What is Lifestyle Creep?
A situation where people’s lifestyle or standard of living improves as their discretionary income rises either through an increase in income or decrease in costs. As lifestyle creep occurs, and more money is spent on lifestyle, former luxuries are now considered necessities. Read more for examples and further explanation including related video clips and also comments
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Tag: funds
Degree Of Relative Liquidity – DRL definition explanation
What is Degree Of Relative Liquidity – DRL?
A liquidity metric that looks at a company’s ability to support short-term expenditures. Degree of relative liquidity is determined by looking at the total percentage of cash that a company has available on hand. The cash must be earned through regular operations and be able to be spent on expenditures and short-term debt obligations through a specific period.
Companies that possess a higher degree of relative liquidity will probably have less difficulty in retrieving funds for payment purposes. Read more for examples and further explanation including related video clips and also comments
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Capital Addition definition explanation
What is Capital Addition?
The cost involved for adding new assets or bettering existing assets within a business. Capital additions can take the form of adding new parts that could be reasonably expected to increase useful life or potential, and/or adding new assets to increase production.
Capital additions are not to be confused with repairs, which only maintain the life of an asset. Capital additions are expected to increase the life or productivity of an asset. Read more for examples and further explanation including related video clips and also comments
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Cash Asset Ratio definition explanation
What is Cash Asset Ratio?
The current value of marketable securities and cash, divided by the company’s current liabilities. Also known as the cash ratio, the cash asset ratio compares the dollar amount of highly liquid assets (such as cash and marketable securities) for every one dollar of short-term liabilities. This figure is used to measure a firm’s liquidity or its ability to pay its short-term obligations. Ideal ratios will be different for different industries and for different sizes of corporations, and for many other reasons. Read more for examples and further explanation including related video clips and also comments
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Value Averaging definition explanation
What is Value Averaging?
An investing strategy that works like dollar cost averaging (DCA) in terms of steady monthly contributions, but differs in its approach to the amount of each monthly contribution. In value averaging, the investor sets a target growth rate or amount on his or her asset base or portfolio each month, and then adjusts the next month’s contribution according to the relative gain or shortfall made on the original asset base. Read more for examples and further explanation including related video clips and also comments
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Fund Flow definition explanation
What is Fund Flow?
The net of all cash inflows and outflows in and out of various financial assets. Fund flow is usually measured on a monthly or quarterly basis. The performance of an asset or fund is not taken into account, only share redemptions (outflows) and share purchases (inflows).
Net inflows create excess cash for managers to invest, which theoretically creates demand for securities such as stocks and bonds. Read more for examples and further explanation including related video clips and also comments
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Subprime Meltdown definition explanation
What is Subprime Meltdown?
A financial crisis that arose in the mortgage market after a sharp increase in mortgage foreclosures, mainly subprime, collapsed numerous mortgage lenders and hedge funds.
The meltdown spilled over into the global credit market as risk premiums increased rapidly and capital liquidity was reduced. The sharp increase in foreclosures and the problems in the subprime mortgage market were largely blamed on loose lending practices, low interest rates, a housing bubble and excessive risk taking by lenders and investors.
It is also known as the “”subprime collapse”” or “”subprime crisis””. Read more for examples and further explanation including related video clips and also comments
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Flow Of Funds – FOF definition explanation
What is Flow Of Funds – FOF?
A set of accounts that is used to follow the flow of money within various sectors of an economy. Specifically, the account analyzes economic data on borrowing, lending and investment throughout sectors like households, businesses and farms. Read more for examples and further explanation including related video clips and also comments
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Reserve Tranche definition explanation
What is Reserve Tranche?
The proportion of the required quota of currency that each International Monetary Fund (IMF) member country must provide to the IMF, but can designate for its own use. The reserve tranche portion of the quota can be accessed by the member nation at any time, whereas the rest of the member’s quota is typically unaccessible. Read more for examples and further explanation including related video clips and also comments
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Offering Price definition explanation
What is Offering Price?
The price at which publicly issued securities are made available for purchase by the investment bank underwriting the issue. A security’s offering price includes the underwriter’s fee and any management fees applicable to the issue. Read more for examples and further explanation including related video clips and also comments
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