What is Reneging? Reneging refers to a situation where one party goes back on a promise or breaks an agreement or contract that they had previously accepted. Every day, individuals and businesses enter into verbal or written contracts that they are expected to abide by the terms of. However, there are situations when one party…
What is a Non-Amortizing Loan? A non-amortizing loan is a loan where the principal owed does not get paid until the loan is due. Non-amortizing loans are also referred to as interest-only loans or balloon-payment loans. Understanding Non-Amortizing Loans A non-amortizing loan does not come with an amortization schedule. Typically, a loan’s principal will get…
What is a Merger? A merger is a corporate strategy to combine with another company and operate as a single legal entity. The companies agreeing to mergers are typically equal in terms of size and scale of operations. Why do Mergers Happen? After the merger, companies will secure more resources and the…
What is Mezzanine Financing? Mezzanine financing is a layer of financing that fills the gap between senior debt and equity in a company. It can be structured either as preferred stock or as unsecured debt, and it provides investors with an option to convert to equity interest. Mezzanine financing is usually used to fund growth…
What is the Monetary Base? The monetary base refers to the amount of cash circulating in the economy. It is composed of two parts: currency in circulation and bank reserves. Currency in circulation refers to banknotes and coins held by the public – money we use in our everyday lives. Bank reserves are cash deposits…
What is Straight Voting? Straight voting, commonly known as statutory voting, is a corporate voting system that may be used to elect directors or to vote on important matters (e.g., voting on auditors, mergers and acquisitions opportunities, etc.). In the context of electing a director, each share is usually entitled to one vote per director…
What is Mercantilism? Mercantilism is an economic theory that emphasizes self-sufficiency through a favorable balance of trade. Mercantilist policies focus on the accumulation of wealth and resources while maintaining a positive trade balance with other countries. By maximizing exports and minimizing imports, mercantilism is also viewed as a form of economic protectionism. Originating in 16th-century…
What is Ethical Decision-Making? Ethical decision-making in finance is a decision-making ideology that is based on an underlying moral philosophy of right and wrong. Ethical decision-making is normative in nature, and ethical decisions are not solely driven by the goal of profit maximization. An ethical decision is one that stems from some underlying system of…
What is Microeconomics? Microeconomics is the study of how individuals and companies make choices regarding the allocation and utilization of resources. It also studies how individuals and businesses coordinate and cooperate, and the subsequent effect on the price, demand, and supply. Microeconomics refers to the goods and services market and addresses economic and consumer concerns….
