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The accounting rate of return, also known as average rate of return, or ARR, is a financial ratio used in capital budgeting. The ratio does not take into account the concept of time value of money. ARR calculates the return, generated to net income of the proposed capital investment. The ARR is a percentage return. Say, if ARR = 7%, then it means that the project is expected to earn seve

Accumulators (a.k.a. share forward accumulators) are financial structured products sold by an issuer (seller) to investors (the buyer) that require the buyers to buy shares of some underlying security at a predetermined strike price, settled periodically.

A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender's standard variable rate/base rate. There may be a direct and legally defined link to the underlying inde

Agricultural finance is a branch of finance which comprises financial services for agricultural production, processing and marketing, leasing (both land and equipment), and crop and livestock insurance.

Arbitrage ( , UK also ) is the practice of taking advantage of a difference in prices in two or more markets – striking a combination of matching deals to capitalize on the difference, the profit being the difference between the market prices at which the unit is traded. Arbitrage has the effect of causing prices of the same or very similar assets in different markets to converge.

In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent the ownership of value that can be converted into cash (although cash itself is also considered an asset).

In finance, an asset class is a group of marketable financial assets that have similar financial characteristics and behave similarly in the marketplace. These instruments can be distinguished as either having to do with real assets or having to do with financial assets. Often, assets within the same asset class are subject to the same laws and regulations; however, this is not always

An asset-backed security (ABS) is a security whose income payments, and hence value, are derived from and collateralized (or "backed") by a specified pool of underlying assets.

In finance, an asset–liability mismatch occurs when the financial terms of an institution's assets and liabilities do not correspond. Several types of mismatches are possible. An asset-liability mismatch presents a material risk at institutions with significant debt exposure, such as banks or sovereign governments. A significant mismatch may lead to insolvency or illiquidity, which can c

A bank examiner is a financial professional who has the task of making sure that banks and savings and loan associations are operating legally and safely, in accordance with the bank regulations imposed on these institutions by the chartering level of government. In the United States, they may conduct supervision on behalf of a U.S. government agency, the Federal Reserve System, a state

Bank reserves are a commercial bank's cash holdings physically held by the bank, and deposits held in the bank's account with the central bank. In most countries, the central bank may set minimum reserve requirements that mandate commercial banks under their purview to hold cash or deposits at the central bank equivalent to at least a prescribed percentage of their liabilities, such as c

A bank transaction tax is a tax levied on debit (and/or credit) entries on bank accounts. In 1989, at the Buenos Aires meetings of the International Institute of Public Finance, University of Wisconsin–Madison Professor of Economics Edgar L. Feige proposed extending the tax reform ideas of John Maynard Keynes, James Tobin and Lawrence Summers, to their logical conclusion, namely to tax a

The Barnett critique, named for the work of William A. Barnett in monetary economics, argues that internal inconsistency between the aggregation theory used to produce monetary aggregates and the economic theory used to produce the models within which the aggregates are used are responsible for the appearance of unstable demand and supply for money. The Barnett critique has produced a lo

Bitcoin (abbreviation: BTC; sign: ₿) is the first decentralized cryptocurrency. Based on a free-market ideology, bitcoin was invented in 2008 when an unknown person published a white paper under the pseudonym of Satoshi Nakamoto. Use of bitcoin as a currency began in 2009, with the release of its open-source implementation. From 2021 to 2025, El Salvador adopted it as legal tender curren

BRICS Pay (stylized as BRICS PAY) is a decentralized and independent payment messaging mechanism system that is affiliated with the BRICS organization.

A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Financial regulators like the B

Capitalism is an economic system based on the private ownership of the means of production and its use for the purpose of obtaining profit. This socioeconomic system has developed historically in several stages and is defined by a number of constituent elements: private property, profit motive, capital accumulation, competitive markets, commodification, wage labor, and an emphasis on inn

Cash flow matching is a process of hedging in which a company or other entity matches its cash outflows (i.e., financial obligations) with its cash inflows over a given time horizon. It is a subset of immunization strategies in finance. Cash flow matching is of particular importance to defined benefit pension plans.

