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….
What is the Reporting Cycle? The reporting cycle involves the running, managing, updating, and reporting of a company’s accounts. The cycle usually runs concurrently with the planning and budgeting cycles. It ensures that the company is ready to begin the following period. A company’s planning/budgeting cycles and reporting cycles are usually independent of each other…
What is Timberland (Alternative Investment)? Timberland refers to an alternative form of investment that involves putting money into trees, either in managed tree plantations or natural forests. Investors bank on the predictable biological growth of the trees to increase in value so that they can be sold at a future date for their wood. Timberland…
What are Regional Trading Agreements? Regional trading agreements refer to a treaty that is signed by two or more countries to encourage the free movement of goods and services across the borders of its members. The agreement comes with internal rules that member countries follow among themselves. When dealing with non-member countries, there are external…
What is Consumption? Consumption is defined as the use of goods and services by a household. It is a component in the calculation of the Gross Domestic Product (GDP). Macroeconomists typically use consumption as a proxy of the overall economy. When valuing a business, a financial analyst would look at the consumption trends in the business’ industry….
What is a Subsidy? A subsidy is an incentive given by the government to individuals or businesses in the form of cash, grants, or tax breaks that improve the supply of certain goods and services. With subsidies, consumers are able to access cheaper products and commodities. Markets that have positive externalities, which are extra benefits…
What is Bartering? Bartering is the act of trading one good or service for another without using a medium of exchange such as money. A bartering economy differs from a monetary economy in a variety of ways. The primary difference is that goods or services are exchanged immediately, and the exchange is reciprocal, meaning it’s…
