Greater Fool Theory
Definition When it comes to pricing an item, the greater fool hypothesis asserts that the price is decided not by its inherent worth, but rather by the irrational beliefs and expectations of market players. In the event that a reasonable buyer believes that another party is prepared to pay an even greater price, he or she may justify the purchase...
Targeted Accrual Redemption Note (TARN)
What is a ‘Targeted Accrual Redemption Note – TARN' A targeted accrual redemption note (TARN) is an investment vehicle, calculated based on a variation of the LIBOR formula, which provides a guaranteed sum of coupons. Once the coupons you've received reaches the target cap, the note will be redeemed and you will be paid the par value of the note. Targeted...
Take or Pay
DefinitionA take-or-pay contract is a rule structuring negotiations between companies and their suppliers. With this kind of contract, the company either takes the product from the supplier or pays the supplier a. For any product the company takes, they agree to pay the supplier a certain price, say $50 a ton. Furthermore, up to an agreed-upon ceiling, the company...
Japan ETFs
What is 'Japan ETFs' A type of exchange-traded fund that invests the majority of its assets in Japanese equities that trade on local stock exchanges. The performance of Japan ETFs does not correlate to the performance of the underlying index when measured in U.S. dollars, because the change in the exchange rate between the yen and the...
Unconventional Cash Flow
What is an ‘Unconventional Cash Flow' A series of inward and outward cash flows over time in which there is more than one change in the cash flow direction. This contrasts with a conventional cash flow, where there is only one change in cash flow direction. In terms of mathematical notation – where the – sign represents an outflow and...
Equity
Simply put: Equity = Assets – Liabilities However, since there are a number of different types of assets, this definition cannot encompass them all and will have different meanings for each. The following are some common definitions for different equities: An ownership equity is represented by a security such as a stock. This can be in a private company...
Hard Inquiry
What is 'Hard Inquiry' A type of credit report check that may lower an individual's credit score. A hard inquiry occurs when an individual applies for any type of credit, such as a mortgage, credit card or auto loan. The reason a hard inquiry may lower an individual's credit score is because someone who has recently applied...
Bad Debt Expense
What is a 'Bad Debt Expense' Bad debt expense represents the amount of uncollectible accounts receivable that occurs in a given period. Bad debt expense occurs as a result of a customer being unable to fulfill its obligation to pay an outstanding debt due to bankruptcy or other financial problems. This expense is the cost of a...
Earnings Credit Rate (ECR)
Earnings Credit Rate (ECR) What is 'Earnings Credit Rate - ECR' A daily calculation of interest paid on idle funds that reduce bank service charges. A calculated amount is then used to pay for banking fees. Therefore, customers with larger deposits and balances tend to pay lower bank fees for their accounts. The rate paid is often...
Kijun Line
What is 'Kijun Line' The mid-point between the highest high and lowest low of a particular security. The kijun line, also called kijun-sen, is the base line used specifically in ichimoku kinko hyo (or ichimoku cloud) candlestick charts. It is one of two moving average lines displayed in the chart, and is a 26-period moving average. (The...