A central business district (CBD) is the commercial and business center of a city. It contains commercial space and offices, and in larger cities will often be described as a financial district. Geographically, it often coincides with the "city centre" or "downtown". However, these concepts are not necessarily synonymous: many cities have a central business district located away from its

Chartalism is a heterodox theory in macroeconomics that views money as a pure creation of the state, introduced to control and organize economic activity rather than arising from barter or debt.

Check kiting or cheque kiting (American and British English, respectively) is a form of bank check fraud, involving taking advantage of the float provided by a bank to make use of non-existent funds in a checking or other bank account. Thus, instead of being used as intended, as a negotiable instrument, checks are misused to source (and manage the flow and timing of) a form of unauthoriz

The chief investment officer (CIO) is a Board-level executive, responsible for investments within an organization.

Christian finance is a kind of ethical finance following Christian ethics. The notion of "Christian finance" or "Catholic finance" refers to banking and financial activities that are not widely used. Whether the activities of the Knights Templar (12th century), Mounts of Piety (appeared in 1462) or the Apostolic Chamber attached directly to the Vatican, a number of operations of a bankin

In macroeconomics, the classical dichotomy is the idea, attributed to classical and pre-Keynesian economics, that real and nominal variables can be analyzed separately. To be precise, an economy exhibits the classical dichotomy if real variables such as output and real interest rates can be completely analyzed without considering what is happening to their nominal counterparts, the mone

The coincidence of wants (often known as double coincidence of wants) is an economic phenomenon where two parties each hold an item that the other wants, so they exchange these items directly. Within economics, this has often been presented as the foundation of a bartering economy.

Collateralized loan obligations (CLOs) are a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various tranches. A CLO is a type of collateralized debt obligation, or CDO.

A commercial mortgage is a mortgage loan secured by commercial property, such as an office building, shopping center, industrial warehouse, or apartment complex. The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop commercial property.

The Committee on Capital Markets Regulation is an independent and nonpartisan 501(c)(3) research organization financed by contributions from individuals, foundations, and corporations.

A commodity currency is a currency that co-moves with the world prices of primary commodity products, due to these countries' heavy dependency on the export of certain raw materials for income. Commodity currencies are most prevalent in developing countries (eg. Burundi, Tanzania, Papua New Guinea). In the foreign exchange market, commodity currencies generally refer to the New Zealand d

Concentration risk is a banking term describing the level of risk in a bank's portfolio arising from concentration to a single counterparty, sector or country.

A concession or concession agreement is a grant of rights, land, property, or facility by a government, local authority, corporation, individual or other legal entity.

In the United States secondary mortgage market, the Constant Maturity Mortgage (CMM) rate is a financial index representing the theoretical yield of a par value agency residential mortgage-backed security (agency RMBS). Unlike the constant-maturity treasury (CMT) which reflects government borrowing costs, the CMM reflects the yield required by investors to transact agency RMBS (such as t

In finance, a contingent claim is a derivative whose future payoff depends on the value of another “underlying” asset, or more generally, that is dependent on the realization of some uncertain future event.

In competition law, cornering the market consists of obtaining sufficient control of a particular stock, commodity, human capital or other asset in an attempt to reduce competition.

A corporate action is an event initiated by a public company that brings or could bring an actual change to the debt securities—equity or debt—issued by the company. Corporate actions are typically agreed upon by a company's board of directors and authorized by the shareholders. For some events, shareholders or bondholders are permitted to vote on the event. Examples of corporate actions

Corporate finance is an area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to maximize or increase shareholder value.

The cost of carry or carrying charge is the cost of holding a security or a physical commodity over a period of time. The carrying charge includes insurance, storage and interest on the invested funds as well as other incidental costs. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of the funds necessary to buy the inst

In macroeconomics, crawling peg is an exchange rate regime that allows currency depreciation or appreciation to happen gradually. It is usually seen as a part of a fixed exchange rate regime.

In real estate, creative financing is non-traditional or uncommon means of buying land or property. The goal of creative financing is generally to purchase, or finance a property, with the buyer/investor using as little of his own money as possible, otherwise known as leveraging. Using these techniques an investor may be able to purchase multiple properties using little, or none, of his

The credit channel mechanism of monetary policy describes the theory that a central bank's policy changes affect the amount of credit that banks issue to firms and consumers for purchases, which in turn affects the real economy.

