What is Marginal Revenue Product (MRP)? Marginal revenue product (MRP) explains the additional revenue generated by adding an extra unit of production resource. It is an important concept for determining the demand for inputs of production and examining the optimal quantity of a resource. It can be analyzed by aggregating the revenue earned by the…
What are Foreign Currency Convertible Bonds (FCCB)? Foreign currency convertible bonds, as the name suggests, are bonds that are issued in a currency foreign to the investor. The name also suggests that the bonds are convertible in nature, indicating that investors not only receive principal and coupon payments but also offer the option of converting…
What is a Fixed Exchange Rate? A fixed exchange rate is an exchange rate where the currency of one country is linked to the currency of another country or a commonly traded commodity like gold or oil. Nowadays, countries usually link their currencies to their trading partners like the United States dollar. For example, the…
What is FINRA BrokerCheck®? FINRA BrokerCheck is a free tool that helps individuals conduct research on the professional experience of brokers and brokerages, as well as investment firms and advisors. FINRA, which stands for Financial Industry Regulatory Authority, is a private American company founded in 2007. FINRA focuses on upholding the integrity and governance of…
What is the Financial Accounting Standards Board (FASB)? The Financial Accounting Standards Board (FASB) is an independent organization that exists in the private sector. It is responsible for establishing accounting standards for financial reporting within the U.S. and follows FASB Standards, also known as Generally Accepted Accounting Principles (GAAP). In order to establish universal accounting…
What is a Family Limited Partnership (FLP)? A Family Limited Partnership (FLP) is a type of limited partnership where family members pool money into a family business. In doing so, each family member owns shares in a business, which means they assume ownership of the business. The partnership divides profits, dividends, and/or interest between two…
What are Factors of Production? Factors of production is an economic concept that refers to the inputs needed to produce goods and services. The factors are land, labor, capital, and entrepreneurship. The four factors consist of resources required to create a good or service, which is measured by a country’s gross domestic product (GDP). In…
What Does Annualize Mean? To annualize is to convert a short-term or partial period result into an annual basis. Annualization is helpful when comparing the returns of two or more investments or if a borrower wants to know how much interest they would need to pay for taking a loan. A return of a short-term…
What are Equity Derivatives? Equity derivatives are financial contracts whose value is derived from the value of an underlying stock assets in the secondary market. Equity derivative contracts are complex financial instruments that are used for speculation, hedging and getting access to stocks or markets that would otherwise not be accessible. These contracts are agreements…
