What is Historical Volatility (HV)? Historical volatility, or HV, is a statistical indicator that measures the distribution of returns for a specific security or market index over a specified period. The historical volatility of a security or other financial instrument in a given period is estimated by finding the average deviation of the instrument from…
What is a Portfolio Company? A portfolio company is a company (public or private) that a venture capital firm, buyout firm, or holding company owns equity. In other words, companies that private equity firms hold an interest in are considered portfolio companies. Investing in a portfolio company aims to increase its value and earn a…
What is Environmental Due Diligence? Environmental due diligence is a systematic procedure that evaluates a property or land for possible environmental contamination risks, such as groundwater or soil contamination. The Environmental Protection Agency (EPA) provides standards for due diligence. Environmental Professionals (EPs) shall decide the degree and form of assessment warranted, which may differ depending…
What is Entity Theory? Entity theory is a concept that advocates for the separation of business transactions and transactions of its owners. The theory states that assets of the owners should not be mixed with the business, as owners cannot be personally liable for the debts of the business. The entity theory enables one to…
What is Current Face? Current face – or current face value – refers to the face value of a mortgage-backed security (MBS) at a given point in time. Current face value is the same thing as current par value or current nominal value. It denotes the outstanding principal value of an MBS – the principal…
What is Currency Overlay? Currency overlay is an investment risk management strategy usually implemented by specialist firms that manage foreign currency exchange risk for client investors. The clients may be individual investors, mutual funds, or large institutional investors such as pension funds or insurance companies. Currency overlays can be an important risk hedging tool for…
What is a Currency Forward? A currency forward is a customized, written contract between parties that sets a fixed foreign currency exchange rate for a transaction that will occur on a specified future date. The future date for which the currency exchange rate is fixed is usually the date on which the two parties plan…
What Does Cross-Sell Mean? A cross-sell is the sale of an additional product or service that is related to the primary purchase that a customer or client makes. Perhaps the most well-known example of cross-selling is the fast-food sales line, “Do you want fries with that?”, encouraging the customer to purchase fries in addition to…
What is Delivered-at-Place (DAP)? The term Delivered-at-Place (DAP) is used in international trade to describe a situation wherein the seller of goods bears the responsibility and cost of transporting them to a place specified in the contract. The seller will also be liable to pay for any potential losses arising in transit. In such deals,…
What is Delivered Duty Paid (DDP)? The term Delivered Duty Paid (DDP) is used in international trade to describe a deal wherein the seller of goods agrees to bear all costs till the goods reach the destination mutually agreed upon in the contract. They include the cost of all transportation, any loss due to damage…
