What is Indirect Security? Indirect security refers to a type of security that a borrower provides against a loan, and is not directly related to the assets pledged as collateral. Usually, when a lender extends credit facilities to a borrower, they require the borrower to pledge certain assets as security for the loan. The type…
What is a Macro Manager? A macro manager is a type of boss who allows employees to carry out their responsibilities independently. Such managers are more concerned with the results obtained by the employees’ inputs, rather than the day-to-day habits of their subordinates. Such a type of leadership is also known as macro-management. Some employees…
What is High Finance? High finance refers to complex financial transactions that involve a huge amount of money. It is often associated with unethical practices when lending, borrowing, or investing large amounts of money. A large proportion of senior professionals working in the financial sector – including bankers, managers, and funders – engage…
What is Negative Amortization? Negative amortization occurs when the principal amount on a loan increases gradually because the loan repayments do not cover the total amount of interest costs for the period. It occurs because borrowers are allowed to make reduced payments for a certain period within the term of the loan. Therefore, the payments…
What is a Vesting Schedule? A vesting schedule is an incentive program established by an employer to give employees the right to certain asset classes. Employers use such type of incentive to reward loyal employees who remain with the company for a long period. A vesting schedule gives employees full ownership rights to employer-provided assets…
What is Annualized Income? Annualized income refers to an estimate of the total income generated for one year. It is calculated using partial data, and therefore, the income generated represents an estimate of the amount a business or an individual would have earned in one year. The annualized income helps taxpayers avoid incurring penalties and…
What is Machine Learning (in Finance)? Machine learning in finance is now considered a key aspect of several financial services and applications, including managing assets, evaluating levels of risk, calculating credit scores, and even approving loans. Machine learning is a subset of data science that provides the ability to learn and improve from experience without…
What is an Accounting Standard? An accounting standard is a standardized guiding principle that determines the policies and practices of financial accounting. Accounting standards not only improve the transparency of financial reporting but also facilitates financial accountability. An accounting standard is relevant to a company’s financial reporting. Some common examples of accounting standards are segment…
What is Accounting Conservatism? Accounting conservatism refers to financial reporting guidelines that require accountants to exercise a high degree of verification and utilize solutions that show the least aggressive numbers when faced with uncertainty. It is a longstanding principle in financial reporting intended to protect users of financial information from inflated revenues and to make…
What is Accountability? Accountability is the concept of answerability by an individual or a department for the performance or outcomes of specific activities. Essentially, the accountable party is responsible for the execution of the desired role. The principal party delegates roles to other parties but remains liable if an action is not executed well or…
