What Are Permanent Open Market Operations (POMO)? Permanent open market operations (POMO) refers to the U.S. Federal Reserve program of ongoing, unlimited purchases and sales of short term U.S. Treasury securities in the open market for Treasuries as a tool to help achieve its normal monetary policy targets. Open market operations (OMO) are the outright
What Is Permission Marketing? Permission marketing refers to a form of advertising where the intended audience is given the choice of opting in to receive promotional messages. The concept of permission marketing has been popularized by Seth Godin, an entrepreneur and author. He first discussed the idea of permission marketing at length in his book
What Is a Permitted Currency? A permitted currency is one that is free from any legal and regulatory restrictions that would keep it from being exchanged with or converted into another currency. Countries with permitted currencies benefit from greater access to international trade and global finance. This can be contrasted with a blocked currency, which
What Is a Perpetual Bond? A perpetual bond, also known as a “consol bond” or “perp,” is a fixed income security with no maturity date. This type of bond is often considered a type of equity, rather than debt. One major drawback to these types of bonds is that they are not redeemable. However, the
What Is a Perpetual Inventory System? A perpetual inventory system is based on an accounting method known as perpetual inventory that continuously records inventory changes in real-time with computerized point-of-sale systems, removing the need for physical inventory checks. It provides a highly detailed view of changes in inventory with immediate reporting of the amount of
What Does Perpetuity Mean in Finance? A perpetuity is a security that pays for an infinite amount of time. In finance, perpetuity is a constant stream of identical cash flows with no end. The concept of perpetuity is also used in several financial theories, such as in the dividend discount model (DDM). Key Takeaways A
What Is a Personal Exemption? The personal exemption was a federal income tax break up until 2017. The Tax Cuts and Jobs Act of 2017 eliminated the personal exemption for tax years 2018 to 2025. The exemption was earmarked for a subsistence level of income, which was untaxed and gave an exemption for each person
What Is a Pension Risk Transfer? A pension risk transfer occurs when a defined benefit pension provider offloads some or all of the plan’s risk (e.g., retirement income liabilities to former employee beneficiaries). The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan early (buying out employees’ pensions) or
What Is a Pension Shortfall? A pension shortfall is a situation where a company offering employees a defined benefit (DB) plan does not have enough money to meet the obligations of the pension fund. A pension shortfall typically occurs because the investments selected by the pension manager did not live up to expectations. A pension
What Is Pent-Up Demand? Pent-up demand refers to a situation where demand for a service or product is unusually strong. Economists generally use the term to describe the general public’s return to consumerism following a period of decreased spending. The idea is that consumers tend to hold off making purchases during a recession, building up a backlog
