What is the Herrick Payoff Index? The Herrick Payoff Index is a forward-looking technical analysis tool used to identify trends in derivative markets. Using price, volume, and open interest, the index provides an overview of money flow in the derivative markets, which investors can use as an indication of bullish or bearish trends. Open interest…
What is a Hedged Tender? A hedged tender is a strategy whereby a shareholder sells short a portion of their shares to hedge against a price drop in anticipation that not all of their tendered shares will be accepted. Understanding Hedged Tenders To understand hedged tenders, it is helpful to dive into their components: Tender…
What are Hara-Kiri Swaps? Hara-Kiri swaps were interest rate or cross-currency financial instruments that were popular in Japan in the 1980s to attract foreign investment into the country. The intention of the originator was solely to obtain foreign business and not to earn a profit. The demand decreased as foreign investment was allowed into the…
What is Marginal Propensity to Save (MPS)? The marginal propensity to save (MPS) refers to the portion of additional disposable income that is saved by a consumer. The MPS for any individual reflects how much one is willing to save, usually a fraction, for each added dollar of income. For example, if the MPS is…
What is the Marginal Rate of Substitution (MRS)? The marginal rate of substitution (MRS) is the quantity of one good that a consumer can forego for additional units of another good at the same utility level. MRS is one of the central tenets in the modern theory of consumer behavior, as it measures the relative…
What is the Marginal Rate of Transformation? The marginal rate of transformation is the number of units of one product that can be increased by reducing the quantity of another product. It is also considered as the opportunity cost for generating an extra unit of output. It examines the number of good X that will…
What is the Marginal Rate of Technical Substitution (MRTS)? The marginal rate of technical substitution (MRTS) is the measure with which one input factor is reduced while the next factor is increased without changing the output. It is an economic illustration that explains the level at which one factor of input must decline. While maintaining…
What is the Marginal Propensity to Import (MPM)? The marginal propensity to import (MPM) is the proportion of change in the volume of imports due to a change in income. This concept holds that the proportion of foreign leakage will naturally increase with rising income. Foreign leakage refers to the money that leaves the domestic…
What is a Subprime Mortgage? A subprime mortgage is a type of debt instrument that is provided to individuals with a low credit score and whose chances of paying back the loan are lower than other individuals. The bank charges a higher rate of interest for taking such an additional risk. What is a Credit…
What is a Shell Corporation? A shell corporation is a business that is formed that has no actual business operations. They are mostly created for money laundering or sometimes for parking early startup funds. They do not employ anyone or provide any services. Shell corporations are created in tax havens to avoid paying taxes and…
