What Is Capital Risk? Capital risk is the potential of loss of part or all of an investment. It applies to the whole gamut of assets that are not subject to a guarantee of full return of original capital. Investors face capital risk when they invest in stocks, non-government bonds, real estate, commodities, and other
What Are Capital Expenditures (CapEx)? Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. CapEx is often used to undertake new projects or investments by a company. Making capital expenditures on fixed assets can include repairing a roof (if the
What is Capital Flight? Capital flight is a large-scale exodus of financial assets and capital from a nation due to events such as political or economic instability, currency devaluation or the imposition of capital controls. Capital flight may be legal, as is the case when foreign investors repatriate capital back to their home country, or
What Are Capital Flows? Capital flows refer to the movement of money for the purpose of investment, trade, or business operations. Inside of a firm, these include the flow of funds in the form of investment capital, capital spending on operations, and research and development (R&D). On a larger scale, a government directs capital flows
What Is Capital Formation? Capital formation is the net capital accumulation during an accounting period for a particular country. The term refers to additions of capital goods, such as equipment, tools, transportation assets, and electricity. Key Takeaways Capital formation is the net accumulation of capital goods, such as equipment, tools, transportation assets, and electricity, during
What Is Capital Funding? Capital funding is the money that lenders and equity holders provide to a business for daily and long-term needs. A company’s capital funding consists of both debt (bonds) and equity (stock). The business uses this money for operating capital. The bond and equity holders expect to earn a return on their
What Is a Capital Gain? The term capital gain refers to the increase in the value of a capital asset when it is sold. Put simply, a capital gain occurs when you sell an asset for more than what you originally paid for it. Almost any type of asset you own is a capital asset.
What Is a Capital Gains Distribution? A capital gains distribution is a payment by a mutual fund or an exchange-traded fund (ETF) of a portion of the proceeds from the fund’s sales of stocks and other assets from within its portfolio. It is the investor’s pro-rata share of the proceeds from the fund’s transactions. It is
What Is Capital Gains Treatment? Capital gains treatments are specific taxes assessed on investment capital gains as determined by the tax code. When a stock is sold for a profit, the portion of the proceeds over and above the purchase value (or cost basis) is known as capital gains. Key Takeaways “Treatment” refers to the amount
What Is Capital Gearing? Capital gearing is a British term that refers to the amount of debt a company has relative to its equity. In the United States, capital gearing is known as “financial leverage.” Companies with high levels of capital gearing will have a larger amount of debt relative to their equity value. The
