If you know when a tax holiday will occur, you can plan your shopping to save money. Learn more about when tax holidays happen and how you can take advantage of them. Definition and Examples of a Tax Holiday A tax holiday is a specific time when a certain type of tax or a tax on some items is either suspended or reduced. These are different from calendar holidays, like Christmas or Thanksgiving....
Definition and Example of Illiquid Assets An illiquid asset is an asset that takes time to convert into cash quickly without incurring significant expense. Illiquid assets have several advantages, as we’ll review, but they are not ideal for emergency expenses because they generally can’t be used immediately. Liquidity refers to how efficiently an asset can be bought and sold on the secondary market. A liquid asset is an asset with plenty of potential buyers that can be quickly sold without incurring substantial costs....
This article will provide an overview of artificial intelligence, what it is, and examples of the use of artificial intelligence in finance. What Is Artificial Intelligence? There is no universally accepted or standard definition of artificial intelligence, but a commonly accepted definition describes it as “machines that respond to stimulation consistent with traditional responses from humans, given the human capacity for contemplation, judgment, and intention.” How AI Works Artificial intelligence comes in different forms, but AI is a general ability to use real-time data to make a decision....
Here’s a look at what contribution margin is, how it is calculated, and why it is a useful measure that helps businesses understand their costs and profit potential. Definition and Examples of Contribution Margin To understand what contribution margin is you first need to have a basic understanding of how businesses define their costs. Businesses classify the costs of producing products and providing services into two basic categories: fixed and variable....
Alternate definition: The written document that transfers property For example, if you sell a home to someone who is using financing, you’ll need to provide the bank a deed of trust to officially transfer the property. How Does Conveyance Work? When a property is purchased, exchanged, or gifted, actual ownership of the property passes from the seller/giver to the buyer/recipient. Following a defined conveyance process helps ensure the title and ownership are correctly transferred and that the title is free of any encumbrances....
Alternate name: Costing method Companies that implement cost accounting usually deal with variable and fixed costs. Variable costs change with the level of production. For example, if an ice cream company orders more dairy this month than last month to produce more ice cream, the supply cost likely increases. In contrast, fixed costs aren’t directly affected by production. For example, the rent for the ice cream company’s building is considered a fixed cost since the amount of ice cream produced doesn’t affect the monthly rent....
Definition and Example of Current Indexed Value The current indexed value is the value your lender uses to determine how much you pay for a variable rate loan. If you’ve recently taken out a variable-rate loan, the indexed rate is one of the factors that determines your interest rate. The indexed rate is set by your lender and can be based on the following indexes: Federal Funds RatePrime RateThe London Interbank Offer Rate (LIBOR)The Cost of Savings Index (COSI)...
Acting as a trustee, the DIP continues to run the business, but must seek approval for anything that falls outside the scope of normal business activities. During this transitional period, the company attempts to salvage some of the value of its assets. If you’re considering filing for Chapter 11 bankruptcy, it’s essential to understand how DIP status works. Definition and Example of Debtor in Possession A debtor in possession is a person or corporation that has filed for Chapter 11 bankruptcy but has retained possession of assets that their creditors have a right to claim....
Disability insurance doesn’t provide job protection, only monetary benefits. Even so, you may secure job protection through state and federal laws such as the Family and Medical Leave Act (FMLA). Alternate name: Disability income insurance How Disability Insurance Works Disability insurance provides benefits to replace lost income when you’re unable to work because of injury, illness, both, or due to pregnancy. To qualify for the benefits, you must meet the policy’s definition of disability....
Definition and Example of Dual Listing A dual listing allows investors to purchase shares of a company on two or more stock exchanges. One example of a dual-listed company is Tencent, an internet and technology company with headquarters in Shenzhen, China. Tencent has been listed on the Hong Kong Stock Exchange since 2004, and is listed in the U.S. on the Nasdaq as an American depositary receipt (ADR). Nestle and Thomson Reuters are two additional examples of companies listed on U....
