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Credit cards and a home equity line of credit (HELOC) are the most common types of revolving credit. Keep reading to learn more about how revolving credit works, how it can affect your credit score and the difference between a revolving and non-revolving line of credit. Definition and Example of a Revolving Line of Credit A revolving line of credit is a preapproved loan or credit line that lets consumers and businesses borrow and repay money on a regular basis....

A company may spin off a subsidiary into a separate company if it believes the process will create more value for either the parent company, the spinoff company, or both. In some cases, company executives, board members, or major shareholders may recommend a spinoff if they feel the subsidiary is not a good fit under the parent company’s guidance, and could thrive as a separate company with independent leadership. Another common example for when a company may initiate a spinoff is if the parent company had tried to sell the division of the business, but it failed....

The listed stock exchanges in the United States are the New York Stock Exchange (NYSE) and the Nasdaq. The NYSE requires companies to maintain a share price of at least $4. The Nasdaq was the first electronic exchange allowing investors to buy and sell stock electronically, without a trading floor. Companies that are selling shares to the public market for the first time with an initial public offering (IPO) are most likely to use the Nasdaq....

Tax benefits can also apply to areas such as retirement planning. Many different types of retirement vehicles exist, and the tax benefits aren’t always the same, but they typically help you reduce your tax bill in the long run. Tax benefits generally work by affecting tax withholdings and tax filings. When you do your taxes, for instance, you might claim a tax benefit like the student loan interest deduction (assuming you meet income requirements) or a tax credit....

So while your trade date to sell 100 shares of a stock might be, say, Monday, August 23, 2021, the cash from the sale might not officially be settled into your account until the settlement date of Wednesday, August 25, 2021. Even if your account shows the cash from the transaction following the trade date, you might not be able to use the cash until the settlement date. The use of such funds to enter another transaction may entail what is termed as a “good-faith violation....

An accommodative monetary policy is often implemented during and after a crisis to provide support for the economy. The goal is to keep employment and prices as stable as possible while the situation gets resolved. While it has the major benefit of saving jobs, the low interest rates that result can hurt savers. If the policy steps are successful, the resulting strong economy could become inflationary. The goal is to give businesses access to low-cost funds while encouraging investors to take risks that will expand the economy over time....

Often, alpha is used to compare mutual funds against their expected return or to describe an investment manager’s performance. Positive alpha means better performance than the market, while negative alpha means worse performance. Find out how alpha works and why it’s important for investors to understand. Definition and Examples of Alpha Alpha describes the success of an investment strategy versus a similar benchmark. In other words, alpha shows how much an investment overperforms or underperforms its expected returns....

If no traditional heirs exist, then the assets can potentially be transferred to what are known as “collateral heirs” of the deceased, like siblings next-of-kin relatives like nieces and nephews. When a person dies, all potential heirs are notified, though that doesn’t necessarily mean they are entitled to assets. If the decedent had a will, the executor of the will is in charge of distributing those assets. After all potential heirs are identified and notified, a probate court decides who will receive the designated assets....

“All these are examples of opportunities to make your money work more effectively for you,” Hayduchok said. Hayduchok explained that you also may hear dead money referred to as “unproductive money” or “lazy money,” although “the term lazy really refers to the investor who is not taking steps to improve her or his situation,” Hayduchok said. While dead money is often viewed in a personal context, you may come across it in the business world, where hoarding cash on balance sheets is often viewed as a form of dead money....

Definition and Examples of Downside Risk Downside risk is the risk that an investment could lose value. This could mean a permanent loss of capital or simply the risk of a downturn over the next few weeks—it depends on the investor. Well-known value investor Charlie Munger famously noted that, to him, downside risk is either the permanent loss of capital or the risk of inadequate return. Munger and most other value investors take an extraordinarily long-term view of investments....

