Fund Flow Fund flow, also referred to as asset flows or just “flows,” measures the net movement of cash into and out of investment vehicles like mutual funds and exchange-traded funds. They do not reflect the performance of the investment, only how investors move their money. Outflows reflect share redemptions, or when investors take their…
Index Fund An index mutual fund or ETF (exchange-traded fund) tracks the performance of a specific market benchmark—or “index,” like the popular S&P 500 Index—as closely as possible. That’s why you may hear people refer to indexing as a “passive” investment strategy. Instead of hand-selecting which stocks or bonds the fund will hold, the fund’s manager buys all…
Fixed cost Fixed cost is a cost that does not change when sales or production volumes increase or decrease. This is because they do not directly associate with manufacturing a product or delivering a service. As a result, fixed costs are indirect. Fixed costs can include property taxes, rent, salaries and the cost of benefits…
Mixed cost A mixed cost is a cost that contains both a fixed cost component and a variable cost component. It is important to understand the mix of these elements of a cost so that one can predict how costs will change with different levels of activity. Typically, a portion of a mixed cost may…
High-Yield Bond High-yield bond (also called junk bonds) are bonds that pay higher interest rates because they have lower credit ratings than investment-grade bonds. They are more likely to default, so they must pay a higher yield than investment-grade bonds to compensate investors. Issuers of high-yield debt tend to be startup companies or capital-intensive firms…
Gross domestic product (GDP) Gross domestic product (GDP), the total market value of the goods and services produced by a country’s economy during a specified period. It includes all final goods and services—that is, those that produce from the economic agents in that country regardless of their ownership. Moreover, it is used throughout the world…
Economic Growth Rate Economic growth Rate describes an increase in the quantity and quality of the economic goods and services that a society produces and consumes. From the long-term perspective of social history, we know that economic prosperity and lasting economic growth is very recent achievement for humanity. In this entry, we will also look…
What Is a Breakeven Point (BEP)? Breakeven Point (BEP) is the point at which your trade neither makes nor loses money. It is also known as the price at which you have entered into a trading position. In terms of price action, it is the level at which the risk on the trade is recovered. For example,…
Balance of Trade What is the Balance of Trade? The Balance of Trade (BoT) is the difference between the total value of exports and the total value of imports of a country within a period. It is also referred to as trade balance, commercial balance or net exports (NX). The Balance of Trade shows whether the country had achieved…
Balance of Payments The balance of payments(BOP) is an accounting of a country’s international transactions over a certain time period. It shows the sum of the transactions—purely financial ones, as well as those involving goods or services—between individuals, businesses and government agencies in that country and those in the rest of the world. What is…