What is the Marginal Tax Rate? The marginal tax rate is the rate charged on taxable income for every additional dollar earned. It is a federal tax system known as a progressive tax. The progressive tax system uses a structure in which individuals with higher taxable income pay more in taxes, while those in the…
What is Marginal Social Cost (MSC)? Marginal social cost (MSC) refers to the cost that society pays as a result of the production of additional units or utilization of a good or service. The total costs of producing an additional unit are not only undertaken by the producer but also by society. MSC examines the…
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…
