What Is a Solidarity Tax? A solidarity tax is a government-imposed tax that is levied in an attempt to provide funding towards theoretically unifying (or solidifying) projects. The tax acts in conjunction with income taxes and places an additional burden on taxpayers, including individuals, sole proprietors, and corporations. Key Takeaways A solidarity tax is an
What Is the Solow Residual? The Solow residual is based on the work of Nobel prize-winning economist Robert Solow, whose growth model defined productivity growth as rising output with constant capital and labor. It tells you whether an economy is growing because of increases in capital or labor, or because those inputs are being used
What Is Solvency? Solvency is the ability of a company to meet its long-term debts and financial obligations. Solvency can be an important measure of financial health, since it’s one way of demonstrating a company’s ability to manage its operations into the foreseeable future. The quickest way to assess a company’s solvency is by checking
What Is a Solvency Capital Requirement (SCR)? A solvency capital requirement (SCR) is the total amount of funds that insurance and reinsurance companies in the European Union (EU) are required to hold. SCR is a formula-based figure calibrated to ensure that all quantifiable risks are considered, including non-life underwriting; life underwriting; health underwriting; and market, credit, operational, and
What Is a Solvency Cone? A solvency cone is a mathematical model that considers the estimated impact of transaction costs when trading financial assets. The solvency cone, in particular, represents a range of possible trades or portfolios that can be traded at a specific time frame after taking the bid-ask spread into account. Key Takeaways
What Is a Solvency Ratio? A solvency ratio is a key metric used to measure an enterprise’s ability to meet its long-term debt obligations and is used often by prospective business lenders. A solvency ratio indicates whether a company’s cash flow is sufficient to meet its long-term liabilities and thus is a measure of its
What Is the System Open Market Account? The System Open Market Account (SOMA) is managed by the Federal Reserve Bank and contains assets acquired through operations in the open market. The assets in the SOMA serve as a management tool for the Federal Reserve’s assets, a store of liquidity to be used in an emergency
What Is the Sterling Overnight Interbank Average Rate (SONIA)? The Sterling Overnight Index Average, abbreviated SONIA, is the effective overnight interest rate paid by banks for unsecured transactions in the British sterling market. It is used for overnight funding for trades that occur in off-hours and represents the depth of overnight business in the marketplace.
What is a Sophisticated Investor? A sophisticated investor is a classification of investor indicating someone who has sufficient capital, experience and net worth to engage in more advanced types of investment opportunities. Key Takeaways Sophisticated investors are investors who have a high net-worth and extensive experience in financial markets.There is no single correct definition of
What Is a Social Enterprise? A social enterprise or social business is defined as a business with specific social objectives that serve its primary purpose. Social enterprises seek to maximize profits while maximizing benefits to society and the environment, and the profits are principally used to fund social programs. Key Takeaways A social enterprise is
