Guaranteed Investment Fund Guaranteed investment income is a type of investment product by insurance companies that allow clients to invest in equity, bond, and/or index fund. While providing a promise of a predefined minimum value of the fund will be available at the fund’s maturity. Guarantor An entity that commits to providing the funds required…
Vertical analysis Vertical analysis is the proportional analysis of a financial statement, where each line item on a financial statement lists as a percentage of another item. It is also useful for trend analysis, to see relative changes in accounts over time, such as on a comparative basis over five years. For example, if the…
Horizontal Analysis Horizontal analysis is an approach used to analyze financial statements by comparing specific financial information for a certain accounting period with information from other periods. Analysts use such an approach to analyze historical trends. Horizontal analysis can also be compared with a vertical one. Whereas vertical analysis analyzes a particular financial statement using…
Income Annuity An income annuity works by converting a large sum of cash into a stream of regular payments. You give them money to an insurance company. And in exchange, the insurer agrees to pay you for a certain length of time — or the rest of your life. You may receive your annuity payouts…
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…
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…
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…