What is a Dormant Account? A dormant account refers to an account that has shown no activities – such as deposits and withdrawals – for a long period of time. Financial institutions need to make attempts to contact the owners of dormant accounts. If a dormant account has been unclaimed for a certain period of…
What is Depreciated Cost? Depreciated cost is the remaining cost of an asset after reducing the asset’s original cost by the accumulated depreciation. Understanding the concept of a depreciation schedule and the depreciated cost is important for both accounting and valuation purposes. Depreciation and Depreciated Cost In accounting, depreciation is an accounting process of reducing…
What is Decoupling? Decoupling represents the creation of gaps. In finance, decoupling happens when different asset classes or markets that typically demonstrate positive correlations start to move in opposite directions. In organizational studies, decoupling takes place when there are gaps between formal policies and actual practices in an organization. Eco-economic decoupling considers the environmental impacts…
What is Corporate Fraud? Corporate fraud consists of illegal or unethical and deceptive actions committed either by a company or an individual acting in their capacity as an employee of the company. Corporate fraud schemes are often extremely complicated and, therefore, difficult to identify. It often takes an office full of forensic accountants months to…
What is Devaluation? Devaluation is a downward adjustment to a country’s value of money relative to a foreign currency or standard. Many countries that operate using a fixed exchange rate tend to use devaluation as a monetary policy tool to control supply and demand. Why Devaluation Happens (Pros) Devaluation happens due to the following: To…
What is Dirty Price? Dirty price is when a bond price includes interest that has accrued since the latest coupon payment. When investors buy fixed-income securities, such as bonds, they expect to receive coupon payments based on a fixed schedule. However, the price of a bond is dependent on the present value of future coupon…
What is a Demand Shock? A demand shock is a sudden and temporary increase or decrease in the demand for a good or a bundle of goods. Usually, the phrase “demand shock” is used in the context of aggregate demand, which describes the cumulative demand for an entire economy. A Shift in Demand A temporary…
What is Vomma? Vomma is an option Greek that represents the sensitivity of vega to the change of the implied volatility of an option. It is the second derivative of the option value to the volatility. Thus, it is also known as a second-order Greek. Other second-order Greeks include gamma, vanna, veta, and so on. Vomma…
What is Excise Tax? Excise tax refers to a tax on the sale of an individual unit of a good or service. The vast majority of tax revenue in the United States is generated from excise taxes. Excise taxes are generally applied to correct the negative externalities generated by the consumption of a unit of…
