What is Annual Return? The annual return is the return on an investment generated over a year and calculated as a percentage of the initial amount of investment. If the return is positive (negative), it is considered a gain (loss) on the initial investment. The rate of return will vary depending on the level of…
What is the Nominal Rate of Return? The nominal rate of return is the total rate of return earned on an investment before adjusting for any deductions and premiums, such as investment fees, trading costs, tax expenses, and inflation. It can be considered the “face” amount of a return. Formula for the Nominal Rate of…
What is a Virtual Good? A virtual good is a non-physical asset that is traded in an online community or marketplace. They are most commonly found in video games, as well as on social media platforms. In the platforms that provide virtual goods, especially video games, purchasing them enables users to level up more quickly…
What is Acquisition Cost? Acquisition cost is the cost of purchasing an asset. It is generally used in three different contexts in business, which include the following: Mergers and acquisitions Fixed assets Customer acquisition In the context of mergers and acquisitions (M&A), the acquisition cost represents the value of compensation transferred from an acquiring company…
What is Nominal Yield? Nominal yield is a fixed percentage amount calculated for fixed income securities representing a stated yield for a bond. It is calculated by dividing the annual interest payments by the face value of the bond. It is also referred to as the coupon rate of a fixed income security. How to…
What is a Net Lease? A net lease is a contractual arrangement where one party conveys land or property to another party in exchange for payment of a combination of rent, property taxes, insurance and various operational costs. The commercial property is provided by the lessor to the lessee, who will pay the lessor for…
What is an Opinion Letter? An opinion letter, also called a legal opinion, is a letter issued by a legal counsel that facilitates a lender’s due diligence process in a transaction. The opinion letter is used in credit analysis to help determine whether to lend to a borrower or not. Lenders often require an opinion…
What is an Arbitrageur? An arbitrageur is an individual who earns profits by taking advantage of inefficiencies in financial markets. Arbitrage opportunities arise when an asset is priced differently between multiple markets at the same time. Such price differences are inefficiencies resulting from deficiencies in the marketplace. A successful arbitrageur profits by simultaneously purchasing financial…
