What Types of Information Does Managerial Accounting Compute?

Response: Managerial accounting is useful for companies to track and craft spending budgets, reduce costs, project sales figures, and manage cash flows, among other tasks.


Response: The primary reason Jordan pegged its currency to the USD is for the same reason that any country would do so: financial stability. The USD is one of the most stable and widely circulated currencies. As such, its value does not fluctuate wildly. By pegging its currency to the USD, Jordan stabilizes its currency and its financial system. Having a stable currency and financial system attracts more investment, which grows a country's economy and the quality of life for its citizens.


Response: Domiciles can be any house or apartment, condominium, or co-op. It is the place where you plan to live indefinitely. You can have more than one residence, but your domicile is your "forever" home.


What Is the Retirement Plan for Teachers?

Response: Teachers, whether for public or private schools, will have access to defined-benefit pension plans. Through the state's Teacher Retirement System, teachers can access the retirement plans offered to them. Teachers can and should also contribute to defined contribution plans, such as 403(b) plans and 457(b) plans. Most teachers are not likely to qualify for Social Security as they do not pay into the system.


Do investments with higher risks yield better returns?

Response: Not necessarily. The appropriate risk-return tradeoff depends on a variety of factors, including an investor’s risk tolerance, the investor’s years to retirement, and the potential to replace lost funds. Time also plays an essential role in determining a portfolio with the appropriate levels of risk and reward. According to risk-return tradeoff, invested money can render higher profits only if the investor is willing to accept a higher possibility of losses.


is Social Media Part of the Technology Sector?

Response: Social media is an industry within the technology sector. Some of the most well-known tech companies are those that run social media platforms, such as Meta and X. Many of these tech companies pursue other projects in addition to social media, so they can belong to other industries within the technology sector as well.


What Is the Purpose of the Production Possibilities Frontier in Economics?

Response: Because the PPF is a curve based on the data of two variables representing resources between two goods, the data can be manipulated to observe how scarcity, growth, inefficiency, efficiency, and other factors can affect production.


Response: An enrolled agent is one that represents taxpayers in front of the Internal Revenue Service (IRS). To become an enrolled agent, one needs to pass an IRS test that covers individual and business tax returns or through experience by being a former IRS employee. Enrolled agents can represent any type of taxpayer over any tax matter in front of any tax department in the IRS.


What Does It Mean to Not Boil the Ocean?

Response: Saying "don't boil the ocean" means don't take on more than can realistically be accomplished in a given time period, or don't set yourself up to fail. As a warning, it plays on the idiom "boiling the ocean."


What Is the Difference Between DLT and DeFi?

Response: Decentralized finance (DeFi) builds off of DLT solutions. DeFi allows for users to enter into many familiar transactions offered by traditional banking solutions. However, these trades, loans, or investments are made without a centralized intermediary.


Response: Yes, LEAPS involve risk and you can lose up to your full investment when purchasing one if it ultimately expires worthless. Selling LEAPS is also risky as you are exposed to theoretically unlimited losses if the underlying security moves against you.


What Are the Disadvantages of a Dynasty Trust?

Response: You lose control of all assets within the trust because it becomes irrevocable. Additionally, you cannot change the terms of the trust once it is created.


What are the back office's main responsibilities?

Response: In short, the back office exists to finalize the transactions conducted by the front office. This includes confirming transactions and settlement instructions with the back office of the counterparty. The back office is also responsible for trade clearances, record maintenance, accounting, and IT services.


Do all primary beneficiaries have to die before assets move to the contingent beneficiary?

Response: Yes. If there is more than one primary beneficiary and one of them dies, their portion is split among the other primary beneficiaries. All primary beneficiaries must be deceased or disclaim their inheritances before the assets pass to the contingent beneficiary.


Which EU Countries Supported the PIIGS Bailout?

Response: The leaders of France and Germany, as the core industrial economies of the European Union, played a key role in providing debt relief for the peripheral economies and restoring the confidence of the international credit markets. In addition, the European Central Bank also provided important rescue packages.


Response: A qualified lead, or sometimes a sales-qualified lead, is a potential customer who has moved through the sales pipeline. Their information has been acquired as a sales lead, and they have demonstrated enough interest that the sales team can work to turn them into an active customer.


What Is the Difference Between Joint Tenancy With Right of Survivorship and Joint Tenancy?

Response: The primary difference between a joint tenancy with the right of survivorship and a joint tenancy is that the former passes ownership to any surviving parties rather than to their heirs or other beneficiaries. It also avoids probate and gives each party equal access and an equal stake along with equal responsibility for the property.


Response: If a company's ROE is negative, it means that there was negative net income for the period in question (i.e., a loss). This implies that shareholders are losing on their investment in the company. For new and growing companies, a negative ROE is often to be expected; however, if negative ROE persists it can be a sign of trouble.


Why Do Businesses Invest in Capital Goods?

Response: When businesses invest in capital goods, companies expand and produce additional products or services.


Does the Stock Split Make the Company More or Less Valuable?

Response: Stock splits neither add nor subtract fundamental value. The split increases the number of shares outstanding, but the company's overall value does not change. Immediately following the split the share price will proportionately adjust downward to reflect the company's market capitalization. If a company pays dividends, the dividend per share will be adjusted accordingly, keeping overall dividend payments the same. Splits are also non-dilutive, meaning that shareholders will retain the same voting rights they had beforehand.


What Is the Difference Between Social Justice and Economic Justice?

Response: Economic justice is about money and making sure everyone has an equal share. Social justice is concerned with equal rights in general for people of all social dimensions. The idea behind social justice is that all people should have equal access to wealth, health, well-being, justice, privileges, and opportunity—regardless of their legal, political, economic, or other circumstances.


What is a payable on death (POD) account?

Response: A bank account or certificate of deposit (CD) with a named beneficiary is called a payable on death (POD) account. People who designate POD accounts do so to avoid probate court when they die.


Response: A pip is the smallest whole unit measurement of the difference between the bid and ask spread in a foreign exchange quote. A pip equals 1/100 of 1%, or .0001. Thus, the forex quote extends out to four decimal places. Smaller price increments are measured by fractional pips, or "pipettes."


What Are the Tools for Fundamental Analysis?

Response: Analysts use many tools. Some examples are financial reports, ratios from the reports, spreadsheets, charts, graphs, infographics, government agency reports on industries and the economy, and market reports.


Response: Opening a brokerage account online is a relatively quick and easy process. You have to register on the brokerage site and provide some required personal information such as your address, date of birth, and Social Security number. Account approvals happen fast, and the next step is to fund your new account, which can also be done online via the Automated Clearing House or wire transfer.


What Are the Benefits of Strategic Management?

Response: Having a long-term focus helps a company maintain its goals, even as short-term rough patches or opportunities come and go. As a result, strategic management helps keep a firm profitable and stable by sticking to its long-run plan. Strategic management not only sets company targets but sets guidelines for achieving those objectives even as challenges appear along the way.


What Does a High Equity Risk Premium Mean?

Response: The higher the equity risk premium, the more you will earn from investing in stocks than you would by investing in risk-free assets. This makes investing in stocks more enticing; however, since the equity risk premium is based on historical data, the returns are not guaranteed.


Response: It depends on how the car is being used. If the car is being used in a company's operations to generate income, such as a delivery vehicle, it may be considered a fixed asset. However, if the car is being used for personal use, it would not be considered a fixed asset and would not be recorded on the company's balance sheet.


Response: Exposure is the maximum potential loss a lender may incur if the borrower defaults. It's a risk measurement technique to assess the position of the lender, the characteristics of the borrower, and the possibility of loss. Exposure is a natural part of lending; in return for being exposed to risk, lenders charge interest to be compensated for their willingness to take on risk.


Response: Krugerrands can be purchased from coin dealers in person or online. All Krugerrand coins, even ones minted during the time when international sanctions were imposed on South Africa, are now legal to own, buy, or sell.


Response: A DuPont employee by the name of F. Donaldson Brown developed a formula in 1914 that was used by the company as an internal management tool to better understand where its operating efficiency was coming from and where it was falling short. By breaking down ROE into a more complex equation, DuPont analysis shows the causes of shifts in this number.


Response: The 80% NOL rule was introduced by the Tax Cuts and Jobs Act (TCJA) of 2017 and limits net operating loss carryforwards to 80% of each subsequent year’s net income.


What's the Difference Between a Call Option and a Put Option?

Response: Options are contracts. A call option gives a buyer a contractual right to buy a security at a specific "strike" price. A put option is effectively the flip side, giving the buyer of a security the right to sell it, again at its strike price. A grantor in the context of investments writes or creates these options.


Response: Companies often set internal thresholds that establish what materiality levels exist for capitalizable assets. In general, costs that benefit future periods should be capitalized and expensed so that the expense of the asset is recognized in the same period as when the benefit is received.In general, examples of costs that can be capitalized include development costs, construction costs, or capital assets such as equipment or vehicles.


What Is the Function of SPVs in Public-Private Partnerships?

Response: Public-private partnerships are collaborations between a government agency and a privately owned company. Many private partners in public-private partnerships demand a special purpose vehicle as part of the arrangement. This is especially true for capital-intensive endeavors, such as an infrastructure project. The private company might not want to take on too much financial exposure, so an SPV is created to absorb some of the risks.


