What is Foreign Exchange Risk? Foreign exchange risk, also known as exchange rate risk, is the risk of financial impact due to exchange rate fluctuations. In simpler terms, foreign exchange risk is the risk that a business’ financial performance or financial position will be impacted by changes in the exchange rates between currencies. Understanding Foreign…
What are Excess Returns? The term “excess returns” is used to denote how a fund has performed compared to a benchmark. Excess return, which is also known as alpha, can provide an indication of whether a respective fund, stock, or security has overperformed or underperformed, and it is computed with the Capital Asset Pricing Model…
What is Fitch Ratings? Fitch Ratings is an award-winning international credit rating agency. It ranks among the “Big Three credit rating agencies,” with the other two being Moody’s and Standard & Poor’s. Fitch Ratings provides forward-looking credit opinions (“ratings”) on investments, which reflects its likelihood of default. The credit ratings provided by Fitch are utilized…
What is the Electronic Fund Transfer Act (EFTA)? The Electronic Fund Transfer Act (EFTA), originally enacted in 1978, is a United States consumer protection law that lays out the rights, responsibilities, and liabilities of parties involved in electronic money transfers. The original legislation has undergone several amendments, primarily to keep up with changing technology. The…
What is the Employment-to-Population Ratio? The employment-to-population ratio is a macroeconomic employment metric that shows the number of people employed as a percentage of the total working-age population. It is sometimes referenced as simply the employment-population ratio. The employment-to-population ratio can be applied to any size area or region but is most commonly calculated for…
What is the Electronic Payments Network (EPN)? The Electronic Payments Network (EPN) is an automated clearinghouse (ACH) system – that is, a computerized electronic funds transfer system that processes both individual consumer and commercial financial transactions. It is the only entity in the private sector in the United States that is authorized to handle ACH…
What is Descriptive Statistics? The term “descriptive statistics” refers to the analysis, summary, and presentation of findings related to a data set derived from a sample or entire population. Descriptive statistics comprises three main categories – Frequency Distribution, Measures of Central Tendency, and Measures of Variability. Although descriptive statistics may provide information regarding a data…
What is Discount Yield? Discount yield is the expected annual percentage rate of return earned on a bond when it is sold at a discount on its face value. The discount yield is also popularly referred to as the bank discount yield (BDY). How is the Discount Yield Calculated? Discount yield is calculated as follows:…
What is “Third World”? The modern definition of “Third World” is used to classify countries that are poor or developing. Countries that are part of the “third world” are generally characterized by (1) high rates of poverty, (2) economic and/or political instability, and (3) high mortality rates. Historical Definition of “Third World” The use of…
What is an Intelligent Manufacturing System (IMS)? Intelligent Manufacturing System (IMS) is a modern system of manufacturing that integrates the abilities of humans, machines, and processes to achieve the best possible manufacturing outcome. Manufacturing system refers to the entire process of gathering inputs, arranging, and transforming them into the desired output. IMS seeks to achieve…
