twenty-five percent rule

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Twenty-Five Percent Rule

1. A cautionary guideline for municipal bond investors stating that a municipality carries excessive debt if its long-term debt exceeds 25% of its annual budget. Investors are generally advised to be cautious about buying bonds from municipalities in violation of the 25% rule.

2. A rule stating that a person or company selling a product based on the intellectual property of another must pay a 25% royalty to the owner of the intellectual property. The 25% rule is applied to copyrights, trademarks, trade secrets, and other forms of intellectual property.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

twenty-five percent rule

A guideline for municipal bond buyers that indicates that if a municipality's total long-term debt exceeds 25% of its annual budget, the debt is excessive.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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