What is a Calendar Spread? A calendar spread is a trading technique that involves the buying of a derivative of an asset in one month and selling a derivative of the same asset in another month. It is most commonly done in the case of futures contracts in commodity markets, especially for grains such as…
Who Evaluates Bank Loans? The lending process involves a series of activities that lead to the approval or rejection of a bank loan application. The loan department of a bank employs different credit professionals with unique roles and responsibilities that complement each other to make the lending process complete. Loans are one of the primary…
What is Political Economy? Political economy is a social science that studies production, trade, and their relationship with the law and the government. It is the study of how economic theories affect different socio-economic systems, such as socialism and communism, along with the creation and implementation of public policy. Different groups in an economy have…
What is the Solow Growth Model? The Solow Growth Model is an exogenous model of economic growth that analyzes changes in the level of output in an economy over time as a result of changes in the population growth rate, the savings rate, and the rate of technological progress. The Solow Growth Model, developed by…
What are Variable Rate Loans? A variable rate loan is a type of loan where the interest changes according to changes in market interest rates. Unlike a fixed-rate loan, where borrowers pay a constant interest rate, a variable rate loan comprises varying monthly payments that change according to the market interest rate changes. Usually, lenders…
What are Secured vs Unsecured Loans? When planning to take out a personal loan, a borrower can choose between secured vs unsecured loans. When borrowing money from a bank, credit union, or other financial institution, an individual is essentially taking a loan. The bank has the discretion to decide whether to require the borrower to…
What is a Veblen Good? Veblen good is a type of luxury good named after American economist Thorstein Veblen. It shows a positive relationship between price and demand, and thus an upward-sloping demand curve. The demand for a Veblen good rises (drops) when its price increases (decreases). A Veblen good generally is considered a high-quality…
What are Transaction-based Indices? Transaction-based indices refer to a mode of monitoring the performance of the commercial real estate market. Such indices are rare since the acquisition of property is a personal endeavor. Appraisal-based indices are the most common form of indices since, to some extent, investors are obliged to revalue the assets they hold….
