What is a Multi-Factor Model? A multi-factor model is a combination of various elements or factors that are correlated with asset returns. The model uses said factors to explain market equilibrium and asset prices. In multi-factor models, different factors are associated with certain characteristics (such as risk), and it helps determine the weight or importance…
What is Negative Growth? Negative growth implies a decline in value over a stated period. It is commonly observed in economic, industry, and business analysis. Typically, negative growth is expressed as a percentage over a period of time. Negative Growth in an Economic Context A country’s economy can experience negative growth when its gross domestic…
What is Net Income After Tax (NIAT)? Net income after tax (NIAT) is an entity’s profits after deducting all expenses and taxes in a fiscal period. NIAT is also commonly referred to as a company’s bottom-line profitability. How to Calculate Net Income After Tax? Calculating net income after tax involves deducting all expenses and costs…
What is a Non-Qualifying Investment? A non-qualifying investment is a type of investment that can never be subject to any tax benefits. Tax benefits include deductions, exemptions, and credits. The benefits are used to reduce taxable income, and therefore, reduce taxes paid. Hence, a non-qualified investment is any property that is not a qualified investment…
What is a Money Center Bank? A money center bank is a bank that is located in major cities like London, New York, and Hong Kong. It covers regions, countries, and continents, providing a wide range of financial services. Its revenue primarily comes from transactions with large corporations, other retail banks, and governments. They are also…
What is a Money Purchase Pension Plan? A money purchase pension plan is a kind of retirement plan where employers are needed to make yearly contributions to the accounts of their employees. It provides guaranteed income after retirement. The employees can either withdraw the lump sum amount upon retirement or purchase an annuity with the total…
What is the Earnings Multiplier? The earnings multiplier, or the price-to-earnings ratio, is a method used to compare a company’s current share price to its earnings per share (EPS). It is used as a valuation tool to compare the share price of a company with that of similar companies. The earnings multiplier also shows how…
What is a Moratorium? A moratorium refers to the delay or temporary deferral of a law or an activity. It can be enforced by either a business or a government. A moratorium continues to be in force until the issues causing its enforcement are solved. Moratoriums can also be imposed to delay debt payments under…
What is an Earnings Estimate? An earnings estimate is the estimate of a firm’s earnings per share (EPS) for the upcoming quarter or fiscal year and is reported by an analyst. Earnings estimates are developed by analysts who are working for investment research firms. Using the earnings estimate, analysts can evaluate the cash flow and…
What is Sustainable Investing? Sustainable investing is the practice of making capital allocation decisions based on socially responsible and ethical strategies to ensure that portfolio companies maintain a high standard of sustainability principles. Investing through ESG (Environmental, Social, and Governance) principles constitute part of sustainable investing and have become increasingly popular over the years. Investors…
