Substitution effects
Definition: The substitution effect occurs when the price of a good falls and the consumer substitutes more of this product for others
Related glossary term: ...
Asset Substitution Problem
Asset Substitution Problem definition :
Arises when the stockholders substitute riskier assets for the firm's existing assets and expropriate value from the debtholders.
What's A Spread?
Substitution Effect
In the two goods - two prices analysis, the effect of a change in the price of one of the goods is generally decomposed into the substitution effect and the income effect.
Substitution (finance term)
Related answers:
How do you substitute egg substitute for eggs? Read answer...
Asset substitution
Occurs when a firm invests in assets that are riskier than those that the debtholders expected.
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Asset substitution problem ...
IMPORT SUBSTITUTION DEVELOPMENT STRATEGY - A development strategy followed by many Latin American count...
IMPORT/EXPORT LETTERS OF CREDIT - Bank or financial institution issuance's of funds in a certain amount...
alimony substitution trust
agreement in which spouse X (the spouse who is mandated by the court to make alimony and/or child support payments to spouse Y) must put assets (the principal) in a trust , from which the payments are made to spouse Y.
Same-day substitution
Definition: [crh] Offsetting changes in a margin account during the day that result in no overall change in the balance of the account.
The elasticity of substitution between the two goods σ is equal to the inverse of the elasticity of the MRS with respect to the ratio between the level of consumption of good i and good j .
Substitution
The terms of the swap may allow the substitution of the reference obligation during the life of the swap.
Substitution effect
When the PRICE of petrol falls people buy more of it. There are two reasons.
The INCOME EFFECT: cheaper petrol means that real purchasing power rises, so consumers have more to spend on everything, including petrol.
substitution effect the amount by which quantity demanded falls when the price rises, exclusive of the income effect. (5) ...
Substitution Effect
Every price change can be converted into a income effect and a substitution effect.
Substitution effect of a price change - The effect of a change in price on quantity demanded arising from the consumer switching to or from alternative (substitute) products.
nonsubstitution clause
A provision in some municipal leases. This lease provision stipulates that if the municipal lessee terminates the lease under a nonappropriation clause, ...
No Substitution
Within the text on a proxy card are the words: "The shareholder appoints certain people (collectively, the proxy committee) with full power of substitution to vote the shares.
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firm's existing assets and expropriate value from the debtholders.
Import substitution:
An economic policy and development strategy focusing on the replacement of imports with domestically produced goods, usually accomplished through protectionism, as the route to economic growth.
Import Substitution
A national economic strategy to build up a domestic economy by emphasizing the replacement of imports by domestically produced goods.
Importer ...
IMPORT SUBSTITUTION
An attempt by a country to reduce imports (and hence foreign exchange expenditures) by encouraging the development of domestic industries regardless of domestic inefficiencies.
SUBSTITUTION EFFECT: One of two reasons for law of demand and the negative slope of the market demand curve (the other is the income effect).
Substitution of replacement cost method for historical cost method does little more than update the valuation, at the expense of importing considerably more subjectivity into the measure.
Substitution swap
A swap in which a money manager exchanges one bond for another bond that is similar in terms of coupon, maturity, and credit quality, but offers a higher yield.
Substitution swap A swap in which a exchanges one for another bond that is similar in terms of coupon, maturity, and credit quality, but offers a higher .
Surplus management Related: management
Swap assignment Related: ...
A substitution for what has been wrong in a prior data interchange between computers inaccordance with interchange agreements.
Correspondent Bank ...
A substitution of risks that investors may undergo in order to move from overpriced shares in highly levered firms to those in unlevered firms by borrowing in personal accounts.
The substitution of one person (or thing) for another person (or thing) is called Subrogation. The person subrogated is said to 'stand in the shoes' of the other. Consequently, the one subrogated has the rights of the person who he has replaced.
The Substitution effect states that a higher wage makes work more attractive than leisure. Therefore, supply increases.
Same Day Substitution
The purchase and sale of securities on the same day in a margin account, both having equal dollar value.
Same-Day Substitution
The buying of one security and the selling of another security, usually of equal value, on the same day.
Sample Grade ...
"Elasticity of Substitution," by Morgan Rose.
Ricardo Reis on Keynes, Macroeconomics, and Monetary Policy EconTalk podcast, Apr. 27, 2009. Why is IS-LM still taught in the classroom?
Related Outside Resources: ...
Import substitution
A strategy for economic development that replaces imports with domestic production. It may be motivated by the infant industry argument, or simply by the desire to mimic the industrial structure of advanced countries.
Occurs when a firm invests in assets that are riskier than those that the debtholders expected.
Asset substitution problem ...
Import Substitution
A strategy which emphasizes the replacement of imports with domestically produced goods, rather than the production of goods for export, to encourage the development of domestic industry.
Importer
The U.S.
An elasticity of substitution is a scalar equal to or greater than one which measures the effect on consumption of each of two goods if the price of the other changes. (See elasticity for a definition of its measurement.) ...
Marginal Rate of Substitution
Calculations
Sometimes referred to as MRS, the marginal rate of substitution measures the rate at which an individual must give up one asset to obtain a single additional unit of a second asset, ...
Novation
1: The substitution of an older debt or obligation with a newer one.
See: Debt; Debt Security ...
Same-day substitution Offsetting changes in a margin account during the day that result in no overall change in the balance of the account. Samurai bond A yen-denominated bond issued in Tokyo by a non-Japanese borrower.
Underinvestment problem The mirror image of the asset substitution problem, wherein stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to the debtholders.
Marginal rate of substitution [r]: The rate at which a person has to substitute the possession of one product for another in order to maintain a constant level of utility. [e] ...
traders are required by the Code of Commerce to keep three books - a journal, an inventory and a letter book, somewhat elaborate provisions being made to identify these books, and to prevent substitution.
novation The substitution of a new contract for an old one; or the substitution of one party in a contract with another party. NOW Acronym for Negotiable Order of Withdrawal. An interest-bearing checking account at a bank or savings and loan.
Important ideas developed in such analysis include marginal cost, marginal revenue, marginal product, marginal rate of substitution, marginal propensity to save, and so on.
The sales comparison approach is founded on the principle of substitution, which holds that a buyer would pay no more for the property than the price at which he could obtain a substitute property having similar utility.
De-equitisation is the substitution of debt for equity, especially at the level of markets. At the company level de-equitisation occurs through share buy-backs, acquisitions for cash, and similar transactions.
The mirror image of the asset substitution problem, wherein stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to the debtholders.
Underlying ...
Senior Refunding. The substitution of a loan maturing in 5 to 12 years with a loan maturing in 15 or more years. Often used to consolidate multiple loans or to extend the maturity date.
In fact, availability of substitution is often a better predictor of price elasticity than is demand. Amount of competition, numerous companies offering the same items, can also affect price elasticity of demand.
That number is then multiplied by a divisor, which compensates for adjustments such as stock splits and substitutions to the index. This figure results in the final value of the Dow Jones Composite Index.
The consequence of such substitution of 'floating debt' (TREASURY BILLS or WAYS and MEANS ADVANCES) by 'funded debt' (LONG-DATED or undated GOVERNMENT SECURITIES) is an increase in the interest burden as a result of the longer maturity of government ...
With a price-weighted index, however, one simply takes one share of each company, adds them all and then calculates a divisor, which for the Dow was 30 at the start, and then adjusted for splits and substitutions over the years.
This special power of attorney document allows you to designate another person to make medical decisions on your behalf, also review the Substitution Decisions Act in the Money Management Newsletter Library.
Mentor: ...
Refinancing: Prepayment of the existing debt and substitution of new debt on more attractive terms (e.g., at a lower cost, with a longer maturity, or with fewer or less restrictive covenants).
In binary economies, any insufficiency resulting from economic scarcity can be overcome through substitution or improvements in technology.
PAR OR BASIS GRADE
The grade or grades specified in a given futures contract for
delivery. A contract may permit substitutions for and deviations
from the par grade subject to specified premiums or discounts.
Medical Power Of Attorney: This special power of attorney document allows you to designate another person to make medical decisions on your behalf, also review the Substitution Decisions Act in the Money Management Newsletter Library.
Exception
A proxy which does not authorize the proxy committee to act on its behalf concerning any other business, adjournments or substitutions.
The first shaded area reflects the substitution of the operating cash flow calculations. The second shaded area reflects that the indirect approach must be supplemented with information about cash paid for interest and taxes.
In 1999, the Bureau of Labor Statistics introduced a geometric mean formula that took into account the shift toward products that had gone down in relative price. However, critics claimed that by accounting for substitution, ...
to buy fewer Canadian-made goods while Canadians now desire more foreign-made goods, thereby reducing net exports, which is equivalent to a reduction in the amount of real goods and services purchased in Canada. Also, called the substitution effect.
 See also: Banks, Expense, Saving, Values, Funding
  
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