What is the Loss Ratio? The loss ratio, used primarily in the insurance industry, is a ratio of losses paid out to premiums earned, expressed as a percentage. Formula for the Loss Ratio The formula for the loss ratio is provided below: Where: Insurance claims paid is the amount of money paid out by the…
What is a Net Importer? A net importer is defined as a country that imports more than it exports. Imports are the goods and services brought into the country from a foreign country. Exports refer to the goods and services provided by a country to foreign clients. Imports and exports summed up constitute the total…
What is a Secular Market? A secular market is predominantly driven and impacted by elements or forces that are likely to be present in the foreseeable future. The forces can impact the price or value of a financial asset or investment and can cause the price to increase or decrease over a long-term period. A…
What is Know Your Client (KYC)? The Know Your Client (KYC) or Know Your Customer (KYC) is a process to verify the identity and other credentials of a financial services user. KYC is a regulatory process of ascertaining the identity and other information of a financial services user. The Know Your Client (KYC) process helps…
What is an Impulse Wave Pattern? An impulse wave pattern refers to a technical trading concept that denotes a vigorous movement in a financial instrument’s price, interfering with the primary path of the usual trend. It is also used to discuss the Theory of Elliott Wave – a method used to evaluate and predict fluctuations…
What is an Incentive Stock Option (ISO)? An incentive stock option (ISO) is a type of compensation given to employees, usually part of a broader compensation plan. ISOs can only be given to participating employees and can only be granted under defined limits. Incentive stock options allow employees to purchase shares at a fixed price…
What is a Sabbatical? The word sabbatical originates from the Biblical Sabbath, which is the observance of the day of rest or time of worship on the seventh day. In the field of education, a sabbatical or paid leave is commonly taken from teaching after seven years. Until today, religious sabbatical laws define the regulations…
What is Income Elasticity of Demand? Income elasticity of demand measures the relationship between the consumer’s income and the demand for a certain good. It may be positive or negative, or even non-responsive for a certain product. The consumer’s income and a product’s demand are directly linked to each other, dissimilar to the price-demand equation….
What is Income Smoothing? Income smoothing is a term used to refer to the different strategies and approaches used by accountants and financial analysts to monitor or control the impact of high rises and sudden drops in corporate income. Income smoothing also involves the manipulation of benefits, innovative accounting methods, and the implementation of generally…
What is the Smoot-Hawley Tariff Act? The Smoot-Hawley Tariff Act raised around 900 import tariffs by an average of 40% to 60%. Also referred to as the United States Tariff Act of 1930, its purpose was to safeguard U.S. businesses and farmers. Rather, it added extensive stress to the Great Depression. The law got its…