Response: With an Ex Works agreement, the seller saves on shipping, customs, and liability for damaged goods after being delivered, packaged, and labeled at the shipping terminal. While this may be optimal sometimes for sellers, it is not always possible due to customs requirements in certain jurisdictions. Take the European Union, for example, which restricts non-resident corporations from completing export declaration forms. In this case, an Ex Works contract would be detrimental to both the seller and the buyer. In contrast, a free carrier contract that bears shipping responsibility on the seller could offer a more suitable alternative.


How Do Traders Use the Price Rate of Change Indicator?

Response: The price rate of change (ROC) indicator is used in technical analysis to measure momentum. A positive ROC can confirm a bullish trend while a negative ROC indicates a bearish one. When the price is consolidating, the ROC will hover near zero.


Response: There are three types of trial balance: the unadjusted trial balance, the adjusted trial balance, and the post-closing trial balance. Each is used at different stages in the accounting cycle.


Response: Web syndication is often free but sometimes a fee is charged by high-traffic sites. The fee usually increases based on the size of the distributor's site because the content provider is paying for traffic. Paying for syndication can ensure premium placement on a high-traffic site and the fee is often less than paying for advertising.


What Are the Concerns Surrounding the Use of AI?

Response: Many are concerned with how artificial intelligence may affect human employment. With many industries looking to automate certain jobs with intelligent machinery, there is a concern that employees would be pushed out of the workforce. Self-driving cars may remove the need for taxis and car-share programs, while manufacturers may easily replace human labor with machines, making people's skills obsolete.


Why Is Sustainable Growth Rate Important?

Response: The sustainable growth rate is an important measurement because it gives a company an accurate picture of expansion and equity requirements. Not all companies want to take on additional partners or outside financing, so the SGR allows the company to "toe the line" when it comes to growth using their own revenues and capital.


How Do Morningstar’s Star Risk Rating Work?

Response: The star rating is a quantitative metric that indicates a mutual fund's historical risk-adjusted return. Funds can receive between 1 and 5 stars, with 5 being the best. A fund loses points for having a greater "risk penalty," so if two funds return the same yield in a given period, the fund that experienced greater volatility (variance) in returns would be rated lower, as riskier.


What Is the Purpose of Social Networking?

Response: Social networking connects individuals and businesses by allowing them to share information, ideas, and messages. Companies also use social networks to create and strengthen brand recognition, promote products and services, and answer customer queries and concerns.


Does Coinbase One Apply to Advanced Trading?

Response: Coinbase One is the exchange's monthly subscription service. It does not include Advanced Trade.


Response: The Global PMI is an economic indicator that is derived from questionnaires sent to manufacturing and services companies in more than 40 different countries. The survey gets responses from roughly 28,000 global companies and represents 89% of global GDP.


Response: Some effects might be freer markets, access to more products and services to meet consumer demand, greater revenue, and higher profits. Price reductions due to greater competition can also be an effect. Savings can result from a more efficient allocation of resources. The better organization of workforces and the ability to hire needed talent for specific jobs can result from neoliberal policies, as well. Others might point out some of the adverse effects believed to be associated with neoliberalism. These could include economic inequality, the growth of monopolies, a lack of job security, the loss of jobs due to outsourcing, and an increasing indifference to the needs and well-being of individuals.


How Did President Hoover Use Trickle-Down Economics?

Response: President Hoover believed incentivizing business prosperity would trickle down to the average person and that economic assistance to citizens would stifle the workforce. This philosophy was not effective against the Depression and his failure to end it led to his defeat in the 1932 presidential election against Franklin D. Roosevelt and the New Deal.


Response: Rent controls, which limit how much landlords can charge monthly for residences (and often by how much they can increase rents) are an example of a price ceiling.Caps on the costs of prescription drugs and lab tests are another example of a common price ceiling. In addition, insurance companies often set caps on the amount they'll reimburse a doctor for a procedure, treatment, or office visit.


What Are the Drawbacks to Married Filing Separately?

Response: Married filing separately is the ideal tax filing status if both spouses want to keep their tax liabilities separate. But if you file separate returns, you miss out on a number of tax credits and deductions that are meant for married couples, such as the earned income tax credit and the American Opportunity Tax Credit.


What Is the Difference Between Independent and Mutually Exclusive?

Response: To illustrate the difference between what is independent and what is mutually exclusive, consider the war and peace example from earlier. There could be war in France and peace in Italy. These are two independent nations and therefore each one could be in its own state of peace. However, there cannot be war in France and peace in France. Since they cannot coexist, that makes them mutually exclusive.


Response: Delta hedging is a trading strategy that involves options. Traders use it to hedge the directional risk associated with changes in the price of the underlying asset by using options. This is usually done by buying or selling options and offsetting the risk by buying or selling an equal amount of stock or ETF shares. The aim is to reach a delta-neutral state without a directional bias on the hedge.


Why Is Accounting Important for Investors?

Response: The work performed by accountants is at the heart of modern financial markets. Without accounting, investors would be unable to rely on timely or accurate financial information, and companies’ executives would lack the transparency needed to manage risks or plan projects. Regulators also rely on accountants for critical functions such as providing auditors’ opinions on companies’ annual 10-K filings. In short, although accounting is sometimes overlooked, it is absolutely critical for the smooth functioning of modern finance.


Response: Inflation is sometimes classified into three types: demand-pull inflation, cost-push inflation, and built-in inflation. Built-in inflation is an alternative explanation for rising prices that differs from cost-push and demand-pull theories, which highlights the role of expectations for future inflation by consumers and businesses.


Response: According to Indeed, a leading job-seeking site, a typical cover letter should be about three or four paragraphs long and highlight any special experience or achievements that make the applicant exceptionally well-suited to the position.


What Does R-Squared Tell You in Regression?

Response: It tells you whether there is a dependency between two values and how much dependency one value has on the other.


Response: In accounting and finance, capital stock represents the value of a company's shares that are held by outside investors. It is calculated by multiplying the par value of those shares by the number of shares outstanding.


What Are Other Words to Describe A Gentlemen’s Agreement?

Response: Other words to describe a gentlemen's (gentleman's) agreement are an "informal agreement," "unspoken agreement," "handshake agreement," "verbal agreement," "tacit agreement," or "unwritten agreement." Pactum (Latin for pact) is another way to describe it.


What Is the World's Largest Stock Exchange?

Response: The world's largest stock exchange is the New York Stock Exchange (NYSE). The exchange had a market cap of $25.56 trillion as of January 2024.


Response: Yes, floating a check is illegal in most U.S. states. While writing a check with insufficient funds can result in a bounced check, this is not illegal. However, using the time it takes to clear or detect a bounced check to commit fraud is.


Response: Take the time to explore your options before committing to a specific networking group. Target your time and effort to the group that best fits your needs and interests.Remember, networking is a process of give and take. Don't just jump in when you're looking for a job. Be generous about sharing tips, recommendations, and insights that benefit others in the group.


Response: If a private company decides to go public, has an initial public offering, and sells one million shares to raise $17 million, that is an example of capital invested. Similarly, if a company decides to sell $10 million worth of bonds with a coupon of 3%, that is an example of capital invested. Capital investments are generally understood to be land, buildings, and equipment.


What Is the Advantage of a Pass-Through Entity?

Response: When it comes to the big advantage of a pass-through entity, we have two words for you: tax treatment.Regular incorporated businesses pay a flat corporate income tax on any profits before they distribute those earnings to stockholders and owners. These shareholders must report their dividends or other distributions on their personal tax returns. So the same dollars effectively get taxed twice.A pass-through entity allows profits to avoid this double taxation—specifically, the initial corporate tax round. A pass-through is exempt from business taxes. It passes earnings straight through to stakeholders, who do owe taxes on it. But the money is only taxed once.A pass-through entity also affords owners and investors an extra deduction on their personal taxes in some cases. If the business suffers a loss, that also gets passed through and can be used to reduce overall taxable income.


What Is the Difference Between Prorated and Pro Rata?

Response: Pro rata and prorated are used interchangeably to define the same thing. Both signify that of any given whole unit, a specific section of it has a defined allocation for an underlying reason.


What Is Covered By Valuable Papers Business Insurance?

Response: Valuable papers insurance covers the loss or damage of important papers such as medical records, contracts, property deeds, blueprints, or any other important documents. Valuable papers insurance generally does not cover the loss of money, securities certificates, or electronic records.


What Are the 12 Banks of the Federal Reserve?

Response: The 12 banks of the Federal Reserve are the Federal Reserve Banks of San Francisco, Minneapolis, Dallas, Kansas City, St. Louis, Chicago, Cleveland, Atlanta, Boston, New York, Richmond, and Philadelphia.


How Much of a NCD Is FDIC or NCUA-insured?

Response: NCDs are insured up to $250,000 per depositor per bank. Any amount over this is not insured.


Response: Despite the best efforts of analysts, a price target is a guess with the variance in analyst projections linked to their estimates of future performance. Studies have found that, historically, the overall accuracy rate is around 30% for price targets with 12-18 month horizons. However, price targets do have the ability to sway investor sentiment, especially if they come from credible analysts.


Response: Inflation targeting is a central banking policy that adjusts monetary policy to achieve a specified annual inflation rate. The principle of inflation targeting is based on the belief that long-term economic growth is best achieved by maintaining price stability, and price stability is achieved by controlling inflation.


Response: "Prima facie" is a Latin term that translates to "at first sight" or "on its face." In legal contexts, it refers to evidence that, on its face or at first impression, appears to be sufficient to prove a particular proposition or fact unless rebutted or contradicted by additional evidence.


