What Is the Ability to Repay? The ability to repay refers to an individual’s financial capacity to make good on a debt. In particular, the phrase “ability to repay” was used in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. It describes the requirement that mortgage originators substantiate that potential borrowers can afford
What Is an ABLE (Achieving a Better Life Experience) Account? An ABLE account is a tax-advantaged savings account available to individuals diagnosed with significant disabilities before age 26. Contributions can be made to the account by the beneficiary, friends, or family members, but the total annual contribution cannot exceed a certain limit, which is pegged to
What Is Activity-Based Management? Activity-based management (ABM) is a system for determining the profitability of every aspect of a business so that its strengths can be enhanced and its weaknesses can either be improved or eliminated altogether. Activity-based management (ABM), which was first developed in the 1980s, seeks to highlight the areas where a business
What Is the Abnormal Earnings Valuation Model? The abnormal earnings valuation model is a method for determining a company’s equity value based on both its book value and its earnings. Also known as the residual income model, it looks at whether management’s decisions will cause a company to perform better or worse than anticipated. The
What Is an Abnormal Return? An abnormal return describes the unusually large profits or losses generated by a given investment or portfolio over a specified period. The performance diverges from the investments’ expected, or anticipated, rate of return (RoR)—the estimated risk-adjusted return based on an asset pricing model, or using a long-run historical average or
What Is Above Par? Above par is a term used to describe the price of a bond when it is trading above its face value. A bond usually trades at above par when its income distributions are higher than those of other bonds currently available in the market. This occurs when interest rates have declined
What Is Abnormal Spoilage? Abnormal spoilage is the amount of waste or destruction of inventory that a firm experiences beyond what is expected in normal business operations or production processes. Abnormal spoilage can be the result of broken machinery or from inefficient operations, and it is considered to be at least partially preventable. In accounting
What Is Above the Market? “Above the market” refers to an order to buy or sell at a price higher than the current market price. The most common above the market order types include limit orders to sell, stop orders to buy, or stop-limit orders to buy. Above the market can be contrasted with “below the
What Was the Automated Bond System (ABS)? The Automated Bond System (ABS) was an early electronic bond-trading platform the New York Stock Exchange (NYSE) used from 1977 to 2007. The system was used to record bids and offers for inactively traded bonds until they were canceled or executed on the exchange. The ABS was replaced in
What Is an Absentee Landlord? An absentee landlord is an individual or corporate or state entity that owns and rents out real estate but is not located on or near the property. An absentee landlord stands in contrast to an owner-occupied landlord, one who lives in the rental property. Absentee landlords are usually those that
