What is a Bank Stress Test? A bank stress test is a simulation or analysis conducted to analyze how a bank will be impacted under adverse market conditions – for example, a financial market crash or recession. The analysis is conducted by stress-testing a bank’s balance sheet under hypothetical market conditions and economic variables, i.e.,…
What is a Royalty Trust? A royalty trust is a type of corporation that usually operates in the energy or resource mining industries and that has ownership rights to mineral deposits, wells, or reservoirs. The main purpose of royalty trusts is to distribute the generated resource sales income to shareholders. If the major…
What are Carbon Credits? Carbon credits, often referred to as carbon allowances, can be thought of as a unit of measurement; however, they have a “tradeable” component. Carbon credits are not the same as carbon offsets. Carbon credits only exist in jurisdictions that are governed by what’s called a “cap and trade” system (such as…
What is For Sale by Owner (FSBO)? For Sale By Owner (FSBO) is a method of selling property that is conducted directly by the seller without using a listing agent. Most owners opt for FSBO in selling their properties because it saves the commission that would’ve been paid to a listing agent or broker, which…
What is a Principal-Agent Problem? A principal-agent problem arises when there is a conflict of interest between the agent and the principal, which typically occurs when the agent acts solely in his/her own interests. In a principal-agent relationship, the principal is the party that legally appoints the agent to make decisions and take actions on…
What is Little’s Law? Little’s Law is a theorem that determines the average number of items in a stationary queuing system, based on the average waiting time of an item within a system and the average number of items arriving at the system per unit of time. The law provides a simple and intuitive approach…
What is Corporate Social Responsibility (CSR)? Corporate social responsibility (CSR) refers to strategies that companies put into action as part of corporate governance that are designed to ensure the company’s operations are ethical and beneficial for society. Categories of CSR Although corporate social responsibility is a very broad concept that is understood and implemented differently…
What is Project Evaluation Review Technique (PERT)? In project management, the Project Evaluation Review Technique, or PERT, is used to identify the time it takes to finish a particular task or activity. It is a system that helps in the proper scheduling and coordination of all tasks throughout a project. It also helps in keeping…
What is Product Mix? Product mix, also known as product assortment or product portfolio, refers to the complete set of products and/or services offered by a firm. A product mix consists of product lines, which are associated items that consumers tend to use together or think of as similar products or services. Dimensions of a…
What is a Stock Keeping Unit (SKU)? A stock keeping unit or SKU (pronounced “skew”) is a number that is assigned to a product for the purpose of inventory management and ease of tracking. In other words, a stock keeping unit is a unique identifier assigned to each product for easier and more efficient record-keeping….
