Learn how the value of money is determined and who decides it. How To Measure the Value of the Dollar There are three ways to measure the value of the dollar. Foreign Exchange Rate The first way to measure the value of the dollar is by how much the dollar will buy in foreign currencies. That’s what the foreign exchange (forex) rate measures. Forex traders on the foreign exchange market determine exchange rates....
PixelCatchers / Getty Images The phrase contains two separate terms, each with a specific meaning: Best: Includes several variables over which the buyer has control, including the price, contingencies, financing, and closing dates.Final: This is the buyer’s last offer; after they put it in, there will be no more negotiation for this property. A buyer’s best and final offer is their final opportunity to bid on a property. To give themselves the best chance of being chosen, they’ll need to use their best homebuying negotiation skills....
Establishing this type of trust could make sense if you’re interested in using your assets to fund good causes during your lifetime while ensuring a smooth transfer of wealth to your heirs after you’re gone. There are some pros and cons involved, and it’s important to understand what it means to be a beneficiary of a charitable lead trust. Definition and Example of Charitable Lead Trust A charitable lead trust is a type of trust in which assets produce income for one or more named charities and then the assets are passed on to the trust beneficiaries once the grantor dies....
CFDs are not available in the U.S. to retail investors because of Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) regulations. However, they are widely available in the U.K., Europe, and Asia. Learn how CFDs work, and what similar derivatives are available here in the U.S. Definition and Examples of Contracts for Difference There are always two parties to a CFD, a “long position” (the buyer) and a “short position” (the seller)....
Demand deposit accounts eliminate your need to carry cash because your money is always at your disposal via a debit card, checkbook, or transfer. But this constant access to funds comes at a cost. Demand deposit accounts generally earn little to no interest compared to time deposit accounts. One common type of demand deposit account is a checking account that allows you to withdraw funds whenever you’d like simply by making a purchase....
To provide a stark illustration, $10,000 invested at 10% for 100 years could turn into $137.8 million. The same $10,000 invested at twice the rate of return, 20%, does not merely double the outcome; it turns it into $828.2 billion. It may seem strange that the difference between a 10% return on investment (ROI) and a 20% return is 6,010 times as much money, but it’s the nature of compound growth....
Learn more about month-to-month tenancy and whether it might be an option for you. Definition and Examples of Month-to-Month Tenancy A month-to-month tenancy renews each month. It doesn’t have an expiration date and will continue until the tenant or the landlord gives notice. A month-to-month tenancy can start as month-to-month or occur when a separate lease—such as a fixed-term lease—has expired and the tenant continues to live in the property....
Nonforfeiture Clause Definition and Example A nonforfeiture clause determines how an insurance policyholder can receive their policy’s accumulated cash value in the event of a lapse due to non-payment, or when the policyholder chooses to surrender the coverage. The terms and conditions of a life insurance policy require you to make premium payments. In addition to a death benefit, permanent life insurance policies also build a cash value over time. A nonforfeiture clause, which stipulates that a policyholder will not forfeit their accumulated cash value if they stop paying premiums, is part of many permanent life insurance policies....
If any parts or materials are required, those costs typically go under cost of goods sold (COGS). The result is gross profit. Next, the statement subtracts any expenses necessary to run the business, such as payroll, utilities, maintenance costs, and other expenses. The result is operating profit. At this stage, you can tell how effective the company is at providing goods or services at a profit. In addition to understanding the ability to operate at a profit, it’s crucial to know what the bottom line is after all taxes and interest costs....
If you’re donating a piece of art, you can’t just say the artwork is worth $10,000 so that you can take a large charitable deduction. You would have to get a qualified appraisal to help support your claim. You generally only have to attach the qualified appraisal to your tax return if you’re claiming a tax deduction of more than $500,000 for donated property. Otherwise, for all donations of $5,000 or more up to $500,000, you can keep the qualified appraisal document for your records....
