Financial Terms Excerpts
Appraised Value
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Arbitrage
Arbitrage refers to the practice of taking advantage of the price imbalances sometimes arising in two or even more markets. People who work in foreign money exchange run their whole businesses on this model. As an example, they look for tourists who require a rapid exchange of their cash for the local currency. Tourists agree to accept this local money [...]
Assessed Value
Assessed Value refers to the specific dollar value amount which a municipality assigns to a certain property. They do this for the purpose of determining the relevant taxes for the property and owner. These assessed valuations actually create a given residence’s tax purpose value. They do this through considering inspections and any comparable home sales in the area. Once this [...]
Asset Allocation
Asset allocation involves diversifying an investor portfolio into a variety of different assets based on the appropriate level of risk. This procedure has investors divide up their investments between varying types of assets. Among these might be stocks, real estate, bonds, and cash. The goal is to maximize the reward and risk balance using the investors’ own goals and scenarios. [...]
Asset Backed Security (ABS)
An Asset Backed Security is also known by its acronym ABS. This refers to a type of financial security. These are commonly backed up using either a lease, a loan, or receivables against company assets (which would not include either mortgage backed securities or real estate). With the world of investing, such ABS provide other choices for those who wish [...]
Asset Classes
Asset classes are different groups of securities which demonstrate characteristics in common, are governed by similar regulations and laws, and behave similarly in the markets. There are five principle classes which include equities (stocks), fixed income (bonds), money market instruments (cash equivalent), commodities (like gold and oil), and real estate (including land, houses, and commercial buildings), as well as some [...]
Asset Management
Asset Management refers to an organization, institution, or individual asset manager directing a client’s securities, assets, and cash. It is commonly a financial services company that will do this, and especially an investment bank like Morgan Stanley, Barclays, UBS, Julius Baer, or Goldman Sachs. Such a financial institution will provide highly researched and sought after investment advice and a wide [...]
Asset Protection
Asset Protection and planning refers to strategies and practices for protecting personal wealth. It happens through deliberate and involved planning processes that safeguard individuals’ assets from the potential claims of any creditors. Both businesses and individuals alike can employ these specific techniques to reduce the ability of creditors to seize personal or business property within the legal boundaries of creditor [...]
Assets
Assets are any thing that can be owned by a company or an individual person. These are able to be sold for cash. Commonly, assets produce income or give value to the owner. In the world of financial accounting, assets prove to be economic resources. They can be physical objects or intangible concepts that can be utilized and owned to [...]
Assets Under Management (AUM)
Assets under management (AUM) refer to the aggregate market value of all assets which an investment management firm or other financial institution (such as a bank) manages for its investor clients. The exact definition of AUM varies from one company to another. Each of them has their own distinctive proprietary formula for figuring up this all important statistic. There are [...]
Assumable Loan
An assumable loan is one that permits a home buyer to take over, or assume, a home seller’s contract on their mortgage. This is not permitted by every mortgage lender in the place of a typical home purchase. Loans that do not have Due On Sale clauses, such as the majority of VA and FHA types of mortgages, can usually [...]
Audit
An audit refers to a third party evaluation and review of a business or individual’s financial statements. The goal is to ensure that the financial records are both accurate and reflective of the transactions for the entity they represent. Such a review can be carried out by an external auditing firm or by accounting employees within an organization itself. There [...]
Austerity
Austerity proves to be an unpopular group of government economic policies which a country engages in usually unwillingly in order to reign in public deficits and to reduce government owed debts. These drastic measures turn out to be the response from the government in question to their public debt which becomes so big that the default possibilities on debt service [...]
Australian Dollar
The Australian Dollar is the official national currency for the country of Australia. It is also considered to be one of the eight main trading and exchange currencies of the world, alongside the U.S. dollar, Eurozone euro, British pound sterling, Japanese Yen, Swiss franc, New Zealand Dollar, and Canadian Dollar. The most popular currency pair for the Australian dollars is [...]
Austrian Economics
Austrian Economics arose as a challenge to the then-dominant British tradition of economics originally championed by Adam Smith in his influential across the centuries work The Wealth of Nations. It was Carl Menger and his Principles of Economics published in 1871 that presented the first alternative to the Imperial British ideas on the workings of the free market system. Menger [...]
