Business Glossary

synonym for error. It is calculated by subtracting the forecast value from the actual value to give a "residual" or error value for each forecast period.

cash balance resulting from the difference between the income stream generated by a pool of mortgages and the cash flow necessary to fund a series of Collateralized Mortgage Obligation bonds. Also known as equity. These excess amounts accrue to the CMO issuer, or to a CMO trustee if it has been sold.

fee paid to a performer for repeat performances of a broadcast commercial or program; also called re-use fee, SAG fee, talent charge. The residual may be paid by the advertiser or television or radio station, depending on the nature of the program. Rates are generally established by AFTRA (American Federation of Television and Radio Artists) or SAG (Screen Actors Guild) contract.

value or income remaining after deducting an amount necessary to meet fixed obligations.

Example: After deducting operating expenses , debt service , and income taxes from gross income , the equity investor is entitled to the residual.

Note: There is no assurance that a residual will exist.

In appraisal , a portion of stabilized Net Operating Income is deducted to support the value of the improvements . The residual net operating income is then left to support the value of the site .