A credit default swap index is a credit derivative used to hedge credit risk or to take a position on a basket of credit entities. Unlike a credit default swap, which is an over the counter credit derivative, a credit default swap index is a completely standardized credit security and may therefore be more liquid and trade at a smaller bid–offer spread. This means that it can be cheaper

Cryptocurrency is a type of digital asset that uses distributed ledger, or blockchain, technology to enable a secure transaction.

Cryptoeconomics is an evolving economic paradigm for a cross-disciplinary approach to the study of digital economies and decentralized finance (DeFi) applications. Cryptoeconomics integrates concepts and principles from traditional economics, cryptography, computer science, and game theory disciplines. Just as traditional economics provides a theoretical foundation for traditional finan

A currency is a standardized form of money used as a medium of exchange. Under this definition, the US dollar, the euro, the yen, sterling, and the renminbi are examples of (government-issued) fiat currencies. Currencies may act as stores of value and be traded between nations in foreign exchange markets, which determine the relative values of the different currencies.

A currency basket is a portfolio of selected currencies with different weightings. A currency basket is commonly used by investors to minimize the risk of currency fluctuations and also governments when setting the market value of a country's currency.

Finco Services, Inc., branded as Current, is an American financial services and software development company based in New York City. It provides mobile banking services through its partner banks, Choice Financial Group, and Cross River Bank.

Debt is an obligation that requires one party, the debtor, to pay money borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Loans, bonds, notes, and mo

Debt deflation is a theory that recessions and depressions are due to the overall level of debt rising in real value because of deflation, causing people to default on their consumer loans and mortgages. Bank assets fall because of the defaults and because the value of their collateral falls, leading to a surge in bank insolvencies, a reduction in lending and by extension, a reduction in

Debt intolerance is a term referring to the inability of emerging markets to manage levels of external debt that, under the same circumstances, would be manageable for developed countries, making a direct analogy to lactose-intolerant individuals. It was coined by Carmen Reinhart, Kenneth Rogoff and Miguel Savastano.

In economics, deflation is an increase in the real value of the monetary unit of account, as reflected in a decrease in the general price level of goods and services exchanged, measurable by broad price indices.

Della Moneta (On Money) is a 1751 book written by Ferdinando Galiani, and is one of the first specific European treatises on economics, especially monetary theory, preceding Adam Smith's The Wealth of Nations by twenty-five years.

Delta one products are financial derivatives that have no optionality and as such have a delta of (or very close to) one – meaning that for a given instantaneous move in the price of the underlying asset there is expected to be an identical move in the price of the derivative. Delta one products can sometimes be synthetically assembled by combining options. For instance, you can be long

Demurrage currency, also known as depreciating money or stamp scrip in its paper money form, is a type of money that is designed to gradually lose purchasing power at a constant rate. Demurrage money is often confused with inflation, as they both cause money to lose value, but they have significantly different economic effects. Unlike normal money, demurrage is designed to be only a temp

The Department of Budget and Management (DBM; Filipino: Kagawaran ng Badyet at Pamamahala) is an executive body under the Office of the President of the Philippines. It is responsible for the sound and efficient use of government resources for national development and also as an instrument for the meeting of national socio-economic and political development goals.

In finance, a derivative is a contract between a buyer and a seller. The derivative can take various forms, depending on the transaction, but every derivative has the following four elements:

The Diamond–Dybvig model is an influential model of bank runs and related financial crises. The model shows how banks' mix of illiquid assets (such as business or mortgage loans) and liquid liabilities (deposits which may be withdrawn at any time) may give rise to self-fulfilling panics among depositors. Douglas Diamond and Philip H. Dybvig, along with Ben Bernanke, were the recipients o

In economics, dishoarding is the opposite of hoarding. In the case of hoarding emphasized most by macroeconomics, someone increases his or her holdings of money as an asset. People may hoard for safety, expected returns, irrationality, or to diversify assets, rather than using money simply as a medium of exchange for buying goods and services. Thus, dishoarding refer to the reduction of

A distributed ledger (also called a shared ledger or distributed ledger technology or DLT) is a system whereby replicated, shared, and synchronized digital data is geographically spread (distributed) across many sites, countries, or institutions. In contrast to a centralized database, a distributed ledger does not require a central administrator, and consequently does not have a single (

Domestic liability dollarization (DLD) pertains to the denomination of banking system deposits and loaning in a currency other than that of the country in which they are held. DLD does not refer exclusively to denomination in US dollars, as DLD encompasses accounts denominated in internationally traded "hard" currencies such as the British pound sterling, the Swiss franc, the Japanese ye

In economics, a dual exchange rate is the occurrence of two different values of a currency for different sets of monetary transactions. One of the most common types consists of a government setting one exchange rate for specific transactions involving foreign exchange and another exchange rate governing other transactions.

