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Negative Volume Index (NVI) Overview The Negative Volume Index (NVI) is a technical indicator that tracks price changes on days when trading volume decreases. It was developed to help separate price moves driven by lower-volume (often considered “smart money” or institutional flows) from moves driven by higher-volume activity. How NVI Works NVI only updates on…

Negative Return A negative return occurs when an investment, project, or business loses value over a specified period, producing a financial loss rather than a gain. It can apply to an individual security, a whole portfolio, a company’s operations for a reporting period, or a capital project financed with debt. Key takeaways A negative return…

Negative Pledge Clause A negative pledge clause is a contractual provision that prevents a borrower from granting security interests (pledging assets) to other lenders if doing so would weaken the position of the existing lender. Common in bond indentures and unsecured loan agreements, it protects creditors’ priority and reduces the risk that the borrower’s assets…

Negative Interest Rate Policy (NIRP) A Negative Interest Rate Policy (NIRP) is an unconventional monetary tool in which a central bank sets its policy (nominal) interest rate below zero. Under NIRP, depositors can be charged for holding funds at banks, rather than receiving interest, with the goal of discouraging hoarding and encouraging lending, investment, and…

Negative Interest Rate Environment What it is A negative interest rate environment occurs when nominal overnight interest rates fall below zero. Under a negative interest rate policy (NIRP), central banks set target rates at negative values so that financial institutions effectively pay to hold excess reserves at the central bank instead of earning interest. Why…

Negative Interest Rates Explained Negative interest rates are an unconventional monetary policy tool used by central banks to stimulate spending and investment during severe economic slowdowns or deflationary episodes. Instead of earning interest, certain balances may be charged a fee, effectively turning the usual borrower–lender relationship upside down: depositors can pay to keep money with…

Negative Income Tax (NIT) Overview Negative Income Tax (NIT) is a proposed alternative to traditional welfare systems in which people with low or no income receive cash payments through the tax system rather than through separate benefit programs. The idea was popularized by economist Milton Friedman in his 1962 work advocating a basic income guarantee…

Negative Growth What is negative growth? Negative growth refers to a decline in economic activity. At the firm level, it describes falling sales or earnings. For an economy, it means a decrease in gross domestic product (GDP) over a measured period and is typically shown as a negative percentage rate. Key takeaways Negative growth can…

Negative Goodwill (NGW) What it is Negative goodwill, also called a bargain purchase, occurs when an acquirer pays less for a company (or its assets) than the fair value of the identifiable net assets acquired. It typically indicates the seller is distressed or otherwise forced to accept a low price. Negative goodwill is the opposite…

Negative Gearing What is negative gearing? Negative gearing is a financing strategy most commonly used in property investment. An asset is described as negatively geared when the income it generates (for example, rent) is less than the ongoing costs of owning it (mortgage interest, maintenance, insurance, depreciation, etc.). The result is an ongoing cash loss…

Negative Gap Key takeaways A negative gap occurs when an institution’s interest-sensitive liabilities exceed its interest-sensitive assets. If interest rates fall, liabilities reprice lower before assets, which can increase net interest income; if rates rise, income can decline. Gap size indicates exposure of net interest income to interest-rate movements. Managing negative (and positive) gaps is…

Negative Feedback Negative feedback describes a process in which a system’s outputs are routed back in a way that reduces, counteracts, or stabilizes the effects of the original input. In other words, it pushes a system toward equilibrium instead of amplifying change. How it works in markets In financial markets, negative feedback tends to dampen…

Negative Equity What is negative equity? Negative equity (also called an underwater mortgage) occurs when a property’s market value is less than the outstanding balance on the mortgage secured by that property. In other words, you owe more on the loan than the house is worth. Explore More Resources › Read more Government Exam Guru…

Negative Directional Indicator (-DI) What it is The Negative Directional Indicator (-DI) is a component of the Average Directional Index (ADX) system. It quantifies recent downward price movement. When -DI rises and sits above the Positive Directional Indicator (+DI), downward momentum is stronger than upward momentum. Key points -DI is used together with +DI and…

Negative Covenant: Definition and Examples What is a negative covenant? A negative covenant (also called a restrictive covenant) is a contractual promise not to take specified actions. Lenders, bondholders, employers, or counterparties use negative covenants to limit behaviors that could increase risk or reduce value. How negative covenants are used In debt contracts (bond indentures…

Negative Correlation Negative correlation (also called inverse correlation) describes a relationship between two variables in which one tends to rise when the other falls. In statistics it is measured by the correlation coefficient, which ranges from -1.0 (perfect negative correlation) to +1.0 (perfect positive correlation); 0 indicates no linear relationship. How negative correlation works If…

Negative Convexity Key takeaways Negative convexity occurs when a bond’s price–yield relationship is concave: price rises less when yields fall and falls more when yields rise. Common in callable bonds and mortgage-backed securities because embedded options (calls or prepayments) limit upside price gains as rates decline. Convexity is the second derivative of price with respect…

Negative Confirmation: Definition, Uses, and Examples What is a negative confirmation? A negative confirmation is a request that asks the recipient to reply only if there is an error, discrepancy, or objection. If the recipient does not respond by the stated deadline, their silence is taken as agreement with the information provided. Negative confirmations are…

Negative Carry Negative carry occurs when the cost of holding an investment exceeds the income it produces over a given period. In other words, an investor pays more to maintain a position than they receive from it. Investors may accept negative carry when they expect capital gains or other benefits to outweigh ongoing carrying costs….

