Good to know - Interesting tems of the day

[PCMNewsdesk]

Hello guys,

From now on, almost every day a term will be provided here and I think it worth paying a little attention and good to know for your own financial knowledge.

Warmest Regards
News Department

[PCMNewsdesk]

Class Action

An action where an individual represents a group in a court claim. The judgment from the suit is for all the members of the group (class).

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Gilt-Edged Switching

The selling and repurchasing of certain high-grade stocks or bonds to capture profits. Gilt-edged switching involves gilt-edged security, which can be high-grade stock or bonds issued by a financially stable company such as the Blue Chip companies or by certain governments. They are considered to be low-risk investments because they are backed by strong, established entities. Gilt-edged securities are generally inversely linked to interest rates, and therefore experience price fluctuations.

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Master Limited Partnership - MLP

A type of limited partnership that is publicly traded. There are two types of partners in this type of partnership: The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from the MLP's cash flow, whereas the general partner is the party responsible for managing the MLP's affairs and receives compensation that is linked to the performance of the venture.

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Marginal Analysis

An examination of the additional benefits of an activity compared to the additional costs of that activity. Companies use marginal analysis as a decision-making tool to help them maximize their profits. Individuals unconsciously use marginal analysis to make a host of everyday decisions.
Marginal analysis is also widely used in microeconomics when analyzing how a complex system is affected by marginal manipulation of its comprising variables.

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Yield Burning

The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as "burning the yield," is done after the bond is placed in escrow for an investor who is awaiting repayment.

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Family Limited Partnership - FLP

A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.

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Organic Growth

The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.

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Joint Venture - JV

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.

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Oil Reserves

An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.

Reserves are calculated based on a proven/probably basis.