What Is a Positive Butterfly? A positive butterfly is a non-parallel yield curve shift that occurs when short- and long-term interest rates shift upward by a greater magnitude than medium-term rates. This shift effectively decreases the overall curvature of the yield curve. A positive butterfly may be contrasted with a negative butterfly, and should not
What Is Positive Carry? The term positive carry refers to a strategy that involves two different positions where the inputs end up being greater than the outputs. Investors often use a positive carry strategy by investing borrowed capital and making a profit on the difference between interest earned and interest paid. This strategy is commonly
What Is a Poisson Distribution? In statistics, a Poisson distribution is a probability distribution that is used to show how many times an event is likely to occur over a specified period. In other words, it is a count distribution. Poisson distributions are often used to understand independent events that occur at a constant rate
What Is a Policyholder Surplus? A policyholder surplus is the assets of a policyholder-owned insurance company (also called a mutual insurance company) minus its liabilities. Policyholder surplus is one indicator of an insurance company’s financial health. It gives an insurance company another source of funds, in addition to its reserves and reinsurance, in the event the company
A policy or sales illustration is an educational tool that shows a prospective or new insurance policyholder how a life or disability insurance policy works. A policy or sales illustration factors in all of a policy’s key details, including the applicant or insured’s age, gender, and underwriting class (the risk level used to determine premiums). Breaking
What Is a Political Action Committee (PAC)? In the U.S., a political action committee (PAC) is a political committee that pools campaign contributions from members and donates those funds to campaigns for or against candidates, ballot initiatives, or legislation. PACs are typically formed to represent business, labor, or ideological interests by individuals who wish to
What Is Political Economy? Political economy is an interdisciplinary branch of the social sciences. It focuses on the interrelationships among individuals, governments, and public policy. Political economists study how economic theories such as capitalism, socialism, and communism work in the real world. Any economic theory is a means of directing the distribution of a finite
What Is the Political Economy Research Institute? The Political Economy Research Institute (PERI) is a progressive, left-leaning economic think tank at the University of Massachusetts Amherst, which conducts economic research intended to influence the public debate and be put into practical policy proposals to improve the quality of human life. Although PERI’s research spans many
What Are Political Futures? Political futures are a type of futures contract used to speculate on the outcome of political events. Although they are similar in function to commodity futures contracts, political futures are currently illegal in the United States. Key Takeaways Political futures are used to speculate on political events. They are traded on
What Is Political Risk Insurance? Political risk insurance provides financial protection to investors, financial institutions, and businesses that face the possibility of losing money because of political events. It protects against the possibility that a government will take some action that causes the insured to experience a large financial loss. Political risk insurance can cover
