Above Full-Employment Equilibrium
What is 'Above Full-Employment Equilibrium' A macroeconomic term used to describe the real gross domestic product (GDP) is currently in excess of its long-run average, or some other historical measure. Accordingly, the amount that the current real GDP is greater then the historic average is called an inflationary gap, as this will create inflationary pressures in this...
Same-Day Funds
What are same-day funds and what do they mean for businesses When a business owner hears the term "same-day funds," they may think it refers to the amount of money they have on hand to meet needs that arise throughout the course of a day. However, same-day funds actually refer to a type of merchant account where payments are processed...
Magic Formula Investing
DefinitionMagic formula investing is a term referring to an investment technique outlined by Joel Greenblatt that uses the principles of value investing. Magic Formula Investing What is 'Magic Formula Investing' A money-making strategy that teaches investors a common-sense method for value investing in the stock market that is designed to beat the market's average annual returns. The...
Absolute Return Index
What is 'Absolute Return Index' A stock index designed to measure absolute returns. The absolute return index is actually a composite index made up of five other indexes. This index is used to compare the absolute returns posted by the hedge fund market as a whole against individual hedge funds. Explaining 'Absolute Return Index' ...
Backup Withholding
What is 'Backup Withholding' Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. Backup withholding may be applied...
Key Money
DefinitionKey money is one of several forms of payment made to a landlord. The term has various meanings in different parts of the world. It sometimes means money paid to an existing tenant who assigns a lease to a new tenant where the rent is below market. It sometimes means a bribe to a landlord. In other parts of...
Hedge Fund
DefinitionA hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques. It is administered by a professional investment management firm, and often structured as a limited partnership, limited liability company, or similar vehicle. Hedge funds are generally distinct from mutual...
Tangible Net Worth
What is 'Tangible Net Worth' It is most typically used to calculate a company's net worth by excluding any value generated from intangible assets, such as copyrights, patents, and intellectual property, from the computation. Tangible net worth may be calculated by subtracting the entire value of a company's tangible assets from the total value of the company's liabilities. Individuals may...
Management By Objectives (MBO)
What is 'Management By Objectives - MBO' Managers use management by objectives (MBO) to enhance the performance of their organizations. MBO is a management approach that tries to improve the performance of an organization by clearly identifying objectives that are accepted by both management and employees. In accordance with the notion, giving workers a voice in goal formulation and action...
Parity Price
What is a ‘Parity Price' When the price of one asset is closely connected to the price of another asset, this is referred to as a parity price. Known as the parity pricing idea, it is used to both stocks and commodities and describes the situation in which two items have the same worth. To decide whether it is financially advantageous...