What is Pro-Rata Right? Pro-rata right is a legal term that describes the right, but not the obligation, that can be given to an investor to maintain their initial level of percentage ownership in a company during subsequent rounds of financing. In other words, if an investor with a pro-rata right initially acquired a 10%…
What is Venture Debt? Venture debt is a type of debt financing obtained by early stage companies and startups. This type of debt financing is typically used as a complementary method to equity financing. Venture debt can be provided by both banks specializing in venture lending and non-bank lenders. Venture debt is frequently used as…
What is a Bullet Bond Portfolio? A bullet bond portfolio, commonly referred to as a bullet portfolio, is made up of a range of bullet bonds, from short-term to long-term bullet bonds. A bullet bond is a non-callable bond wherein the total principal amount or its total value is paid in a lump sum on…
What is a Laddered Bond Portfolio? A laddered bond portfolio is an investment portfolio strategy that is composed of fixed income securities with different maturity dates. It is also referred to as a “bond ladder” portfolio. Why use a Bond Ladder? A bond ladder allows an investor to mitigate risks through diversification. It comes with…
What is a Barbell Bond Portfolio? A barbell bond portfolio is an investment portfolio that comprises both short-term and long-term bonds wherein one half of the portfolio consists of short-term bonds and the other half consists of long-term bonds. The investment portfolio is called the barbell bond portfolio because it can be graphically described using…
What is a Fixed Income Portfolio? A fixed income portfolio comprises investment securities that pay a fixed interest until their maturity date. Upon maturity, the principal amount of the security is paid back to the investor. Some examples of fixed income securities are: Certificates of deposit (CDs) Government-issued bonds Corporate-issued bonds Treasury bills Bond mutual…
What is Variable Overhead Spending Variance? Spending variance is a term used to describe the difference between the real amount associated with a certain expense and the expected amount associated with the same expense. It is the relation of the budgeted costs as calculated by the cost accountants of a company versus the real cost….
What is Variable Overhead Efficiency Variance? Variable overhead efficiency variance is a measure of the difference between the actual costs to manufacture a product and the costs that the business entity budgeted for it. Thus, it can arise from a difference in productive efficiency. The productivity efficiency variance is the difference between the actual number…
What is Structured Finance? Structured finance deals with financial lending instruments that work to mitigate serious risks related to complex assets. For most, traditional tools such as mortgages and small loans are sufficient. However, borrowers with greater needs, such as corporations, seek structured finance to deal with complex and unique financial instruments and arrangements to…
What is Variable Overhead? Variable overhead refers to the fluctuation in the manufacturing costs associated with the operation of businesses. To operate continuously, companies need to spend money on the production and sale of goods and services that generate revenue for their business. The overall operational costs usually include the salaries of managers, sales staff,…
