What is Matching Orders? Matching orders refers to the process of entering identical orders of buy and sell simultaneously to encourage trading in that particular security. When an investor wants to buy a certain quantity of security and another investor seeks to sell a similar quantity of that security at a similar price, the orders…
What is Merger Arbitrage? Merger arbitrage, otherwise known as risk arbitrage, is an investment strategy that aims to generate profits from successfully completed mergers and/or takeovers. It is a type of event-driven investing that aims to capitalize on differences between stock prices before and after mergers. Investors who employ merger arbitrage strategies are known as…
What is a Middle-Market Firm? A middle-market firm is one with a size that falls in the middle range of a market or industry. U.S. businesses can be divided into three categories – the big, middle-market, and small businesses. The middle-market firms are larger than the small businesses and smaller than the big businesses. They…
What is a Mixed Economic System? The mixed economic system is defined as an economic system that combines the elements of a market economy and the elements of a planned economy. It is a synthesis of socialism and capitalism, which contains both private enterprises and public enterprises. Most modern economies implement a mixed economic system….
What is Modified Accrual Accounting? Modified accrual accounting refers to an accounting method that combines cash-basis accounting and accrual-basis accounting. It follows the cash-basis method to record short-term events and follows the accrual method to record long-term events. The modified accrual method of accounting is created by the Government Accounting Standards Board (GASB). It does…
What is Minimum Wage? Minimum wage is the lowest wage that companies are obliged to give their employees for work performed over a certain period. It is the legal wage that cannot be reduced further by any contract or mutual agreement. The hourly minimum wage rate can be determined by the legislative body, wage board,…
What is Mom-and-Pop? The term mom-and-pop describes the small business entities that are independent or family-owned. It is in contrast to big-box stores, such as Walmart, Home Depot, Starbucks, and Pizza Hut. Mom-and-pop stores comprise a wide variety of businesses, including restaurants, groceries, repair shops, etc. Under the investment concept, mom-and-pop can also be used…
What is Top-Down Analysis? Top-down analysis starts by analyzing macroeconomic indicators, then performing a more specific sector analysis. Only after that does it dive into the fundamental analysis of a specific firm. It is the opposite of bottom-up analysis, which focuses on looking at fundamentals or key performance indicators before anything else. Breaking…
What is Strategic Analysis? Strategic analysis refers to the process of conducting research on a company and its operating environment to formulate a strategy. The definition of strategic analysis may differ from an academic or business perspective, but the process involves several common factors: Identifying and evaluating data relevant to the company’s strategy Defining the internal…
What is the Threat of New Entrants? The Threat of New Entrants, one of the forces in Porter’s Five Forces industry analysis framework, refers to the threat that new competitors pose to current players within an industry. It is one of the forces that shape the competitive landscape of an industry, and it helps determine the…