How Much Do People Borrow With a Signature Loan?

Response: They can start at as little as $500 and go up to $50,000. However, keep in mind that not all banks and credit unions offer signature loans.


Why Does the IRS Penalize Withdrawals From Qualified Accounts?

Response: The IRS penalizes early withdrawals to prevent misuse of tax-advantaged, qualified retirement accounts that are intended to be used to save for retirement years. It wants to encourage people to keep money growing in their accounts and discourage them from withdrawing it too early.


What Does "Seeding" Mean in Relation to a Viral Marketing Campaign?

Response: Seeding is a marketing technique in which companies purposefully distribute viral information or content to select users who they think will effectively share the campaign. Most often, social media influencers are chosen as seeds to spread the word and solicit feedback about a product.


Response: No, INSEAD is not an Ivy League school. Ivy League schools are a certain grouping of specific schools in the U.S. Schools outside of the U.S., such as INSEAD, are not part of the Ivy League.


Response: Some of the most basic tax planning strategies include reducing your overall income, such as by contributing to retirement plans, making tax deductions, and taking advantage of tax credits.


Why Did Lehman Brothers File Bankruptcy?

Response: Lehman Brothers was forced to file for bankruptcy after its subprime mortgage portfolio was exposed to be worth far less than people had thought. Clients began to abandon Lehman as its stock price plummeted, and soon creditors would not lend the bank money. On Sept. 15, 2008, Lehman declared bankruptcy.


Response: If you're shopping online in the U.S., PayPal is likely to be the only choice at the checkout other than directly using a credit or debit card for payment. If you card or bank account is already saved in PayPal, it might be a bit faster to go with PayPal rather than reentering your payment information on the website. Additionally, it can be more secure since you don't have to share payment information with the seller, when using PayPal. Also, PayPal offers protection for buyers who don't receive what they ordered.If you're shopping in the real world, you have many payment apps to choose from. Best to compare payment apps for the one that suits you best.


What Are Some Limitations of Using DuPont analysis?

Response: While the DuPont analysis can be a very helpful tool for managers, analysts, and investors, it is not without its weaknesses. Its expansive nature means that it requires several inputs. As with any calculation, the results are only as good as the accuracy of the inputs.This tool utilizes data from a company's income statement and balance sheet, some of which may not be entirely accurate. Even if the data used for calculations are reliable, there are still additional potential problems, such as the difficulty of determining the relative values of ratios as good or bad compared to industry norms.Seasonal factors, depending on the industry, can also be an important consideration since these factors can distort ratios. For instance, some companies always carry a higher level of inventory at certain times of the year. Different accounting practices between companies can also make accurate comparisons difficult.


Response: A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.


Can You Use Delta to Determine How to Hedge Options?

Response: Yes, you can use delta to hedge options. In order to do this, you must figure out whether you should buy or sell the underlying asset. You can determine the quantity of the delta hedge by multiplying the total value of the delta by the number of options contracts involved. Take this figure and multiply that by 100 to get the final result.


Who Is a Public Limited Company Owned by?

Response: Like publicly traded companies headquartered in the U.S., PLCs are owned by shareholders. These companies are traded on exchanges where shares can be openly bought or sold by individuals, companies, and mutual funds. This listing contrasts with the limited (Ltd.) listing which does not trade publicly and has limitations on shares and shareholders.


Can an Employee Be Salaried and Non-Exempt?

Response: Yes, an employee can be "salaried, non-exempt," meaning that they receive a weekly salary (or however the employer chooses to pay) and qualify for overtime pay for any hours worked over 40 hours a week. Non-exempt employees do not have to be paid hourly; they can be paid in a variety of manners, via commission, salary, hourly, etc, as long as the compensation meets minimum wage requirements.


Can Graduates of Cornell Johnson Explore Careers in Consulting?

Response: Nearly 30% of Johnson School graduates pursue careers in consulting with preparation from project-based consulting courses, and a Management Consulting Immersion.


Response: Michael Bloomberg was married to the former Susan Brown from 1975 to 1993. They have two daughters. Diana Lancaster Taylor, a former New York State superintendent of banks, was known as New York City's de facto "first lady" during Bloomberg's tenure as mayor.


Response: Insurtech relies on minimal overhead and operational efficient to make money. Though it still earns revenue from clients, the goal is to have minimal costs by eliminating a physical office or personnel to perform tasks that have been eliminated through chatbots or automation. Due to lower costs, insurtech companies are often able to offer lower prices.


Do Merchants Pay More When You Use Credit vs. Debit?

Response: Merchants tend to pay lower fees when the customer uses a debit card rather than a credit card. According to the National Retail Federation, swipe fees for credit cards average about 2%, while "fees for debit cards from the nation's largest banks are capped by the Federal Reserve at 21 cents per transaction plus 0.05% of the transaction amount." Debit cards from small banks, it adds, are exempt from that restriction.


What Is the Difference Between Profit Before Taxes and EBITDA?

Response: While profit before tax shows a company's profits before taking into account its tax costs, earnings before interest, tax, depreciation, and amortization (EBITDA) includes non-cash activities like depreciation and amortization. In this way, EBITDA is used as a measure for profitability, but critics have said that it is less reflective of a company's performance since it leaves out these important aspects. In this way, showing EBITDA versus net income can make a company look more attractive, but may be less indicative of a company's overall performance since it ignores a company's asset costs.


Response: Mathematically, it shows that two probabilities are equal. Used in statistics, investing, or other industries, it allows you to view conditional probabilities.


How Do I File the General Business Credit?

Response: To claim the general business credit, start by completing the specific tax forms for each individual credit you are taking. Next, carry over the total of all these credits to Form 3800, General Business Credit.


Response: A debt-to-equity ratio is another way of looking at the risk that investing in a particular company may hold. It compares a company's liabilities to the value of its shareholder equity. The higher the debt-to-equity ratio, the riskier a company is often considered to be.


Response: Value investing refers to investing in a security with an intrinsic value that's greater than its market value. The idea is that the undervalued security's market value should increase to meet its intrinsic value. Warren Buffett is one example of an investor whose focus on value investing has led to incredible success.


What Is the Difference Between an S Corp and a C Corporation (C Corp)?

Response: C corps pay corporate taxes on their earnings, the way individuals pay income taxes. (In the U.S., corporations are currently taxed at a flat rate of 21%.) Any dividends or other profits are then distributed to shareholders with after-tax funds. S corps, by contrast, are generally exempt from federal tax on most earnings, so they can distribute more gains to stockholders. In return for this tax benefit, S corps face certain IRS-mandated restrictions.


What Types of Policies Are Traditionally Level-Premium Contracts?

Response: Level-premium insurance is usually associated with term life policies or with whole life policies, which guarantee the premium will not change. Other forms of insurance like variations of universal life (UL) or annual term may be subject to changing premiums over time as circumstances change.


Response: Money market accounts at a bank are insured by the Federal Deposit Insurance Corporation, an independent agency of the federal government. The FDIC covers certain types of accounts, including MMAs, up to $250,000 per depositor per bank. If the depositor has other insurable accounts at the same bank (checking, savings, certificate of deposit), they all count toward the $250,000 insurance limit. For depositors who want to insure more than $250,000, the easiest way to accomplish that is to open accounts at more than one bank or credit union. Joint accounts are insured for $500,000.


What Are the Types of Greenshoe Options?

Response: There are three main types of greenshoe option: full, partial, and reverse. With the full option, the underwriter sells the maximum amount of extra shares from the company. With the partial option, they sell more than the originally agreed amount but less than the maximum permitted. And with a reverse option, the underwriter sells the extra shares back to the issuing company.


Response: The standard deduction is a specific dollar amount that taxpayers may use to reduce their taxable income if they do not choose to itemize their deductible expenses.For 2023, the standard deduction for single taxpayers and married couples filing separately is $13,850. For married couples filing jointly, it is $27,700. For heads of households, it is $20,800.For 2024, the standard deduction for single taxpayers and married couples filing separately is $14,600. For married couples filing jointly, it is $29,200. For heads of households, it is $21,900.


Response: Workers' comp covers employees that get sick or injured while on the job. It includes death benefits, disability benefits, compensation for lost wages, medical expenses, and lawsuits.


Response: Hedging is a strategy that tries to limit risks in financial assets. It uses financial instruments or market strategies to offset the risk of any adverse price movements. Put another way, investors hedge one investment by making a trade in another.


Response: An open-end index fund is an open-end fund that tracks a specific index. An open-end index fund selects a benchmark to track, such as the S&P 500, and purchases the stocks in that index in order to replicate its returns. An open-end index fund is different from an exchange traded fund (ETF), which also tracks an index, in that it has characteristics reflective of an open-end fund, such as being priced to its NAV once a day and only being able to be purchased and sold once a day.


Response: Hard commodities are usually classified as those that are mined or extracted from the earth. These can include metals, ore, and petroleum (energy) products. Soft commodities instead refer to those that are grown, such as agricultural products. These include wheat, cotton, coffee, sugar, soybeans, and other harvested items.


Response: Collateral can take many forms, but some of the most common are real estate, art, jewelry, stocks, bank accounts, and letters of credit.


Response: Debit notes can be issued for a few reasons. A vendor may create and send their customer a debit note to remind them that there is a payment due for goods and services delivered. In other cases, a customer may issue a debit note to their supplier about an adjustment to their order, including the total amount of goods returned and their value.


