Greater Fool Theory – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is the Greater Fool Theory?Greater fool theory is an assumption that there is a possibility of making money by purchasing securities and selling them at a later date, whether they are overvalued or not. In other words, there is that individual (greater fool) in...

Leverage Ratio- Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is a Leverage Ratio?A leverage ratio is any kind of financial ratio that indicates the level of debt incurred by a business entity against several other accounts in its balance sheet, income statement, or cash flow statement.  The most common leverage ratios...

Pass-Through Rate (Mortgage-Backed Securities) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is the Pass-Through Rate?The pass-through rate is the interest amount paid to investors by a mortgage-backed security issuer once all fees and costs to do with servicing the investment have been paid. This type of rate, also known as coupon rate for an MBS,...

Modified Cash Basis – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is a Modified Cash Basis?Modified cash basis is a term in accounting that combines two major bookkeeping practices: accrual and cash basis. With a cash basis, you recognize a transaction when there is either outgoing or incoming cash. So, the cash receipt from a...

Lump of Labor Fallacy – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Lump of Labor Fallacy?The lump of labor fallacy is a belief that the amount of labor available in an overall economy can be distributed to create fewer or more job openings. It holds that there is a fixed amount of labor required in the entire economy....

Agio – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is Agio?Agio refers to a premium or percentage paid on a bond. This term is also used in the context of currency exchange, it refers to the percentage charged when one currency is exchanged for another one with a higher value. Agio also describes the difference...

Central African Economic and Monetary Community – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Central African Economic and Monetary Community?The Central African Economic and Monetary Community (CEMAC) is generally defined as an African Union Economic Community that facilitates Central African Regional Economic Cooperation. It aims at achieving...

Aggregate Level Cost Method – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is the Aggregate Level Cost Method?The Aggregate level cost method is a method that matches and allocates the cost and benefit of a pension plan over the span of its life. It is a form of actuarial accounting in which the present value of a pension benefit is...

Amplitude (Securities) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is Amplitude?Amplitude is a measure of a change in a variable over a period of time, it also measures the degree of difference between the extreme values of a variable. In the context of securities or asset. Amplitude is the measure of the difference in the price...

Affordable Market Value – Explained

by TheBusinessProfessor | Feb 23, 2025 | Banking, Lending, and Credit Industry

Update Table of Contents What is Affordable Market Value?How Does Affordable Market Value Work?History of Affordable Market Value (AMV) What is Affordable Market Value?Affordable market value (AMV) is a mechanism used by the Federal Deposit Insurance Corporation...