The S&P 500 is the most common index used to track the performance of the U.S. stock market. It is based on the stock prices of 500 of the largest companies that trade on the New York Stock Exchange or the NASDAQ. The S&P 500 is often hailed as a representation of the entire U.S. stock market and American business as a whole, but that is not entirely accurate. While it gives you exposure to a broad swath of the economy, it is heavily weighted toward specific market capitalizations, sectors, and industries, which is important to know if you want to build a diversified equity portfolio....

The advantage of using leverage is that you can use more money than you have to increase your returns. The disadvantage is that you can lose more money than you invest when trading with leverage. It all depends on how you use the leverage and how you manage your risk. You Have More Control Than You Think Leverage makes a rather boring market incredibly exciting, but when your money is on the line, exciting is not always good, and that is what leverage has brought to FX....

Our weekly credit card news roundup contains all the things you should know about the cards in your wallet, other available offers, and new product announcements or reports that made our ears perk up. What’s the Lowdown? Here’s what caught our attention between Dec. 4 and Dec. 10, 2020: Delta and Amex Amp Up Elite Status Swag for Cardholders If you have a Delta SkyMiles Platinum or Delta SkyMiles Reserve card, your annual elite status bonuses for spending a lot are about to get sweeter....

There are two common ways to use comps: precedent transactions and public stocks. Public comps use the current trading price of similar companies. Precedent transactions, or private comps, are recent merger or acquisition prices for similar companies. For either type, it is important to find good comparables and use the correct multiple. Factors like debt load, size, and growth profile can all impact valuation. Additionally, companies in industries that are asset-heavy shouldn’t be valued in the same way as companies that are capital-light and fast-growing....

The following items are generally considered nonexempt assets and can be used to repay your creditors: A house or other residential property that’s not your primary homeA newer-model vehicle in which you have equityExpensive musical instruments that aren’t needed for your professionA valuable stamp or coin collectionInvestments that aren’t held in retirement accountsValuable artworkExpensive clothingJewelry Exempt assets that typically cannot be sold to pay creditors include: A car in which you have only minimal equityFurniture and everyday clothingTools required for your professionRetirement accounts...

In other words, when you keep the ownership of the property and get royalties from someone for use of that property, that is licensing. Licensing your business’s intellectual property and getting royalties from these licenses is a common way to increase your business income. Royalties also protect the buyer from claims by the owner for improper use. Royalty fees and payment amounts can be set in a variety of ways....

Whether you’re a small business owner or a senior accountant at a large company, temporary accounts can help you track your economic activity, manage your company’s finances, and maintain a clear record of how much profit and loss the business is generating. Let’s look at what temporary accounts are, how they work, and the types of temporary accounts you can use. Definition and Example of Temporary Accounts Temporary accounts are short-term accounts that start each accounting period with zero balance and close at the end to maintain a record of accounting activity during that period....

What is a Partnership? A partnership is a business with several individuals, each of whom owns part of the business. The partners may be active participants in running the business or they may be passive investors. The relationship between the partners, the percentage and type of ownership, and the duties of partners is clarified in the partnership agreement. In any partnership, each partner must “buy-in” or invest in the partnership. Usually, each partner’s share of the partnership profits and losses is based on his or her percentage share of ownership....

In exchange for a lower rate, the difference is paid through a one-time fee, or point, when you close on your home. This fee is usually deposited in an escrow account, and a small amount is paid out every month to cover the difference. Through this process, you are essentially buying your way into obtaining a lower interest rate for a two-year period. Alternate name: temporary buydown How a 2-1 Buydown Works With a 2-1 buydown loan, the borrower pays a lump sum upfront, ensuring a temporarily lower interest rate for the first two years of homeownership....

