What is the National Association of Investors Corporation (NAIC)? The National Association of Investors Corporation (NAIC) was first founded in 1951 as the National Association of Investment Clubs. Today, the NAIC conducts its business as BetterInvesting. The NAIC works as a sort of school/think tank. It offers broad investment advice, educational information, and support that…
What is the National Association of Securities Dealers (NASD)? The National Association of Securities Dealers (NASD) was a regulatory body responsible for overseeing the securities industry. It was tasked with both the operation and regulation of all securities exchange market trades, as well as over-the-counter (OTC) market trades. Founded in 1939 – using…
What is Near Money? Near money is a term used to describe non-cash assets that are very liquid and that are easily convertible into cash. It is also referred to as quasi-money or cash equivalents. Examples of near money are: Savings accounts Government treasury securities (T-bills) Money market securities Liquid foreign currencies (US dollar, Japanese…
What is Scenario Analysis vs Sensitivity Analysis? To understand scenario analysis vs sensitivity analysis, one should first understand that investment decisions are based on a set of assumptions and inputs. The lack of certainty in the premises and inputs brings about investment risk. Before making an investment, an individual assesses the magnitude of such risks…
What is Asset Coverage Ratio? The asset coverage ratio is a financial metric that indicates how a company can potentially settle its debts by selling its tangible assets. The ratio is used to evaluate the solvency of a company and helps lenders, investors, management, regulatory bodies, etc. determine how risky a particular company is. The…
What is Actuarial Science? Actuarial science deals with applying quantitative and statistical techniques to answer uncertainties pertaining to the future. It may relate to finance, insurance, or any other field where there is a possibility of loss or injury. Professionals skilled in this field are called actuaries. In other words, an actuary can be defined…
What is a Natural Gas ETF? Natural gas ETF is defined as an exchange-traded fund that helps investors obtain exposure to returns based on the performance of natural gas. Natural gas ETF falls under the broader universe of commodity ETFs. In theory, commodity ETFs should be easy to create. However, that’s not quite true. No…
What is Negative Income Tax? Negative income tax is a system where cash is given by the government to eligible tax residents who are earning below a certain threshold. We can consider negative income tax as a mirror image of regular income tax, where those individuals earning above the threshold pay tax to the government,…
What is Voluntary Compliance? Voluntary compliance is an assumption under which the U.S. tax system operates. It is the principle for which all the taxpayers will cooperate with the tax system, filing an honest and accurate annual return autonomously. Voluntary compliance does not mean that there are no tax-related laws or rules. It means that…
What Software is Used in Financial Modeling? Before we discuss Excel vs. automation in financial modeling, let’s take a look first at how software is used to build financial models. Financial modeling involves creating an abstract representation of an actual or projected financial event. Thus, a financial model is a mathematical tool that can be…
