What is Foreign Portfolio Investment (FPI)? Foreign portfolio investment (FPI) involves an investor purchasing foreign financial assets. The transaction of foreign securities generally occurs at an organized formal securities exchange or through an over-the-counter market transaction. Foreign portfolio investment is becoming increasingly more common as a means of portfolio diversification. Often, FPIs consist of securities…
What is a Vostro Account? A Vostro account is part of correspondent banking where a foreign bank holds the funds and acts as an intermediary to those funds. The account is held on behalf of a domestic bank that manages and supervises the funds. The domestic bank will approach the international correspondent bank to open…
What is a Voluntary Trust? A voluntary trust is a fiduciary relationship between a trustor, trustee, and a beneficiary used for estate planning over an individual’s lifetime. A voluntary trust is also known as a living trust, and its lifetime is set at the time of creation to meet both parties’ needs as they see…
What is the Fortune 100? The Fortune 100 is a list of the top 100 public and private companies in the United States ranked by revenue. Fortune magazine generates this list based on reported annual revenue figures to a government agency. The list is a subset of the published Fortune 500, which is a list…
What is Keiretsu? Keiretsu is an interconnected network of companies characterized by strong alliances and cross-shareholding that originated from Japan and dominated the economy during the last half of the 20th century, particularly after World War II. The keiretsu still exists in the 21st century, undergoing radical changes since its formation. Keiretsu is best described…
What is a Moratorium Period? A moratorium period is a period during which the borrower is not obligated to make payments. In other words, during a moratorium period, the borrower is permitted to halt their payments. It is commonly incorporated in home loans – called an equated monthly installments holiday – and educational loans. Understanding…
What is Forfaiting? Forfaiting is the provision of medium-term financial support for the import and export of capital goods. The forfaiter is a third party to transactions that takes on certain risks from importers and exporters in return for a margin. The forfaiter operates similarly to a central clearing counterparty in the OTC markets. Forfaiting…
What is Foreign Investment? Foreign investment is when a domestic investor decides to purchase ownership of an asset in a foreign country. It involves cash flows moving from one country to another to execute the transaction. If the ownership stake is large enough, the foreign investor may be able to influence the entity’s business strategy….
What is a Folio Number? A folio number is an identification code for one’s own account in a mutual fund. Similar to a bank account number, a folio number helps identify the investors within a fund. It also records the amount of money each investor has allocated within the fund, along with the contact and…
What is the Fiscal Multiplier? The fiscal multiplier measures the impact of a fiscal stimulus on the Gross Domestic Product (GDP) of an economy. Fiscal stimulus is the increase in government spending to stimulate the economy. The fiscal multiplier should not be confused with the monetary multiplier, which is the impact of change in money…