Response: If traders are long gamma, the delta of their options position increases with price movements in the underlying asset. For example, a long gamma position will see an ever-increasing delta as the underlying price rises—or ever-decreasing deltas as the price falls. If the trader can sell deltas as prices rise and then buy deltas as prices fall, the long-gamma exposure can lead to net profits by incentivizing the trader to consistently buy low and sell high.


Response: Similar to consumer surplus, producer surplus is the economic benefit to producers of goods measured by the difference in market price and where the producer would be willing to sell. A producer surplus thus exists if the market price of a good is higher than the price the producer is willing to sell.


Response: SMART goals are part of a goal-setting system and philosophy used by many companies and other organizations, as well as by individuals. Following the SMART acronym, it advocates creating goals that are specific, measurable, achievable (or attainable), relevant, and time-bound.


How Do I Become a Certified Valuation Analyst (CVA)?

Response: There are six primary steps to becoming a CVA. These are (1) meeting the CVA qualifications and applying for the designation, (2) paying a CVA designation fee or becoming a member at NACVA, (3) studying the provided material for the exam, (4) passing the CVA exam, (5) participating in a peer-reviewed business valuation report, (6) and paying membership fees and completing the continuing education requirements every three years to maintain the designation.


Why Would a Company Want to List Its Shares on an Exchange?

Response: The main goal of listing a stock on an exchange is to raise money. Going public and allowing investors to buy and sell shares can help companies raise enough capital to meet their financial needs, including growing their business or paying off their debts. By selling shares on an exchange, the company gives investors equity in the company.


Response: Levered beta measures the risk of a firm with debt and equity in its capital structure to the volatility of the market. A key determinant of beta is leverage, which measures the level of a company’s debt to its equity. So, a publicly traded security's levered beta measures the sensitivity of that security's tendency to perform in relation to the overall market. A levered beta greater than positive 1 or less than negative 1 means that it has greater volatility than the market. A levered beta between negative 1 and positive 1 has less volatility than the market.


Does the Internal Revenue Service Charge Late Fees?

Response: The IRS can impose what it calls a "failure to pay penalty." The penalty is "0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won’t exceed 25% of your unpaid taxes," the agency says.


Response: One reason investors ladder bonds, or buy individual bonds of different maturities and reinvest in new bonds as each matures, is to take advantage of the fixed income cash flows they offer when held to maturity. Laddering protects against market price risk (the risk that their price will drop as interest rates rise) since an investor doesn't plan to sell the bonds. It also helps manage reinvestment risk since the investor reinvests proceeds from each maturity back into the longer-term bond (higher-yield) end of the ladder.


Response: Companies keep cash on hand in imprest to pay for incidentals like office supplies, small reimbursements, or other minor expenses. Similar to petty cash, imprest should not be used for material expenses such as utilities or to purchase assets for the firm.


What Is the Alternative to the Always Be Closing Strategy?

Response: Modern salespeople have learned that a high-pressure sales pitch doesn't work well with a customer base that has the full resources of the internet at its fingertips. Today's alternative mantra might be Always Be Helping. This suggests that a salesperson's goal is to find out what the customer needs and wants and tailor the message to how a product can meet those needs and wants.


Response: A z-score, or z-statistic, is a number representing how many standard deviations above or below the mean population the score derived from a z-test is. Essentially, it is a numerical measurement that describes a value's relationship to the mean of a group of values. If a z-score is 0, it indicates that the data point's score is identical to the mean score. A z-score of 1.0 would indicate a value that is one standard deviation from the mean. Z-scores may be positive or negative, with a positive value indicating the score is above the mean and a negative score indicating it is below the mean.


How Does Absolute Advantage Differ From Comparative Advantage?

Response: Absolute advantage is the ability of an entity to produce a product or service at a lower absolute cost per unit using a smaller number of inputs or a more efficient process than another entity producing the same good or service. Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality.


Response: Cash management can come in various forms, including the improvement of accounts payable processes. Let's say a business has an existing (and good) relationship with a vendor. The two have been doing business with one another for the last five years. The vendor ships supplies to the business every month and requires payment on its invoices every 30 days. Since the two have an amicable relationship, the business negotiates payment for invoices every 45 days.


Can Businesses Charge a Credit Card Surcharge?

Response: A merchant is responsible for paying a credit card transaction fee, and some merchants charge a credit card surcharge to recoup this expense. However, in some states it is illegal for merchants to charge a credit card surcharge.


Response: QoQ stands for quarter over quarter, and measures how some metric such as revenues has changed from one quarter to the next, so looking atYoY stands for year over year, and instead measures changes based on 12 months ago until the present.


Is the recovery rate the same for all debt?

Response: No. It can vary greatly depending on the kind of debt in question. Generally, senior debt has a higher recovery rate than junior debt. Other factors that influence the recovery rate include corporate capital structure, type of debt instrument, level of indebtedness, and macroeconomic issues.


Response: There are two schools of thought when it comes to inflation: those who beat inflation, and those who simply match it. Looking to match inflation is possible as a retail investor by investing in asset classes that are more likely to do well during such periods. Two common classes are real estate and commodities. A fixed mortgage will do well in an inflationary environment as it devalues the payments required. More commonly, an investor will place their money in inflation-indexed bonds, such as Treasury Inflation-Protected Securities (TIPS). Those looking to actively beat inflation could consider value stocks and other companies that are easily able to pass on inflated costs to their consumers.


Is Form 8949 Required for Reporting Cryptocurrency Transactions?

Response: Form 8949 may be required when you realize a gain on cryptocurrency by buying and then selling crypto for profit in a taxable account or exchanging crypto for goods or services that realize a gain in value.


What Is the Corporate Partnership of Cornell Johnson?

Response: The school partners with 65 companies or corporations to provide students with real-world exposure and industry connections.


How Many Mortgages Can I Have on My Home?

Response: Lenders generally issue a first or primary mortgage before they allow for a second mortgage. This additional mortgage is commonly known as a home equity loan. Most lenders don’t provide for a subsequent mortgage backed by the same property. There’s technically no limit to how many junior loans you can have on your home as long as you have the equity, debt-to-income ratio, and credit score to get approved for them.


What Are Some of the Risks Involved with Currency Trading?

Response: Risk is inherent in any type of trading. Some of the risks associated with trading currencies include economic, liquidity, and exchange rate risks. Geopolitical issues, counterparty risks, and transaction risk can also affect currency rates.


Response: The original TIPS were set at 20-year maturities. In 2009, 20-year TIPS were discontinued in favor of 30-year TIPS. The U.S. Treasury currently issues five-, 10-, and 30-year TIPS.


Is Gross Sales Misleading About a Company's Performance?

Response: Yes, if used alone, gross sales can be misleading because it doesn't consider crucial factors like profitability, net earnings, or cash flow.


Response: A take-or-pay clause in a contract stipulates that a buyer will take an agreed-upon amount of a commodity from a seller on a certain date or pay a set penalty fee if it does not. The fee is generally less than the full purchase price of the commodity.


Response: While Roth IRAs do not include an employer match, they do allow for a greater diversity of investment options. For individuals who anticipate that they will be in a higher tax bracket when they’re older, Roth IRAs also can be a beneficial option. And you can withdraw your contributions (but not earnings) at any time, tax- and penalty-free. Ultimately, you can manage how you want to invest your Roth IRA by setting up an account with a brokerage, bank, or qualified financial institution.


Can I Claim the AOTC and the Lifetime Learning Credit?

Response: Yes. You can claim the AOTC and the LLC on the same tax return. However, you can’t claim both credits for the same student or the same expenses during a single tax year.


What Is the Difference Between a Perpetuity and an Annuity?

Response: A perpetuity and an annuity are similar in that both offer a fixed set of cash flows over time. The key difference is that annuities have a predetermined end date, known as the maturity date, whereas perpetuities are intended to last forever. Importantly, both annuities and perpetuities can be valued using DCF analysis.


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

Response: Spinning tops appear similarly to doji, where the open and close are relatively close to one another, but with larger bodies. In a doji, a candle's real body will make up to 5% of the size of the entire candle's range; any more than that, it becomes a spinning top.


What Are the Pros and Cons of Free vs. Premium Stock Screeners?

Response: Free stock screeners often offer basic functionalities, making them suitable for casual investors. Premium stock screeners, on the other hand, provide advanced features, additional screening criteria, and enhanced data analysis capabilities. Many free versions offer a profile where you can save screening criteria, though the full functionality here may be limited.


Response: ZCash has a maximum supply of 21 million coins, with 14.6 million in circulation. Once there are 21 million ZCash in circulation, no more can be mined, and you’ll only be able to acquire them by purchasing them on an exchange or from an individual.


Response: The SEC has identified a few traits that often signify a fraudulent financial scheme. If an investment opportunity guarantees a specific high rate of return, guarantees that return by a certain time, and is not registered with the SEC, the SEC advises caution.


What Is Decoupling in Sustainable Development?

Response: The United Nations Sustainable Development Goals are a group of long-term projects seeking to reduce economic reliance on environmentally destructive or harmful industrial practices. This includes several provisions for "decoupling growth from resource generation," i.e., exploring ways to achieve economic growth that do not deplete natural resources or cause environmental pressures.


What Is the Meaning of Right of First Refusal?

Response: A right of first refusal is a contract with an asset owner for the ability to match or refuse to match an offer from another party to buy the asset.


How Is Gross Merchandise Value Calculated?

