What is Survivorship Bias Risk? Survivorship bias risk is the chance of an investor making a misguided investment decision based on published investment fund return data that reflects only successful funds rather than all funds. Key Takeaways Survivorship bias risk is the risk that the reported returns for investment funds is overly optimistic because failed
What Is Sushi Bond? The colloquial term sushi bond is used to describe a bond issued by a Japanese company in a market outside of Japan and denominated in a currency other than the yen. The most common issuing currency is the U.S. dollar. Key Takeaways A sushi bond, denominated in a currency other than
What Is a Suspended Loss? A suspended loss is a capital loss that cannot be realized in a given tax year due to passive activity limitations. These losses are, therefore, “suspended” until they can be netted against passive income in a future tax year. Suspended losses are incurred as a result of passive activities, and
The term “suspense account” can have several different meanings, depending on the context. In the business world generally, a suspense account is a section of a company’s financial books where it can record ambiguous entries that need further analysis to determine their proper classification. In mortgage servicing, the servicer can use a suspense account to
What Is Sustainability? In the broadest sense, sustainability refers to the ability to maintain or support a process continuously over time. In business and policy contexts, sustainability seeks to prevent the depletion of natural or physical resources, so that they will remain available for the long term. Key Takeaways Sustainability is ability to maintain or
What Is the Sustainable Growth Rate (SGR)? The sustainable growth rate (SGR) is the maximum rate of growth that a company or social enterprise can sustain without having to finance growth with additional equity or debt. In other words, it is the rate at which the company can grow while using its own internal revenue without
What Is a Swap? A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. Most swaps involve cash flows based on a notional principal amount such as a loan or bond, although the instrument can be almost anything. Usually, the principal does not change hands. Each cash flow comprises
What Is a Swap Curve? A swap curve identifies the relationship between swap rates at varying maturities. A swap curve is effectively the name given to the swap’s equivalent of a yield curve. The yield curve and swap curve are of similar shape. However, there can be differences between the two. This difference, which can
What Is a Swap Rate? A swap rate is the rate of the fixed leg of a swap as determined by its particular market and the parties involved. In an interest rate swap, it is the fixed interest rate exchanged for a benchmark rate such as LIBOR or the Fed Funds Rate plus or minus
What Is a Swap Ratio? A swap ratio is a ratio at which an acquiring company will offer its own shares in exchange for the target company’s shares during a merger or acquisition. When two companies merge or when one company acquires another, the transaction does not have to be an outright purchase of the
