An expense ratio, in the context of mutual fund investing, is a measure of how much it costs a financial institution to manage a mutual fund for every dollar it manages. If management of the fund costs $1 for every $100 managed, the expense ratio is 1%. This ratio is important to look at if you want to invest in a mutual fund, because higher expense ratios can eat into your returns. An expense ratio can also relate to the amount of money a company spends to produce $1 of revenue.
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An Expense Ratio is…
Friday, August 21st, 2009R&D is…
Friday, August 21st, 2009R&D is an abbreviation for “research and development.” This is the investment an organization makes to investigate and create new goods, services, or other techniques to gain an advantage over its competitors.
The S&P 500 is…
Friday, August 21st, 2009The S&P 500 (or Standard & Poor’s 500) is an index of 500 stocks that are used to measure the performance of the domestic stock market in the U.S. The S&P 500 was created to represent the major common stock of public American companies.
A Bailout is…
Friday, August 21st, 2009A bailout is major financial support from a government to a failing business so that it doesn’t collapse and cause even greater harm to the economy as a whole. Usually the business will be subject to tighter government regulation as a result of accepting the financial support.
A Sector is…
Friday, August 21st, 2009A sector is a specific portion of the economy or society. It can be really general, as in the public or the private sectors; slightly more specific, like manufacturing or commercial sectors; or quite specific, for example referring only to textiles or grain.
Pay-to-Play is…
Friday, August 21st, 2009Pay-t0-play is essentially the practice of exchanging money for access to or the privilege of participating in certain activities. Sometimes it is in reference to the actions of government officials or politicians to award benefits to a business or individual. For example, the owner of a road construction company might give a politician some money – maybe through campaign contributions or maybe just cash in a suitcase – to make sure his company gets a big government contract to build a new highway. There are all sorts of campaign finance and other laws to try and prevent this practice.
The Great Depression is…
Friday, August 21st, 2009The Great Depression is the severe, global, long-term economic downturn that began with a stock market crash in October 1929. In the United States, the stock market lost half of its value within a month of the crash’s start and unemployment remained as high as 17% in 1939, 10 years after the crash. The depression followed a decade of spectacular economic growth – the “roaring twenties” – and the U.S. economy didn’t really recover until the build-up to WWII in the 1940s.
A Profit Margin is…
Friday, August 21st, 2009A profit margin is the amount by which the income of a business exceed its costs – or, in other words, the percentage of an item’s price that the seller gets to keep. So if your business sells jeans for $100 a pair, but each pair takes only $89 to make, you get to keep the remaining $11, and your profit margin is 11%.
A Defined Benefit Plan is…
Friday, August 21st, 2009A defined benefit plan is a type of pension plan under which the plan’s sponsor agrees to pay all employees who are covered by that plan a specified amount of benefits when they retire. For example, and in contrast to a Defined Contribution Plan, a retiree is guaranteed health care rather than a certain dollar amount to use towards health care.