What is Insurance? Insurance is a contract, also referred to as a policy, where an individual is protected from financial losses by an insurance company. In order to receive protection, the company will require you to pay a fee called a premium. In return, you will be provided with a sum of money if you…
What is Index Investing? Index investing is a passive investment method achieved by investing in an index fund. An index fund is a fund that seeks to generate returns from the broader market by tracking an index. The S&P 500 is the most popular index to track, with a historical annual return of 10%. Understanding…
What is Import Substitution Industrialization (ISI)? Import substitution industrialization (ISI) is an economic policy that favors the development of domestic industries and the reduction of reliance on manufactured foreign imports. ISI was a prominent policy in the 20th century for developing countries seeking to reduce their dependence on developed countries, with the goal to reach…
What is Imputed Interest? Imputed interest is the interest that is estimated to be collected by the lender, regardless of what the lender actually receives. Tax collection agencies use imputed interest to collect tax revenue on below-market loans and zero-coupon bonds. Calculating Imputed Interest Tax Implications – Base Scenario Generally, lenders must report interest income…
What is an Income Annuity? An income annuity, also known as an immediate annuity, is an annuity that is contractually designed to start paying income as soon as the policy is started. Income annuities can be funded as soon as the policy begins. In addition, they may be annuitized immediately, giving the individual extra freedom…
What Does In-House Mean? In-house, or insourcing, is a term used in business to describe the utilization of internal sources rather than outsourcing for activities such as hiring and operations. In-House vs. Outsourcing The performance of operational duties and activities is an increasingly important aspect within a business that requires educated cost allocation to become…
What is Per Capita Income (PCI)? Per capita income (PCI) or “average income” is the measurement of average income per person in a specific country, city, or region within a definitive time period. Used primarily in economics, PCI utilizes average income to calculate and present the standard of living and quality of life for a…
What is an Income Fund? An income fund is an investment vehicle similar to a mutual fund or an exchange-traded fund (ETF) that emphasizes current income compared to capital gain or appreciation. The term current income refers to income that is received on a fixed basis compared to waiting for some future date in order to…
What is Incidence Rate? The incidence rate or incidence measures the frequency of a specific event over a defined period of time. In business, determining an incidence rate can be done through gathering samples, conducting surveys, and testing products. Incidence is generally expressed as the number of cases per person per year of examination. For…
What is an Index Option? An index option is a financial derivative contract whose value is derived from an underlying stock market index. It gives the holder the right (but not the obligation) to buy or sell the underlying index at a specified strike price. Index options comprise call and put options that confer the…
