Category: Investments glossary

A withholding tax is an amount that an employer withholds from employees’ wages and pays directly to the government. The amount withheld is a credit against the income taxes the employee must pay during the year. It also is a tax levied on income (interest and dividends) from securities owned by a nonresident alien, as well as other income paid to nonresidents of a country. Withholding tax is levied on the vast majority of people who earn income from a trade or business in the United States.

The National Stock Exchange of India Limited (NSE) is India’s largest financial market. Incorporated in 1992, the NSE has developed into a sophisticated, electronic market, which ranked fourth in the world by equity trading volume in 2015. Trading commenced in 1994 with the launch of the wholesale debt market and a cash market segment shortly thereafter.

Make to order (MTO), or made to order, is a business production strategy that typically allows consumers to purchase products that are customized to their specifications. It is a manufacturing process in which the production of an item begins only after a confirmed customer order is received. It is also known as mass customization.

Backup withholding is a tax that is levied on investment income, at an established tax rate, as the investor withdraws it. For payments not subject to withholding, payers are required to withhold the tax. Backup withholding helps to ensure that government tax-collecting agencies, such as the Internal Revenue Service (IRS) or Canada Revenue Agency, will be able to receive income taxes owed to them from investors’ earnings.

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.

Odious debt, also known as illegitimate debt, is when a country’s government misappropriates money it has borrowed from another country.

Make to order (MTO), or made to order, is a business production strategy that typically allows consumers to purchase products that are customized to their specifications. It is a manufacturing process in which the production of an item begins only after a confirmed customer order is received. It is also known as mass customization.

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.

A hara-kiri swap is an interest rate or cross-currency swap devoid of profit potential for the originator. The term became popular in the 1980s when Japanese banks and brokers were offerings very attractive rates in order to obtain business from mostly foreign companies. In Japan, hara-kiri is a form of slow ritual suicide. The swaps were dubbed hara-kiri because not making a profit on these types of transactions was viewed as financial suicide.

Open kimono means to reveal what is being planned or to share important information freely. Similar to ”open the books” or an open door policy, opening the kimono means revealing the inner workings of a project or company to an outside party. The practice is also referred to as opening (up) one’s kimono.