Finance
Question Archives

Generally accepted accounting principles (GAAP) are a set of accounting standards and guidelines that companies must follow when preparing financial sta…

Arbitrage-free is a term used in finance to describe a situation where there is no potential for making an arbitrage profit. An arbitrage profit is made…

Arbitrage is the process of taking advantage of a price difference between two or more markets. In finance, arbitrage is often used to refer to the prac…

Arbitrage pricing theory is a finance theory that deals with how asset prices are determined. It is based on the idea that asset prices are determined b…

An annuity is an insurance product that allows you to receive a stream of payments in exchange for an upfront investment. The payments can be made on a …

An annuity is a financial product that pays out a fixed stream of payments over a period of time. Annuities can be used for a variety of purposes, inclu…

An American option is a type of financial contract that gives the holder the right to either buy or sell an underlying asset at a specified price on or …

Algorithmic trading is a type of trading that uses computer algorithms to automatically make trades. This type of trading has become increasingly popula…

The Altman Z-Score is a statistical model used to predict the probability of bankruptcy within two years. The score is based on five financial ratios: w…

The advising bank is the financial institution that provides assurances to the exporter that payment will be received. The advising bank may also be kno…

The Adjusted Present Value (APV) is the net present value of a project when both debt and equity financing are considered. The APV method is used to fin…

Bank reserves are the funds that a bank keeps on hand to meet its customers’ demands for withdrawals. They also serve as a buffer against unexpected dep…

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a measure of a company’s operating performance. EBITDA is often…

An expense is an accounting term for a cost that has been incurred by a business. An expense represents a decrease in the company’s assets or an increas…

EBIT is an accounting term that stands for “earnings before interest and taxes.” It is a measure of a company’s profitability that excludes interest and…

Earnings per share (EPS) is a key metric used by investors to determine the profitability of a company. EPS is calculated by dividing a company’s net in…

A bond is a debt security, in which the issuer owes the holders a debt and is obliged to pay them interest (coupons) or to repay the principal at a late…

Contribution Margin Analysis is a marketing technique that quantitatively evaluates marketing mix decisions in terms of their contribution to profitabil…

In accounting, credit refers to an accounting entry that increases a liability or equity account, or decreases an asset or expense account. A credit is …

Diluted earnings per share (diluted EPS) is a measure of the profit attributable to each ordinary share that would be paid if all convertible securities…

A 403(b) is a retirement savings plan offered by certain public schools and nonprofit organizations to their employees. It’s similar to a 401(k), but th…

Active risk is the chance that an investment will lose money, or underperform compared to its benchmark. Also known as “volatility” or “beta.” Many inve…

An accrual bond is a type of debt instrument that pays periodic interest payments to investors based on the amount of time that has elapsed since the bo…

Active return is the return on an investment after taking into account the effects of inflation. It is used to measure the real rate of return on an inv…

Most investors are familiar with the concept of relative return, which is simply the performance of an investment in comparison to another investment. A…

Active management is a type of investment strategy where portfolio managers attempt to generate alpha through active buying and selling of securities. A…

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, named after Section 529 of the Internal …

An Able Account is a tax-advantaged savings account for persons with disabilities that was created by the Achieving a Better Life Experience (ABLE) Act …

Accretion/Dilution analysis is a tool used in finance to measure the impact of a proposed merger or acquisition on a company’s earnings per share (EPS)….

A 457 plan is a retirement savings plan that is sponsored by an employer. Employees can contribute pretax dollars to the plan, and the funds can be used…

Accident insurance is a type of insurance that covers medical expenses and other costs incurred as a result of an accident. It can be purchased as a sta…

A 401(k) is a retirement savings plan sponsored by an employer. It lets workers save and invest a portion of their paycheck before taxes are taken out. …

The 2010 Flash Crash was a sudden stock market crash that occurred on May 6, 2010. The Dow Jones Industrial Average (DJIA) fell by over 1,000 points, or…

Accountancy is the process of communicating financial information about a business to users such as shareholders and managers. The main purpose of accou…

Accounting reform refers to a set of changes that aim to improve the accuracy and transparency of financial reporting by businesses and other organizati…

Debitcapital refers to accounting entries that record increases in liabilities, expenses, and losses, or decreases in assets, equity, income, and gains….

Creative accounting is a term that is used to describe accounting practices that may be considered aggressive or unconventional. These practices can be …

A Certified General Accountant (CGA) is a professional designation earned after completing specific coursework and exams in accounting. A CGA can provid…

A capital expenditure is an outlay of cash by a company for the purposes of acquiring, improving, or maintaining long-term assets. These assets may incl…

There are two main types of accounting research: primary research and secondary research. Primary research involves collecting original data through s…