What Is an Industry? An industry is a group of companies that are related based on their primary business activities. In modern economies, there are dozens of industry classifications. Industry classifications are typically grouped into larger categories called sectors. Individual companies are generally classified into an industry based on their largest sources of revenue. For
What Is an Industry Group? An industry group is a classification method that groups together individual companies or stocks based on common lines of business. The Global Industry Classification Standard (GICS), a joint effort by MSCI Inc. and S&P Dow Jones Indices, is regarded as the definitive categorization system for industry groups in the United
What Is the Industry Life Cycle? The industry life cycle refers to the evolution of an industry or business through four stages based on the business characteristics commonly displayed in each phase. The four phases of an industry life cycle are the introduction, growth, maturity, and decline stages. Industries are born when new products are
What Is an Industry Loss Warranty (ILW)? An industry loss warranty (ILW) is a reinsurance or derivative contract that pays out when the financial losses experienced by an industry exceed a specified threshold. Also known as original loss warranties, the contracts are often written by hedge funds or reinsurance companies, which are more able to absorb
What Is in Escrow? In financial transactions, the term “in escrow” indicates a temporary condition of an item, such as money or property, that has been transferred to a third party. This transfer is usually done on behalf of a buyer and seller. “In escrow” is a type of legal holding account for items, which can’t
What Is an Inferior Good? An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. These goods fall out of favor as incomes and the economy improve as consumers begin buying more costly substitutes instead. Key Takeaways An inferior good is one whose demand drops when people’s
Investopedia / Ellen Lindner What Is Inflation? Inflation is a rise in prices, which can be translated as the decline of purchasing power over time. The rate at which purchasing power drops can be reflected in the average price increase of a basket of selected goods and services over some period of time. The rise
What Is the Inflation-Adjusted Return? The inflation-adjusted return is the measure of return that takes into account the time period’s inflation rate. The purpose of the inflation-adjusted return metric is to reveal the return on an investment after removing the effects of inflation. Removing the effects of inflation from the return of an investment allows
What Is Inflation Targeting? Inflation targeting is a central banking policy that revolves around adjusting monetary policy to achieve a specified annual rate of inflation. This is known as the target rate, which is normally set at around 2% to 3%. The principle of inflation targeting is based on the belief that long-term economic growth
What Is Inflation Accounting? Inflation accounting is a special technique used to factor in the impact that soaring or plummeting costs of goods in some regions of the world have on the reported figures of international companies. Financial statements are adjusted according to price indexes, rather than relying solely on a cost accounting basis, to paint a
