Recession
What is a recession and how does it affect the average person A recession is a period of economic decline in which trade and investment fall, typically lasting for six months or more. recessions are often characterized by high unemployment, slow growth in gross domestic product (GDP), and falling prices (deflation). The most recent recession in the United States began...
Above Par
What is 'Above Par' A term used to describe the price of a security when it is trading above its face value. A security usually trades at above par when its income distributions are higher than those of other instruments currently available in the market. If an investor purchases a security above face value, he or...
Correlation
Financial Correlation basically measures the relationship between the changes occurring in two or more variables at the same time. Correlation plays a major role in finance. According to the CAPM or Capital Asset Pricing Model, an increase in diversification can significantly increase the return to risk ratio. This is the reason why diversification is a word that is synonymous...
Par Value
DefinitionPar value, in finance and accounting, means stated value or face value. From this come the expressions at par, over par and under par. Par Value What is 'Par Value' The face value of a bond. Par value for a share refers to the stock value stated in the corporate charter. Par value is important for a...
How to Account For Goodwill
When determining how much goodwill a company possesses, there are several factors that must be considered. These factors include the measurement of goodwill, the test to determine whether goodwill has been impaired, and the accounting treatment of the value of goodwill. Read on to discover more about how to account for goodwill and the importance of measuring it. In...
Impairment
What is 'Impairment' Impairment is an accounting principle that describes a permanent reduction in the value of a company's asset, normally a fixed asset. When testing for impairment, the total profit, cash flow or other benefit that's expected to be generated by a specific asset is periodically compared with that same assets book value. If it's found...
Realized Gain
What is a 'Realized Gain' A realized gain is the consequence of selling an asset at a price that is greater than the price at which it was originally purchased. It happens when an asset is sold for a price that is higher than the asset's book value cost. The asset may be valued at a level that is far...
Tax Court
What is 'Tax Court' A specialized court of law that hears and adjudicates tax-related disputes and issues. The tax court in the United States is a federal court established by Congress to provide a judicial forum where an entity could contest a tax deficiency determined by the Internal Revenue Service before paying the disputed amount. The Tax...
Target Risk Fund
What is 'Target Risk Fund' A fund that attempts to expose its investors to a specified amount of risk. The fund manager of a target risk fund is responsible for overseeing all the securities owned within the fund, to ensure that the level of risk isn't greater or less than the fund's target amount of risk exposure....
Tainted Alpha
What is 'Tainted Alpha' An alpha return that cannot be attributed solely to the money manager due to consequential beta exposure. Tainted alpha is seen when money managers invest in individual equities, instead of using market neutral strategies such as arbitrage, and hedging. Explaining 'Tainted Alpha' Due to many individual investors being unable to...