Response: GMV is calculated by multiplying the total amount of goods sold by their sales price in a given period. GMV = Sales Price of Goods x Number of Goods Sold.


What Is Excess and Surplus (E&S) Lines Insurance?

Response: Excess and surplus (E&S) lines insurance is basically another name for surplus lines insurance that is used by some carriers.


What Is the Difference Between Prime Cost and Overhead Cost?

Response: Prime costs are the direct costs involved in production, including raw materials and labor. By contrast, overhead costs refer to costs that are indirectly related to production, which include electricity, rent, or salaries, among others.


Response: The Small Business Investment Act (SBIC) in 1958 boosted the VC industry by providing tax breaks to investors. In 1978, the Revenue Act was amended to reduce the capital gains tax from 49% to 28%. In 1979, a change in the Employee Retirement Income Security Act (ERISA) allowed pension funds to invest up to 10% of their assets in small or new businesses. The capital gains tax was reduced to 20% in 1981. These developments catalyzed growth in VC and the 1980s turned into a boom period for venture capital, with funding levels reaching $4.9 billion in 1987.


Response: For real estate buyers, a general warranty deed provides greater protection than any other type of deed. While it’s the best deed for the grantee, it gives the grantor the most liability. The grantor is generally bound by several covenants, including:The covenant of seizin—the grantor warrants that they own the property and has a legal right to convey it.The covenant against encumbrances—the grantor warrants that the property is free of liens or encumbrances.The covenant of quiet enjoyment—the grantor guarantees that the grantee’s title will be good against third-party claims.


What Are the Disadvantages of Transfer Pricing?

Response: Since transfer prices are usually equal to, or lower than, market prices, the entity selling the product is liable to get less revenue. There is also the fact that it is a complicated process. Market prices are based on supply-demand relationships, whereas transfer prices may be subject to other organizational forces. Additionally, intra-entity animosity might arise, especially if the transfer price is appreciably higher or lower than the market price as one of the parties will feel cheated.


What Is the Benefit of a Negotiable Instrument?

Response: A negotiable instrument is easily transferable. There are no formalities and limited paperwork involved in making such a transfer. The instrument's ownership can be shifted simply by delivery or by a valid endorsement.


Response: Any member state of the World Bank or Asian Development Bank is qualified to join the Asian Infrastructure Investment Bank. As of 2023, the AIIB has 106 member states, including many outside of the Asian region.


Response: Interest-paying entities must submit Form 1099-INT by Jan. 31. Anyone who doesn't receive one should contact the issuer to get another copy. Be mindful that many lending institutions may offer Form 1099-INT as a downloadable form. Upon logging into your online banking portal, search for 'Tax Forms' or a similar area of reporting.


Response: Available credit refers to the amount remaining on the credit line. The available credit can be determined by subtracting the account balance from the credit limit.


Response: Detachable warrants are derivatives that are attached to certain securities. They allow the holder the right to buy the underlying asset at a certain price within a certain period of time. As their name implies, these warrants can be detached or removed from the associated asset and sold or traded separately on the secondary market. As such, the holder can sell either the investment or the detachable warrant and keep the other.


What Is the Main Purpose of Economic Exposure Management?

Response: The main purpose of economic exposure management is to reduce the impact that changes in exchange rates have on the cash flows of a company. Economic exposure management seeks to help companies preserve as much foreign profit as they can when profits in foreign currencies are converted to the domestic currency.


Why Does a Company Need a Marketing Strategy?

Response: A marketing strategy helps a company direct its advertising dollars to where it will have the most impact. Compared with the data from 2018, the correlation between organization and success in marketers jumped from being almost four times more likely to almost seven times more likely in 2022.


Response: IRS Form 1095-B is sent to taxpayers who receive minimum essential health insurance coverage as defined by the Affordable Care Act (ACA), showing health insurance coverage, the insurance provider, coverage dates, and individuals covered.


How Long Does It Take to Get Vested Under a Pension Plan?

Response: Different entities will have different benefit schedules including when employees are vested. Vesting can be immediate, but it may kick in partially from year to year for up to seven years of employment. If you contribute money to the plan, it's yours if you leave. If your employer kicks in money, it's not all yours until you are fully vested.


What Is the Difference Between Authorized Shares and Issued Shares?

Response: Authorized shares are the total number of shares a company can legally issue, while issued shares are the number the company has issued to date. The number of authorized and issued shares may be the same or different, in which case there would be more authorized than issued shares.


What Is the Purpose of a Bill of Lading?

Response: A bill of lading has three main purposes. First, it is a document of title to the goods described in the bill of lading. Second, it is a receipt for the shipped products. Finally, it represents the agreed terms and conditions for the transportation and eventual release of the shipped goods.


Response: Many economists have characterized the economic downturn and recovery following the onset of the COVID-19 pandemic from 2020 to 2021 as K-shaped, whereby certain industries suffered (such as travel and hospitality) while others saw positive growth (such as internet communications and online streaming).


Response: A margin call is issued by the broker when there is a margin deficiency in the trader’s margin account. To rectify a margin deficiency, the trader has to either deposit cash or marginable securities in the margin account or liquidate some securities in the margin account.


Response: Ratio analysis is important because it may portray a more accurate representation of the state of operations for a company. Consider a company that made $1 billion of revenue last quarter. Though this seems ideal, the company might have had a negative gross profit margin, a decrease in liquidity ratio metrics, and lower earnings compared to equity than in prior periods. Static numbers on their own may not fully explain how a company is performing.


Can Mutual Fund Shares Be Sold At Any Time?

Response: Yes, mutual funds are considered liquid assets, and shares can be sold anytime. When you sell all or part of your fund holdings, you'll need to identify a cost basis for that sale. While mutual funds themselves only price their shares once per day based on NAV, you can place orders to sell their mutual fund shares at any time. Review the fund's policies for exchange or redemption fees. There may also be tax implications for capital gains earned with a mutual fund redemption.


Response: If a dividend will be high, the price of the stock may fall by the value of the dividend on the ex-dividend date. The 25% dividend rule states that if the dividend is 25% or more than the stock's value then the ex-dividend date will be deferred to one business day after the dividend is paid.


Response: As of December2023, an MBA earns an estimated total pay of over $119,000 per year. Pay is widely contingent on the industry, company, and underlying position occupied by the degree hold er. For example, the same salary data indicates that most total pay packages range between $89,000 to $161,000 per year for an MBA. Of course some MBAs are paid amounts below this range and some can earn much more.


What Can Inventory Tell You About a Business?

Response: One way to track the performance of a business is the speed of its inventory turnover. When a business sells inventory at a faster rate than its competitors, it incurs lower holding costs and decreased opportunity costs. As a result, they often outperform, since this helps with the efficiency of its sale of goods.


What Does Tender Mean in Business and Finance?

Response: Tender can have a couple of different meanings in business in finance. The most common definition of the word is the invitation to bid for a project—usually a large bid from contractors for projects by governments and financial institutions. It may also refer to the acceptance of a formal offer, which can include a takeover bid. In this case, shareholders put up their shares to the offering entity.


How Is the Industrial Revolution Best Defined?

Response: The Industrial Revolution shifted societies from an agrarian economy to a manufacturing economy where products were no longer made solely by hand but by machines. This led to increased production and efficiency, lower prices, more goods, improved wages, and migration from rural areas to urban areas.


What's the Difference Between AML, CDD, and KYC?

Response: Anti-money laundering (AML) refers to legally recognized rules for preventing money laundering. Customer due diligence (CDD) refers to practices financial institutions implement to detect and report AML violations. Know your client (KYC) is the application of a component of CDD that involves screening and verifying prospective clients.


Response: Kenan-Flagler is rated in the top 30 business schools, and it costs less than its Ivy League or top 10 peers. Whether it is worth the cost depends on your location, budget, and career outlook after graduating. The school has a 96% job offer rate, suggesting employers respect and demand its graduates.


Response: A school voucher gives eligible families the right to choose a private or charter school, using a portion of state funding otherwise set aside for public schools.


Response: There are two types of warranties—express and implied. Each has sub-types intended for different circumstances and products.


Response: Most payday loans are unsecured. This means that you do not have to give the lender any collateral or borrow against a valuable item as you do in a pawn shop.Instead, the lender will normally ask you for permission to electronically take money from your bank, credit union, or prepaid card account. Alternatively, the lender may ask you to write a check for the repayment amount, which the lender will cash when the loan is due. Under federal law, lenders cannot condition a payday loan on obtaining authorization from the consumer for “preauthorized” (recurring) electronic fund transfers.


Response: Zacks ETF Rank is a similar ranking system that seeks to identify exchange-traded funds that have a favorable one-year outlook. These rankings are based on a wide range of quantitative metrics, such as expense ratio, momentum, yields, and the assets contained in each ETF.


What Role Do Non-Tariff Barriers Play in Trade Agreements?

Response: Companies can employ several strategies to overcome non-tariff barriers in international trade. They can invest in thorough research to understand. This knowledge allows them to adapt their products and operations to meet the required standards and regulations. Collaboration with local partners or trade associations can provide valuable insights and support in navigating nontariff pays. Additionally, companies can engage in dialogue with government authorities to advocate for trade facilitation measures and compliance support.


Do I Lose Control of My Living Will If I Appoint a Proxy?

Response: You will not lose control of your living will while you have the ability or capacity to make decisions. If incapacitated, the proxy has the legal authority to act on your behalf, making decisions about your healthcare.Review the living will with the proxy to ensure they understand your wishes and agree to enforce them when needed.


