What is Called Away? Called away is an investment term used to describe an event where a monetary contract is terminated when a delivery obligation or redemption is completed. The delivery obligation refers to the distribution of an underlying asset – such as a bond – to the other party in the monetary contract. In…
What is an L-Shaped Recovery? An L-shaped recovery occurs when an economy enters into a severe recession, with high levels of unemployment and close to zero economic growth. When seen on a line chart, the recovery looks like the letter “L.” During an L-shaped recovery, there is a sharp decline in economic growth led by…
What is a K-Shaped Recovery? A K-shaped recovery divides an economy into two, with divisions based on wealth, geographic, and industrial characteristics. It is called the K-shaped recovery, because at its most basic, one portion of the economy is bouncing back and increasing in value, and the other continues to suffer the effects of the…
What is a W-Shaped Recovery? A W-shaped recovery is a form of economic recovery where the economy cycles in and out of recessionary periods. The up-and-down recovery pattern is graphically represented by changes in economic indicators such as industrial output, Gross Domestic Product (GDP), and employment. The W-shaped recovery is characterized by a steep decline, followed by…
What is a U-Shaped Recovery? A U-shaped recovery is a form of economic recovery where the recession portion typically lasts for several quarters with a slow return to growth. It is measured by economic indicators like GDP, inflation, employment levels, and industrial output. A U-shaped recovery occurs when the economy goes through a recession with…
What is the Project Life Coverage Ratio (PLCR)? The project life coverage ratio (PLCR) refers to a financial ratio that is used to determine the repayment ability of a project’s cash flows to its debt obligations. Lenders set a minimum PLCR to constrain the borrower’s maximum loan amount, thus reducing the risk of default. Understanding…
What is a Prediction Market? A prediction market or betting market is an exchange-traded market where individuals can bet on the outcome of a variety of events with an unknown future. The events range from future commodity prices, yearly revenue results of a company, exchange rates, etc. A well-known public prediction market, Predictlt, predicts the…
What are Money and Time Weighted Returns? In many areas of finance, where investors and other stakeholders often make decisions based on profitability and returns, it’s critical to accurately assess how well investments, investment strategies, and portfolios are performing. A key skill for this assessment is being able to calculate what is called the “weighted…
What is Money Supply? Money supply refers to the cash and cash equivalents in a country at a given point in time. It is an important measurement for monetary policy decision-making because money supply is a key variable that drives macroeconomic performance. Understanding Money Supply Monetary supply aggregates are the formal breakdown and measurement of…
What is Money Market Yield? The money market yield is the yield earned from investing in liquid, short-term debt securities with less than one year maturity. Money market instruments include Treasury bills (T-bills), short-term guaranteed investment certificates (GICs), banker’s acceptances, commercial papers, short-term mortgages, and more. Understanding Money Market Yield The diagram above illustrates the…
