What is Downside Risk? Downside risk refers to the probability that an asset or security will fall in price. It is the potential loss that can result from a fall in the price of an asset as a result of changing market conditions. Downside risk can also be described as a statistical measure that aims…
What is an Endowment? An endowment is a structure used by large non-profit organizations – such as hospitals, museums, and universities – to raise donation capital in order to fund its operations on an ongoing basis. The endowment structure enables such non-profit organizations to manage a set of financial assets through which investment returns can…
What is an Engagement Letter? An engagement letter refers to a legal document that defines the relationship between a business providing professional services (accounting, consulting, legal, etc.) and their clients. It sets the terms of the agreement between two parties and includes details such as the scope, fees, and responsibilities, among others. An engagement letter…
What is Equity Financing? Equity financing refers to the sale of company shares in order to raise capital. Investors who purchase shares also acquire ownership rights in the company. Equity financing can refer to the sale of all equity instruments, such as common stock, preferred shares, and share warrants. Equity financing is especially important during…
What is the Dotcom Bubble? The dotcom bubble is a stock market bubble that was caused by speculation in dotcom or internet-based businesses from 1995 to 2000. The companies were largely those with a “.com” domain on their internet address. The dotcom bubble’s origins can be traced to the launch of the World Wide Web…
What is Double Taxation? Double taxation is a situation associated with how corporate and individual income is taxed and is, therefore, susceptible to being taxed twice. Categories of Double Taxation 1. Corporate Double Taxation It is a situation in which corporate earnings are taxed twice at two different levels but include the same income. A…
What is Divestment? Divestment is the sale of an existing business or an asset class that doesn’t perform or meet the expectations of the company or a country. Divestment is also referred to as divestiture. Reasons for Divestment Divestment is a difficult decision for a business. However, there are many reasons why…
What is Dumping? Dumping in the financial world occurs when a company or a country exports its products at a price lower than its domestic price. Exporters dump to compete with the producers and sellers in the importing country. How Dumping Takes Place It may seem that the dumping company may lose a lot of…
Who is an Early Adopter? An early adopter is one who tries new products before most other consumers. Early adopters are more common with technology products. They provide feedback to the vendor and help them to refine the product features, design, distribution, and support. Early adoption can also be viewed as a form of testing…
