What is an Asset Swap? An asset swap is a derivative contract between two parties that swaps fixed and floating assets. The transactions are done over-the-counter based on the amount and terms agreed upon by both sides of the transaction. How an Asset Swap Works Suppose a buyer wants to purchase a corporate bond but…
What is Asset Financing? Asset financing is a type of borrowing related to the assets of a company. In asset financing, the company uses its existing inventory, accounts receivable, or short-term investments to secure short-term financing. There are two ways to finance assets: The first involves companies using financing to secure the use of assets,…
What is Net Operating Loss (NOL)? A net operating loss (NOL) for income tax purposes is when a company’s allowable deductions exceed the taxable income in a tax period. When a company’s deductibles are greater than its actual income, the Internal Revenue Service (IRS) allows the company to use the loss to reduce previous years’…
What is a Working Capital Loan? A working capital loan is a type of short-term loan offered by a bank or alternative lender to finance a company’s everyday operations. The goal of working capital loans is to provide working capital for short-term capital expenditures, such as wages, rent, debt service payments, or to finance activities,…
What is a Bank Guarantee? A bank guarantee is an assurance that a bank provides to a contract between two external parties, a buyer and a seller, or in relation to the guarantee, an applicant and a beneficiary. The bank guarantee serves as a risk management tool for the beneficiary, as the bank assumes liability…
What is Agribusiness? Agribusiness is the complete value chain in agriculture, from the raw materials and resources necessary to create biological products to distributors and retailers that get products to end consumers. It can be separated into four links: input providers, producers, processors, and other service providers (such as marketers, distributors, etc.). Each link adds…
What is Artificial Intelligence (AI)? Artificial Intelligence (AI) is a broad branch of computer science that is focused on a machine’s capability to produce rational behavior from external inputs. The goal of AI is to create systems that can perform tasks that would otherwise require human intelligence. AI manifests itself in everyday life via virtual…
What is APIC (Additional Paid-In Capital)? Additional paid-in capital (APIC) is a component of shareholders’ equity that reflects the price investors are willing to pay above the par value of issued stock. APIC can be thought of as the surplus amount or premium a company receives from stock issued in an initial public offering (IPO)…
What is Simple Moving Average (SMA)? Simple Moving Average (SMA) refers to a stock’s average closing price over a specified period. The reason the average is called “moving” is that the stock price constantly changes, so the moving average changes accordingly. SMA is one of the core indicators in technical analysis and is usually the…
What is a Variable-Benefit Plan? A variable-benefit plan is a type of pension plan wherein the payout that the beneficiary is entitled to is subject to change according to the performance of the investments made as part of the plan. The benefit that the pensioner is entitled to changes in tandem with market fluctuations, hence…
