What is Net Settlement? A net settlement is an inter-bank payment settlement system wherein banks collect data on transactions throughout the day and exchange the information with the clearinghouse and the central bank to settle any outstanding amounts. In a net settlement system, banks keep track of their electronic (and physical) credit and debit transactions…
What are Negative Interest Rates? Negative interest rates are used by central banks to increase borrowing in times of economic recession. By offering a negative interest rate, the central bank decreases the overall economy-wide cost of borrowing, aiming to increase economic activity through increased investment and consumption spending. Negative interest rates are a monetary policy…
What is Negative Gearing? Negative gearing occurs when an investment that is made using borrowed funds produces cash flows that are lower than the interest and other expenses paid towards that investment. Understanding Negative Gearing The concept can be explained using the figure below: Normally, negative gearing is seen in…
What is Net Unrealized Appreciation (NUA)? Net unrealized appreciation (NUA) occurs when employees own stock in the company where they are employed, and there is a difference between the average cost basis and the current market value of the shares owned. Several companies give employees stock ownership in the company as a form of compensation…
What is Neoliberalism? Neoliberalism is an economic philosophy that conceptually describes a move towards free markets, capitalism, and a diversion from government ownership. The typical policies associated with neoliberalism include free trade, globalization, privatization, and changes in government spending to stimulate the private sector. Neoliberals favor a progressive tax regime and do not oppose measures…
What is a Prisoner’s Dilemma? A prisoner’s dilemma is a decision-making and game theory paradox illustrating that two rational individuals making decisions in their own self-interest cannot result in an optimal solution. The paradox was developed by mathematicians M. Flood and M. Dresher in 1950, and the modern interpretation was conceptualized by Canadian mathematician A.W. Tucker. The…
What is Game Theory? Game theory is a mathematical framework developed to address problems with conflicting or cooperating parties who are able to make rational decisions. The theory primarily deals with finding the optimal rational decision in various scenarios. Game theory is a relatively new discipline. Modern game theory was introduced in the works of…
What are Employee Wellness Programs? Employee wellness programs are programs undertaken by an employer in order to improve employee health and also to help individual employees overcome particular health-related problems. The employer can offer compulsory employee training, staff seminars, or even work with a third-party provider offering a variety of wellness programs. Employees are invaluable…
What are Metrics? Metrics are a system of measurement or related measures that facilitate the quantification of a specific characteristic. It is a decimal measurement system that is internationally accepted. Business Uses of Metrics There are different types of metrics for different disciplines, which include business, science, mathematics, physics, and engineering. Metrics communicate information that…
What is Negative Goodwill? The negative goodwill (NGW) amount, also known as the “bargain purchase” amount, is the difference between the purchase price paid for an asset and its actual fair market value. Negative goodwill is an accounting principle that occurs when the price paid for an asset is lower than its value in the…
