What is Disintermediation? Disintermediation is the removal of different elements within the middle of a supply chain. The intermediaries in product development – or “middlemen” – are removed from the supply chain to cut costs or shorten the time duration within a chain. Disintermediation can influence the overall cost of the product, as well as…
What is the Exogenous Growth Theory? The Exogenous Growth Theory is a theory of neoclassical economics that asserts that outside – exogenous – factors are more critical in determining the success of an economy, industry, or individual business than inside – endogenous – factors. The main implication of the exogenous growth theory is that the…
What is Expropriation? Expropriation refers to a government taking over any property that is privately owned, with or without the permission of the owners, for the benefit of the general public. Properties can be expropriated for the construction of roadways, airports, and other infrastructure projects. The government can also expropriate property in a heavily polluted…
What is Extended Trading? Extended trading (or electronic trading hours) is trading conducted by electronic networks either before or after the trading day of a stock exchange, i.e., pre-market trading or after-hours trading. It tends to be limited in volume than regular trading hours when the exchange is open. Pre-market stock trading in the U.S….
What is a Debt/Equity Swap? A debt/equity swap is a mechanism a company utilizes for financial restructuring. It can also be viewed as a renegotiation of debt. In a debt/equity swap, a lender receives an equity interest such as shares of stock in the company in exchange for the cancellation of a company’s debt to…
What is a Debt/Bond Fund? A debt fund or a bond fund is a pool of investments, usually a mutual fund or an exchange-traded fund, that invests in fixed-income securities. The fixed-income securities include government bonds, corporate bonds, money market instruments, junk bonds, etc. An example of a bond fund is the Vanguard Total Bond…
What is a Day-Count Convention? A day-count convention is a methodology that determines the number of days that interest accrues between coupon payment days. It is used in a variety of debt securities such as bonds, mortgages, swaps, and forward rate agreements (FRAs). For interest-earning investments, if transactions are not made on the coupon payment…
What is Decision Analysis (DA)? Decision analysis (DA) is a form of decision-making that involves identifying and assessing all aspects of a decision, and taking actions based on the decision that produces the most favorable outcome. The goal of decision analysis is to ensure that decisions are made with all the relevant information and options…
