Category: Investments glossary

The money factor is a method for determining the financing charges on a lease with monthly payments. The money factor can be translated into the more common annual percentage rate (APR) by multiplying the money factor by 2,400.

A reversal is a change in the price direction of an asset. A reversal can occur to the upside or downside. Following an uptrend, a reversal would be to the downside. Following a downtrend, a reversal would be to the upside. Reversals are based on overall price direction and are not typically based on one or two periods/bars on a chart. Certain indicators, such a moving average or trendlines, may help in isolating trends as well as spotting reversals.

Overlay refers to a management style that harmonizes an investor’s separately managed accounts. Overlay management uses software to track an investor’s combined position from separate accounts. The overlay system analyzes any portfolio adjustments to ensure the overall portfolio remains in balance and to prevent any inefficient transactions from occurring. Overlay portfolio management makes sure the investor’s strategies are implemented and coordinated successfully.

3P oil reserves are the total amount of reserves that a company estimates having access to, calculated as the sum of all proved and unproved reserves. The oil industry breaks unproved reserves into two segments: those based on geological and engineering estimates from established sources (probable) and those that are less likely to be extracted due to financial or technical difficulties (possible). Therefore, 3P refers to proved plus probable plus possible reserves.

The Hodrick-Prescott (HP) filter refers to a data-smoothing technique. The HP filter is commonly applied during analysis to remove short-term fluctuations associated with the business cycle. Removal of these short-term fluctuations reveals long-term trends. This can help with economic or other forecasting associated with the business cycle.

A product portfolio is the collection of all the products or services offered by a company. Product portfolio analysis can provide nuanced views on a stock type, company growth prospects, profit margin drivers, income contributions, market leadership, and operational risk. This is essential for investors conducting equity research by investors or analysts supporting internal corporate financial planning.

The University of Iowa Tippie College of Business is the business school at the University of Iowa in Iowa City, Iowa. Founded in 1921, it offers both undergraduate and graduate programs.

An overfunded pension plan is a company retirement plan that has more assets than liabilities. In other words, there is a surplus amount of money needed to cover current and future retirements. Although accounting standards allow the company to record the surplus as net income,1 it cannot be paid out to corporation shareholders like other income as it is reserved for current and future retirees.

A service charge is a fee collected to pay for services related to the primary product or service being purchased. The charge is usually added at the time of the transaction.

A general partnership is a business arrangement by which two or more individuals agree to share in all assets, profits, and financial and legal liabilities of a jointly-owned business. In a general partnership, partners agree to unlimited liability, meaning liabilities are not capped and can be paid through the seizure of an owner’s assets. Furthermore, any partner may be sued for the business’s debts.