What Is Net Exposure? Net exposure is the difference between a hedge fund’s long positions and its short positions. Expressed as a percentage, this number is a measure of the extent to which a fund’s trading book is exposed to market fluctuations. Net exposure can be contrasted with a fund’s gross exposure, which does not
What are Net Free Reserves? Net Free Reserves was one side of a statistic that was (until 2013) released in weekly Federal Reserve data showing the difference between the excess reserves banks held on account at the Fed and the liquid reserves the banks had borrowed from the Fed. When this difference (excess reserves –
What Is Net Income (NI)? Net income (NI), also called net earnings, is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses. It is a useful number for investors to assess how much revenue exceeds the expenses of an organization. This number appears
What Is Net Income After Taxes? Net income after taxes (NIAT) is a financial term used to describe a company’s profit after all taxes have been paid. Net income after taxes is an accounting term and is most often found in a company’s quarterly and annual financial reports. Net income after taxes represents the profit
What Is Net Interest Margin? Net interest margin (NIM) is a measurement comparing the net interest income a financial firm generates from credit products like loans and mortgages, with the outgoing interest it pays holders of savings accounts and certificates of deposit (CDs). Expressed as a percentage, the NIM is a profitability indicator that approximates the likelihood of
What Is the Net Interest Rate Differential (NIRD)? The net interest rate differential (NIRD), in international currency (forex) markets, is the total difference in the interest rates of two distinct national economies. For instance, if a trader is long the NZD/USD pair, they will own the New Zealand currency and borrow the U.S. currency. The
What Is the Net Interest Rate Spread? The net interest rate spread is the difference between the average yield that a financial institution receives from loans—along with other interest-accruing activities—and the average rate it pays on deposits and borrowings. The net interest rate spread is a key determinant of a financial institution’s profitability (or lack
What Is Net Internal Rate of Return – Net IRR? Net internal rate of return (net IRR) is a performance measurement equal to the internal rate of return after fees and carried interest are factored in. It is used in capital budgeting and portfolio management to calculate an investment’s yield or overall financial quality by
What Is a Net International Investment Position (NIIP)? A net international investment position (NIIP) measures the gap between a nation’s stock of foreign assets and a foreigner’s stock of that nation’s assets. Essentially, it can be viewed as a nation’s balance sheet with the rest of the world at a specific point in time. Key
What Is a Negative Gap? A negative gap is a situation where a financial institution’s interest-sensitive liabilities exceed its interest-sensitive assets. A negative gap is not necessarily a bad thing, because if interest rates decline, the entity’s liabilities are repriced at lower interest rates. In this scenario, income would increase. However, if interest rates increase
