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We provides you with financial knowledge posted by verified advisors. It descripts complexity financial information in short sentences.
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12b-1 fee 12b-1 fee. A mutual fund fee, named for the SEC rule that permits it, used to pay distribution costs, such as compensation to financial advisers for initial and ongoing assistance. If a fund has a 12b-1 fee, it will be disclosed in the fee table of a fund’s prospectus.
2x2x2 Model The Heckscher-Ohlin Model with 2 factors, 2 goods, and 2 countries. 
401(k) plan 401(k) plan. An employer-sponsored retirement plan that enables employees to make tax-deferred contributions from their salaries to the plan. See also defined contribution plan.
403(b) plan 403(b) plan. An employer-sponsored retirement plan that enables employees of universities, public schools, and nonprofit organizations to make tax-deferred contributions from their salaries to the plan.
457 plan 457 plan. An employer-sponsored retirement plan that enables employees of state and local governments and other tax-exempt employers to make tax-deferred contributions from their salaries to the plan.
529 plan 529 plan. An investment program, offered by state governments, designed to help pay future qualified higher education expenses. States offer two types of 529 plans: prepaid tuition programs allow contributors to establish an account in the name of a student to cover the cost of a specified number of academic periods or course units in the future at current prices; and college savings plans allow individuals to contribute to an investment account to pay for a student’s qualified higher education expenses.
Abandonment value The value of a project if the project's assets were sold externally; or alternatively, its opportunity value if the assets were employed elsewhere in the firm. 
ABC method of inventory control Method that controls expensive inventory items more closely than less expensive items. 
Absolute advantage The ability to produce a good at lower cost, in terms of labor, than another country. An absolute advantage exists when a nation or other economic region is able to produce a good or service more efficiently than a second nation or region. 
Absolute-priority rule The rule in bankruptcy or reorganization that claims of a set of claim holders must be paid, or settled, in full before the next, junior, set of claim holders may be paid anything. 
Absorption and balance of trade Total demand for goods and services by all residents (consumers, producers, and government) of a country (as opposed to total demand for that country's output). The balance of trade is equal to income minus absorption. 
Accelerated depreciation Methods of depreciation that write off the cost of a capital asset faster than under straight-line depreciation. 
Acceptance A time draft that is accepted by the drawee. Accepting a draft means writing accepted across its face, followed by an authorized person’s signature and the date. The party accepting a draft incurs the obligation to pay it at maturity. 
Accession The process of adding a country to an international agreement, such as the GATT (General Agreement on Tariffs and Trade), WTO (World Trade Organization), EU (European Communities), or NAFTA (North American Free Trade Agreement). 
Accommodating transaction In the balance of payments, a transaction that is a result of actions taken officially to manage international payments; in contrast with autonomous transaction. Thus official reserve transactions are accommodating, as may be short-term capital flows that respond to expectations of intervention. 
Accounting (translation) exposure Changes in a corporation’s financial statements as a result of changes in currency values. The change in the value of a firm’s foreign-currency-denominated accounts due to change in exchange rates. 
Accounts receivable Amounts of money owed to a firm by customers who have bought goods or services on credit. A current asset, the accounts receivable account is also called receivables. 
Accrued expenses Amounts owed but not yet paid for wages, taxes, interest, and dividends. The accrued expenses account is a short-term liability. 
Acid-test (quick) ratio Current assets less inventories divided by current liabilities. It shows a firm's ability to meet current liabilities with its most liquid (quick) assets. 
Acquisition of assets In an acquisition of assets, one firm acquires the assets of another company. None of the liabilities supporting that asset are transferred to the purchaser. 
Acquisition of stock In an acquisition of stock, one firm buys an equity interest in another. 
Acquisition premium In a merger or acquisition, the difference between the purchase price and the pre-acquisition value of the target firm.
Act of State Doctrine This doctrine says that a nation is sovereign within its own borders and its domestic actions may not be questioned in the courts of another nation.
Active fund management An investment approach that actively shifts funds either between asset classes (i.e. asset allocation) or between individual securities (i.e. security selection).
Active income In the U.S. tax code, income from an active business as opposed to passive investment income.
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