What is Call Risk? Call risk is the risk for a bond buyer that exists in purchasing a callable bond. The chance that the bond may be redeemed (i.e., called) before its scheduled maturity date represents an investment risk for the buyer, as it can result in them earning less from their bond purchase investment…
What is the Effective Interest Method? The Effective Interest Method is a technique used for amortizing bonds to show the actual interest rate in effect during any period in the life of a bond before maturity. It is based on the bond’s book value at the beginning of any given accounting period. The effective interest…
What is the Comorian Franc (KMF)? The Comorian Franc (KMF) is the official currency of the island nation, the Union of Comoros, which is located in the Indian Ocean, near Madagascar and Mozambique. Originally pegged to the French franc, the Comorian franc is, as of 2020, pegged to the euro. The franc of Comoros is…
What is Early Exercise? Early exercise refers specifically to options contracts. The early exercise of an options contract refers to the process of buying and/or selling shares of a particular stock that include the underlying terms of a corresponding options contract before its expiration date. How It Works The underlying terms of an options contract…
What is a Direct Quote? A direct quote is an exchange rate quotation in the foreign exchange market. It quotes a fixed unit of a foreign currency against a variable amount of the domestic currency. In other words, a direct quote depicts the amount of foreign currency that can be bought for a certain unit…
What is the Direct Method? The direct method is one of the two methods used while preparing a cash flow statement. It is an accounting treatment that uses the actual cash inflows and outflows from the company’s operations. The direct method is also known as the income statement method. How is a Cash Flow Statement…
What is Delivered Ex Ship (DES)? Delivered Ex Ship (DES) was an Incoterms term/rule that basically required the seller to fulfill their delivery obligations by delivering the goods to the port specified by the buyer. The seller is responsible for the delivery and bears all risks and costs associated with it from the point of…
What is the Economic Value of Equity (EVE)? The economic value of equity (EVE) is a long-term economic measure/indicator of net cash flow. The EVE is calculated by taking into account the present value of all asset cash flows and subtracting the present value of all liability cash flows. In other words, it is the…
What are Unrestricted Net Assets? Unrestricted net assets are the asset (current and/or fixed) donations made to not-for-profit organizations (NPOs). The assets are “unrestricted” because they can be used for general expenditures or any other operational purpose(s), i.e., the donor didn’t specify where or how their donation(s) are to be used. Net Assets Classifications 1….
What is an Unsecured Note? An unsecured note is basically a debt instrument or a loan that is not secured (covered by collateral) by the assets of the issuer of the note. An unsecured note is typically a corporate debt obligation. In the spectrum of finance and investment, a note is primarily a legal financial…
