Jae's Blog

An image on paper currency designed to differentiate officially sanctioned bills from counterfeit bills.

Money that is invested in a firm by its owner(s) or holder(s) of common stock (ordinary shares) but which is not returned in the normal course of the business. Investors recover it only when they sell their shareholdings to other investors, or when the assets of the firm are liquidated and proceeds distributed among them after satisfying the firm's obligations.

Capital flow from a foreign country to the country of origin. This usually refers to returning returns on a foreign investment in the case of a corporation, or transferring foreign earnings home in the case of an individual.

A security which is comprised of two parts that cannot be separated from one another. The two parts of a stapled security are a unit of a trust and a share of a company. The resulting security is influenced by both parts, and must be treated as one unit at all times, such as when buying or selling the security.

The maximum amount of currency positions that can be carried over from one trading day to another. The overnight limit is set by the Central Bank regulation the financial institution where the positions are held.

A security, usually a bond, issued by a U.S. government-sponsored agency. The offerings of these agencies are backed by the government, but not guaranteed by the government since the agencies are private entities. Such agencies have been set up in order to allow certain groups of people to access low cost financing e.g. students and home buyers. Some prominent issuers of agency securities are Student Loan Marketing Association (Sallie Mae), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Agency securities are usually exempt from state and local taxes, but not federal tax. also called agency security.

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Broadly-defined plan aimed at creating a desired future. In contrast, a long-term plan is aimed at meeting estimated future needs, a short-term plan at meeting current or immediate needs, and a tactical plan at realizing interim objectives that lead to the goal(s) of a strategy. See also strategic business plan.

Balance sheet that assigns due value to intellectual assets (personnel who generate valuable know how) intellectual capital (copyrights, formulas, patents) and intellectual property (brand names, registered designs, trademarks), etc. It is based on the concept that the true worth of a firm is based at least as much on its knowledge assets as it is on its physical assets. It draws on the analogy that the value of a property (as judged by a real estate appraiser) includes non-material factors (such as its accessibility, amenities, condition, convenience, location, neighborhood) in addition to the value of building material used in its construction. See also traditional balance sheet.

Any interest rate that changes on a periodic basis. The change is usually tied to movement of an outside indicator, such as the prime interest rate. Movement above or below certain levels is often prevented by a predetermined floor and ceiling for a given rate. For example, you might see a rate set at "prime plus 2%". This means that the rate on the loan will always be 2% higher than the prime rate, which changes regularly to take into account changes in the inflation rate. For an individual taking out a loan when rates are low, a fixed rate loan would allow him or her to "lock in" the low rates and not be concerned with fluctuations. On the other hand, if interest rates were historically high at the time of the loan, he or she would benefit from a floating rate loan, because as the prime rate fell to historically normal levels, the rate on the loan would decrease.

Situation where an obligation is entered into, or a transaction is conducted, under the stipulation that it is without recourse to the borrower, endorser, or seller. That is, he or she is not personally liable (beyond the specific collateral pledged, if any) to the lender, holder, or buyer for any default, loss, or defect. Presence or absence of recourse determines whether a sale is actually a sale for accounting purposes (hence non-taxable) or is a transfer of ownership (hence taxable). See also recourse, sans recourse and with recourse.