In this article, we’ll cover the pre-bankruptcy credit counseling and pre-discharge education requirements that are mandatory when you’re seeking bankruptcy protection. We’ll also discuss where to find companies that are allowed to issue bankruptcy certificates for both credit counseling and the education requirement. Finally, we’ll explore what you should look for in a bankruptcy counselor. Definition and Examples of a Bankruptcy Certificate Bankruptcy is a legal process that can give you a fresh start when you’re overwhelmed by debt....

Find out more about how a bear hug in business is defined, and the ramifications for the companies involved, particularly the target company’s shareholders. Definition and Example of a Bear Hug in Business When a company makes an offer to purchase another company that values the target company at a price much higher than its value in the market, it is called a bear hug. A bear hug can put the target company in an untenable position....

A common example of this is a married couple applying for a mortgage. By applying for the loan together, both spouses’ incomes and credit are used as criteria for the loan. Alternate name: Co-borrower How Having a Co-Applicant Works Married couples are the most common example of co-applicants. However, a co-applicant also can be a parent, friend, or business partner. The process of applying for a loan with a co-applicant is similar to applying on your own....

The government allocates all resources according to the central plan. It tries to use the nation’s capital, labor, and natural resources in the most efficient way possible. The central plan sets the priorities for the production of all goods and services. That includes quotas and price controls. The goal is to supply enough food, housing, and other basics to meet the needs of everyone in the country. The central plan also sets national priorities on issues like mobilizing for war....

A credit facility can be useful for addressing cyclical demands that seasonal businesses face. A tour guide company in Hawaii, for example, has its peak season during the summer. A revolving credit facility can help the company navigate cash flow crunches, such as meeting payroll, during slower months in the winter. How Does a Credit Facility Work? Credit facilities can operate as a revolving line of credit—the business that gets the line of credit withdraws up to a certain limit when the situation demands it—but this is not always the case....

Many U.S. states and several nations use a flat tax system, including Russia, Latvia, and Lithuania. The U.S. federal government uses a progressive income tax system, in which the percentage of taxes owed increases with the income of the taxpayer. A sales tax is an example of a flat tax. The tax is a fixed percentage of the product or service sold. Rich or poor, everyone pays the same amount....

The term may have been created by David Shulman, senior economist of the UCLA Anderson Forecast, who wrote an article in 1992 called “The Goldilocks Economy: Keeping the Bears at Bay.” Shulman described the economy during the Clinton administration when the economy was hot enough to spur profitable business growth, but cool enough to keep the Fed from using contractionary monetary policy to ward off inflation. That means higher interest rates, which stock traders and businesses dislike because of their negative impact on profit margins....

When you sell your home, you sign the deed to the buyer. You’re conveying ownership of your home to the buyer. That makes you the grantor and the buyer the grantee in the transaction. How Does Granting Ownership Work? A grantor transfers property ownership by granting it to another person through a property deed. Transferring ownership in a real estate transaction is complex due to the laws involved. If you’re selling a home, you’ll likely need a real estate lawyer to help you draw up the necessary contracts so that you grant the house to the buyer properly....

In a seller’s market, some buyers will even consider forgoing the inspection to make their offer stand out. However, a home inspection is an important tool to protect yourself from making a bad investment. Definition and Example of a Home Inspection If you’ve recently found the home you want to buy, conducting a home inspection can feel like another hurdle to jump through. But an inspection is an important step in the homebuying process....

Home inspection contingencies are handled in many ways across the United States, depending on local customs and state laws. In most states, home inspection contingencies are part of the purchase contract. In some cases, home inspections are done before signing a contract to purchase. Alternate names: Inspection rider, due diligence contingency Due diligence contingencies give you recourse as a buyer if problems with a home are found. For instance, suppose you found the home you wanted to buy....

Businesses that sell products or services will likely need a payment gateway to secure transactions between them and their customers, though all-in-one solutions for payment services that don’t require a separate payment gateway are common. Here’s more about how a payment gateway works and why it’s an important part of the online shopping experience. Definition and Examples of a Payment Gateway A payment gateway securely transmits customer data, including bank information or credit card details, to the payment processor....