What Is the Permanent Income Hypothesis? The permanent income hypothesis is a theory of consumer spending stating that people will spend money at a level consistent with their expected long-term average income. The level of expected long-term income then becomes thought of as the level of “permanent” income that can be safely spent. A worker will save only if their current income is
What Is Permanent Life Insurance? Permanent life insurance is an umbrella term for life insurance policies that do not expire. The two primary types of permanent life insurance are whole life and universal life, and most permanent life insurance combines a death benefit with a savings portion. Whole life insurance offers coverage for the full
What Is a Permanent Loan? A permanent loan is a type of loan with an unusually long term. The term can have different meanings, however, depending on the context in which it is used. Despite its name, permanent loans are generally not permanent, although they may last for a long time. Key Takeaways Permanent loans
What Are Permanent Open Market Operations (POMO)? Permanent open market operations (POMO) refers to the U.S. Federal Reserve program of ongoing, unlimited purchases and sales of short term U.S. Treasury securities in the open market for Treasuries as a tool to help achieve its normal monetary policy targets. Open market operations (OMO) are the outright
What Is Permission Marketing? Permission marketing refers to a form of advertising where the intended audience is given the choice of opting in to receive promotional messages. The concept of permission marketing has been popularized by Seth Godin, an entrepreneur and author. He first discussed the idea of permission marketing at length in his book
What Is a Permitted Currency? A permitted currency is one that is free from any legal and regulatory restrictions that would keep it from being exchanged with or converted into another currency. Countries with permitted currencies benefit from greater access to international trade and global finance. This can be contrasted with a blocked currency, which
What Is a Perpetual Bond? A perpetual bond, also known as a “consol bond” or “perp,” is a fixed income security with no maturity date. This type of bond is often considered a type of equity, rather than debt. One major drawback to these types of bonds is that they are not redeemable. However, the
What Is a Perpetual Inventory System? A perpetual inventory system is based on an accounting method known as perpetual inventory that continuously records inventory changes in real-time with computerized point-of-sale systems, removing the need for physical inventory checks. It provides a highly detailed view of changes in inventory with immediate reporting of the amount of
What Does Perpetuity Mean in Finance? A perpetuity is a security that pays for an infinite amount of time. In finance, perpetuity is a constant stream of identical cash flows with no end. The concept of perpetuity is also used in several financial theories, such as in the dividend discount model (DDM). Key Takeaways A
What Is a Personal Exemption? The personal exemption was a federal income tax break up until 2017. The Tax Cuts and Jobs Act of 2017 eliminated the personal exemption for tax years 2018 to 2025. The exemption was earmarked for a subsistence level of income, which was untaxed and gave an exemption for each person
