What Are Average Indexed Monthly Earnings (AIME)? Average indexed monthly earnings (AIME) are used to calculate the primary insurance amount (PIA), which is used to determine an individual’s Social Security benefits. AIME works by taking into consideration the 35 years that represent an individual’s top earnings. Those top-earning years are then indexed to factor in wage growth and
What Are Aged Assets? Aged assets are goods that have outlived their usefulness and require upgrades. Aged assets have nothing to do with the aging of receivables. Those searching for a way to incorporate the aging of machines and other items into their financial statements should look into the depreciation of assets instead. Key Takeaways
What Are Agency Automatic Contributions? Agency automatic contributions are contributions made by the federal government to an employee’s Thrift Savings Plan (TSP) that equals 1% of their pay. Once federal government employees establish a TSP, the agency they work for automatically makes a contribution equal to 1% of their basic pay each payday. That occurs
What Is an Agency Debenture? An agency debenture is debt (bonds) issued at a fixed, or variable, interest rate by a United States federal agency or a government-sponsored enterprise (GSE), for the purposes of procuring funds to finance their activities, which usually entails purchasing mortgages from various lenders. Key Takeaways Agency debentures are debt, or
What Is an Agency Bond? An agency bond is a security issued by a government-sponsored enterprise or by a federal government department other than the U.S. Treasury. Some are not fully guaranteed in the same way that U.S. Treasury and municipal bonds are. An agency bond is also known as agency debt. Key Takeaways Federal
What Is Agency by Necessity? Agency by necessity is a type of legal relationship in which one party can make essential decisions for another party until legally recognized agents like someone with power of attorney or guardianship are put in place. The courts recognize agency by necessity during an emergency or urgent situation under which
What Is Agency Cost of Debt? The agency cost of debt is the conflict of interest between shareholders and debtholders or creditors of a firm based on the decisions made by management. The agency costs of debt would specifically be the actions taken by debtholders in restricting what management can do with their capital if they
What Are Agency Costs? An agency cost is a type of internal company expense, which comes from the actions of an agent acting on behalf of a principal. Agency costs typically arise in the wake of core inefficiencies, dissatisfactions, and disruptions, such as conflicts of interest between shareholders and management. The payment of the agency
What Is Agency MBS Purchase? Agency MBS purchase is the purchase of mortgage-backed securities (MBS) issued by government-sponsored enterprises (GSE) such as Fannie Mae, Freddie Mac, and Ginnie Mae, the latter of which is a wholly-owned government corporation. The term is most commonly used in reference to the U.S. Federal Reserve’s (Fed) $1.25 trillion program
What Is an Agent? An agent, in legal terminology, is a person who has been legally empowered to act on behalf of another person or an entity. An agent may be employed to represent a client in negotiations and other dealings with third parties. The agent may be given decision-making authority. Two common types of
