentally sound. Greenwashing is considered an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly.