Response: EBIDA is used to gauge how profitable a company is when not considered some non-cashflow expenses. For instance, both depreciation and amortization are expensed over time not in line with when an initial investment and cash outlay may have occurred. Therefore, EBIDA gives an organization a better understanding of what its profitability is from a cash-generating standpoint.


Response: A high-growth enterprise is one that is successfully scaling up. The Organisation for Economic Cooperation and Development (OECD) defines it as having "an average annualized growth greater than 20% a year, over a 3-year period, and with 10 or more employees at the beginning of the observation period." In its definition, the European Union sets the growth threshold at 10%. The OECD also refers to such businesses as "scalers."


What Target-Date Fund Should I Pick If I Plan to Retire in a Year Not Ending in -5 or -0?

Response: Most target-date funds are established in 5-year intervals (e.g., maturing in 2030, 2035, 2040, 2045, and so on). There is no set rule if you plan to retire in say, 2033. You can round up to the 2035 fund, or if you have a lower risk tolerance, use the nearer-term 2030 one. You can also choose to put something like 60% of your allocation in 2035 fund and 40% in the 2030 fund.


Response: The U-1 unemployment rate is only one of six "alternative measures" of labor utilization in the U.S. that are published monthly by the Bureau of Labor Statistics.The alternative measures include:U-1: The percentage of the civilian labor force that has been unemployed for 15 weeks or longer.U-2: The percentage of the civilian labor force that lost jobs or completed temporary jobs.U-3: The percentage of the civilian labor force that is unemployed and has sought work in the past four weeks.U-4: The number of unemployed plus the number of discouraged job-seekers as a percentage of the total labor force.U-5: The total of the unemployed plus discouraged job-seekers plus marginally attached workers, as a percentage of the total labor force.U-6: All of the people counted in U-5 plus those working part-time due to economic conditions, as a percentage of the total labor force.


What Are the Component Indicators of the GPI?

Response: The GPI consists of 26 indicators, grouped into three categories (social, economic, and environmental). Each measures a different condition of the economy. Within the social category, you will find crime, family structure, academics, and more. In the environmental category, you will find pollution, climate change, and other factors that positively or negatively affect the environment.


Response: The five kaizen elements or principles are: know your customer, let it flow, go to gemba, empower people, and be transparent. People also sometimes ask what kaizen 5S refers to. It's a process often used in lean manufacturing and relates to five steps of improvement: Sort, Set in Order, Shine, Standardize, and Sustain. A 5S event follows each of these steps one day at a time.


Response: Yes, you are responsible for a deferred tax liability because RMDs are withdrawn from retirement accounts that had contributions made with pre-tax dollars. You must pay income tax on RMDs when they are taken (at your current tax bracket).


What Are the Advantages of Gilt-Edged Securities?

Response: The primary advantage of gilt-edged securities is their safety. They are low-risk investments with a better asset quality than equities, and as such, come with low yields, which can be seen as a disadvantage. To earn more yield, one would need to invest in higher-risk securities, such as stocks or high-yield bonds.


How Have Countries Developed Factor Conditions to Create a Better Economy?

Response: Japan has developed a competitive global economic presence beyond the country's inherent resources by producing a large number of engineers that have helped drive technological innovation in Japanese industries.


Response: There are a variety of ways to learn technical analysis. The first step is to learn the basics of investing, stocks, markets, and financials. This can all be done through books, online courses, online material, and classes. Once the basics are understood, from there you can use the same types of materials but those that focus specifically on technical analysis. Investopedia's course on technical analysis is one specific option.


What Are Some Criticisms of Trend Analysis?

Response: Critics of trend analysis, and technical trading in general, argue that markets are efficient, and already price in all available information. That means that history does not necessarily need to repeat itself and that the past does not predict the future. Adherents of fundamental analysis, for example, analyze the financial condition of companies using financial statements and economic models to predict future prices. For these types of investors, day-to-day stock movements follow a random walk that cannot be interpreted as patterns or trends.


What Happens When a Defined-Benefit Plan Is Underfunded?

Response: When a defined benefit plan is underfunded, it means that it does not have enough assets to meet its payout obligations to employees. If a plan is underfunded, then it must increase its contributions to be able to meet these obligations. A plan may allow for employees to increase their contributions or a plan may decide to reduce the payout for employees. This is usually the case if a plan is significantly underfunded rather than slightly underfunded; the latter of which may be due to temporary adverse market movements.


What Is a Deferred Tax Asset vs. a Deferred Tax Liability?

Response: A deferred tax asset represents a financial benefit, while a deferred tax liability indicates a future tax obligation or payment due.For instance, retirement savers with traditional 401(k) plans make contributions to their accounts using pre-tax income. When that money is eventually withdrawn, income tax is due on those contributions. That is a deferred tax liability.


Response: The general recommendation is for a startup business to have six to 12 months of expenses on hand. If the company has $100,000 in the bank, a good burn rate would fall between $16,667 (six months) and $8,333 (12 months).


What Does a Probability Density Function (PDF) Tell Us?

Response: A probability density function (PDF) describes how likely it is to observe some outcome resulting from a data-generating process. A PDF can tell us which values are most likely to appear versus the less likely outcomes. This will change depending on the shape and characteristics of the PDF.


What Industries Are Included in the Energy Sector?

Response: The Energy Sector includes companies that target oil, gas, coal, and consumable fuels through exploration and production, refining and marketing, and storage and transportation. The sector also includes companies that offer oil and gas equipment and services.


What Happens If I've Done My Part for a Contract Then Considered Void?

Response: When a contract is deemed void, it's as if the contract never existed legally speaking. Hence, anything you did under the void contract is generally not recoverable, and you can't seek restitution. However, it's best to consult with a legal professional about your particular situation to understand the possible remedies open to you.


Response: Insider trading is deemed illegal when the material information is still non-public and comes with harsh consequences, including potential fines and jail time. Material non-public information is defined as any information that could substantially impact that company's stock price.


Why Do Nonprofit Organizations Not Pay Taxes?

Response: Nonprofit organizations do not pay taxes because they are engaged in public or private interests. The purpose of a nonprofit is to further extend the benefit to a community; for this reason, the IRS recognizes and awards these entities tax-exempt as any collected taxes would be used for a similar purpose (i.e. would be redistributed to benefit the community).


Are there any other ways to Analyze Volatility?

Response: There are several ways to analyze volatility beyond skew and smile patterns. Some ways include using historical volatility, Volatility Indices, Generalized Autoregressive Conditional Heteroskedasticity (GARCH) models, volatility term structure, volatility surface and the Average True Range (ATR).


Response: The gold standard in the U.S. and many other nations was replaced by fiat money. Fiat money is the currency of a government, which is not backed by a commodity but has value because the government has determined that it does and that it must be accepted as a form of payment. Fiat money includes paper bills and metal coins.


What Are the Pros and Cons of Gold Options?

Response: Gold options allow traders to take out a position on gold using less up-front capital than they would by trading the physical metal or gold futures contracts. However, if gold prices move in an unfavorable direction, options can result in significant losses.


Response: Stockjobbers officially disappeared from British stock exchanges in October 1986, coinciding with a sudden deregulation of financial markets in the U.K. put into effect by then-Prime Minister Margaret Thatcher. This deregulation meant that stockjobbers were no longer needed to facilitate stock trades; while at the same time, efforts to introduce electronic, screen-based trading were enacted that further led to their obsolescence.


What Is the Difference Between Social Security and Supplemental Security Income (SSI)?

Response: Supplemental Security Income (SSI) is a separate program from Social Security. It provides monthly cash distributions to elderly or disabled people with little to no income to help them meet their basic needs. You can be eligible for both Social Security benefits and SSI.


Response: Assets may be described as liquid to explain that they have fluidity, have flexibility, and can easily change. As opposed more rigid assets that can't be easily exchanged for cash, fluid assets can easily change form and be quickly traded.


Response: An oversubscribed IPO is the opposite of an undersubscribed one. This means that the IPO has a lot of interest from investors. As such, demand far outweighs the available supply of shares. Underwriters can make changes to the offer price or they can increase the number of shares in order to meet demand.


Response: Loss given default (LGD) is the amount of money a financial institution loses when a borrower defaults on a loan, after taking into consideration any recovery, represented as a percentage of total exposure at the time of loss.


What Is a Common Dispute Among Tenants In Common?

Response: TIC tenants share equal rights to use the entire property regardless of their ownership percentage of the property. Maintenance and care are divided evenly despite ownership share. Problems often arise when a minority owner overuses or misuses the property.


How Do I Find Out About Encumbrances on a Property?

Response: You can request this specific information from your real estate agent or the seller. In addition, when you perform a title search, you should find out about any outstanding claims or liens.


What Are the Best Cash Back Credit Cards?

Response: Credit card deals change frequently, so it is worth taking time to research the latest deals. You can also check out Investopedia's review of the best credit cards currently available.


Response: Marxism is a philosophy, while communism is a system of government based on Marxist principles. Marx envisioned a society in which workers owned the means of production. In real-world communism, governments own the means of production.


What's the Difference Between On-Balance Volume and Volume-Price Trend?

Response: Volume-Price Trend (VPT) is similar to on-balance volume in that it measures the cumulative volume and provides traders with information about a security’s money flow. But whereas OBV looks at volume just according to whether the close was higher or lower, VPT looks at how much higher or lower it was. This helps determine a security’s price direction and strength of price change.


What Are Some Examples of Stock Tickers?

Response: Here are some examples of popular ticker symbols:Apple Inc. (AAPL)Alphabet Inc. (GOOGL)Microsoft Corporation (MSFT)Amazon.com, Inc. (AMZN)Meta (formerly Facebook) Inc. (META)Tesla Motors (TSLA)The Goldman Sachs Group, Inc. (GS)The Dow Jones Industrial Average (DJIA)The S&P 500 Index (SPX)The NASDAQ Composite Index (COMP)


Response: When a small company starts, it must create a capitalization strategy that outlines how the company will use its scarce resources to start operations. Based on initial forecasts, business owners may project how much financing they need to ensure profitability and sustainability until the company can be self-sustaining. Whether it is raising equity from a private investor, applying for debt, or contributing personal capital, these funding sources combined comprise of the capitalization strategy.


Response: A private equity fund is managed by a general partner (GP), typically the private equity firm that established the fund. The GP makes all of the fund's management decisions. It also contributes 1% to 3% of the fund's capital to ensure it has skin in the game. In return, the GP earns a management fee often set at 2% of fund assets, and may be entitled to 20% of fund profits above a preset minimum as incentive compensation, known in private equity jargon as carried interest. Limited partners are clients of the private equity firm that invest in its fund; they have limited liability.


Response: One example of a population might be all green-eyed children in the U.S. under age 12. Another could be all the great white sharks in the ocean.


Response: Home equity is the market value of your home minus any liens, such as the amount you owe on a mortgage or a home equity loan. The equity in your home can fluctuate based on real estate market conditions in the community or region where you live.


How Does the Forex Market Differ From Other Markets?

Response: The Forex is a decentralized market. It has no physical existence and no owner or management.There are no clearing houses or central bodies to oversee the forex. That means traders aren't held to strict standards or regulations, as are seen in the stock, futures, or options markets.It also means there are fewer fees and commissions to pay.


What Government Purchases Are Included in National Income Accounting?

Response: National income accounting includes government purchases, such as any federal, state, or local government spending. Government purchases includes infrastructure spending, such as buying steel for a project, and paying employees. However, transfer payments, such as Social Security payments, are not included.


Can You Protect an Inheritance from a Chapter 13 Bankruptcy?

Response: If you receive an inheritance within 180 days of filing Chapter 13 bankruptcy, your trustee may require you to pay the sum into your bankruptcy plan. It’s more complicated for inheritances received more than 180 days after a bankruptcy filing—most courts have ruled that these windfalls should be repaid to creditors, but some courts have allowed the inheritor to keep the money.


Is a Quanto Swap the Same as a Cross-Currency Swap?

Response: A quanto swap is not the same as a cross-currency swap, although there are some similarities. A typical cross-currency swap involves two parties that exchange principal and cash flows in two different currencies, along with predetermined interest rates. In a quanto swap, one party pays another at a foreign interest rate, but using a local currency.


Response: Heteroskedasticity in statistics is the error variance. This is the dependence of scattering that occurs within a sample with a minimum of one independent variable. This means that the standard deviation of a predictable variable is non-constant.


What Is the Downside of Filing for Bankruptcy?

Response: One downside of filing for bankruptcy is an immediate large and negative impact on your credit score. Bankruptcy will remain on your credit report for seven to 10 years. As a result, it will be more difficult and more costly to borrow money. Depending on the type of bankruptcy, you could lose assets like your home and car.


Response: Depending on the financial instrument, different parties may be the one to prepare the term sheet. For seed round investments, investors often provide a term sheet when offering their private investment. For loans, lending institution will often provide a term sheet to prospective borrowers.


Response: Typical non-compete periods are six months to one year, but they can last longer. However, it is difficult for businesses to enforce long-term non-compete agreements legally. Some states will not enforce these agreements, and a few do not recognize them as legal.


What Is the Internal Growth Rate Formula?

Response: The formula for the internal growth rate is (Retained Earnings ÷ Net Income) × (Net Income ÷ Total Assets).


Response: Pareto efficiency is commonly used to compare various economic outcomes of proposed policies. Though the Pareto test has limitations as to which one to choose, it can be an indicator to inform analysts which option is most efficient and allocates resources with the least amount of waste. It is also an important psychological concept that helps decision-makers realize which individuals will be better off and which will be worse off based on market efficiency.


What Does a Cup and Handle Pattern Indicate?

Response: A cup and handle is a technical indicator where the price movement of a security resembles a “cup” followed by a downward trending price pattern. This drop, or “handle” is meant to signal a buying opportunity to go long on a security. When this part of the price formation is over, the security may reverse course and reach new highs. Typically, cup and handle patterns fall between seven weeks to over a year.


Response: Form 1099-MISC is used to report certain miscellaneous compensation including rent, royalties, prizes, and awards, healthcare payments, and payments to an attorney.


Response: MPS can be used to understand how government spending and investment may influence saving and what the economic impact of the spending and investment might be.


What's the Difference Between a Last Will and Testament and a Living Will?

Response: A living will does not have anything to do with the transfer of assets upon death. Also known as a healthcare directive, this legal document allows an individual (while they are alive and mentally capable) to empower another person to make decisions about their medical care if the person signing the living will becomes incapacitated. Healthcare proxies can communicate with the patient's doctors to prevent unwanted treatments and make sound decisions on their behalf.


Response: Modus operandi is Latin, where it may be translated literally as "way of operating."


How Does Capitalization Impact Leased Equipment?

Response: For leased equipment, capitalization is the conversion of an operating lease to a capital lease by classifying the leased asset as a purchased asset, which is included on the balance sheet as part of the company's assets. Leases over twelve months must be capitalized as an asset and recorded as a liability on the lessee's books.


Response: Payday loans are usually meant to be paid off in one lump-sum payment when you get your paycheck. Because of this, the interest rate on these loans is fixed. In fact, many payday lenders don’t even express their charges as an interest rate, but they instead charge a fixed flat fee that can be anywhere from $10 to $30 per $100 borrowed.


Response: Establishing a trust can have benefits and drawbacks depending on your financial situation. If you have significant assets and wish to create a legacy of wealth for your family, a dynasty trust might be a good idea. It's best to talk to an attorney familiar with trusts to see if one works for your circumstances.


Response: Determining the next-of-kin and inheritance varies by jurisdiction. In the United Kingdom, inheritance matters are handled as per succession laws. In other countries, the laws about next-of-kin help settle the estates of people who die intestate. The right of someone to inherit or receive property in the U.S. by inheritance exists by way of state laws and legislative action.


What Does an Uptick in Bond Yields Mean?

Response: An uptick in bond yields means the returns that an investor will receive from investing in the bond will be higher. When the yield of a bond goes up, its price goes down.


What Is the Best Time Frame To Use for the Bearish Engulfing Pattern?

Response: The ideal time frame for using the bearish engulfing pattern largely depends on your trading style, objectives, and risk tolerance. Longer time frames generally offer more reliable signals but may require more patience and capital, while shorter time frames enable you to move more quickly but have a greater chance of not panning out. Traders often incorporate additional indicators and risk management techniques to improve the pattern's reliability, regardless of your chosen time frame.


Response: You must open an account with a brokerage firm to trade index futures. Once your account is open, choose the index you want to trade and decide whether to go long (you believe the price will increase) or short (you think the price will decrease). Keep an eye on your contract as it nears the expiration date.


Is Negative Correlation Better Than Positive Correlation?

Response: For some investors, negative correlation is better than positive correlation. This means that investors are exposed to less risk, have the chance to invest in different types of securities, and often experience less portfolio volatility. For others, negative correlation means hedging their investment which minimizes potential gains.


What did the Housing and Economic Recovery Act (HERA) do?

Response: The Housing and Recovery Act (HERA) addressed some of the most important shortcomings of the mortgage lending industry following the 2008 financial crisis and housing collapse. The purpose of HERA is to prevent the circumstances that could result in a repeat of the crisis, including predatory lending.


Response: A well-diversified portfolio includes as many sectors as possible and does not concentrate too many funds into a single sector or related sectors. Investors can employ the five percent rule with sector funds. To diversify within specialty sectors, such as biotech, commercial real estate, or gold miners, investors keep their allocation to 5% or less for each.


Response: You can collect Social Security retirement benefits at full retirement age while continuing to work, but your benefits will be temporarily reduced if you begin collecting Social Security before your full retirement age and you earn over $22,320 in 2024.There's no limit on how much you can earn while collecting full benefits beginning with the month and year in which you reach your FRA, but $1 will be deducted for every $3 you earn over $59,520 in 2024 up to the month before you reach FRA. These earnings thresholds are periodically adjusted to keep pace with inflation.


What's the Difference Between Social Democracy and Democratic Socialism?

Response: Social democracy is based on maintaining a capitalist economic system but blunting its excesses via regulation and addressing inequality with government-run social programs—in a sense, humanizing capitalism. Social democracies exist today in Denmark, Finland, Norway, and Sweden.Democratic socialism has a vision of a society and economy that is democratic, not authoritarian, in which individuals have more of a say than large corporations in how the economy is run. It is committed to finding ways to transform an economy from capitalism to socialism. As the website of the Democratic Socialists of America notes, "Our vision pushes further than historic social democracy and leaves behind authoritarian visions of socialism in the dustbin of history... We want to collectively own the key economic drivers that dominate our lives, such as energy production and transportation."


What Is a Capital Account vs. Equity Account in Accounting?

Response: A capital account in accounting refers to the financial assets that a company is able to spend in a given period. An equity account is the portion that shareholders would receive in a liquidation event—when a company's assets are sold and its debts are paid off.


How Can You Get a Better Purchase APR on a Credit Card?

Response: When you're looking for a new credit card, it pays to shop around. You'll also improve your odds of getting the best rate if you have a strong credit score. Fortunately, there are a number of things you can do to raise your credit score and keep it up there. Also consider cards with low introductory interest rates. Just remember to pay off your balance before the promotional period ends and the card starts charging its full rate.


Response: PoW requires nodes on a network to provide evidence that they have expended computational power (i.e., work) to achieve consensus in a decentralized manner and to prevent bad actors from overtaking the network.


What Are the Risks Associated With Investing in ETPs?

Response: Investing in ETPs carries various risks, including market risk, liquidity risk, tracking error, and specific risks associated with the underlying assets. Market conditions, geopolitical events, and interest rate changes can impact ETPs' performance. In many ways, an ETP can be considered similar to a stock. Consider all the ways a business can face risk—an ETP is susceptible to similar risks.


Response: According to the Pew Research Center, “millennial” applies to anyone born from 1981 through 1996.


Response: Depending on the company, different parties may be responsible for preparing the balance sheet. For small privately-held businesses, the balance sheet might be prepared by the owner or by a company bookkeeper. For mid-size private firms, they might be prepared internally and then looked over by an external accountant.Public companies, on the other hand, are required to obtain external audits by public accountants, and must also ensure that their books are kept to a much higher standard. The balance sheets and other financial statements of these companies must be prepared in accordance with Generally Accepted Accounting Principles (GAAP) and must be filed regularly with the Securities and Exchange Commission (SEC).


Where Was Tapering Evident in Response to the 2007-2008 Financial Crisis?

Response: Tapering by the Fed followed the massive QE program implemented in reaction to the 2007-08 financial crisis. Tapering was evident in June 2013 when the former Chair of the Fed, Ben Bernanke, announced that the Fed would reduce the number of assets purchased every month as long as economic conditions, such as inflation and unemployment, were favorable.As 2013 drew to a close, the Federal Reserve Board concluded that QE, which had increased the Fed's balance sheet to $4.5 trillion, had achieved its intended goal, and it was time for tapering to commence. The process of tapering would involve making smaller bond purchases through October 2014.


What Does a White Line in a Candlestick Chart Represent?

Response: A white line in a candlestick chart represents a closing with a higher price than the open but without much price fluctuation during the period. Candles are taller when there is a greater price spread so when a candle is flat and looks like a line, it is because of nominal price movement during the period.


Response: Bond duration measures the change in a bond's price when interest rates fluctuate. If the duration is high, the bond's price will move in the opposite direction to a greater degree than the change in interest rates. Conversely, when this figure is low, the debt instrument will show less movement to the change in interest rates.


How Does the Graham Number Work in Value Investing?

Response: The Graham number takes a company's per-share metrics and normalizes it based on a recommended upward limit for value investors of 15x P/E and 1.5x P/B.


What's the Difference Between the Use Tax and the Sales Tax?

Response: A sales and use tax are ultimately the same thing. They are both applied to goods and services. The difference lies in how they're calculated and who pays them. While a sales tax is applied at the time a purchase is made and is collected and remitted to the government by the seller, a use tax is calculated and paid by the consumer or end user. The rate, however, is generally the same as the local/state sales tax.


What Does Discharge of Lis Pendens Mean?

Response: If you receive a discharge of lis pendens, it means your property no longer has a claim or lawsuit against it.


Response: The partners own the partnership. Ideally, the partnership will create a partnership agreement that, among other things, states who the partners (owners) are as well as the profit allocation percentage for each.


Why Do You Need a Letter of Testamentary?

Response: A letter of testamentary is important since it is issued by the probate court, assigning the executor or executrix named in a person's will with the legal power to act on behalf of the deceased person's estate. The letter of testamentary, along with the person's death certificate, is usually needed in order for the executor to conduct financial transactions on behalf of the estate.


Can You Have a Negative Liquidity Premium?

Response: Yes, it's possible to have a negative liquidity premium. This can occur when the yield curve inverts, meaning longer-term bonds offer less yield than short-term ones. This is uncommon, and investors often view it as a sign that the wider economy is not faring well.


Response: A mom-and-pop store is a small, often family-owned-and-operated business that maximizes its profits by providing personalized, interactive services for its customers, curating its inventory to fit a local need. Examples include bookstores, grocery stores, delicatessens, bakeries, restaurants, auto repair shops, insurance agencies, gift shops, ice cream emporiums, butcher shops, clothing boutiques, drug stores, card shops, and more.


What Are Some of the Largest Custodian Banks?

Response: Bank of New York (BNY) Mellon, JPMorgan Chase, State Street, and Citigroup are among the largest custodian banks in the U.S. Some of the best-known custodian banks overseas include the Bank of China, Credit Suisse and UBS (Switzerland), Deutsche Bank (Germany), Barclays (England), and BNP Paribas (France).


Response: Generally, the higher the PI the better. A profitability index greater than 1.0 is often considered to be a good investment, as it means that the expected return is higher than the initial investment. When making comparisons, the project with the highest PI may be the best option.


What Types of Activities Can Be Found in Research and Development?

Response: Research and development activities focus on the innovation of new products or services in a company. Among the primary purposes of R&D activities is for a company to remain competitive as it produces products that advance and elevate its current product line. Since R&D typically operates on a longer-term horizon, its activities are not anticipated to generate immediate returns. However, in time, R&D projects may lead to patents, trademarks, or breakthrough discoveries with lasting benefits to the company.


Response: Average daily trading volume (ADTV) is the average amount of shares traded each day for a given stock. It can be a useful metric because high or low trading volume attracts different types of traders. Traders and investors can use ADTV to assess liquidity, analyze volatility, optimize trade execution, and manage risk. ADTV can be used alongside OBV and other indicators to evaluate the market's activity.


What Are the Major Changes Between Basel III and Basel IV?

Response: The Basel IV standards are a set of recommendations to financial regulators that were adopted in 2017 and started to take effect in January 2023. These recommendations fine-tune the calculations of credit risk, market risk, and operations risk. They also enhance the leverage ratio framework for certain banks, and other reforms.


Response: The benefits of microfinance extend beyond the direct effects of giving people a source for capital. Entrepreneurs who create successful businesses can then offer jobs and trade to help improve their community. Additionally, the International Finance Corp. (IFC) has helped establish or improve credit reporting bureaus in 30 developing nations. It also has advocated for adding relevant laws that govern financial activities in developing countries.


Response: A finder's fee may be paid if someone plays a role in helping another person transact business.


Response: Corporate philanthropy is the act of giving to charitable causes and/or organizations by corporations. The most common way of giving through a corporation is by donating money but there are other ways to do so. Some of them include volunteering (like when employees donate their time to charities), scholarships, community investments, and sponsorships.


What's The Maximum Interest Rate Allowed By Law?

Response: The maximum interest rate will vary from state to state based on each geographical location's legislation. Some states do not have interest rate limits for some types of loans. In addition, some states currently have very lax restrictions. For example, New Mexico has presented a House bill to reduce the APR on loans up to $5,000 from 175% APR to 36% APR on loans up to $10,000.


Response: Gamma hedging is a strategy that tries to maintain a constant delta in an options position. This is done by buying and selling options in such a way as to offset each other, resulting in a net gamma of just around zero. At such a point, the position is said to be gamma-neutral. Often, a trader will want to maintain zero gamma around a delta-neutral (zero-delta) position as well. This is done via delta-gamma hedging, where both net delta and net gamma are close to zero. In such a case, an options position's value is immunized against price changes in the underlying asset.


What Is Enterprise Value-to-Sales (EV/Sales)?

Response: Enterprise value-to-sales (EV/sales) measures how much it would cost to purchase a company's value in terms of its sales. A lower EV/sales multiple indicates that a company is a more attractive investment as it may be relatively undervalued. Essentially, it uses enterprise value and not market capitalization like the P/S ratio. Enterprise value adds debt and preferred shares to the market cap and subtracts cash. Since it does account for a company's debt load, the EV/Sales ratio is said to be superior, although it involves more steps and isn’t always as readily available.


Response: A good mission statement is concise. It should be limited to one sentence, though it shouldn't be too limiting as it should encompass the entire company's purpose. A good mission statement also focuses on the long-term goal it wishes to deliver to customers.


What Causes Volatility in Exchange Rates?

Response: According to the Dornbusch Overshoot model, exchange rates are volatile because forex markets are highly sensitive to changes in monetary policy, while goods prices are more slow to react. As a result, when monetary policy changes, exchange rates will fluctuate until goods prices adjust to the new equilibrium.


Response: To calculate the prime cost formula, take the direct raw materials costs and add them to a business's direct labor costs, both found on the balance sheet.


Response: To start a sole proprietorship, you generally have to launch your business. It is useful to choose a company name. Depending on your business and local regulations, you may need to apply for a permit or license with your city, county, or state. If you plan to hire employees, you will need an employee identification number from the IRS. If you are going to sell taxable products, you will need to register with your state for a sales tax license.


What Is a Real Estate Agent vs. a Real Estate Broker?

Response: Real estate agents and brokers can perform many of the same tasks for home sellers and buyers. The prime difference between them is that while agents have met the necessary tests to become a licensed agent in their state, brokers have taken additional training and passed the exam for a broker's license. Many brokers employ multiple agents in their offices.


Response: A falling wedge pattern is seen as a bullish signal as it reflects that a sliding price is starting to lose momentum, and that buyers are starting to move in to slow down the fall.


What Is the Main Goal of Using a Cost-Benefit Analysis?

Response: The main goal of cost-benefit analysis is to determine whether it is worth undertaking a project or task. This decision is made by gathering information on the costs and benefits of that project. Management leverages the findings of a cost-benefit analysis to support whether there are more benefits to a project or if it is more detrimental to a company.


Response: The SEC is an independent federal agency that is headed by a bipartisan five-member commission, comprised of the Chairman and four Commissioners who are appointed by the President and confirmed by the U.S. Senate. The SEC is accountable to Congress as it operates under the authority of federal laws including the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), among others.


Response: The CPI value for the base year is always 100 because it is a starting point to measure changes in price. A basket of goods in future years will be compared to the base year to measure the increase/decrease in price.


Are Limited Liability Companies Taxed Differently Than Corporations?

Response: Yes. In the case of a corporation, profits are first taxed at the corporate level and then taxed a second time once those profits are distributed to the individual shareholders. This double taxation is decried by many businesses and investors.Limited liability companies, on the other hand, allow the profits to be passed directly to the investors so that they are taxed only once, as part of the investors’ personal income.


How Are Locked-in Retirement Accounts (LIRAs) Taxed?

Response: The money in a locked-in retirement account (LIRA) continues to grow tax-deferred until it is withdrawn.


Response: No. Critical thinking is an important soft skill. You can study and practice critical thinking, but it cannot be “learned” in the same way you can teach yourself to use accounting software.


Response: Cycles in the market tend to have cycles lasting 6-12 months on average. However, fiscal policy in either the United States or world markets can have a widespread effect on the length of a market cycle. The average is 6 to 12 but if, for example, the Federal Reserve were to drastically cut interest rates, it could prolong a market trending upward for a period of years.


Response: Accumulated depreciation is a contra asset that reduces the book value of an asset. Accumulated depreciation has a natural credit balance (as opposed to assets with a natural debit balance). However, accumulated depreciation is reported within the asset section of a balance sheet.


Which Type of Average Is Best Suited to Compounding?

Response: There are different types of average (mean) calculations used in finance. When computing the average returns of an investment or savings account that has compounding, it is best to use the geometric average. In finance, this is sometimes known as the time-weighted average return or the compound annual growth rate (CAGR).


Response: According to the Bible, the Lord has made several covenants. At the highest level, God has promised to humanity that he will one day return to Earth and grant everlasting life. The Bible also outlines several other covenants where God has made a promise to mankind that may or may not require action on humanity's part.


What Credit Score Do I Need for a Conventional Loan?

Response: Fannie Mae says conventional loans typically require a minimum credit score of 620, but it can vary by lender. Banks may be more willing to lend to people with a significant down payment.


Which Countries Have the Highest Debt-to-GDP Ratios?

Response: As of 2022 (latest data), Japan had the highest general government debt-to-GDP ratio of the countries for which the IMF had available data, at 261.3%. Next was Greece, with a reading of 177.4%. The U.S. was fifth with a debt-to-GDP ratio of 121.4%.


Response: Any investment is ultimately judged by its rate of return, whether it's a certificate of deposit, a share of stock, or a government bond. APY allows an investor to compare different returns for different investments on an apples-to-apples basis, allowing them to make a more informed decision.


What Type of Business Is a Limited Partnership?

Response: Businesses that form a limited partnership generally own or operate specific assets, such as the property owned by a real estate investment partnership.One party (the general partner) has control over the assets, manages the business, and can be held personally liable for its debts. The other participants (limited partners) are investors who have no role in management and are not responsible for its debts beyond the amount of their investment.


At What Age Is Social Security No Longer Taxed?

Response: Your Social Security benefits could theoretically be tax-free once you reach full retirement age, which is around 66 or 67, depending on your year of birth. But that's only if they're your sole source of income. More specifically, if your overall gross income is $25,000 or above ($32,000 if married filing jointly), they are taxable, at your ordinary income tax rate.


Response: Most portfolio analysts focus on the standard deviation of the portfolio as a whole to get the best picture of the range of outcomes in the portfolio. Standard deviation is the square root of the variance and provides a more realistic look at the level of risk of the portfolio. The higher the standard deviation, the more volatile a portfolio is likely to be, and vice versa.


What Are Smart Contracts in Simple Terms?

Response: Smart contracts are apps on a blockchain that make each side of a transaction complete its part. For example, a smart contract could initiate a fund transfer with a third party to verify that the transfer took place.


How long does it take for a check to bounce?

Response: Generally speaking, a check for an amount greater than $225 won’t clear until two or more business days after it’s deposited at a bank. In the same vein, it typically takes at least two business days for a bad check to bounce.


Response: The three sections of generally accepted auditing standards are General Standards, Standards of Field Work, and Standards of Reporting.


Response: The triple top is a bearish reversal chart pattern that leads to the trend change to the downside. On the other hand, the triple bottom pattern is a bullish reversal chart pattern that leads to the trend change to the upside.


What Did Ben Bernake Do During the Financial Crisis?

Response: To counter the effects of the financial crisis of 2008, Bernake employed a low-rate policy—whereby rates were reduced to practically nothing—and a quantitative easing plan to increase the money supply. Bernake also bailed out many large, failing financial institutions.


Response: A startup can obtain a loan from a bank, certain organizations, or friends and family. One of the best and first options should be working with the U.S. Small Business Administration, which provides microloans to small businesses. The average SBA loan is $13,000 and the max loan amount is $50,000. These loans are usually from nonprofit community lenders and can be easier to obtain than traditional loans from banks.


Response: Data analytics has been adopted by several sectors where turnarounds can be quick, such as the travel and hospitality industry. Healthcare is another sector that combines the use of high volumes of structured and unstructured data, and data analytics can help in making quick decisions. The retail industry also uses large amounts of data to meet the ever-changing demands of shoppers.


Response: A poison pill, which is officially known as a shareholder rights plan, is a common defense against a hostile takeover.


Can You Start Affiliate Marketing With No Money?

Response: Yes, several free platforms and affiliate networks are available for little or no money. Instead, you will need a large online following through efforts such as blogging or social media posting.


What Is the Difference Between Neoclassical and Keynesian Economics?

Response: Neoclassical economic theory believes that markets will naturally restore themselves. Prices, and therefore wages, will adjust on their own in response to changes in consumer demand. Keynesian economic theory does not believe markets can adjust naturally to these changes. It encourages using fiscal and monetary policy to impact the economy, specifically by slowing the economy during booms and stimulating it during recessions.


Response: The LLC has two main advantages:It prevents its owners from being held personally responsible for the debts of the company. If the company goes bankrupt or is sued, the personal assets of its owner-investors cannot be pursued.It allows all profits to be passed directly to those owners to be taxed as personal income. This prevents the double taxation of both the company and its individual owners.


What Is the Difference Between a Trader and a Dealer?

Response: A dealer is a specialized type of trader who commits to continuously make two-sided markets in the securities that they deal in. This means that they will always be posting both a bid and an offer. The goal is to trade frequently enough with both buyers and sellers in the market to generate profit from the bid-ask spread.Traders, on the other hand, need not make two-sided markets and can buy or sell as they please. In this respect, non-dealer traders are considered to be price takers (instead of market makers). Traders do not profit from the bid-ask spread, but instead hope for the market to move in their favor in order to exit the trade at a favorable price later on.


Response: While we can report the deadlines U.S. regulators have given, a "wait and see" approach might be in order. Since the Basel III Endgame process began, bank requests for more time to digest and comment on the plans, COVID-19, and shifts in the post-pandemic economy have all pushed back the deadlines. As it stands now, the regulations should start taking effect July 1, 2025, followed by a three-year phase-in period to give banks time to transition to the new rules. While previous deadlines have come and gone, the commentary period is over, which offers U.S. federal regulators more room to maneuver in going ahead with implementation.


How Has Nelson Peltz Donated to Political Fundraisers?

Response: Nelson Peltz has donated to the presidential elections of George W. Bush and Donald Trump.


What Did Adam Smith Say About the Invisible Hand?

Response: Adam Smith wrote about an invisible hand in his writings during the 1700s, noting that the mechanism of an invisible hand benefits the economy and society thanks to self-interested individuals. Smith mentions "an" invisible hand, which is the automatic pricing and distribution mechanisms in the economy that interact directly and indirectly with centralized, top-down planning authorities.


Response: A VIF equal to one means variables are not correlated and multicollinearity does not exist in the regression model.


Response: A valid oral contract consists of an offer, usually a price or a promise for some action to be taken, and an acceptance; an agreement accepting the offer in exchange for payment or service. There need not be more information involved in an oral contract than just the offer and the acceptance of that offer.


Response: The typical payout for a viator ranges from 50% to 70% of the face amount. The main variable in the calculation is your life expectancy.


Response: It depends. Broadly speaking, a product may be designed for a mass market or a niche market, and a niche market can be a very small group indeed, especially in a product's early introductory phase.Some carbonated beverages aim for a practically universal market. Coca-Cola had to branch out to 200 markets abroad to continue growing its customer base. Gatorade is owned by Pepsi Cola, but the brand is positioned as a drink for athletes. The soda brand Poppi, which is branded as a "Healthy, Sparkling, Prebiotic Soda with Real Fruit Juice, Gut Health, and Immunity Benefits," is clearly aimed at a younger, healthier, and more trend-conscious target market.


Response: A “bait and switch” is a scam to mislead buyers, whereby a seller advertises an appealing but ingenuine offer to sell a product or service that the seller does not actually intend to sell. Instead, the seller offers a sub-par, defective, or unwanted alternative.


Who Are Some Famous Contrarian Investors?

Response: Berkshire Hathaway's Warren Buffett and Charlie Munger are two of the most well-known contrarian investors. David Dreman, investment company founder and author of several books on contrarian investing, is another prominent contrarian. Ray Dalio, Sir John Templeton, Michael Burry, and George Soros are all investors who have made a name for themselves as contrarians.


How Does Emigration Affect the Sending Country's Economy?

Response: Emigration can have a mixed impact on the sending country's economy. While remittances from emigrants can boost household incomes and local businesses, a departure of skilled workers may result in lost economic potential. The overall effect depends on factors such as the skill level of emigrants, the volume of remittances, and the country's ability to replace lost talent.


What Is the Difference Between Contribution Margin and Profit Margin?

Response: Profit margin is calculated using all expenses that directly go into producing the product. Contribution margin only takes into account variable costs.


Where Can I Find Reports on Leading Indicators?

Response: The reports are issued by various government agencies and other organizations. Certain business publications (e.g., the Wall Street Journal) will publish a calendar of upcoming announcements as well as the actual data. Some of the entities responsible for the data include the The Conference Board (Consumer Confidence Index), the U.S. Department of Labor (jobless claims), and the U.S. Census Bureau (durable goods orders).


What Investments Are Considered Safe Havens?

Response: Investors look to safe havens to offer protection against market downswing or upheaval. Investment vehicles that may be considered safe havens are gold, cash, and U.S. Treasury bonds.


How Do You Calculate the Cost of Equity?

Response: There are two primary ways to calculate the cost of equity. The dividend capitalization model takes dividends per share (DPS) for the next year divided by the current market value (CMV) of the stock, and adds this number to the growth rate of dividends (GRD), where Cost of Equity = DPS ÷ CMV + GRD. Conversely, the capital asset pricing model (CAPM) evaluates if an investment is fairly valued, given its risk and time value of money in relation to its anticipated return. Under this model, Cost of Equity = Risk-Free Rate of Return + Beta × (Market Rate of Return – Risk-Free Rate of Return).


Response: HOA fees vary drastically, but some estimates claim these fees range from $100 to $1,000 per month, with the average ranging from $200 to $300. The amount of an HOA fee varies based on the type of property and the amenities it provides—the more services and amenities, the higher the fees. In some cases, owners face higher fees when an association’s reserve fund isn’t managed correctly.


Response: Some of the most common examples of price controls include rent control (where governments impose a maximum amount of rent that a property owner can charge and the limit by how much rent can be increased each year), prices on drugs (to make medication and health care more affordable), and minimum wages (the lowest possible wage a company can pay its employees).


Response: Sensitivity analysis in NPV analysis is a technique to evaluate how the profitability of a specific project will change based on changes to underlying input variables. Though a company may have calculated the anticipated NPV of a project, it may want to better understand how better or worse conditions will impact the return the company receives.


Response: An offset in a payment is a reduction in the total amount owed. It occurs when one party successfully argues that the amount due should be reduced due to some compensation owed to the payer.


What Is the Difference Between an Industry and a Sector?

Response: A sector is a broader term than industry. For example, consumer goods is a sector. This sector can then be broken into many different consumables such as clothes or personal health. Therefore, sectors are often further divided into industries that further group similar companies based on an even lower level of detail regarding their products and operations.


Response: A debt instrument is used to raise capital. It involves a binding contract in which an entity borrows funds from a lender and promises to repay them according to the terms outlined in the contract.


How Can You Lose Money on a Long Strangle?

Response: If you are long a strangle and the underlying does not move past the strikes involved, both options will expire worthless and you will lose what you paid for the strategy.


What Is the Main Advantage of the Herfindahl-Hirschman Index (HHI)?

Response: The primary advantage of the HHI is the simplicity of the calculation and the small amount of data required for the calculation. Also, firms are weighted according to their size, which makes the HHI superior to other measures, like the concentration ratio.


Response: The two systems have the same goal: clarity and honesty in financial reporting by publicly-traded companies.IFRS was designed as a standards-based approach that could be used internationally. GAAP is a rules-based system used primarily in the U.S.Although most of the world uses IFRS standards, it is still not part of the U.S. financial accounting world. The SEC continues to review switching to the IFRS but has yet to do so.Several methodological differences exist between the two systems. For instance, GAAP allows a company to use either of two inventory cost methods: First in, First out (FIFO) or Last in, First out (LIFO). LIFO, however, is banned under IFRS.


Response: Funds that can be transferred electronically sometimes are called mobile money. The funds typically are connected directly to a bank account or they might be in the form of a prepaid gift card or prepaid debit or credit card. Apps like PayPal or Venmo are common examples electronic payment services that function similarly to M-Pesa.


How Does Inflation Impact the Value of Money?

Response: Inflation reduces the future value of current money. The value of a dollar today is worth less than it will be in the future because prices go up. The same dollar today will be able to buy fewer goods and services in future years. Money is always worth more now than it is in the future, particularly due to the investment capability of money.


Response: It's a system of banking whereby a portion of all money deposited is held in reserve to protect the daily activities of banks and ensure that they are able to meet the withdrawal requests of their customers. The amount not in reserve can be loaned to borrowers. This continually adds to the nation's money supply and supports economic activity. The Fed can use fractional reserve banking to affect the money supply by changing its reserve requirement.


Response: Household income is the total gross income received by all members of a household within a 12-month period. This figure comprises the earnings of everyone under the same roof who is age 15 or older, whether they're related or not. Sources include wages, salaries, retirement income, investment income, Social Security benefits, and earnings from other income sources.


How Are Probability Distributions Used in Finance?

Response: There are two main ways in which probability distributions are used in finance: (1) to estimate the returns of an investment asset and (2) to determine the possibility of loss events, which will allow the investor to hedge their risk.


Response: Covered interest arbitrage is when someone engaging in arbitrage purchased a forward currency contract in order to hedge risk regarding exchange rate fluctuations. Due to purchasing a forward contract to offset risk, the financial gains of covered interest arbitrage transactions tend to be lower than those of outright arbitrage. This style of trading usually demands a high volume of trades to be markedly profitable.


What Is the Largest Stock Exchange in the World?

Response: The New York Stock Exchange (NYSE) remains the largest stock exchange in the world in terms of the market capitalization of the companies listed on it. The NASDAQ ranked second, followed by the Shanghai Stock Exchange, and the Euronext.


Response: In healthcare settings, AI is used to assist in diagnostics. AI can identify small anomalies in scans to better triangulate diagnoses from a patient's symptoms and vitals. AI can classify patients, maintain and track medical records, and deal with health insurance claims.


Why Do Companies Choose a Reverse Morris Trust?

Response: When a company is looking to focus on its core operations and sell assets in a tax-efficient manner, it may choose a reverse Morris trust. This allows the parent company to raise money and help reduce its debt while selling unwanted business assets. This type of transaction can be useful to companies that are highly indebted.


Response: In 1971, a company called Starbucks opened its first store in Seattle’s historic Pike Place Market. At the time, it might have been able to claim to be an SME. But with Starbucks locations now all over the world, the company can no longer make that claim. That option has passed to other coffee shops, such as Lighthouse Roasters, an independent and locally owned coffee roaster. With a single address in Seattle, Lighthouse Roasters is considered an SME.


What Is the Difference Between a Real or a Nominal Interest Rate?

Response: A real interest rate is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor. A nominal interest rate refers to the interest rate before taking inflation into account. Nominal can also refer to the advertised or stated interest rate on a loan, without taking into account any fees or compounding of interest.


Response: A bank's reserves are calculated by multiplying its total deposits by the reserve ratio. For example, if a bank's deposits total $500 million, and the required reserve is 10%, multiply 500 by 0.10. The bank's required minimum reserve is $50 million.


Response: A feasibility study may be conducted by a team of the organization's senior managers. If they lack the expertise or time to do the work internally it may be outsourced to a consultant.


What Is the Importance of the Personal Consumption Expenditures Number?

Response: The personal consumption expenditures number shows how Americans collectively spend their money. Tracked from month to month, it is an indicator of the economy's health overall. It also is a key component of the PCE Price Index, which tracks inflation or deflation in consumer prices over time.


How Do I Apply for a Homestead Exemption?

Response: Go directly to your county or local tax assessor's website for details on available homestead tax exemptions. Some states require that you fill out an application but they're often available online. Make sure you comply with your state's application deadlines.Be aware that some sites may be fraudulent and may request payment to fill out an application for you. Your county or local tax assessor will not require you to pay a fee to fill out an application for a homestead tax exemption.


Response: Some multiplier effects are simply the product of metric analysis as one number is compared to another. In other cases, the multiplier effect is a product of public policy or corporate governance. For example, the government may establish boundaries on how many times a deposit may be cycled through an economy. These regulations are often in place to restrict the multiplier effect; otherwise, financial institutions may become encumbered with too much risk.


Response: Many Y-share classes have no fees for purchasing the shares, but charge a management fee. Y-share classes do tend to have a high minimum investment threshold—$25,000 or more, however.


What Happens to an Out of the Money Option at Expiration?

Response: At expiration, out of the money options expire worthless.


Response: Retained earnings are a type of equity and are therefore reported in the shareholders’ equity section of the balance sheet. Although retained earnings are not themselves an asset, they can be used to purchase assets such as inventory, equipment, or other investments. Therefore, a company with a large retained earnings balance may be well-positioned to purchase new assets in the future or offer increased dividend payments to its shareholders.


What Is the Process for Listing a Public Company in the OTC Market?

Response: To be able to trade in the OTC market, a company must be sponsored by a market maker. The market maker will sponsor the issue as market makers are the only ones allowed to apply to have a quote listed.


Response: Because of its criticisms, several alternative models to the capital asset pricing model have been developed to understand the relationship between risk and reward in investments.One of these is arbitrage pricing theory (APT), a multi-factor model that looks at multiple factors, grouped into macroeconomic or company-specific factors.Another is the Fama-French 3-factor model, which expands on CAPM by adding company-size risk and value risk factors to the market risk factors.In 2015, Fama and French adapted their model to include five factors. Along with the original three factors, the new model adds the concept that companies reporting higher future earnings have higher returns in the stock market, a factor referred to as profitability. The fifth factor, referred to as "investment", relates the concept of internal investment and returns, suggesting that companies directing profit towards major growth projects are likely to experience losses in the stock market.


Response: CPAs compile, maintain, and review financial statements and related transactions. They also prepare tax returns for individuals and businesses. They are authorized to perform audits.Some CPAs specialize in areas like forensic accounting, personal financial planning, and taxation.A CPA is required to complete continuing education requirements and uphold a standard of professional ethics.


Response: A delinquent status means that you are behind in your payments. The length of time varies by lender and the type of debt, but this period generally falls anywhere between 30 to 90 days.


When I Place a Deposit for Goods or Services, Do I Get the Money Back?

Response: This depends on your agreement. In many rental agreements, a security deposit is held to ensure that there is no damage to a property. This may also be the case in renting equipment. The deposit may be returned if the item or space is returned in the same condition. For other items, a deposit may be used a partial payment on the balance due.


Response: Bureaucracies can help organizations run smoothly and efficiently. This allows large organizations to streamline processes and bring order to systems and procedures. Management becomes easier and processes become less chaotic. Bureaucracies tend to include a division of labor with clearly defined roles. They also ensure that everyone is treated equally and fairly, which means there is no bias toward any one entity. For instance, the government makes everyone fill out the same (often cumbersome) paperwork for benefits like student loans.


Response: Forex trading can be risky and complex, involving quick decisions due to how fast exchange rates change. It is likely not suited for beginner traders; however, traders can spend time learning forex trading with test trading or with low levels of capital.


How Long Does the Triple Top Pattern Take to Form?

Response: As other major reversal patterns, the triple top pattern usually form over a three- to six- month period.


Is It Better to Buy Before or After the Ex-Dividend Date?

Response: While it might seem to make sense to buy before the ex-dividend date so you can receive the dividend, buying after has perks, too. That's because the market usually adjusts the stock price to reflect the dividend payout, meaning you'll typically see a reduction in price equal to the amount of the dividend.


Why do governments keep exchange rates high?

Response: Governments, especially in developing economies, seek to manage exchange rates to balance their ability to pay debts denominated in foreign currencies. Because investors generally prefer instruments denominated in more stable currencies, governments in developing economies often raise funds by issuing bonds denominated in U.S. dollars, Japanese yen, or euros.However, if the value of the domestic currency falls vs. the currency in which its debt is denominated, that effectively increases the debt, as more local currency is needed to pay it. So, when the Thai baht lost half of its value in 1997, that meant local borrowers needed twice as many baht to pay debts denominated in U.S. dollars. As many developing countries also rely on imports, a higher-valued local currency also makes those imports cheaper in local currency terms.


How Do Day Traders Use the Opening Range?

Response: Day traders frequently use the trading range of the first half hour of the trading session as a reference point for their intraday strategies. For example, a trader might buy a stock if it breaks above its opening trading range.


Response: Yes, an information ratio can be negative. If the investment is returning below the benchmark, then the information ratio will be negative.


How Did Gambling in Las Vegas Influence Bill Gross?

Response: As an avid blackjack player in Las Vegas, Gross noted that it gave him a “sense of risk” and taught him to avoid placing too many high-stakes bets, citing “although the odds were many times in my favor, if you took too much leverage and had too much debt then the house of cards will come tumbling down.”


What Impact Does a Greenshoe Option Have On Investors?

Response: Greenshoe options can essentially result in more shares being available to buy at the IPO stage, opening the doors up to more participants. They can also reduce initial share price volatility.


What Is the Regulation Letter for the HMDA?

Response: The Home Mortgage Disclosure Act falls under the Federal Reserve's Regulation C. This regulation requires the annual disclosures of residential mortgage loan data from financial institutions. Data reported includes details about applicants and loan types among others. The data is used by different entities, including regulators and watchdogs, who ensure that lenders are meeting the needs of the communities they serve.


What Are the 4 Major Types of Insurance?

Response: There are insurance products for almost everything, but for most people, there are four types of insurance products that are seen more than any other. Life insurance, auto insurance, health insurance, and long-term disability insurance are those that cover most of an individual's risk factors. Once someone owns significant property like a house or something high-value like jewelry or other collector items, they will need additional policies tailored to these individual items. However, most people who rent will own the four major types listed above.


Is an Annual Report the Same As a 10-K Filing?

Response: In general, an annual report is similar to the 10-K filing in that both report on the company's performance for the year. Both are considered to be the last financial filing of the year and summarize how the company did for that period. Annual reports are much more visually friendly. They are designed well and contain images and graphics. The 10-K filing only reports numbers and other qualitative information without any design elements or additional flair.


What Is the Difference Between Market-Cap Weighted ETF and a Smart Beta ETF?

Response: Most major indexes like the S&P 500 and the Russell 1000 Index are market-cap weighted, with the largest companies having the largest weight index. Smart Beta employs strategies that include equal weighting, fundamental weighting, minimum variance, and low volatility.


Response: A population mean is the average of whatever value you're measuring in a given population.


Response: A comparative market analysis can reveal a property's fair price range; however, it is not considered by lenders or real estate experts to be as good or accurate a method as an appraisal by a licensed and certified appraiser.


Response: This will depend on the time frame for which the budget is being prepared. A short-term cash budget of a few weeks will only account for day-to-day expenses related to funding and supplying a company's operations, while a cash budget for a quarter or longer might also account for larger expenses like equipment, capital investment, and corporate taxes. In each case, any remaining cash surplus at the end of one budget period will be carried on to the beginning of the next.


What Happens When You Withdraw Cash From Life Insurance?

Response: If you make a withdrawal from the cash value in a life insurance policy, the death benefit will decrease. If you withdraw everything, the policy terminates. Withdrawing money from life insurance is tax-advantaged in that the IRS considers your withdrawals a return of the premiums you paid for the policy. So you can withdraw that amount of money without paying taxes. Any gains from dividends or interest, however, would be taxed—but these would not occur until after you've withdrawn all your premium payments.


How Do You Fight Termination of Employment?

Response: You may not be able to fight termination of employment if you were let go for a legitimate reason, such as restructuring or theft of company property. But if you believe you were terminated without just cause, there are some steps you can take.Make sure you understand why you're being terminated. If you can, appeal the decision with your employer or the company's human resources department. Request copies of documents, including your employment contract, any communications between you and your employer regarding your performance, as well as your employment file. If you have a union, contact your representative. You can also consult an employment lawyer to take your case to court if you have a case.


How Do You Use a Double Exponential Moving Average?

Response: Like any moving average, the double exponential moving average is designed to trigger a buy or sell signal based on the price movements over time of a given asset. The signal is triggered by a sustained change upwards or downwards of the asset's price.


What Are the Main Functions of Financial Markets?

Response: Financial markets exist for several reasons, but the most fundamental function is to allow for the efficient allocation of capital and assets in a financial economy. By allowing a free market for the flow of capital, financial obligations, and money, the financial markets make the global economy run more smoothly while allowing investors to participate in capital gains over time.


Can the IRS Deny an Injured Spouse Claim?

Response: Yes, the IRS may determine that someone filing Form 8379 is ineligible for an injured spouse allocation, or that they are not entitled to as much as they believe. When the IRS receives a claim, they will calculate the injured spouse's share of the tax return, based on state laws and the circumstances surrounding each case.


What Is the Difference Between a Spinning Top and a Doji?

Response: Spinning tops and dojis both represent indecision. Dojis are smaller, with small real bodies and small upper and lower shadows. The spinning top has long upper and lower shadows. Both patterns occur frequently and are sometimes used to warn of a reversal after a strong price move. Both types of candlesticks rely heavily on confirmation. A strong move after the spinning top or doji tells more about the new potential price direction than the spinning top or doji itself.


What Is the USA Patriot and Terrorism Reauthorization Act?

Response: Many of the Patriot Act’s requirements were set to expire in 2005 and despite continued civil liberties and privacy concerns, President George W. Bush signed the USA Patriot and Terrorism Reauthorization Act on March 9, 2006, continuing the use of the provisions already in place.


Does My Loan Agreement With a Family Member Have to Be Notarized?

Response: No. While notarization may take it the next step, your written and signed agreement is legally binding on its own.


What are the benefits of a municipal bond?

Response: Although municipal bonds may have lower interest rates than riskier investments like corporate bonds or stocks, they offer stability for your capital with low default rates. Interest from munis is also generally exempt from federal taxes, making it an attractive investment.


Response: The fiscal year of the U.S. government runs from Oct. 1 to Sept. 30. It is not the same as a calendar year.


What Is the Best Indicator to Use With ADX?

Response: The ADX works best when combined with other technical indicators, like the relative strength index (RSI). While the ADX measures the intensity of the trend, the RSI can help with entries and exits by giving a time-based component to the trend.


How Is Disinflation Different from Deflation?

Response: The key difference between disinflation and deflation is that the former is always positive but decreasing, while the latter is always negative.


What Is the Difference Between a Giffen Good and an Inferior Good?

Response: The term Giffen goods, named after the Scottish economist Sir Robert Griffin, refers to goods whose demand increases even if prices rise, largely because there are few substitutes or alternatives for them. A classic example of a Giffen Good would be a basic food staple, such as rice. If consumers have no choice but to purchase the staple, they will continue to do so, even if it becomes more expensive. In fact, because these purchases will consume a greater share of their income, demand for Giffen goods will actually increase with higher prices: The limits on disposable income make slightly higher options even more out of reach.


Response: Hot wallets can be safe if you use them only to transfer digital currency. When the cryptocurrency you're not going to use is in cold storage, there is no risk of loss if the hot wallet is accessed.


Response: "Adverse" means unfavorable or harmful. Adverse selection is therefore when certain groups are at higher-risk because they lack full information. In fact, they are selected (or choose to select) to enter into a transaction precisely because they are at a disadvantage (or advantage).


Response: Haircut value is the lower-than-market valuation placed on an asset when the asset is being used as collateral for a loan. The haircut value is externally determined, and the asset holder often does not have a say in the determination of the haircut value.


What's the Difference Between Inheritance and IRD?

Response: Inheritance is property bequeathed to you by a decedent. Income in respect of a decedent, or IRD, is income that was owed to the decedent but wasn't received by them due to their death. Instead, that income may go to the beneficiary. For example, a required minimum distribution from an IRA (that you are to inherit) that was to be made to the decedent the year the decedent passed away will go to you. While you don't normally owe taxes on inheritance, you will owe taxes on IRD that you receive.


How Do You Know If a Stock's Price Will Go Up?

Response: The best answer to this question is that nobody knows whether a stock's price will go up or down. However, analysts and investors can leverage information to make the best, most strategic decision to follow general information related to the stock. In general, if the fair value of a stock is less than the current price of the stock, the price will go down. On the other hand, companies with higher fair values as determined by the market will go up.


Response: Pareto efficiency is a state of the economy where resources cannot be reallocated to provide more advantages for one individual without making at least one individual worse off. Pareto efficiency implies that resources are allocated in the most economically efficient manner. However, this state does not guarantee equality or fairness.


Response: The median annual salary was $49,980 for real estate sales agents and $62,190 for real estate brokers in 2022, according to the U.S. Bureau of Labor Statistics. However, salaries for agents can vary significantly depending on experience and location. These professionals make money primarily through commissions on property sales, which means their income can fluctuate based on the real estate market and the size and number of deals they close. It's also the case that many real estate agents do so part-time, and experience and skill can vary widely—and also the pay.


How Reliable Is the Bearish Engulfing Pattern?

Response: The reliability of the bearish engulfing pattern varies based on several factors, including market conditions, the asset being traded, and your broader trading strategy. Some factors that could increase its reliability include volume analysis, confirmatory indicators, and the overall market context and environment.


Response: Due diligence is a process or effort to collect and analyze information before making a decision. It is a process often used by investors to assess risk. It involves examining a company's numbers, comparing the numbers over time, and benchmarking them against competitors to assess an investment's potential in terms of growth.


Response: Various studies have been published on the shrinking middle class. Results vary depending on the country being analyzed, the timeframe being examined, and the criteria of the study. In 2020, the Pew Research Center claimed that the share of American adults living in middle-income households decreased from 61% in 1971 to 51% in 2019. The OECD, meanwhile, said in 2019 that the share of people in middle-income households—defined as households earning between 75% and 200% of the median national income—across OECD countries fell from 64% in the mid-1980s to 61% in the mid-2010s.


What Is the Difference Between Face Value and a Bond’s Price?

Response: A bond’s face value is fixed, often issued in $1,000 denominations. By contrast, its price fluctuates in response to market interest rates, time to maturity, and the issuer’s credit rating. A bond may be priced above par, or below par based on these conditions. For example, if interest rates increase, bond prices will decline, trading at a discount to face value in the secondary market.


Response: A household expenses ratio, used for budgeting, is different from a housing expense ratio, which is focused on the cost of housing compared to your income and is used by lenders. In contrast, a household expense ratio includes daily living costs like groceries, utilities, and other necessary expenses. Ideally, your household expense ratio should be lower than 50%.


What Are Examples of Nonbank Financial Companies?

Response: There are many types of NBFC. Some of the most familiar are:Casinos and card clubsSecurities and commodities firms (e.g., brokers/dealers, investment advisers, mutual funds, hedge funds, or commodity traders)Money services businesses (MSB)Insurance companiesLoan or finance companiesOperators of credit card systems


Response: Instead of using EBITDA, EBITDAR is used by companies that recently underwent restructuring. The goal of EBITDAR is to eliminate these one-time restructuring costs to allow management an easier opportunity to analyze financial performance. EBITDAR is also used by casinos, restaurants, or other businesses that typically pay rent. Companies that want to strictly look at financial performance relating to more controllable aspects of operations may choose to internally eliminate rent for better analysis.


Response: Some of it is stashed in a vault at the bank. Reserves also may be kept in the bank's account at one of the 12 regional Federal Reserve Banks. Some small banks keep part of their reserves at larger banks and tap into them as needed. This flow of cash between vaults peaks at certain times, like during holiday seasons when consumers withdraw extra cash. Once the demand subsides, the banks ship off some of their excess cash to the nearest Federal Reserve Bank.


Response: KPI is an abbreviation for key performance indicator: data that has been collected, analyzed, and summarized to help decision-making. KPIs may be a single calculation or value that summarizes a period of activity, such as “450 sales in October.” By themselves, KPIs do not add any value to a company. However, a company can use this information to make more informed decisions about business operations and strategies.


What Is the Difference Between Fixed-Income and Equity Securities?

Response: Fixed-income securities are debt instruments that pay interest to investors along with the return of the principal amount when the bond matures. Equity, on the other hand, is issued in the form of company stock and represents a residual ownership stake in the firm, and not a debt. Equity does not have a maturation date, and while it may pay a dividend makes no guaranteed payments to investors. In general, equity is a higher-risk/higher-return security than a company's bonds.


What Is the Difference Between Information Ratio and Tracking Error?

Response: An information ratio will inform an investor if the portfolio manager or investment is generating enough returns in comparison to the risk taken. A tracking error will inform how much the investment's returns deviate from the benchmark.


Response: Yes, mortgage bonds still exist. While mortgage-backed securities (MBSs) had a bad image after the financial crisis in 2008 due to many MBSs consisting of subprime loans, MBSs are an important aspect of the financial markets. They provide liquidity, free up the balance sheets of banks, support the housing market, and provide investors the ability to invest in home real estate.


Response: A job or workplace quota refers to the number of jobs allocated to underrepresented members of certain groups. For example, a company may decide it wants a workforce that mirrors the community or customers it serves. As a result, it may institute a quota to hire a certain number of women or a certain number of persons with disabilities.


What Role Does High-Frequency Trading (HFT) Play in Arbitrage?

Response: HFT has a large role in modern arbitrage strategies. HFT involves the use of sophisticated algorithms to execute a large number of orders at extremely high speeds. For arbitrage, HFT allows traders to capitalize on fleeting price discrepancies that may exist only for fractions of a second across different exchanges or between different securities. These algorithms can analyze market conditions, execute orders, and then exit those positions within the blink of an eye, often before the market has had the chance to correct these inefficiencies.


Response: If you believe your party on a contract has repudiated the contract, you can terminate the contract as an acceptance of the repudiation, or you may simply continue with the contract.


What Are the 3 Main Monetary Tools of the Federal Reserve?

Response: The Federal Reserve's three primary monetary tools are reserve requirements, the discount rate, and open market operations. The reserve requirement stipulates the amount of reserves that member banks must have on hand, the discount rate is the rate at which banks can borrow from the Federal Reserve, and open market operations is the Fed's buying or selling of U.S. Treasuries.


How Long Do You Have to Answer a Margin Call?

Response: Brokerage firms typically give customers two to five days to come up with the cash after a margin call, according to FINRA.


How Do I Become a Certified Information Systems Auditor?

Response: To become a CISA, you must pass an exam hosted by the ISACA, meet application requirements, and earn continuing education credits upon achieving certification. In addition, you must act in accordance with the ISACA's ethical and professional standards.


Response: The components of an ERP system depend on the organization's needs. However, there are key features that each ERP should include. Generally, packages include finance, human resource, logistics and manufacturing, supply chain management, and customer relationship management.


Which Markets Do Firms Use to Raise Capital?

Response: Companies that raise equity capital can seek private placements via angel or venture capital investors but are able to raise the largest amount through an initial public offering when shares list publicly on the stock market for the first time. Debt capital can be raised through bank loans or via securities issued in the bond market.


How Do You Calculate the Deposit Multiplier?

