What is Extrinsic Value? Extrinsic value of an option is calculated by taking the difference between the market price of an option (also called the premium) and its intrinsic price – the value of an options contract in relation to the underlying at expiration or if exercised. In other words, it is determined by factors…
What is Sharia Law? Sharia law is a religious law that lays down governing principles for spiritual, mental, and physical behavior that must be followed by Muslims. Regarded as God’s command for Muslims, Sharia law is essentially Islam’s legal system. The four primary sources of Sharia Law are: The Quran – The Holy Book conveys…
What is Translation Exposure? Translation exposure is a kind of accounting risk that arises due to fluctuations in currency exchange rates. Understanding Translation Exposure The assets, liabilities, equities, and earnings of a subsidiary of a multinational company are usually denominated in the currency of the country it is situated in. If the parent company is…
What is Stablecoin? Stablecoin refers to a type of cryptocurrencies that tries to tackle price fluctuations to maintain a more stable price. The way of doing this is to link the stablecoin’s market value to some external reference, most commonly a fiat currency like the USD, although some stablecoins are linked to commodities, such as…
What is Standard Error? Standard error is a mathematical tool used in statistics to measure variability. It enables one to arrive at an estimation of what the standard deviation of a given sample is. It is commonly known by its abbreviated form – SE. Standard error is used to estimate the efficiency, accuracy, and consistency…
What is the Eclectic Paradigm? Based on the internalization theory of British economist J.H Dunning, the eclectic paradigm is an economic and business method for analyzing the attractiveness of making a foreign direct investment (FDI). The eclectic paradigm model follows the OLI framework. The framework follows three tiers – ownership, location, and internalization. The eclectic…
What is an Earnings Announcement? An earnings announcement is the public statement a company offers to reveal its profitability for a certain period of time. Most often, an earnings announcement details profit for a quarter or a year. Well before an earnings announcement is made, equity analysts study past announcements and other metrics to develop…
What is an Evergreen Loan? In the financial world, an evergreen loan is, as its name suggests, one that doesn’t go away. Essentially, an evergreen loan is a type of revolving loan. The borrower makes payments on the loan balance, based on the loan’s terms. As the principal balance on the loan is paid off,…
What is a Master of Business Administration (MBA)? An MBA, also known as a Master of Business Administration, is a post-secondary degree that provides in-depth knowledge and training from the perspective of business management. The graduate degree can involve a general focus or specialize in areas, such as accounting, finance, marketing, and more. An In-depth…
What is Business Process Outsourcing (BPO)? Business process outsourcing (BPO) is a type of outsourcing in which a third-party service provider is engaged to perform one or more business functions for a company. The third party is responsible for carrying out all operations related to the business function. BPO is also known as subcontracting or…
