What Is Negative Goodwill? In business, negative goodwill (NGW) is a term that refers to the bargain purchase amount of money paid, when a company acquires another company or its assets for significantly less their fair market values. Negative goodwill generally indicates that the selling party is distressed or has declared bankruptcy, and faces no
What Is Negative Growth? Negative growth is a contraction in business sales or earnings. It is also used to refer to a contraction in a country’s economy, which is reflected in a decrease in its gross domestic product (GDP) during any quarter of a given year. Negative growth is typically expressed as a negative percentage rate. Key Takeaways
What Is Negative Income Tax? Negative income tax (NIT) is an alternative to welfare suggested by, among other proponents, economist Milton Friedman in his 1962 book Capitalism and Freedom. NIT proponents assert that every American without income above the threshold for tax liability should have a basic income guarantee and that NIT is a means to subsidize the needy at
What Is Negative Information? Negative information is data in a consumer’s credit report that lowers their credit score. Credit reports also contain positive information such as on-time payments and loans that have been repaid in full. Understanding Negative Information Negative information includes items such as late payments on loans and credit cards, delinquent accounts, charge-offs
What Is a Negative Interest Rate Policy (NIRP)? A negative interest rate policy (NIRP) is an unconventional monetary policy tool employed by a central bank whereby nominal target interest rates are set with a negative value, below the theoretical lower bound of zero percent. A NIRP is a relatively new development (since the 1990s) in
What Is a Negatively Amortizing Loan? A negatively amortizing loan, sometimes called a negative amortization loan or negative amortized loan, is one with a payment structure that allows for a scheduled payment to be made by the borrower that is less than the interest charged on the loan. When that happens, deferred interest is created.
What Is a Negative Pledge Clause? A negative pledge clause is a type of negative covenant that prevents a borrower from pledging any assets if doing so would jeopardize the lender’s security. This type of clause may be part of bond indentures and traditional loan structures. Key Takeaways A negative pledge clause is a part
What Is the Neglected Firm Effect? The neglected firm effect is a financial theory that explains the tendency for certain lesser-known companies to outperform better-known companies. The neglected firm effect suggests that stocks of lesser-known companies are able to generate higher returns because they are less likely to be analyzed and scrutinized by market analysts
What Is a Negotiable Instrument? A negotiable instrument is a signed document that promises a sum of payment to a specified person or the assignee. In other words, it is a formalized type of IOU: A transferable, signed document that promises to pay the bearer a sum of money at a future date or on-demand.
What Is a Negotiated Market? A negotiated market is a type of secondary market exchange in which the prices of each security are bargained out between buyers and sellers. In a negotiated market, there are no market-makers or order matching. Instead, buyers and sellers actively negotiate on the price at which a transaction is finalized either
