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Index Fund

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…

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Fixed cost

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…

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Variable Cost

Variable Cost A variable cost is a corporate expense that changes in proportion to how much a company produces or sells. Variable costs increase or decrease depending on a company’s production or sales volume—they rise as production increases and fall as production decreases. Examples of variable costs include a manufacturing company’s costs of raw materials…

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High-Yield Bond

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…

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High-Low Method

High-Low Method In cost accounting, the high-low method is a way of attempting to separate fixed and variable costs given a limited amount of data. Thus, the high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level. Formula Once the variable cost…

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Gross domestic product (GDP)

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…

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Economic Growth Rate

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…

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Effective Gross Income

Effective Gross Income What is Effective Gross Income (EGI)? There’s big money-making potential with an investment rental property. However, determining how much you’ll actually make isn’t as simple as multiplying the monthly rent by 12. To understand your true cash flow, you’ll need to keep an eye on your effective gross income (EGI) about your net…

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