Accounting and Finance Questions

Smart money is a term used for credit card.

Other things the same, when the interest rate rises people would want to lend more, making the quantity of loanable funds supplied increase.

Inflation risk, also called purchasing power risk, is the chance that the cash flows from an investment won't be worth as much in the future because of changes in purchasing power due to inflation.

HOW IT WORKS (EXAMPLE):

For example, $1,000,000 in bonds with a 10% coupon might generate enough interest payments for a retiree to live on, but with an annual 3% inflation rate, every $1,000 produced by the portfolio will only be worth $970 next year and about $940 the year after that. The rising inflation means that the interest payments have less and less purchasing power. And the principal, when it is repaid after several years, will buy substantially less than it did when the investor first purchased the bonds.

A savings vehicle is a bank account that's used to hold your savings.

The basic saving vehicles include :

Savings accounts,

Money market accounts,

Certificates of deposit, and

Stock market.

Depreciation is a process of cost allocation, not valuation. In accounting, the term depreciation refers to the allocation of cost of a tangible asset to expense to the periods in which the asset is expected to be used to obtain the economic benefit.

In brief, Depreciation is fall in the value of assets due to wear and tear over a period of time, it is a loss.