Valuation Analysis
What is a 'Valuation Analysis' A form of fundamental analysis that looks to compare the valuation of one security to another, to a group of securities or within its own historical context. Valuation analysis is done to evaluate the potential merits of an investment or to objectively assess the value of a business or asset. Valuation...
IDC Deposits
What is 'IDC Deposits' IDC Deposits Corp. oversees the MMAX (Money Market Account Extra) program which provides depositors with an efficient way to make large deposits – up to a maximum of $5 million – and secure FDIC insurance. Expanded FDIC coverage is attractive to depositors, particularly when financial markets are experiencing significant volatility and...
Baby Bond
What is 'Baby Bond' Fixed income securities issued in small denominations, generally with a maximum face value of $5,000. The small denominations enhance the attraction of baby bonds to the average retail investor. Explaining 'Baby Bond' Baby bonds may also refer to a series of small denomination bonds with face value ranging from $75...
Obsolescence Risk
What is 'Obsolescence Risk' The risk that a process, product or technology used or produced by a company for profit will become obsolete, and therefore no longer competitive in the marketplace. Obsolescence risk is most significant for technology-based companies or companies with products or services based on technological advantages. Explaining 'Obsolescence Risk' Obsolescence risk is...
What is the Pareto Principle?
Definition The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes. Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne in 1896. In his first work, Cours d'économie politique, Pareto showed that approximately...
QSBS (Qualified Small Business Stock)
What is 'QSBS (Qualified Small Business Stock)' A qualified small business stock (QSBS) is simply the stock or share of a qualified small business (QSB). A qualified small business is defined as a domestic and active C-corporation whose gross assets (valued at original cost) do not exceed $50 million as of the date the stock was issued...
Obsolete Inventory
What is 'Obsolete Inventory' An obsolete inventory item is defined as inventory that has reached the end of its product life cycle and has not seen any sales or utilization for a certain length of time, which is generally stipulated by the industry in question. This form of inventory must be written down, and it might result in significant losses...
Pacific Exchange (PCX)
What is 'Pacific Exchange - PCX' An exchange network that coordinates the trading of stock options between both institutional and individual investors. The PCX was one of four U.S. exchanges to trade equity options and the first to develop and implement an electronic trading system. At one time, the PCX had operations in both Los Angeles and...
EBITA
What is 'EBITA' EBITA is an acronym for earnings before interest, taxes and amortization. To calculate a company's EBITA, start with its earnings before tax (EBT), which can be found on the income statement, and add interest and amortization expenses back in. EBITA is a variation of the more commonly used EBITDA, which deducts depreciation expenses. Both are used to gauge a...
Federal Funds Rate
Definition According to the Federal Reserve, the federal funds rate refers to the interest rate at which depository institutions lend reserve balances to other depository institutions on an uncollateralized basis overnight in the United States. Reserve balances are sums of money stored at the Federal Reserve in order to meet the reserve requirements of financial institutions such as banks and...