What Is the Replacement Chain Method? The replacement chain method is a capital budgeting decision model that compares two or more mutually exclusive capital proposals with unequal lives. The replacement chain method takes into consideration the different life spans of alternative plans, as well as their expected cash flows. That makes it easier to compare
What Is a Replacement Cost? Replacement cost is a term referring to the amount of money a business must currently spend to replace an essential asset like a real estate property, an investment security, a lien, or another item, with one of the same or higher value. Sometimes referred to as a “replacement value,” a
What Is a Replacement Property? Replacement property is any property that is received in place of property that has been destroyed, lost, or stolen. Replacement property can be personal or business property and can include various types of assets, such as real estate, equipment, and vehicles. Replacement property is often insured by a casualty-insurance carrier.
What Was Repo 105? Repo 105 was a type of loophole in accounting for repurchase (repo) transactions that the now-extinguished Lehman Brothers exploited in an attempt to hide true amounts of leverage during its times of trouble during the 2007-2008 financial crisis. In this repurchase agreement, since updated to close the loophole, a company could
What Is Reported But Not Settled (RBNS)? Reported but not settled (RBNS) refers to losses reported to an insurance company that have not been settled by the end of the accounting period. Reported but not settled (RBNS) losses are calculated using an estimation of the severity of the loss based on the available information from
What Is a Reporting Currency? Reporting currency is the currency in which an entity’s financial statements or other financial documents are reported. Choosing one currency for reporting makes it easier to understand the financial documents across the board. Most often the currency used is the currency of the country in which the parent company is
What Is Repricing? Repricing involves the exchange of worthless employee stock options for new options that have intrinsic value. This is a common practice for companies to keep or incentivize executives and other highly valued employees when the value of the company’s shares falls below the exercise price or break-even point for the options issued
What Is a Reinsurer? The term reinsurer refers to a company that provides financial protection to insurance companies. Reinsurers handle risks that are too large for insurance companies to handle on their own and make it possible for insurers to obtain more business than they would otherwise be able to. Reinsurers also make it possible
What Is Reinvestment? Reinvestment is the practice of using dividends, interest, or any other form of income distribution earned in an investment to purchase additional shares or units, rather than receiving the distributions in cash. Key Takeaways Reinvestment is when income distributions received from an investment are plowed back into that investment instead of receiving cash.Reinvestment works by
What Is a Reinvestment Rate? The reinvestment rate is the amount of interest that can be earned when money is taken out of one fixed-income investment and put into another. For example, the reinvestment rate is the amount of interest the investor could earn if he purchased a new bond while holding a callable bond