Automated Underwriting
Automated underwriting proves to be one of the biggest changes that has come to the mortgage lending business in the last several years. The process uses computers to handle the process of underwriting mortgage loans. There are numerous benefits to the concept. Among them are lower closing costs, quicker loan approvals, fewer requirements for documentation, and approval for applications which [...]
A Bad Bank refers to a special bank which a government agency typically establishes in order to purchase the failing loans from one or more banks that possess a large number of non-performing assets. They purchase these at the market price in order to not wreck the bank. Through the action of transferring such toxic assets from the institution’s balance [...]
Bad Credit refers to the results of failing to stay current on credit agreements. In practice it leads to an incapability of being approved on new lines of personal (or business) credit. It usually results because the individuals or businesses in question have failed to pay prior credit obligations or loans in a timely fashion. It could also mean that [...]
Bad debts are those accounts receivable that simply can not be collected. Once businesses make the determination that they are not likely to be able to collect on such sums, then they actually write these off as complete losses for the company. A debt is not typically deemed to be un-collectable until every effort within reason has been made to [...]
Bailout
Bailouts prove to be the action of handing money or other capital to a company, individual, or nation that will likely go down without help. This is done in an effort to keep the entity from financial insolvency, bankruptcy, or total failure. Sometimes bankruptcies are pursued to permit an organization to fail without panic, so that fear and systemic failure [...]
Balance of Payments
The balance of payments refers to a statement whose purpose is to explain the transactions of an economy with the other countries of the world. Such a statement covers a particular time frame. This is also referred to as the balance of international payments. It covers every transaction that occurs between the inhabitants of the nation with the remainder of [...]
Balance of Trade refers to a nation’s difference between the value of its exports and imports in a particular time frame. It also represents the biggest part of the nation’s BOP balance of payments. Economists often utilize the BOT as their statistical tool for grasping the comparative strength of any national economy against another national economy. It also helps them [...]
Balance Sheet
Balance Sheet refers to a corporate financial statement. The purpose of it is to thoroughly summarize the liabilities, assets, and shareholders’ equity in the firm at a fixed moment in time. The statement provides a revealing glimpse into the things the corporation owns and the money it owes, along with the total amount which shareholders have invested in the going [...]
Balanced Budget
The phrase balanced budget refers to the scenario within the world of financial planning or a government budgeting in which the aggregate revenues prove to be greater than or at least equal to the total expenses. Government budgets are called balanced after the fact, once a complete year’s expenses and revenues have been tallied up and reconciled. A firm’s operating [...]
Balloon Loan
A balloon loan is a kind of loan that does not divide its payments up evenly throughout the life of the loan. These kinds of loans are not fully amortized over the loan’s term. As a result of this, one time balloon payments are mandatory at the end of the loan’s time frame in order to pay off the loan’s [...]
Banco Santander
Banco Santander is the largest Spanish banking group in the world. This giant financial institution boasts over 121 million customers among its various divisions. Founded in 1856, it maintains a staff of over 193,000 employees. For 2015, the group boasted a nearly six billion euros profit and a market capitalization of over 65.5 billion euros. Banco Santander and the entire [...]
Bank for International Settlements (BIS)
The Bank for International Settlements proves to be the oldest entity in the world for international financial organization. Central banks of the world established this bank on May 17 of 1930. Today 60 different central banks are members of this bank of central banks. Their economies represent 95% of all the combined Gross Domestic Product of the globe. This Bank [...]
Bank Notes
A bank note refers to a promissory note that can be negotiated by the bank which issues it. The holders of such bank notes will be paid on demand. The face of the note in question states the amount which is payable. As with coins, bank notes represent legal tender. They make up the modern forms of money along with [...]
Bank of England
The Bank of England is the prestigious and incredibly old central bank for the United Kingdom. The country founded this model central bank in 1694 to promote the good of the individuals in the U.K. through maintaining both monetary as well as financial stability. The bank is often affectionately referred to as the “Old Lady” of Threadneedle Street. The bank [...]
Bank of Japan
The Bank of Japan is the name of the central bank in Japan. The Bank of Japan Act established this entity. Unlike a number of central banks, Japan’s central bank is neither a private corporation nor a government agency. The bank has several key objectives. These are to create and issue the country’s banknotes, to handle monetary and currency control, [...]