Response: Mark to market is an accounting standard governed by the Financial Accounting Standards Board (FASB), which establishes the accounting and financial reporting guidelines for corporations and nonprofit organizations in the United States. FASB Statement of Interest "SFAS 157–Fair Value Measurements" provides a definition of "fair value" and how to measure it in accordance with generally accepted accounting principles (GAAP). Assets must then be valued for accounting purposes at that fair value and updated on a regular basis.


Response: A round lot holder is a party who owns a round lot of unrestricted shares. A round lot is made up of 100 shares or a multiple of 100 shares. Unrestricted shares are those that do not required any conditions to be filled before they can be transferred or sold.


What Is the Difference Between Demand and Quantity Demanded?

Response: Demand and quantity demanded both pertain to purchasing but in different ways. Demand is just how many of an item a consumer is willing to buy—the sheer quantity. Quantity demanded is how many things a consumer will purchase at a specific price. Quantity demanded is a more detailed metric. Graphed out, demand is the entirety of the demand curve, whereas quantity demanded is a single point.


Response: Options are a type of derivative product that allow investors to speculate on or hedge against the volatility of an underlying stock. Options are divided into call options, which allow buyers to profit if the price of the stock increases, and put options, in which the buyer profits if the price of the stock declines. Investors can also go short an option by selling them to other investors. Shorting (or selling) a call option would therefore mean profiting if the underlying stock declines while selling a put option would mean profiting if the stock increases in value.


What Is the Difference Between a Qualifying Child and a Qualifying Relative?

Response: A taxpayer must choose to claim a dependent as a qualifying child or qualifying relative. If a dependent meets these criteria, they are considered a qualifying child and not a qualifying relative:A qualifying child is commonly the taxpayer’s biological or adopted child but may be a stepchild or a foster child.A sibling, half-sibling, or step-sibling may also qualify as a qualifying child.A qualifying child must meet be younger than the taxpayer and under age 19 or a full-time student under 24 years old. The age requirement does not apply if the qualifying child is permanently disabled during the tax year.


Response: The IRR rule is used as a guideline for deciding whether to proceed with a project or investment. The higher the projected IRR on a project, the higher the net cash flows to the company as long as the IRR exceeds the cost of capital. In this case, a company would be well off to proceed with the project or investment. But if the IRR is lower than the cost of capital, the rule declares that the best course of action is to forego the project or investment.


Response: A margin call can occur when the customer's account falls below the brokerage firm's minimum maintenance requirement. When they receive a margin call, the customer must deposit additional cash or securities into the account to bring it up to a level where it satisfies the requirement. If they fail to do so within a prescribed period (often two to five days), the broker will sell enough of the securities already in the account to make up the difference.However, as the U.S. Securities and Exchange Commission notes, brokers are not required to issue a margin call and "may be able to sell your securities at any time without consulting you first. Under most margin agreements, even if your firm offers to give you time to increase the equity in your account, it can sell your securities without waiting for you to meet the margin call."


What Is The Meaning of Novation Agreement?

Response: In novation, the rights and obligations of one party to a two-party contract are transferred to a third party, with the agreement of all three parties.


Are Retained Earnings the Same as Profits?

Response: The main difference between retained earnings and profits is that retained earnings subtract dividend payments from a company’s profit, whereas profits do not. Where profits may indicate that a company has positive net income, retained earnings may show that a company has a net loss depending on the amount of dividends it paid out to shareholders.


What Is the Rule of Indemnity in Insurance?

Response: With indemnity insurance, one party commits to compensate another for prospective loss or damage. In insurance policies, in exchange for premiums paid by the insured to the insurer, the insurer offers to compensate the insured for any potential damage or losses.


Response: No, not all schools require GRE scores for admission. In recent years, some programs have waived the GRE requirement, especially for specific intakes, due to factors such as the COVID-19 pandemic or changes in admissions policies.


Response: A material misrepresentation is a promise, false statement, or omission of facts that would cause another party to act differently if the whole truth were known. An example of a material misrepresentation is incorrectly stating one's income on a mortgage application or omitting key risk factors on an application for insurance coverage.


Who Introduced the Consumption Function?

Response: The consumption function was introduced by economist John Maynard Keynes. He is known as the father of modern macroeconomics and the founder of Keynesian economics. This branch of economics suggests that governments should be actively involved in their economies. Rather than let their economies fall under the free market, Keynes said government spending can be used as a tool to cut back on weakness in the economy.


Response: Search engine optimization (SEO) describes a variety of techniques that companies use in an effort to increase traffic to their website and raise its position in search results. The higher a site appears on the search results page, the more likely consumers are to see it and potentially click to visit it.


Response: Bootstrapping is not necessarily bad. If a business owner doesn't have all the resources it needs on the first day of operations, they may need to take special considerations to make sure the business needs are met. Many successful businesses have bootstrapped during its infancy and though some may negatively view the process, others may find charm in bootstrapping and have greater respect for these types of companies.


What Are the Top Companies on the London Exchange?

Response: The largest companies by market cap listed on the LSE as of June 21, 2023, are:AstraZeneca PLCShell PLCHSBC Holding PLCUnilever PLCBP PLC


How Long Do You Have to Repay a Revolving Loan Facility?

Response: Unlike a term loan with fixed payments, a revolving loan facility has no established term. Money is withdrawn by the company, reducing the amount available to borrow. It is then paid back, replenishing the line of credit.


How Is a Resident Alien Defined in the United States?

Response: An individual is classified as a resident alien of the U.S. for tax purposes if they meet either the green card test or the substantial presence test for the calendar year (January 1-December 31). The green card test states that a person needs to either have a current green card or have had one in the previous calendar year. The substantial presence test requires that a person has been in the U.S. for more than 31 days during the current year and 183 days during a three-year period that includes the current year and the two years prior.


What Are the Federal Income Tax Brackets for 2023 and 2024?

Response: The U.S. federal income tax is a marginal tax rate system based on an individual's income and filing status. For the 2023 and 2024 tax years, the tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.


What are the Assets than can be Used with the Inverse Head and Shoulders Chart Patterns?

Response: The inverse head and shoulders chart pattern is a versatile tool that can be applied to a variety of asset classes. These include equities, commodities, forex, fixed income, ETFs and mutual funds, futures, options and REITs.


How Are Venture Capitalist Firms Structured?

Response: VC firms typically control a pool of funds collected from wealthy individuals, insurance companies, pension funds, and other institutional investors. Although all of the partners have partial ownership of the fund, the VC firm decides how the monies will be invested. Investments are usually made in businesses with attractive growth potential that are considered too risky for banks or capital markets. The venture capital firm is referred to as the general partner, and the other financiers are referred to as limited partners.


Response: Investors disagree about whether the FAANG stocks are overvalued. Their proponents will argue that their valuations are justified based on their fundamental strength as businesses. But critics argue that, even with impressive business performance, the FAANG stocks’ prices have become so expensive that it may be difficult to realize attractive long-term profits from investing in them. Ultimately, this “debate” between investors is best captured by the buying and selling patterns in the FAANG stocks themselves.


Response: Most applicants can expect to spend between 90 and 135 hours on course-related activities before sitting for the exam, according to Kaplan Financial Education. Classes can be taken online, either live or on demand.


What Is the Difference Between a CEO and COO?

Response: A CEO is the top-most ranking person at a firm, responsible for the long-term health and direction of the firm, while a COO is the second-highest individual in the firm, reporting to the CEO and responsible for the day-to-day operations of the firm.


Response: Most brokerages allow retail investors to trade on OTC markets, although they may have additional requirements due to the risk of OTC trades. Interactive Brokers, TradeStation, and Zacks Trade are all examples of brokers that offer OTC markets.


Response: A positive linear relationship is represented by an upward line on a graph. It means that if one variable increases then the other variable increases. Conversely, a negative linear relationship would show a downward line on a graph. If one variable increases then the other variable decreases.


What Is the Difference Between a Tariff and a Quota?

Response: A tariff imposes a tax on a particular good coming in from another country, while a quota limits the quantity of such goods.


Response: OTC markets are safe to trade but there are some risks with the process, such as less information available about the securities and less liquidity. Picking companies in the tiers that have stronger financial standards can help reduce the risks in OTC trading.


Response: Banks may sell nonperforming loans to focus on the loans that bring in money each month. Selling the loans at a discount may be more profitable than trying to collect money from a delinquent borrower.


Response: Generally speaking, the CFO position is reserved for very experienced professionals with established track records in their field. CFOs are generally equipped with advanced educational designations, such as a Master of Finance or Chartered Financial Analyst (CFA) designation. Many CFOs have professional backgrounds in fields such as accounting, investment banking, or financial analysis. For financial professionals, the CFO is among the most prestigious and highly paid positions available in a firm.


What Happens to Your Health Insurance When You Get Laid Off?

Response: In most cases, your employer will stop paying for health insurance at the end of the month if you are laid off. You can then continue your coverage through the federal COBRA program for a term of 18 to 36 months. You will get the same insurance you had as an employee at the rate that the company has negotiated for its employee coverage.COBRA coverage is significantly more expensive than employer-provided health insurance. You may be better off getting coverage through one of the plans offered under the Affordable Care Act. During the time you're unemployed, you should qualify for a substantial subsidy for the coverage and may pay little or nothing for it.


What's the Difference Between a Journal and a Diary?

