Investing
Reclassification
Reclassification Reclassification is the process of reassigning an item from one category to another based on new information or criteria. It involves reevaluating the item’s characteristics and assessing its conformity with the criteria of the new category. Reasons for Reclassification: Changes in criteria: When the criteria used to categorize an item change, it may become […]
Financial Instrument
Definition: A financial instrument is a contract that represents the promise of payment or delivery of financial assets or liabilities in the future. It is a tangible or intangible asset that gives rise to a legally enforceable obligation to pay or receive payments or deliver or receive assets. Types of Financial Instruments: Debt securities: Bonds, […]
Constituent
Sure, “constituent” has a few different meanings depending on the context. Here are the main ones: 1. Member of a political constituency: This is the most common meaning of “constituent.” A constituent is any person who is represented by a particular politician or political party. It’s important to note that the term “constituent” is used […]
Book Value
Book value is a theoretical value of a asset or liability based on its recorded book entry value. It is the cost of the asset or liability at the time it was acquired, minus any depreciation or amortization that has been taken. Formula: Book value = Cost – Depreciation or Amortization Example: A company purchased […]
Credit Money
Definition: Credit money is a type of money that is lent to individuals or businesses by banks and other financial institutions. It is not a physical currency but rather a debt that is recorded in the lender’s books. Main Features: Borrowed funds: Credit money is borrowed funds that are lent by banks or other lenders. […]
Bonus Issue
Definition: A bonus issue is a distribution of additional shares of stock or other securities to existing shareholders as a reward or incentive. It is typically done to increase the company’s share price and attract new investors. Types of Bonus Issues: Cash bonus: Payment of a cash dividend in addition to the regular dividend. Stock […]
Hurdle Rate
The hurdle rate is the minimum rate of return that an investment must generate in order to be considered acceptable. It is used to calculate the present value of an investment and is typically the cost of borrowing money. Formula: Hurdle rate = Discount rate that results in a present value of 1 equal to […]
Dealer
A dealer is a person who acts as an intermediary between buyers and sellers in a market. There are different types of dealers, each specializing in a particular type of good or service. Here are some of the different types of dealers: Retail dealers: Sell goods directly to consumers. Examples include department stores, supermarkets, and […]
Face Value
Definition: Face value is the principal amount or the stated value of a security, such as a bond, currency, or stock. It is the original amount paid for the security and is the amount that the holder of the security is entitled to receive upon maturity or redemption. Example: A bond with a face value […]
Mark To Market, Mtm
Mark-to-Market (MTM) Valuation Mark-to-market (MTM) valuation is a type of accounting valuation that involves valuing financial assets and liabilities at their current market prices. This is used to ensure that financial statements accurately reflect the true value of the company’s assets and liabilities. Key Principles of MTM Valuation: Arm’s Length Transactions: Assets and liabilities are […]
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