What is the Morningstar Sustainability Rating? The Morningstar Sustainability Rating is a consistent and objective way for investors to evaluate mutual funds and exchange-traded funds (ETFs) based on their environmental, social, and corporate governance (ESG) impact. Implemented in 2016, the Morningstar Sustainability Rating is a rating out of five globes, instead of stars. It indicates…
What are Net Liquid Assets? Net liquid assets is a term used to define the immediate liquidity position of a company. It is calculated as the difference between liquid assets and current liabilities. Examples of liquid assets include cash, money market assets, stocks, accounts receivable, marketable securities, or any assets that can be quickly converted…
What is the Variance Inflation Factor (VIF)? The Variance Inflation Factor (VIF) measures the severity of multicollinearity in regression analysis. It is a statistical concept that indicates the increase in the variance of a regression coefficient as a result of collinearity. Variance Inflation Factor and Multicollinearity In ordinary least square (OLS) regression analysis, multicollinearity exists…
What is a Municipal Bond? A municipal bond refers a bond or fixed income security that is issued by a government municipality, township, or state to finance its governmental projects. Municipal bonds are also referred to as “muni bonds” or “muni.” The advantage of municipal bonds for investors is the fact that they are tax-exempt,…
What is the Municipal Securities Rulemaking Board (MSRB)? The Municipal Securities Rulemaking Board (MSRB) is a regulatory organization that drafts protection rules and several other rules that regulate broker-dealers, banks, and other parties within the United States municipal securities market. What are Municipal Securities? Municipal securities are financial securities that are offered by…
What are Mortgage Servicing Rights (MSR)? Mortgage servicing rights (MSR) are a specific arrangement where a third party promises to collect mortgage payments on behalf of a lender in exchange for a fee. Mortgage Servicing Rights Explained A mortgage is a form of a loan or debt instrument that is secured by the collateral of…
What is the Multiple Employer Welfare Arrangement (MEWA)? The Multiple Employer Welfare Arrangement (MEWA) is a procedure that involves multiple employers coming together with a particular association to offer health and welfare benefit plans for their employees. MEWA forms the basis of group healthcare coverage that is offered through association health plans. Essentially, MEWA is…
What is a No-Transaction-Fee (NTF) Mutual Fund? A no-transaction-fee (NTF) mutual fund refers to mutual funds that do not charge trading fees for the transactions made. They are also known as no-load mutual funds. Investors can buy and sell the shares of a no-transaction-fee mutual fund without paying sales commission, which is favorable to them….
What is a Non-Accredited Investor? A non-accredited investor refers to investors who fail to meet the net worth or income requirements defined by the Securities and Exchange Commission (SEC). Non-accredited investors are also known as retail investors. Being a non-accredited investor does not mean that the individual cannot invest; however, investment opportunities for them are…
What is Diffusion of Innovation? Diffusion of Innovation (DOI) is a theory popularized by American communication theorist and sociologist, Everett Rogers, in 1962 that aims to explain how, why, and the rate at which a product, service, or process spreads through a population or social system. In other words, the diffusion of innovation explains the…