Negative Bond Yield A negative bond yield occurs when an investor receives less money at a bond’s maturity than the price they paid. In that situation the bond buyer is effectively paying the issuer to hold their money, rather than earning interest. Key takeaways A bond has a negative yield if its purchase price is…

Negative Assurance Key takeaways Negative assurance is an auditor’s statement that nothing came to their attention to indicate material misstatements or fraud. It is used when a full, positive (express) assurance audit is not performed. The procedures are more limited than a full audit; negative assurance does not prove the absence of wrongdoing, only that…

Negative Arbitrage What it is Negative arbitrage is an opportunity cost that occurs when a bond issuer holds proceeds from a debt offering in an escrow account (typically invested in cash or short-term Treasuries) and the return on those investments is lower than the interest the issuer must pay on its debt. In short: the…

Negative Amortization Key takeaways * Negative amortization occurs when unpaid interest is added to a loan’s principal, causing the balance to rise. * It commonly appears in certain mortgage products, such as payment-option ARMs and graduated payment mortgages. * While it can lower short-term payments, it increases exposure to interest-rate risk and can raise the…

Needs Approach The needs approach is a method for estimating how much life insurance an individual should carry. It focuses on the actual cash needed to meet immediate obligations and to replace household income for a defined period, so surviving dependents can maintain financial stability. Key points Estimates insurance by totaling immediate obligations plus future…

Neckline: Definition, Use, and Trading Guidelines Key takeaways * The neckline is the support (topping pattern) or resistance (inverse/bottoming pattern) line that connects the two reaction lows or highs in a head and shoulders formation. * A decisive break through the neckline signals completion of the pattern and a likely trend reversal: down after a…

Near the Money A “near-the-money” option is one whose strike price is very close to the current market price of the underlying security. Because the market price rarely equals a strike exactly, traders often refer to options that are just above or below the underlying price as near-the-money (NTM). This state of moneyness sits between…

Near Term: What it Means and How it’s Used The near term refers to a period not far into the future—events or changes expected to occur soon. In finance and business, it describes time horizons that are short relative to longer-term planning, but the exact length varies by context: for some it’s minutes or hours,…

Near Money Key takeaways * Near money (cash equivalents, quasi‑money) are non‑cash assets that are highly liquid and easily convertible to cash. * Near money helps measure liquidity for individuals, businesses, and central banks. * Central banks classify money supply into tiers (commonly M1 and M2), with near money included in M2. What is near…

Near‑Field Communication (NFC) Key takeaways NFC is a short‑range wireless technology that enables quick, intentional data exchange between devices (typically within a few centimeters). Common uses: contactless payments, transit cards, access control, device pairing, and content sharing. NFC is derived from RFID and typically operates at 13.56 MHz; it supports secure modes such as tokenization…

NAV Return: Definition, Calculation, and How It Differs from Market Return NAV return measures how the net asset value (NAV) of a fund changes over a period, showing the performance of the fund’s underlying holdings rather than the trading price of its shares. Understanding NAV return helps investors evaluate how well a mutual fund, ETF,…

What is the natural unemployment rate? The natural unemployment rate is the lowest sustainable level of unemployment that results from real and voluntary forces in the labor market. It reflects ongoing labor-market processes such as: Workers transitioning between jobs (frictional unemployment). Structural mismatches between workers’ skills and available jobs (structural unemployment). Job losses caused by…

Natural Selection: What It Is and How It Works Natural selection is the process by which heritable traits that increase an organism’s chances of survival and reproduction become more common in a population over successive generations. Individuals with advantageous traits are more likely to leave offspring, so those traits spread while less advantageous traits decline….

Natural Monopoly: Definition, How It Works, and Practical Implications Key takeaways * A natural monopoly exists when a single firm can supply an entire market more efficiently and at lower cost than multiple competing firms. * It usually arises from high fixed costs and strong economies of scale (e.g., utilities, railroads). * Natural monopolies are…

Natural Law Natural law is an ethical and philosophical theory that holds certain moral principles are inherent to human nature and universally discoverable, rather than created by societies or governments. These principles supposedly provide a foundation for judgments about right and wrong that stand independently of enacted laws. Key principles Universal moral standards: Natural law…

Natural Language Processing (NLP) Key takeaways NLP is a branch of artificial intelligence that enables computers to understand, interpret, and generate human language. Modern NLP combines linguistics, statistics, and machine learning (especially deep learning) to convert between text/speech and structured representations that machines can act on. Common NLP applications include virtual assistants, machine translation, sentiment…