Investments glossary terminology
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.
Keynesian economics is an economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression.
A non-competitive tender is a bid made by a small investor to purchase a debt issue that has its price based on the average price of all competitive tenders submitted. It is a method of distribution used primarily by the U.S. Treasury and is one of the two bid processes for buying debt issues. A non-competitive tender is for small investors, while the competitive tender is for large institutional investors. A non-competitive tender is also known as a non-competitive bid.
An irrevocable letter of credit (ILOC) is an official correspondence from a bank that guarantees payment for goods or services being purchased by the individual or entity, referred to as the applicant, that requests the letter of credit from an issuing bank.
A holding company depository receipt (HOLDR) is a security that allows investors to buy and sell a basket of stocks in a single transaction. HOLDRs allow investors to trade stocks in a specific industry, sector, or group.
A trader is an individual who engages in the buying and selling of financial assets in any financial market, either for himself or on behalf of another person or institution. The main difference between a trader and an investor is the duration for which the person holds the asset. Investors tend to have a longer-term time horizon, while traders tend to hold assets for shorter periods of time to capitalize on short-term trends.
Land is real estate or property, minus buildings and equipment, that is designated by fixed spatial boundaries. Land ownership may offer the titleholder the right to natural resources on the land. The traditional school of economics dictates that land is a factor of production, along with capital and labor. The sale of land results in capital gain or loss; under IRS tax laws, land is not a depreciable asset, and qualifies as a fixed asset instead of a current asset.