Here’s a simplified example: Say the fair market value of your home is $200,000 and you owe $150,000 on the mortgage. Your equity is, therefore, $50,000, assuming you sell the property for fair market value. How Does Home Equity Work? Home equity is your ownership of the house. To calculate your equity, take the home’s current value (what it would fetch in the real estate market) and subtract any liens (such as what you owe on the mortgage)....

Farm income works by calculating the amount that a farm business earns from several types of farming activities. Some examples can include selling: Livestock such as cows and pigsFruits and vegetablesCrops such as cotton All of these types of farming activities can generate farm income, such as for individuals operating sole proprietorships, S corporations, single-member LLCs, and a few other types of entities that might run these businesses. Farm income can also include several other sources of revenue, such as crop insurance proceeds or dividends from a farming cooperative....

Discover how hot money works, how it got its name, and whether this type of investment strategy fits into your investing comfort zone. Definition and Example of Hot Money While there is no official definition of the term “hot money,” it refers to something that happens in financial markets. It refers to the flow of funds (or capital) from country to country so investors can take advantage of higher interest rates....

To calculate demand elasticity, you divide the percentage change in the quantity demanded for a good by the percentage change in the price for that same good. For instance, if the price of bananas were to drop by 10% with a corresponding demand-quantity increase of 10%, the ratio would be 0.1/0.1 = 1. Elastic demand occurs when the ratio of quantity demanded to price is more than one. For example, if the price dropped 10%, and the amount demanded rose 50%, the ratio would be 0....

It spotlights the immorality of corporations using social issues to advance their brand. An example is Budweiser spending $5 million on a Super Bowl ad to advertise how it donated millions of cans of clean water for disaster relief efforts. Another example is Starbucks’ #racetogether campaign. Characteristics of Late Stage Capitalism Late stage capitalism describes the unrealistic perspectives of the wealthiest 1%. In the same vein, it highlights how the middle class is largely oblivious to the struggles of the poor....

The claims on the property don’t disappear if the property is sold, and they pass with ownership of the land or house. This means that should an individual purchase the property at hand, the new owner would have to face the lawsuit. Therefore, any potential buyers should be notified, via the lis pendens, of the claims against the property they’re considering. Lis pendens can be filed, for instance, while divorce proceedings are sorted out and a decision is made about the ownership of previously, jointly held property....

Many sources of risk bring this uncertainty, and they can be divided into two broad types: Market risk, also known as systematic, economic, or undiversifiable risk. Market risk affects all securities in a market, and cannot be eliminated through diversification. Company-specific risk, which is diversifiable or unsystematic risk. This type of risk does not affect all securities and can be reduced through diversification. Types of Market Risk Market risk is also called systematic risk because it is not unique to a particular investment....

Acronym: PPP Parity is tedious to compute. A U.S. dollar value must be assigned to everything. That includes items not widely available in America. For example, there aren’t too many ox carts in the United States. Also, it is doubtful that the cart’s U.S. price would accurately describe its value in rural Vietnam, where it’s needed to grow rice. The World Bank computes PPP for each country in the world. It provides a map that shows the PPP ratio compared to the United States....

If you were considering buying stock in a company, but you were worried that it was taking on more debt than it could handle, you could calculate the cash flow-to-debt ratio. That would allow you to see how the company’s operating cash flow measures up to its overall liabilities. How Do You Calculate the Cash Flow-to-Debt Ratio? To calculate a company’s cash flow-to-debt ratio, first figure out its annual operating cash flow....

Keep reading to learn how to assess both individual stocks and entire foreign stock markets using the CAPE ratio. Definition of the Cyclically Adjusted Price-to-Earnings Ratio Invented by Nobel prize-winning economist Robert Shiller, the cyclically adjusted price-to-earnings ratio is a way of assessing how a stock’s price compares to its company’s value. Unlike the standard price-to-earnings ratio, the cyclically adjusted price-to-earnings ratio attempts to better account for long-term trends. This can make it a valuable tool for U....