What Is Relative Purchasing Power Parity (RPPP)? Relative purchasing power parity (RPPP) is an expansion of the traditional purchasing power parity (PPP) theory to include changes in inflation over time. Purchasing power is the power of money expressed by the number of goods or services that one unit can buy, and which can be reduced by inflation.
What Is Relative Return? Relative return is the return an asset achieves over a period of time compared to a benchmark. The relative return is the difference between the asset’s return and the return of the benchmark. Relative return can also be known as alpha in the context of active portfolio management. This can be contrasted
What Is a Relative Valuation Model? A relative valuation model is a business valuation method that compares a company’s value to that of its competitors or industry peers to assess the firm’s financial worth. Relative valuation models are an alternative to absolute value models, which try to determine a company’s intrinsic worth based on its
What Is Relative Value? Relative value is a method of determining an asset’s worth that takes into account the value of similar assets. This is in contrast with absolute value, which looks only at an asset’s intrinsic value and does not compare it to other assets. The price-to-earnings ratio (P/E ratio) is a popular valuation
What Is a Relative Value Fund? A relative value fund is an actively managed investment fund that seeks to exploit temporary differences in the prices of related securities. This approach to investing is often used by hedge funds. A common strategy when managing relative value funds is called pairs trading, which consists of initiating a
What Is Relevant Cost? Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions. The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process. As an example, relevant cost is used to determine whether to sell or keep
What Is a Relocation Mortgage (Relo)? Designed explicitly for relocating and transferring employees, the relocation mortgage (relo) is a type of alternative mortgage product. Corporations take advantage of these loans as part of the signing or employment package for upper-level employees. Relo mortgages make the moving process more comfortable and economical. Key Takeaways The relocation
What Is Remeasurement? Remeasurement is the re-evaluation of the value of a long-term asset or foreign currency on a company’s financial statements. Remeasurement is often used by companies that conduct business in multiple currencies. Key Takeaways Remeasurement is the process of re-establishing the value of an item or asset to provide a more accurate financial
What Is a Remittance? A remittance is money that is sent from one party to another. Broadly speaking, any payment of an invoice or a bill can be called a remittance. However, the term is most often used nowadays to describe a sum of money sent by someone working abroad to their family back home.
What Is a Remittance Letter? A remittance letter is a document sent by a customer, which is often a financial institution or another type of firm, to a creditor or supplier along with payment to briefly explain what the payment is for so that the customer’s account will be credited properly. A remittance letter can
