Investment Terms

A hurdle rate is the minimum rate of return on a project or investment required by a manager or investor. It allows companies to make important decisions on whether or not to pursue a specific project.
The hurdle rate describes the appropriate compensation for the level of risk present—riskier projects generally have higher hurdle rates than those with less risk.
In order to determine the rate, the following are some of the areas that must be taken into consideration: associated risks, cost of capital, and the returns of other possible investments or projects.

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After-hours trading starts at 4 p.m. U.S. Eastern Time after the major U.S. stock exchanges close. The after-hours trading session can run as late as 8 p.m., though volume typically thins out much earlier in the session. Trading in the after-hours is conducted through electronic communication networks.
After-hours trading is something traders or investors can use if news breaks after the close of the stock exchange. In some cases, the news, such as an earnings release, may prompt an investor to either buy or sell a stock.
The volume for a stock may spike on the initial release of the news but most of the time thins out as the session progresses. The amount of volume generally slows significantly by 6 p.m. There is a substantial risk when trading in illiquid stocks after-hours.
Not only does volume sometimes come at a premium in the after-hours trading sessions but so does the price. It is not unusual for the spreads to be wide in the after-hours. The spread is the difference between the bid and the ask prices.

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Free on Board is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping.
FOB shipping point or FOB origin means the buyer is at risk once the seller ships the product. The purchaser pays the shipping cost from the factory and is responsible if the goods are damaged while in transit.
FOB destination means the seller retains the risk of loss until the goods reach the buyer.
FOB was used only to refer to goods transported by ship—in the U.S., the term has since been expanded to include all types of transportation.
The most common international trade terms are Incoterms, which the International Chamber of Commerce publishes, but firms that ship goods within the U.S. must also adhere to the Uniform Commercial Code.

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An endowment is a donation of money or property to a nonprofit organization, which uses the resulting investment income for a specific purpose.
An endowment can also refer to the total of a nonprofit institution’s investable assets, also known as its principal or corpus, which is used for operations that are consistent with the wishes of the donor.
Most endowments are designed to keep the principal amount intact while using the investment income for charitable efforts.
Many endowments are administered by educational institutions, such as colleges and universities.
Others are overseen by cultural institutions, such as art museums, libraries, religious organizations, private secondary schools, and service-oriented organizations, such as retirement homes or hospitals.
A certain per cent of an endowment’s assets is allowed to be used each year so the amount withdrawn from the endowment could be a combination of interest income and principal.5
The ratio of principal to income would change year to year based on prevailing market rates.

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Break-even analysis shows how many sales it takes to pay for the cost of doing business. Analyzing different price levels relating to various levels of demand, the break-even analysis determines what level of sales is necessary to cover the company's total fixed costs.
Break-even analysis is useful in determining the level of production or a targeted desired sales mix. The study is for a company's management’s use only, as the metrics and calculations are not used by external parties, such as investors, regulators, or financial institutions.
The break-even point is calculated by dividing the total fixed costs of production by the price per individual unit less the variable costs of production. Fixed costs are costs that remain the same regardless of how many units are sold.

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An inheritance tax is a tax imposed by some states on the recipients of inherited assets. In contrast to an estate tax, an inheritance tax is paid by the recipient of a bequest rather than the estate of the deceased.
The tax is not common in the U.S., and whether or not it applies in one of six states with an inheritance tax as of 2022 depends on the state in which the deceased lived or owned property, the value of the inheritance, and the beneficiary's relationship to the decedent
Inheritance taxes are collected by six U.S. states: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Whether your inheritance will be taxed, and at what rate, depends on its value, your relationship to the person who passed away, and the prevailing rules where you live.
Inheritance tax may be assessed by the state or states where the decedent lived or owned property.

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A negative interest rate refers to interest paid to borrowers rather than to lenders. Central banks typically charge commercial banks on their reserves as a form of non-traditional expansionary monetary policy, rather than crediting them.
This is a very unusual scenario that generally occurs during a deep economic recession when monetary efforts and market forces have already pushed interest rates to their nominal zero bound.
It is meant to encourage lending, spending, and investment rather than hoarding cash, which will lose value to negative deposit rates.
Negative rates are normally set by central banks and other regulatory bodies. They do so during deflationary periods when consumers hold too much money instead of spending as they wait for a turnaround in the economy. Consumers may expect their money to be worth more tomorrow than today during these periods.
When this happens, the economy can experience a sharp decline in demand, causing prices to plummet even lower.

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The eurozone, officially known as the euro area, is a geographic and economic region that consists of all the European Union countries that have fully incorporated the euro as their national currency.
As of 2022, the eurozone consists of 19 countries in the European Union (EU): Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain.1 Approximately 340 million people live in the eurozone area.
In 1992, the Maastricht Treaty created the EU and paved the way for the formation of a common economic and monetary union consisting of a central banking system, a common currency, and a common economic region, the eurozone.
Not all European Union nations participate in the eurozone; some opt to use their own currency and maintain their financial independence.
European Union nations that decide to participate in the eurozone must meet requirements regarding price stability, sound public finances, the durability of convergence, and exchange rate stability.
The eurozone is one of the largest economic regions in the world and its currency, the euro, is considered one of the most liquid when compared to others.
It is often used as an example when studying trilemmas, an economic theory that postulates that nations have three options when making decisions regarding their international monetary policies.

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The York Antwerp Rules are a set of maritime regulations concerning protocols surrounding jettisoned cargo.
The York Antwerp Rules are a set of maritime rules that were established in 1890. Amended several times since their inception, this set of maritime rules outlines the rights and obligations of both ship and cargo owners in the case that cargo must be jettisoned in order to save a ship.
The York Antwerp Rules state three clear principles, all of which must be met in order for the rule to be applied. The first stipulation is that danger to the ship must be imminent. Second, there must be a voluntary jettison of a portion of the ship’s cargo in order to save the whole. Third, the attempt to avoid the danger must be successful. If a situation meets all the stipulations, all parties involved in the maritime adventure must share proportionately in the financial burden of the losses incurred to the owner or owners of any of the cargo that was jettisoned in order to save the vessel.

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Upside refers to the potential increase in value, measured in monetary or percentage terms, of an investment.
Analysts use either technical analysis or fundamental analysis techniques to predict the future price of an investment, particularly stock prices.
A higher upside means that the stock has more value than is currently reflected in the stock price.
The upside is the potential for an investment to increase in value, as measured in terms of money or percentage.
Upside refers to the predicted appreciation in the value of an investment and is the opposite of the downside.
Investors with a high tolerance for risk will choose investments with huge upside, while those that are risk-averse will opt for investments that have limited upside but will be more apt to preserve their initial investment value.

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