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Meaning / Definition of

Circuit Breaker

Categories: Investing and Trading,

After the stock market crash of 1987, stock and commodities exchanges established a system of trigger-point rules known as circuit breakers. They temporarily restrict trading in stocks, stock options, and stock index futures when prices fall too far, too fast.Currently, trading on the new york stock exchange (NYSE) is halted when the dow jones industrial average (DJIA) drops 10% any time before 2:30 p.m., sooner if the drop is 20%. But trading could resume, depending on the time of day the loss occurs. However, if the DJIA drops 30% at any point in the day, trading ends for the day. The actual number of points the DJIA would need to drop to hit the trigger is set four times a year, at the end of each quarter, based on the average value of the DJIA in the previous month.The only time the circuit breakers have been triggered was on October 27, 1997, when the DJIA fell 554 points, or 7.2%, and the shut-down level was lower. In fact, the DJIA has dropped as much as 10% in a single day only three times in its history.

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Definition / Meaning of

Highest And Best Use

Categories: Real Estate,

Key appraisal and zoning principle employed in valuing any parcel of land or property. Since the value of a property and its use are closely linked, its highest and best use is that which results in the highest present value, and brings in the greatest net return over a given period or the foreseeable future - within the applicable constraints. The value of, and return on, a property are related to its surrounding environment so its use has to be consistent with the neighboring land use. Because a property's value is influenced by the local competitive and political forces, the timing of the property development is another critical factor. And, especially in metropolitan areas, where a property can be put to several different uses, its combination of uses is very important. A highest and best use appraisal must take these four factors into consideration: (1) legal permissibility, (2) physical possibility, (3) financial feasibility, and (4) maximum productive use. However, even the most detailed appraisal is simply a considered opinion of an appraiser, not the final word.

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