What is a Technical Correction? A technical correction is a fall in the stock’s market value by 10% or more but not more than 20% after a series of extensive high gains in the previous closes. Technical correction can apply to individual assets such as bonds, commodities, or stock-market indexes, such as the S&P 500…
What is the Special Revenue Fund? A special revenue fund is a fund that is used by government entities to accumulate proceeds from certain revenue sources whose use is restricted to specific purposes or activities. The primary reason for establishing such a fund is to demonstrate accountability and transparency when tracking cash inflows and outflows…
What is the Standard Mileage Rate? A standard mileage rate is the dollar amount per mile imposed by the Internal Revenue Service (IRS) when calculating the deductible costs for business use of automobiles. The standard mileage rate is also known as deductible mileage or per diem. It can be used to reduce taxable income and…
What are Stranded Assets? Stranded assets are assets that are unable to earn their original economic return due to changes in the landscape in which the assets operate. In simpler terms, stranded assets are assets that are worth less than expected. Understanding Stranded Assets Stranded assets are assets that face: Unexpected write-downs Premature write-downs Devaluations…
What is a Sovereign Credit Rating? A sovereign credit rating is an assessment of a country’s creditworthiness. It shows the level of risk associated with lending to a particular country since it is applied to all bonds issued by the government. When evaluating the creditworthiness of a country, credit rating agencies consider various factors such…
What is Sovereign Default? Sovereign default refers to the failure of the government of a sovereign entity to pay back principal and interest payments when they are due. The failure to repay debts owed to creditors may be accompanied by a government’s formal declaration that it will not pay owed debts, or it may sometimes…
What is the Sovereign Fund of Brazil? The Sovereign Fund of Brazil is the country’s government-controlled financial vehicle with different revenue sources, objectives, and investment approaches. It was established to insulate the country from short-term political pressure. Some of the Sovereign Fund of Brazil’s objectives were to fund projects of strategic interest to the country…
What is Sovereign Risk? Sovereign risk is a country’s probability of missing a debt obligation in its present economic status. Sovereign risks come in many forms and pose a considerable challenge to the banking system and a country’s financial stability in general. Strong central banks will impose foreign exchange regulations to reduce the value of…
What is a Sovereign Bond? A sovereign bond is a national government-issued debt security to finance spending programs, cover interests due, or repay old debts. As with other types of bonds, a sovereign bond promises to pay the buyer periodic interest and repay the face value on the maturity date. Its rating is associated with…