Response: Take the Federal Reserve's reserve requirement for banks. Divide that figure into 1. The result is the amount of new money that could be created. So, say the Fed's reserve requirement is 18%. The deposit multiplier would be 1/.18, or 5.55. That means for every $1 in bank reserves, $5.55 could be added to the money supply. The lower the reserve requirement, the greater the amount of money that can be created (because more money is available to be lent).


How Can Alternative Investments Be Useful to Investors?

Response: Some investors seek out alternative investments because they have a low correlation with the stock and bond markets, meaning that they may maintain their values in a market downturn. Also, hard assets such as gold, oil, and real property are effective hedges against inflation. For these reasons, many large institutions such as pension funds and family offices seek to diversify some of their holdings into alternative investment vehicles.


What Does an Indifference Curve Explain?

Response: An indifference curve is used by economists to explain the tradeoffs that people consider when they encounter two goods that they wish to buy. Because people are constrained by a limited budget, they cannot purchase everything. Instead, a cost-benefit analysis must be considered. Indifference curves visually depict this tradeoff by showing which quantities of two goods provide the same utility to a consumer (i.e., where they remain indifferent).


Response: In many localities and states, public tax debt can be sold through auctions known as "tax lien sales." At auctions, third parties can bid on liens and buy them from munipalities and states. After such a transfer occurs, the property owner will owe unpaid taxes and interest to the third-party purchaser of their lien going forward. A good understanding of tax lien investing and the local real estate market is important.


Response: New assets are typically more valuable than older ones for a number of reasons. Depreciation measures the value an asset loses over time—directly from ongoing use through wear and tear and indirectly from the introduction of new product models and factors like inflation. Writing off only a portion of the cost each year, rather than all at once, also allows businesses to report higher net income in the year of purchase than they would otherwise.


What Is a Quasi Contract in Simple Words?

Response: A quasi contract is an obligation between two parties created by a court order rather than an agreement between the parties to prevent enrichment.


Response: To prepare a trend analysis as a trader, you will typically need to follow these steps:Identify the security or market you want to analyze: Decide which security or market you want to analyze in order to identify trends that could inform your trading decisions. This could be a specific stock, bond, currency, commodity, or other financial instrument, or it could be a broader market index or sector.Gather the data: Collect data on the security or market you have identified. This may involve accessing financial statements, downloading market data, or accessing databases or other sources of data.Organize the data: Organize the data in a way that makes it easy to analyze. This could involve creating spreadsheets, charts, or graphs to visualize the data.Analyze the data: Use your chosen method of analysis to identify trends in the data. This could involve looking for patterns in the data, calculating statistical measures such as averages or standard deviations, or using graphical tools such as charts to identify trends.Interpret the results: Once you have identified trends in the data, interpret the results to determine what they mean for your trading decisions. This could involve making predictions about the future direction of the security or market, identifying risks or opportunities, or making recommendations for buying, selling, or holding the security.Use the results to inform your trading decisions: Use the insights gained from your trend analysis to inform your trading decisions. This could involve adjusting your portfolio, placing trades, or making other decisions based on the trends you have identified.


What Is the Difference Between Horizontal Integration and Vertical Integration?

Response: Horizontal integration is the strategy of acquiring other companies that reside along a similar area of the supply chain. For example, a manufacturer may acquiring a competing manufacturing firm to better enhance its process, labor force, and equipment.Vertical integration occurs when a company acquires a company outside of their current position along the supply chain. For example, a manufacturer may acquire a retail company so that the manufacturer can not only control the process of making the good but also selling the good as well.


What Are the Key Factors Affecting Insurance Premiums?

Response: Insurance premiums depend on a variety of factors, including the type of coverage being purchased by the policyholder, the age of the policyholder, where the policyholder lives, the claim history of the policyholder, and moral hazard and adverse selection. Insurance premiums may increase after the policy period ends or if the risk associated with offering a particular type of insurance increases. It may also change if the amount of coverage changes.


Response: A life annuity is an insurance contract that provides a guaranteed income for life, typically in return for a lump-sum payment.


What if you think you’re a beneficiary of a death benefit?

Response: Try to find out from the policyholder whether or not you’re named as a beneficiary—don’t rely on the insurance company to tell you. You can request information from the National Association of Insurance Commissioners’ Life Insurance Policy Locator Service about whether you are a beneficiary on a life insurance policy. To claim a benefit, beneficiaries must submit death claim forms with a copy of a death certificate to insurers.


Response: To activate a debit card PIN, you often must enter your card at an ATM or use it in a transaction. You may be prompted to enter the debit card number, then you can follow the instructions to set your PIN. In other cases, you may be given a phone number to call to verify and activate your card. As part of that phone call, you may be asked to establish a PIN.


What Are the Income Levels of Countries?

Response: The World Bank breaks down countries as a classification based on their gross national income (GNI) per capita. Its four main categories are low income, low-middle income, upper-middle income, and high income.


What Is the Annual Gift Exclusion for 2022?

Response: The annual exclusion for gifts is $16,000 for 2022 and $17,000 in 2023. That means you can give up to $16,000 or $17,000 tax-free to as many people as you wish without using any of your lifetime gift and estate tax exemption.


Response: A cafeteria plan refers to a suite of fringe benefits that allow employees to choose among them. Often, these benefits will come out of pre-tax dollars and may include insurance plans, and retirement benefits. The name cafeteria is used because it is akin to a menu of benefits that can be selected or passed over, such as at a cafeteria buffet.


How Much Is a Lawyer Retainer Fee in the US?

Response: Retainer fees vary by specialty, ranging from hundreds to thousands of dollars depending on what they are retained for.


Response: Passive income is defined by the IRS as any earnings from a rental property, limited partnership, or other business in which a person is not actively involved in the business. Common forms of passive income include rents, royalties, interest, dividends, and capital gains.


What Does the U.S. Department of Housing and Urban Development Do?

Response: The Department of Housing and Urban Development is responsible for administering programs that provide housing and community development assistance, while also ensuring access to fair and equal housing for all.


Response: Compensation is a fair synonym for remuneration. It implies total payments. Salary or wages may be only one part of remuneration.


What Was JCPenney’s Failed Blue Ocean Strategy?

Response: In 2011, JCPenney made a spectacular strategic blunder under its new CEO, Ron Johnson, who attempted to pivot the company towards a blue ocean strategy. At the time, JCPenney had some financial struggles but was still regarded as an industry leader for value shopping. Johnson attempted to differentiate JCPenney to a more upscale clientele, with in-store boutiques and exclusive merchandise. At the same time, he did away with the clearance racks and coupons that attracted the company's most loyal customers.To make matters worse, rather than testing the changes on a small group of experimental stores, Johnson implemented them in all 1800 JCPenney stores. After less than 18 months at the helm, JCPenney fell out of the S&P 500 Index and Johnson was fired.


How are NOL carryforwards accounted for?

Response: NOL carryforwards are recorded as an asset on the company’s general ledger. A deferred tax asset is created for the NOL carryforward, which is offset against net income in future years. The deferred tax asset account is drawn down each year, not to exceed 80% of net income in any one of the subsequent years, until the balance is exhausted.


What Is an Example of Negative Feedback?

Response: One example of a negative feedback loop that occurs constantly is the body's method of maintaining its internal temperature. The body senses an internal change (such as a spike in temperature) and activates mechanisms that reverse, or negate, that change (the activation of the sweat glands).


What Changes Require Additional Undewriting?

Response: If you increase the death benefit amount, the insurance company may require additional underwriting before approving the change. Substantial face amount increases may require a medical exam and full medical underwriting.


Which States Allow Credit Card Surcharges?

Response: Credit card surcharging is a fee structure that allows credit card companies to charge consumers to process transactions. Although surcharging isn't illegal across the United States, there are certain jurisdictions where companies can't impose these fees on their customers, including Connecticut, Massachusetts, and Puerto Rico. Anti-surcharging laws are limited or cannot be enforced in California, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Utah.


Response: Compound probability looks to determine the likelihood of two independent events occurring. Compound probability multiplies the probability of the first event by the probability of the second event. The most common example is a coin flipped twice and finding if the second result will be the same as the first.


What Is the Difference Between Allocational Efficiency and Distributive Efficiency?

Response: Allocational efficiency is the optimal distribution of goods in an economy that meets the needs and wants of society. Distributive efficiency occurs when goods and services are consumed by those who need them most and focuses on the equitable distribution of resources.


Response: A bank identification code, which is also known as a bank identifier code, is a special code made up of eight to 11 digits. It is an international standard that identifies a bank or non-financial institution whenever someone makes an international purchase or transaction. A BIC can be connected or non-connected. The former is part of the SWIFT network and is called a SWIFT code, while the latter is generally used for reference only.


Response: A broker is essentially a middleman. Brokers match buyers with sellers, complete the transaction between the two parties, and pocket a fee for their service.If you use an online brokerage to buy stock, there's no human standing between you and the transaction. The brokerage software makes the match.If you use a full-service brokerage, the process is much the same, except that someone else is pressing the keys on the keyboard. However, the full-service brokerage may have identified a good investment opportunity, discussed it with the client, and acted in the client's behalf in making the transaction.


Why is the term ‘first world’ contentious?

Response: “First world” is a problematic term because it is outdated. First coined during the Cold War, it referred to countries that were allies of the United States—mostly other westernized countries, as opposed to countries that aligned with the former Soviet Union. Because the economic indicators used to define the first world vary by their perspective, the first world can represent an opaque concept of a country’s economic stature. For instance, despite Saudi Arabia having per capita income that is nearly equal to Portugal’s, it is often considered a second world nation.