Response: The terms are virtually interchangeable. However, the word diary implies a personal record of daily activities and events, while a journal is often used to explore thoughts and ideas in depth.


What GPA Do You Need to Get Into Kellogg?

Response: There is no set GPA required by the school, but the higher your GPA, the better your chances. The average GPA for the class of 2024 is 3.7, so you'll need to be close to or above that.


Response: A budget surplus is generally considered a good thing, because it means that the government has money left over that can be reinvested or spent to pay off debts. However, it depends on how wisely the government is spending money: if the government has a surplus because of high taxes or reduced public services, that can result in a net loss for the economy as a whole.


Has the Tragedy of the Commons Led to Extinction of a Resource?

Response: The extinction of the dodo bird is a historical example of the tragedy of the commons. An easy-to-hunt, flightless bird native to only a few small islands, the dodo was a source of meat for sailors traveling the southern Indian Ocean. Due to overhunting, the dodo was driven to extinction less than a century after its discovery by Dutch sailors in 1598.


Response: Compensation that is put into an NQDC plan is taxed when you actually receive it. This should be after you retire; otherwise, you may owe a penalty in addition to tax on the compensation. There are also other triggering events that can prompt distributions, such as a disability.


Response: A wire transfer is generally safe and secure, provided you know the recipient. A legitimate service will vet the identity of each entity involved in a transaction so that anonymous transfers are impossible.International wire transfers that originate in the United States are monitored by the Office of Foreign Assets Control, an agency of the U.S. Treasury. This agency makes sure the money being sent overseas is not being used to fund terrorist activities or for money laundering purposes. They are also tasked with preventing money from going to countries that are the subject of sanctions by the U.S. government.


Is the Nepal Rupee the Same as the Indian Rupee?

Response: No, the Nepal rupee is not the same as the Indian rupee. They are two different currencies belonging to two different nations. The Nepal rupee, however, is pegged to the Indian rupee. "Rupee" is the name of the currency for many countries, much as the dollar is. For example, the U.S. dollar, Canadian Dollar, and Australian dollar.


What Is the Likely Outcome of a Prisoner's Dilemma?

Response: The likely outcome for a prisoner's dilemma is that both players defect (i.e., behave selfishly), leading to suboptimal outcomes for both. This is also the Nash Equilibrium, a decision-making theorem within game theory that states a player can achieve the desired outcome by not deviating from their initial strategy. The Nash equilibrium in this example is for both players to betray one other, even though mutual cooperation leads to a better outcome for both players; however, if one prisoner chooses mutual cooperation and the other does not, one prisoner's outcome is worse.


Response: The pass rate for the Series 24 is not published. However, many who sit for the exam consider it very difficult compared to the prerequisite exams. This is why study prep courses and FINRA itself recommend an extended period of time to prepare for the intense exam.


Why might you want a noncancellable disability insurance policy?

Response: A noncancellable policy prevents your insurance premiums from going up. These policies also offer protection when income changes. Under a noncancellable policy, even if your income declines in the future, the company must pay the original disability benefit amount. With disability insurance, if you take up another job for lesser pay, you would still be able to keep your insurance with a noncancellable policy and draw the original benefit as needed.


Do You Get Your Money Back at the End of a Term Life Insurance Policy?

Response: If you're alive when the term expires, you get nothing back from your term life insurance policy. The death benefit is only payable to your beneficiaries if you die. That is the reason why term life insurance is relatively inexpensive. Most people outlive their term life insurance policies.


Response: A hammer candlestick is a technical trading pattern that resembles a “T” whereby the price trend of a security will fall below its opening price, illustrating a long lower shadow, and then consequently reverse and close near its opening. Hammer candlestick patterns occur after a downtrend. They are often considered signals for a reversal pattern.


Response: Covenants may be related to finances, property, law, or religion. In business, a loan covenant may disallow a company from acquiring another company or may require a certain amount of cash on hand. A property covenant may require the grass to be cut a specific number of times per year. A religious covenant may be a promise from God to never send a destructive flood like the one Noah experienced again.


Response: There are many strategies that taxpayers can use to avoid paying taxes. These are very legal and legitimate options. They include taking the standard deduction, contributing to a qualified retirement account, claiming work-related expenses, and offshoring profits.


Why Is the Efficient Frontier Important?

Response: The curvature of the efficient frontier graphically shows the benefit of diversification and how this can improve a portfolio's risk versus reward profile.


How Long Do I Need To Pay Mortgage Insurance?

Response: If you have a conventional loan, you'll generally need to pay mortgage insurance until you have at least 20% equity in the home. If you have an FHA loan, you'll have to pay mortgage insurance premiums (MIP) until you pay off the mortgage or refinance.


What Happens If a Futures Contract Is Held Until It Expires?

Response: Unless the contract position is closed out prior to its expiration, the short is obligated to make delivery to the long, who is obligated to take it. Depending on the contract, the values exchanged can be settled in cash. Most often, the trader will simply pay or receive a cash settlement depending on whether the underlying asset increased or decreased during the investment holding period. In some cases, however, futures contracts will require physical delivery. In this scenario, the investor holding the contract upon expiration would be responsible for storing the goods and would need to cover costs for material handling, physical storage, and insurance.


What Happens When the Federal Reserve Limits the Money Supply?

Response: A country’s money supply has a significant effect on its macroeconomic profile, particularly in relation to interest rates, inflation, and the business cycle. In America, the Federal Reserve is responsible for the monetary supply. When the Fed limits the money supply via contractionary or "hawkish" monetary policy, interest rates rise and the cost of borrowing goes higher.There is a delicate balance to these decisions. Limiting the money supply can slow down inflation, as the Fed intends. But there is also the risk that it will slow economic growth too much, leading to more unemployment.


What Are Some Differences Between a Bill of Exchange and a Check?

Response: A check always involves a bank while a bill of exchange can involve anyone, including a bank. Checks are payable on demand while a bill of exchange can specify that payment is due on demand or at a specified future date. Bills of exchange generally do not pay interest, making them in essence post-dated checks. They may accrue interest if not paid by a certain date, but that rate must be specified on the instrument. Unlike a check, a bill of exchange is a written document outlining a debtor's indebtedness to a creditor.


Where Do I Find a Company’s Accounts Receivable?

Response: Accounts receivable are found on a firm’s balance sheet. Because they represent funds owed to the company, they are booked as an asset. Investors need to dig into the numbers shown under accounts receivable to determine if the company follows sound practices.


What Is a Back-to-Back Letter of Credit?

Response: A back-to-back letter of credit refers to two separate letters of credit issued for the same transaction when a middleman is involved. The buyer will provide a letter of credit to the middleman (such as a re-seller or broker), assuring them that they'll be paid. Based on the first letter, the middleman can then provide a separate letter of credit to their supplier (such as a manufacturer). The two letters ensure that all parties get paid.


When Should the Poisson Distribution Be Used?

Response: The Poisson distribution is best applied to statistical analysis when the variable in question is a count variable. For instance, how many times X occurs based on one or more explanatory variables. For instance, to estimate how many defective products will come off an assembly line given different inputs.


What's the Difference Between TOD and POD?

Response: A payable on death (POD) designation is an arrangement between a bank and a client that designates beneficiaries to receive assets after the client's death, without going through probate. A POD designation is usually associated with bank accounts and certificates of deposit, while a TOD is used for stocks, bonds, deeds, and similar assets.


Is the Minimum Wage Set by States or Cities?

Response: All U.S. states may set their own minimum wage rates or accept the federal rate as the state's minimum. Cities and counties may impose higher rates than the state's rate.For example, California's minimum wage is $16 an hour as of Jan. 1, 2024. However, many cities and counties in the state have set their rates higher.


What’s the difference between FIFO and LIFO?

Response: FIFO (first in, first out) refers to an accounting system that assumes the oldest products are sold first, followed by newer ones. LIFO (last in, first out) assumes the most recent products are sold before older ones.


What Happens in Each Phase of the Economic Cycle?

Response: In the expansionary phase, the economy experiences growth over two or more consecutive quarters. Interest rates are typically lower, employment rates rise, and consumer confidence strengthens. The peak phase occurs when the economy reaches its maximum productive output, signaling the end of the expansion. After that point, employment numbers and housing starts to decline, leading to a contractionary phase. The lowest point in the business cycle is a trough, which is characterized by higher unemployment, lower availability of credit, and falling prices.


Response: Economic order quantity will be higher if the company’s setup costs or product demand increases. On the other hand, it will be lower if the company’s holding costs increase.


What is the difference between European and American options?

Response: European options can be exercised only on their expiration date, while American options can be exercised at any time.


Response: Bitcoin is a volatile asset. Its value changes daily; it reached a record price of $69,000 in late 2021, so it has dropped in value since then. However, it has increased in value over its lifetime many times over.


Response: PP&E is recorded on a company's financial statements, specifically on the balance sheet. To calculate PP&E, add the amount of gross property, plant, and equipment, listed on the balance sheet, to capital expenditures. Next, subtract accumulated depreciation. The result is the overall value of the PP&E. It's often referred to as the company's book value.


What Happens When a Drawee Receives a Bill of Exchange?

Response: A bill of exchange represents instructions to the drawee to pay the person presenting it with a certain amount of money. This type of transaction occurs every day in the normal course of business. That's why you can walk into your bank with a check written to you and can rest assured that you or your account at that bank will receive those funds.


Why Is Economic Order Quantity Important?

