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Manufacturer’s Suggested Retail Price (MSRP) Key takeaways * MSRP is the price a manufacturer recommends retailers charge for a product; commonly called the sticker price in the auto industry. * Retailers are not required to follow the MSRP and frequently sell above or below it depending on demand, inventory and market conditions. * MSRP differs…

Managerial Accounting Key takeaways Managerial accounting delivers tailored financial analyses for internal decision-makers. It is forward-looking and flexible, focusing on planning, controlling, and decision support rather than standardized external reporting. Common techniques include product costing (activity-based costing, contribution margin, break-even), cash-flow and capital analysis, inventory management, constraint analysis, performance measurement, and budgeting/forecasting. Managerial accounting helps…

Management Fees: Definition and Key Considerations Key takeaways * Management fees compensate investment managers for selecting and overseeing a fund’s assets. * They are typically charged as a percentage of assets under management (AUM) and commonly range from about 0.10% to more than 2%. * Actively managed funds usually charge higher fees than passive funds,…

Management Discussion and Analysis (MD&A) What is MD&A? Management Discussion and Analysis (MD&A) is the narrative section of a public company’s periodic filings (typically the annual 10-K and quarterly 10-Q) in which management explains the company’s financial performance, condition, and future prospects. It complements the audited financial statements by providing context, explanations for variances, and…

Management by Objectives (MBO) Management by Objectives (MBO) is a strategic management method that aligns organizational goals with individual employee objectives through mutual agreement. It emphasizes clear, measurable targets, regular feedback, and performance evaluation tied to rewards. When implemented well, MBO increases engagement and clarity; when applied rigidly, it can encourage short-termism and quality compromises….

Management Buyout (MBO) Overview A management buyout (MBO) is a transaction in which a company’s existing management team acquires the business they operate, purchasing its assets and assuming control of operations. MBOs are commonly structured as leveraged buyouts (LBOs) because they rely heavily on borrowed capital combined with equity. They are used as succession strategies,…

Managed Futures: Overview and How They Trade What are managed futures? Managed futures are professionally managed investment programs that trade futures contracts across multiple markets—commodities, energy, agriculture, interest rates, and currencies. Managed by commodity trading advisors (CTAs) or commodity pool operators (CPOs), these strategies are treated as alternative investments and are commonly used to diversify…

What Is a Managed Account? A managed account is an investment account owned by an individual or institution in which a professional investment manager makes buy and sell decisions on the client’s behalf. These accounts are customized to the client’s objectives, risk tolerance, and tax situation, and are commonly used by high-net-worth individuals and institutions…

Malpractice Insurance: Definition, Types, Importance What is malpractice insurance? Malpractice insurance is a form of professional liability insurance for healthcare professionals. It protects providers against claims that they caused harm through negligence, improper treatment decisions, or other professional errors. Coverage typically includes legal defense costs, settlements, medical damages, and, in some cases, punitive damages. Key…

Make-Whole Call Provision: What It Is and How It Works A make-whole call provision lets a bond issuer retire debt before maturity by paying bondholders a lump sum equal to the net present value (NPV) of the bond’s remaining cash flows. The payment is intended to “make investors whole” for lost future interest and principal…

Make to Stock (MTS) Make to Stock (MTS) is a traditional production strategy in which manufacturers produce goods in advance based on forecasts of customer demand. Inventory is held ready for sale so that products can be delivered quickly when orders arrive. How MTS works Demand forecasts—usually derived from historical sales and market analysis—drive production…

Make-to-Order (MTO) Make-to-Order (MTO), also called made-to-order or mass customization, is a production strategy in which goods are manufactured only after a confirmed customer order. Rather than building and storing finished products in advance, MTO is a pull-based approach that responds to actual customer demand and enables higher levels of customization. Key takeaways Products are…

Make-or-Buy Decision: A Practical Guide A make-or-buy decision determines whether a company should produce a good or service internally (make) or obtain it from an external supplier (buy). This choice affects costs, capacity, quality, intellectual property, and strategic flexibility. Making the right decision requires combining quantitative cost analysis with qualitative judgment about risk, capability, and…

Majority Shareholder A majority shareholder is a person or entity that owns more than 50% of a company’s outstanding shares. When those shares carry voting rights, the majority shareholder controls corporate decisions such as electing the board of directors and influencing management and strategy. Key takeaways A majority shareholder holds over 50% of a company’s…

Maintenance Margin: What It Is and How It Works Maintenance margin is the minimum amount of equity an investor must keep in a margin account after buying securities on borrowed funds. It’s typically expressed as a percentage of the total market value of the securities and is intended to protect both the investor and the…

Maintenance Expenses (Costs of Maintenance) Maintenance expenses are the ongoing costs required to keep assets functioning and in good condition. They are incurred in addition to the purchase price and can apply to personal items (homes, cars, appliances, electronics) or business assets (vehicles, machinery, facilities, technology). Why maintenance matters Regular upkeep prevents minor issues from…

Main Street: Meaning, Types, and Support for Local Businesses Key takeaways “Main Street” refers to local, independently owned small businesses and the communities they serve. It stands in contrast to “Wall Street,” which represents large financial firms and global corporations. Main Street businesses include retail shops, restaurants, personal services, and other brick-and-mortar enterprises. You can…

