What is Non-Assessable Stock? Non-assessable stock is a class of stock ownership where the stock owner is limited in their liability to the amount paid for the stock. It means that in the instance of bankruptcy or a lawsuit, the shareholders cannot be found liable for any financial or legal troubles endured by the company…
What is a No-Load Fund? A no-load fund is a type of mutual fund where shares are bought and sold without commission charges for the purchase or the sale being taken out of the investor’s funds. The sales charges are called the “load,” and no-load mutual funds, as the name would imply, offer investors a…
What is a Mortgage Forbearance Agreement? A mortgage forbearance agreement is made when a bank or other mortgage lender agrees to temporarily either forego a borrower’s mortgage payments or reduce them. Lenders are open to making such agreements during times of economic crisis, such as the Global Financial Crisis of 2008 or the COVID-19 pandemic…
What is Next-In First-Out (NIFO)? Next-In First-Out (NIFO) is a method of inventory valuation used for internal purposes. NIFO involves charging the cost of goods sold by the replacement cost of the item sold from inventory. The value of NIFO inventory valuation method is derived from its ability to integrate the effect of inflation into…
What is Net Interest Margin? Financial intermediaries in the economy deal extensively with borrowing and lending, and the net interest margin is the net benefit of lending. Net interest margin is the difference between the interest income generated and the amount of interest paid out to lenders. It is an industry-specific profitability ratio for banks…
What is Monetarism? Monetarism (also referred to as “monetarist theory”) is a fundamental macroeconomic theory that focuses on the importance of the money supply as a main driver for economic growth. Subscribers to monetary economics believe that money supply is a primary determinant of price levels and inflation. Increasing money supply, according to the theory,…
What is the National Securities Markets Improvement Act (NSMIA)? The National Securities Markets Improvement Act (NSMIA) was introduced in 1996 to more efficiently allocate capital in financial markets. NSMIA amended the previously passed Investment Company Act of 1940 to promote the more efficient management of mutual funds, protect investors, and provide more effective regulation. What…
What is a Negative Pledge? A negative pledge is a contract provision prohibiting the debtor in a contract from creating security interests over specified property assets. The contractual provision aims to protect unsecured creditors by ensuring that debtors can only use unencumbered assets as collateral. Over time, the negative pledge’s become a boilerplate…
What is Net of Tax? Net of tax is the amount obtained after the applicable tax is deducted from the gross income that resulted from investments or transactions. Net of tax is a term most commonly used for showing the results of businesses in terms of income, profits, or losses. If the tax effect is considered…
