What is Segment Margin? Segment margin is a profitability measure that assesses the profit or loss generated by a particular product line of a business, or a particular geographic location. The segment margin is mainly used to compare the profitability of different components of a company. The measure is extremely helpful for large companies with several…
What is the Cost Approach (Real Estate)? The cost approach of evaluating real estate properties is based on the assumption that the cost of a property should be equal to the cost of building a similar property from scratch. The cost of building a real estate property includes the value of the underlying land and…
What are Funds Available for Distribution (FAD)? Funds available for distribution (FAD), also known as cash available for distribution, is used in reference to REIT investing. It shows the amount of net earnings of a REIT that will be distributed to stockholders and unitholders as dividends. REITs own and manage a portfolio of real estate…
What is an Accelerated Dividend? An accelerated dividend is a dividend that is paid out ahead of a change in the way the dividends are treated, such as a change in the tax rate of dividends. The dividend payments are made early in order to protect shareholders and mitigate the negative impact that a change…
What is Dollar Duration? Dollar duration is a bond analysis method that helps an investor ascertain the sensitivity of bond prices to interest rates changes. The method measures the change in the price of a bond for every 100 bps (basis points) of change in interest rates. Dollar duration can be applied to any fixed…
What is the Information Ratio? The information ratio measures the risk-adjusted returns of a financial asset or portfolio relative to a certain benchmark. This ratio aims to show excess returns relative to the benchmark, as well as the consistency in generating the excess returns. The consistency of generating excess returns is measured by the tracking…
What is the Forward Rate? The forward rate, in simple terms, is the calculated expectation of the yield on a bond that, theoretically, will occur in the immediate future, usually a few months (or even a few years) from the time of calculation. The consideration of the forward rate is almost exclusively used when talking…
