Growth Capex
What is Growth Capex? Growth capex is a form of capital expenditure undertaken by a company to expand existing operations or further growth prospects. It focuses on activities such as the acquisition of fixed assets, purchase of hardware (e.g., computers), vehicles for transporting goods, and building expansion. Usually, transactions relating to growth capex are recorded…
Annuity
What is an Annuity? An annuity is a financial product that provides certain cash flows at equal time intervals. Annuities are created by financial institutions, primarily life insurance companies, to provide regular income to a client. An annuity is a reasonable alternative to some other investments as a source of income since it provides guaranteed…
Quantitative Finance
What is Quantitative Finance? Quantitative finance is the use of mathematical models and extremely large datasets to analyze financial markets and securities. Common examples include (1) the pricing of derivative securities such as options, and (2) risk management, especially as it relates to portfolio management applications. Professionals who work in this field are often referred…
Commercial Paper
What is Commercial Paper? Commercial paper refers to a short-term, unsecured debt obligation that is issued by financial institutions and large corporations as an alternative to costlier methods of funding. It is a money market instrument that generally comes with a maturity of up to 270 days. Commercial paper is sold at a discount to…
Bad Debt Expense
What is Bad Debt Expense? Bad debt expense is the way businesses account for a receivable account that will not be paid. Bad debt arises when a customer either cannot pay because of financial difficulties or chooses not to pay due to a disagreement over the product or service they were sold. Reporting Bad Debts…
Agency Bonds
What are Agency Bonds? Agency bonds, also known as agency debt, is the debt issued by a government-sponsored enterprise (GSE) or a federal agency. The key difference between a GSE and a federal agency is that a GSE’s obligations are not guaranteed by the government, whereas a federal agency’s debt is backed up by a…
Balanced Fund
What is a Balanced Fund? A balanced fund, also known as a hybrid fund, is characterized by diversification among two or more asset classes. A balanced fund usually combines stock and bond components in a diversified portfolio. Balanced funds typically follow a 60% stock and 40% bond asset allocation, as seen below: Asset allocation in…
Prime Rate
What is the Prime Rate? The term “prime rate” (also known as the prime lending rate or prime interest rate) refers to the interest rate that large commercial banks charge on loans and products held by their customers with the highest credit rating. Typically, the customers with high creditworthiness are large corporations that are borrowing…
Bank Credit Analysis
What is Bank Credit Analysis? In bank credit analysis, banks consider and evaluate every loan application based on merits. They check the creditworthiness of every individual or entity to determine the level of risk that they subject themself by lending to an entity or individual. Clients with a high level of risk are less desirable…
