What is the Circular Flow Model? The circular flow model is an economic model that presents how money, goods, and services move between sectors in an economic system. The flows of money between the sectors are also tracked to measure a country’s national income or GDP, so the model is also known as the circular…
What is Physical Capital? Physical capital refers to the human-created tangible assets or inputs that are used to support the production of goods and services. It is one of the main factors of production in classical and neoclassical economics. Examples of physical capital include machinery, buildings, vehicles, equipment, etc. Understanding Physical Capital In economics, capital…
What is Inherent Risk? Inherent risk refers to the natural risk level in a process that has not been controlled or mitigated in risk management. In accounting, inherent risk indicates the probability of any material misstatements in financial reporting caused by factors other than an internal control failure. Inherent Risk in Risk Management Inherent risk…
What is “Insufficient Funds”? “Insufficient funds” is a checking account status where the balance is deficient. It is a banking term that may appear as a notice in bank statements or receipts. The insufficient funds status describes the scenario where a checking account does not hold sufficient funds to cover transactions. Understanding Insufficient Funds “Insufficient…
What is an Impaired Asset? An impaired asset is an accounting term that describes an asset with a recoverable value or fair market value that is lower than its carrying value. When an asset is impaired, a write-down on the balance sheet and an impairment loss are recognized on the income statement. IFRS and GAAP…
What is Fill or Kill (FOK)? A fill or kill (FOK) order is a conditional order requiring the transaction to be executed immediately and to its full amount at a stated price. If any of the conditions are broken, then the order must be automatically canceled (kill) right away. Brokers usually use the FOK type…
What is a Market-on-Open Order (MOO)? A market-on-open (MOO) order is used to execute a trade when the market opens, or very shortly after, at the day’s opening price. For MOO orders, the share price for the trade must be equal to the opening price recorded that morning. Market-on-open orders are not made with a…
What is Henry Hub? Henry Hub is a natural gas pipeline and distribution hub located in Erath, Louisiana. Sabine Pope Line LLC owns Henry Hub, its parent company being EnLink Midstream Partners, LP. The hub serves an important role in natural gas pricing, leading its name to be used as a price point in determining…
What are Hire Purchase Agreements? Hire purchase agreements are used as an arrangement when purchasing expensive goods or services. The purchaser will pay the initial installment or down payment at the beginning, followed by additional payments in the future to pay off the remaining balance of the good, plus interest. In the U.S., hire purchase…
What are Trading Instruments? Trading instruments are all the different types of assets and contracts that can be traded. Trading instruments are classified into various categories, some more popular than others. They range from equities and forward contracts to indices, currencies, and more. The Most Popular Trading Instruments Popular trading instruments usually see high trading…
