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…
What is Decreasing Term Insurance? Decreasing term insurance, also called DTA insurance, can be defined as a life insurance policy with a feature that allows for the decrease of the benefit on a monthly or yearly basis. Ideally, the size of the policy also decreases over the period until the coverage period concludes or until…
What is a Defined-Contribution Plan? A defined-contribution plan (also known as a DC plan) is a type of pension fund payment plan to which an employee, and sometimes an employer, make regularly occurring contributions. Each employee maintains an individual pension account and is entitled to the contributions made (by the employee and, if applicable, the…
What is a Deed? A deed can be defined as any written legal document or instrument that gives a specified natural person control or specified rights over an asset. In some instances, some conditions must be met in order for the rights granted to be effective. Referencing common law, a deed is any legally binding…
What is Demonetization? Demonetization is an economic process in which a country’s currency unit is no longer legal tender. A currency unit is what we would commonly refer to as physical money, such as banknotes and coins. When demonetization occurs, the country’s currency unit is essentially worthless, as it can no longer be used to…
What is a Developed Economy? A developed economy is a region, typically a country, with a high level of wealth and resources available to its residents or citizens. What Does “Developed” Mean? The notion that an economy is “developed” is not rigorously defined and is instead based on the consideration of a multitude of factors….
What is a Direct Cost? Direct cost is an accounting term that describes any type of expenditure that can be directly attributable to a cost object. Cost objects can take many different forms, which we will analyze below. Direct costs are correlated and causative of an object. Direct cost is a relatively simplistic term and…
What is a Direct Stock Purchase Plan (DSPP)? A Direct Stock Purchase Plan (DSPP) is a way for individuals to buy stocks directly from a company rather than through a brokerage. Typically, investors purchase stocks through brokerages, such as banks or online investment platforms. In this case, the brokerage acts as a middleman between the…
