Liquid Asset definition explanation

What is Liquid Asset?
An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally regarded in the same light as cash because their prices are relatively stable when they are sold on the open market. Read more for examples and further explanation including related video clips and also comments
Continue reading “Liquid Asset definition explanation”

Mortgage Servicing Rights – MSR definition explanation

What is Mortgage Servicing Rights – MSR?
A contractual agreement where the right, or rights, to service an existing mortgage are sold by the original lender to another party who specializes in the various functions of servicing mortgages. Common rights included are the right to collect mortgage payments monthly, set aside taxes and insurance premiums in escrow, and forward interest and principle to the mortgage lender. Read more for examples and further explanation including related video clips and also comments
Continue reading “Mortgage Servicing Rights – MSR definition explanation”

Marginal Rate Of Transformation definition explanation

What is Marginal Rate Of Transformation?
The rate at which one good must be sacrificed in order to produce a single extra unit (or marginal unit) of another good, assuming that both goods require the same scarce inputs. The marginal rate of substitution is tied to the production possibilities frontier (PPF), which displays the output potential for two goods using the same resources. To produce more of one good means producing less of the other because the resources are efficiently allocated.

The marginal rate of transformation is the absolute value of the slope of the production possibilities frontier. For each point on the frontier (which is displayed as a curved line), there is a different marginal rate of substitution, based on the economics of producing each product individually. Read more for examples and further explanation including related video clips and also comments
Continue reading “Marginal Rate Of Transformation definition explanation”

Mental Accounting definition explanation

What is Mental Accounting?
An economic concept established by economist Richard Thaler, which contends that individuals divide their current and future assets into separate, non-transferable portions. The theory purports individuals assign different levels of utility to each asset group, which affects their consumption decisions and other behaviors. Read more for examples and further explanation including related video clips and also comments
Continue reading “Mental Accounting definition explanation”

Department of Labor – DOL definition explanation

What is Department of Labor – DOL?
A U.S Government cabinet body responsible for standards in occupational safety, wages and number of hours worked, unemployment insurance benefits, re-employment services and a portion of the country’s economic statistics. Read more for examples and further explanation including related video clips and also comments
Continue reading “Department of Labor – DOL definition explanation”

Mutual Fund Theorem definition explanation

What is Mutual Fund Theorem?
An investing theory, postulated by Nobel laureate James Tobin, that states that all investors should hold an identically comprised portfolio of “”risky assets”” combined with some percentage of risk-free assets or cash. A conservative investor would hold a higher percentage of cash, but would have the same basket of risky investments in his or her portfolio as an aggressive investor. Read more for examples and further explanation including related video clips and also comments
Continue reading “Mutual Fund Theorem definition explanation”