Net Premium
What is net premium and why should you care about it Net premium is the dollar amount an insurance company expects to pay out in claims minus expenses. In order to make a profit, the company must collect more in premiums than it pays out in claims. The difference between the net premium and the amount of money collected in...
Graded Vesting
What is graded vesting When an employee is granted stock options, they may not be able to immediately exercise those options. This is because the options may vest over time, meaning that the employee must remain with the company for a certain period of time before they are vested. Graded vesting is a type of vesting schedule where the options...
Investment Multiplier
What is an investment multiplier and how does it work An investment multiplier is an economic tool that measures the impact of a change in investment on the level of economic activity. The multiplier effect occurs when an increase in investment leads to a greater than proportionate increase in economic activity. For example, if a company builds a new factory,...
Unfavorable Variance
What is an unfavorable variance An unfavorable variance is when actual results are worse than expected. For example, if a company was expecting to make a profit of $10,000 but only made $5,000, that would be an unfavorable variance of $5,000. Unfavorable variances can happen for a number of reasons, such as unexpected changes in the market, lower than expected...
Piotroski Score
What is the Piotroski Score The Piotroski Score is a nine-point scale that is used to evaluate the financial health of a company. It was developed by Joseph Piotroski, a professor at Stanford University. The score ranges from 0 to 9, with 9 being the highest possible score. To calculate the score, several factors are taken into account, including profitability,...
Underwriting Spread
What is an underwriting spread Underwriting spreads are used by lenders to protect themselves from loss in the event of borrower default. The spread is the difference between the interest rate charged to the borrower and the rate paid by the lender on their own funds used to finance the loan. For example, if a lender charges a borrower an...
Weather Insurance
What is weather insurance Weather insurance is a type of insurance that helps protect businesses and organizations from financial losses due to weather-related events. Weather insurance can cover events such as hurricanes, floods, drought, and extreme temperatures. This type of insurance can be purchased as a standalone policy or as an endorsement to a business interruption policy. Weather insurance can help...
Volatility Arbitrage
What is volatility arbitrage Volatility arbitrage is a type of statistical arbitrage that is implemented by trading a group of securities that are predicted to have similar price movements. The aim of volatility arbitrage is to exploit the differences in the level of volatility between two assets or groups of assets, and profit from the difference. In order to successfully implement...
Brownfield Investment
What is a brownfield investment and why should you consider them A brownfield investment is the purchase of an industrial or commercial property where the potential for environmental contamination is known. Brownfields are often abandoned or under-utilized properties, such as old factories, mills, or warehouses. Many brownfields are located in urban areas, and they can be found in virtually any...
Unlimited Marital Deduction
What is the unlimited marital deduction The unlimited marital deduction is a tax deduction that allows spouses to transfer an unlimited amount of assets to one another without incurring any gift or estate taxes. This deduction is available regardless of the size of the asset transfer, and it can be used to transfer both real property and personal property. The...