When a consumer or business realizes there’s something wrong with a transaction soon after the transaction has been made, the business can cancel the transaction within its payment point of sale or control panel, voiding the transaction. For example, say you purchase a dress marked at $80 from a clothing store via a credit card terminal. Instead of typing $80 in the terminal, the salesperson accidentally typed $90 and already swiped your credit card....
There are five components of aggregate demand. Everything purchased in a country is the same thing as everything produced in a country. As a result, aggregate demand equals the gross domestic product of that economy. These are the same as the components of GD: When COVID-19 hit, the U.S. GDP became alarmingly low in the second quarter of 2020. As a result, aggregate demand also fell. This had to do with the supply shock that happened when factories and businesses that supply services closed....
Martin Barraud/Getty Images How Acquisitions Work Acquisitions can be the amicable result of friendly discussions between two firms in which the target company welcomes the acquisition. In this situation, the two companies negotiate the terms of the acquisition and ultimately reach an agreement. However, acquisitions can also occur against the will of the acquired firm’s management in what is called a “hostile takeover.” In a hostile takeover, an outside firm acquires a controlling interest in the target firm by purchasing more than 50% of the target company’s shares....
Here are a few examples of the role an assignor plays in some common scenarios. Auto Loan The contract between a consumer with a car lease and a dealership is frequently assigned to a third party. The initial contract is signed between the car buyer and the car dealership when a vehicle is bought or leased. The buyer and the dealership are the two original party members of the contract....
There are several ways to calculate an earn-out. In most cases, the business or the business assets are valued during the negotiation process, and a lump sum payout is determined. The payouts are spread out over several years and are tied to the profits of the business, so if profits are high, the payouts are made more quickly. If profits are not as high, the payouts are lower and the loan takes longer to be paid off....
Tax rates are typically graduated, with spouses being exempt and more distant relatives and non-relatives paying the highest percentage. Some states exempt direct descendants as well. Maryland, New Jersey, Pennsylvania, Kentucky, Iowa, and Nebraska have inheritance taxes as of 2022. The inheritance tax rate usually graduates, depending upon the degree of kinship between the deceased and their beneficiary. Tax rates in Pennsylvania, for example, are lowest for inheritances passed to a surviving spouse or to a parent from a child that was 21 or younger ....
These accounts give you more flexibility on the amount you borrow at one time. You can use a little or a lot of the credit that’s available to you, depending on what you need. You also have flexibility in how you repay what you’ve borrowed. Alternate Names: Open-end credit, revolving loan A credit card is the perfect example of an open-ended account. You can repay the minimum one month, and more than that in another month, based on your available cash flow....
For example, a brand-new 2021 Ford Escape with a sticker price of $30,985 would be worth an estimated $24,788 after one year and just $12,939 after five, according to State Farm’s calculator. While industry averages offer an idea of how much cars depreciate over time, various factors contribute to a vehicle’s actual depreciation rate, including: MileageVehicle ageInternal and external damageMake/ModelPurchased new or usedDemand in the marketFeatures and technologyMaintenance historyOwnership historyFuel efficiencyColor How Does Depreciation Affect Car Insurance?...
How Does Crowdfunding Work? Crowdfunding combines the concepts of crowdsourcing and microfinancing, bringing together various individuals who commit small amounts of money to projects and entities they want to support. This is often done through websites that make it easy for entities to find potential funders. Funders could expect something in return for their contributions—such as equity, products, or services—or they may donate the funds. The people who fund crowdfunding projects and entities may do so without expecting anything in return—they’re donations to a cause they support....
Pattern Day Trading If the investor regularly buys and sells stocks on the same day, they may be designated as a pattern day trader by their investment firm. A pattern day trader is someone who executes four or more day trades within five days, representing more than 6% of their total trades. Financial firms are required to designate investors as pattern day traders if they fit this definition or if the firm has a reasonable basis to believe that they will engage in pattern day trading....
It is the most common cause of inflation. The other reason, cost-push inflation, is rarer. It starts with a decrease in total supply or an increase in the cost of that supply. Suppliers raise prices because they know consumers will pay it. That situation is called “inelastic demand.” Six Causes of Demand-Pull Inflation There are six causes of demand-pull inflation 1. A Growing Economy The first is a growing economy....
Companies usually pay cash dividends quarterly, and if the company’s profits increase over the years, the dividend amount may increase too. Dividends can also be paid from the company’s retained earnings, which is a sort of savings account of accumulated profits over the years. Companies can also pay dividends in stock, meaning they give equity shares instead of cash. Example of Dividend Investing Suppose you invest in a company that pays a 3% dividend per share....
The amount of earnest money you’ll offer depends on the seller; they may decide that they require a specific percentage of the list price or just a flat amount. Deposits of 1% to 2% of the purchase price are common. Depending on how the sale goes through—or doesn’t—earnest money will be distributed to the buyer, the seller, or back to you. Earnest money shows the seller a buyer’s intention to purchase their home....
Definition of Form 4506 IRS Form 4506 is the “Request for Copy of Tax Return.” You can request a copy of your returns for the past six tax years and the current year, but the form isn’t necessarily a speedy solution to receiving a copy. The IRS warns that it can take up to 75 calendar days to process your request. You usually can instead get your hands on a tax transcript, rather than the full tax return, much more quickly and at no charge....
Definition of Ginnie Mae and Examples Ginnie Mae is a federal corporation that backs securities made up of mortgages (known more commonly as mortgage-backed securities) from multiple federally insured loan programs. Established in 1968, the organization’s goal is twofold: opening up the availability of mortgage loans to a wider variety of people and increasing the confidence that banks have when they choose to originate a mortgage loan. The mortgage lending markets Ginnie Mae participates in might be a new subject for many people, especially when you learn for the first time that banks or credit unions may sell your mortgage on the secondary market to another entity....
Before you can get to gross operating income, GOI, you start with gross potential income, GPI. Potential is self-explanatory in a way. It is potential income, but it isn’t necessarily reality. GPI is the expected rent you will receive in a year from your rental property if it is rented the entire 365 days, and if the tenants pay their full rent as agreed. GPI is also before any expenses, taxes, etc....
Gross profit margin is a valuable financial measurement to company managers as well as to company investors since it indicates the efficiency with which the business can produce and sell one or more products before extraneous costs are deducted. Gross profit margin is based on the company’s cost of goods sold. It can be compared to the operating profit margin and net profit margin depending on the information you want....
Medicaid is one of the most extensive social welfare programs in the United States, providing health care coverage to more than 80 million people nationwide. It’s a needs-based program, meaning that only low-income people are eligible for coverage. Each state manages its own Medicaid program to determine the type, duration, amount, and scope of health services within the larger federal guidelines. Medicaid eligibility qualifications vary by state, but most are based on your:...
If you’re a small business owner, it’s important to understand how petty cash can be used so you can account for it correctly in your books. Definition and Example of Petty Cash The petty cash account covers business-related expenses generally categorized as miscellaneous expenses. Business owners usually keep a small amount of cash in a safe or lockbox that they use to pay for unexpected items. Alternate names: Petty cash fund, Imprest fund, Pocket money...
Let’s learn how the Fama-French 3-factor model can be used to build portfolios, evaluate mutual funds and alpha, the value added by a fund manager. Definition and Examples of the Fama-French 3-Factor Model The Fama-French 3-factor model, an expansion of the traditional Capital Asset Pricing Model (CAPM), attempts to explain the returns of a diversified stock or bond portfolio versus the returns of the market. Instead of the single factor of market risk used by CAPM, the Fama-French 3-factor model uses three factors: market risk, size risk, and value risk....