Why You May Need It Businesses that rely on mechanical or electrical equipment are vulnerable to losses caused by the three types of perils described below. These perils are excluded by a typical property policy. Artificially generated electrical, magnetic, or electromagnetic energy: Damages or disrupts electrical or electronic devices. Most property policies do cover ensuing loss caused by fire.Mechanical breakdown: This includes rupture or bursting caused by centrifugal force. Most policies cover ensuing loss caused by elevator collision....
How Does Estate for Years Work? In real estate, a property being leased is called a leasehold estate. One type of leasehold estate is the “estate for years,” which means the tenant will lease the property for a specified length of time. It is sometimes also called tenancy for years or estate for term. In this type of lease, there is a defined beginning date and ending date for a specific term....
Doing business with fiat money is just a fact of life. Let’s talk about how fiat money works and then discuss the alternatives. Definition and Examples of Fiat Money Fiat money is a currency that is declared money by decree—not by the marketplace. Though some fiat currencies were once backed by commodities, they are now only backed by the legislative power of the government issuing them. The U.S. dollar was originally on the gold standard, which means all dollars could be traded for gold but is now a fiat currency....
For example, a financially literate person knows that if they take home $2,000 a month in pay, they cannot spend more than $2,000 each month without going into debt. Someone with a higher level of financial literacy may know that they should save some of that $2,000 for the future. Someone with even more financial literacy might be familiar with the 80/20 budgeting rule (spend 80%, save 20% of your income) and aim to set aside $400 of the $2,000 they have coming in each month....
As a taxpayer, you’ll receive copy B. The form has several copies of which different ones go to different people and agencies. Getting a Form 1099-DIV can sometimes catch you by surprise because you’ll receive one even if your dividends or capital gains were automatically reinvested to buy more shares. Who Uses Form 1099-DIV? You’ll only receive a Form 1099-DIV if your distributions occurred in a taxable account. You won’t receive the form for distributions from an individual retirement account (IRA), annuity, pension, or profit-sharing plan....
Who Uses Form 1098? Doug Jackson, a Certified Financial Planner (CFP) and Enrolled Agent with the IRS, explained to The Balance via email that the 1098 Form is used by lenders to report mortgage interest payments, as well as mortgage insurance premiums, points, and more to the IRS. The information is reported directly to the IRS and to taxpayers. You might receive more than one Form 1098, depending on the number of mortgages on which you pay interest....
Legal tender laws also determine what institutions will create and manage the currency. In the U.S., these institutions are the Department of the Treasury and the Federal Reserve. The Treasury currently issues coins and currency in the denominations: 1, 5, 10, 25, 50, and 100 cents and $1, $2, $5, $10, $20, $50, and $100. How Legal Tender Works Economists agree that money must be widely recognized as a medium of exchange, unit of account, and store of value....
Here’s an easy way to look at present value. If you invest $1,000 in a savings account today at a 2% annual interest rate, it will be worth $1,020 at the end of one year ($1,000 x 1.02). Therefore, $1,000 is the present value of $1,020 one year from now at a 2% interest, or discount, rate. The discount rate has a big impact on the present value. What if we changed the discount rate in our example from 2% to 5%?...
The Racketeer Influenced and Corrupt Organization (RICO) Act outlines dozens of crimes that count as racketeering. RICO was passed in 1970 to address organized crime’s infiltration of legitimate enterprises. The most serious crimes include any act or threat related to the following: MurderKidnappingGamblingArsonRobberyBriberyExtortionDealing in obscene matterDealing in a controlled substance or listed chemical However, dozens of additional crimes can also be prosecuted under RICO, including: Embezzlement from pension and welfare fundsExtortionate credit transactionsTrafficking in firearmsTampering with a witness, victim, or an informantPossessing, developing, producing, stockpiling, transferring, or acquiring biological weapons...
Understanding simple interest is one of the most fundamental concepts for mastering your finances. It involves some simple math, but calculators can do the work for you if you prefer. With an understanding of how interest works, you become empowered to make better financial decisions that save you money. Interest can affect you in various aspects of your financial life: When borrowing money: You must repay the amount you borrowed and include payments for interest, which represents the cost of borrowing....
