A brokerage fee is what such a company charges to handle specific transactions related to your account. For instance, when you’re buying a security through your account, you should receive confirmation from your brokerage about how much that transaction cost you. It should show the cost of buying a security plus any fees associated with the transaction. How Brokerage Fees Work Because there are so many different types of brokerage fees, make sure you understand how they’re implemented and what firms can’t do when it comes to fees....

Learn how commercial loans work, when your business might benefit from one, and how to get one. Definition and Example of a Commercial Loan A commercial loan is a type of business loan offered by a bank or financial institution. They are one of the most important assets to which a business can have access. Alternate name: business loan Commercial loans are often used to finance the purchase of real estate, equipment, inventory, or other business needs....

Commodity Brokers Commodity brokers play an integral role in facilitating trading; whether the trades are executed online or over the phone, a commodity broker is essential for getting trades done efficiently. The term “commodity broker” often refers to someone who places commodity trades for their clients. It can also refer to a brokerage firm that handles commodity trades. For registration purposes, brokerage firms are designated as introducing brokers (IB) or futures commission merchants (FCM)....

Types of Real Estate Contingencies There are many different types of contingency clauses in real estate transactions, though some are more common than others. Mortgage Approval Contingency A contract will typically spell out that the transaction will only be completed if the buyer’s mortgage is approved with substantially the same terms and numbers as are stated in the contract. In other words, if the contract specifies a down payment of 30 percent and a conventional 30-year loan, that’s what should be approved by the lender....

CIFs were historically used by banks and financial institutions, but other types of companies are also starting to use them. Here’s a look at how they work. Definition and Examples of a Customer Information File A Customer Information File is a computerized file created by companies that stores information pertaining to a customer’s account and activity history. Acronym: CIFAlternate name: Client information file All customer information files contain a unique CIF number....

Immediate Diminished Value This is the difference in the value of the car immediately before and after the accident. It’s the value before any repairs have been made. This type of diminished value is rarely used in claims because insurance companies usually provide repairs right after an accident. Inherent Diminished Value Also known as “residual diminished value” or “stigma damage,” this is the most common form of diminished value in claims....

Double-dip recessions can also be called W-shaped recessions. Each point in the “W” represents the economy at different points: It’s high, then low, then on the rise again before dipping a second time. Then, there’s an official recovery. How Do Recessions Work? According to the National Bureau of Economic Research, a recession is a “decline in economic activity spread across the economy that lasts more than a few months.” Recessions can be triggered by any number of events or economic shocks, including: Runaway inflation in excess of 10%, as in the late 1970s...

Definition and Example of a Flexible Work Schedule An alternative to the traditional 9-5, 40-hour traditional workweek schedule, flexible work arrangements allow employees flexibility as to when and where they can work. Employees who have a flexible work schedule can vary their arrival and departure times, the days and hours they work, or they can telecommute. For example, an employee might be allowed to arrive between 9-11 a.m. and leave between 5-7 p....

MIPs are constructed in a very specific manner, and they operate under defined rules. Learn about the makeup of a typical MIP, the rules governing MIPs, and where MIPs are popular. How Does an MIP Work? Monthly income plans are conservative strategies designed to preserve capital and deliver regular income to investors. They’re more popular in India than they are in the U.S., where they may be hard to find, particularly by this name....

If a property owner wants to sell part of their property but still has a mortgage loan on it, they have to obtain this permission and verify that the new parcel is clear to be sold with the appropriate authority, often a county recorder’s office. Alternate name: partial lien release Let’s say you purchased a 2-acre parcel of land, with your home located on the edge of the land. If you are approached by a developer a few years into your mortgage who wants to buy 0....

Payroll cards work similarly to other prepaid cards, and they can be used to pay bills, make purchases or withdraw cash at an ATM. You might consider getting paid via a payroll card if you don’t have a bank account—but it helps to understand how they work first. Let’s learn more about how payroll cards work, who might use them, and about the alternatives. Definition and Example of Payroll Card A payroll card is a prepaid card loaded with an employee’s salary or wages....

If a borrower is taking out a loan to purchase a particular asset, such as a home or a car, that item will serve as collateral for the loan. However, the lender may also require additional collateral. This can happen if the borrower has too little equity in the asset being purchased. For example, a borrower making a low down payment on a home or car may not have much equity, so the lender may require additional collateral beyond the home or vehicle....

In some cases, shareholder activism can be relatively passive and include a letter-writing campaign to the company. On the other end of the spectrum, shareholder activists may actively work to change the company’s strategy, leadership, and structure. Shareholder activism can have a wide variety of purposes. Shareholders might attempt to oust the company’s current leadership, change financial policies within the firm, or encourage the company to change its environmental practices, for example....

Find out more about what makes a subsidiary, how it works, pros and cons, and what it can mean for individual investors. Definition and Example of a Subsidiary A subsidiary can be created when a company purchases another company—or at least becomes the majority shareholder. Subsidiaries also can be started by a parent company. In the parent-subsidiary relationship, the parent company owns a controlling share of the subsidiary’s stock or capital, so it is able to control the subsidiary’s activities, such as business strategy and appointing a board of directors and executive leadership....

Within a single trading day, for example, a security will often move up and down a bit, and the difference between the high and low points is the trading range. You could also look at a stock’s high compared to its low during a longer trading range, such as a year. Some investors believe a trading range can contain insights into what will happen to a security going forward, but these beliefs can vary significantly based on an investor’s own interpretation and the circumstances around the investment....

Definition and Examples of Transaction Deposits Transaction deposits are liquid, meaning they can be cashed at any time. A checking account is an example of a transaction account from which transaction deposits can be withdrawn or made. Alternate name: Demand deposit Transaction deposits can be accessed on demand by several means, including by making a cash withdrawal at an ATM or by cashing a check at a bank branch. Conversely, non-transaction deposits are known as time deposits....

Here’s a closer look at what transfers are, how they work and more details about the different types of transfer you may use. Definition and Examples of a Transfer A transfer is the act of shifting of money or assets (or even ownership) from one account to another. This is a broad term that covers a range of industries and services, but it is commonly used to talk about moving money from account to account....

To find AGI, after you have added up your full taxable income (gross income), you can take several “above-the-line” deductions to lower that taxable amount. These are called “above the line” because they apply whether you itemize your deductions or take the standard deduction. The standard deduction is an amount that the IRS sets each year that you can deduct from your taxable income, meaning a portion of your income isn’t taxed, lowering your tax bill....

Each lender may have its own criteria for designating an A credit or any other letter grade. This means the same credit score could fall into a different letter grade if you check with two different lenders. For example, one financial institution offering auto loans might consider you to have A credit with a credit score of 700, while another might give you the same grade with a lower score of 680....

Alternate name: vehicle service contract For example, suppose that you buy a new electric car that comes with a three-year manufacturer’s warranty. Because the car has a complex electrical system, you also opt to purchase an extended auto warranty. In the third year of car ownership, the onboard computer in the car malfunctions, but your manufacturer’s warranty doesn’t cover repairs of this kind. Fortunately, your extended auto warranty does cover it, potentially avoiding out-of-pocket repair costs to the tune of several hundred dollars....