In finance and accounting, and particularly in asset and liability management (ALM), the duration gap measures how well matched are the timings of cash inflows (from assets) and cash outflows (from liabilities), and is then one of the primary asset–liability mismatches considered in the ALM process.

Bitcoin was designed by its pseudonymous inventor, Satoshi Nakamoto, to work as a currency, but its status as a currency is disputed. Economists define money as a store of value, a medium of exchange and a unit of account, and agree that bitcoin does not currently meet all these criteria.

Endogenous money is an economy’s supply of money that is determined endogenously—that is, as a result of the interactions of other economic variables, rather than exogenously (autonomously) by an external authority such as a central bank.

In monetary economics, the equation of exchange is the relation:

In finance and investing, the Home bias puzzle is the term given to describe the fact that individuals and institutions in most countries hold only modest amounts of foreign equity, and tend to strongly favor company stock from their home nation. This finding is regarded as puzzling, since ample evidence shows equity portfolios obtain substantial benefits from diversification into global

In macroeconomics, a flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by supply and demand.

Finance refers to the management, movement, investment, and raising of money.

A financial analyst is a professional undertaking financial analysis for external or internal clients as a core feature of the job. The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, or ratings analyst. The job title is a broad one:

Financial astrology (also known as business astrology, economic astrology, and/or astro-economics) is a pseudoscientific practice of relating the movements of celestial bodies to events in financial markets. The use of astrology in any context is not empirically based and its use in predicting financial markets is at plain odds with standard economic and financial theory.

A financial centre (financial center in American English) or financial hub is a location with a significant concentration of commerce in financial services.

Financial cryptography is the use of cryptography in applications in which financial loss could result from subversion of the message system. Financial cryptography is distinguished from traditional cryptography in that for most of recorded history, cryptography has been used almost entirely for military and diplomatic purposes.

Financial econometrics is the application of statistical methods to financial data. Financial econometrics is a branch of financial economics, in the field of economics. Areas of study include capital markets, financial institutions, corporate finance and corporate governance. Topics often revolve around asset valuation of individual stocks, bonds, derivatives, currencies and other fina

Financial fragility is the vulnerability of a financial system to a financial crisis. Franklin Allen and Douglas Gale define financial fragility as the degree to which "...small shocks have disproportionately large effects." Roger Lagunoff and Stacey Schreft write, "In macroeconomics, the term "financial fragility" is used...to refer to a financial system's susceptibility to large-scale

A financial instrument is a monetary contract between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form of currency (forex); debt (bonds, loans); equity (shares); or derivatives (options, futures, forwards).

Financial integration is a phenomenon in which financial markets in neighboring, regional and/or global economies are closely linked together. Various forms of actual financial integration include: Information sharing among financial institutions; sharing of best practices among financial institutions; sharing of cutting edge technologies (through licensing) among financial institutions;

Financial law is the law and regulation of the commercial banking, capital markets, insurance, derivatives and investment management sectors. Understanding financial law is crucial to appreciating the creation and formation of banking and financial regulation, as well as the legal framework for finance generally.

A financial market is a marketplace where the pricing and trade of securities, commodities, currency, derivatives, or other financial products takes place. The term may refer to a specific stock or commodity exchange, or to the general process by which relevant economic activity is organized and carried out.

There are several concepts of efficiency for a financial market. The most widely discussed is informational or price efficiency, which is a measure of how quickly and completely the price of a single asset reflects available information about the asset's value. Other concepts include functional/operational efficiency, which is inversely related to the costs that investors bear for maki

A financial planner or personal financial planner is a qualified financial advisor. Practicing in full service personal finance, they advise clients on investments, insurance, tax, retirement and estate planning.

