What Is a Related-Party Transaction? The term related-party transaction refers to a deal or arrangement made between two parties who are joined by a preexisting business relationship or common interest. Companies often seek business deals with parties with whom they are familiar or have a common interest. Although related-party transactions are themselves legal, they may
What Is Relationship Banking? Relationship banking is a strategy used by banks to strengthen customer loyalty and provide a single point of service for a range of different products and services. A customer of a bank may start out with a simple checking or savings account, but relationship banking involves a personal or business banker
What Is Relationship Management? The term relationship management refers to a strategy in which an organization maintains an ongoing level of engagement with its audience and supply chain. This management can occur between a business and its customers, which is called business to consumer [B2C], or between a business and other businesses, which is referred to as
What Is a Relationship Manager? Relationship managers work to improve business relationships with partner firms and clients. Relationship management is generally divided into two fields: client relationship management and business relationship management. Both fields share the common goal of facilitating good relationships so businesses can maximize the value of those relationships and maintain a good reputation. Key
What Is Relative Purchasing Power Parity (RPPP)? Relative purchasing power parity (RPPP) is an expansion of the traditional purchasing power parity (PPP) theory to include changes in inflation over time. Purchasing power is the power of money expressed by the number of goods or services that one unit can buy, and which can be reduced by inflation.
What Is Relative Return? Relative return is the return an asset achieves over a period of time compared to a benchmark. The relative return is the difference between the asset’s return and the return of the benchmark. Relative return can also be known as alpha in the context of active portfolio management. This can be contrasted
What Is a Relative Valuation Model? A relative valuation model is a business valuation method that compares a company’s value to that of its competitors or industry peers to assess the firm’s financial worth. Relative valuation models are an alternative to absolute value models, which try to determine a company’s intrinsic worth based on its
What Is Relative Value? Relative value is a method of determining an asset’s worth that takes into account the value of similar assets. This is in contrast with absolute value, which looks only at an asset’s intrinsic value and does not compare it to other assets. The price-to-earnings ratio (P/E ratio) is a popular valuation
What Is a Relative Value Fund? A relative value fund is an actively managed investment fund that seeks to exploit temporary differences in the prices of related securities. This approach to investing is often used by hedge funds. A common strategy when managing relative value funds is called pairs trading, which consists of initiating a
What Is Relevant Cost? Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions. The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process. As an example, relevant cost is used to determine whether to sell or keep