Response: Economic order quantity is important because it helps companies manage their inventory efficiently. Without inventory management techniques such as these, companies will tend to hold too much inventory during periods of low demand while also holding too little inventory during periods of high demand. Either problem creates missed opportunities.


What Tends to Cause Structural Unemployment?

Response: Structural unemployment is caused when there are major changes to how the world operates. Consider the implications of COVID-19. As consumer trends change and the world adapts to new preferences, workers must adapt or they risk losing their jobs due to obsolescence.


Response: There are three main types of audit risk: Inherent risk, control risk, and detection risk.


Response: Morningstar rates mutual funds and exchange-traded funds' past performance in relation to other funds within the same category. Ratings range from one to five stars, with one star assigned to the lowest rating and five assigned to the highest.


Can portfolio diversification protect against risks?

Response: Portfolio diversification is an effective strategy used to manage unsystematic risks (risks specific to individual companies or industries); however, it cannot protect against systematic risks (risks that affect the entire market or a large portion of it). Systematic risks, such as interest rate risk, inflation risk, and currency risk, cannot be eliminated through diversification alone. However, investors can still mitigate the impact of these risks by considering other strategies like hedging, investing in assets that are less correlated with the systematic risks, or adjusting the investment time horizon.


Response: Bonds that have a BBB rating from either Standard & Poor’s or Fitch are considered investment-grade bonds, although they are the lowest tiers of investment-grade bonds. Non-investment-grade bonds are rated BB+ through CC. (Moody’s uses a different rating system.)


Response: Lightning Labs, led by Elizabeth Stark, is the company that developed the Lightning Network. The network itself is deployed on the internet and runs on thousands of nodes located around the world.


Response: A mean reversion strategy is a trading approach that capitalizes on the tendency of financial assets to revert to their historical mean or average price over time. The strategy aims to identify assets that are significantly overvalued or undervalued and take positions based on the expectation that they will revert to their mean.


How Can One Deal With Multicollinearity?

Response: To reduce the amount of multicollinearity found in a statistical model, one can remove the specific variables identified as the most collinear. You can also try to combine or transform the offending variables to lower their correlation. If that does not work or is unattainable, there are modified regression models that better deal with multicollinearity, such as ridge regression, principal component regression, or partial least squares regression. In stock analysis, the best method is to choose different types of indicators.


Why Do Countries Impose a Marginal Tax Rate Over a Proportional Tax Rate?

Response: Developed countries tend to use a graduated or marginal tax system where those with lower incomes pay a smaller percentage of their income in taxes. The common argument for a marginal tax system is that those who have low incomes need most to all of their income to provide for basic needs such as food and shelter.


What Are Other Types of Noncurrent Assets?

Response: Other noncurrent assets include long-term investments and intangibles. Intangible assets are those that can lack physical existence but can still be used over the long term. These types of assets include goodwill, copyrights, trademarks, and intellectual property. Long-term investments can include bonds that won't be sold or mature within a year.


Response: The formula for tax shield is, Tax Shield = Value of Tax-Deductible Expense x Tax Rate.


Response: Wharton has been teaching business finance for more than 120 years, creating a brand and education that is in demand by students and industries worldwide.


Response: Bearish overhang refers to a situation in which buyers are reluctant to purchase a certain asset, due to the presence of a large block of that asset that would cause prices to fall if the block were sold. This usually refers to stock shares, but it can also refer to commodities. For example, during the negotiations over U.S.–Iran sanctions, some analysts warned of a "bearish overhang" caused by a potential sell-off of the Iranian oil supply.


Are There Any Other Yield Curve Strategies?

Response: There are bullet, barbell, and laddering strategies, as well as spread trades such as the butterfly spread. Investors employ these yield curve strategies to optimize returns and manage risks based on their expectations of interest rate changes and the economy.


Response: Roth 401(k) plans are only available through an employer, which means you can't set one up on your own. Contributions are made using after-tax dollars through payroll deductions. The contributions grow tax-free in your account. Withdrawals are also tax-free as long as you've held the account for at least five years and you're at least 59½. The required minimum distribution must be taken for those who turn 72 in 2022 or before. That age increased to 73 after Jan. 1, 2023.


Response: A tax-to-GDP ratio of 15% or higher is believed to ensure economic growth and, thus, poverty reduction in the long term, according to the World Bank. The tax-to-GDP ratio in the United States was 26.6% in 2021.


Why Do Companies Do Foreign Currency Swaps?

Response: Foreign currency swaps serve two essential purposes. They offer a company access to a loan in a foreign currency that can be less expensive than when obtained through a local bank. They also provide a way for a company to hedge (or protect against) risks it may face due to fluctuations in foreign exchange.


Response: Inflation is the decline of purchasing power of a given currency over time. The rate of inflation, or the rate of decline in purchasing power, is reflected by the Consumer Price Index (CPI). CPI measures the change in an average price of a basket of selected goods and services over a specific period of time.The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods. Inflation can be contrasted with deflation, which occurs when the purchasing power of money increases and prices decline.


Response: A zombie foreclosure refers to an incident in which a homeowner is presented with a pending foreclosure notice and abandons their house before legally necessary. Because the foreclosure process can be a long one, homeowners are still responsible for taxes and home insurance. If an owner leaves their home and it becomes zombie foreclosure, it often means the house can fall into disrepair.


What Is the Difference Between a Commodity and a Security or Asset?

Response: Commodities are physical products that are meant to be consumed or used in the production process. Assets, on the other hand, are goods that are not consumed through their use. For instance, money or a piece of machinery are used for productive purposes, but persist as they are used. A security is a financial instrument that is not a physical product. It is a legal representation (e.g., a contract or claim) that represents certain cash flows generated from various activities (such as a stock representing the future cash flows of a business).


What Business Structures Feature Limited Liability?

Response: There are several company structures that feature limited liability, including a limited liability company (LLC), an S corporation, and a C corporation. Partnerships may have limited liability partners, but at least one partner must have unlimited liability.


Response: Best practices in healthcare include training your staff so that they know how to deliver great service and put patient care and experience as their main priority. Ensure patient education, which has been proven to improve the overall healthcare experience. A patient that understands the what and why of their health and the care they are getting are usually happier and more comfortable. Establish a care-orientated environment by incorporating small details, such as remembering a patient's name, smiling, listening carefully, and incorporating follow-up calls.


Response: In the U.S., taxation progressively increases as an individual’s income grows. There are currently seven federal tax brackets in the U.S., with rates ranging from 10% to 37%.


Where Is Skewness Evident in the Economy?

Response: The broad stock market is often considered to have a negatively skewed distribution. The notion is that the market often returns a small positive return and a large negative loss. However, studies have shown that the equity of an individual firm may tend to be left-skewed.A common example of skewness is displayed in the distribution of household income within the United States.


What Are Common Types of Lines of Credit?

Response: The most common types of lines of credit are personal, business, and home equity. In general, personal LOCs are typically unsecured, while business LOCs can be secured or unsecured. HELOCs are secured and backed by the market value of your home.


Response: NSF fees don't affect a customer's credit or credit score directly because banks do not report the transactions to credit bureaus such as Equifax, TransUnion, and Experian.However, a bounced check can make delay a credit card or loan payment which may affect a customer's credit score.


Response: A structured note is a complicated investment. It is a derivative that brings together the features of different investments into one vehicle. As such, they track the performance of an underlying asset. Put simply, it is a debt obligation with a derivative embedded into it. There is some degree of flexibility that provides limited losses with limited gains. But they provide investors with low levels of liquidity and can be hard to trade on the secondary market.


What Is the Difference Between Cash and Cash Equivalents?

Response: Cash is ownership of actual U.S. dollars or other currencies. Cash equivalents are interest-earning financial vehicles/investments that are widely traded, highly liquid, and easy to convert to cash. Cash equivalents are not identical to cash in hand, though they have such low risk and high liquidity that they're often considered as accessible.


Response: To determine how much an underlying security must rise or fall in order to earn a profit on a straddle, divide the total premium cost by the strike price. For example, if the total premium cost was $10 and the strike price was $100, it would be calculated as $10 divided by $100, or 10%. In order to make a profit, the security must rise or fall more than 10% from the $100 strike price.


Response: The internal audit process entails planning the audit, performing the audit procedures, compiling the audit report, and monitoring post-audit changes. Management may choose to expand the scope of an audit at any point of the audit if findings during the audit cause the scope to shift a different direction.


Do Statutory or Judgement Liens Affect Your Credit?

Response: Involuntary liens can negatively affect your credit. A judgement or statutory lien can remain on your credit report for up to seven years. Liens don't appear on your credit report, but they are available through public records.


What Is the Difference Between Communism and Socialism?

Response: Both communism and socialism advocate public over private ownership, champion equality, and seek to give power to the working class. However, socialism is viewed as a more moderate ideology. Unlike communism, it permits the continued existence of capitalism in some parts of the economy and favors gradual change over revolution.


Response: Modified whole life insurance is permanent life insurance in which premiums increase after a specific period. Policyowners pay lower premiums than they would for a level premium policy during the first few years, and higher premiums in the later years. Traditional whole life insurance premiums, in contrast, remain the same throughout the life of the policy.


What Are the Top 10 Overseas Tax Havens?

Response: The top tax havens currently are the British Virgin Islands, Cayman Islands, Bermuda, The Netherlands, Switzerland, Luxembourg, Hong Kong, Jersey, Singapore, and the United Arab Emirates.