What Is the Doctrine Of Utmost Good Faith? The doctrine of utmost good faith, also known by its Latin name uberrimae fidei, is a minimum standard, legally obliging all parties entering a contract to act honestly and not mislead or withhold critical information from one another. It applies to many everyday financial transactions and is one of
What Is Documentary Collection? Documentary collection is a form of trade finance in which an exporter is paid for its goods by an importer after the two parties’ banks exchange the required documents. The exporter’s bank collects funds from the importer’s bank in exchange for documents releasing title to the shipped merchandise, usually after the
What Is the Dodd-Frank Wall Street Reform and Consumer Protection Act? The Dodd-Frank Wall Street Reform and Consumer Protection Act is legislation that was passed by the U.S. Congress in response to financial industry behavior that led to financial crisis of 2007–2008. It sought to make the U.S. financial system safer for consumers and taxpayers.
What Is a Diversification Acquisition? Diversification acquisition is a corporate action whereby a company takes a controlling interest in another company to expand its product and service offerings. One way to determine if a takeover comes under diversification acquisition is to look at the two companies Standard Industrial Classification (SIC) codes. When the two codes differ, it means
What Is a Diversified Common Stock Fund? A diversified common stock fund is a particular type of investment fund that seeks to invest its assets in a relatively large number and variety of common stocks. A diversified common stock fund tends to comprise a portfolio of stocks in the range of 100 or more issues. These funds
What Is a Diversified Company? A diversified company is a type of company that has multiple unrelated businesses or products. Unrelated businesses are those that: Require unique management expertiseHave different end customersProduce different products or provide different services One of the benefits of being a diversified company is that it buffers a business from dramatic fluctuations
What Is a Diversity Score? The diversity score is a proprietary tool developed by Moody’s Investors Service that estimates the level of diversification in a portfolio containing alternative assets. In particular, it was initially created to gauge the relative risk of particular collateralized debt obligations (CDOs). As the mortgage CDO market expanded in the early 2000s, however
What Is Divestment? Divestment is the process of selling subsidiary assets, investments, or divisions of a company in order to maximize the value of the parent company. Also known as divestiture, divestment is effectively the opposite of an investment and is usually done when that subsidiary asset or division is not performing up to expectations.
What Is a Dividend? A dividend is the distribution of a company’s earnings to its shareholders and is determined by the company’s board of directors. Dividends are often distributed quarterly and may be paid out as cash or in the form of reinvestment in additional stock. The dividend yield is the dividend per share and
What Is a Dividend-Adjusted Return? A dividend-adjusted return is a calculation of a stock’s return that relies not only on capital appreciation but also on the dividends that shareholders receive. This adjustment provides investors with a more accurate evaluation of the return of an income-producing security over a specified holding period. Key Takeaways A dividend-adjusted