Doing a Roth conversion can make sense in some situations, but there are tax implications, upfront costs, and specific rules to follow. Learn more about how a Roth conversion works, the pros of cons of doing one, and the requirements for converting to a Roth IRA. Definition and Example of a Roth Conversion A Roth conversion is when you take part or all of a traditional IRA and move it into a new Roth IRA....
Ridofranz / Getty Images Definition and Examples of Term Deposits With a term deposit, you choose to keep your money in a savings account for a term that may range from days to years. Generally speaking, the more you invest and the longer you’re willing to leave your funds untouched, the greater return you’ll receive. The most common example of a term deposit is a Certificate of Deposit (CD). Unlike a traditional savings account, a CD requires you to lock away a lump sum for an agreed-upon term....
An appraiser sets aside an allowance for the spouse and children who depended on the deceased person to support them. Learn how state laws set the terms for widow’s allowances, how they work, and how a surviving spouse can receive them. Definition and Example of a Widow’s Allowance A widow’s allowance is any money or property a widow or widower receives after the death of a spouse to support them during the probate process....
Let’s take a look at ability to repay, how it works, and what it means for you. Definition and Examples of Ability To Repay Ability to repay is the capacity of a home loan borrower to make good on a mortgage. Mortgage lenders must make a good-faith estimate of a borrower’s qualification for a home loan. Prior to the mortgage crisis, many mortgage loans were created without regard to whether or not the borrower could repay them....
Most major rental car companies offer this insurance for auto rentals. Supplemental liability coverage can also be suggested as an option by moving-truck rental companies or peer-to-peer ride-sharing companies for hourly or daily trips. With peer-to-peer ride-share apps or platforms, this insurance may be included with the service. ALI policies for different sectors can vary based on which state you’re in. Alternate name: Supplemental liability coverage, liability insurance supplement, or liability protectionAcronym: ALI, SLP, or LIS...
This is in contrast to the standard “named perils” insurance, which specifically lists losses that will be covered. The insurance industry is moving away from use of the term “all risk,” as it can be confusing to consumers. “Open perils” and “special perils” are now more commonly used instead. A peril is an unexpected occurrence, such as a thunderstorm, that can cause property damage or loss. How All-Risk Insurance Works Standard home and property insurance policies usually are named-perils policies, and typically cover damage caused by hail, snow, ice, windstorms, and other acts of nature as well as losses due to fire, vandalism, or theft....
Borrowers who benefit most from an all-in-one mortgage generally have the goal to pay down their loan quickly or own their home outright, but they also want some liquidity if they find themselves short on cash for an unexpected expense. Homeowners who want to make home improvements without a definite timeline might also benefit from an all-in-one mortgage. Here’s an example of how an all-in-one mortgage could work: Let’s say you qualify for a $300,000 mortgage loan at 5% interest....
The person who died, also known as a decedent, will typically name their executors in their wills, and the judge will almost always appoint these individuals unless beneficiaries object. For example, someone may designate a sibling to oversee their will in case they die—in that case, the sibling becomes the executor. If no executor was named, a judge will usually appoint a close family member to oversee the estate. Many states have statutes citing which relatives qualify and in what order of preference....
Definition and Examples of Inflation-Protected CDs A certificate of deposit is a special type of deposit account that typically will earn a higher amount of interest than a standard checking or savings account. Unlike other types of investments, most certificates of deposit are insured by the FDIC for up to $250,000. While a CD may sound like a good idea—it can return a better rate than your regular savings account, after all—certificates of deposit also carry risk, especially when the rate of inflation outpaces the interest you’re accruing....
More than half of all insurance adjusters work for insurance companies or for agencies, brokerages, and other activities related to insurance. For example, after a natural disaster, an insurance company might temporarily contract with an independent insurance adjuster to inspect home damage, if the insurer lacks sufficient staff adjusters. Insurance adjusters are responsible for determining the amount of compensation that a policyholder is entitled to after a natural disaster, accident, or theft....