MICR: What Is a Magnetic Ink Character Recognition Line? What is a MICR line? A MICR (Magnetic Ink Character Recognition) line is the string of characters printed at the bottom of a check that identifies the bank routing number, the account number, and the check number. The characters are printed with magnetic ink and special…

Magna Cum Laude Definition Magna cum laude is a Latin academic honor meaning “with great praise.” It denotes that a student graduated with a grade point average or academic standing near the top of the class. In the U.S., Latin honors are commonly awarded at three levels: * Cum laude — “with distinction” * Magna…

Magic Formula Investing: A Concise Guide What it is Magic Formula Investing is a rules-based value investing strategy developed by Joel Greenblatt. It ranks stocks using two simple quantitative metrics—earnings yield and return on capital—and aims to identify companies that are both cheap and efficient at generating profits. The approach is systematic, unemotional, and designed…

Macroeconomics: Definition, Scope, and Key Concepts What is macroeconomics? Macroeconomics is the study of the economy as a whole. It focuses on aggregate measures and broad phenomena such as national output (GDP), inflation, unemployment, economic growth, and the business cycle. The discipline seeks to explain what drives these variables, how they interact, and how policy…

Macroeconomic Factors: Definition, Types, Examples, and Impact A macroeconomic factor is a broad economic condition or force that affects the overall economy of a region or country rather than individual firms or households. These factors can arise from fiscal and monetary policy, natural events, technological shifts, or geopolitical developments. Governments, businesses, and investors monitor them…

Macro Manager: Definition, How It Works, and Benefits What is a macro manager? A macro manager is a leader who takes a hands-off approach, delegating day-to-day decision-making to employees while focusing on strategy, outcomes, and overall direction. This contrasts with a micromanager, who closely supervises tasks and processes. The term also appears in finance: a…

Macro Environment What the macro environment is The macro environment describes the broad external forces and overall economic conditions that shape an economy’s performance. Unlike the micro environment, which focuses on factors inside a company or within a specific market (suppliers, customers, competitors), the macro environment covers economy-wide variables such as GDP, inflation, employment, fiscal…

Macaulay Duration What is Macaulay Duration? Macaulay duration is the weighted average time until a bond’s cash flows (coupons and principal) repay the bond’s purchase price. It measures how long, on average, an investor must hold a bond for the present value of its cash flows to equal the price paid. Portfolio managers use it…

Maastricht Treaty: Definition, Purpose, History, and Significance What the Maastricht Treaty is The Maastricht Treaty (formally the Treaty on European Union) is the international agreement that created the European Union (EU) and set the groundwork for deeper political and economic integration among its member states. Signed in Maastricht, the Netherlands, on February 7, 1992, it…

M-Pesa: Mobile money for financial inclusion M-Pesa is a mobile money service that lets users store, send and receive funds using a mobile phone. Launched in Kenya in 2007 by Safaricom and operating as a joint venture with Vodacom since 2020, M-Pesa expanded from Kenya to serve multiple African countries, enabling people without traditional bank…

M3 (Broad Money): Definition, Components, and Role M3 is the broadest measure of a country’s money supply. It includes highly liquid money plus less-liquid financial assets that serve as stores of value for institutions and large investors. The measure is useful for understanding the total amount of money available in the economy beyond what households…

M2 (Money Supply) M2 is a Federal Reserve measurement of the U.S. liquid money supply. It estimates assets that are readily convertible to cash and commonly used for transactions or near-term savings, giving policymakers and economists a picture of money available in the economy. What M2 Includes M2 is broader than M1 and combines highly…

M1 M1 is the narrowest measure of a country’s money supply, consisting of the most liquid forms of money used as a medium of exchange. It reflects cash and deposits that can be spent immediately. Key takeaways * M1 includes currency, demand deposits, and other highly liquid deposits (since May 2020 this definition was expanded…

Luxury Tax: Definition, Examples, and How It Works A luxury tax is an additional levy on non‑essential, high‑value goods and services that are typically purchased by affluent consumers. Governments use these taxes to raise revenue from a narrow segment of the population, discourage excessive consumption, or pursue social and environmental policy goals. Key takeaways Luxury…

Understanding Luxury Items A luxury item is a good or service that is not essential for basic living but is highly desirable within a culture or social group. Demand for luxury goods typically rises faster than income growth as people become wealthier. These items often function as status symbols and may be purchased for prestige…

Lump‑Sum Payment A lump‑sum payment is a single, complete payment of money rather than a series of installments. Common situations that offer a lump sum include pension buyouts, lottery winnings, corporate asset purchases, bullet loan repayments, and settlement payouts. How lump sums work In retirement plans, a pension’s commuted value is the one‑time amount calculated…

Luhn Algorithm The Luhn algorithm (also called the Modulus 10 or MOD 10 algorithm) is a simple checksum formula used to validate identification numbers. It’s widely used in payment systems to check credit card numbers and in other contexts where quick detection of input errors is needed. Key points Developed in the 1950s, the Luhn…

Lucrative: Meaning, Measurement, and Examples What “lucrative” means Lucrative describes something that produces substantial profit or financial return. It can refer to an investment, business, job, product, or venture that yields net gains after costs are accounted for. Used in the present tense it typically implies strong potential; used in the past tense it indicates…