A deed of surrender will also specify conditions that must be met for execution. This may mean leaving the property in a certain way, such as the condition in which you found it. It can also mean that if you’ve missed a rent payment, you agree to repay all funds owed before the deed is signed. Alternate names: Deed of surrender of lease, end of tenancy agreement, agreement for termination of lease...
If the option is a call option, the option holder can exercise it to buy shares at the strike price. If it’s a put, they can exercise the option to sell shares. For example, on Jan. 1, if an investor buys a European put option for XYZ with an expiration date of June 30 and a strike price of $50, they will not be able to exercise that option until June 30....
Both terms come from the limit up-limit down rule, a marketplace rule created by the SEC to help protect futures contracts from unusual market volatility or unexpected events in U.S. equity markets. With these events, there are typically massive changes in commodity prices. The SEC aimed to stop this volatility by preventing trades that exceed the price bands established throughout that day’s trading hours for individual exchange-traded funds (ETFs) and stocks....
While merchant agreements are primarily for businesses, learn what effect they may have on you as a consumer and your finances. Definition and Example of a Merchant Agreement A merchant agreement is a contract that allows businesses to accept credit card payments for consumer purchases. It is a legal agreement between a business (merchant) and a financial institution, known as an acquiring bank, to accept and process bank card payments....
In this case, “volatility” means the same thing as “market risk.” The greater the volatility (the wider the swings up and down in price), the higher the market risk. So, if you want to minimize risk, you want to minimize the ups and downs for a greater chance of slow but steady returns over time. Doing so may also help you avoid a massive loss at some point. A minimum variance portfolio might contain a number of high-risk stocks, for example, but each from different sectors, or from differently sized companies, so that they do not correlate with one another....
Alternate definition: A company that regularly shares with the public certain business and financial information. How Does a Public Company Work? Companies that go public typically move through a series of regulatory steps the SEC requires. How Companies Go Public Companies go public through an initial public offering, more commonly known as an “IPO.” An IPO is the first time a company issues public securities. To issue an IPO, a company typically must file Form S-1 with the SEC, which is where it registers the securities it plans to sell....
Purchase money loans are often used by buyers who have trouble getting a traditional mortgage due to poor credit or by those who do not have enough cash for the down payment they need. Alternate definition: The term “purchase money loan” is sometimes used for any loan used to buy a home or property. This is to distinguish loans used for buying a property from home equity loans or refinanced mortgages....
You have to file a tax return in order to claim a refundable tax credit (or any kind of tax credit, for that matter). Another benefit of refundable credits is that they can offset certain types of taxes that normally can’t be reduced in other ways. They can help offset the self-employment tax, the surtax on early distributions of retirement savings, or even other surtaxes such as household employee taxes, the net investment income tax, or the additional Medicare tax....
With a reverse mortgage, the borrower is not required to make payments, and the balance can accrue until it is paid off when the house is sold either by the borrower or their heirs. The line of credit means that funding works similarly to a credit card in that the borrower can withdraw funds, up to their credit limit, as they need. Also like with a credit card, the balance can be paid down to free up that amount for future borrowing....
This flexible form of financing allows borrowers to access funds as needed. That makes a revolving loan facility a good option for businesses that have ongoing working capital needs. Learn more about how revolving loan facilities work and what alternatives you might have. Definition and Example of a Revolving Loan Facility A revolving loan facility is a type of credit issued by a financial company to, in most cases, a business....
Keep reading to learn how these alternative financial vehicles work, as well as some pros and cons. Definition and Example of a Rotating Savings and Credit Association A rotating savings and credit association is a group of individuals who act as an alternative financial institution. Each person contributes money toward a common fund, and the funds rotate through members at regular intervals. The member who borrows funds will eventually repay the debt back into the association so the next member can withdraw their funds, but the methods of borrowing and repaying may vary between associations....
Spot trading is attractive to investors who day trade because they can own short-term positions without the expiration date a derivative contract would otherwise have. For example, suppose you decide to invest in XYZ stock through your broker and submit a “market order,” where the payment occurs immediately and ownership of the investment occurs immediately. In that case, you are making a spot trade. Types of Spot Trading Markets There are essentially two different types of markets where you can make spot trades....
Creditor or lender’s namePartial account numberType of accountDate the account was openedDate of last activityCurrent balanceCredit limit or loan amountAmount of the last paymentDate the account was last updatedPayment historyCurrent account status There are two kinds of tradelines: revolving and installment. A revolving tradeline is a line of credit or a credit card account. These accounts let the borrower use credit as needed (up to their credit limit) over an extended time frame....
Here’s a closer look at how a turnkey solution works and when you may want to go with it instead of a custom option. Definition and Examples of a Turnkey Solution A turnkey solution (sometimes spelled “turn-key” or “turn key”) is any product or service that’s complete and ready for use. Turnkey solutions are common in real estate and business, but can refer to any ready-use product or process. For example, a South Carolina university developed online gardening courses and hands-on workshops for educators, including a “Turn Key School Garden Kit....
What Is Accident Insurance? Accident insurance is a type of insurance that only pays when the insured dies or suffers injuries in an accident. Accident insurance policies typically have a fixed payout amount and do not cover costs associated with illness. Accident insurance policies do not replace health or life insurance, but can supplement those coverages. Accident insurance is inexpensive, readily available, and fairly easy to obtain. Let’s say Jane has a $500,000 accident insurance policy....
To be considered an “accountable plan” by the Internal Revenue Service (IRS), the employer’s arrangement with employees must include all of the following: If all three of these requirements are not met, the plan is determined by the IRS not to be accountable. Accountable plans may include reimbursement for a number of different employee-related expenses, including travel expenses, meals, and equipment purchases. The accountable plan must include details on how employees account for their expenses....
If you hold stocks in your portfolio, it’s important to understand how an earnings estimate could affect their value. Learn how earnings estimates can be used to determine what a company is worth, which in turn can influence that company’s stock price. Definition and Example of Earnings Estimate An earnings estimate is a projection about the level of earnings a company will report on a quarterly, semiannual or annual basis....
Alternate name: Economic expansion In the United States, periods of economic recovery and recession are measured by the National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee, a group of economists who analyze data to mark the beginning and end of recessions. It looks at several factors, such as personal income, employment, personal consumption expenditures, and industrial production. NBER data goes back to 1857. It records the dates for when the economy peaks and troughs, as well as the periods between troughs and peaks, showing any recovery....
How Encumbrances Work The way encumbrances work varies, depending on the type. Some encumbrances, like liens, complicate property transfers. Others, like zoning laws, have minimal impact when you buy or sell property. When a property no longer has any encumbrances, it’s considered “unencumbered.” Here are common types of encumbrances and how they work. Deed of trust or mortgage When a homebuyer finances the purchase of a home, that financial transaction typically consists of two documents: the promissory note, which is an obligation to pay, and the mortgage or deed of trust, which secures the note and is recorded....
When creating policies, actuaries analyze the risk of insuring different groups of people based on their lifestyle, their health, where they live, and several other factors. Their work allows a company to offer plans that are priced in a way that still makes a profit. Insurance companies rely on actuaries to determine risk for life, property, liability, auto, home, and other insurance plans. How Insurance Actuaries Work To make money and stay in business, insurance companies need a way to assess risk....