Financial regulation is a broad set of policies that apply to the financial sector in most jurisdictions, justified by two main features of finance: systemic risk, which implies that the failure of financial firms involves public interest considerations; and information asymmetry, which justifies curbs on freedom of contract in selected areas of financial services, particularly those tha

Financial repression refers to government implementation of policies to channel domestic funds to the public sector that in a deregulated market environment would go elsewhere. These policies are used to reduce the government's debt-to-GDP ratio.

Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent.

Financial sector development in developing countries and emerging markets is part of the private sector development strategy to stimulate economic growth and reduce poverty.

Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.

A financial system is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels. Financial institutions consist of complex, closely related services, markets, and institutions intended to provide an efficient and regular linkage between investors and borrowers.

Financial technology (abbreviated as fintech) refers to the application of new technologies to products and services in the financial industry. This broad term encompasses a wide array of technological tools in financial services, including mobile banking, online lending platforms, digital payment systems, robo-advisors, and blockchain-based applications such as cryptocurrencies. Financi

A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment. Any transaction involves a change in the status of the finances of two or more businesses or individuals. A financial transaction always involves one or more financial asset, most commonly money or another valuable item such as gold or silver.

Financialization (or financialisation in British English) is a term sometimes used to describe the development of financial capitalism during the period from 1980 to the present, in which debt-to-equity ratios increased and financial services accounted for an increasing share of national income relative to other sectors.

The fiscal theory of the price level is the idea that government fiscal policy, including debt and taxes present and future, is the primary determinant of the price level or inflation as opposed to the quantity theory of money. The theory is one of the strongest advocates in the debate among mainstream economists for combatting inflation primarily through fiscal policy instead of monetar

A fixed exchange rate, often called a pegged exchange rate or pegging, is a type of exchange rate regime in which a currency's value is fixed, or pegged, by a monetary authority against the value of another currency, a basket of other currencies, or another measure of value, such as gold or silver.

Fixed-income arbitrage is a group of market-neutral-investment strategies that are designed to take advantage of differences in interest rates between varying fixed-income securities or contracts (Jefferson, 2007). Arbitrage in terms of investment strategy, involves buying securities on one market for immediate resale on another market in order to profit from a price discrepancy.

In macroeconomics and economic policy, a floating exchange rate (also known as a fluctuating or flexible exchange rate) is a type of exchange rate regime in which a currency's value is allowed to fluctuate in response to international events affecting exchange rates. A currency that uses a floating exchange rate is known as a floating currency. In contrast, a fixed currency is one where

Food speculation refers to the buying and selling of futures contracts or other commodity derivatives by traders with the aim of profiting from changes in food prices. Food speculation can be both positive and negative for food producers and buyers. It is betting on food prices in financial markets.

Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets such as gold and silver held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence the foreign exchange rate of its currency, and to maintain confidence in financial markets. Reserves are held in one or more reserve cur

Foreign exchange risk (also known as FX risk, exchange rate risk or currency risk) is a financial risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the company. The exchange risk arises when there is a risk of an unfavourable change in exchange rate between the domestic currency and the denominated currency before the date when

The forward exchange rate (also sometimes referred to as forward rate or forward price) is the exchange rate at which two counterparties (such as a bank and an investor) agree to exchange one currency for another at a future date when they enter into a forward contract. Multinational corporations, banks, and other financial institutions enter into forward contracts to take advantage of t

Fractional-reserve banking is the system of banking under which banks that take deposits from the public keep only part of their deposit liabilities in liquid assets as a reserve, and lend a percentage to borrowers, thus increasing the money supply by the loaned amount. Bank reserves are held as cash in the bank or as balances in the bank's account at the central bank. Fractional-reserv

Free banking is a monetary arrangement where banks are free to issue their own paper currency (banknotes) while also being subject to no special regulations beyond those applicable to most enterprises.

Full-reserve banking (also known as 100% reserve banking) is a system of banking where banks do not lend demand deposits and instead only lend from time deposits. It differs from fractional-reserve banking, in which banks may lend funds on deposit, while fully reserved banks would be required to keep the full amount of each customer's demand deposits in cash, available for immediate with

Fundamentally based indexes or fundamental indexes, also called fundamentally weighted indexes, are indexes in which stocks are weighted according to factors related to their fundamentals such as earnings, dividends and assets, commonly used when performing corporate valuations. This fundamental weight may be calculated statically, or it may be adjusted by the security's fundamental to m