What Is a Short Sale? A short sale in real estate is an offer of a property at an asking price that is less than the amount due on the current owner’s mortgage. A short sale is usually a sign of a financially distressed homeowner who needs to sell the property before the lender seizes
What Are Real Estate Market Tiers? Real estate market tiers categorize cities as Tier I, Tier II, or Tier III depending on the stage of development of their real estate markets. Each real estate tier has defining characteristics: Tier I cities have a developed and established real estate market. These cities tend to be highly developed
What Is Real Gross Domestic Product (Real GDP)? Real gross domestic product (GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year. Real GDP is expressed in base-year prices. It is often referred to as constant-price GDP, inflation-corrected GDP, or constant dollar GDP. Put
What Is Real Income? Real income is how much money an individual or entity makes after accounting for inflation and is sometimes called real wage when referring to an individual’s income. Individuals often closely track their nominal vs. real income to have the best understanding of their purchasing power. Key Takeaways Real income, also known as
What Is a Real Interest Rate? A real interest rate is an interest rate that has been adjusted to remove the effects of inflation. Once adjusted, it reflects the real cost of funds to a borrower and the real yield to a lender or to an investor. A real interest rate reflects the rate of
What Is the Realization Multiple? The realization multiple is a private equity measurement that shows how much has been paid out to investors. The realization multiple measures the return that is realized from the investment. Private equity funds are unique in that they hold assets that are pulled together from all sorts of illiquid sources
What Is a Realized Loss? A realized loss is the loss that is recognized when assets are sold for a price lower than the original purchase price. Realized loss occurs when an asset that was purchased at a level referred to as cost or book value is then disbursed for a value below its book
What Is Realized Yield? Realized yield is the actual return earned during the holding period for an investment. It may include dividends, interest payments, and other cash distributions. The term “realized yield” can be applied to a bond sold before its maturity date or a dividend-paying security. Generally speaking, the realized yield on bonds includes
What Is Risk-Adjusted Return On Capital (RAROC)? Risk-adjusted return on capital (RAROC) is a modified return on investment (ROI) figure that takes elements of risk into account. In financial analysis, projects and investments with greater risk levels must be evaluated differently; RAROC thus accounts for changes in an investment’s profile by discounting risky cash flows
What Is the Ratable Accrual Method? The ratable accrual method is a formula for determining how much interest income was earned on an investment over a period of time and when within the period it was earned. It counts income as it’s accrued rather than paid and is mainly used for determining taxes owed on
