What Is an Expansion Option? An expansion option is an embedded option that allows the firm that purchased a real option (which is a right to undertake certain actions) to expand its operations in the future at little or no cost. An expansion option, unlike typical options that obtain their value from an underlying security
What Is an Expatriate? An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another. Key Takeaways An expatriate is
What Is an Expatriation Tax? An expatriation tax is a government fee charged to individuals who renounce their citizenship, usually based on the value of a taxpayer’s property. In the United States, the expatriation tax provisions under Section 877 and Section 877A of the Internal Revenue Code (IRC) apply to U.S. citizens who give up their citizenship, and long-term residents
What Is the Expectations Index? The Expectations Index is a component of the Consumer Confidence Index® (CCI), which is published each month by the Conference Board. The CCI reflects consumers’ short-term—that is, six-month—outlook for, and sentiment about, the performance of the overall economy as it effects them. The Expectations Index is made up of the
What Is Expectations Theory? Expectations theory attempts to predict what short-term interest rates will be in the future based on current long-term interest rates. The theory suggests that an investor earns the same interest by investing in two consecutive one-year bond investments versus investing in one two-year bond today. The theory is also known as the “unbiased expectations
What Is the Student Aid Index (SAI)? When the Consolidated Appropriations Act of 2021—the bill that delivered the second round of economic stimulus payments during the COVID-19 pandemic—passed the U.S. Senate on Dec. 27, 2021, one of the lesser-known provisions was the FAFSA Simplification Act, which brought long-awaited changes to the Free Application for Federal
What Is Expected Value (EV)? The expected value (EV) is an anticipated average value for an investment at some point in the future. Investors use expected value to estimate the worthiness of investments, often in relation to their relative riskiness. Modern portfolio theory (MPT), for instance, attempts to solve for the optimal portfolio allocation based
What Is the Expedited Funds Availability Act? The Expedited Funds Availability Act (EFAA) was implemented to regulate the hold periods on deposits made to commercial banks. Enacted by the U.S. Congress in 1987, the EFAA also standardized financial institutions’ use of the deposit holds. The EFAA specifies the types of holds that banks can utilize
What Is the Expenditure Method? The expenditure method is a system for calculating gross domestic product (GDP) that combines consumption, investment, government spending, and net exports. It is the most common way to estimate GDP. It says everything that the private sector, including consumers and private firms, and government spend within the borders of a
What Is an Expense? An expense is the cost of operations that a company incurs to generate revenue. It is simply defined as the cost one is required to spend on obtaining something. As the popular saying goes, “it costs money to make money.” Common expenses include payments to suppliers, employee wages, factory leases, and equipment depreciation.
